gdog

U.S. Dealing with a Boatload of Debt - Moody's

Well said Sir!

The coming period will require the testicular fortitude and foresight demonstrated by the likes of Chris, and Warren Buffet.

Join us! In 30 years we shall be known as the greatest generation.


On Feb 05 03:56 PM Chris B wrote:

> I hate the national debt and I hate paying 9.5% of my taxes to cover
> the INTEREST ONLY on debt that we built up in previous years just
> because we didn't want to pay higher taxes or cut spending at the
> time. We're get absolutely nothing in return for those billions
> in interest spending. Not more infrastructure, not better security,
> not better schools - nothing. The ROI on the Iraq war is negative.
> It's the price we pay for being selfish and irresponsible in previous
> years.
>
> However, if the beginning of the great depression is any guide, now
> is NOT the time to rediscover fiscal conservativism. The good times
> were when we should have been running balanced budgets so we could
> be better prepared for times like this.
>
> 9 out of 10 economists will tell you that cutting government spending
> in the middle of what was then a severe recession was a contributing
> factor in making it the great depression. It was only when the US
> took on unprecedented amounts of debt and put people to work building
> roads, bridges, tanks, and ships that the depression ended. The
> boatload of WWII debt was paid off after several years of subsequent
> economic growth boosted tax revenues (at the higher tax hikes that
> had been justified by WW2).
>
> The world has given us a once-in-a-lifetime gift; offering to loan
> the US government trillions of dollars at interest rates of less
> than 2%. If I could borrow money at those rates, I'd be in business
> because I could surely find a way to earn yields greater than that.
> Similarly, the US should be able to put this money to use to generate
> long term economic gains (infrastructure, technology, education,
> etc.) that will generate revenue above and beyond the cost of the
> loans - just as was done in the late 40's through the 60's.
>
> First, get us out of the depressionary spiral by investing in the
> future, then balance the budget when things get better, then reap
> the rewards.

Is It Time to Buy? What History Shows

Mark10r: I would say this true except that the gov't is artificially inflating treasury prices.

Is It Time to Buy? What History Shows

Sideways?

Maybe for some...

Govt allows banks to use toxic assets for loans to buy treasuries, pushes price of treasuries up, foreign govt's also want treasuries as their currencies tank. Interest rate goes to zero.

Gov't is flush with cash, goes on the biggest building spree since whatever year. Bridges, barracks, roads, bio tech, clean energy tech, stem cells, tunnels, levees for new orleans, schools, hospitals. Everything a caring government might build with oodles of free cash. If this creates any economic activity at all, it's a net gain for the gov't and everyone who invests.

Probably also a great time for small business sub contractors.

Allocate accordingly.


On Dec 09 06:52 AM The LFB wrote:

> I really don't know why you and everyone else who writes about this
> stuff doesn't see this:
>
> Put EPS on an S&P chart. You will see that the sustained 2003-2007
> rally didn't begin until long after earnings had crashed and AFTER
> they begun to rise once again.
>
> And if you look at the EPS during the rally, you'll see it goes up.
>
>
> Of course there will be intermediate ups and downs-we're in a 18%
> upswing on the S&P right now from the Nov. 21 low. But these
> are moves for traders, not investors.
>
> Stocks are probably more likely to move up and down like this without
> a sustained rally for several years because earnings still have further
> to fall.
>
> The ones who saw price declines coming and bought debt are way ahead
> of the game. Why? Because in the three months to October, headline
> CPI fell at a 4.4% annualized rate which means during that time they
> were earning maybe 8% annualized. And they got to sleep at night.
>
>