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David Stockman: "Both Parties And The White House Are Advocating A US Default"
Last week David Stockman was on Tom Keene, making the usual media rounds (sometimes we marvel at his patience and endurance), as one of the few voices of fiscal prudence available to TV producers who seek to hold a balanced debate on the topic of US insolvency. Today, Reagan's budget director was again on Bloomberg TV explaining the reality of the situation to Matt Miller for the nth time (by now even a 2 year old will understand the cul-de-sac facing the US), although presenting a new spin on the situation, namely that we have gotten to a point where both parties are implicitly pushing for a US default, while though their inability to reach a political compromise, blaming each other for this inevitable outcome. "The real problem is the de facto policy of both parties is default.
When the Republicans say no tax increases, they're saying we want the
U.S. government to default. Because there isn't enough political will in
this country to solve the problem even halfway on spending cuts. When
the Democrats say you can't touch Social Security, when you have Obama
sponsoring a war budget for defense that is even bigger than Bush, then I
say the policy of the White House is default as well...That
is the question that really needs to be understood better and appraised
by the bond market. Both parties are advocating default even as they
point the finger at each other."
On the debt ceiling negotiations in Washington D.C.:
"Between now and November 2012, it is virtually certain [Congress] can't pass a large, permanent increase in the debt ceiling. We'll have periodic short-term fixes, a month, two months, and then they'll back to squabbling and this enormous political battle we're having over the major components of the budget: revenues, Social Security, Medicare and so forth. It will be back to the same old gong show.”
"I don't have any hope they'll come to a substantive agreement on the big things that need to be done because both parties have ruled off the table the essential things that are necessary.”
“We have to raise revenue, there is no doubt about that. We have to allow the Bush tax cuts to expire for everybody, not just the rich. We have to reset Social Security if we're doing to make any headway in denting this massive, $6 billion a day borrowing spree we're on… Neither [political] party is facing up to the real truth or telling the public."
On broadening the tax base through VAT taxes or taxes for Wall Street:
"At the moment it is very unlikely [that any of these taxes will be implemented], but that is simply a measure of how unrealistic the debate is down in Washington today."
"If they were realistic, they would be discussing what are the new revenue sources we can possibly tap in order to fill this gigantic $1.5 trillion hole in the budget. What are the pros and cons, what are the tradeoffs? You hear none of that discussion. They're whistling past the grave. They should be talking about new sources of revenue and possibly increasing some of the existing taxes we have in place today."
On when Washington will get to the point of discussing raising taxes:
"I think [Washington will discuss raising taxes] only when we get a major, thundering conflagration in the bond market."
"For the last 10 years, Congress has been lulled to sleep by the central banks that keep buying all the debt and therefore holding down the real cost of interest on the middle and long term debt that we are issuing every day.
"And frankly, bond fund managers who somehow think that the tooth fairy is going to arrive and fix this problem, when it's clear that is not going to happen, and that we have sovereign risk on the debt of the United States, just as clearly as the world is now discovering there are sovereign risks in the European debt issues and so forth."
On whether there will be a 9/11-style crisis in the economy:
"That kind of crisis would be a vicious sell-off in the global bond market. That could come sooner than people think, because the Fed is getting out of the market with QE2 ending.”
"For the last six months, the Fed has bought nearly 100% of this $6 billion a day that's been issued. Once they are out of the market, where is the new bid, where is the new demand going to come from? The Chinese are getting out of the market because finally they are having to deal with the rip-roaring inflation they have had. The people's printing press of China will not be buying as much U.S. debt because of its own internal problems.”
"When we get to real investors, what are some of the real investors saying today? PIMCO is short the bond, they're selling, they're not buying.
"When we get into a two-way market when real investors began to look at real risk, begin to look at the gong show in Washington and the magnitude of the gap that we are borrowing, I think we're going to get a re-rating of sovereign risk. We're going to get a huge dislocation in the global bond market, and then maybe the wake-up call will finally come."
On political problems in solving the debt problem:
"The problem is not the debt ceiling. When push comes to shove, at the 11th-hour, they will do it for a couple of weeks or months and we will have a little more borrowing headroom and will be back to the same impasse where we are now."
"The real problem is the de facto policy of both parties is default. When the Republicans say no tax increases, they're saying we want the U.S. government to default. Because there isn't enough political will in this country to solve the problem even halfway on spending cuts.
When the Democrats say you can't touch Social Security, when you have Obama sponsoring a war budget for defense that is even bigger than Bush, then I say the policy of the White House is default as well."
"That is the question that really needs to be understood better and appraised by the bond market. Both parties are advocating default even as they point the finger at each other."
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Same all over. Attack, Ignore, Acept
Its real structure is every man for himself. Into this system investors had poured hundreds of billions of dollars. And the credit boom had pushed the country over the edge, into total moral collapse.
