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The more bonds lose ground, the more investors are likely to wonder whether the Federal Reserve will increase its current $300 billion program of buying Treasurys, which it launched in March to keep credit conditions loose throughout the recession-bound economy.
National Debt reaches $14.3 Trillion!! Financial Terror Debt interest ranks 3rd in Federal Budget and grows 1.5 Billion a day
MultiQuote#22 Richard in NY
Posted 04 August 2009 - 09:46 AM
On Tuesday, Treasury suffered its worst five-year auction in history. Yet that news barely made a headline. The Treasury’s five-year auction yield was 2.69% with 21.15% allotted at the high and bid to cover was 1.92 to 1. The average of the past ten auctions has been 2.20%. Indirect, central bank participation was 35.7% versus an average of 36.8%. Overall that was weak demand. Do not forget the Treasury has to raise $2 trillion by 9/30/09. In addition, the $2 trillion or so of "government" issuance over the past year is greater than the $1.4 trillion peak total mortgage credit growth during 2005 and 2006.
Today’s credit crisis finance bubble will make the residential and commercial bubble look like a joke. Multiply by 5 or 10. Who knows where this can end up? Despite record debt issuance, the market will lend the Treasury three-month money at about 11 basis points (bps), or 0.11%. Two-year borrowings come at cost of about 100 bps. The price of Treasury notes and bonds inflates in spite of enormous deficits as far as the eye can see.
Instead of a movement toward constructing a more stable global credit system and backdrop, policymakers have instead jumped farther into the uncharted waters of unconstrained credit expansion.
Today’s credit crisis finance bubble will make the residential and commercial bubble look like a joke. Multiply by 5 or 10. Who knows where this can end up? Despite record debt issuance, the market will lend the Treasury three-month money at about 11 basis points (bps), or 0.11%. Two-year borrowings come at cost of about 100 bps. The price of Treasury notes and bonds inflates in spite of enormous deficits as far as the eye can see.
Instead of a movement toward constructing a more stable global credit system and backdrop, policymakers have instead jumped farther into the uncharted waters of unconstrained credit expansion.
#23 Capitol Hill
Posted 28 August 2009 - 03:37 PM
The economy could spiral into hyperinflation not seen since the early 1980s if the Federal Reserve does not tighten its monetary policy soon, Sen. Chuck Grassley (R-Iowa) warned Tuesday.
Grassley, speaking about the renomination of Federal Reserve Chairman Ben Bernanke to a second term as head of the Fed, asserted that Bernanke's ability to hold down inflation would be the metric by which the Fed's success would be measured.
Grassley, the ranking member of the Senate Finance Committee, said that inflation as a result from government spending on bailouts could result in inflation rivaling rates in 1980, when it hit a peak of 13.5 percent.
Grassley argued that while it would be a year until lawmakers will know whether Bernanke has been successful at bringing inflation under control, it would probably be best to keep the chairman on board for a second term as head of the Federal Reserve.
Grassley, speaking about the renomination of Federal Reserve Chairman Ben Bernanke to a second term as head of the Fed, asserted that Bernanke's ability to hold down inflation would be the metric by which the Fed's success would be measured.
Quote
"We won't know for a year if he's done a good job so far, because he shoveled money out of an airplane to save banks and the financial system," Grassley said in a conference call with Iowa reporters. "But shoveling money out of an airplane to solve problems can be inflationary — in this case, hyperinflationary — if he doesn't start mopping up some of the money that's out there."
Grassley, the ranking member of the Senate Finance Committee, said that inflation as a result from government spending on bailouts could result in inflation rivaling rates in 1980, when it hit a peak of 13.5 percent.
Quote
"The Fed has the ability to put money out, it's got the ability to take money back in, and if they don't do that, we will have hyperinflation worse than we had in 1980 and '81," Grassley said. "And I hope he demonstrates that ability."
Grassley argued that while it would be a year until lawmakers will know whether Bernanke has been successful at bringing inflation under control, it would probably be best to keep the chairman on board for a second term as head of the Federal Reserve.
Quote
"I would suggest that right now, when everybody's nervous about the economy, that you don't change horses in the middle of the stream, and consequently, it would probably be detrimental to not have him reappointed,"
#24 Human
Posted 28 August 2009 - 04:04 PM
To give you folks how much money is a Billion Dollars?
