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CBO's Revised Budget Sees 2011 Deficit Rising By $500 Billion To $1.5 Trillion; $4 Trillion In Deficit Through 2013 Guarantees QE3+

Tyler Durden's picture




 

No surprise: the projected deficit just went up by another half a trillion: "For 2011, the Congressional Budget Office (CBO) projects that if current
laws remain unchanged, the federal budget will show a deficit of close
to $1.5 trillion, or 9.8 percent of GDP." This is up from $1.07 trillion: a very small margin of error there. But don't worry - like true Keynesians the CBO expects that future deficits will have no choice but to go down: "The deficits in CBO's baseline projections drop markedly over the next
few years as a share of output and average 3.1 percent of GDP from 2014
to 2021. Those projections, however, are based on the assumption that
tax and spending policies unfold as specified in current law.
Consequently, they understate the budget deficits that would occur if
many policies currently in place were continued, rather than allowed to
expire as scheduled under current law." So between 2010's $1.3 trillion, 2011 $1.5 trillion, and 2012's revised $1.1 trillion, we have $3.9 trillion just in deficit costs to plug. And as Zero Hedge has repeatedly demonstrated the actual debt to be issued is usually about 33% higher than the deficit funding need, meaning that over the next 3 years the US will need to issue about $5 trillion in debt. Which means further debt monetization is guaranteed as foreign investors have now fully withdrawn and the Fed is all alone in gobbling up every dollar in gross issuance. QE3 is guaranteed and we are stunned that the market continues not to realize this.

From the release:

The United States faces daunting economic and budgetary
challenges. The economy has struggled to recover from the recent
recession, which was triggered by a large decline in house prices and a
financial crisis—events unlike anything this country has seen since the
Great Depression. During the recovery, the pace of growth in the
nation's output has been anemic compared with that during most other
recoveries since World War II, and the unemployment rate has remained
quite high.

For the federal government, the sharply lower revenues and
elevated spending deriving from the financial turmoil and severe drop in
economic activity—combined with the costs of various policies
implemented in response to those conditions and an imbalance between
revenues and spending that predated the recession—have caused budget
deficits to surge in the past two years. The deficits of $1.4 trillion
in 2009 and $1.3 trillion in 2010 are, when measured as a share of gross
domestic product (GDP), the largest since 1945—representing
10.0 percent and 8.9 percent of the nation's output, respectively.

For 2011, the Congressional Budget Office (CBO) projects that
if current laws remain unchanged, the federal budget will show a deficit
of close to $1.5 trillion, or 9.8 percent of GDP. The deficits in CBO's
baseline projections drop markedly over the next few years as a share
of output and average 3.1 percent of GDP from 2014 to 2021. Those
projections, however, are based on the assumption that tax and spending
policies unfold as specified in current law. Consequently, they
understate the budget deficits that would occur if many policies
currently in place were continued, rather than allowed to expire as
scheduled under current law.

The Economic Outlook

Although recent actions by U.S. policymakers should help
support further gains in real (inflation-adjusted) GDP in 2011,
production and employment are likely to stay well below the economy's
potential for a number of years. CBO expects that economic growth will
remain moderate this year and next. As measured by the change from the
fourth quarter of the previous year, real GDP is projected to increase
by 3.1 percent this year and by 2.8 percent next year. That forecast
reflects CBO's expectation of continued strong growth in business
investment, improvements in both residential investment and net exports,
and modest increases in consumer spending. It also includes the impact
of the Tax Relief, Unemployment Insurance Reauthorization, and Job
Creation Act of 2010 (referred to in this report as the 2010 tax act),
enacted in December, which provides a short-term boost to the economy by
reducing some taxes, extending unemployment benefits, and delaying an
increase in taxes that would otherwise have occurred in 2011. CBO
projects that inflation will remain very low in 2011 and 2012,
reflecting the large amount of unused resources in the economy, and will
average no more than 2.0 percent a year between 2013 and 2016.

The recovery in employment has been slowed not only by the
moderate growth in output in the past year and a half but also by
structural changes in the labor market, such as a mismatch between the
requirements of available jobs and the skills of job seekers, that have
hindered the reemployment of workers who have lost their job. Payroll
employment, which declined by 7.3 million during the recent recession,
gained a mere 70,000 jobs (or 0.06 percent), on net, between June 2009
and December 2010. (By contrast, in the first 18 months of past
recoveries, employment rose by an average of 4.4 percent.) Consequently,
the rate of unemployment has fallen by only a small amount: After
climbing to 10.1 percent of the labor force during 2009, the
unemployment rate declined only to 9.4 percent by December 2010. Other
measures of labor market conditions suggest even more slack than does
the unemployment rate. For example, almost 9 million workers who have
wanted full-time work in the past two years have been employed only part
time.

