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Will the market take the U.S. Government down with it?
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by Mikasi | October 10, 2008 at 04:29 am
569 views | 34 Recommendations | 12 comments
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Oct. 10 (Bloomberg) -- The global financial crisis is turning into a bigger drain on the U.S. federal budget than experts estimated two weeks ago, increasing the deficit and the national debt.
It would be well worth your time to read this exclusive story from Bloomberg. It talks about not just what we've spent so far, but what we're going to spend like it or not. The numbers this comes up with are truly frightening.
For example, take in this quote
The 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in a wider lead, according to the CNN/Opinion Research Corporation poll released Monday afternoon,1983, according to David Greenlaw, Morgan Stanley's chief economist. Two weeks ago, budget analysts said the measures might push deficit to as much as $1.5 trillion.
In case you missed it, that's "Trillion" with a big fat "T". Had enough? No? Well chew on this
The additional borrowing could push the national debt well past 70 percent of GDP, the highest since the immediate aftermath of World War II, when the U.S. was still paying off war debt.
This takes into account what we'll be spending on shoring up financial institutions and states who are also destined to suffer. What makes things even worse is that human opportunism is still in high gear during times that call for restraint and sacrifice.
budget watchdogs say the sheer size of the interventions is making Washington more profligate than usual. To attract votes in Congress, leaders added several costly items to the $700 billion rescue, including extensions of some tax credits and tax breaks for makers of wooden arrows and stock-car racetrack owners.
[snip]The rescue legislation ``creates a mask for all sorts of fiscal irresponsibility,'' said Bixby. ``It covers up a multitude of sins.''
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Most RecentMost Recommended Comments (12)
at 04:39 on October 10th, 2008
Mikasi, I like this story. It's great stuff.
at 05:34 on October 10th, 2008
Mikasi,
One can only hope ...
... it is the social engineering put in place in the mid-nineties with the desire of Bill Clinton for 70% of all Americans to be involved in home ownership - eventual mission creep combined with the greed of the CEO's and others at Fannie MAE and Freddie MAC ($100 million dollars paid out in compensation bonuses to the chief executives over six years) then re-marketing the bundled greed instruments as securities thus inflating the value upon which companies used to secure credit.
Congress and the Executive Branch did nothing to control this practice and now THEY have further socialized our free market system with a $700 Billion (with a "b") dollar taxpayer moneyed "Rescue" plan last week that does nothing to stop the bleeding. A correction that re-affirmed free market mechanisms would have had the cheaters be punished but this rescue plan is much the enabler giving Booze to an Alcoholic!
Markets plunge as the United States economy dives straight into socialism - a system that CREATES NOTHING!
This Socialist based Government needs to come to an end.
This story is good stuff.
at 05:51 on October 10th, 2008
The US election overlay?
John McCain? ... who knows what with all of the bi-partisan talk - Pelosi, Reid, Frank and Dodd will NOT reach back across the asile.
Barack Obama? Socialism, plain and simple - How will he tax Capital Gains when the market is down over 20% in six days and opens to over a 600 point loss this morning?
at 08:55 on October 10th, 2008
The USA and its $US might be the only entity standing when this is over.
at 09:09 on October 10th, 2008
How about that Canadian dollar? Solid as a rock compared to $US. $1.18 today, quite a move from parity a few weeks ago. Must be something in the oil.
at 09:21 on October 10th, 2008
54 40 or fight!
at 10:18 on October 10th, 2008
Mikasi, gosh to read something like '$2 trillion' doesn't mean a lot on the screen, but if you really think about it, that is so shocking and incomprehensible.
at 10:22 on October 10th, 2008
one can only hope it does so that Obama can start us over with a clean slate
at 23:22 on October 10th, 2008
Who did America borrow the 700 billion dollars from??????????????
The US tax payers of course when will they rcoup this?
Not before an election that is for sure.
Same shit in the UK: looking forward to massive tax bills but heh I got no money so will it be deducted at source?
Can't wait to see what W and Gordon are going to cook up next.
Blair certainly got out at the right time :)
at 06:29 on October 11th, 2008
Actually we did not borrow it rom the taxpayers directly, though they (we) will ultimately be responsible for it. We borrowed it from China and Saudi Arabia chiefly (and I could be wrong on the Saudi part). And someday it will come due.
at 07:40 on October 11th, 2008
Mikasi, I like this story. It's good stuff. Here's a pdf transcript of the podcast you mention, entitled "The Giant Pool of Money".
at 21:02 on October 11th, 2008
Sub prime borrowing to NINJAS is best explained by the following analogy. By the way the anaology works well for the governments of this world also.
Ten guys go on a bachelor party that they know will cost at least $200 but they only take $100 each. After a short length of time punter 1 begins to run out of money and borrows $50 from punter2 who of course very soon after begins to run out of money and borrows from punter3 and so on and so forth until they have all borrowed from each other. All now in debt but still not enough money for the bachelor party to be a success; so they come home early (the world falls into deep reccession)