Free Republic

Two recent news stories illustrate, more clearly than ever, the Obama Democrats' contempt for the free market and individual economic liberty. If given the chance, they will expand government and spend as much of our money as they can get away with. First we learn that Obama and his party simply will not agree to keep their grubby government hands off the estimated $200 billion the banks are going to repay under TARP. Just when we finally receive this glimmer of good news to ameliorate our reasonable panic over the ever-increasing national debt, Obama announces that he intends to intercept...

The financial reform bill working its way through the House of Representatives, that includes Ron Paul's "Audit the Fed" provision, has gotten so morphed and horrific that Ron Paul is not even going to vote for it. The evil bastards have added an amendment to the Bill that will allow the Fed to pump any amounts of money it so chooses to "financial holding" companies deemed TBTF, without approval from anyone. William Greider explains: The sales pitch for financial-reform legislation pending in the House claims it would put a stop to “too big to fail” bailouts for the leading banks....

Polled support for the health care plan wending its way through Congress continues to crash downward in the polls. And before you say it, it's not just Rasmussen, which has actually been pretty much in the middle of the other polls. Here's where we stand as of today. For reform advocates, this is not good news. At 40% approval, it probably passes. At 30% approval--what Social Security reform enjoyed by the time it imploded--it's not going to no matter how the Senate massages their plan. Democrats cannot pass a bill this large on a straight party line vote if the...

WASHINGTON, D.C. — Sens. Amy Klobuchar and Al Franken today urged the Senate to pass an extension of unemployment and COBRA benefits before the end of the year, citing the 10 percent unemployment rate and the annual rise in heating bills coming this winter. The Minnesota Democrats joined 22 other senators who signed a letter to Senate Majority Leader Harry Reid, asking for a vote on the issue by Dec. 31. A 65 percent subsidy of premium costs for those with COBRA benefits, authorized by the stimulus bill, is set to expire at the end of the year.

In a bold but risky year-end strategy, Democrats are preparing to raise the federal debt ceiling by as much as $1.8 trillion before New Year’s rather than have to face the issue again prior to the 2010 elections. “We’ve incurred this debt. We have to pay our bills,” House Majority Leader Steny Hoyer told POLITICO Wednesday. And the Maryland Democrat confirmed that the anticipated increase could be as high as $1.8 trillion — nearly twice what had been assumed in last spring’s budget resolution for the 2010 fiscal year. The leadership is betting that it’s better for the party to...

<p>President Barack Obama has recently unveiled bold new plans for government programs and tax breaks to try to boost the economy. These initiatives have no price tag yet, but they will require significant spending.</p> <p>You can debate whether new highway and bridge projects and sundry tax breaks will help the economy. That's a political question. But as the U.S. government piles borrowing atop more borrowing, it begs a financial question that is not utterly ridiculous: Are your U.S. Treasury bonds safe?</p>

Moody's cut other Illinois ratings, affecting about $24 billion of outstanding debt, including the state's Build Illinois sales tax revenue bonds, also cut to A2 from A1. The downgrade gave Illinois the second lowest U.S. state rating from Moody's, with California having the lowest at Baa1, a Moody's spokesman said. Moody's said Illinois has yet to take action to tackle a structural budget gap of more than $11 billion, equal to about 35 percent of its expenditures.

Obama's Debt CrisisHow much is the National Debt costing America?It’s interesting to note that the total interest paid on the National Debt since 1988 has been $7,393 billion (that’s $7.4 trillion). That’s a lot of money being wasted by politicians in Washington, D.C. and there are not enough people talking about it. There is an even more deafening silence regarding what the cost will be over the next 10 years. The United States will pay almost as much interest as it did over the last 20 years in just the next 10. And no one in Washington is addressing the...

I think it's high time that we start to consider more than words, my friends.. Action more than apathy, and our nation and it's future more than ourselves: In this course, I implore you all to think about but do NOT act yet. I think it is high time that we start thinking about a TAX PROTEST (Civil Disobedience); aka a Tax Rebellion. Peaceful civil disobedience has been used throughout history to change the direction of a nation. I would like to ask you if the next step of the Tea Party movement might be a (peaceful) civil disobedience of...