As the recovery continues, the economy will add roughly 2.5
million jobs per year over the 2011–2016 period, CBO estimates. However,
even with significant increases in the number of jobs, a substantial
reduction in the unemployment rate will take some time. CBO projects
that the unemployment rate will gradually fall in the near term, to 9.2
percent in the fourth quarter of 2011, 8.2 percent in the fourth quarter
of 2012, and 7.4 percent at the end of 2013. Only by 2016, in CBO's
forecast, does it reach 5.3 percent, close to the agency's estimate of
the natural rate of unemployment (the rate of unemployment arising from
all sources except fluctuations in aggregate demand, which CBO now
estimates to be 5.2 percent).

For the period beyond 2016, CBO's economic projections are
based on trends in the factors that underlie potential output, including
the labor force, capital accumulation, and productivity. The
projections therefore do not explicitly incorporate fluctuations
resulting from the business cycle. In CBO's projections, growth of real
GDP averages 2.4 percent annually from 2017 to 2021, a pace that matches
the growth of potential GDP over those years. The unemployment rate
averages 5.2 percent in that same period.

The Budget Outlook

The recovery now under way might be expected to lessen the
budget imbalance in 2011 by increasing tax revenues and decreasing
spending for certain income-support programs, such as unemployment
compensation. However, revenue growth will be restrained by the slow and
tentative pace of the recovery and by the 2010 tax act.

Moreover, outlays for many programs are projected to continue
to grow and more than offset the decreases in spending (for unemployment
compensation, for example) yielded by improving economic conditions.

The resulting federal budget deficit of nearly $1.5 trillion
projected for this year will equal 9.8 percent of GDP, a share that is
nearly 1 percentage point higher than the shortfall recorded last year
and almost equal to the deficit posted in 2009, which at 10.0 percent of
GDP was the highest in nearly 65 years.

By CBO's estimates, federal revenues in 2011 will be $123
billion (or 6 percent) more than the total revenues recorded two years
ago, in 2009. The continued slow improvement in economic conditions is
anticipated to boost revenues from individual income taxes, corporate
taxes, and other sources by nearly $200 billion between those two years;
however, revenues from social insurance taxes are projected to decline
by more than $70 billion relative to their level two years ago, mostly
as a result of a one-year reduction in payroll taxes included in the
2010 tax act.

Spending, for the most part, has been growing faster than
revenues. Programs related to the federal government's response to the
problems in the housing and financial markets are an exception; outlays
recorded for the Troubled Asset Relief Program (TARP), for example, will
decrease by $176 billion from 2009 to 2011, CBO projects. But if
current laws remain unchanged, federal outlays other than those for the
TARP are projected to be $366 billion (or 11 percent) higher in 2011
than they were in 2009.

According to CBO's projections, mandatory spending excluding
outlays for the TARP will increase by $191 billion (or 10 percent)
between 2009 and 2011. Significant growth in many areas—in particular,
for Social Security, Medicare, and Medicaid—is expected to be offset
only partially by reductions in outlays for other programs, primarily
for Fannie Mae, Freddie Mac, and deposit insurance. Discretionary
spending will increase by an estimated $137 billion over the two-year
period; about one-third of that increase stems from funding provided by
the American Recovery and Reinvestment Act of 2009 (ARRA). In addition,
outlays for net interest will rise by an estimated $38 billion from 2009
to 2011, mostly because of substantial increases in borrowing.

Under current law, CBO projects, budget deficits will drop
markedly over the next few years—to $1.1 trillion in 2012, $704 billion
in 2013, and $533 billion in 2014. Relative to the size of the economy,
those deficits represent 7.0 percent of GDP in 2012, 4.3 percent in
2013, and 3.1 percent in 2014. From 2015 through 2021, the deficits in
the baseline projections range from 2.9 percent to 3.4 percent of GDP.

The deficits that will accumulate under current law will push
federal debt held by the public to significantly higher levels. Just two
years ago, debt held by the public was less than $6 trillion, or about
40 percent of GDP; at the end of fiscal year 2010, such debt was roughly
$9 trillion, or 62 percent of GDP, and by the end of 2021, it is
projected to climb to $18 trillion, or 77 percent of GDP. With such a
large increase in debt, plus an expected increase in interest rates as
the economic recovery strengthens, interest payments on the debt are
poised to skyrocket over the next decade. CBO projects that the
government's annual spending on net interest will more than double
between 2011 and 2021 as a share of GDP, increasing from 1.5 percent to
3.3 percent.