We deserve these idiots, case closed.
Cut the dollar in half.
you don;t really think a two-fer would do it, do you? they'll roll out the (already printed) red bills & swap ya reds for FRN's @ 10:1
Failure! Can it be that a Democracy, a people who “self govern”, can not be a success in today’s world? Can it be that the brightsters are far too clever, greedy, and manipulative and that the proletariat is far too naïve, gullible, and dumb to have a successful Free society. Or is it that the World has always been run by the stellar class and this time the powerful have lost it and it is a run away freight train. Or is this a rerun that we have more access to and more informed.
I suspect that this is a new breed of an old cat, as it is every time. This time may be different in that the masses are finding out about the rigged game they are involved in.
This time the people may actually speak out and act out to change the game.
How do like that .416? Faster bullet= more accuracy due to lower exposure time to wind etc,, but isn't that proprietary Barrett ammo? No concern about being able to get it? 50 cal ammo more mainstream. But I digress. I like the poster who challenged the govt to try to tax her tomatos, or is it tomatoes? Damn Quayle, see what a mess you got me into?
www.wsj.com/article/SB10001424052748704681904576317781140034982.html
Just up and it explains Italy's financial policy .
Additional taxes would be the same as having to pay high interest rates on those Fed bonds which would crush the economy. Make huge cuts first, then we'll talk taxes. Since when did the government bureaucracy itself become another entitlement?
Stockman should STFU up about shilling for higher taxes when we're still spending millions on freaking turtle tunnels, trillions to bail out private banks, trillions for non-existent shovel-ready jobs, hundreds of billions to bail out crony FMA & FMAC, and now billions more to pay tributes to the MB and MENA uprisings. Hey, just dumping Obamacare will save $250 billion per year.
The Ryan Plan is a good starting point and will save hundreds of billions per year on entitlements. Herman Cain advocates making at least 10% lateral government cuts across the board --- 300 billion/yr right there. Coburn says to consolidate and cut out all duplicate programs and waste -- $250 billion/yr more right there.
Any whiff of new taxes will immediately send the socialists into a frenzy to spend it and add it to their debt spiral. Time for adults to cut spending and cut the bureaucratic monster to the bone first, then we can talk about higher taxes.
Stockman wouldn't even get his puss on TV if he wasn't constantly calling for more taxes that make the spenders all giggly. He was a bit of an economic gadfly before, and he hasn't changed.
Why would Whitehouse and Congress critters want to do anything to make things better when they are getting very rich maintaining the status quo? When the whole mess comes crashing down they will just disappear here to reappear in their villas on the Amalfi Coast or their estancias in Paraguay. As a little indicator of this note that the Bush family bought an 89,000 acres spread in paraguay.
Those pathetic shriveling maggots are going to start dropping like flies from natural causes soon. Wasted life, epic fail, time to move on.
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Between now and November 2012, it is virtually certain [Congress] can't pass a large, permanent increase in the debt ceiling
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I just watched Too Big to Fail on HBO and I have to say it should be named Too Big to Tell the Truth. What a shit fest! The movie was full of half-truths (and that's being generous, should be quarter truths). It made the Paulson Treasury department look like the heroes who saved Capitalism (the opposite of what I thought the movie would be like). It made Bernanke look like a wise old sage who participated in saving the American economy. Past the first few scenes I watched the "movie" just to see how high they could stack the bullshit. I hope no one else sat through that crap.
Without even watching the credits, who executive produced it, or who produced it, I will step out on a limb and say that SEVERAL Jews did, faBRICATED THIS piece of propaganda.
Tell me if i'm wrong. And prove it.
I watched the whole movie. Paulson comes accross as the "Savior" and Bernanke as "Yoda."
The movie should be re-classified as science fiction. Biggest bs I've seen.
Agreed. The nerve of those pricks to make a movie about saving the American economy with our tax dollars where they are the heroes.
Double post...
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Between now and November 2012, it is virtually certain [Congress] can't pass a large, permanent increase in the debt ceiling
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ITS EVEN FUCKIGN WORSE.. US FEDERAL GOVERMENT NEED TO INCREASE DEBT CEILIING BY at least 1.5 TLN $ EACH AND EVERY YEAR FUKCING YEAR .. got it ?
revenues are running up y/y, but 3.8 trln outlays are running up 2-3% y/y .. so in 2011 deficit is getting bigger
no way out, in current political system not one congresman will come up idea w/ giant cuts and/or giant tax increse..
