RatWatcher

Increased Deficit Spending: We Can't Afford It

Yessir. The gov separates 'Debt Held by the Public' (owed to bondholders) from 'Intragovernmental Holdings' (the SS Trust Fund, owed to retirees). The former is $7.4T and the latter is $4.4T. Add together you get $11.8T.

The trick is, the people who buy Treasuries (China, eg) don't care if we honor the SS Trust Fund piece. Debt to GDP is based only on the Debt Held by the Public figure.

The problem is, the gov is currently (massively) selling bonds to the public. That is what is and will continue to push the Debt/GDP ratio.

Here is a safe, government link that may explain better:

www.treasurydirect.gov...



On Aug 26 05:20 PM JJJ wrote:

> I keep hearing that our debt to Gdp ratio is around the 40% range
> from the CNBC talking heads, and that this latest revised 9 trillion
> 10 budget deficit will bring us near 80% debt to GDP. Just looking
> at our current national debt of about 11.3 trillion and a GDP of
> around 14trillion(rounded up), Isn't the debt to gdp ratio already
> above 80%(11.3t/14t)? Am I missing something here.

July Retail Sales: The Economic Storm Is Not Over

On Aug 14 06:17 AM Ed Zimmer wrote:

> Not only has the American consumer hit a wall, the airbags didn't
> go off, at least not until the consumer was pulled from the wreckage
> and left to lie on the side of the economic freeway. Then the rescuers
> (govt) set off the airbags to protect the car (banks).
> While the govt is concerned about the banks, the consumer has been
> left to get better on his or her own, if they can. Now the Government
> wants to raise it's credit line so it can spend more. Kinda like
> dropping the jaws of life on the poor slob laying on the ground while
> propping pillows around the injured car.
> Great article, good points, some food for thought. I favor buying
> the dips in metals because there is just way too much funny smoke
> and mirrors in everything else right now.

I really like your metaphor, but 180 degrees about: the banks are in the drivers seat, and the taxpayer TARP airbag went off. They walked away whole. The car (consumer) was totalled. We are still waiting for the tow truck.......

Cash for Clunkers: What Can the Government Buy You Next?

'This cash-for-clunkers is dumb idea- debt ridden customers are being induced to incur more debt, and tax payers (the prudent) will end up paying for all this. So in short Govt is encouraging bad behavior all through. '

Concur in part....modified, the taxpayer is ALREADY paying for this and will pay AGAIN when they default on the car payments.

Although in a way, cars can provide shelter value....maybe some loan modifications? :-)

Sorry its Friday night I couldn't resist.

-Rat

U.S. Government Converts Inflation into GDP

Hello,

One point more on why there will be no recovery: in October, the government will announce NO increase in SS benefits due to 'low inflation.' However that is overall CPI-W reported inflation, not a basket of senior-goods such as health care and heating oil. Any marginal demand they have for other goods will evaporate.

Never thought I'd actually see the year with no SS increase. Strange times we are living in.

Reich Is Right: Watch Your Wallets

'Consumption is the largest driver of economic growth, and with unemployment rising and consumer credit shrinking we don’t see that improving before 2010.'

The first part of this doesn't require -US- consumers. Exports also drive economic growth. If (when) the USD begins its inevitable free-fall, those holding them will naturally get rid of them via spending. Their final destination must be US products, real estate, or intangible property such as copyrights and patents. When the dam bursts, the flood will come....

Barry Eichengreen Is Wrong: We Need to Pass a Bigger Stimulus

177 Seekers follow this guy???

Government's New Credit Approach: Does the End Justify the Means?

It has been awhile since I found an article to disagree with 100%. The banking / credit card practices of stealth fees and rate hikes are banks' means of collecting the money they are owed, without crediting the borrower with the payment. Rather like the mob: all your payments are just 'juice', you've paid everything borrowed but you still owe it all anyway.

Universal default is particularly odious: the only ways to get this info are collusion or surveillance, both un-American; there is no investigation for cause (e.g., 'my gas bill was late because I was away on vacation' doesn't stop the doubled interest rate on my credit card); it is just an excuse.

The great flock of American middle class golden-egg laying geese has been slaughtered. We will be very lucky indeed if it can be reconstituted by the few survivors.

Why Our Credit Crunch Mirrors the Weimar Hyperinflation from 1919-1923

Friar:

You ask who has the courage to say why they give you thumbs down.

I do so because you are so clearly judgmental that we, the average Joes, are to blame for the current unpleasantness. You expect good intentions (solving world pollution, hunger, and disease) will lead to the expected results. The unfortunate, and ironic, truth is that good intentions are the road to hel....perdition.

You have a great heart. Get a head.

The Worst Isn't Over Yet

This worked well in both 2007 and 2008.


On Apr 05 09:35 AM dcb wrote:

> Sell in may and walk away?

The Ultimate Game Changer: Why 2009 Will Be Worse Than 2008 (Part 1)

"Surprisingly few Americans have the ability to put 20% down on a $300,000 home"

Interesting breakpoint. With median earnings at $50K or so, how many people could be expected to have more than a year's income ($60K) available for a home downpayment? Maybe they have that in IRA/401k, but deploying it for a home wouldn't be particularly prudent.

If we use the 3x rule of thumb (home=3x annual earnings), how many could put $30K down on a $150K home? My guess is not many.

Don’t Blame Wall Street - At Least Not Completely

"The people that are being foreclosed, primarily those who initially received subprime mortgages, should never have been given a loan to buy a house. These people were renters and will become renters again."

Not so easily. They may get an apartment in a complex. Owners of single-family for-rent homes don't want these people, as they have record of not paying and then walking away. The 'investor' with one or two rentals understands risk management up close and personal, and can't take them as tenants.

The Presidential Speech, in Context

There was not a single word about bankruptcy protections for the people. I've read that there's been a 'compromise'.....it's a scandal of its own there was ever an issue.

Imagine...panhandling from the homeless, and opposing any relief for their needs. What soulless people running PA Ave and Wall St.