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 Post subject: Spending money we won't ever have!
PostPosted: Thu Feb 02, 2006 10:41 am 
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This is a little reported story, but one I think should be front page everywhere.

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WASHINGTON (AP) -- The government expects to borrow a record $188 billion in the January-March quarter, even more than it anticipated three months ago, the Treasury Department announced Monday.

The total will surpass the old mark of $146 billion set in the first quarter of 2004, a year in which the federal budget deficit hit an all-time high in dollar terms of $413 billion.

After declining last year to $319 billion, this year's deficit is expected to reach $400 billion, according to the Bush administration, which has said part of that increase will reflect higher spending to rebuild New Orleans and other hurricane-damaged areas of the Gulf Coast.

The Treasury Department's new estimate of the amount it will need to borrow in the current quarter surpasses the $171 billion estimate made in November.

Officials attributed the higher figure to a timing issue when Medicare payments are made to health maintenance organizations. Those payments were made in January instead of December as Treasury had expected and therefore will drive up borrowing needs for this quarter.

Treasury officials said they still expect to hit the current debt ceiling of $8.184 trillion in mid-February but will be able to use various bookkeeping maneuvers to keep from disrupting borrowing operations until mid-March.

Democrats are hoping to use the congressional debate over the need to raise the borrowing ceiling to highlight the failure of Bush administration budget policies. They contend Bush's support for sweeping tax cuts during his first term is the major reason the deficits have been soaring.

The administration contends the tax cuts helped to get the country out of the 2001 recession and must be made permanent so economic growth will not be slowed in the future.

The announcement Monday was part of the government's quarterly refunding operations. It will announce on Wednesday the amounts of money it will raise next week and the types of Treasury securities it will sell to raise that cash.

One of those securities will be a 30-year Treasury bond. The government announced last August that it was bringing back the 30-year bond with the first auction of the new bonds taking place February 9.


It follows close on the heels of this almost entirely unreported story:

Quote:
In a shocking development, the Treasury Department website is openly stating that as of January 24, 2006 our national debt stood at $8,185.3 billion and on January 26th at $8,190.5 billion.

http://www.publicdebt.treas.gov/opd/opdpenny.htm

Yet the US national debt ‘ceiling’, the maximum amount of debt the US government may hold at any one time, stands at $8,184 billion – a full $5.5 billion less. Although called upon by John Snow, Congress has not yet passed an expansion of the debt ceiling and so the US government is now operating in technical default.

You may recall that when last the debt ceiling was approached in the months surrounding the 2004 elections, the Treasury department furiously employed every accounting trick in the book (and then some) to avoid breaching the limit. They even went so far as to take the unprecedented step of borrowing $14 billion from the Federal Financing Bank to cover up the shortfall.

But they never breached the ceiling.

On January 24th they breached it brazenly and openly and with nary an accompanying explanation. Neither have any lawmakers have broached this indelicate subject.

I suppose we could write this off as merely an unsurprising development from a government that no longer bothers to even appear to be adhering to rules, laws and procedures, let alone actually doing so.

But the silence is all the more troubling because there is an unprecedented level of government borrowing on the books for 1Q06 with next 2 weeks (Feb 1st to Feb 9th) an especially busy period of time. An ambitious ~$70-$80b in Treasury paper will hit the market.

The federal government does not have the legal authority to borrow above the statutory debt limit, which raises the prospect of emergency congressional action to avoid a full-fledged default.

Congress will probably attach a rider to a “must-pass” defense appropriation bill and ironically title it “The Fiscal Responsibility Amendment of 2006”. And if they do, $50 says they do it very late on Friday night.

Since the debt ceiling has been raised 50 times over the past 40 years, hoping for some rational debate on the matter would be an extravagant indulgence. Time spent wishing pigs could fly would offer a far better potential return.

Another odd facet of this story is the deafening silence from the financial press (and I use that term loosely) regarding this matter. Leaving aside the issue of a technical default, one wonders why questions aren’t being asked about the rate of debt accumulation and whether it’s sustainable.

The last debt-ceiling adjustment was $800 billion and was passed in November 2004. Now, on January 24th 2006, it is entirely gone. $800 billion in only 16 months for an average of $50B a month.