SO USA IS FUCKED.. TIME IS RUNNING OUT.. its matter of when next year , or in 2013 bond amrket will sell out, 10yy %rate will be 5-7%, and deth spiral will start..
more debt servicing for 20 tlrn$, more money printing , more debt servicing...END
alx
QE2 Has Created a Massive New Bubble
http://www.smartmoney.com/invest/markets/qe2-has-created-a-massive-new-b...
the most disturbing thing about this clip is that pink shirt with white collar
the US is not going to default on debt held offshore the provisions are in place to keep offshore paid.
now that we have cleared that up..
the only thing(s) that are going to change are the quality of life for the poor / middle people without a Billion dollar lobby.. again.. for the worse.. some more!
the Country is being crashed on purpose and NO! ONE! is paying any attention.. everyone is to busy pretending that what they say or think matters, it doesnt!
the Country is on the path to civil un-rest.. and no one here has put us on that path and the sheer force needed to keep the Country on that path is immense! mean while the sheep keep on eating grass and baaaaaahing at each other.. all the while slowly being herded off the fucking cliff! I guess the slow motion car accident type herding being done is why no one is noticing?
at some point the safety nets will have been all cut away and there will be an angry crowd.. but that is what the Army is training for, to maintain order over the starving Country men / women and children of the United States of America!
Fuck those scumbags! the weak can die off! shoulda dug a ditch! every man for themself!
Austerity will thin the herd! and! we will have that pesky population problem licked!
Thank God everyone is on board for starving Americans and using the Army to beat back the starving hoards on U.S. Soil! Fuck the Constitution! the Founding Fathers never would have fed a bunch of scumbags! they would have let them starve!
thats why I like to say ....
RON PAUL OR BUST
that means you America!
We still seem to have some "change" left over to help free the poor people of Libya. As long as we are doing , God's work, let the default begin.
Hence your motto
"ON a LONG ENOUGH TIME LINE, THE SURVIAL RATE FOR EVERYONE DROPS TO ZERO"
dA!
sO LONG tYLER , i GOT MORE IMPORTNAT THINGS TO DO WITH MY TIME , THEN .......
I think we know how this is going to end. But this is one mother of a big ship. You can't just torpedo it and sink it. It takes time. There are so many diverse parts of this economy and country to make it difficult for all the pieces to fit together at once and end the BS. This will not go on much longer, but when will it end, hell, I do not know. There are so few of us that are prepared. I tell my friends and business associates how I buy gold and silver and they Still stare at me like I am a jerk. It is going to take time for the truth to move along the masses. There is so much stifling of the truth by MSM and the govt. Our democracy is being shredded. But it is not happening in the light of day but in the darkness of night, and few notice.
Right now this is still a bull market and the Bernank will do everything he can to keep it from failing for too long. At some point interest rates will rocket higher, as will unemployment, banks will move towards default and then the shyster Geithner will come in, spend more of our money, that we do not have, rinse and repeat. But until, until the people get it and march, until they say enough and they will not take it anymore, well it is just us, an intelligent minority. We cannot change what is happening by ourselves. But we Can Prepare. And in spite of the few morons here, this is one solid community that may not always be right, but is also truthful. Few sights around like Zero Hedge. I feel good supporting this site with my confetti dollars. Finally, I do not care if gold is at 1,300, 1,500 or 1,600 for my purchases are not for this month or this year. The idiots here bellow about "the silver bubble" and it is going to 10 or 15. These are just morons who think they can move us away from our objective and think they have the answer. My silver is for way down the road. Day to day changes do not bother me.
When Obama quits, The Bernank is indicted and tried, Geithner fired, and when Congress grows up, and acts like adults and advises the Piper must be paid, then, maybe, I will sell my gold and silver.
Bah, 1.5 trillion? Piece o' piss: 5k/household if they have it. If they don't they owe ten k next year, plus interest (and not that pussy ZIRP the banks pay either, REAL interest that compounds to pound them into serfdom, credit card style). Whoooo hhooooooo! Oh, to be a bankster!
Problem solved.
(/sarc)
That was a Damn good post! Nice work!
not to be a dick.. but i thought we owed $51k per man woman and child..
with the average being Mom, Dad and 2.25 children.. or something the average household debt would be $200K plus. not $5k going to $10k..
So if we are $200k Plus this year? what will it be next year? use 100% like he did and hop on up to $400k real quick?
Oh no prob JW, I hear you.
I was only talking about dealing with this year's deficit; and I admit I was treating every `Merican man, woman, and child as an entire household, which I believe is justified (have you seen the obesity stats in the US? I mean if your belly can hold as much as a house... I call `em like I see `em)
But you`re talking about the total debt? Whoa, slow down there sparky; I'm not old enough to have grandkids in the workforce yet, let's just hold off on tackling that baby for awhile, k?
If anything let`s double down on a trillion in `defence` spending and slash absolutely everything else to literally zero (especially that pesky 53 billion pittance utterly wasted on education every year). Yep, the best place to start is to throw ever-expanding financial support behind the military IC as they are always good for lotsa `revenue` for the multinationa....er `Merican patriots.
