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The Coming Economic Insolvency
#21
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#22
The S&P had released a "negative" outlook on the US debt's AAA rating. That means that the next S&P action will be strip off the US treasury bonds from their "100% risk free" label.
Something unthinkable before 2009, and even now still.

The mst amazing is that the debt is still rising, and its ceiling has to be raised with it.

And not only the Treasury debt, but you still have state debts and municipality debts, and with that the student loan debts which are more and more in default...
How's that possible?
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#23
I thought I had posted this earlier, but can't find it. So I'll post it here. The point is that we are in such fiscal trouble, and monetary too, that our options are cut down drastically. Here is what AEI(American Enterprise Institute) has to say about this corner we have painted ourselves into.

Quote:Hope that the global economy has shaken off the dust of the 2007-2008 financial crisis is giving way to uncertainty as the Arab Spring and disaster in Japan threaten to reverse recovery momentum. Market behavior is signaling a slowdown in U.S. growth, but there are few options left for policymakers as fiscal and monetary stimulus fade. Budget pressures will make further stimulus unlikely, leading to mounting uncertainty about the way forward, says John H. Makin, a resident scholar at the American Enterprise Institute.

In his study, Makin makes the following key points:

-Instability in North Africa and the Middle East, tragedy in Japan and rising energy prices make for a highly uncertain global economic outlook.
-Major segments of the global economy are withdrawing fiscal and monetary stimulus, and higher pressure on oil supplies will likely cut overall demand growth.
-The global economic recovery is still dependent on U.S. consumption and investment, but first quarter U.S. growth estimates have been revised down from 4 percent to 2.5 percent.
-U.S. policymakers have few tools left to jumpstart the economy if it stalls midyear after the second round of quantitative easing and second stimulus fade.
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#24
Also relevant, it seems to me, are:
1. The dicey nature of some nearly bankrupt EU countries,
2. The commodity bubble which gooses inflation (oil, cu, minerals, etc. etc.)
3. The inflation in China
4. House prices are still declining in the US.
5. The vast amount of $ that has been pumped into the world economy in the last couple of years.

But he is right: the new thing is that the US is no longer the economic locomotive of the world. But did not our Dear Leader tell us this?
Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#25
He doesn't really want us to be. After all it is but one of the "Dreams from My Father".
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#26
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#27
Prince wish fatigue. May it last.
Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#28
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#29
With 20-20 hindsight, we should have put all of the treasury money that we thought China and other countries were keeping, above a certain threshold for currency manipulation, in a trust fund. That would have forced a debt crisis a lot sooner - and it probably would have a lot more effectively convinced other countries to stop undervaluing their currencies.
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#30
(04-21-2011, 04:31 PM)Fredledingue Wrote: The S&P had released a "negative" outlook on the US debt's AAA rating. That means that the next S&P action will be strip off the US treasury bonds from their "100% risk free" label.
Something unthinkable before 2009, and even now still.

The mst amazing is that the debt is still rising, and its ceiling has to be raised with it.

And not only the Treasury debt, but you still have state debts and municipality debts, and with that the student loan debts which are more and more in default...
How's that possible?

never going to happen. the situation of the us isn't any better than of greece, portugal, and ireland, but s&p, moody's and finch are american companies, and a monopoly. that's why they need to be disposed. their agenda-driven ratings, and insider trading has damaged economies and enterprises for long enough. just look at what they do, first they propose austerity measures for the countries mentioned above, and when the austerity measures choke off the economies, they lower the rating because the economy is in trouble, and the lower rating keeps the downward spiral going. i wonder why those countries can't do what the us are doing, printing money and pumping it into the economy, investing has always been the cure for everything. someone should have an eye on buffet, just like on soros. buffet is a very important shareholder in at least two of the rating agencies, and might make lots of money by the downgradings.
"You know, Paul, Reagan proved that deficits don't matter." Dick Cheney
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#31
Well, I might partially agree that the US is not so far from the PIGS in financial acumen.

However, no one in their right mind needs rating agencies to tell them to stay away from PIGS bonds. Even the German and Finn proletariat are balking as far as further bailouts go.

I suppose you are jumping in with both feet and buying up all the PIGS bonds you can get, just to make sure your retirement is even more well funded.
Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#32
Dr Walter E. Williams wonders, Do We Deserve Our Fate?

Quote:The latest Social Security Trustees Report tells us that the program will be insolvent by the year 2037. The combined unfunded liability of Social Security and Medicare has reached nearly $107 trillion in today's dollars. That is about seven times the size of the U.S. economy and 10 times the size of the national debt. Those entitlement programs, along with others, account for nearly 60 percent of federal spending. They are what Congress calls non-discretionary spending. About half of discretionary spending is for national defense. Each year, non-discretionary spending consumes a higher and higher percentage of the federal budget.