If you were to count up to a BILLION DOLLARS, it would take you from birth till the person dies plus ten years afterwards to count to a Billion.
That’s just 1 Billion, now imagine 10 Billion? 100 Billion? 500 Billion? 1 Trillion?
Now Imagine the interest on the national debt? 1.4 trillion And counting, and that's with out Nationalized health care. Add 2 trillion more at least.
------------------------------------------------------------------------------------------------
If you were to count up to a BILLION DOLLARS, it would take you from birth till the person dies plus ten years afterwards to count to a Billion.
That’s just 1 Billion, now imagine 10 Billion? 100 Billion? 500 Billion? 1 Trillion?
Now Imagine the interest on the national debt? 1.4 trillion And counting, and that's with out Nationalized health care. Add 2 trillion more at least.
------------------------------------------------------------------------------------------------
Capitol Hill, on 28 August 2009 - 11:37 AM, said:
The economy could spiral into hyperinflation not seen since the early 1980s if the Federal Reserve does not tighten its monetary policy soon, Sen. Chuck Grassley (R-Iowa) warned Tuesday.
Grassley, speaking about the renomination of Federal Reserve Chairman Ben Bernanke to a second term as head of the Fed, asserted that Bernanke's ability to hold down inflation would be the metric by which the Fed's success would be measured.
Grassley, the ranking member of the Senate Finance Committee, said that inflation as a result from government spending on bailouts could result in inflation rivaling rates in 1980, when it hit a peak of 13.5 percent.
Grassley argued that while it would be a year until lawmakers will know whether Bernanke has been successful at bringing inflation under control, it would probably be best to keep the chairman on board for a second term as head of the Federal Reserve.
Grassley, speaking about the renomination of Federal Reserve Chairman Ben Bernanke to a second term as head of the Fed, asserted that Bernanke's ability to hold down inflation would be the metric by which the Fed's success would be measured.
Grassley, the ranking member of the Senate Finance Committee, said that inflation as a result from government spending on bailouts could result in inflation rivaling rates in 1980, when it hit a peak of 13.5 percent.
Grassley argued that while it would be a year until lawmakers will know whether Bernanke has been successful at bringing inflation under control, it would probably be best to keep the chairman on board for a second term as head of the Federal Reserve.
#26 Hang em High
Posted 14 September 2009 - 09:16 PM
34 GOP Senators (around 75% of the GOP Senators) and 91 GOP Congressmen (50% of the GOP Congressmen) voted for Bush’s TARP Socialist bailout of Wall Street, a transfer of 700 billion dollars of taxpayers’ money to their campaign-financing buddies on Wall Street along with the Dems. The vote was on October 1st right before the October re-election recess. It was found shortly thereafter that $53,000,000 dollars was transferred to the campaign funds of Democrat and GOP Congressmen and Senators who had voted for TARP. The money was traced to Wall Street banking and securities firms. Source: “Meltdown” by Thomas E. Woods Jr, p. 5, a book endorsed by Ron Paul.
#28
Sen. Blutarsky 
- Friend
-
- Group: Guru
- Posts: 51
- Joined: 09-August 08
Posted 30 December 2009 - 10:47 PM
How many zeros in a trillion?
The next time you hear a politician use the word 'trillion' in a casual manner, think about whether you want the 'politicians' spending YOUR tax money.
A trillion is a difficult number to comprehend, but after some serious drinking on this I had an epiphany while watching Land of the Lost.
10 trillion seconds ago it was 314,870 BC. Neanderthals were living in Europe. I am sure they could open beer bottles with their teeth. But, could they imagine owing 96 million woolly mammoth carcasses?
This may be the reason for the extinction of the megafauna. And possibly the Neanderthals. The politicians may have indirectly killed Chaka.
Note. I used today's current value for beef stock.
The next time you hear a politician use the word 'trillion' in a casual manner, think about whether you want the 'politicians' spending YOUR tax money.
A trillion is a difficult number to comprehend, but after some serious drinking on this I had an epiphany while watching Land of the Lost.