Developed Countries Rapidly Blowing AAA Ratings And Entering Debt Crisis Danger Zone Joe WeisenthalDec. 8, 2009, 3:43 PM Here's a fantastic chart from Moody's, courtesy of David Goldman, showing the ratings trajectory of various Western developed countries. Basically, Switzerland is the only country not to be racing headlong into the purple -- non-AAA -- zone. Says Goldman: Under US government projections, debt service will exceed 10% of GDP by 2013, which means that by one measure the US will move out of AAA territory. But the UK, Germany and France will be headed in the same direction.[snip]

The credit crunch continues, with businesses large and small finding that their bankers remain exceedingly stingy in the wake of the 2008 financial debacle. "We need to see banks making more loans to their business customers," Federal Deposit Insurance Corporation (FDIC) Chairwoman Sheila Bair told reporters recently after the FDIC released figures showing that the amount of loans outstanding in the nation's banks fell $210.4 billion in the third quarter of 2008. That is the largest quarterly decline since the FDIC began tracking loans in 1984. Of course, today's low interest rates don't especially make lending to small businesses worth...

Countries must get their fiscal houses in order or face credit downgrades, international ratings agencies say. International ratings agencies are warning the United States and several European governments that they face credit downgrades if they don't soon come up with clear plans to get their deteriorating fiscal houses in order. Moody's Investors Service said Tuesday the weakening public finances in the U.S. and Britain may “test the Aaa [triple-A] boundaries” for their ratings. While analysts say there is no immediate risk of a cut in the ratings of major developed economies, the less stable fringe players are already feeling the...

December 8, 2009 Dear Senator Kerry, I have always wanted to receive just such a mailing as I did from you today in support for the Democratic Party and President Obama. So let me begin by thanking you for this opportunity to express myself to you. What you, President Obama, and your Democratic cohorts have done to this nation in the short time you have tried to exploit your filibuster proof majority is nothing short of an atrocity against the American people. To your everlasting shame you have seized the opportunity to spend money that we don’t have and money...

Dubai's economic meltdown was a warning sign of further sovereign default troubles for other governments. CMA, a credit information specialist, tracks the world’s most volatile sovereign debt issuers according to percentage changes in their 5 year Credit Default Swaps. On top of their list for the greatest sovereign risks are countries from the former Russian Eastern Bloc, conflict-torn nations, and an oil-rich dictatorship. #1 Venezuela Cumulative Probability of Default: 60% WSJ: "one week ago, the government was forced to begin shutting down seven small banks that together represent up to 12% of banking system deposits, after the public began to...

John Mauldin: Here's Why Our Massive Debt Mountain Will Kill Us In The End Henry BlodgetDec. 7, 2009, 1:36 PM John Mauldin, President, Millennium Wave Advisors, LLC (4 min)(Go to the site to view the video)* We're borrowing ourselves to death * But government spending doesn't fix anything--investments must be made in the private sector in order to create jobs * The U.S. will not reach a $2 trillion deficit--because government will raise taxes and cut spending before that happens. These moves will kill the economy. * Another financial crisis will occur if there is no credible plan to get...

Worries about Greek debt contributed to a flight from risk in European financial markets Tuesday following a decision by Fitch Ratings to downgrade Greece's sovereign rating. Fitch cut Greece's long-term foreign-currency and local-currency ratings to BBB+ from single-A-minus, highlighting "concerns over the medium-term outlook for public finances given the weak credibility of fiscal institutions and the policy framework in Greece."

With the national debt topping out over $12,020,717,005,598 the Ship of State is now sailing in a sea of red ink. But is this foreign or domestic ink? According to the U.S. Treasury Department 25% of the debt is owed to foreign interests. With your share of the debt at close to $40,000 you owe foreign governments like Japan and China more than $10,000. Yes you owe them that. You see Washington views your paycheck as collateral that it can put on the market at any time it wants to and then you get stuck with the bill. The Treasury...

Stuart Varney was just on Fox and said Moody's will lower the United States bond rating for the first time ever in 2013 with current spending plans.

John Mauldin, President, Millennium Wave Advisors, LLC (4 min) We're borrowing ourselves to death But government spending doesn't fix anything--investments must be made in the private sector in order to create jobs The U.S. will not reach a $2 trillion deficit--because government will raise taxes and cut spending before that happens. These moves will kill the economy. Another financial crisis will occur if there is no credible plan to get back to manageable debts

Pre-Budget report: UK ‘faces decades of debt’, warns Treasury Britain faces decades of rising public sector debt, increasing taxes and, potentially, falling living standards unless it tackles the growing costs of its pensions and health bill, the Treasury will warn this week. By Edmund Conway Published: 9:20PM GMT 05 Dec 2009 In a paper to be printed alongside the pre-Budget report (PBR), the Treasury will warn that the costs of paying for state pensions and the National Health Service are set to rocket between now and 2059 unless action is taken to reduce the bill. The paper on long-term fiscal...

