Posted on 01/10/2009 8:13:46 AM PST by BGHater
How much is $1.186 trillion or $1,186,000,000,000, written out the long way?
Its more than the inflation-adjusted cost of the Vietnam ($698 billion) and Korean Wars ($454 billion).
Its more than the Louisiana Purchase ($217 billion) and the Savings and Loan bailouts ($256 billion).
Its greater than the 2007 Gross Domestic Product of all but 13 other countries in the world.
Its equal to $3,881 for every man, woman, and child in the U.S.
It could buy 189,760,000,000 bushels of wheat at recent prices. 26,893,424,036 barrels of oil. Or 1,581,333,333,333 cans of Diet Coke at my trusty vending machine in the break room.
Why do I bring this up? Because that $1.186 trillion figure is the projected 2009 deficit, according to the latest report from the Congressional Budget Office (CBO).
And it is downright scary.
These Numbers Are Big Really Big!
That $1.186 trillion is such a large number so out of control that its hard for most of us mere mortals to process it. Suffice it to say Its the biggest flood of budgetary red ink any country has ever seen in world history. And it makes last years $455 billion deficit look like chump change.
Its not just the absolute number, either
The projected 2009 figure is equal to about 8.3% of U.S. GDP. That tops the post-World War II record of 6% set in 1983.
Still not worried?
Then get a load of this:
The CBO estimate doesnt even include any potential stimulus package from Congress and the Obama administration.
We havent gotten the final details of the stimulus plan. But it could cost anywhere from $675 billion to $1 trillion. That means the ultimate 2009 deficit could end up being larger by 60% 70% 80% or more!
Is the red ink a short-term problem, one that will soon go away? Not according to the CBO. Scroll through the agencys report The Budget and Economic Outlook: Fiscal Years 2009 to 2019″ (available at: http://www.cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf) and youll come to a nifty table on page 23.
It projects red ink as far as the eye can see: An ADDITIONAL $3.135 trillion from 2010 through 2019.
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Source: CBO
Two possibilities could bail us out of this black hole of debt:
Both are highly unlikely
And if neither scenario comes about, this countrys finances are going to be blown to hell for years and years to come.
Consequence-Free Borrowing Forever?
Not Bloody Likely
Now if youre the type of person who believes consumers, corporations, or even sovereign nations can borrow money they dont have and spend far beyond their means for all eternity, then you can stop reading right now.
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The amount of money Obama will need in 2009 scares the bejesus out of me. |
Theres absolutely nothing to worry about.
But if youre like me, and you think numbers like $1.186 trillion are so far off the charts that they HAVE to have consequences, then you should be downright scared!
The government is already selling record amounts of debt at auction, day after day, week after week.
This week alone, Treasury sold $8 billion in 10-year TIPS and $24 billion in four-week bills on Tuesday $30 billion in 3-year notes and $35 billion in 70-day cash management bills on Wednesday and $16 billion of nominal 10-year notes on Thursday. And theres no end in sight.
Total net issuance could approach a mind-boggling $2 trillion by years end!
At some point, investors are going to balk at all this issuance. Theyre going to choke on the massive amount of U.S. paper spilling out of Washington. Theyll demand higher yields to buy our debt, driving bond prices down and interest rates up, just as I warned in my December 5, Money and Markets column, The Biggest Bubble of All: Long-term Treasuries?.
Heck, the day of reckoning could already be upon us
Thirty-year Treasuries plunged more than 3 points on New Years Eve another 2 30/32 on January 2 a whopping 5 16/32 on January 5 and another 1 28/32 on January 7. Theyve lost almost 13 points in a virtual straight line, while yields on 10-year notes shot up from 2.25% to 2.5%.
My advice remains the same: Short-term Treasuries are fine as a place to park your keep safe money. But stay the heck away from long-term U.S. debt.
ping.
Unless you like the idea of being paid back in Monopoly money.
If it isn’t expressed a percentage of the GDP at the time, then its a fake statistic.
as is most of the news lately...
1000 seconds is a coffee break
1.000,000 [a million]seconds is a vacation.
1000,000,000 [a billion] seconds is a career,
1,000,000,000,000 [a trillion] seconds is 310 centuries
Odummer thinks this is Kenya and wants to add another trillion to that in reparations for his voters.
Virtual budget dust compared to what a couple of Obama Clinton DoD appointments are used to..
BTW how much has been spent so far on a war we truly lost? The War on Poverty.
That would be 1.186 million millionaires and if they were lined up shoulder to shoulder (2 ft per person) the line of millionaires would extend 450 miles.
ROFL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1.000,000 [a million]seconds is a vacation.
1000,000,000 [a billion] seconds is a career,
1,000,000,000,000 [a trillion] seconds is 310 centuries
I committed this to memory and have told it to several people over the last few weeks. I always have to add "I know -- I didn't believe it either, but I got out my calculator and did the math. It's true."
It's a great way to visualize a trillion. Thanks!
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