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#2764257 - 02/21/12 10:57 PM As US Debt To GDP Passes 101%
FLTENNHUNTER1
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Registered: 11/21/07
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The Global Debt Ponzi Enters Its Final Stages

It took just 21 days to increase 1 full percentage point. We will be at 110% of debt to GDP in no time at all.

http://www.zerohedge.com/news/us-debt-gdp-passes-101-global-debt-ponzi-enters-its-final-stages


Today, without much fanfare, US debt to GDP hit 101% with the latest issuance of $32 billion in 2 Year Bonds. If the moment when this ratio went from double to triple digits is still fresh in readers minds, is because it is: total debt hit and surpassed the most recently revised Q4 GDP on January 30, or just three weeks ago. Said otherwise, it has taken the US 21 days to add a full percentage point to this most critical of debt sustainability ratios: but fear not, with just under $1 trillion in new debt issuance on deck in the next 9 months, we will be at 110% in no time. Still, this trend made us curious to see who has been buying (and selling) US debt over the past year. The results are somewhat surprising. As the chart below, which highlights some of the biggest and most notable holders of US paper, shows, in the period December 31, 2010 to December 31, 2011, there have been two very distinct shifts: those who are going all in on the ponzi, and those who are gradually shifting away from the greenback, and just as quietly, and without much fanfare of their own, reinvesting their trade surplus in something distinctly other than US paper. The latter two: China and Russia, as we have noted in the past. Yet these are more than offset by... well, we'll let the readers look at the chart below based on TIC data and figure out it.

That the Fed is now actively monetizing US debt is beyond dispute (although some semantic holdouts remain - we are quite happy for them). Alas, with China, which has traditionally been the biggest buyer of US paper, no longer buying Treasurys, we are confident that the Fed will have no choice but to be dragged kicking and screaming once again into the fray, especially since traditional buyers of paper, even when allowing for exponential repo market leveraging (and someone please look at what is going on in the BoNY, State Street sponsored $15 trillion quicksand of repo'ed securities, which is the biggest black hole in the shadow banking system and will be the next pillar of the ponzi system to collapse) will be unable to keep up with US issuance. Especially since Primary Dealers already saw their Treasury holding rise to an all time high in the past week, and are loaded to the gills with US paper. So who is buying? Why Japan and the UK.

Japan and the UK? Hmm, if these two names sound oddly familiar, allow us to refresh one's memory. Behold the pristine leverage condition of both these two countries, in all its glory.

Read more at the link.



_________________________
The Second Amendment - George Washington didn't use free speech to defeat the British, he shot them.
"If there must be trouble, let it be in my day, that my child may have peace." - Thomas Paine





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#2764460 - 02/22/12 09:02 AM Re: As US Debt To GDP Passes 101% [Re: FLTENNHUNTER1]
Still-n-Quiet
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To make matters worse, most of the debt is publicly held. This means the gubbment will have very little reason not to just print money.
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"I am not ashamed of the gospel of Christ, for it is the power of God to salvation for everyone who believes..." (Romans 1:16)

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#2764495 - 02/22/12 09:27 AM Re: As US Debt To GDP Passes 101% [Re: Still-n-Quiet]
AndyW
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Registered: 10/21/10
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And yet all DC has done lately is argue over RAISING the debt ceiling
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This fall, FIRE THEM ALL. Re-elect NO ONE!!!!!

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#2764521 - 02/22/12 09:46 AM Re: As US Debt To GDP Passes 101% [Re: AndyW]
Crappie Luck Moderator
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DC is mostly arguing about Condoms for the past week.
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No matter how big your house is, how big your bank account is or how big your car is, you grave will be the same size as everyone else's.

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#2764524 - 02/22/12 09:49 AM Re: As US Debt To GDP Passes 101% [Re: Crappie Luck]
AndyW
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Registered: 10/21/10
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Are jimmy hats the latest craze? I have to take regularly scheduled breaks from the news for my sanity.
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This fall, FIRE THEM ALL. Re-elect NO ONE!!!!!

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#2764528 - 02/22/12 09:51 AM Re: As US Debt To GDP Passes 101% [Re: AndyW]
sgtwebb1
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Registered: 08/06/00
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We are SOOOOOOO screwed.
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#2764546 - 02/22/12 10:02 AM Re: As US Debt To GDP Passes 101% [Re: sgtwebb1]
FLTENNHUNTER1
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Registered: 11/21/07
Posts: 15538
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Exactly Sarge. This is a worldwide event taking place. The UK and Japan have slid their chips to the middle of the table and bet "all in" while the Chinese and Russians are slowly picking up their chips and leaving the table. This a mathematical certainty, collapse will happen, the question is when. The liBerAls want to continue to spend spend spend using the logic if we don't, our fragile economy will collapse, and they believe sometime in the future the USA will grow our way out of this. One of the problems is the 10,000 baby boomers a day retiring, and their big spending years are over. This does not bode well for an economy that is based on consumption. The Conservatives realize we need drastic spending cuts now, regardless of what happens to the economy. Pay me now or pay me more later. Either way, there is no way out of this mess without a hyperinflationary Great Depression type of event.