10 trillion seconds ago it was 314,870 BC. Neanderthals were living in Europe. I am sure they could open beer bottles with their teeth. But, could they imagine owing 96 million woolly mammoth carcasses?
This may be the reason for the extinction of the megafauna. And possibly the Neanderthals. The politicians may have indirectly killed Chaka.
Note. I used today's current value for beef stock.
This post has been edited by Sen. Blutarsky: 30 December 2009 - 10:49 PM
#29 Human
Posted 31 December 2009 - 11:17 PM
Russia’s' infrastructure is falling apart, and currently the Russians WILL need a massive amount
Of money to rebuild their infrastructure. More than their current strategic holdings, as well as their monetary system combined.
------------------------------------------------------------------------------------------------
Of money to rebuild their infrastructure. More than their current strategic holdings, as well as their monetary system combined.
------------------------------------------------------------------------------------------------
Cyberian, on 10 September 2009 - 06:05 PM, said:
The largest currency reserve managers, namely China and Russia want a new alternative global reserve currency, including expanded SDR to incorporate the yuan and ruble.
#30 420
Posted 12 January 2010 - 10:21 AM
The U.S. Debt Clock show the trouble we are in.
http://www.usdebtclock.org/
We need to do something to stop this.
http://www.usdebtclock.org/
We need to do something to stop this.
#31 Bob Dobbs
Posted 18 January 2010 - 03:36 PM
National Debt Understanding Test
This test only has one question, but it's a very important one.
By giving an honest answer, you will discover where you stand morally in our economic crisis. The test features an unlikely, completely fictional situation in which you will have to make a decision. Remember that your answer needs to be honest, yet spontaneous.
THE SITUATION:
You are in Florida , Miami to be specific. There is chaos all around you caused by a hurricane with severe flooding. This is a flood of biblical proportions. You are a photojournalist working for a major newspaper, and you're caught in the middle of this epic disaster. The situation is nearly hopeless. You're trying to shoot career-making photos. There are houses and people swirling around you, some disappearing under the water. Nature is unleashing all of its destructive fury.
THE TEST:
Suddenly you see a bunch of old men screaming in the water. They are fighting for their lives, trying not to be taken down with the debris. You move closer. Somehow they look familiar. You suddenly realize who theses men are: It's Alan Greenspan, Phil Gramm, John Thain, Timothy F. Geithner, Ben Bernanke, Lloyd C. Blankfein, Gary Cohn, and Jon S. Corzine!! At the same time you notice that the raging waters are about to take them under forever.
You have two options:
OPTION A - You can save their lives
OPTION B - You can shoot a dramatic Pulitzer Prize-winning photo, documenting the deaths of the world's most powerful cartel.
Here's the question, and please give an honest answer....
THE QUESTION:
Would you select High Contrast Color film, or would you go with the classic simplicity of Black and White?
This test only has one question, but it's a very important one.
By giving an honest answer, you will discover where you stand morally in our economic crisis. The test features an unlikely, completely fictional situation in which you will have to make a decision. Remember that your answer needs to be honest, yet spontaneous.
THE SITUATION:
You are in Florida , Miami to be specific. There is chaos all around you caused by a hurricane with severe flooding. This is a flood of biblical proportions. You are a photojournalist working for a major newspaper, and you're caught in the middle of this epic disaster. The situation is nearly hopeless. You're trying to shoot career-making photos. There are houses and people swirling around you, some disappearing under the water. Nature is unleashing all of its destructive fury.
THE TEST:
Suddenly you see a bunch of old men screaming in the water. They are fighting for their lives, trying not to be taken down with the debris. You move closer. Somehow they look familiar. You suddenly realize who theses men are: It's Alan Greenspan, Phil Gramm, John Thain, Timothy F. Geithner, Ben Bernanke, Lloyd C. Blankfein, Gary Cohn, and Jon S. Corzine!! At the same time you notice that the raging waters are about to take them under forever.
You have two options:
OPTION A - You can save their lives
OPTION B - You can shoot a dramatic Pulitzer Prize-winning photo, documenting the deaths of the world's most powerful cartel.
Here's the question, and please give an honest answer....
THE QUESTION:
Would you select High Contrast Color film, or would you go with the classic simplicity of Black and White?
