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David Stockman Says US Has "Run Out Of Runway" On Debt, Compares The Treasury Market To A "Roach Hotel", Endorses A Tobin Tax
David Stockman has become every major news organization's (and CNBC) go to critic when it comes to bashing each stupid idea currently preoccupying the DC C-grade soap opera artists. Obviously, at the current time this would mean the budget deficit and the debt ceiling. On both those issues, Stockman's position is well-known. Today, when asked by Bloomberg's Tom Keene to compare the current deficit with that of Reagan's, Stockman spares no praise: "The essential distinction is that we had a clean balance sheet then - $1
trillion of national debt. Today we have $14 trillion in national
debt. We have used up all the runway, so to speak. We
have piled our national balance sheet with so much debt that the
government is at the very edge of a huge solvency crisis that isn't
going to be addressed unless both parties dramatically change their
position, and I see no sign of it. So we're going to have a gong show." Stockman also opines on the Monetary Roach Hotel that the US debt has become: "We have not had a two-way bond market. We have had a rigged
market that has been dominated by not just the Fed, but all the central
banks. Today over half of the $9 trillion in publicly-held debt is in
central bank vaults. I call it the 'Monetary Roach Hotel.'" Lastly, on a proposal endorsed by Zero Hedge back in the summer of 2009, namely the introduction of a Tobin tax for Wall Street's high-frequency casino: "Wall Street needs to have a transaction tax. I know they won't like it.
A tax on every trade, a small amount, would go a long way to putting
money in the coffers." As usual: absolutely spot on recommendations, which have little to no chance of occurring before the final bond crash finally takes away the multiple-use heroin needle from both DC and Wall Street.
Stockman on what's different regarding the deficit under Obama vs. Reagan:
"The essential distinction is that we had a clean balance sheet then - $1 trillion of national debt. Today we have $14 trillion in national debt. We have used up all the runway, so to speak."
"We have piled our national balance sheet with so much debt that the government is at the very edge of a huge solvency crisis that isn't going to be addressed unless both parties dramatically change their position, and I see no sign of it. So we're going to have a gong show. Year after year after year of these debt ceiling crises, maybe they will be solved for a month or two, and then we will go right to the next."
Stockman on the deficit to GDP ratio:
"When this all started, it was 30% national debt to GDP. Now, effectively what's built in will take us as close to 100% within a matter a couple years. That is baked into the cake and cannot be stopped."
"I think the more important thing is the annual deficit to GDP. It should be a balance over the cycle, but we have not had any balance over the cycle for decades…We were petrified in 1982 when the deficit went to 6%, the highest ever seen. Reagan, although he is known as a great tax cutter, signed a huge tax increase bill in 1982 at the bottom of the worst recession that we'd had up until then and raised taxes by the tune of 1.5% of GDP."
On the issues with the current market:
"We have not had a two-way bond market. We have had a rigged market that has been dominated by not just the Fed, but all the central banks. Today over half of the $9 trillion in publicly-held debt is in central bank vaults. I call it the 'Monetary Roach Hotel.' Bonds go in and never come out. If the central banks stopped buying the debt, which will happen with the end of QE2, then we're going to get back into a real investor's market, a two-way market where some people don't believe that Congress and the White House have the capacity to deal with our problems. I think then we run the risk that we'll get real pricing on the debt, which has to be a lot more than 3%."
On how the debt ceiling debate will be resolved:
"I do not know that there's any process that can solve it. We're so far down the road here that I think it will take a thundering conflagration in the global bond market to wake up the process and get people out of their positions...Look at the current White House. We had Geithner last night saying, you don't dare not raise the debt ceiling, but the policy of this administration is de facto default. They have a war budget as big as Bush ever had, therefore, extending 75% of the Bush tax cuts. The only thing they have objected to is the 2% risk."
On why we should care about the debt ceiling:
"I do not think we should care about the debt ceiling, because they will extend it when push comes to shove at the 11th hour after a lot of smoke and mirrors and tricks have been played...What we should care about is the fact that we're borrowing $6 billion every business day. Both parties have taken fiscal positions that will not even begin to close the gap. Both parties are simply aligned, deceiving the public that there will not be sacrifice. There will be. Tax increases across the board for the entire middle class, not just the rich."
Stockman on whether the tax base needs to be broadened:
"I think bring the tax base or have new tax revenue sources. We are in a stage where I think a tax on imported oil might be one way to get two birds with one stone. Revenue into the coffers of the Treasury and also some incentive for more conservation, domestic production, and alternative energy.