It took 21 days to go up 1%. How long will it take to get to 150-160% like Greece?
_________________________
The Second Amendment - George Washington didn't use free speech to defeat the British, he shot them.
"If there must be trouble, let it be in my day, that my child may have peace." - Thomas Paine





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#2764654 - 02/22/12 11:08 AM Re: As US Debt To GDP Passes 101% [Re: FLTENNHUNTER1]
Crappie Luck Moderator
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Some more sobering information:


We’re Already Europe

With seemingly every day bringing more bad news from Europe, many are beginning to ask how much longer the United States has before our welfare state follows the European model into bankruptcy. The bad news is: It may already have.

This year, the fourth straight year that we borrowed more than $1 trillion to support the U.S. government, our budget deficit will top $1.3 trillion, 8.7 percent of our GDP. If you think that sounds bad, it’s because it is. In fact, only two European countries, Greece and Ireland, have larger budget deficits as a percentage of GDP. Things are only slightly better when you look at the size of our national debt, which now exceeds $15.3 trillion, 102 percent of GDP. Just four European countries have larger national debts than we do — Greece and Ireland again, plus Portugal and Italy. That means the U.S. government is actually less fiscally responsible than countries like France, Belgium, or Spain.

And as bad as things are right now, we are on an even worse course for the future. If one adds the unfunded liabilities of Social Security and Medicare to our official national debt, we really owe $72 trillion, by the Obama administration’s projections for future Medicare savings under Obamacare, and as much as $137 trillion if you use more realistic projections. Under the best-case scenario, then, this amounts to more than 480 percent of GDP. And, under more realistic projections, we owe an astounding 911 percent of GDP.

Meanwhile, counting both official debt and unfunded pension and health-care liabilities, the most indebted nation in Europe is Greece, which owes 875 percent of GDP. That’s right, the United States potentially owes more than Greece. France, the second most insolvent nation in Europe, owes just 549 percent of GDP. Even under the most optimistic scenario, we owe more than such fiscal basket cases as Ireland, Italy, Portugal, and Spain.

So far we have been able to avoid the consequences of our profligate ways because the very public turmoil in Europe has helped prop us up as the world’s safe haven for foreign investment. Compared to the euro’s problems, the dollar looks pretty safe. This means that others are still willing to lend us money at absurdly low rates. But that won’t last forever. In fact, already seven European countries, including Germany and Sweden, have better credit ratings than the U.S.

Perhaps we can take some solace in the fact that our welfare state is not yet as big as Europe’s. But the key word here is “yet.” Today, our federal government spends more than 24 percent of GDP. Throw in state and local spending, and government at all levels consumes over 43 percent of everything produced in this country over the course of a year. As bad as that is, it’s still less than Europe, where the average of government spending at all levels is slightly more than 50 percent of GDP. But the Congressional Budget Office projects that federal-government spending in this country is currently on a path to exceed 42 percent of GDP by 2050. Government spending at all levels will exceed 59 percent of GDP. And CBO assumes state and local spending will decline in the future, which seems unlikely.

By way of comparison, today, Ireland is the only country in Europe with a bigger government than the U.S.’s will be in 2050. That’s right, one can look at countries like France and Greece, or even Denmark and Sweden, and realize that we will eventually have bigger governments than those quintessential welfare states have today.

At that point does the United States cease being the United States as we have known it? At the very least, can our economy survive such a crushing burden of government spending, and its attendant level of taxes and debt?

Given this looming disaster, President Obama has just submitted a budget that explicitly rejects “austerity,” avoids any reform of Medicare or Social Security, and adds some $7 trillion to the national debt over the next ten years. And Republicans? They are busy debating the pros and cons of birth control.

What is wrong with this picture?

— Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

http://www.nationalreview.com/articles/291628/we-re-already-europe-michael-tanner
_________________________
No matter how big your house is, how big your bank account is or how big your car is, you grave will be the same size as everyone else's.

- Keep it real

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#2764754 - 02/22/12 12:40 PM Re: As US Debt To GDP Passes 101% [Re: Crappie Luck]
de novo
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Registered: 07/21/08
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Imagine this family budget: Last year, you earned $24,700. But you spent $37,900, incurring $13,300 in debt, and you were already $153,500 in debt.