For our money, one of the better parts of President Obama's speech at West Point this week was his connection between a healthy economy and U.S. national security. To quote: "Our prosperity provides a foundation for our power. It pays for our military. It underwrites our diplomacy." We only wish Mr. Obama understood the link between the larger welfare state he is trying to build at home and the economic weakness that will undermine our military power. The proof is right before his eyes in the U.S. struggle to get Europe to contribute more forces to Afghanistan. Mr. Obama has...

Fears Mount Over Japan's $100 Billion Treasury Sell Off Vince VenezianiDec. 4, 2009, 3:39 PM Japan denies it, but rumors persist that the country may dump Treasuries. Bloomberg continues to fan the flames. Bloomberg: Speculation that the Japanese government plans to sell $100 billion of U.S. Treasury debt to pay for domestic spending may impede the Obama administration’s borrowing plans. Japan has been this year’s biggest buyer of Treasuries, which means it has done more to help finance the widening U.S. budget deficit than any other country. Its holdings have risen by $125.5 billion, according to data compiled by the...

World Debt Crisis, Dubai Is Not Alone Interest-Rates / Global Debt Crisis Dec 04, 2009 - 06:46 AM By: Michael Pento The Persian Gulf emirate Dubai is seeking to defer debt payment on nearly $90 billion in liabilities from their state-run companies. Like many other over-leveraged enterprises and some countries across the globe, the government of Dubai made massive bets on real estate that have since gone sour. But no matter where in the world such a case occurs, the ramifications of taking on too much debt are always the same. Unless the party in question can be bailed out,...

Let's spin this globe and take a look at things from a slightly different angle. If we could inventory the entire planet, every real, solid, tradable item we came across would belong to someone. Someone somewhere, or a group of someones would have bragging rights to each and every thing on this planet. Each one of these items that is the least bit tradable would have some sort of value attached to it. Of course some things are not tradable. For example, a mountain in the United States that has been designated by the collective as public land is not...

House Majority Leader Steny Hoyer said Tuesday that Congress should vote this year on a debt ceiling increase that gets "us through next year." At his weekly briefing, Hoyer said that voting against a debt ceiling increase is "not a responsible vote." "There is no alternative," he said. But Hoyer's terse comments on the debt ceiling signal a new Democratic strategy on the debt ceiling. Congress increased the debt limit from $11.3 trillion to $12.1 trillion in February. The House later voted to increase the debt ceiling to $13 trillion this spring when it passed its 2010 fiscal year budget....

Hundreds of thousands of illegal immigrants could receive health care coverage from their employers under the bills winding their way through Congress, despite President Obama's explicit pledge that illegal immigrants would not benefit. The House bill mandates, and the Senate bill strongly encourages, businesses to extend health care coverage to all employees. But the bills do not have exemptions to screen out illegal immigrants, who usually obtain jobs by using false identities and are indistinguishable from legal workers.

Some of the most controversial financing practices of the credit-bubble years – from cov lite loans to Pik toggle notes and dividend recap exercises – have returned to Wall Street, stoking fears that debt markets are growing overheated. The techniques fell into disrepute during the financial crisis because they were based to varying degrees on the same rosy expectations that encouraged companies and consumers to assume what proved to be crippling levels of debt. In a cov light – short for covenant light – loan, borrowers are granted credit with few, if any, conditions. Pik toggle transactions make it possible...

Marc Faber warns that further sovereign defaults are ahead. Dubai was just a teaser. Starting from 0:45 in the video: Dubai was just the tip of the iceberg. The ultimate result of the financial crisis will be not just bankrupt banks, but more bankrupt governments. Massive U.S. economic stimulus means that U.S. bonds will one day have to offer higher yield than corporate bonds due to default risk. China has learned one thing from the U.S. -- how to massage and doctor economic statistics.

Run On The U.S. Dollar ....Soon Currencies / US Dollar Nov 30, 2009 - 04:33 PM By: DailyWealth Porter Stansberry writes: It's one of those numbers that's so unbelievable you have to actually think about it for a while... Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion. Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly...

Debt Fuelled Zombie Capitalism, Bernanke "Marching Ignorantly Forward" Economics / US Debt Dec 01, 2009 - 08:20 AM By: Mike_Shedlock Australian economist has another blockbuster post on the dynamics of debt deflation and the Great Financial Collapse. Please consider Debtwatch No 41, December 2009: 4 Years of Calling the GFC. During a debt-driven financial bubble, which is the obvious precursor to a debt-deflation, rising levels of debt propel aggregate demand well above what it would otherwise be, leading to a boom in both the real economy and asset markets. But this process also adds to the debt burden on the...

