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Bill Gross: This Deal Does Nothing, And We Still Have An "Unfathomable" $66 Trillion In Liabilities
TBI ^ | 8-2-2011 | Joe Weisenthal

Posted on 08/02/2011 6:35:27 AM PDT by blam

Bill Gross: This Deal Does Nothing, And We Still Have An "Unfathomable" $66 Trillion In Liabilities To Deal With

Joe Weisenthal
Aug. 2, 2011, 7:42 AM

Bill Gross's big bet against US Treasuries didn't work out well (latest yield on the 10-year is 2.70%), but nevertheless, as a gigantic bond investor his opinion on debt matters always matters... and obviously he's pretty underwhelmed by the latest "deal."

Here's what scares him the most: $66 trillion in future liabilities:

So, how might this be rectified?

Gross sees four options:

* Balance the budget/growth – The current Congressional compromise is but one small step for fiscal solvency. There is no giant leap for mankind anywhere on the horizon. Trillions of further spending cuts, and yes trillions of tax hikes, are necessary to stabilize our “official” debt/GDP ratio of 90% or so. One important detail to keep in mind: projected deficits in 2012 and 2013 of 7-8% of GDP rely on OMB growth estimates of 3%+ in the next few years. Recent trends give pause to these estimates as does PIMCO’s New Normal, which believes 2% not 3% is closer to reality. If so, deficits move right back up to near-double-digit percentages of GDP. Likewise, should interest rates ever rise from current 2% average levels, a 100 basis point increase raises the deficit by 1% and erases any hoped for gains. Sisyphus would be familiar with this seemingly unsolvable dilemma.

* Unexpected inflation – While markets are global these days, figures sometimes lie and policymakers often figure. Focusing investors’ attention on statistics emphasizing “core” or “chain-linked” methodologies can entice investors to stay home, or in the case of foreign nations, to “invest American.” Central bankers, not just in the U.S., but the U.K.

(snip)

(Excerpt) Read more at businessinsider.com ...


TOPICS: Government; News/Current Events; Politics/Elections
KEYWORDS: budget; debt; economy; liabilities
WAD (We Are Doomed)

How much is a trillion:

* A million seconds is almost 12 days.

* A billion seconds is 32 years.

* A trillion seconds is 32,000 years.

1 posted on 08/02/2011 6:35:31 AM PDT by blam
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To: blam
This caught my eye:

"Few Americans are aware that the dollar’s recent 12-month depreciation of over 15% is an explicit tax on their standard of living."

2 posted on 08/02/2011 6:39:53 AM PDT by blam
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To: blam
* Balance the budget/growth – The current Congressional compromise is but one small step for fiscal solvency. There is no giant leap for mankind anywhere on the horizon. Trillions of further spending cuts, and yes trillions of tax hikes, are necessary to stabilize our “official” debt/GDP ratio of 90% or so.

Maybe we ought to reduce taxes to increase revenue.

3 posted on 08/02/2011 6:40:55 AM PDT by kabar
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To: blam
I was looking at the actual bill and found the following increases enumerated in it. I also found the debt increase for this year, alone, can be $1.8 trillion. The following table shows the ADDITIONAL spending authorized in the bill for each year. It add 5% more every year.

In $ Trillions 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Total $1,936 $2,107 $2,319 $2,570 $2,668 $2,854 $2,899 $2,945 $2,992 $3,039
Social Security $623 $751 $924 $1,123 $1,166 $1,309 $1,309 $1,309 $1,309 $1,309
Health and Human Services $270 $299 $329 $361 $395 $414 $434 $454 $475 $496
Discretionary Spending $1,043 $1,057 $1,066 $1,086 $1,107 $1,131 $1,156 $1,182 $1,208 $1,234

4 posted on 08/02/2011 6:42:21 AM PDT by CodeToad (Islam needs to be banned in the US and treated as a criminal enterprise.)
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To: blam
First of all this guy can't add. Why did he drop the $14T of Obama’s debt? FERS, the federal employees retirement system, is the largest unfunded retirement system in the world, a few more trillion. Some add it up to $136T. Is our country worth that much?
5 posted on 08/02/2011 6:42:36 AM PDT by mountainlion (I am voting for Sarah after getting screwed again by the DC Thugs.)
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To: blam
HUSSMAN: Check Out These 4 Early Warning Signs Of Recession
6 posted on 08/02/2011 6:50:09 AM PDT by blam
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To: blam

These “unfunded liabilities” are not debt.