"Secondly, Wall Street needs to have a transaction tax. I know they won't like it. A tax on every trade, a small amount, would go a long way to putting money in the coffers."
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Fuck this guy, all the bail out monet went to wall street and the banks. Let govt start suckin the blood out of the banks and wall street. If you agree you should pay more taxes then pay my share. Really fuck this guy for even suggesting lower and middle class families foot the bill for the wall street and bank bailouts
What about a 5% Tobin tax and NO capital gains taxes? That would attract more investors and stable investors at the same time.
hmmm.....closet bankster here
That's the right idea. How about a fiat fee and end all other taxes?
.49% * $3 Quadrillion = $15 Trillion > cost of government at all levels.
Stockman's best speech was given at the Mises Institute this year. Talks about what happened during the Reagan years (no, not everyone who ever worked for Reagan agreed with each other and some people came out on top in high level debates with the actor as president). Talks really about what happened in 2008. That the bailout was completely unnecessary and a lie. Talks about international monetary economics and trade with china. Worth a listen.
Get real. The solution is:
1: Default (print fiat to pay back all bond holders).
2: Declare fiat era ended, money = grams of gold.
3: Terminate federal government.
4: Terminate federal reserve.
The solution is NOT to accept unlimited federal expendatures AND unlimited federal taxes [and printing].
The experiments in central government and central bank are both massive failures. Both need to be completely eliminated.
AHEAD to corporate feudalism!
We need to tax more and spend less. Both are needed to address the deficit. Neither is on the table seriously. So, Ben will print more to keep the plates in the air until they fall. Be prepared for when that happens. The really tough part to take is all the bullshit being spouted about doing nothing. I'm not listening anymore.
We need to eliminate the Fed, repeal the 16th amendment, and abolish the IRS as a decent start.
Tax is gun to the head stealing.
Thieves. Penny ante fiat thieves who can't work for a living, they have to steal.
I vote for the spending less part to be implemented first...BWAHAHAHAHAHAHA! I crack myself up, sometimes!
Stockman is another old-school econo-political shill turned apologist for the system, but at least he had the balls to call out the transaction tax.
I'm sure Jamie Dimon is sending over the "white shirts with black ties" to have a discussion with him about that little faux-pas...
More correctly- they should impose said tax on every trade that is an obvious, electronically generated front-run by the brokerage deliberately intended to steal "just a little bit" of their client's potential capital gains.
If it is ok for the Brokerages to steal from their own clients, then it should be ok for the government to steal from the brokerages, no?
4.6 rating for this article? Really?
There is no Senate. What do not realize.
My history be fuzzy, what was the Boston Tea Party about again?
The Crown mandated that the North American colonies could only buy East India Company tea.
That's capitalism, baby. Back then it was called Mercantilism.
"Buy our shit, or else we fuck you up." Same as it ever was.
this guy thinks the answer lies in taxes and more taxes. somebody needs to hit him in the nose with a rolled up newspaper........
The guy who thinks austerity comes at the expense of grandmothers, children born into poverty, and already decaying infrastructure rather than banker-gangsters really needs a few ounces of lead in the back of their skull.
Such big talk! Tell ya what, I'll send you 10 .40S&W rounds, you supply the gun and the manpower! Looking forward to hearing of your progress on prime-time news...
Okay, just 2 more minutes of Hate Taxes. Then everybody download the new screen saver of Big Brother. That's an order.
Yeah, right! Another tax increase will fix everything. Never mind that politicians have spent all of the previous umpteen tax increases (and more).
In 1912, the year before the Sixteenth Amendment was ratified, the US Federal deficit was 0.01% of GDP.
Give a politician a dollar and he will spend ten.
correction.
the 16th ammendment was never lawfully ratified......
How much should banker-gangsters be allowed to steal in the derivatives casino before they're taxed (at least)?
It goes deeper than that, DWB. The no transaction tax crowd are the same ones always crowing about how everything should be rugged individualism. They don't want to pay policemen, fire fighters, or teachers. They want to do away with unions because everyone should be on their own. I bet most of them either have money in "funds" or work for "funds". Well, "funds" are nothing more than monetary communism. Where is the rugged individualism when it comes to money?
I might listen to one of them if they start crowing just as loudly about the evils of "funds". Jack asses like Shedlock almost constantly harangue about the evil of unions and how they're just worker communism and all the while he makes his living in the financial services industry which is monetary communism. Sounds like hypocrisy to me, typical Wall street crap, heads we win tails you lose.
