Debt Supernova Gets Worse

Thursday, May 28, 2009 \AM\.\Thu\.

Debt Supernova

I list below posts I have written on this blog about the US debt situation.  As pessimistic as I have been, apparently the debt situation for the nation is appreciably worse than even I thought.  Hattip to Ed Morrissey at Hot Air.  Tax revenues to the IRS are down 44% from where they were last year.  Previous debt projections, as Ed Morrissey points out, were based on the assumption that the loss to GDP this year would be -1.2%.  With GDP contracting at -6% during the first quarter on an annual basis, the economy will have to show a lot of growth for the remainder of the year for the target of a -1.2% GDP contraction to be reached.  I very much doubt if the GDP contraction will be much better than -2.5% and could easily be far worse.

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Chutzpah

Sunday, May 17, 2009 \AM\.\Sun\.

 s-DISASTER-large

Bringing to mind the story Abraham Lincoln used to tell about a young man who killed his father and mother and then begged that the court would have mercy on a poor orphan, President Obama now seeks to pose as a deficit hawk:

President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

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National Debt Road Trip

Saturday, May 16, 2009 \AM\.\Sat\.

Hattip to the Cranky Conservative.  My only suggested improvement to this video would be a shot of the debt car hitting a brick wall which will happen, and I am beginning to think sooner rather than later, when the government is simply unable to find lenders willing to risk their funds to cover our national credit card binge of federal spending.


Bye Bye Triple A Rating?

Wednesday, May 13, 2009 \PM\.\Wed\.

Broke Uncle Sam

One of many problems in having a government that is digging the deepest debt hole in history, is that lenders can’t help but take note.  The US has enjoyed a Triple A credit rating since 1917.  It is possible that we may  lose that rating.  Hattip to StreetInsider.com.

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So Obvious, Even The New York Times Notices

Monday, May 4, 2009 \PM\.\Mon\.

red-ink

Hattip to Ed Morrissey at Hot Air.  The New York Times reports that Wall Street is alarmed at the matterhorn of debt the Obama administration is piling up.   The Times notes that 10 year Treasury Notes briefly rose to a yield of 3.17% last week, and the federal deficit is currently running at one-seventh of gross domestic product.  There is no mystery here.  Investors are looking at this debt and beginning to understand two simple facts:  it is never going to be repaid and it is doubtful if long-term politically the US can continue to pay the interest on this debt if it dominates an ever-growing portion of tax receipts.  I have discussed the issue of national debt a few times on this blog, here , here, here, here and  here.  We are pursuing lunatic economic policies and we are heading for economic catastrophe. 

Update: The People’s Republic of China,  i.e. Communist China, sharply curtailed  their US bond purchases in January and February before resuming purchases in March.  I never thought I would live to see the day when “Red” China would be rightfully concerned with the stability of the US economy and the wisdom of purchasing US debt instruments.


Debt Sun

Wednesday, April 22, 2009 \AM\.\Wed\.

 debt-sun

Hattip to Instapundit.  The Heritage Foundation supplied the above graphic which compares Obama budget “cuts” of $100,000,000.00 to the appropriations bill for fiscal 2009 of $410,000,000,000.00, the Bankrupt the Nation Act of 2009, sometimes erronously called the “stimulus” bill, which has a price tag of $787,000,000,000.00 and the estimated bill for fiscal year 2010 of $3,600,000,000,000.00.  How ludicrous is all this?  Ludicrous enough that the Obama supportive Associated Press makes fun of it.  Ludicrous enough that even Paul Krugman is chuckling.

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Obama’s Speech on the Economy

Tuesday, April 14, 2009 \PM\.\Tue\.

President Obama gave a speech today on the economy and the agenda of his Administration and Congress, thus far into his presidency. I personally watched the speech. I have yet to go back and read it. I thought it might generate some good discussion, in collective analysis of the text. In the spirit of Easter, please engage with criticisms of his positions, not of his person or broad generalizations that are not necessary or charitable.