CBO's baseline projections are not intended to be a forecast of
future budgetary outcomes; rather, they serve as a neutral benchmark
that legislators and others can use to assess the potential effects of
policy decisions. Consequently, they incorporate the assumption that
current laws governing taxes and spending will remain unchanged. In
particular, the baseline projections in this report are based on the
following assumptions:

  • Sharp reductions in Medicare's payment rates for physicians' services take effect as scheduled at the end of 2011;
  • Extensions of unemployment compensation, the one-year
    reduction in the payroll tax, and the two-year extension of provisions
    designed to limit the reach of the alternative minimum tax all expire as
    scheduled at the end of 2011;
  • Other provisions of the 2010 tax act, including extensions of
    lower tax rates and expanded credits and deductions originally enacted
    in the Economic Growth and Tax Relief Reconciliation Act of 2001, the
    Jobs and Growth Tax Relief Reconciliation Act of 2003, and ARRA, expire
    as scheduled at the end of 2012; and
  • Funding for discretionary spending increases with inflation
    rather than at the considerably faster pace seen over the dozen years
    leading up to the recent recession.

The projected deficits over the latter part of the coming
decade are much smaller relative to GDP than is the current deficit,
mostly because, under those assumptions and with a continuing economic
expansion, revenues as a share of GDP are projected to rise
steadily—from about 15 percent of GDP in 2011 to 21 percent by 2021.

As a result, the baseline projections understate the budget deficits
that would arise if many policies currently in place were extended,
rather than allowed to expire as scheduled under current law. For
example, if most of the provisions in the 2010 tax act that were
originally enacted in 2001, 2003, and 2009 or that modified estate and
gift taxation were extended (rather than allowed to expire on December
31, 2012), and the alternative minimum tax was indexed for inflation,
annual revenues would average about 18 percent of GDP through 2021
(which is equal to their 40-year average), rather than the 19.9 percent
shown in CBO's baseline projections. If Medicare's payment rates for
physicians' services were held constant as well, then deficits from 2012
through 2021 would average about 6 percent of GDP, compared with 3.6
percent in the baseline. By 2021, the budget deficit would be about
double the baseline projection, and with cumulative deficits totaling
nearly $12 trillion over the 2012–2021 period, debt held by the public
would reach 97 percent of GDP, the highest level since 1946.

Beyond the 10-year projection period, further increases in
federal debt relative to the nation's output almost certainly lie ahead
if current policies remain in place. The aging of the population and
rising costs for health care will push federal spending as a percentage
of GDP well above that in recent decades. Specifically, spending on the
government's major mandatory health care programs—Medicare, Medicaid,
the Children's Health Insurance Program, and health insurance subsidies
to be provided through insurance exchanges—along with Social Security
will increase from roughly 10 percent of GDP in 2011 to about 16 percent
over the next 25 years. If revenues stay close to their average share
of GDP for the past 40 years, that rise in spending will lead to rapidly
growing budget deficits and surging federal debt. To prevent debt from
becoming unsupportable, policymakers will have to substantially restrain
the growth of spending, raise revenues significantly above their
historical share of GDP, or pursue some combination of those two
approaches.

Full report summary (pdf)

And entire soon to be re-re-re-revised document (pdf)

 

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Wed, 01/26/2011 - 11:14 | 905990 HelluvaEngineer
HelluvaEngineer's picture

QE3 is guaranteed and we are stunned that the market continues not to realize this.

Wtf are you talking about - the market just ramped.  Party time! Dow 12000!  Next stop: 36000.

Wed, 01/26/2011 - 11:15 | 906000 Ragnarok
Ragnarok's picture

Happy Dow 12000!  I'm going to go take out a Mega Mortgage with no money down.

Wed, 01/26/2011 - 11:21 | 906024 Johnny Lawrence
Johnny Lawrence's picture

Yes!  300 points higher than we were in January 2000!  I'm maxing out my credit cards today!

Wed, 01/26/2011 - 11:20 | 906020 bonddude
bonddude's picture

These mutha Fukas here's hillary clinton talking about some banksta muthas

http://www.xtranormal.com/watch/8290775/

and just announced shareholders revenge

http://www.pressdemocrat.com/article/20110125/BUSINESS/110129640/1036/bu...

Wed, 01/26/2011 - 11:20 | 906021 Hedgetard55
Hedgetard55's picture

That was a nice little juicing there of the market, huh? Must be warm feelings from Soetoro's speech last night.

 

FWIW this CBO report is worthless. Deficits will be twice as large as projected IF the system hasn't crashed before then.

Wed, 01/26/2011 - 14:13 | 906616 traderjoe
traderjoe's picture

"As the recovery continues, the economy will add roughly 2.5 million jobs per year over the 2011–2016 period, CBO estimates. "

Wow, did they sacrifice a goat to read its entrails for this prediction?

"under those assumptions and with a continuing economic expansion, revenues as a share of GDP are projected to rise steadily—from about 15 percent of GDP in 2011 to 21 percent by 2021."

So, the economy's going to gain 2.5 million jobs per year all while the share of revenue of the economy received by the government is going to go up by 35%?

Stunning. Simply stunning. 


