Posts Tagged ‘debt’

AAA to AA+



The stunning decision by Standard & Poor’s on Friday to downgrade the long-term credit rating of the United States government to AA+ from AAA will likely raise questions about investor confidence in the economy and throw equity markets into more turmoil. What is so stunning is that it happened so quickly, financial market consensus was our debt would be downgraded within the next year if Obama didn’t address the debt issue.

So how’s that HOPE & CHANGE working?

Standard & Poor’s warned that the agency could downgrade U.S. debt a notch lower in the next six to 24 months if Congress doesn’t cut another $1.6 trillion over 10 years to reach the $4 trillion figure.

The probability of another downgrade is 3-1 odds, he said.

Asked whether the U.S. can regain its triple-A rating, Standard & Poor’s said the five governments that did achieved it in 9 to 18 years.

The great unknown is, how will U.S. stocks (which have already been hammered over the past two weeks) respond to this shocking development? And will there be a long-term lingering impact on stock price performance going forward?

  • Saudi market was off 5% on Saturday.
  • Israel off 7% Sunday.
  • Currently our futures market is off 230 points (Sunday).
  • Asia is off 2% Sunday.
  • China off 4% Sunday.
  • Hang Sing off 4% Sunday.

The federal government makes about $250 billion in interest payments a year, so even a small increase in the rates demanded by investors in United States debt could add tens of billions of dollars to those payments.

Barney Frank ranking member of the House Financial Services Committee is outraged. Really? Where was Barney when he was riding the coattails of Fannie Mae, and taking in all the money from them when they were cooking the books to the tune of billions of dollars. During the Bush Administration there were numerous attempts to reign in Fannie Mae, by conservatives showing how there would be a bailout if that didn’t happen. Barney, why are you surprised about the downgrade and your fellow cronies now?

  • We are bailing out Fannie Mae and Freddie Mac at the cost to US Taxpayers at a clip of tens of billions of dollars each year.
  • This administration parties like it’s 1999. SPEND, SPEND, SPEND.
  • The American people have had it with Washington Politics. I’m tired of being hosed!

Chinese economists said the U.S. credit rating downgrade by Standard & Poor’s poses great risk to financial markets and expect it to prompt China, the world’s biggest holder of U.S. Treasuries, to accelerate the diversification of its holdings.

So who’s going to finance the US runaway debt? Probably our Treasury Department who will do QE3 and keep printing money, and printing money, and printing money. What that means for you and me. Higher prices, Inflation is coming, get ready.

Tennessee Ernie Ford would be proud Sixteen Tons of Debt…

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store

Government Stimulus

Government Stimulus

It was just last May that the consensus was that second-quarter GDP would be 3.3%. That had been revised down to 2.7%, but the number came in at 1.3%.

  • Normally, at this time in a recovery we are growing at close to 3 times that number, or 3.6%. Double Dip?

Government stimulus is not creating jobs. Printing money, spending money is not going to do it. If anything, the government interference to the economy is destroying jobs. Remember Obama promised that we would not have unemployment above 8% if we passed this stimulus bill? We are 9%+, and that doesn’t count the ones who are not reporting.

The program  created or saved just under 2.4 million private or public jobs.  That amounts to a cost to taxpayers of $278,000 per job. Now with the average wage in this country around $40,000…you do the math. How about just giving us a check? Where did all the money go?

White House’s Council of Economic Advisors reports that, as of two quarters ago, the “stimulus” had added or saved just under 2.7 million jobs — or 288,000 more than it has now.  In other words, over the past six months, the economy would have added or saved more jobs without the “stimulus” than it has with it. In comparison to how things would otherwise have been, the “stimulus” has been working in reverse over the past six months, causing the economy to shed jobs.”

  • Too much money spent on something that did not work, there is a pattern here.  And we still have to pay back the money!

At the end of 2008, when President Obama was about to take office, the national debt was $9.986 trillion.  The national debt is now $14,467 trillion and climbing.  We are heading for the cliff, DOW OFF 513 points today. Projections are for almost $17 Trillion by end of next fiscal year.

  • Obama will have almost doubled the entire national debt of this country in 4 years versus the previous 232 years.

Let’s bring back Cash for Clunkers and give everybody $3500-$4500 again. Let’s continue to spend and print more money. Let’s continue to dig a deeper hole. That seems to be the current day philosophy. Maybe that’s explains why this administration only has 8% of it’s staff with any business knowledge. The lowest on record for a President’s administration in over 50 years.

“You cannot spend your way out of recession or borrow your way out of debt.”
-Daniel Hannan

We’ve already lost $16.4 Trillion in wealth over the past couple of years. Hey let’s continue the streak…why not?