The language Congress uses to describe their spending is corrupt beyond redemption. Think about the term entitlement. If one American is entitled to something he didn't earn, where in the world does Congress get the money? It's not Santa or the Tooth Fairy. The only way Congress can give one American a dollar is to first take it from another American. Therefore, an entitlement is a congressionally given right for one American to live at the expense of another. In other words, Congress forcibly uses one American to serve the purposes of another American. As such, it differs in degree, but not kind, from that uglier part of our history where black people were forcibly used to serve the purposes of their slave masters.

What about the terms discretionary versus non-discretionary congressional spending? Non-discretionary refers to uncontrollable things like sunsets and sunrises, low tides and high tides and laws of thermodynamics. By contrast, all congressional spending is discretionary and controllable. For political expedience, Congress has written laws to shield certain spending from annual budget scrutiny by calling it non-discretionary.

The level of congressional spending is unsustainable, but how willing are Americans to do anything about it? A courageous member of Congress, Paul Ryan, R-Wis., chairman of the House Budget Committee, has put forth a budget plan that would trim the deficit by $4.4 trillion over 10 years by reforming Medicare and Medicaid, making defense cuts and imposing hard spending caps on domestic spending.

Ryan's plan was immediately attacked as trying to balance the budget on the backs of the poor. In the wake of this attack, even some of his Republican backers, including House Speaker John Boehner, have become lukewarm in support.

The president and his supporters call for tax increases as a means to cover the deficit, but higher tax revenues cannot eliminate the deficit. Controlling for inflation, federal tax revenue today is 23 times greater than it was in 1960, but congressional spending is 42 times greater. During the last half-century, except for five years, the nation has faced a federal budget deficit. It's just simple math. If tax revenues soar, but congressional spending soars more, budget deficits cannot be avoided.

People ask what can be done to save our nation from decline. To ask that represents a misunderstanding of history and possibly a bit of arrogance. After all, how different are Americans from the Romans, Spaniards, French and the English? These were once mighty nations standing at the top of civilization. At the height of these nation's prosperity, no one would have predicted that they'd become third-rate nations, especially England. If during Queen Victoria's Jubilee in 1887 had a person suggested that England would become a third-rate nation and later challenged on the high seas by a sixth-rate nation (Argentina), he would have been declared insane.

One chief causal factor for the decline of these former great nations is what has been described as "bread and circuses," where government spends money for the shallow and immediate wants of the population, and civic virtue all but disappears. For the past half-century, our nation has been doing precisely what brought down other great nations. We might have now reached the point of no return. If so, do we deserve it?
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#33
I've been sitting on this little tidbit for a couple of days, trying to figure out if the CNBC crowd are actually starting to get serious, or if they are finally going to officially divorce their crazy sibling, MSNBC. I still haven't decided yet, but thought it worthwhile throwing into the mix.

What I find interesting is this:

Quote:"Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything," Yastrow said. "We’re on the verge of a great, great depression. The [Federal Reserve] knows it.

The fellow is problably correct too. The Fed must surely be aware of the precipice they are facing. But is "The Bernacke" in front of congress pushing for fiscal prudence? Is he trying to get the spending addicts committed to "Private Life"?
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#34
The poor suckers running the country have no idea how to get the economy moving again. They shot their Keynesian wad (big time) and are dead in the water. All other remedies are anathema to them. Bernanke's attempt to "pull a Greenspan" and get things going seems doomed as well with the aversion to new debt and spending. Lots of people are going to look bad (for good reason) if we do double dip.

The poor chap who wrote this article must have recently been on the wrong end of a market move, or mentally allied with the ruling class. Is he now wearing a hair shirt?
Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#35
The sad truth is that the Keynesians are clueless of the opportunities to jump start the economy.

As an estimator in Vegas, I saw the investors back off after Schumer's IndyMac gaffe, and put aside the investment in construction projects they had going. The infrastructure is in place. The Architect's and Engineering plans are filed and ready to go. All that is needed to ignite a recovery is the barest belief that one can earn a profit from the projects.

The economic collapse was a cascade event. The re-invigoration can be catalytic.
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#36
Let's look at all this from another angle, ok? First there is this little ditty on Drudge, concerning our short term notes:China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills. Granted, it's not long term notes, but this is obviously just the down payment.

Now, let's look here, and see if you can see some 'causality' to all this: The Great Unraveling. And I am not stating that he is definitely correct, but it certainly appears logical.

And just to beat the dead horse,.......one more time. This is all the result of keynesian Stupidity. When will we finally say Enough!, and throw all this "We can spend our way into prosperity" Bullshit into the garbage can? Once and for all?!

Quote: The U.S. has already defaulted on its debts. We’re just all politely pretending that we haven’t. But we have.

According to Pimco, last year, the Federal Reserve — a central bank printing press — bought 70 percent of Treasury debt. The year before, it bought 80 percent. Where did the money come from? Out of thin air.