Wed, 01/26/2011 - 11:49 | 906129 I Am The Unknow...
I Am The Unknown Comic's picture

I've found in life that when things make no sense, then I am operating under false assumptions and wrong information.  "We are stunned that the market continues to not realize this" and behold we also break Dow 12K.  "It's all good" says CNBC.

So, this report and todays activity is the final nail in the coffin, convincing me that my assumptions are false.  In other words I have accepted that THERE IS NO "MARKET" anymore.....

So, let's not play it like it is.  Nothing of truth matters anymore.  There is no rule of law.  Just BTFD while completing an exit strategy to get the fuck out of this country.  This is madness to the power of madness, or at least madness squared.  I hope they bring on both QE3 and QE4 in the next 6 months....the faster this shithouse crashes down the better.  We'll dig another hole and build another shitter. 

Wed, 01/26/2011 - 12:46 | 906343 CH1
CH1's picture

A fast, hard crash is about the only hope we have left. :(

Wed, 01/26/2011 - 13:25 | 906477 Caviar Emptor
Caviar Emptor's picture

Oh baby! You're on my wavelength: 

We're living in The Matrix now (as foretold in the movie);

Spoon boy: Do not try and analyze the market. That's impossible. Instead... only try to realize the truth. 
Neo: What truth? 
Spoon boy: There is no market. 
Neo: There is no market? 
Spoon boy: Then you'll see, that it is not the market that moves, it is only The Bernank

Wed, 01/26/2011 - 14:11 | 906609 Cash_is_Trash
Cash_is_Trash's picture

=(1+MONETIZE)^Mugabe

Wed, 01/26/2011 - 18:22 | 907522 Rule of 72
Rule of 72's picture

I've been feeling that for a while.  Every time I watch the bull-tards on CNBC, actually.  When I tune in I think to myself, "Tell me a story, CNBC.  None of this shit is real, anyways."

I nominate the banksters to play the parts of the machines, BTW.

Wed, 01/26/2011 - 16:08 | 907032 Triggernometry
Triggernometry's picture

I must agree with my fellow engineer. The limit of QE(t) as t approaches infinity equals infinity.

Wed, 01/26/2011 - 11:14 | 905993 LongSoupLine
LongSoupLine's picture

and the Dow celebrates by punching through 12,000 like a chainsaw through rice paper.

Wed, 01/26/2011 - 11:23 | 905994 hedgeless_horseman
hedgeless_horseman's picture

...meaning that over the next 3 years the US will need to issue about $5 trillion in debt. Which means further debt monetization is guaranteed as foreign investors have now fully withdrawn and the Fed is all alone in gobbling up every dollar in gross issuance. QE3 is guaranteed and we are stunned that the market continues not to realize this.

Stunned?  I call feigned ignorance.  The Fed is the market, and the bank shareholders that control it realize exactly what they are doing.

Wed, 01/26/2011 - 11:15 | 905997 Jason T
Jason T's picture

China is going to throw their inflation right in the face of every American consumer.  A Rudolf Havenstein policy disaster.

Long gold and  silver and Chinese stocks.

 

Wed, 01/26/2011 - 11:16 | 905998 Sudden Debt
Sudden Debt's picture

Like Saint-Bernanke would say:

 

JUST FREAKING SPEND IT LIKE THERE'S NO TOMORROW!!!

WE CAN ALWAYS PRINT MORE!!

 

 

Wed, 01/26/2011 - 11:15 | 906001 Turd Ferguson
Turd Ferguson's picture

Austerity, schmausterity...

Wed, 01/26/2011 - 16:15 | 907046 patience...
patience...'s picture

LOL

Wed, 01/26/2011 - 11:16 | 906002 lizzy36
lizzy36's picture

Dow 12,000.

Party like it is June 2008.

Drink enough absinthe so one forgets how that party ended.

Mazel Tov to The Bernank.

Wed, 01/26/2011 - 11:22 | 906030 Salinger
Salinger's picture

La Fée Verte

Wed, 01/26/2011 - 11:18 | 906007 CrashisOptimistic
CrashisOptimistic's picture

There simply has to be an analysis performed on the amount of money disappearing from the universe from each mortgage default.

It is at least possible that Bernanke buying all this deficit PLUS munis may not exceed money destruction due to ongoing real estate collapse.

Wed, 01/26/2011 - 11:58 | 906161 cxl9
cxl9's picture

Hypothetically, I have a home mortgage on which I will pay out a total of $1M in principal and interest over a 30-year period. I default. Bernanke prints up $1M and purchases 30-year government bonds with the money. You're saying what? That these two events somehow cancel each other out? Or that Bernanke's action is not inflationary?

Wed, 01/26/2011 - 12:17 | 906224 ColonelCooper
ColonelCooper's picture

"It is at least possible that Bernanke buying all this deficit PLUS munis may not exceed money destruction due to ongoing real estate collapse."