Wealth Plunge

With financial markets in turmoil and economic growth slowing, policymakers around the world may once again be forced to cooperate to try to head off a crisis, as they did successfully in 2008-2009. But this time, they have fewer good options.

Central banks have less room to ease monetary policy than they did three years ago; cash-strapped governments cannot afford to boost spending as much; and political disarray in some countries may make concerted global policymaking harder. Where are we going to find the…

Answer...the Silver Bullet

Unfortunately our government has run out of ammo.

The current situation is more troublesome than it was in 2008: There is widespread concern about the risk of a downgrade of the U.S. sovereign credit rating, and a bond market attack on Italy, the euro zone’s third-biggest economy, has called into question the long-term viability of the zone. Valuations of U.S. and European bank shares are back around levels hit at the time of Lehman’s collapse.

On Thursday, growing fear about the weakening U.S. economy was joined by concern in Europe that the troubled economies of Italy and Spain might need help from the European Union.

Manufacturing is barely growing. The service sector, which covers about 90 percent of the American work force, is growing at the slowest rate in a year and a half. People spent less in June than in May, the first decline since September 2009.

“The difference (between 2008 and now) is that this is not only a currency and banking crisis, you have now a currency, banking and sovereign crisis.”

The House passed a $2.4 trillion debt-ceiling increase Monday night with the Senate planning to follow on Tuesday, after one of the most ferocious fights ever over government spending. It raises the debt limit through the end of 2012.

If the panel deadlocks or Congress doesn’t accept its plan, a pre-arranged set of spending cuts would kick in.

The agreement, struck late Sunday, raises the debt cap by up to $2.4 trillion in three steps. It cuts $917 billion in spending over 10 years and creates a congressional committee to close the deficit by an additional $1.5 trillion. Unfortunately that is not enough. The debt rating agencies have projected the cuts need to be $10-$12 Trillion over the next 10 years. On the current record-setting pace of this administration we will hit $25 Trillion in debt within the next 6-8 years.

Can you say DOWNGRADE. Look at Europe and Greece. It’s heading to our shores.

Here’s the little SECRET… built into the budget is an annual 10% increase automatically. So, if you have a $15 Trillion dollar annual budget, guess what? Next year it automatically increases 10% or $1.5 Trillion to $16.5 Trillion.

These are not spending cuts! Spending cuts would imply that you go beyond the 10% annual increase, that’s when you can deem them spending cuts. Washington, let’s quit playing this game! You are ruining our country and everything it stands for.

Let’s all operate our personal budgets the way the government does. We are in financial difficulty, so we will spend our way out of this. Also, let’s print more money. How does that work?

The U.S. government has grown dramatically under this administration. In fact more people are on welfare than anytime in history. Debt projections are even greater now than this graph predicts, possibly topping $1.7 Trillion for 2011.

Obama Budget Deficit


Kicking the debt can down the road…we will have to deal with this all over again, and again, and again. We are on a collision course, world history demonstrates what happens to country’s who continue this game and not deal in reality.

Will USA be one the history books write about… like other countries around the world who followed this same path?


Heading in the Wrong Direction

Posted: May 24, 2011 in Debt
Tags: ,



After two years of the Obama Administration … Here ‘ s your change!

January 2009


% chg


Avg.. Retail price/gallon gas in U.S.





Crude oil, European Brent (barrel)





Crude oil, West TX Inter. (barrel)





Gold: London (per troy oz.)





Corn, No.2 yellow, Central IL





Soybeans, No. 1 yellow, IL





Sugar, cane, raw, world, lb. Fob





Unemployment rate, non-farm, overall





Unemployment rate, blacks





Number of unemployed





Number of fed. Employees





Real median household income





Number of food stamp recipients





Number of unemployment benefit recipients





Number of long-term unemployed





Poverty rate, individuals





People in poverty in U.S.





U.S.. Rank in Economic Freedom World Rankings





Present Situation Index





Failed banks





U.S.. Dollar versus Japanese yen exchange rate





U.S.. Money supply, M1, in billions





U.S.. Money supply, M2, in billions





National debt, in trillions





Just take this last item: In the last two years we have accumulated national debt at a ratemore than 27 times as fast as during the rest of our entire nation ‘ s history.
Over 27 times as fast. Metaphorically speaking, if you are driving in the right lane doing 65 MPH and a car rockets past you in the left lane.
27 times faster, it would be doing 7,555 MPH!