#33 Daniel
Posted 23 January 2010 - 11:19 AM
The U.S. has allowed the total federal debt (including debt held by government agencies, like the Social Security fund) to balloon by 50% since 2006 to $12.3 trillion. The pain of repayment is not yet being felt, because interest rates are so low--close to 0% on short-term Treasury bills. Someday those rates are going to rise. Then the taxpayer will have the devil to pay.
#34 LAW
Posted 05 February 2010 - 09:22 PM
Today Congressman Chris Van Hollen (D-MD) issued the following statement on final passage to establish statutory pay-as-you-go (PAYGO) requirements:
“Today is an important day for budget discipline in America. For the first time since 2002, Congress is once again bringing the force of law to the common sense proposition that the federal government should pay for what it buys. The history is clear – when Congress lived under PAYGO in the 1990s, we turned deficits into record surpluses. After PAYGO was abandoned, deficits skyrocketed and our national debt nearly doubled.
“Everyone is entitled to their own opinions, but not their own facts. It is a fact that before President Obama was sworn in last year, America faced a record budget deficit of $1.3 trillion. It is also a fact that virtually all of last year’s fiscal imbalance is attributable to the legacy of financial mismanagement that President Obama inherited from the previous Administration. The Bush Administration felt no need to pay for a variety of programs, including tax cuts for the wealthiest Americans, the war in Iraq, and the prescription drug program. All of that was placed on our national credit card, pushing us further into the red. We are working now to address the damage that reckless spending caused.
“PAYGO is proven, common sense fiscal policy. It will force Congress to prioritize and make the same kinds of choices our constituents make every day. Under this legislation, virtually any new policy that reduces revenue or increases mandatory spending will have to be offset elsewhere in the budget. In reinstating PAYGO, we’ve put our nation back on the path to fiscal responsibility.”
“Today is an important day for budget discipline in America. For the first time since 2002, Congress is once again bringing the force of law to the common sense proposition that the federal government should pay for what it buys. The history is clear – when Congress lived under PAYGO in the 1990s, we turned deficits into record surpluses. After PAYGO was abandoned, deficits skyrocketed and our national debt nearly doubled.
“Everyone is entitled to their own opinions, but not their own facts. It is a fact that before President Obama was sworn in last year, America faced a record budget deficit of $1.3 trillion. It is also a fact that virtually all of last year’s fiscal imbalance is attributable to the legacy of financial mismanagement that President Obama inherited from the previous Administration. The Bush Administration felt no need to pay for a variety of programs, including tax cuts for the wealthiest Americans, the war in Iraq, and the prescription drug program. All of that was placed on our national credit card, pushing us further into the red. We are working now to address the damage that reckless spending caused.
“PAYGO is proven, common sense fiscal policy. It will force Congress to prioritize and make the same kinds of choices our constituents make every day. Under this legislation, virtually any new policy that reduces revenue or increases mandatory spending will have to be offset elsewhere in the budget. In reinstating PAYGO, we’ve put our nation back on the path to fiscal responsibility.”
#35 Fedup
Posted 08 February 2010 - 01:30 PM
This was my favorite Superbowl commercial.
Children: I pledge allegiance to Americaʼs debt, and to the Chinese government that lends us money. And to the interest, for which we pay, compoundable, with higher taxes and lower pay until the day we die.
VO: American tax payers owe more than $500 million in interest payments every day to cover our governmentʼs debt, much of that debt is owe to foreign governments. Go to DefeatTheDebt.com.
Children: I pledge allegiance to Americaʼs debt, and to the Chinese government that lends us money. And to the interest, for which we pay, compoundable, with higher taxes and lower pay until the day we die.
VO: American tax payers owe more than $500 million in interest payments every day to cover our governmentʼs debt, much of that debt is owe to foreign governments. Go to DefeatTheDebt.com.
#36 Paul Craig Roberts
Posted 08 February 2010 - 06:21 PM
The global crisis is understood as a banking crisis brought on by the mindless deregulation of the U.S. financial arena. Investment banks leveraged assets to highly irresponsible levels, issued questionable financial instruments with fraudulent investment grade ratings, and issued the instruments through direct sales to customers rather than through markets.
