The budget problem that the country faces isn’t merely big. Posted on 04/07/2011 5:17:38 AM PDT by Kaslin
The budget problem that the country faces isn’t merely big.
It isn’t even really, really big.
It’s much bigger, and more dangerous, in actual fact, than politicians are willing to acknowledge.
Think of the biggest number you can.
Yeah. It’s bigger than that.
The Congressional Budget Office says that if we continue at our current rate spending, we’ll “chalk up nearly $7 trillion in red ink over the next 10 years,” according to Reuters.
Yawn. Think bigger than that.
Because that number’s not even close to the size of the real problem we have. $7 trillion is just a fraction of the liabilities of the government as it doesn’t take into account all the “off-the-book” items.
You might remember “off-the-book” accounting. It made a stunning debut in the Enron scandal.
Oh.
You thought politicians fixed that problem? They did. The “fix” doesn’t apply to government accounting; it just applies to the rest of us.
While experts usually peg the unfunded portion of pension liabilities at around $1 trillion, that number is based on reports from public pension managers who are anxious to downplay the size of the gap in pension liabilities.
If real-world accounting methods are used to gauge the pension gap- you know, the methods that private pension managers have to use to stay out of prison- the states owe about $3 trillion to pension funds that they don’t have.
But, hey, what $2 trillion more or less.
Because, still, our problem is much bigger than that.
The IMF yesterday called upon the U.S. government to “make explicit its guarantees of the housing-finance market and bring them fully onto the government balance sheet.”
The IMF has this silly notion that the government should stand by loans it’s guaranteed and add the bill to the balance sheet.
Forbes’ Bill Bonner reckons the “total bailout bill…may exceed $20 trillion.”
The IMF stated the obvious by saying that government-guaranteed, easy credit helped drive prices up and create a real estate bubble in the first place.
So far that’s $7, plus $3, plus $20 trillion.
But wait. It gets worse.
Bill Gross, the manager of the world’s largest mutual fund, did calculations that includes all the liabilities of the government he could think of- Social Security, Medicaid, Medicare- and figured a deficit of around $75 trillion more or less.
Gross “has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden,” he said, as reported in Bloomberg.
“This country appears to have an off- balance-sheet, unrecorded debt burden of close to 500 percent of GDP. We are out-Greeking the Greeks,” Gross concluded, referring to the debt crisis which has Greece teetering on bankruptcy.
Fellow investor Warren Buffet agrees with Gross. He’s told investors to stay away from U.S. government securities.
"If you ask me if the U.S. Dollar is going to hold its purchasing power fully at the level of 2011, 5 years, 10 years or 20 years from now, I would tell you it will not," Buffet said to overseas investors in March.
It’s not clear if we’re supposed to add the $20 trillion in mortgage obligations that the IMF is counting on to Gross’ estimate of $75 trillion.
$75 trillion is a number that would stagger even the late Carl Sagan.
Written out it's $75,000,000,000,000.00 if you are keeping box-score at home.
So, what’s a measly $2 or $3 trillion more or less, in a figure like that?
Just the pension problem, that’s what.
Our real problem, unfortunately, is much bigger than that.
AAAAAAAAAGGGGGGGHHHHHHHHH!!!!!!!!!!!!
Its because the rich aren’t paying their fair share.
The Congressional Budget Office says that if we continue at our current rate spending, we’ll “chalk up nearly $7 trillion in red ink over the next 10 years,” according to Reuters.
Yesterday, I saw some democrat saying the CBO said Ryans’ new budget would add to the deficit. At this point, is there ANYTHING that won’t add to the deficit?
Now’s the time to make those big purchases you’ve been waiting on. You won’t be able to afford it later.
Our politicians think a $25 billion cut will solve the problem and they can go home for spring recess.
Bump.
Some are.
As in those days, the American project is menaced by a survival-level threat. We face an enemy, lethal to liberty, and even more implacable than those America has defeated before. We cannot deter it; there is no countervailing danger we can pose. We cannot negotiate with it, any more than with an iceberg or a Great White. I refer, of course, to the debts our nation has amassed for itself over decades of indulgence. It is the new Red Menace, this time consisting of ink. We can debate its origins endlessly and search for villains on ideological grounds, but the reality is pure arithmetic. No enterprise, small or large, public or private, can remain self-governing, let alone successful, so deeply in hock to others as we are about to be.Gov. Mitch Daniels, CPAC speech
It will add to the deficit, we just go broke slower, thank goodness.
$25B????? Are you crazy?? That’s draconian!! Old people will have to eat dog food! Are you heartless?? [/s]
No wonder they are always so far off on their numbers. If we are running $1.6T deficits, we will run up $7T debt in less than 5 years. Do the math, CBO!
The country isn’t broke. We have plenty of money. Michael Moore said so, and I always believe him.
politician’s should be horse whipped, debt created in numbers only few can understand, what they have done to the citizens of this country just to get re elected. Our currency all but destroyed and they still cannot stop themselves.
We still have ink and paper don’t we? Well then he must be correct.
I found a govt website a short while back that listed the unfunded liabilities. I’ll see if I can find it but the number they had was around $100 Trillion.
It will add to the deficit, we just go broke slower, thank goodness.
I think it is time to pull the government back from the brink. They are fiscally suicidal right now (some say intentionally) but I do not want to go down with that ship.
At some point, the gravy train has to end. All kinds of shenanigans have and will be tried to keep it going, but even if they take every cent of every Fortune 500 company and every cent of anyone who makes over $250K a year and every last dime in our 401K’s, it would only buy us a year or two. And at that point, they will have killed the goose that lays the golden egg.