So you say, “I promise I’ll spend $300 less this year!”

Anyone can see that your cutback is pathetic and that you need to spend much less.

Yet if you add eight zeroes, that’s America’s budget.

The president says again that he will cut spending — but don’t be fooled. He wants to spend more on some items, those he euphemistically calls “invest(ment) in the things that will help grow our economy.” (As though politicians can know what a free market would reveal.)

He says he wants to reduce the deficit by raising taxes on the rich — but again, don’t be fooled. Even if he took every penny over $1 million from the rich, it would reduce the deficit by only $616 billion.

The politicians are spending us into oblivion. But I can’t blame only them. The American people are complacent. We like the goodies. We think we're getting something for nothing. We are like alcoholics who know we have a problem but just can’t resist one last fix. One more infrastructure bill or jobs plan will jump-start the economy. Then we’ll kick our spending addiction once and for all.

But we don’t stop spending. Almost all budget categories grow, even when adjusted for inflation. This is a break with most of America’s history. When the economy grew most dramatically, government was less than 5 percent of gross domestic product. Today, it’s well over 20 percent.

Since Lyndon Johnson’s War on Poverty began in the late 1960s, government spending has gone up relentlessly. This is just not sustainable. So what do we do? We must cut. But I fear Americans aren’t up for that. People on the street told me that the budget is out of control. But when I then asked them, “What would you cut?” most just stared ahead.

But there’s plenty to cut. We can easily cut things like foreign aid, NPR, Amtrak and post office subsidies, and the war on drugs. But we should not pretend that such cuts would be enough to stop the coming crisis. They’re not. Killing Fannie Mae and Freddie Mac and a hundred other subsidy programs would help more. But that still makes only a dent in the deficit.

To really save America, we need to cut whole departments: Commerce, Energy, Education, Agriculture, Labor. We don’t need them.

Commerce just happens. It doesn't need an expensive Cabinet department that hands out money to politically connected businesses.

The same is true for the Energy and Agriculture departments. Some states now have more agriculture bureaucrats than farmers!

Education is not a federal responsibility. Federal spending of $106 billion a year has not raised test scores one bit.

Now I’ve cut $329 billion. It’s still not enough.

The military is about a fifth of the budget. I want to support our troops, but we could do that and save money if the administration would shrink the military’s mission to what it is supposed to be: protecting us from external threats. We cannot put America on a road to solvency without cutting military spending, too.

Of course, what will really bankrupt America are entitlements, especially Medicare. That’s the big one.

Why even call it an entitlement? Are we entitled to the money? People think we are, but the money is taken from the taxpayers — by force. The program is totally unsustainable. We now live so long that most of us get back about three times what we paid into these programs.

So we have to raise the retirement age, maybe index it to life spans, and turn Medicare into an insurance plan that sustains itself. That will mean that if I want the latest in high-end medicine, I have to pay for it myself.

We’re on the way to becoming Greece — while our “leaders” stand and watch. A catastrophe is happening before our eyes, but the politicians won’t act to avert it. How did they ever end up with enough power to sink our society?



Read more on Newsmax.com: A Greece-Like Fiscal Crisis Looms
Important: Do You Support Pres. Obama's Re-Election? Vote Here Now!





http://www.newsmax.com/Stossel/Greece-Fiscal-Crisis-deficit/2012/02/22/id/430197
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“The further a society drifts from truth the more it will hate those who speak it.”

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#2765001 - 02/22/12 04:41 PM Re: As US Debt To GDP Passes 101% [Re: de novo]
sgtwebb1
14 Point


Registered: 08/06/00
Posts: 9367
Loc: Ooltewah/Harrison TN, USA

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Where is the tipping point?

101% debt to GDP is a number I thought I'd never see.

However, Greece is somewhere around 160% debt to GDP, after 2 bailouts from the other Eurozone countries, with a 3rd bailout just approved, and a projected drop to "only" 120% by 2020 IF they get their act together.

Who is going to inject cash into our economy?
We've burned our financial bridges with everyone who bought our (now near worthless) bonds, and our own Federal Reserve is printing (near worthless) currency to buy our own debt. We're loaning ourselves money!!

Our economy is so broken, it is too far gone to be fixed.

It's only a matter of time before the giant that is our economy is blown over into a free fall by the incessant winds of debt that we ourselves created.

The only thing holding it up now is its own weight, the sheer size of the monster.

Once it starts to fall, no power on earth can stop it. The crash will be heard around the world.
_________________________
~~Death from above~~
)))---------------->>


Visit my Blog:
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