The crisis was initiated when the U.S. allowed Lehman Brothers to fail, thus threatening money market funds everywhere. The crisis was used by the investment banks, which controlled U.S. economic policy, to secure massive subsidies to their profits from a taxpayer bailout and from the Federal Reserve. How much of the crisis was real and how much was hype is not known at this time.
As most of the derivative instruments had never been priced in the market, and as their exact composition between good and bad loans was unknown (the instruments are based on packages of securitized loans), the mark-to-market rule drove the values very low, thus threatening the solvency of many financial institutions. Also, the rule prohibiting continuous shorting had been removed, making it possible for hedge funds and speculators to destroy the market capitalization of targeted firms by driving down their share prices.
The obvious solution was to suspend the mark-to-market rule until some better idea of the values of the derivative instruments could be established and to prevent the abuse of shorting that was destroying market capitalization. Instead, the Goldman Sachs people in charge of the U.S. Treasury and, perhaps, the Federal Reserve as well, used the crisis to secure subsidies for the banks from U.S. taxpayers and from the Federal Reserve. It looks like a manipulated crisis as well as a real one due to greed unleashed by financial deregulation.
The crisis will not be over until financial regulation is restored, but Wall Street has been able to block re-regulation. Moreover, the response to the crisis has planted seeds for new crises. Government budget deficits have exploded. In the U.S. the fiscal year 2009 federal budget deficit was $1.4 trillion, three times higher than the 2008 deficit. President Obama’s budget deficits for 2010 and 2011, according to the latest report, will total $2.9 trillion, and this estimate is based on the assumption that the Great Recession is over. Where is the U.S. Treasury to borrow $4.3 trillion in three years?
This sum greatly exceeds the combined trade surpluses of America’s trading partners, the recycling of which has financed past U.S. budget deficits, and perhaps exceeds total world savings.
It is unclear how the 2009 budget deficit was financed. A likely source was the bank reserves created for financial institutions by the Federal Reserve when it purchased their toxic financial instruments. These reserves were then used to purchase the new Treasury debt. In other words, the budget deficit was financed by deterioration in the balance sheet of the Federal Reserve. How long can such an exchange of assets continue before the Federal Reserve has to finance the government’s deficit by creating new money?
Similar deficits and financing problems have affected the EU, particularly its financially weaker members. To conclude: the initial crisis has planted seeds for two new crises: rising government debt and inflation.
A third crisis is also in place. This crisis will occur when confidence is lost in the U.S. dollar as world reserve currency. This crisis will disrupt the international payments mechanism. It will be especially difficult for the U.S. as the country will lose the ability to pay for its imports with its own currency. U.S. living standards will decline as the ability to import declines.
The financial crisis is essentially a U.S. crisis, spread abroad by the sale of toxic financial instruments. The rest of the world got into trouble by trusting Wall Street. The real American crisis is much worse than the financial crisis. The real American crisis is the offshoring of U.S. manufacturing, industrial, and professional service jobs such as software engineering and information technology.
Jobs offshoring was initiated by Wall Street pressures on corporations for higher earnings and by performance-related bonuses becoming the main form of managerial compensation. Corporate executives increased profits and obtained bonuses by substituting cheaper foreign labor for U.S. labor in the production of goods and services marketed in the U.S.
Jobs offshoring is destroying the ladders of upward mobility that made the U.S. an opportunity society and eroding the value of a university education. For the first decade of the 21st century, the U.S. economy has been able to create net new jobs only in domestic nontradable services, such as waitresses, bartenders, sales, health and social assistance and, prior to the real estate collapse, construction. These jobs are lower paid than the jobs were that have been offshored, and these jobs do not produce goods and services for export.
Jobs offshoring has increased the U.S. trade deficit, putting more pressure on the dollar’s role as reserve currency. When offshored goods and services return to the U.S., they add to imports, thus worsening the trade imbalance.
The policy of jobs offshoring is insane. It is shifting U.S. GDP growth to the offshored locations, such as China, thus halting growth in U.S. consumer incomes. For the past decade, U.S. households substituted an increase in indebtedness for the lack of growth in income in order to continue increasing their consumption. With their home equity refinanced and spent, real estate values down, and credit card debt at unsustainable levels, it is no longer possible for the U.S. economy to base its growth on a rise in consumer debt. This fact is a brake on U.S. economic recovery.
