Let that sink in.
A couple hundred years, we did pretty OK.
And then....
WHAM!!
POW!!
KABLOOY!!
TILT!!
At the same time a $1 trillion plus stimulus is being discussed, a gaping hole in government receipts is going to open up as businesses and individuals make less money and pay less taxes. Significantly less. Added to the $500 billion plus structural deficits we were running anyway.
Thank you George Bush. Thank you Ted Stevens. Thank you Harry Reid. Thank you Nancy Pelosi.
You fu*ked us all.
And anyone buying up US debt in this environment might be the biggest fool of all.
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14 comments:
Are you sure you want to use the US Dollar as the carry trade currency.
http://caps.fool.com/blogs
/viewpost.aspx?bpid=117292&
t=01000420523245711617
If we turn the government into a massively leveraged hedge fund that cycles a multi-trillion dollar carry trade of short-term debt used to finance long term mortgages, then I think we already know how that movie ends.
Whats a budget?We have a printing press and a bazooka.
2 Trillion is nothing and most of it will be sitting in bank reserves.
20 Trillion has been wiped out from house and stock equity in 2008.
The inflation occurred years ago in the twin stock bubbles and house bubble.
Everything you see out there is unwinding except Gold and that too will unwind back to around $300 next year as oil finds it's bottom around $30.
Ultrashort Gold (GLL) could be as good next year on selective entry points as shorting real estate and financials were this year.
apparently the foreigners still can't get enough of US Treasuries. they have finally tempered their lust for agencies, however.
Where be MY check? I needs to gets some new nails.
Time to fire up the printing presses.
Soon you can add Obama to the ever increasing list...
"Deficits don't matter."
The Neo-Cons were a deranged, leader-absolving cult and the effects of their cult linger on and on. The Democratic Congress is clearly following the philosophies of that cult. We're in for a long Great Depression II.
Milk $10/gallon. No wait...make that $11/gallon. No wait...
obama is going to fix it. all he needs to do is raise taxes on the rich and those fat cat corporations. that will close the budget deficit.
It's up to congress, not Obama, to raise income taxes. The taxes would have to increase significantly just to break even on the present budget as Federal tax revenue is significantly falling. Presumably, the US is going to have slower GDP growth as our credit binge has come to an end (although some will fight to reinflate). Fiscal stimulus now will go a long way toward fixing this crisis. We must also take into account Medicare, Social Security, and proposals for Universal Healthcare. Raising taxes on corporations should go a long way in provided needed jobs for construction workers and guest workers thru the fiscal stimulus programs. The government should also subsidize any state government with budget shortfalls in order to prevent any unnecessary budget cuts or job losses. We should also subsidize the US automakers directly until this economic crisis subsides in a few years. If the dollar collapses as a store of value, it will help the over indebted and only punish the savers. The dollar hegemony won't be broken as the Chinese and Japanese need us, at least for now. Most savings are pooled in the wealthy end of the spectrum and they can shoulder the losses more easily than the poor. Any persistent private sector job losses can be balanced by growth in the public sector jobs. Taxes can be adjusted as necessary to meet the needs. We can eventually default on the US debt, selectively if necessary.
Is the US too big to fail? Who will bail the US out?
"Everything you see out there is unwinding except Gold and that too will unwind back to around $300 next year as oil finds it's bottom around $30."
Not as long as Treasury yields remain <= 0; it's cheaper to own gold than Treasuries right now.
But if rates ever climb off zero, it's because the Fed is having trouble selling debt. They can't raise interest rates, though, because it'll tank what's left of our economy and they can't afford to finance $trillions with interest. Then its monetization time, meaning gold to the moon.
Deflation = gold price steady to slowly rising
Inflation = gold price to the moon
The only way I see gold getting whacked is if we have full societal collapse and nothing but canned food and ammunition has value, in which case I don't care.
PS: China has joined the competitive devaluation party.
Hey, you left some people off the list. Don't forget about me or Sheila Bair, or the fine lobbying efforts of Bob Toll and the NAHB. Without us encouraging debt, housing could never have become so profitable and made everyone so rich.
There's never been a better time to buy.
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