Factoring out the plundering of excess social security contributions, the US government borrowed $52B in 3Q05, $96B in 4Q05 and expects to borrow $171B in 1Q06. A trend nearly as mind-boggling as the soon to be discontinued M3 series.

Why do I even bother to pen such distressing factoids?

Because in all my time studying economics I have determined only one thing; there’s no free lunch. Pay now or pay later but pay we will.

Or, more accurately, we hope that our kids will, and not stiff us for the bill. But if they did, who could blame them?


While the Conservatives of both parties have long held that debts are not really of much concern, it is imprtant to weigh this in in light of social developments in the US. The debt hurts the lowest classes worse, forcing higher interest rates, increased costs for all aspects of retail, resulting in higher costs at POS.

As some have pointed out the US may already be in a recession. Personally, I think it certainly feels like a recession.

While the feds report unemployment at roughly 6%, any one with the wit to look around knows this cannot be accurarate, it has to be closer to 20% (and this would be depression levels, btw. At its worst the depression of the 1930's had about a 25% unemployment rate). Couple this with the downward trend in wages, (wage slaves are never counted as *unemployed* although they are certainly in the same dire situation as those who cannot find work at all) and you can begin to see the cash crunch that is developing.

We are beginning to see the cost of 150 years of Merchantilism. With over 95% of all the cash available to US citizens held by less than 5% of the population, there simply isn't enough cash left to go around. No matter how much tax increase is placed upon the citizens, it will be to no avail, since even 100% tax rate wouldn't yield enough income to support the growing federal debt!

In economics there is a *law* that states when 5% of the population hold 95% of the resources, a total failue of the monatary system is inevitable. It's called the 95/5 law. Historically, it has happened a few times, and each time has led to the downfall of the economy involved.

It has even happened once with the direct involvement of Merchantilism. The fall of the British Empire was directly due to a situation that was very similar to this one we see now in the US.

It is interesting to note that many of these Merchatile Elitists literally moved to the US, and set up shop in the middle of the 19th century as Britannia disintegrated. They became partners and investors in the Railroad Corps, already run by homegrown merchantilists, and aided them in gaining for themselves rights and privleges they were never meant to have.

Now they have run the course in the US, and WE the PEOPLE will be left holding the bag. A rather empty bag at that.

We already see them running like hell, for China, India and other new *slave states* with ripe and growing economies. They are *selling* worthless dollars for almost anything they can get. China, Japan, and even Bill Gates are selling dollars (often selling them short, btw) and buying Euros, Iran is pledging to open their Oil Brouse with a Euro exchange. China has announced it will not buy any more treasury bonds, and will begin divesting the bonds it has. Japan will follow suit.

This money will neot come *back* to the US economy, as one might imagine. With a debt so vast, all this returned money will go to the upper 5% (more like 2% in actuality) to pay off massive interest payments, and it will still not be enough.

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PostPosted: Thu Feb 02, 2006 11:11 am 
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This from Illinois Senator Dick Durbin after Bush's SOTU address:

Quote:
As Durbin walked through the Capitol after the speech, he thumbed through a copy of the president's address as he talked to reporters.

"I didn't hear the word `deficit,'" Durbin said. "Surely it must be in here."


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PostPosted: Thu Feb 02, 2006 11:29 am 
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WHAT? But, but, but....haven't we "enjoyed" four years of uninterrupted economic growth?????????? :lol: :lol: (yeah, ask the Ford employees, and the plants and industries that are closing their doors within my own state.)


Catherine

Thanks for posting this, Al!

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PostPosted: Thu Feb 02, 2006 3:58 pm 
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No wonder Americans are told to hate communism. To me mercantilism is no different than modern communist rule, where the 95/5 ratio is the cornerstone of the communist doctrine. Workers work for the elites comfort. Sounds like the wage slaves fate.

This is why we are taught to hate communism because it is really a disguise for the way America is run. At least it is the same as the Russian bastardized version of communism. True Marxist communism would never end up like this. It is what the elite do to the poor, and so exploit it by making communism appear to be an infringement on rights and freedoms. Capitalist imperialism is sold to us as an individual goal for freedom to enter the higher elite, but is actually nothing more than a crapgame where some win today, but most lose and pay. Casino financing, where everyone's a winner baby, or at least has a chance to be.