It has now been twelve weeks since my administration began.  And I think even our critics would agree that at the very least, we’ve been busy.  In just under three months, we have responded to an extraordinary set of economic challenges with extraordinary action – action that has been unprecedented in both its scale and its speed.

I know that some have accused us of taking on too much at once.  Others believe we haven’t done enough.  And many Americans are simply wondering how all of our different programs and policies fit together in a single, overarching strategy that will move this economy from recession to recovery and ultimately to prosperity.

So today, I want to step back for a moment and explain our strategy as clearly as I can.  I want to talk about what we’ve done, why we’ve done it, and what we have left to do.  I want to update you on the progress we’ve made, and be honest about the pitfalls that may lie ahead.

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Red Ink

Wednesday, March 25, 2009 \AM\.\Wed\.

bush-obamabudget1

A look at the federal budget since 2000, with projections, for what little they are worth, by the White House and the Congressional Budget Office to 2019.  By CBO estimates last week, the budget deficits between now and 2019 would total $9, 300, 000, 000, 000.00.  The entire cost of WW2 for the US in 2008 dollars was 3.6 trillion.  This year the budget deficit will total 13% of our gross domestic product.  This isn’t economic policy, it is lunacy.  These type of deficits are completely unsustainable, and we are running towards national bankruptcy.  It is impossible to borrow these type of funds from abroad.  We will simply create the funds out of thin air.  The long term impact on our children and their children can be easily imagined.  As the Heritage Foundation points out, this is a completely bi-partisan disaster.  Politicians have acted like teen-agers with stolen credit cards for far too long.  However, this will stop.  It will stop either by voters throwing out of office the fiscally irresponsible, or, much more likely in my estimation, the economy will simply hit a brick wall.  This will not, cannot, go on.  How it is stopped is up to us.

Update I:  The President of the EU slams current US economic policy as a road to hell.  I never thought I would live to see the day when a President of the EU would have more economic sense than a President of the US.

UpdateII:  Hattip to Instapundit.  A sign of things to come.  Stocks slide after a lack-lustre sale of T bills and notes: 

“Bond prices fell after the auction of $34 billion in 5-year Treasury notes. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 2.77 percent from 2.71 percent late Tuesday. The yield on the three-month T-bill rose to 0.19 percent from 0.17 percent Tuesday.

Investors gave an unexpectedly cool response to the note sale just a day after a $40 billion auction of 2-year notes suggested strong demand. The government is running up huge deficits in order to fund an array of plans to provide stimulus to the economy and support to the ailing financial system. Any suggestion that demand for U.S. government debt is weakening is a negative for stocks, simply because Wall Street has been relying so heavily on the government’s rescue plans.

The surge of worry over the debt auction wiped out the market’s early optimism in response to durable goods and home sales data.”


Of Tea and Taxes

Wednesday, March 18, 2009 \PM\.\Wed\.

dont-tread-on-me

In politics, as in physics, an action causes a reaction.  With the election of President Obama and strong Democrat majorities in both houses of Congress, the stage is set for a radical increase in the size, power and scope of government to transform the United States into a socialist state, along the lines of the European social welfare states.  The Bankrupt the Nation Act of 2009, erroneously called a stimulus bill, is merely the first step in the process.  The President has already warned of trillion dollar budget deficits as far as the eye can see, and he has the votes for now to carry out his vision.  Can he be stopped?

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Obamanomics, or How Low Will the Dow Go!

Wednesday, March 4, 2009 \AM\.\Wed\.

bear-market

As Glenn Reynolds at Instapundit notes here, since the passage of the Bankrupt the Nation Act of 2009, erroneously referred to as the Stimulus Bill,  the Dow has lost over 1400 points.  Since the election of President Obama, the Dow has lost over 2700 points as detailed here.  However, in the midst of the greatest Bear market in a generation, our President has financial advice for us:  Buy stocks!

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Obama Finds His 9/11

Friday, February 27, 2009 \PM\.\Fri\.

