Posted on 07/06/2009 5:58:12 AM PDT by FromLori
The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank
In a 2003 paper, Thomas Laubach, the US Federal Reserve’s senior economist, calculated the impact on long-term interest rates of rising fiscal deficits and soaring national debt. Applying his assumptions to the recent spike in the US fiscal deficit and national debt, long-term interests rates will double from their current 3.5pc. The impact would be devastating by making it punitively expensive to finance national borrowings and leading to what Tim Congdon, founder of Lombard Street Research, called a “debt explosion”. Mr Laubach’s study has implications for the UK, too, as public debt is soaring. A US crisis would have implications for the rest of the world, in any case
Using historical examples for his paper, New Evidence on the Interest Rate Effects of Budget Deficits and Debt, Mr Laubach came to the conclusion that “a percentage point increase in the projected deficit-to-GDP ratio raises the 10-year bond rate expected to prevail five years into the future by 20 to 40 basis points, a typical estimate is about 25 basis points”.
The US deficit has blown out from 3pc to 13.5pc in the past year but long-term rates are largely unchanged. Assuming Mr Laubach’s “typical estimate”, long-term rates have to climb 2.5 percentage points.
(Excerpt) Read more at telegraph.co.uk ...
We ought to Nationalize the Federal Reserve and cancel our huge debt to it; problem solved.
Dems and Pubs alike are responsible for this madness.
Instead of fishing from the same ol pond....let's try putting our clout behind a set of principals rather than a party or a person.
True, we need a leader with name recognition to step up and lead us into battle, but I'm not seeing anyone....least wise, not within the current two party system.
So Ron Paul is the only outside-the-parties/name recognition guy left then?
Remember 14% mortgages and 19% prime rates? 15% money market accounts?
Jimmy Carter II.
Ron Paul isn’t the guy. I supported him out of a lack of options last time, but he is to old, uncharismatic, and a Libertarian will never win an election in America, especially in the midst of a recession. We need a younger Conservative populist that can unite the middle and working class like Reagan did. You cannot win an election without the middle and working class, or the “white workers” as the liberal media callously calls them.
Ron Paul isn’t the guy. I supported him out of a lack of options last time, but he is to old, uncharismatic, and a Libertarian will never win an election in America, especially in the midst of a recession. We need a younger Conservative populist that can unite the middle and working class like Reagan did. You cannot win an election without the middle and working class
He's a republican isn't he?
Who will be the Ronald Reagan II though?
I sure do...I bought a house in 1980 at 13% interest.
Indeed. I was just responding to Sboy's comment that it had to be someone with name recognition outside the parties.
For a politician, other than Paul, there isn't someone that fits that description.
BTW, Reagan didn't fit that description either.
Unless you get someone from business (oops...CEOs and entreprenuers are on the outs right now) or you get someone from show-business, (but double oops...they almost all hate America) then there's no such thing as a conservative with name recognition outside the two parties who fits the bill!
I'll take it!
If interest rates double, that means inflation doubles, at least.
And they never mention how much of the Federal Budget is spent just to simply make the interest payments.
The American people don’t want a Ronald Reagan or a Ron Paul. They have made it clear that they want someone to take care of them. The writing was on the wall when the pony-tailed guy asked the presidential candidates something about the government being “daddy”, and instead of setting him straight, Bush I treated it as a serious question. That is when I knew that most Americans had decided they no longer wanted to be an independent people.
If it worked that way but nationalizing them socializes the debt witness Iceland and they are bankrupt and having to pay back all the debt even to foreign depositors.
He's a pub in name only. He does not toe the party(s) line(s) (see his Nay vote against the Iranian people support resolution.)
I was just responding to Sboy's comment that it had to be someone with name recognition outside the parties.
For a politician, other than Paul, there isn't someone that fits that description.
BTW, Reagan didn't fit that description either.
Unless you get someone from business (oops...CEOs and entreprenuers are on the outs right now) or you get someone from show-business, (but double oops...they almost all hate America) then there's no such thing as a conservative with name recognition outside the two parties who fits the bill!
I disagree, Reagan won the union vote(not the bosses) and rural voters and wouldn’t have won without them. We need someone to reach out to those voters. A Blue blood easterner like Steele or Romney that supports bank bailouts, gun control, free trade, and amnesty won’t win.
I’m not really arguing with you. I see Ron Paul as 90% right and 10% nuts. It’s that ten percent that always stops me from fully supporting him.
Someone I worked with in 1980 bought a house on an 18% mortgage; her and her husband, two paychecks, no kids to be able to afford it.
If I recall correctly, the prime rate hit 22% at one point.
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