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Peter1469
05-22-2013, 05:26 PM
A reminder that the US debt is at unsustainable levels. Once interest rates rise, it will be a very big deal.

http://online.wsj.com/article/SB10001424127887324787004578494864042754582.html?m od=WSJ_Opinion_LEADTop

President Obama has raised the national debt by nearly $6.2 trillion, the equivalent of $78,385 per family of four. It is true that projected deficits recently have been reduced. April tax filings increased 28% from 2012, but much of this was thanks to a one-time rush at the end of 2012 to report income before rates rose in January. The second largest reduction in the deficit came from Fannie Mae (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=FNMA) FNMA +7.02% (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=FNMA?mod=inlineTicker) taking a one-time accounting adjustment.

But unless the economy soars, or a significant budget agreement is reached, the most lasting legacy of the Obama presidency will be a $10 trillion increase in the national debt—a burden that bodes ill for the nation's future.
Once the Federal Reserve's easy-money policy comes to an end and interest rates return to their post-World War II norms, the cost of servicing this debt will explode. The cost will increase further as the Fed sells down its $1.85 trillion holding of government bonds, and the Social Security system runs deeper and deeper into the red. The Treasury will then have to pay interest on an ever-growing percentage of the debt.

Cigar
05-22-2013, 05:30 PM
Where Are The Deficit Celebrations?

For three years and more Beltway politics has been all about the deficit. Urgent action was needed to avert crisis. A Grand Bargain absolutely had to be reached...So where are the celebrations now that the debt issue looks, if not solved, at least greatly mitigated? And it’s not just recovering revenues: health costs, the biggest driver of long-run spending, have slowed dramatically.

What we’re getting from the deficit scolds, however, are at best grudging admissions that things may look a bit less dire — if not expressions of regret that the public seems insufficiently alarmed.

Jamelle Bouie gets at a large part of it by noting what was obvious all along: for many deficit scolds, it was never really about the debt, it was about using deficits as a way to attack the social safety net. Deficits may have come down, but not the way they were supposed to — hey, we were supposed to be kicking 65 and 66 year-olds off Medicare, not doing something so goody-goody as managing costs better.

There is, however, a secondary factor: think about the personal career incentives of the professional deficit scolds. You’re Bowles/Simpson, with a lucrative and ego-satisfying business of going around the country delivering ominous talks about The Deficit; you’re an employee of one of the many Pete Peterson front groups; and now, all of a sudden, the deficit is receding, and you had nothing to do with it. It’s a disaster!

- more -

http://krugman.blogs.nytimes.com/2013/05/20/where-are-the-deficit-celebrations/

Peter1469
05-22-2013, 05:33 PM
Krugman is a political hack in his NY Times article and blog, not an economist.

He has yet to address what will happen if interest rates rise to their historical average.

Cigar
05-22-2013, 05:37 PM
Krugman is a political hack in his NY Times article and blog, not an economist.

He has yet to address what will happen if interest rates rise to their historical average.

Ok so let's change the talking points to "if" interest rates rise to their historical average.

BTW ... how are "your" personal interest rates doing in the real world you are living in "today"?

zelmo1234
05-22-2013, 05:38 PM
I don't have interest rates. I buy munies, erealestate, and mutuals and I have No debt! So I guess they are great.

Cigar
05-22-2013, 05:42 PM
I don't have interest rates. I buy munies, erealestate, and mutuals and I have No debt! So I guess they are great.

Well I have 5 properties ... and I ain't paying cash for any of them ... with my money. :)

And if you own a business you care about interest rates.

Peter1469
05-22-2013, 05:48 PM
Ok so let's change the talking points to "if" interest rates rise to their historical average.

BTW ... how are "your" personal interest rates doing in the real world you are living in "today"?

The only interest that I pay is on my mortgage. It is low: 3.25%. But I have a lot of interest bearing accounts that are low too.....

Interest rates will rise once the Fed ends its QE programs. And it will really rise if the USD loses its status as the reserve currency.

