Posted on 02/23/2010 11:06:33 PM PST by neverdem
ping
I believe that the current cast of characters believes the world will keep buying our debt because of the ‘symbiotic’ relationship we have with them. They believe our debt holders won’t make a run on our bank. Basically, they are betting that the rest of the world will happily buy all the debt we are willing to issue. How this turns out? I don’t know.
I can tell you....
It ain't going to be pretty, no matter what!
Walter Russell Mead: Do Soldiers Drink Tea?
An Exceptional Debate: The Obama administration’s assault on American identity
Mark Steyn: Celebrate Diversity Unto Death
White House Accused of Federal Crime in Specter, Bennet Races
Some noteworthy articles about politics, foreign or military affairs, IMHO, FReepmail me if you want on or off my list.
My vote is for stopping the QE and getting the pain over with by, say 2012.
Its purpose was two-fold: (a) make excess liquidity available to fund short-term gov't expenditures ie 'stimulus'; and (b) provide a hard ceiling on interest rates for treasury & agency debt.
QE could never hope to actually 'inflate away the debt' simply because the $USD is linked to a hard oil peg. That is why all Fed printing conducted to date has been through extremely convoluted channels. If the true extent of the Fed's illegal activities were ever discovered, we'd see a collapse in the value of the $USD.
As a short-term ploy ie a 'hail Mary' it was deemed worth the risk. But as a long-term policy prescription, forget it. So when push comes to shove, Ben is going to have to terminate QE.
Like Norma Desmond, the good ole USA is nearing its close-up known as the "Minsky moment".
ping
That's a tall order, but Øbama surpassed that record right out of the chute.
Both the Federal government and our state governments are going to be forced to deal with reality sooner than later and start cutting spending across the board. They have no choice and the longer they wait the more extreme the consequences.
Yesterday an indirect buyer bought the entire 6 billion 2yr auction at zero percent interest. Indirect may well = the government buying its own debt. This is an extreme example but the USA has had a significant number of failed and semi-failed bond auctions for the past 6 months. Sometimes the primary dealers buy them (the banks) and they are then sold back to the Fed. There have been other quirky gimmicks.
Buying your own debt is like writing checks to yourself, depositing them, and then claiming you have more money in the bank. It is a hidden form of QE, It is the same as printing money. It will destroy the dollar (think rising gasoline prices).
The real reason for the health care package is not health care (which does not kick in until 2013... 2014 ...2015... never) but is a tax increase which does start 2010. They need to find some real money somewhere. Hence the suggestion is floated of turning 401Ks and IRAs into an annuity (repackaged Social Security which is broke). The idea is to take the money in your 401K and give you a government IOU (promise) of payment when you retire. They set the figure and the amount, with a devalued dollar, they come out ahead. You, of course, get riped off.
They are broke and will not stop spending. FDIC is broke, Social Security is broke, Medicare etc. is broke.
The only thing is Europe, China Japan are in worse shape. AIG may, by the way, have also insured Greek Debt, and others. Guess who will get the bill for that? (Who bailed them out before?) The bad mortgage debt of Freddy and Fanny has also been passed on to the Treasury.
This is going to blow up, globally! The question is not if but when.
Ping
“the current cast of characters believes the world will keep buying our debt”
Which, of course, is ridiculous.
Look for war.
The whole point of this piece is "the party is already over."
America's choices now are reduced to "do we want to be shot or hanged?"
The fed stops printing money to finance government debt and the economy and federal government pretty much come to a screeching halt. If the Fed keeps printing money to finance the debt, roaring inflation destroys the value of the U.S. Dollar.
Sobering read this morning... Of course, this will all be “Bush’s fault”. “It was like that when I got here!”
How’s that hope & change working out?
Since there is,only one solution to the problem, inflation, massive inflation, the printing of money will continue.
QE is the only way out
A Global Economic Meltdown, a.k.a., “The Great Depression II”
And the pity of it is that Obama could have avoided it. Yes, granted we were in a Recession, but Obama’s decisions made a Second Great Depression inevitable.
I think it was done with just that goal in mind: Wreck the economy and make everyone dependant on the government.
I wonder if he really thought a civil war wouldn’t break out? A revolutionary movement that would hold him guilty of treason?
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