This is the “pretended payment” on sovereign debt that economist Adam Smith warned against, which he wrote in The Wealth of Nations “has gradually enfeebled every state which has adopted it.” To him, increasing the money supply to pay the debt was substantively no different than a public bankruptcy.

So, while the Fed dresses up its actions as targeting unemployment or maintaining its balance sheet, the real reason for QE2 has been to prop up the U.S. Treasury from a catastrophic default, just as the European Central Bank (ECB) has been propping up Greece, Ireland, and Portugal.

And as the bank assures the American people it will not be engaging in QE3, its treasuries holdings will continue to rise from their current $1.5 trillion level after QE2 ends in June. It’s already the world’s largest lender to the U.S. government, more than China or Japan. So how can it become an even larger sovereign lender?

It still has $922 billion of mortgage-backed securities (MBS) left over from its $1.25 trillion bailout to financial institutions all over the world. It has been slowly selling them off, and replacing them with more treasuries purchases. So, we should continue to expect more of that over the next year. The Fed will continue monetizing the debt — i.e. printing money to pay principal and interest owed on the $14.3 trillion national debt.

But what about after that? Where will the Treasury borrow money from after the Fed exhausts its MBS holdings? By then, it will hold over $2.5 trillion of treasuries.

Will demand for treasuries have been restored by then? That certainly seems dependent on the economy turning around, but the indicators right now are really bad: unemployment remains persistently high at 9 percent, growth is anemic at 1.8 percent in the first quarter, and rising fuel, food, and other inflation is raising both producer and consumer prices.

All over the world, the situation has not been much better. The European Union (EU) is unraveling before our very eyes. As the situation in Greece continues to deteriorate, now the ECB President Jean-Claude Trichet has advocated “giving euro-area authorities a much deeper and authoritative say in the formation of the county’s economic policies”. He wants a new Finance Ministry — to run Greece, essentially.

In other words, because German and French banks own 57 percent ($922.9 billion) of the total $1.613 trillion of foreign exposure to Portuguese, Irish, Greek, and Spanish debt, those international banks should have a say in how troubled sovereigns like Greece and the others conduct their affairs.

These banks, including the ECB, cannot afford for Greece to default. They cannot even afford to take a haircut on these debt securities, as has been proposed in Ireland, Finland and elsewhere. They will go belly up if that happens.

So, the international banks are racing against time — to prop up Greece and the others, to contain the dominoes from falling.

This represents the end of sovereignty in the EU, and for the first time, the brazen rise of a new order that seeks to successfully supplant the nation-state. It is an order where the governed no longer have any role in the social contract. Instead, the new arrangement is between governments, and their lenders. And when the government can no longer honor its obligations, the lender steps into the role of the sovereign, which is exactly what is happening.

Such is the great unraveling we are living in. It has been seen here too in the U.S., where since 2008, the American people have been forced to accept over $2 trillion of bailouts, “stimulus,” and other interventions in an endless carousel of plunder from the public treasury.

Sadly, these developments do not portend well for the cause of liberty and limiting government. The people cry foul, and say no, but as with other tyrannies, they are without a voice. They were coerced into propping up the failed financial institutions, which are now larger and more powerful than ever.

Such is the price of the bailouts, the price of monetizing the debt: The loss of independence. When the Treasury reaches the true limit of borrowing, when the debt is so large that it cannot be refinanced let alone be repaid, it will turn to confiscating the wealth of citizens.

And it must be said: We’d be better off publicly defaulting than losing our liberty to faceless institutions that possess the ability to take everything away from us.
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#37
Here is the Real Problem. And Surprise, it is coming from USA Today, of all things:U.S. funding for future promises lags by trillions.

Quote:The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.

This gap between spending commitments and revenue last year equals more than one-third of the nation's gross domestic product.

Medicare alone took on $1.8 trillion in new liabilities, more than the record deficit prompting heated debate between Congress and the White House over lifting the debt ceiling.

Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.

Corporations would be required to count these new liabilities when they are taken on — and report a big loss to shareholders. Unlike businesses, however, Congress postpones recording spending commitments until it writes a check.

The $61.6 trillion in unfunded obligations amounts to $534,000 per household. That's more than five times what Americans have borrowed for everything else — mortgages, car loans and other debt. It reflects the challenge as the number of retirees soars over the next 20 years and seniors try to collect on those spending promises.

All it will take is someone, who is a fiscal hawk, and a Little Government proponent, and he/she will be able to win, if he/she can get all this across to the voters. It's a "Slam Dunk" IMO.
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#38
Polls "show", consistently, that citizens don't seem to like the idea or reducing SS or Medicare. Evidently the sleeping public giant has not yet awoken. If the somnolent public cannot be aroused and made to be frightened of the debt, BHO will do just fine on that issue. It is not clear yet that the distaste for debt has spread beyond the Tea Party, Libertarians and Classical Liberals.
Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#39
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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#40
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Hillary Clinton Is Like Herpes, "She Wont Go Away" - Anna Paulina
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