Cigar
05-22-2013, 05:50 PM
The only interest that I pay is on my mortgage. It is low: 3.25%. But I have a lot of interest bearing accounts that are low too.....

Interest rates will rise once the Fed ends its QE programs. And it will really rise if the USD loses its status as the reserve currency.

I think you can knock a point off the 3.25% :)

Peter1469
05-22-2013, 05:55 PM
I think you can knock a point off the 3.25% :)

Not in this area. That was the best that I could do.

Now if I turned it into a 15 year note..., then I could.

Cigar
05-22-2013, 06:18 PM
BTW ... :grin:

AT THE CLOSING BELL ON 22 May 2013

Dow Jones 15,307.17 -80.41 (-0.52%)
S&P 500 1,655.35 -13.81 (-0.83%)
Nasdaq 3,463.30 -38.82 (-1.11%)


10 Year 2.04% +0.11 (5.70%)
30 Year 3.22% +0.09 (2.88%)

jillian
05-22-2013, 06:55 PM
BTW ... :grin:

AT THE CLOSING BELL ON 22 May 2013

Dow Jones 15,307.17 -80.41 (-0.52%)
S&P 500 1,655.35 -13.81 (-0.83%)
Nasdaq 3,463.30 -38.82 (-1.11%)


10 Year 2.04% +0.11 (5.70%)
30 Year 3.22% +0.09 (2.88%)

doesn't mean that the rate is available to you. as he said, to get the lower rate, he'd have to compress the pay off.

zelmo1234
05-22-2013, 08:53 PM
Well I have 5 properties ... and I ain't paying cash for any of them ... with my money. :)

And if you own a business you care about interest rates.

No if you own a business and you borrow money you care about interest rates! I happend to be in the rental business and sell most of my homes on contract! So if interest goes up so will the rent and the interest rate that I charge!

I own hundreds of properties and I used my money to pay for each and every one of them! I have NO payments!

I feel sorry for those that do, we are not out of the water yet!

Chris
05-22-2013, 09:04 PM
Krugman: "So where are the celebrations now that the debt issue looks, if not solved"

OP: "It is true that projected deficits recently have been reduced."

Krugman is a neoKeynesian for whom projections are real data, the way model projections of global warming were for Al Gore.

Germanicus
05-23-2013, 04:14 AM
America cant continue to raise the Debt Ceiling. Ratings Agencies cant be impressed by the lack of leadership and compromise in Washington. America must find a way to live within its means.

The military is the obvious place to make deep cuts. America can no longer afford to 'police' the world for the corporatists.

Deep deep military cuts.

zelmo1234
05-23-2013, 04:20 AM
America cant continue to raise the Debt Ceiling. Ratings Agencies cant be impressed by the lack of leadership and compromise in Washington. America must find a way to live within its means.

The military is the obvious place to make deep cuts. America can no longer afford to 'police' the world for the corporatists.

Deep deep military cuts.

I agree that there are huge savings to be made in the military. It would be important for you for us to have a small military, but I think that we have about the right size, we just run it the most expensive way possible

But the entitlement programs have to be brought under control and slowly moved to a wealth producing program instead of a promise of poverty!

Also those able bodied people that refuse to work and play the system are going to have to have the system taken from them!

You are correct in seeing that Amerca is a t a cross roads, but the debt crisis is not on your side! It is gong to hit about 10 years to soon and send the USA back into the raw capitalism of the past to produce the money needed to pay of the debt!

Chris
05-23-2013, 06:18 AM
America cant continue to raise the Debt Ceiling. Ratings Agencies cant be impressed by the lack of leadership and compromise in Washington. America must find a way to live within its means.

The military is the obvious place to make deep cuts. America can no longer afford to 'police' the world for the corporatists.

Deep deep military cuts.

As the US moves from social democracy toward socialism it will continue this game. A socialist state knows no bounds. One reason the communism collapsed in the Soviet Union.

The solution is cuts across the board.