Posted on 06/28/2015 3:38:59 PM PDT by Hojczyk
Russia, China... stuff that’s cheap...
The Clinton Administration's much ballyhooed "surplus" was basically attributable to two things. One was the accounting trick of essentially applying SS funds into the general budget.
The other was selling a higher proportion of US debt in short term bonds which carried lower interest rates, thus lowering the cost of servicing the debt. Thereby making the "accounts payable" of the US government lower.
Although longer term bonds carry higher interest rates, they have the distinct advantage of fixing borrowing costs for a longer period, providing some protection from rising interest rates and enable to plan for a more stable budget over the longer term.
The Clinton approach meant that as soon as interest rates went up the illusion of a surplus would disappear. Hopefully when someone else was in office.
Wait, Greece declares bankruptcy, and gets to stay in the Euro? Jim is nuts. Italy, Ireland, Portugal and Spain would immediately follow Greece. What happens to the Euro then?
The only way to save the Euro, if that’s what they want, is to kick Greece out. The pain the Greeks will experience over the next couple years might scare Italy, Portugal, Spain and Ireland into getting their economic house in order, rather than follow Greece down the toilet.
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