When the austerity comes and sheeple start to realize that politicians have known for decades that we were on an unsustainable path yet did nothing but demagogue, there will be anger like we haven’t seen in this country in a long time. And it will be fully justified.
Localities and states will be first because they can’t print money, but it will slowly trickle up to the federal level.
Thats an interesting video, thanks.
POINTS TO PONDER---POINT ONE Obama announced, "Several financial institutions are set to pay back $68B to taxpayers." While Obama's announcement was welcome news, it was assumed that any money or profit would be returned to the general funds from whence it had come in order to pay down the debt. The truth, however, is that the money returned by the banks is finding new life as part of what amounts to a Treasury Department-controlled slush fund.
POINT TWO We kept reading and hearing Congress rushed to approve the "$787 billion stimulus package" but very little of it was actually used. Supposedly $17B was sent to NJ when the incumbent Dem Gov was up for reelection----but it disappeared without a trace. The Dem lost, anywat, In a segment on nightly news, uber-Lobbyist Thomas Hale Boggs, Esq (Patton Boggs) said there was $2 TRILLION federal stimulus "waiting" to be distributed and clients from all over the US wanted a piece of it. Boggs is the son of former Cong Hale Boggs and sister of ABC-TV commentator Cokie Roberts.
POINT THREE Obama tapped VP Joe Biden to "allocate" the stimulus $$trillions. Biden's family was involved with Texas financier H. Allen Stanford, now charged with an $8 billion offshore fraud. The Bidens $50 million fund was jointly branded between the Bidens' Paradigm Global Advisors LLC and a Stanford Financial Group entity, and was known as the Paradigm Stanford Capital Management Core Alternative Fund, the WSJ said. Stanford-related companies marketed the fund to global investors....... Paradigm Global Advisors is owned through a holding company by the VP's son, Hunter, and Joe Biden's brother, James, according to the WSJ.
POINT FOUR How can this be legal? A jaw-dropping policy the White House released late on a Saturday afternoon 2009, hoping we would not notice. "Following OMB’s review, the Obama Administration has decided to make a number of changes to the rules that we think make them even tougher on special interests and more focused on merits-based decision making. First, we will expand the restriction on oral communications to cover all persons, not just federally registered lobbyists. For the first time, we will reach contacts not only by registered lobbyists but also by unregistered ones, as well as anyone else exerting influence on the process. We concluded this was necessary under the unique circumstances of the stimulus program."
POINT FIVE Obama, Soros and FDIC's Sheila Bair, among others, are engaged in a "War on Wall Street" to get complete control of our financial system.
ANALYSIS "Government bankers want to control the debt, And whoever controls the debt, controls everything. This is the essence of the banking industry, to make us all slaves to debt." (Umberto Calvi)
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REFERENCE Behind The Real Size of Obama's Wall Street Bailout (more like $14 trillion)
Mother Jones | Dec. 21, 2009 / FR Posted January 04, 2010 by E. Pluribus Unum
A guide to the abbreviations, acronyms, and obscure programs that make up the $14 trillion federal bailout of Wall Street.
The price tag for the Wall Street bailout is often put at $700 billion—the size of the Troubled Assets Relief Program. But TARP is just the best known program in an array of more than 30 overseen by Treasury Department and Federal Reserve that have paid out or put aside money to bail out financial firms and inject money into the markets. To get a sense of the size of the real $14 trillion bailout, see our chart here. Below, a guide to the pieces of the puzzle:
Treasury Department bailout programs (controlled by Rahm Emanuel)
Money Market Mutual Fund: In September 2008, the Treasury announced that it would insure the holdings of publicly offered money market mutual funds. According to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), these guarantees could have potentially cost the federal government more than $3 trillion [PDF].
Public-Private Investment Fund: This joint Treasury-Federal Reserve program bought toxic assets from banks and brokerages—as much as $5 billion of assets per firm. According to SIGTARP, the government's potential exposure from the PPIF is between $500 million and $1 trillion [PDF].
TARP: As part of the Troubled Asset Relief Program, the Treasury has made loans to or investments more than 750 banks and financial institutions. $650 billion has been paid out (not including HAMP; see below). As of December 21, 2009, $117.5 billion of that has been repaid. Government-sponsored enterprise (GSE) stock purchase: The Treasury has bought $200 million in preferred stock from Fannie Mae and another $200 million from Freddie Mac [PDF] to show that they "will remain viable entities critical to the functioning of the housing and mortgage markets." GSE mortgage-backed securities purchase: Under the Housing and Economic Recovery Act of 2008, the Treasury may buy mortgage-backed securities from Fannie Mae and Freddie Mac. According to SIGTARP, these purchases could cost as much as $314 billion [PDF].
--SNIP--- long read
Federal Reserve bailout programs
Commercial Paper Funding Facility: With the support from the Treasury, the Fed established the CPFF in October 2008 to increase the availability of short-term debt (commercial paper) funding. Up to $1.8 trillion [PDF] was earmarked for the program.
Mortgage-backed securities purchase: In 2009, the Fed earmarked up to $1.25 trillion to buy investments based on home loans.
Term Asset-Backed Securities Loan Facility: TALF provides financing to investors who are buying asset-backed securities. In February 2009, the Fed and Treasury announced an expansion of the program to generate up to $1 trillion in new lending.
Foreign Central Bank Currency Liquidity Swaps: The Fed has provided $755 billion [PDF] for currency liquidity swaps with foreign central banks.
--SNIP--- long read
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