Why don't you two get a room? Better still, start your own Socialist/Progressive blog...OVER THERE-------------------->
Well guess what? Each of us is an individual.
And we're totally freaking tired of having the income we earn stolen from us by the predators-that-be to buy votes from parasites. We're fed up. Those predators and parasites have zero right to our time, effort, work, assets, resources and our LIFE.
It isn't that we don't want ANY services. It is that we want to decide which services we want. As it is now, we must pay for ALL those crappy services, whether we want them or not. That's BS. That's theft. If we want services, LET US BUY THEM.
You can have your unions, and any other voluntary association... as long as ALL workers and ALL individuals in unions have the same rights, and no special rights or priveledges that others do not have. Yeah, go on strike. Go ahead. Get fired. Have a ball. Then get another job or starve to death. Just leave us alone.
Give a politician a dollar and he will spend ten.
Give a politician a dollar and he will spend ten trillion.
We need more wars bitchezzzzzzzzzzzzzzz. Only lucarative biz in the USA and lets not forget American idol and IPADS.
Well at least there is no real deflation spending cuts with real inflation tax increases like we have in the UK for you Americans..
....wait a mintute, I see some "budget efficiency" ideas coming from over the pond....
May be Timmy boy should have though twice before sneering at UK debt reduction plans..
And the military budget needs to be cut in half. Say that, too, Mr. Stockman.
Stockman's a douche bag. If we raised the fucking taxes to 100% the SOB's in Washington would find a way to spend more than that.
I don't buy this "run out of runway" nonsense, or supposed tipping points. QE can be infinitely extended, and govt borrowing likewise.
The DAMAGE comes when the government starts to roll back on borrowing. That in itself will piss off the banksters. The fact that Timmah is already pickpocketing pensions instead of borrowing from banksters has got to frost their balls.
We have to WORRY when (if ever) the budget is balanced. The banksters are drawing them in, like a pusher ensnares fresh junkies with free dope. Interest rates are going to skyrocket as soon as it looks like the gravy train is done, drastically increasing the burden this ludicrous debt will cause.
The safe thing for the US to do is to coin money, deposit it with the Fed and pay off the debt with fiat created by the government instead of by the Fed.
Stop spending so much money. "small amount on every trade".... everything starts small. There is a tax on gains and I am trading with after-tax money. Hilarious... just stop spending so much fucking money and pandering your repsective bases... We have 2+ wars going - WTH? Come on - min wage workers have 6 kids on the dole and then society suports them. I have 2 kids, I support them, I live below my means, I basically produce a surplus.... gov't produces NOTHING. Go to work, get taxed at the pump, on the phone, fucking everywhere then pay income tax... then invest for passive income and the fucking divvys are taxed. Now you want to tax the transaction in and out too. Some of you guys must have bipassed the kiddy filter to log on.
Stop spending so much money. "small amount on every trade".... everything starts small. There is a tax on gains and I am trading with after-tax money. Hilarious... just stop spending so much fucking money and pandering your repsective bases... We have 2+ wars going - WTH? Come on - min wage workers have 6 kids on the dole and then society suports them. I have 2 kids, I support them, I live below my means, I basically produce a surplus.... gov't produces NOTHING. Go to work, get taxed at the pump, on the phone, fucking everywhere then pay income tax... then invest for passive income and the fucking divvys are taxed. Now you want to tax the transaction in and out too. Some of you guys must have bipassed the kiddy filter to log on.
adn I will make the prediction now... when a transaction stock tax is passed, the IBs will get waivers.
The slave cares nothing for the debt of the plantation owner.
During the Reagan administration, the national debt quadrupled from $700 billion to $3 Trillion. If we quadrupled the debt every eight years since 1988 the debt would be $34 Trillion with a "T".
1988, end of Reagan administration: $3 T
plus 8 years, 1996: $6 T
plus 8 years, 2004: $12 T
plus 8 years, 2012: $24 T
exponential intermediate for 2011: $22 T
Pity we aborted a broader tax base over the last few decades.
I'm amused by all the solutions people suggest to restore normal government & normal markets, eliminate fraud & theft, etc.
TPTB aren't interested in restoring normal government & normal markets.
They're not interested in eliminating fraud & theft. Fraud & theft is how they keep operating when they're insolvent and bankrupt.
The federal government is insolvent and bankrupt.
It's been insolvent and bankrupt a long time.
Fraud and theft is how the federal government keeps operating.