7 posted on 08/02/2011 6:51:02 AM PDT by oblomov
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To: blam

The DJIA opens down 76.

8 posted on 08/02/2011 6:51:47 AM PDT by blam
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To: blam

9 posted on 08/02/2011 6:53:02 AM PDT by blam
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To: blam

The table above points out something that few ever bother to mention: the biggest future liability is not SS or Medicare, but it is Medicaid. Medicaid $35 trillion, Medicare $23 trillion and SS $8 trillion.

We hear the moaning and accusing and hand-wringing about what is destroying the nation in the opposite order of reality. The thing ruining our financial present and future are the mushrooming welfare type programs that now total $950 billion per year, with Medicaid being the biggest part.


10 posted on 08/02/2011 6:54:31 AM PDT by Will88
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To: blam

bookmark


11 posted on 08/02/2011 6:57:26 AM PDT by corlorde (New Hampshire)
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To: blam

When boner and cantor passed tarp, I told the little woman that in five years a twelve oz. Coke would cost five dollars . I will not miss it by much.


12 posted on 08/02/2011 7:15:33 AM PDT by org.whodat (What does the Republican party stand for////??? absolutely nothing.)
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To: blam

That compound interest is growing by leaps and bounds.


13 posted on 08/02/2011 7:19:45 AM PDT by freekitty (Give me back my conservative vote; then find me a real conservative to vote for)
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To: freekitty
What is wrong with him?

He doesn't read the New York Times for Financial Advise.

14 posted on 08/02/2011 7:21:33 AM PDT by scooby321
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To: blam
Hey, Boehner got 98% of what he wanted. What did we get?

The bill. Thank you, Mr. Speaker.

15 posted on 08/02/2011 7:40:33 AM PDT by Jabba the Nutt (.Are they stupid, malicious or evil?)
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To: scooby321

LOL Apparently he does. However, the real truth is we are 52 trillion in debt with compounded interest growing by leaps and bounds daily. That is what is strangling us.

These people should be in prison.


16 posted on 08/02/2011 7:41:17 AM PDT by freekitty (Give me back my conservative vote; then find me a real conservative to vote for)
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To: blam

Ass clowns Boner and Cantor don’t care.

And they are going to raise our taxes by Trillions.

They are scum that need to be removed if the country is to have any chance of survival.


17 posted on 08/02/2011 7:45:11 AM PDT by LowTaxesEqualsProsperity
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To: blam

Lots of folks have opinions on the budget/debt deal, but Bill Gross’ opinion counts. As the director of the world’s largest fixed income investment fund, he literally puts big money where his mouth is. Lately, Gross has pulled funds from the US Treasury market.

One may disagree with Gross’ opinions, but smart money listens well.


18 posted on 08/02/2011 7:58:07 AM PDT by Skepolitic
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To: mountainlion
There are three certainties in life....

Death, Taxes, and Bill Gross will talk down the economy.

He might have a point, this time. But, it's just because of the blind squirrel theory, rather than any penetrating insight.

19 posted on 08/02/2011 8:12:23 AM PDT by wbill
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To: blam
Perhaps Gross's problem is that he fails to realie that the unfunded promises in SS and Medicare aren't liabilities. Congress can make the go away with the stroke of a pen by simply changing the benefit formulas. It's done so before, and it will do so again.
20 posted on 08/02/2011 1:20:17 PM PDT by curiosity
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