Playing Tug Of War With Tthe Dollar Carry Trade And Risk Aversion Minyanville Staff Dec 01, 2009 8:40 am Today the “dollar carry trade” is back on as market strategists claim no contagion from Dubai. This perception is wrong, just as most strategists were wrong about saying that Subprime was contained. Problems at Dubai World aren't a lingering effect of “The Great Credit Crunch” but a clear warning that “The Great Credit Crunch” is far from over. (See also The Great Credit Crunch Is Deepening) It’s naïve to think that there aren't many more time bombs in the $206 trillion...

CHICAGO (Reuters) - Cash was king for consumers who shopped over the Thanksgiving weekend, according to survey results released on Sunday, and that factor could have cost retailers additional sales. Only 26 percent of people who shopped over the weekend said they used credit cards for their purchases, according to a poll conducted for Reuters by America's Research Group. "That's an amazing shift in consumers' habits," said Britt Beemer, founder of America's Research Group. Consumers shunning credit cards is a bad sign for retailers, since people who buy gifts with a credit card tend to spend anywhere from 20 to...

Porter Stansberry writes: It's one of those numbers that's so unbelievable you have to actually think about it for a while... Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from? How...

We've experienced an earthquake. Here come the aftershocks. What happens after governments go trillions into debt to rescue their banking systems? The governments themselves collapse. It's what Niall Ferguson has been warning about. It's the lesson that Roubini sees in Dubai. And now Morgan Stanley, in a new report about the upcoming slog, reminds us of some history.

Global markets sank sharply at the end of last week on fears that Dubai World, a subsidiary of the government of Dubai, was on the verge of defaulting on approximately $60 billion of the emirate's $80 billion in total debt held by creditors world-wide. The rush of news stories added to the wildfire of panicky speculation, with headlines ranging from "Dubai Default Risk May be Big US Bank Problem," to "Dubai Shows Limits of Government Rescues." The mini-panic, however, has little to do with Dubai and everything to do with the tenuous psychology of global investors still skittish after the...

Investors face huge losses as Dubai abandons debt company Dubai has brought in Deloitte, the accountancy firm, to help restructure Dubai World David Robertson The Government of Dubai said today that it will not stand behind its wholly-owned subsidiary Dubai World, prompting fears that the company’s creditors could lose billions of dollars. Today's comment, from Abdulrahman al-Saleh, the director general of Dubai’s Department of Finance, effectively confirms that country does not have enough money to repay Dubai World’s $60 billion of liabilities. Deloitte, the accountancy firm, has been called in to restructure the giant business. Last week, the state-owned conglomerate...

Best Buy, Krugman and the Carry Trade Submitted by Bruce Krasting on 11/29/2009 22:35 -0500 /snip On ABC’s "This Week" show there were some interesting thoughts from Paul Krugman. He remarked: “The cost of the deficit is only 1.2% real rate of interest at the Federal level.” This is economic speak. What Mr. Krugman was saying is that the Government can borrow long term at 3.2% and inflation is 2% so the real cost of debt is only 1.2%. In response, George Will made the point: "In ten years the interest cost of servicing the debt will go to $700...

The Federal Government admits to over $12 Trillion dollars in debt. In reality, its obligations are multiples of that number. The unfunded promises from Social Security and Medicare total around $100 trillion. To properly fund the forecasted future deficits in Social Security and Medicare, $100 trillion would have to be put in the fund today. Without this infusion, this liability grows exponentially. Next year, for example, it will be $4 - 5 trillion higher! The Government has promised benefits that they cannot possibly honor. The total net worth of the entire country (the country's total assets less liabilities) is slightly...

Sen. Levin said on Face the Nation today that he doesn't support a tax for Afghan War....

As you read this, feel free to replace the word 'Greece' with 'America' and '2009/2010' with '2022-2025'. If not for the fact the U.S. still enjoys its role as the world's reserve currency, and has a central banker who has no qualms with throwing the savers of the nation under the bus to keep the mirage going, I would not be talking 2020s. The US is playing the highest form of poker... but on current course, it only appears when, not if, we're called out. [Nov 23, 2009 - NYT: Wave of Debt Payments Facing US Government] Think it's impossible?...

Just days before Gov. Arnold Schwarzenegger and legislators finalized a water package, including an $11.1 billion bond issue, state Treasurer Bill Lockyer warned them not to do it. California is already deeply in debt, Lockyer warned, has huge budget deficits and can't afford another big bond issue. "The days of blithely heaping more and more debt burden on the general fund are over – at least they should be," Lockyer said. The earmark-laden bond issue, the package's single most controversial element, raises an interesting question: Just how deeply in debt are our state and local governments? The answer: No one...