(/sarc)
Even though this guy is speaking some truth, he's still a douche-fairy. Raise taxes? Please. Working class people can barely keep up with rising grocery prices and gasoline. If he worked for Reagan he's gotta be a trickle-down advocating dick head globalist.
GDP calculations are based on the Keynesian system practiced around the world. That is why government spending is an addition. Frankly, it should be a subtraction. Government is dead weight loss to an economy. It is a hindrance, obstacle and drain in a thousand ways. However, it runs so much (bad) decision making that there is no way out. Stockman is partially correct in his reasoning. He fails to mention that the tax rates necessary to fully fund social programs would still kill the economy. The only real solution is fewer and smaller social programs. Republicans will fail because they promise to cut or balance the budget without asking government to do less. That is like mowing weeds. They need to pull them.
Commercial news break please:
Radiation at Reactor No. 1 skyrockets — Now over 200 Sieverts per hourhttp://enenews.com/radiation-at-reactor-no-1-skyrockets-now-over-200-sie...
The link does work now and it has really risen. There was a lot of smoke coming from number 1 yesterday on the live link. If this is accurate and true, then possibly what is about to hit the jet stream could really skyrocket. What, five days before it hits the west coast or less? And now there are no public links to any scientific endeavors to track the radiation fallout. The EPA and the rest of the supposed protectors are all shut up. Why?
People have commented there about the unusual growth of Dandelions and grass with out water being all healthy and green. Parsley in the garden is lush, dark green, and yet has had no real care or watering.
What is alarming is if these reports from around the country all indicate something noticeable is happening with the weeds, then one can only wonder about the fruits and vegetables that are now being grown for the food chain? Any and all information/discussion around this subject is appreciated.
They are using boron to keep it stable and the huge jump is indicating that it's about to run out of time. Probably about 2 more weeks it goes critical and dirty bombs entire planet.
Everyone at CNBC dies too so it's fair.
I still think I should have killed everyone at the local comcast when I moved to florida. But they are all gonna die too.
GE we bring good things to death.
On TV I'm watching the world at war about 70 years ago. It doesn't end well for most of them. We sure won't like what's coming our way, and yet today we are living large. Why can't things stay the same?
Criminal and civil charges
On March 26, 2007, federal prosecutors in Manhattan indicted Stockman in "a scheme ... to defraud [Collins & Aikman]'s investors, banks and creditors by manipulating C&A's reported revenues and earnings." At the same time, the Securities and Exchange Commission brought civil charges against Stockman related to actions he took while CEO of Collins & Aikman.[10] Stockman suffered a personal financial loss, estimated at $13 million, along with losses suffered by as many as 15,000 Collins & Aikman employees worldwide. Stockman said in a statement posted on his law firm's Web site that the company's collapse was the consequence of an industry melt-down, not fraud.[11] On January 9, 2009, the U.S. Attorney's Office announced that it did not intend to prosecute Stockman in this case.
Mr. Stockman is well versed!
The USA debt entered the superexponential (accelerating growth increments) unsustainable mode in 2001 and since than, nothing has happened to stop it, while 2008 crisis made it finally ready and heading for a crash correction=default. When- most likely market will get the clear idea in H2 of 2012, so perhaps it will be the new adminstrations first job to default selectively and effectively, if it does not happen before via devaluation of USD, when everyone suffers in proportion to its exposure.
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&sta...
The discussion and plans in politicians heads is not how to NOT default, but in what way to default, though they of course deny it, but the reality, as article notes, is here, either we wish to see it or not.
So in near future, expect articles which detail how it would be most prudent for USA to default, who gets haircuts, by how much.
In the USA the "collective" domestic and "international" investment wealth held by both local and federal government is proximately 110 trillion-dollars as of 2007.
Your articles are of much interest BUT
Stop being so pessimistic!!!!
I can only assume that the numerical facts for you have not been presented.. I offer a quick how to become a pessimist course for $19.95.. this includes... just kidding..
But try these links and see how sunny you fucking day is Mr. Blind as a Bat!
http://research.stlouisfed.org/fred2/series/BASE 3 Years 300% More Dollars Printed Out of Thin Air!
http://goo.gl/FnxBZ Treasury Direct $14 Trillion Debt / http://goo.gl/TMl74 $15 Trillion in Loans / http://goo.gl/EXzal / ='s $29T
Congress is Stealing $2.5 surplus from Social Security - Robbing The Middle Class http://goo.gl/m8QMq
Does "fiscal prudence" involve transferring billions/trillions of public dollars to the politically powerful (Wall St, military-industrial complex, overseas "aid" to affluent nations, etc) and sticking the bill to the plebs?
This must be some new kind of "fiscal prudence".
Crisis capitalism: Wall Street's new business model all for the greater good of course.
"Advocating a US default",
DEFAULT: is the signal that the growth and fossil economy days are numbered.