Stimulus packages cannot substitute for the growth in real income. As so many high value-added, high productivity U.S. jobs have been offshored, there is no way to achieve real growth in U.S. personal incomes. Stimulus spending simply adds to government debt and pressure on the dollar, and sows seeds for high inflation.
The U.S. dollar survives as reserve currency because there is no apparent substitute. The euro has its own problems. Moreover, the euro is the currency of a non-existent political entity. National sovereignty continues despite the existence of a common currency on the continent (but not in Great Britain). If the dollar is abandoned, then the result is likely to be bilateral settlements in countries’ own currencies, as Brazil and China now are doing. Alternatively, John Maynard Keynes’ bancor scheme could be implemented, as it does not require a reserve currency country. Keynes’ plan is designed to maintain a country’s trade balance. Only a reserve currency country can get its trade and budget deficits so out of balance as the U.S. has done. The prospect of U.S. default and/or inflation and decline in the dollar’s exchange value is a threat to the reserve system.
The threats to the U.S. economy are extreme. Yet, neither the Obama administration, the Republican opposition, economists, Wall Street, nor the media show any awareness. Instead, the public is provided with spin about recovery and with higher spending on pointless wars that are hastening America’s economic and financial ruin.
The crisis was initiated when the U.S. allowed Lehman Brothers to fail, thus threatening money market funds everywhere. The crisis was used by the investment banks, which controlled U.S. economic policy, to secure massive subsidies to their profits from a taxpayer bailout and from the Federal Reserve. How much of the crisis was real and how much was hype is not known at this time.
As most of the derivative instruments had never been priced in the market, and as their exact composition between good and bad loans was unknown (the instruments are based on packages of securitized loans), the mark-to-market rule drove the values very low, thus threatening the solvency of many financial institutions. Also, the rule prohibiting continuous shorting had been removed, making it possible for hedge funds and speculators to destroy the market capitalization of targeted firms by driving down their share prices.
The obvious solution was to suspend the mark-to-market rule until some better idea of the values of the derivative instruments could be established and to prevent the abuse of shorting that was destroying market capitalization. Instead, the Goldman Sachs people in charge of the U.S. Treasury and, perhaps, the Federal Reserve as well, used the crisis to secure subsidies for the banks from U.S. taxpayers and from the Federal Reserve. It looks like a manipulated crisis as well as a real one due to greed unleashed by financial deregulation.
The crisis will not be over until financial regulation is restored, but Wall Street has been able to block re-regulation. Moreover, the response to the crisis has planted seeds for new crises. Government budget deficits have exploded. In the U.S. the fiscal year 2009 federal budget deficit was $1.4 trillion, three times higher than the 2008 deficit. President Obama’s budget deficits for 2010 and 2011, according to the latest report, will total $2.9 trillion, and this estimate is based on the assumption that the Great Recession is over. Where is the U.S. Treasury to borrow $4.3 trillion in three years?
This sum greatly exceeds the combined trade surpluses of America’s trading partners, the recycling of which has financed past U.S. budget deficits, and perhaps exceeds total world savings.
It is unclear how the 2009 budget deficit was financed. A likely source was the bank reserves created for financial institutions by the Federal Reserve when it purchased their toxic financial instruments. These reserves were then used to purchase the new Treasury debt. In other words, the budget deficit was financed by deterioration in the balance sheet of the Federal Reserve. How long can such an exchange of assets continue before the Federal Reserve has to finance the government’s deficit by creating new money?
Similar deficits and financing problems have affected the EU, particularly its financially weaker members. To conclude: the initial crisis has planted seeds for two new crises: rising government debt and inflation.
A third crisis is also in place. This crisis will occur when confidence is lost in the U.S. dollar as world reserve currency. This crisis will disrupt the international payments mechanism. It will be especially difficult for the U.S. as the country will lose the ability to pay for its imports with its own currency. U.S. living standards will decline as the ability to import declines.