Why I'm (Cautiously) Optimistic About The Future by: John Mauldin November 29, 2009 I admit that of late my writings have had a rather dark tone. There are certainly a number of severe long-term problems that we must deal with, and they're going to serve up a lot of economic pain. But the Thanksgiving weekend with the kids has me in a reflective mood, and one that has only served to underscore my long-term optimism. This week we look at why 2007 will not be the good old days we will yearn for in 20 years, after we briefly visit...

Like many home owners, hotels are starting to drown in debt. They have been enticing travelers all year with sweet deals: credits for in-house spas and restaurants, up to 50 percent off five-star rooms, even free nights. But all that discounting hasn't stopped occupancy from dropping an average of 10 percent. The result? Hotel loans have begun falling into delinquency faster than any other kind of commercial real estate debt. The rising defaults paint a grim picture... The oversupply means room rates should stay low for at least another year, good news for consumers but not so great for hotel...

It's a fair bet that few around the Thanksgiving dinner table talked much about Dubai last week, even as that Emirate quietly rocked world financial markets with the surprise prospect of the biggest government debt default since Argentina's back in 2001. Unfortunately, by the time Americans break out the holiday eggnog, we may all be a lot more familiar with the tiny city-state on the Persian Gulf. For if ever there was a poster-child for commercial real estate excess, it is Dubai -- land of indoor ski slopes, man-made islands and home to what will soon be the tallest skyscraper...

Since Obama is rather attached to describing everything he does as “unprecedented”, “I have achieved an unprecedented level of transparency”, “I played an unprecedented amount of golf this year” and “I just wasted an unprecedented amount of money”... in honor of the Liar in Chief, we can make “unprecedented” the word of the day. First up is Obama’s unprecedented deficit. The current real cost of ObamaCare is up to 2.5 Trillion dollars and rising. The Senate Republicans’ chart demonstrates that the total for all of these costs—based on CBO projections for the bill’s true first 10 years—is $2.5 trillion. And...

If Countries Like Dubai Begin To Fail, Who Will Save Them?Dubai's plea this week for debt deferment could just be the thin end of the wedge, fears Jeremy Warner. By Jeremy Warner Published: 6:46PM GMT 27 Nov 2009 As one financial crisis recedes, another may be beginning. In Dubai this week, we've had a foretaste of what may be to come as governments around the globe seek to grapple with the explosive growth of fiscal deficits and public debt. [snip] Yet the important question for markets today is not whether Dubai and Sheikh Mohammed can survive the sandstorm; in fact,...

When Bob Schieffer of NBC News asked the rhetorical question: "...has going a trillion dollars in hock to one country [China] made us more secure?", he was reminded of Everett Dirksen (Illinois Senator for nearly 20 years) and his famous comment: "...a billion here and a billion there and pretty soon you're talking about real money!". The current account deficit, at the present moment, is over $12 trillion and climbing. About half of that debt is owned by foreign countries, most notably China (about $800 billion) and India (about $300 billion), with the balance owned by Japan, Germany, and others....

Global investor confidence was given a severe jolt this week as the spectre of debt default in Dubai added to a growing catalogue of financial stresses in countries around the world. Dubai World , the Middle Eastern state’s flagship holding company, stunned creditors by announcing a restructuring and asking for a debt standstill. The move sent the cost of insuring against default in Dubai rocketing and triggered a sharp increase in broader risk aversion, with investors dumping equities, commodities and emerging market currencies in favour of “safer” assets such as government bonds, the dollar and the Japanese yen. The steep...

Dubai Friday: The Black Swan Rears Its Ugly Head by: TraderMark November 27, 2009 So much for a sleepy Thanksgiving week Friday... a tiny Black Swan called Dubai reared its ugly head. There has been some hand wringing in the UK papers about the debt situation in Greece (all of which ignored by giddy US traders who only know one trade anymore: "US dollar down, buy anything"), so Dubai was a bit out of left field. You might say Dubai what? Greece who? Small peanuts... but they key is contagion risk. In the late 90s a small economy (Thailand) caused...

We all know the economic planners want us to go right back to where we were, going in debt to buy things to make the economy look better for the next election. That's why they are keeping interest rates artificially low to get more and more people to borrow at low interest things they really couldn't afford at market interest rates. If you can't buy it with cash don't buy it. Also conservatives should live within their means. Your kids will be better off not having some consumer products now if we can get some more people that will preserve...