While most people’s attention is on the upcoming elections our economy teeters on the brink of disaster. President Obama and the MSM want us to belive that the economy is getting better; that we really are seeing the benefits of his policies. But we on Main Street do not see the economy improving. We know that the government manipulates the numbers to make them look better than they are. But there are some numbers the government can not hide.
Ted, the Country Thinker, is worried about his son’s future because of the recent fall in bond prices and the accompanying increase in the interest rates. He likens it to an earth tremor that may be a precursor to a major earthquake.
… when I opened today’s Wall Street Journal and scanned the top bar, my jaw nearly hit the floor when I saw how Treasuries performed last week. The interest rates on 10-years soared 15% in a single week. That is not a minor move in a market where moves are generally tiny when compared to the vastly more volatile stock and commodity markets. It was a “Black Friday” event that the average American didn’t notice.
* Higher interest rates mean higher debt service costs. It means more government spending and higher deficits without any Congressional “assistance.”
* If interest rates on our debt reach levels consistent with the Bush and Clinton years (5–6%), our debt service costs will more than double, which is the fiscal equivalent of passing a few more ObamaCares. If the bond market has indeed been in a bubble for the last few decades, and rates “normalize” at a higher level yet (above 7%, say), it will be like passing another ObamaCare or two.
Brian at the Frankenstein Government blog is even more discouraged than Ted. He is hearing The Warning Bell Tolls On the USS Debt Titanic.
By my ‘ciphering, we are past the mathematical zenith of our national debt trajectory. The question of collapse is no longer “if” in my mind, it is simply a matter of when. You do not have to be a mathematical genius to see this. We simply do not have the capacity to dig ourselves out of this mess like we have in the past. The difference this time is that we have lost as many as 30 million taxpaying jobs in the past 10-15 years. Remaining jobs are paying squat. Inflation is kicking all of our collective asses irrespective of those fraudulent numbers our government puts out. Those numbers exclude food and energy, they exclude rising taxes, they exclude rising rents and insurance, and they exclude dwindling salaries or excess capital which people are now using to pay for their own health care needs (which are also rising) in between bankruptcies.
They can’t skew every number- there is one number that never lies. U.S. tax receipts. They are down 9 billion year over year through February. So while your government and head cheerleader (and media) talk big recovery- the facts do not reflect that.The stock market is a paper tiger propped up with counterfeited FED generated federal reserve notes and laundered through primary dealers.
Can you envision the miracle that makes this mess go away? I can’t.
I think you will find it worth your time to read both of these articles. Brian’s article has some interesting links that you may like as well.
To complete our trifecta of bad news, I paid a visit to Zero Hedge this morning and found this interesting tid bit in an article about raising gold prices.
Gold will have a “sharp” rally as the U.S. boosts monetary stimulus because of a faltering economy in the coming months, Societe Generale said in a report that was picked up by Bloomberg.
Data on U.S. gross domestic product in the first and second quarters will “surprise dramatically to the downside,” the bank said today in a report.
So, if Societe Generale is correct, we are about to get some that typically “unexpected” news that our GDP growth rate is not so good. This would mesh perfectly with Brian’s comment on our tax revenue shortfall. I have to wonder how long after that news breaks before the credit rating agencies downgrade the US debt again. If this were to happen our cost to finance our debt will go up. Consider this. No matter who wins the presidential elections, the national debt by 2016 will be close to $20 trillion. If interest rates are pushed up to a modest 5%, our annual debt service cost will be approaching $1 trillion. Of course, we all know that we don’t have a trillion dollars to service our debt so we will have to borrow more and the death spiral begins. So, while Ted is feeling tremors and Brian is hear the bells of the Titanic, I am hearing the ticking of the debt time bomb that no one has a clue on how to disarm it.
Well, that’s what I’m thinking. What are your thoughts?