The financial crisis is essentially a U.S. crisis, spread abroad by the sale of toxic financial instruments. The rest of the world got into trouble by trusting Wall Street. The real American crisis is much worse than the financial crisis. The real American crisis is the offshoring of U.S. manufacturing, industrial, and professional service jobs such as software engineering and information technology.
Jobs offshoring was initiated by Wall Street pressures on corporations for higher earnings and by performance-related bonuses becoming the main form of managerial compensation. Corporate executives increased profits and obtained bonuses by substituting cheaper foreign labor for U.S. labor in the production of goods and services marketed in the U.S.
Jobs offshoring is destroying the ladders of upward mobility that made the U.S. an opportunity society and eroding the value of a university education. For the first decade of the 21st century, the U.S. economy has been able to create net new jobs only in domestic nontradable services, such as waitresses, bartenders, sales, health and social assistance and, prior to the real estate collapse, construction. These jobs are lower paid than the jobs were that have been offshored, and these jobs do not produce goods and services for export.
Jobs offshoring has increased the U.S. trade deficit, putting more pressure on the dollar’s role as reserve currency. When offshored goods and services return to the U.S., they add to imports, thus worsening the trade imbalance.
The policy of jobs offshoring is insane. It is shifting U.S. GDP growth to the offshored locations, such as China, thus halting growth in U.S. consumer incomes. For the past decade, U.S. households substituted an increase in indebtedness for the lack of growth in income in order to continue increasing their consumption. With their home equity refinanced and spent, real estate values down, and credit card debt at unsustainable levels, it is no longer possible for the U.S. economy to base its growth on a rise in consumer debt. This fact is a brake on U.S. economic recovery.
Stimulus packages cannot substitute for the growth in real income. As so many high value-added, high productivity U.S. jobs have been offshored, there is no way to achieve real growth in U.S. personal incomes. Stimulus spending simply adds to government debt and pressure on the dollar, and sows seeds for high inflation.
The U.S. dollar survives as reserve currency because there is no apparent substitute. The euro has its own problems. Moreover, the euro is the currency of a non-existent political entity. National sovereignty continues despite the existence of a common currency on the continent (but not in Great Britain). If the dollar is abandoned, then the result is likely to be bilateral settlements in countries’ own currencies, as Brazil and China now are doing. Alternatively, John Maynard Keynes’ bancor scheme could be implemented, as it does not require a reserve currency country. Keynes’ plan is designed to maintain a country’s trade balance. Only a reserve currency country can get its trade and budget deficits so out of balance as the U.S. has done. The prospect of U.S. default and/or inflation and decline in the dollar’s exchange value is a threat to the reserve system.
The threats to the U.S. economy are extreme. Yet, neither the Obama administration, the Republican opposition, economists, Wall Street, nor the media show any awareness. Instead, the public is provided with spin about recovery and with higher spending on pointless wars that are hastening America’s economic and financial ruin.
#38 LAW
Posted 13 February 2010 - 10:50 AM
http://www.gather.co...281474978042902
How ingrained is deficit spending in Congress? Consider this: Over the forty years ending in 2008, revenues have averaged about 18.3 percent of our economy, while spending has averaged over 20.6 percent, resulting in an average deficit of about 2.4 percent.
The federal government's long term “fiscal exposure” – the sum of all the benefits, programs, debt payments, and other expenses – will cost taxpayers huge sums in the future, regardless of whether or not it cuts discretionary spending.
In the first eight years of this century, that fiscal exposure has grown from $20.4 trillion to $56.4 trillion – a 176 percent increase. That is a financial obligation of unimaginable size and scope.
For decades, government revenues have not kept up with spending. Or, perhaps it's best to say that government spending has continually, and significantly, exceeded government revenues. As a result, the government has borrowed vast sums of money – and pays huge sums interest – to make up the difference.
Based on the GAO’s latest long-range alternative budget simulation, within about twelve years, our interest payments will become the largest single expenditure in the federal budget. By 2040, all of our federal tax revenues will add up to cover only our two biggest expenses: interest on our debt plus Medicare and Medicaid. Everything else – Social Security, defense, education, road building, you name it – will fail to be funded.