The problem with that theory is the the defaulted upon house is still sitting on a balance sheet at pre-crash levels in order to keep the banks solvent.

Wed, 01/26/2011 - 11:18 | 906011 Jason T
Jason T's picture

Oil exporting nations to the US in 1 year:  "We don't want your Ben confetti from Washington."

 

 

 

Wed, 01/26/2011 - 11:21 | 906027 IBelieveInMagic
IBelieveInMagic's picture

Do they want to be Iraqified?

Wed, 01/26/2011 - 12:32 | 906285 Bubbles...bubbl...
Bubbles...bubbles everywhere's picture

I think the correct term is "liberated".

Wed, 01/26/2011 - 11:19 | 906015 vote_libertaria...
vote_libertarian_party's picture

How the F*** is the 10 yr rate not > 20%???

 

I don't care how much the Fed is buying.  I would be unloading any Fed bond > 3 months in duration.

Wed, 01/26/2011 - 11:22 | 906022 hedgeless_horseman
hedgeless_horseman's picture

Fed lifts bid, and rates go down.  Sad how few understand the inverse relationship of price and rates.

Wed, 01/26/2011 - 11:21 | 906028 CrashisOptimistic
CrashisOptimistic's picture

It is possible that the destruction of money due to mortgage default (ongoing) exceeds the money he's adding.

Wed, 01/26/2011 - 11:21 | 906016 Cognitive Dissonance
Cognitive Dissonance's picture

Image of the life being sucked out of America.

Notice the handy carrying case for the banksters to exit stage right with the loot.

 

Wed, 01/26/2011 - 11:23 | 906035 papaswamp
papaswamp's picture

..I don't know what to say here.....shit! I just drooled on my keyboard.

Wed, 01/26/2011 - 11:26 | 906044 bingaling
bingaling's picture

That's hilarious ......the size of that monitor on the desk makes me think this has been going on for a very long time .

Wed, 01/26/2011 - 12:25 | 906260 -Michelle-
-Michelle-'s picture

Yes, women have been lactating for many years now.

Wed, 01/26/2011 - 12:47 | 906347 Cognitive Dissonance
Cognitive Dissonance's picture

LOL

THE oldest occupation in the world.

Wed, 01/26/2011 - 11:28 | 906050 Sudden Debt
Sudden Debt's picture

YOU SEE! WOMAN CAN BE PRODUCTIVE!!

 

Wed, 01/26/2011 - 11:29 | 906055 Turd Ferguson
Turd Ferguson's picture

+++++, CD. lol stuff

Wed, 01/26/2011 - 12:07 | 906191 Cognitive Dissonance
Cognitive Dissonance's picture

Turd,

It looks like your prediction on your blog of gold needing to make a double bottom in the 1321ish range is being tested here and now.

See...I do read your blog. You do an excellent job and you're a natural writer and communicator. :>)

Wed, 01/26/2011 - 12:28 | 906267 gaoptimize
gaoptimize's picture

How I wish she and her baby were mine.  Why do people post pictures like that here?  I'm trying to work.

Wed, 01/26/2011 - 12:28 | 906268 gaoptimize
gaoptimize's picture

How I wish she and her baby were mine.  Why do people post pictures like that here?  I'm trying to work.

Wed, 01/26/2011 - 11:23 | 906033 Spalding_Smailes
Spalding_Smailes's picture

Gold/Silver " Off " like pong ~ A waterboarding ....

Wed, 01/26/2011 - 11:29 | 906056 bingaling
bingaling's picture

You didn't hear ? LEADER has proclaimed the end of the great recession , if he said it on TV it must be true .

Wed, 01/26/2011 - 11:30 | 906060 spartan117
spartan117's picture

In percentage terms, your AIG is down even more.

Wed, 01/26/2011 - 11:36 | 906075 Spalding_Smailes
Spalding_Smailes's picture

Nope,

Thats the great thing about being up 25% on your call even a stop out gives you 10 % ...

 

Fuck, you seen my NVDA i'm up 44% since early dec .... LOL' Made my quarter ... Lol'

And US Steel off and running .... Front running.

Wed, 01/26/2011 - 11:54 | 906149 Astute Investor
Astute Investor's picture

Nope,

Thats the great thing about being up 25% on your call even a stop out gives you 10 % ...

= 6.5% after-tax

Wed, 01/26/2011 - 12:03 | 906157 Spalding_Smailes
Spalding_Smailes's picture

Thats right ....

And whats that double monkey hammer tax thingy for gold again ?

And the yield thingy ...

 

 

* Great video on China -

Roach Says China Inflation Borders on `Serious Problem'

 

http://www.youtube.com/watch?v=AMRijetfbnU

 

Wed, 01/26/2011 - 12:05 | 906185 Astute Investor
Astute Investor's picture

Only relevant if you sell at a profit.  I treat it as a store of wealth, NOT an investment.  Represents a fixed % of my net worth with a Buffett-esque holding period - forever.

