Posted on 03/25/2009 8:05:46 PM PDT by Unam Sanctam
The Obama administration has embarked on a spree of borrowing that eclipses anything seen in world history. The Democratic Congress is nervous, but seems willing to go along. But this borrowing is not occurring in a vacuum; many other governments are also floating debt. So, who's going to lend the trillions of dollars that governments need to disguise the fact that their ideas are bankrupt? Maybe nobody.
Yesterday, the British government offered its "gilt-edged bonds" for sale. For the first time in over a decade, the auction failed as not enough buyers appeared to cover the bonds that were offered:
"Fears are growing on the financial markets that Britain may not be able to repay the billions of pounds in debt it is amassing to rescue banks and revive the economy. The Government admitted yesterday that, for the first time since 1995, investors had been unwilling to buy the full complement of its so-called gilt-edged bonds at one of its official auctions."
Britain's failure roiled Wall Street, as Noel Sheppard reports:
"Wall Street got rocked Tuesday by a "debt bomb" economists have worried about for decades.
"Hours after the United Kingdom failed to attract enough buyers for its auction of $2.5 billion of 40-year bonds, the United States Treasury had similar difficulties with its sale of $34 billion worth of five-year notes and was forced to raise their interest rate to a much higher yield than had been anticipated.
"Such problematic debt offerings came on the heels of Germany having two failed auctions of its bonds already this year."
The amount of debt the Obama administration intends to float dwarfs any historical experience. More from Bloomberg:
"Treasury 10-year note yields rose the most in more than two weeks after an auction of $34 billion in five-year notes drew a higher-than-forecast yield, spurring concern record sales of U.S. debt are overwhelming demand. ...
"President Barack Obama's government is selling record amounts of debt to revive economic growth, service deficits, and cushion the failures in the financial system. Debt sales will almost triple this year to a record $2.5 trillion, according to estimates from Goldman Sachs Group Inc."
What most Americans may not yet understand is that the vast majority of the debt that the Obama administration intends to incur, not just this year but for years to come--assuming it can find the requisite creditors--has nothing to do with the present financial crisis. Rather, Obama intends to finance a grotesquely swollen federal government, with socialized medicine just one item on the agenda, by borrowing the money. How to pay it back? Hey, not our problem--Obama will be out of office by 2017 at the latest, so paying off trillions in needless debt will be up to our children.
Thanks for the good info, Unam...
Every time they have to raise the yield in order to sell the notes the cost of the debt goes up. We just keep digging a deeper hole. The first thing to do is stop digging.
I don't think we have an asylum anymore. The lunatics are now running loose, and running everything...
Here's the bottom line of all bottom lines.
The "full faith and credit" of the United States government is NOT infinite, nor are tax dollars monopoly money.
Politicians are running us into a brick wall at warp 10.
We've got a major catastrophe on the way and right quick too.
HELLO! They are going to PRINT it, not Borrow it!
Inflation is here sooner than the “experts” predicted.
It's financial Kama Kazi, intentionally destroying our banking system in order to create chaos.
This is the devaluation of our wealth and savings resources, so that they can confiscate our way of life.
In Wall Street terms, it's a hostile takeover.
.
if they print money,it just comes out of the value of existing dollars
Yup. And investors will stop lending even faster.
China has been a big buyer in the past. They did this to keep us free to buy their exports. However, exports are declining rapidly and that might be part of the reason it's getting harder to sell the treasuries. China might be pulling back.
It's a house of cards, and the Democrats and Republicans are so narrowly focused on keeping the economy artificially inflated that they miss the big picture: The phony economy is about run out. We'll either have to print the money or pay more in interest, something we can't do long term.
I don't predict doomsday because we have a knack for fixing things at the last moment, but what scares me more is that we could conceivably exist in a flat, ugly, half-dead economy for years, just as Japan did. Nothing says we couldn't have our standard of living chopped, unemployment at 18%, inflation at 40% and persist that way for years.
There’s always a third option, they can raise taxes sky-high.
Commissar Obama is the BERNIE MADOFF of Presidents!!! Chief controller of his great PONZI scheme....we need to get this across to the everyday guy....he’s WORSE than MADOFF!!! His “investments” are a PONZI scheme that will pay back NOTHING!!!
We have an automagic debt increaser. If we do nothing to pay down the debt, even if we took on no new debt, we accumulate an additional half a trillion+ dollars every single year.
And I don't hear a single voice proclaiming the need to begin paying down the debt. I hear 300 million voices proclaiming, 'SPEND, SPEND, SPEND!!!!'
I'm calling doomsday, even if you aren't.
Well, maybe that’s not accurate. But I do hear 535+ voices yelling that.
Really, really sky high because they’ll have to make up for the taxes that the 18% unemployed won’t be paying too.
The only way to keep this game going is through inflation but they should be careful what they wish for. An economy that is sustained by borrowing and spending can’t survive when the borrowers can’t afford to borrow anymore. This is where the FED steps in to flood the market with just enough money to slowly ease the borrowers debt burden through inflation. Unfortunately there’s no magic number or formula to tell the FED how much is enough. If we look to the past as a reference we will see that this road ends in hyper inflation and disaster every time it’s taken.
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