(1) U.S. Energy Information Administration; (2) Wall Street Journal; (3) Bureau of Labor Statistics; (4) Census Bureau; (5) USDA; (6) U.S. Dept. Of Labor;
(7) FHFA; (8) Standard & Poor ‘ s/Case-Shiller; (9) RealtyTrac; (10) Heritage Foundation and WSJ; (11) The Conference Board; (12) FDIC;
(13) Federal Reserve; (14) U.S. Treasury

The U.S. government reached its debt limit ceiling of $14.3 Trillion dollars. That’s the equivalent of each person in the U.S. spending 60% above their budget. Isn’t this excessive spending, easy credit got us into this debacle in the first place? Does Subprime loans ring a bell? Didn’t matter what your FICO score was, we were going to lend you money.

Or one of our local commercials that say…We don’t care about your credit we care about YOU! Really??? When you stop paying because you cannot afford it, how much will he care about you then? Or will it be someone else’s problem because the loan was sold. Another example of kicking the can down the road.

The debate over raising the debt limit will gain more urgency, after the federal government officially hits the $14.3 trillion ceiling today.

Even though the government has the tools to stave off a default of government debts until August, lawmakers this weekend were ramping up the debate, laying out demands and issuing warnings about the $14.3 trillion debt.

One just needs to look across the pond to Europe, where the sovereign debt is bubbling to a crisis. The U.S. is not too much further behind with our current path. The biggest bubble in history is the bubble of government debt. It is a bubble in a world full of pins. It will take a great deal of luck and crisis management to keep it afloat, without wreaking havoc on the financial system and markets of the world.

What happens when you come to the end of the road? The European answer seems to be to haul in the heavy equipment and extend the road. What about here in the U.S.? Continue to up the debt ceiling? Cut spending? The U.S. government has grown dramatically under this administration. In fact more people are on welfare than anytime in history. Debt projections are even greater now than this graph predicts, possibly topping $1.7 Trillion for 2011. This administration wants to keep spending, throwing parties and printing money. Gas prices are at all time highs, groceries are going up, inflation is starting to take hold.

Did you know that a 10% automatic increase in spending is built into the budget?

Obama Budget Deficit

The Administration’s Home Affordable Modification Program (HAMP) was a bust. Tightening lending standards, the renewed decline in-house prices, fears of job loss as unemployment remains high and the drying up of mortgage securitization have handily offset the positive effects of low mortgage rates and new homeowner tax credits. Indeed, the jumps in home sales in anticipation of the tax credit expiration first in November 2009 and then in April 2010 were promptly retraced and followed by still-weaker sales.

Home Sales

Let’s be serious here. Everyone knows the debt ceiling will be raised. All this politics is about preventing (or gaining) spending concessions. Obama and the Democrats wants to raise taxes, the Republicans want to reduce spending.

The debt ceiling is a game of chicken to see who blinks first and by how much.

This country was founded on capitalist principles, and has made America great. We’ve had rough seasons throughout our history, as has everyone else. However, we’ve always weathered the storm, because it was our founding principles that drove our economy. Now we are heading to a Socialist/Marxist country before our very eyes with this administration.

The two parties on Capitol Hill and the president will not be coming together to solve the gravest financial and fiscal crisis America has faced since the Great Depression. Between them today is a high wall and a deep ditch.

Obama wants bigger government. He doesn’t want the private sector to perform, so that masses of people become dependent on the government like an addict.

  • Welfare spending is up 54%.
  • Government spending is up 41

Nobody noticed, but in Obama’s speech on his deficit-reduction policy, he proposed stripping congress of the power to tax and establishing an automatic tax trigger if deficit reduction goals are not met. Taxes by Immaculate Conception…the new democratic plan to soak us.

Dick Morris take on the budget speech.

Now Obama is proposing to do away with or scale back severely.

  • Charitable Deductions
  • The Mortgage Deductions

Has anybody noticed the housing depression we are in? That would kill any kind of recovery for housing in this generation.

How many charitable organizations would be put out of business with deductions taken away?

And that raises another question. How long can the Federal Reserve continue financing these deficits?

China, choking on U.S. debt, is reportedly beginning to divest itself of U.S. bonds. Japan will need to sell U.S. bonds to get hard currency to repair the damage from the earthquake and tsunami. And the Fed is about to end its QE2 monthly purchases of $100 billion in U.S. bonds.

Where is the Fed going to borrow the $125 billion a month to finance this year’s deficit of $1.65 trillion, and another of comparable size in 2012?

Bill Gross’ Pimco, the world’s largest bond fund, has sold all his U.S. bonds and begun to short U.S. debt. Pimco is betting that the value of U.S. Treasury bonds will begin to fall.

We may be about to enter a maelstrom.

With interest rates rising, gas prices rising and inflation rising, the squeeze is on, and there is talk of a double-dip recession. And if that happens, Obama is toast. But, then, so are we.