Critics of the Bush Administration often complained (especially during his first term) that Bush used 9/11 as a justification for nearly everything he did. Given that the country was widely supportive of the administration in the years right after the attack, this was (the complaint went) a way for Bush to do things he’d wanted to do anyway under the guise of responding to an emergency. While I think this complaint was overstated, there is an element of truth to it. For instance, I don’t think there’s a whole lot of question that many within the administration (rightly or wrongly) wanted to get rid of the Baathist regime in Iraq even prior to taking office.

In this respect, Obama seems to have found his 9/11, his excuse for doing all the things he and his party want to do while assuring everyone it would be a Very Bad Idea it not Downright Unpatriotic for them to disagree. Obama’s 9/11 is the recession, or as the media seems to have named it “The Worst Economic Downturn Since the Great Depression”. (This is, to my mind, a rather unwieldy name. Perhaps we could just call it the “Big Recession” or the “Little Depression”?)

Thus, in his presentation of a new budget which is heavy on partisan measures (big tax increases on “the rich” and preparation for major changes in social service structure and spending) and racks up the largest deficit (as percentage of GDP) since 1942, Obama assured people that this was necessary in order to restore the economy:

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Now We Know Who Gets The Change

Thursday, February 12, 2009 \AM\.\Thu\.

obama-reid-pelosi

President Obama ran on a platform of Hope and Change.  From the details of the National Bankrupt the Nation Act of 2009, sometimes called a “stimulus” bill, we can now see who gets the change:

“Q: What are some of the tax breaks in the bill?

A: It includes Obama’s signature “Making Work Pay” tax credit for 95 percent of workers, though negotiators agreed to trim the credit to $400 a year instead of $500 — or $800 for married couples, cut from Obama’s original proposal of $1,000. It would begin showing up in most workers’ paychecks in June as an extra $13 a week in take-home pay, falling to about $8 a week next January.”

Thanks a heap!


Obama and the Stimulus Package

Tuesday, February 10, 2009 \AM\.\Tue\.

Has anyone ever wondered if it is possible that one can land in a financial crisis when one has a steady income, no debts, and a large reserve of money in case of emergencies?  Certainly, I suppose, if something devastating comes around, like an accident that requires weeks in the ICU, surgeries, and a long rehabilitation, that could bankrupt a person.  Yet such accidents, on a whole, are rare, and most people who live a financially responsible life never have to plead for a bailout.

When we look at our current financial crisis nationwide, I can’t help but wonder what people are thinking.  President Obama has promised us trillion dollar deficits for years to come in an effort to restore our economy.  Like most right-leaning folk, I’m under the impression that our current crisis has come from overspending, living beyond our means, and not being prepared for when we hit bumpy times in the economy (like $4/gallon gas, which drives prices up all around).  Perhaps, if this view is incorrect, someone will be willing to explain to me why it is so.  But my impression has been that first, people individually are consumed with buying, buying, buying, even when they don’t have the money to buy.   I have friends who, though they grossed over $60,000 a year, were still living paycheck to paycheck because of their deficit spending.  I’ve seen people who, upon receiving their government money, have gone and blown it on new cell phones (that are shut down after two delinquent months), on fancy steack dinners, and so on, instead of buying necessities or saving up what they can.  I’ve seen people struggling with hundreds of thousands of dollars of accumulated debt that came from student loans, house loans, car loans, credit cards, and so on.  This is just what I’ve seen.  What I’ve heard–word of mouth, or in the news, or on blogs–is even worse.

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An Obama Promise You Can Believe

Sunday, November 2, 2008 \PM\.\Sun\.

Think the rates that you are paying currently for electricity are too high?  If Obama is elected you will feel nostalgic for these rates.  That is not a prediction by me.  That is a promise from Senator Obama.


Trust Your 401(k) to Uncle Sam?

Friday, October 24, 2008 \AM\.\Fri\.

The government of Argentina plans to nationalize, read steal, the private pensions of Argentinian citizens.  Good thing we’re Americans right?  That could never happen here, right?   Depending on how the election next month goes, maybe it could happen here?   Hmmm, that investment strategy of gold in coffee cans buried in the back yard is sounding better and better.