Wed, 01/26/2011 - 12:15 | 906210 Spalding_Smailes
Spalding_Smailes's picture

But alas, many,many,many,many traders must deal with the tax issue ... The paper trading boom that has grown over the past few years ... A frenzy'

Coin sales up 200% in a couple of years ... A frenzy'

Wed, 01/26/2011 - 13:49 | 906535 Astute Investor
Astute Investor's picture

Alas many, many, many, many traders are idiots.  It just proves once again that seemingly similar nominal return streams are not necessarly equal.  Real net return is the only the only relevant metric (i.e. after management fees, carried interest / profit participation, commissions, storage costs, taxes and inflation).

Wed, 01/26/2011 - 11:28 | 906037 Robslob
Robslob's picture

But since the Fed is now all alone thou shall not have extra funds to ramp the markets 300 points like the good ole days...instead 30-50 point daily ramps will have to suffice.
Meanwhile: there will be no need for hedge funds or advisory services as the cartoon characters advice are all that is required...now everyone can just BTFD....

Goodbye Wall Street...we hardly knew ya...

Wed, 01/26/2011 - 11:59 | 906165 Commander Cody
Commander Cody's picture

But the Fed is not alone - there is Spalding (ate the booger) Smailes right along for the ride.  Giddy up!

Wed, 01/26/2011 - 11:24 | 906041 DavidC
DavidC's picture

And another priapic move in the indices...

DavidC

Wed, 01/26/2011 - 12:00 | 906171 Commander Cody
Commander Cody's picture

Boing!

Wed, 01/26/2011 - 11:30 | 906057 Alex Lionson
Alex Lionson's picture

Is there any device that measures the patience of the American people? If yes I am wondering what the current reading is???

 

 

Wed, 01/26/2011 - 12:50 | 906358 CH1
CH1's picture

A sideways 8 - infinity.

They want to believe.

Wed, 01/26/2011 - 11:30 | 906061 EscapeKey
EscapeKey's picture

QE3 is guaranteed, unless the Fed's current purpose is to fatten up the reserves of the PDs, so they can keep buying for a while after QE has ended.

The fact that QE will "end" will be used to pump the market to stratospheric heights, and the market will yawn, claim it's "priced in already", when QE3 is announced once the reserves have been depleted.

Wed, 01/26/2011 - 12:36 | 906297 pods
pods's picture

The FED is making sure all the big boys are fat and happy with oodles of FRNs.  When that happens, some form of austerity will be pushed to the forefront.  Then we will have a slight deflationary/liquidity crunch that the people clamored for.  They big boys buy up real assets for pennies on the FRN and the cycle starts over again.

Wash, rinse, repeat.  

Been going on since they got control of our money supply.

pods

Wed, 01/26/2011 - 11:31 | 906062 lieutenantjohnchard
lieutenantjohnchard's picture

not to worry. our betters have told us that "all spending is stimulus".

Wed, 01/26/2011 - 11:37 | 906086 Kina
Kina's picture

Zimbabwe here we come.

Wed, 01/26/2011 - 11:39 | 906097 LehmanRefugee
LehmanRefugee's picture

What a croc of shit. CBO is projecting 5.5% nominal GDP growth in years 2013 - 2016. Umm...that can't be right. The last time the US economy crossed 5.5% it was the tech bubble. Their 5%+ per year growth projections make the sell side analyst seem like angels.

Wed, 01/26/2011 - 11:40 | 906102 EscapeKey
EscapeKey's picture

Either that, or they expect substantial inflation.

Wed, 01/26/2011 - 11:53 | 906145 LehmanRefugee
LehmanRefugee's picture

They are not. As per Uncle Ben's order inflation generally trends to 2%.

Wed, 01/26/2011 - 12:04 | 906182 EscapeKey
EscapeKey's picture

I agree that that is what they tell you.

Wed, 01/26/2011 - 11:59 | 906163 lunaticfringe
lunaticfringe's picture

geezus man, what is wrong with you? They double GDP after they price is some futuristic Ishit, they overestimate revenue by 35%, they cut all real inflation figs by 66% they put that mix into blenderator and woohoo! Fat city and easy street.

Wed, 01/26/2011 - 11:39 | 906098 wcvarones
wcvarones's picture

The difference between the debt and the deficit is mainly Soc Sec, GSE "preferred equity," and student loans.

Expect all those to keep bleeding, especially with the SS payroll tax giveaway and a housing double dip for the GSEs.

Wed, 01/26/2011 - 11:40 | 906101 Kina
Kina's picture

Bernanke is driving this bus down the mountain with no breaks. Eventually there will be one turn he wont make....else there is always the end of the road.

