There have been celebrations in Washington this week to mark the 50th anniversary of the now famous Martin Luther King speech on civil rights.
Radio 4’s Today programme featured two Americans debating progress on the realisation of the dream this morning.
The memorable phrase which encapsulated the hopes and dreams of the time referred to MLK’s children; “I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character”
What is less well known is that MLK used a financial analogy to illustrate his point:
“we refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. So we’ve come to cash this check, a check that will give us upon demand the riches of freedom and the security of justice.”
MLK made reference to a promissory note, and there are echoes today of this contract between the state and it’s citizens in the US. The context now though is not the debt owed to the nation in terms of civil rights but the debts incurred by the state on behalf of the nation.
Is the state in the US and elsewhere spending the future, leaving the as yet unborn with the bill? Will a halt be called at some point and what will the implications be for the world economy?
The debt burden in the US has climbed dramatically and is predicted to pass $17trn by 2014. The debt is rocketing up at a rate of $2bn every hour!
The pressures are so great that the US Treasury has set October as the date to achieve resolution over the budget given that they predict the US will run out of money before the end of the year.
Debt in the US, UK and the Eurozone has not been sorted, it is simmering, and may yet come back to disturb financial stability with the potential to significantly disrupt the nascent recovery that is underway.
The impasse between democrat and republican cannot be dealt with indefinitely by kicking the can down the road. Eventually the bond markets will address the problem if politicians can’t or won’t.
The cash will run out as private investors refuse to lend their governments any more money.
Let’s hope we get to a resolution before that happens.