The Republicans and Democrats are all acting as if they've suddenly found religion as it applies to spending and debt. Recently, President Obama proposed freezing one-sixth of the federal budget in order to bring government revenues in line with spending.
While it's a nice gesture, it's largely symbolic and will be ineffectual since it doesn't address the real problems.
We've reached a critical mass where government spending on the military and entitlement programs is literally out of control.
Benefits payments are the biggest chunk of the government’s massive obligation, and total defense spending has increased in recent years as the military fights two foreign wars.
In addition, the government has added new and prodigious resources for homeland security. The U.S. now spends more on its military than all of the other nations on the planet – combined!
How ingrained is deficit spending in Congress? Consider this: Over the forty years ending in 2008, revenues have averaged about 18.3 percent of our economy, while spending has averaged over 20.6 percent, resulting in an average deficit of about 2.4 percent.
The federal government's long term “fiscal exposure” – the sum of all the benefits, programs, debt payments, and other expenses – will cost taxpayers huge sums in the future, regardless of whether or not it cuts discretionary spending.
In the first eight years of this century, that fiscal exposure has grown from $20.4 trillion to $56.4 trillion – a 176 percent increase. That is a financial obligation of unimaginable size and scope.
For decades, government revenues have not kept up with spending. Or, perhaps it's best to say that government spending has continually, and significantly, exceeded government revenues. As a result, the government has borrowed vast sums of money – and pays huge sums interest – to make up the difference.
Based on the GAO’s latest long-range alternative budget simulation, within about twelve years, our interest payments will become the largest single expenditure in the federal budget. By 2040, all of our federal tax revenues will add up to cover only our two biggest expenses: interest on our debt plus Medicare and Medicaid. Everything else – Social Security, defense, education, road building, you name it – will fail to be funded.
The Republicans and Democrats are all acting as if they've suddenly found religion as it applies to spending and debt. Recently, President Obama proposed freezing one-sixth of the federal budget in order to bring government revenues in line with spending.
While it's a nice gesture, it's largely symbolic and will be ineffectual since it doesn't address the real problems.
We've reached a critical mass where government spending on the military and entitlement programs is literally out of control.
Benefits payments are the biggest chunk of the government’s massive obligation, and total defense spending has increased in recent years as the military fights two foreign wars.
In addition, the government has added new and prodigious resources for homeland security. The U.S. now spends more on its military than all of the other nations on the planet – combined!
#39 HUMAN
Posted 13 February 2010 - 10:38 PM
Let’s talk/type plain Hard religion in here.
The democrats have so indoctrinated the African American Community that the African American Community WILL vote democrat no matter what.
The Republican Party "minus me" is Actively after the African American Community for their vote.
For I believe that the indoctrination of the African American has been so Successful that there is NO CHANCE for the Republican Party to get the African American vote , no matter what My party does.
For the simple truth is that the democrats have a new group to indoctrinate LATINOS, and hence fourth The democrats will throw the African American Community to the wolves, and the African American Community Will still vote democrat.
I am as far as I can get from this. I want NO PART OF IT. There is not a chance in heck that I will get in the middle of this one.
The Latino Community is central for the economic recovery of this country "Which is true", and I still DO NOT WANT ANY PART OF THIS.
The democrats have so indoctrinated the African American Community that the African American Community WILL vote democrat no matter what.
The Republican Party "minus me" is Actively after the African American Community for their vote.
For I believe that the indoctrination of the African American has been so Successful that there is NO CHANCE for the Republican Party to get the African American vote , no matter what My party does.
For the simple truth is that the democrats have a new group to indoctrinate LATINOS, and hence fourth The democrats will throw the African American Community to the wolves, and the African American Community Will still vote democrat.
I am as far as I can get from this. I want NO PART OF IT. There is not a chance in heck that I will get in the middle of this one.
The Latino Community is central for the economic recovery of this country "Which is true", and I still DO NOT WANT ANY PART OF THIS.
#40 Kurfco
Posted 14 February 2010 - 10:23 PM
Why should the LATINOS, with their relatively high standard of living, get to take all the jobs for minimum wage just because they are close by? I'll bet we could get Somali's or Bangladeshi's or Bolivians if we just did the right recruiting. And then just think how cheap our lettuce could be!
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