Wed, 01/26/2011 - 12:22 | 906109 plocequ1
plocequ1's picture

Has anyone ordered Dow 12,000 hats? If not, I know a good hat company... Susquehanna Hat company on Bagel Street. Susquehanna Hat Company!!!!!!!!! .

http://www.youtube.com/watch?v=THZV5g1CNZM

Wed, 01/26/2011 - 12:27 | 906264 youngman
youngman's picture

NOT THE SUSQUEHANNA HAT COMPANY OF THE THREE STOOGES???  MY OH MY

Wed, 01/26/2011 - 12:40 | 906318 plocequ1
plocequ1's picture

Abbott and Costello.

Wed, 01/26/2011 - 11:43 | 906112 Hondo
Hondo's picture

PIMCO not looking for QE3............but I don't know how the TSY can finance $1.5 trillion deficit without the FED buying......there is no one buying but the FED today.

Wed, 01/26/2011 - 11:42 | 906113 Chris Jusset
Chris Jusset's picture

Says Tyler:

The federal budget will show a deficit of close to $1.5 trillion, or 9.8 percent of GDP." This is up from $1.07 trillion ...

Why didn't Obama mention this during his State of the Union lie-a-thon?  Oh, I forgot ... Obama doesn't care about deficits ...

 

Wed, 01/26/2011 - 11:52 | 906142 lunaticfringe
lunaticfringe's picture

This is our "Skylab" moment. Woo hoo muthas!

Yo Ben, fits us another ham sammich bits! We beez hungry.

Wed, 01/26/2011 - 22:20 | 908227 twinshot
twinshot's picture

Didn't Skylab come crashing down in the Australian desert?

Wed, 01/26/2011 - 11:56 | 906154 JasperNewtonDaniel
JasperNewtonDaniel's picture

Debt and deficits are so last decade.  QEternity is the cure to our disease.  Take your medicine.  It even tastes like soylent green.  Dow 36,000 is no longer in question.  Dow 360,000 is the new target on Bennie's desktop.  All sarcasm aside, how long can this continue without someone recognizing the elephant in the room?  Even Roubini says the GOP cuts will amount to pissing in the ocean and without tax increases the deficit will not stop growing.  This is insanity.

Wed, 01/26/2011 - 12:11 | 906203 Chris Jusset
Chris Jusset's picture

Says JasperNewtonDaniel:

How long can this continue without someone recognizing the elephant in the room?  Even Roubini says the GOP cuts will amount to pissing in the ocean and without tax increases the deficit will not stop growing.  This is insanity.

Jasper, welcome to the Age of Insanity, where bad is good, down is up, and Fraud is King.

 

Wed, 01/26/2011 - 11:56 | 906155 Captain Kink
Captain Kink's picture

El-Erian (on a conference call) just said that PIMCO does not anticipate QE3.  Are they talking their book or running dis-information?

Wed, 01/26/2011 - 11:59 | 906166 sudzee
sudzee's picture

Just booked a bit more of the shiny stuff. Eventually this report will show up on one of the national media sites. Anyone else notice that CNBC can't fill their advertising spots.

Wed, 01/26/2011 - 12:02 | 906178 lunaticfringe
lunaticfringe's picture

Why does anyone think QE2 will stop? They never said that. PIMCO is right- it's all just one giant QE2 to eternity. Welcome to easy street brother.

Wed, 01/26/2011 - 12:03 | 906181 sheeple
sheeple's picture

clusterfuck to the max, where's cheeky/sqwirl lately?

Wed, 01/26/2011 - 12:11 | 906204 alexwest
alexwest's picture

well as far as I remember in end of 1999 CBO said
next 10 years its gonna be federal surplus something like +5 trln $, US debt will be paid out..

well.,, happeaned exact opposite..
they 'are jsut bunch of gov losers who cant jobs in private sectors..

in their analysis they project current into future like future is just static replication of current..

should be closed out first
alx

Thu, 01/27/2011 - 02:00 | 908625 RmcAZ
RmcAZ's picture

Spot on...

http://www.cbo.gov/ftpdocs/10xx/doc1059/eb0199.pdf

Projected Deficit/Surplus ($Billion):

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

-164 -107 -22 70 107 131 151 209 209 234 256 306 333 355 381

This is actually quite comical.

Wed, 01/26/2011 - 12:14 | 906214 alexwest
alexwest's picture

#—to $1.1 trillion in 2012, $704 billion in 2013, and $533 #billion in 2014.

what a hog wash... there will be never ever deficit less 1.5 trkn $.. more yes... less never..

mark my word
alx

Wed, 01/26/2011 - 14:15 | 906619 LehmanRefugee
LehmanRefugee's picture

The fall off in 2013 is because they are assuming bush tax cuts expire. IMHO a complete overhaul of the tax system is more likely than that 3% rate hike on the top bracket.