It all comes down to how we make money. It's a supply and demand thing. We demand more than we should supply. And so goes inflation, which means we need more supply to satisfy the increased demand. Prices go up and wages stay the same or go down. This is how Greenspan decided to fight inflation, by decreasing the amount of money he would supply to the poor class. Worked for a while, until the poors' demands outweigh the balance of mercantilisms supply, namely the poors money. It's not really borrowing when you just manufacture it.

But now the rest of the world has caught on- we're making money with nothing but demand, so we can supply our needs with worthless money. It is catching up to us, so we have decided, like all dying imperialistic plutocracies, that we can continue to rule the world by controlling it. Stealth for wealth is our motto now. It won't work. Eventually there will be a price to pay for our need for greed. Doesn't matter what lines Bush feeds to the masses, the elite chickenhawks cannot convince the world that they aren't the pirates of old and must be dealt with. The only ace America has up their sleeve now is that China and others own so much useless American currency, that to devalue the dollar would make their reserves of American dollars worthless and the spiral of inflation would be worldwide.

Who's got the guts to bring down these pirates of business? Who will be the new Captain Morgan, ready to put himself out of business. The opposition has been trumped. This is a well thought out connundrum that has provided America with unlimited wealth up 'til now. But with the world on the verge of bringing it all down, perhaps it is only inevitable that the poor in America will have to pay for the wealthy in America now. It is the end of American's free ride and it will require great amounts of sacrifice and repositoning for America to regain that cushion of privilege that they had on all levels and classes of society.

Welcome to the birth of the third world America. We won't need immigrants to do the dirty work Americans refused to do, there will be plenty of wage slaves to do it, right here in America the free. The next generations will be forced to deal with it. This is our legacy we leave to them. It will be no wonder that they will turn against us in our old age. With them forced to abandon any hope of the American dream, you'll see a rise in prisons and concentration camps. Prison work gangs will reappear. Begging for work will be like begging for food or money, and illegal. Take what is offered or else. Either that or go to prison and work- or starve.

Someone has to pay that debt and like always, that someone is you and you AND YOU.
From SOTU 2006-
Quote:
Our greatest advantage in the world has always been our educated, hardworking, ambitious people -- and we're going to keep that edge. Tonight I announce an American Competitiveness Initiative, to encourage innovation throughout our economy, and to give our nation's children a firm grounding in math and science.

So get out there you educated, hardworking, ambitious people and take that fine low paying job as offered. math and science will surely pave the way to a greater America. Yeah right.

Finally a quote from your g.OD's- the dollar bill
Quote:
May God bless America.
May as well start praying now, cause he/she/it's your only hope.

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PostPosted: Thu Feb 02, 2006 9:25 pm 
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Yeah really catherine, Ive also whatched all the GM jobs leave ohio when we were reassured they wouldnt. Everytime we turn around, 1300 there, 700 here, 300 there, 3000 there. Delphi was one of the biggest employers in Dayton ohio, now theyve closed dam near every plant. Shame. just a shame. Ohio is right behind michigan for top spot of most jobs lost in the 5 years. But our economy is booming yeah ok


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PostPosted: Thu Feb 02, 2006 9:35 pm 
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Hey Justin,
I hear the very popular mayor of Columbus, Michael B. Coleman, is running for governor in Ohio.

I've heard him talk on Air America. I like the guy.

How is he doing in his campaign?


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PostPosted: Fri Feb 03, 2006 6:04 am 
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I like him too. Here in the great state of ohio, they dont care much for black politicians. Yeah they all say that theres no racial tension here but its bullshit. They poke fun fun at him and say he cares so much about the ""projects"" cause hes from there(STEREOTYPING). I think hes done a good job so far. He cares more about safety and low income than anything, which is good. Of course you know republicans dont believe in spending money on the poor. I dont know if he'll run though. Right now the front runners are Larry Bays (R), Ken Blackwell (R) crooked piece of shit that said there was no need for a recount, Pete Draganic (R), Jim Petro (R), Eric D. Fingerhutt (D), Bryan Flannery (D), Ted Strickland (D), Bill Peirce (Libertarian)


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PostPosted: Sun Mar 05, 2006 3:33 pm 
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<Bump>

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People don't choose to be dishonest
the choice chooses them

Now I know how Kusinich feels.


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