deficit

The Joe DiMaggio of economics: Federal deficit streak reaches 33rd straight month

by Lee on July 12, 2011 15:42 pm · 1 comment

In 1941, baseball great Joe DiMaggio reeled off a streak of 56 consecutive games with a hit. It’s a record that will probably never be broken.

Unfortunately, the federal government just set a far more dubious record – 33 straight months in the red. Even more unfortunately, the record appears poised to continue month after month after endless month.

The federal government notched its 33rd straight month in the red in June, extending its record deficit streak to three times the previous low-water mark, according to preliminary estimates Friday from the Congressional Budget Office.

But lower spending, thanks in large part to less money going to Fannie Mae and Freddie Mac, shrank the deficit to just $45 billion in June — down from $68 billion last year.

And with three months to go still in fiscal year 2011, the government has racked up $973 billion in total deficits, a pace which is slightly better than 2010, when the government had just crossed the $1 trillion mark at this point.

The record 33 month streak is the longest since they began keeping records in 1980.

Unfortunately, interest makes up a rapidly-increasing share of the debt: 18% more in 2011 than in 2010.

Ahhh, the power of compound interest. Combine it with the power of Congressional spending and it’s the perfect recipe to destroy the greatest economy the world has ever seen.

Source: Washington Times

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Three reasons the deficit is going to spiral even further out of control

by Lee on June 20, 2011 11:00 am · 2 comments

There’s a very interesting article by Veronique de Rugy over at National Review. It’s about a conference called “The Debt Ceiling, Fiscal Plans, and Market Jitters: Where Do We Go From Here?”

The conference had a long list of impressive speakers and panelists, including Alan Simpson and Congressman Paul Ryan.

But the one speaker who stood out was Lawrence Lindsay. He was director of the National Economic Council (2001–2002) and played a leading role in formulating President Bush’s $1.35 trillion tax cut. He left the White House in December 2002 (that’s a polite way of saying he got bounced by Bush) after insisting that a war in Iraq would prove to be unaffordable. History has shown that his estimates of $200 billion were remarkably low, but let’s give him the benefit of the doubt because he was, at least, on the right side of the argument.

[click to continue…]

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Obama’s Chief Economist Austan Goolsbee on S&P warning of U.S. Credit Rating: “I don’t make too much about it”

by Mark on April 18, 2011 10:55 am · 1 comment

This morning Standard & Poor’s issued a negative outlook on the current AAA credit rating of the United States, saying that there is a material risk that our leaders in Washington will fail to make adeal to cut our rising budget deficits and debt in any material way.

“We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013. If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.”

Furthermore, while maintaining the US’s AAA rating, they warned that there is a one in three chance that a downgrade is coming if we don’t get our act together — not in the long term, but by 2013.

[Click to read more and watch one other (crazy) video...

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Obama’s Deficit Speech a Disgrace, Shallow, Hyper-Partisan, Demagogic and Deeply Dishonest

by Mark on April 14, 2011 7:59 am · 1 comment

I’ve been absent from posting the last few days because, among other things, I’ve been busy putting together my taxes, a completely unproductive task that takes many days to a week or two to complete each year. Imagine my joy yesterday as I was going through my records, cursing the government, when our Campaigner-in-Chief came on TV to tell us how we can Win the Future by raising taxes on “the rich.”

As usual, President Obama’s speech had little of substance, was full of contempt and surprise, surprise, class warfare. Obama, who’s always in campaign mode, was probably at his best in a long time because he’s found a fight he truly can sink his teeth into — taxation versus spending cuts — with the issue so clear, at the fortuitous time of the kickoff of his reelection drive.

I tried to post something after watching it, but I filled with so much hate (yes, that is the proper word) for this man that could not get the right words out. Later on, I tuned into watched my favorite segment of the day on cable news, Bret Baier’s Special Report’ All Star Panel. In particular, I tune in for Charles Krauthammer. Once again, he didn’t disappoint. In describing Obama’s deficit speech, Krauthammer took the words out of my mouth, but so much more eloquently:

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Economist Busts 4 Myths About Deficits and the Debt

by Mark on April 4, 2011 7:58 am · Comments/Link

Reason columnist and Mercatus Center economist Veronique de Rugy busts four myths about the deficits and the debt.

Myth 1: Debt and deficits are a disease that can only be cured by raising taxes.

Fact 1: Debt and deficits are only a symptom. The disease is overspending. And tax increases are no cure. Besides, even if we could balance the budget by raising taxes it wouldn’t stay balanced so long as programs like Social Security, Medicare, and Medicaid remain unreformed.

Myth 2: There is no relationship between high interest rates and deficits. And even if there was, interest rates remain at all-time lows.

Fact 2: That may have been true once, but the data now shows that investors anticipate an increase in both interest rates and deficits.

Myth 3: Debt and deficits may be a problem, but we don’t have to fix it now.

Fact 3: Debt and deficits are having an immediate negative impact on the economy.

