MarshAviator wrote:Personally while I expect any collapse to be a living hell, the stress of watching a slow protracted decline is just as bad.
CBO’s baseline projects 2009 revenues of 16.5 percent of GDP and expenditures of 24.9
percent of GDP. Incorporating the stimulus package, these percentages would be 16.1 percent and 25.7 percent, respectively. This represents the highest expenditure share of GDP since 1945, and a revenue share that has been lower only once since 1950. The gap between revenues and expenditures, the deficit, will be the highest as a share of GDP since the end of World War II. Debt held by the public will rise to 50.5 percent of GDP in 2009, the highest since 1956. It is worth noting that the projected 2009 deficit and debt would be even higher were it not for the extremely low interest rates on government debt that currently prevail. Whereas debt service accounted for $249 billion – 1.8 percent of GDP – in fiscal year 2008, it is projected to drop to $195 billion – 1.4 percent – in 2009. Some see these low interest rates as a silver lining to the fiscal picture’s otherwise very dark cloud, arguing that meeting our fiscal obligations will be much easier, and the rowding out effects of deficits will be smaller, as long as interest rates remain low.
CBO also treats the government’s bailout of Fannie Mae and Freddie Mac on a present
value basis, estimating that the cost to the government of guaranteeing these liabilities will contribute $218 billion to the deficit in fiscal year 2009. However, as this guarantee is not associated with any new official government borrowing, there is no corresponding increase projected for the national debt in fiscal year 2009. Thus, the treatment of Fannie Mae and Freddie Mac adds more to the deficit than to the accumulation of federal debt.
Taking these and other adjustments into account, CBO projects that the increase in
federal debt will exceed the deficit in fiscal year 2009 and fall short of the deficit in each
remaining year of the budget period. But which set of numbers is more relevant is difficult to say, given the somewhat arbitrary nature of the conventions. It is unclear, for example, the extent to which the guarantees extended to Fannie Mae and Freddie Mac should be treated as having a new cost, given that such guarantees were already implicit in the pricing of the securities issued by these agencies. However, if these agencies are really now part of the federal government, then it would make economic sense to include their very considerable liabilities – at the end of 2007, the GSEs had combined outstanding debt of $1.5 trillion and had provided mortgage-backed securities totaling $3.5 trillion – as part of the national debt. However, for a variety of definitional reasons, these liabilities are not included in the official public debt figures.
http://www.brookings.edu/papers/2009/~/ ... e_gale.pdf
Well, since Uncle Sam is the Broker of last resort again, and since the President has the Army to find them Patriots who created no value CDS who looted capital, meanwhile the taxpayer who is being exterminated as we speak, what do we the people do? My children are allowed no debt as such. I must consider 50 percent moving of capital to survive avarice in a historical context. Pages have conveyed where we are going since who has the stick anymore to discipline.
While one can argue that a different recovery rate would be appropriate, three points are worth making. First, the trend in the data clearly shows a visible uptick in the likelihood of default on U.S. Treasury bonds, a notion that was virtually unthinkable in the past. Second, if one assumes a higher recovery rate than 40 percent in the event of default, then the implied default rate is higher, not lower, than reported in the table. Third, the figures relate to default in the next five years, not to long-term liabilities associated with Medicare and Medicaid. While we find these figures hard to reconcile with our
own views of the current creditworthiness of the U.S., especially over the next five years, it is also worth pointing out that the data show similar or even higher credit default prices and implied default probabilities for other countries. In any case, it may well be that long-term fiscal problems will beset us much sooner than one might have expected in the past.
How can so large a fiscal gap be closed? Even under the most optimistic estimates just
provided, for the CBO baseline without the stimulus package, closing the gap would translate into a permanent reduction in non-interest spending of 22.8 percent or a permanent increase in revenues of 28.9 percent, both calculated relative to their projected trajectories. Narrower means of closing the gap would be even more Draconian – a 51.6 percent increase in income taxes, for example; and eliminating nearly all discretionary spending. Because the fiscal gap measures the size of the required immediate fiscal adjustment, the required adjustment also rises if action is delayed, and would be substantially larger when computed relative to the adjusted baseline.
I fired my bank in 1986 no explanations needed. This was from a like minded person across the pond.
Perhaps you, like I, find it richly ironic that members of the public still use your investment subsidiaries as a means to protect and grow their private wealth. I think you should promote the activities of these subsidiaries more widely. My idea for an advertising slogan: “When it comes to moral hazard, we’re Number One. We helped trigger the biggest financial and economic collapse in history through our imprudent lending and investment. Between 18 million and 30 million jobs throughout the world are almost certain to be lost. And more than 50 million jobs throughout the world are now in jeopardy. As a result of our investment expertise, we’ve lost billions, and those of us that still exist and aren’t owned by the taxpayer are technically insolvent. Now, how can we help you with your finances? In any event, this letter is also to let you know that now that you and your members, in collusion with your governmental paymasters, are offering negative real returns to cash depositors, I am withdrawing what remains of my funds since I can find altogether better opportunities for the preservation and growth of my capital within high quality pockets of the equity and corporate bond markets, and I can get sufficient “insurance” for my increasingly worthless fiat currency in the form of gold. I appreciate that the withdrawal of my funds may send you spiraling into nationalization. Sorry about that. In closing I will work for the common good in my Corporate Job hopefully long enough so you prove me wrong.