Wed, 01/26/2011 - 12:24 | 906249 TimmyP
TimmyP's picture

I think this video pretty much sums everything up!

http://www.youtube.com/watch?v=VRrMu7B1L2I

Wed, 01/26/2011 - 12:25 | 906257 apberusdisvet
apberusdisvet's picture

3rd sentence of release:  "during the recovery"

 

What frickin' recovery, you morons.

Wed, 01/26/2011 - 12:33 | 906287 youngman
youngman's picture

the game is set...we all know what the end is going to be...we have to play day to day..but we know one day it all ends...stops...and we will all sit there with our mouths wide open.....but hopefully some of us on this board will have prepared for that...PM´s comes to mind among other security items...and we will do our best to survive....because it will be tough and dangerous...the world will not like us...and neither will the gang down the street...

Wed, 01/26/2011 - 13:46 | 906541 Ned Zeppelin
Ned Zeppelin's picture

It seems that the prevailing sentiment is that deficits just don't matter, and therefore monetization of deficits can't possibly matter either.  Credit? Unlimited. Why? Because we say so.  Seems to be the case, doesn't it? If you are monetizing half of it, why not eliminate taxes altogether and monetize the whole damn thing? What's that? We have to maintain appearances?  

Wed, 01/26/2011 - 14:44 | 906719 chartcruzer
chartcruzer's picture

January 25th, 2011

AR Newswire.

Tonight in the state of the union address, it was announced that a deposit of rare hopium was discovered that was so large that it will save the US from one of the largest economic debt bubbles in the history of the world.   An expert advisor commented after the ground breaking speech that the hopium deposit is so vast that future generations of Americans will indeed be saved from a bankrupt federal government, insolvent states/cities, unsustainable pension/healthcare systems, and collapsing real estate markets.

The financial markets applauded the announcements as the hopium is reported to be so pure as corporate taxes will be reduced even in the presence of desires to radically cut exploding federal deficits.   The first recipiants of the hopium will be the new and completely reformed US banking system which will bolster confidence in continuing profits and salaries.

The fringe element known as Citizens Against Global Hopium Depletion, derided the announcement noting that they are making progress with a chemical process that will transform common sea water into a usable synthetic hopium.  Hence, the limited real hopium in the earths crust should be preserved for future generations to use in earnest.  

Finally, NASA announced that they will annotate the discovery by launching a new geosynchronous satellite over the US that is shaped like Sputnik and made almost entirely of irradiated hopium.   The satellite will be a beacon of light in the sky that will inspire future generations.

http://www.scribd.com/doc/47609543/The-Crash-of-the-US-Empire 

 

Wed, 01/26/2011 - 14:49 | 906739 6 String
6 String's picture

So between 2010's $1.3 trillion, 2011 $1.5 trillion, and 2012's revised $1.1 trillion, we have $3.9 trillion just in deficit costs to plug.

Isn't fiscal year 2010 already behind us, therefore the debts already printed?

Wed, 01/26/2011 - 17:56 | 907431 Madhouse
Madhouse's picture

More of the same:

Let me just get re-elected, then I can save things. The guy has zero cajones.

The average idiot does not know how paultry, in the context of the crisis we have, a $400 billion savings over 5 years really is. "Gee Alice, he's doing a great job, ain't he"

Ryan warned but stayed on the "nice boy" side. Result: no impact. A simple illustration should have been enough to explain how fucked we are. Then the tired notion that somehow all this was the fault of the last 2 years. Debt was 5 when Bush came in and 11+ when he walked, period.

We again should have seen a Washington perp walk. CBO staffers should have been filing out of their offices, fired from their positions after a 1/2 trillion $ fuck up. But, no one mentions it, no one cares. These CBOers now take their place alongside porn watching SEC staffers, "never saw any problem coming" Fed wanks from 2007 and hundreds of thousands of other incompetent to the point of fraud Federal employees. There is zero accountability within the beltway. Its like a fucking zoo after an earthquake - utter chaos.

He mentioned the word "waste" just once in a 7000 word speech. How could that be when obviously there has been trillions in waste. Ahhhhhhhhhhhhh

Wed, 01/26/2011 - 18:12 | 907483 Rule of 72
Rule of 72's picture

Does anyone think we'll make it to 2013?  Why do projections past that?

The sheeple are going to be seriously ticked if this interrupts Dancing with the Stars or Monday Night Football.  That may be the only thing that'll register with the majority of this country.  Absolute disgrace.

Wed, 01/26/2011 - 19:17 | 907658 Madhouse
Madhouse's picture

The fact that these levels of deficits are even allowed to be printed is itself clear evidence that we won't make it to 2013. Clear failure.

Buy a farm. Buy gold coins. Buy a gun to protect against the many that do not have either of the first two. Nothing else matters, except perhaps a truckload of bourbon.

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