Source: Reason.TV

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The Deficit: A Lose – Lose Situation

by Mark on March 4, 2011 9:38 am · Comments/Link

Marc Faber: I have read Treasury reports in 2010 by Tim Geithner saying the U.S. government debt increased by more than2 trillion dollars during that period of time. The deficit, in my opinion, mathematically,cannot come down, because 80% of the budget is mandatory expenditures, in other words, you cannot cut them. Legally, they have to be met.Of the remaining 20%, you can cut a little bit, but not that much, because then services collapse. In my view, the fiscal deficit of the U.S. will stay around 1½ trillion dollars for as far as the eye can see, and maybe even go to 2, or 2½ trillion dollars, and then the interest expenditures on the debt go up. So actually, over time, in my view, unless taxes are increased significantly, and spending is cut significantly, not by a little bit here, a little bit there, the budget will never again be balanced, and that will then necessitate, in time, QE-III, QE-IV, and QE-V. Taxes cannot be increased dramatically, because if you increase them very substantially, we will go straight back into a recession…
- McAlavany interview 23 Feb 2011
H/t: Financial Doom Blog

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Waiting for The Big Splatter

by Mark on February 18, 2011 8:31 am · Comments/Link

Gonzalo Lira has written a great story today on the state of the United States.  Not because it prevents any new facts about the ever-rising deficit and the inevitability of continued quantitative easing, but because it tells the story in such a clear way that anyone one can understand why we are not getting out of the mess we’re in. Go to Lira’s blog for whole article, but we just had to print his brilliant conclusion her:

The American people have thrown in the towel. They collectively realize that the shit is gonna hit the fan big time. So in this little window of time before The Big Splatter, everyone’s pretending that nothing’s wrong, everything’s fine—we’re doing hunky dory, couldn’t be better. Any bad news—like the monster deficit? Ignored, blatantly.

You know those gamblers in Vegas, who go there and blow their house on the black jack tables? And then they go around town buying hookers and blow left and right, partying hard until the dawn, acting as if they didn’t have a care in the world? At least until the night runs out?

That’s the United States.

The American people—collectively, irrespective of political parties—blew their country like a gambler blows his house on the black jack tables. Whether it was on unsustainable entitlement programs, or unwinnable (and illegal) (and pointless) wars, or foolishly short-sighted tax policies, or crony corruption, or demands for absurd services—it doesn’t matter, the result is the same:

The American people collectively blew their country. So now, everyone’s pretending that everything’s fine, while they wait for the shit to hit the fan.

Everybody with any sense knows that The Big Splatter is on its way—everyone knows there’s nothing that can stop it. So when bits of bad news crop up—like the revised deficit numbers—Americans are placid as Hindu cows.

And why not? These deficit numbers are nothing! Americans all know that it’s going to get much, much worse. They all know that there’s no sense worrying about the little milestones on the road to hell.

They all know that they’re waiting for The Big Splatter.

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U.S. Debt Now Equals Total U.S. Economy, Washington Kicks Can Down the Road

by Mark on February 15, 2011 7:46 am · Comments/Link

Here are some new records we U.S. citizens can be proud of this morning: Budget for 2012: $3.7 billion, the biggest one-year jump in debt in history, or nearly $2 trillion in a single year. Deficit: $1.65 trillion, 11% of the $14 trillion economy, the largest since 1945, Debt: $15.476 trillion by Sept. 30, the end of the fiscal year, to reaching 102.6 percent of GDP — the largest by far since WWII. If you want to read the budget yourself and see how we close (or beyond?) we are to the Greece, Ireland, Spain, Italy and Portugal, you can get a short 216 page PDF here.

And nothing that can save us is coming our of Washington. Nothing.

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George Soros on the European sovereign debt crisis, outlook for commodities and the U.S. deficit

by Mark on January 27, 2011 8:43 am · Comments/Link

All the billionaires are in Davos, Switzerland this week to see how they can make more billions. Erik Schatzker of Bloomberg Television’s “On The Move” caught up with investor George Soros and got a great interview out of him. They talked about the European sovereign debt crisis, the outlook for commodities and the U.S. deficit.

You won’t walk away form this video feeling too good about where the world is headed, unless you are one of those billionaires in Davos who will find ways to profit from our sorrow.

You either love or hate George Soros, and I fall into the latter camp. But I still forced myself to watch it and found the interview enlightening. You should take ten minutes to listen in.

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State of the Union Address: Where’s Talk of Debt and the Deficit?

by Mark on January 25, 2011 21:54 pm · Comments/Link

As a political and economic blogger I had to sit through President Obama’s State of the Union address. So he wants us to have high speed rail and high speed internet. Fine, not that it’s his job. To what extent did he address the most crucial issues facing America? You tell me. Where are the words “deficit” and “debt” in this word cloud of the speech?

obama word cloud state of the union

Source: Zero Hedge

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More Spending? Obama Just Doesn’t Get It.

by Mark on January 22, 2011 12:32 pm · Comments/Link

Headline from the Wall Street Journal this morning:

Obama New Spending 2011
He just doesn’t get it.

‘Nuff said.

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America’s Structural Deficit: A Picture is Worth a Thousand Words

by Mark on January 19, 2011 12:26 pm · 1 comment

I love how infographics can convey information in a way no words or traditional chart can. This graphic certainly does that.

The upper half compares the structural deficits of the United States to other western nations running in the red. The lower half charts the debt-to-GDP of the United States since 1940, including projected deficits through 2035, which is practically off the chart.

structural deficit chart

This graphic was part of the article, America: Paydown Problems. We’d give credit to whoever created it, but we cannot read the bottom of the image.

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Ron Paul: Refuse to Raise the Debt Ceiling!

by Mark on November 29, 2010 6:26 am · Comments/Link

It shouldn’t seem revolutionary, but with this government unfortunately it is: Ron Paul says congress should refuse to raise the debt limit. Instead, they need to find a way for congress to spend only what the Treasury raises in revenue on a month-to-month basis.

In addition, forget all the talk about baseline budgets and discretionary spending — “it’s all discretionary,” he says. Take the the 13 appropriations bills that fund the federal government and rewrite them.

But as we all know, Paul’s words are just a voice in the wind, never to be heard seriously.

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