Obama's Budget Has One Small, Missing Piece.... For $6.3 Trillion Dollars

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Mon, 02/01/2010 - 22:42 | 214261 deadhead
deadhead's picture

well, interesting comments by Orszag, no doubt.  

At least on the bright side, David Stevens has assured us that FHA is okey dokey smokey and they will never need any bailout.  I know some have called for an FHA implosion but no need to worry because a U.S. government official has said that the FHA will not implode.

I'm feeling a little more crameresque about the whole housing mess now....

the question i keep asking myself is, at the age of 54, will I see the Minsky moment actually occur or will I be long gone.....

Mon, 02/01/2010 - 23:48 | 214328 Oracle of Kypseli
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Just like every toddler now knows words like micro, nano, giga, terra etc., we will soon have to get used to words like quadrillion, quintillion and say things like: I remember when gold was just $1200 an oz. I wish I had bought some more of it.

So, yes my friend, we will indeed be speaking these words and chances are that somewhere between the words trillion and quadrillion, the Minski moment and "black swan" will also become an everyday word.

If you were to google these words every Sunday morning and chart how many hits you get on a weekly basis, you will soon see an exponential trend.

That may be a good way to see the future.

Just now:

Minski moment 593,000 hits

Black swan 12,200,000 hits

Trillion 12,300,000 hits

Quadrillion only 401,000 hits








Tue, 02/02/2010 - 01:30 | 214430 Marley
Marley's picture

"We're so screwed its sad." - 12 million google hits.  

"We're so screwed it's sad." - 10 million google hits

Tue, 02/02/2010 - 01:48 | 214440 faustian bargain
faustian bargain's picture


Tue, 02/02/2010 - 02:31 | 214462 Hephasteus
Hephasteus's picture

See the people willing to make mistakes in spelling are 20 percent more screwed than the people who aren't.

Tue, 02/02/2010 - 10:37 | 214619 Invisible Hand
Invisible Hand's picture

Or, it could be that even people who can't spell can read the writing on the wall.

Tue, 02/02/2010 - 07:34 | 214515 Anonymous
Anonymous's picture

..... somebody has way too much time on their hands.

Tue, 02/02/2010 - 11:59 | 214725 WaterWings
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Potentially part of their profession. Data miners, for example, could show you a lot of really, really cool stuff it they weren't "State Secrets".

Tue, 02/02/2010 - 09:17 | 214557 Anonymous
Anonymous's picture

You forget Gaga as in Lady

Tue, 02/02/2010 - 11:32 | 214682 Anonymous
Anonymous's picture

We'll never make it to quadrillion. It's over before 100 Trillion.

Tue, 02/02/2010 - 09:48 | 214577 Anonymous
Anonymous's picture

Ah, Orszag...He He He...oh, boy.

Mon, 02/01/2010 - 22:51 | 214272 jm
jm's picture

What I'd really like to know is how to derive reliable loss severities for that guaranteed GSE paper. 

I mean, everything is so assumption sensitive, and GSE paper has so many moving parts, and which of them can be / are hedged?  And how good is that hedge book?

Don't get me wrong.  I love your site.  It just makes my head swim trying to figure out the "collateral damage".  Pun intended. 


Tue, 02/02/2010 - 00:53 | 214403 Dburn
Dburn's picture

The govt accounting system is some strange hybrid of cash and accrual accounting. One example that always struck me was when the social security surplus was spent each year they would take the amount spent and deduct that from the deficit. I suppose thinking that since it was inter governmental and it was surplus, it count as a deduction even though it was spent.

Putting the guarantees in the budget doesn't work until the mortgages default . Even then they won't put it in the budget because no one can project with and certainty the cash out put required to cover the defaults. This is not unusual at all.  If there was a dead certainty that in the next 12 months they had to come up with 6.5 trillion, it would have to go in the budget. Since I don't think that is a dead certainty, it isn't going to show up in the budget.

Wed, 02/03/2010 - 01:56 | 215637 Anonymous
Anonymous's picture

A very lucid comment by Dburn, afaict. Would that more readers would put on thinking caps before swallowing the thesis of such a story. Thanks.

Wed, 02/03/2010 - 11:47 | 215833 Anonymous
Anonymous's picture

You are correct, but we can agree that the losses will certainly not be zero - lots more red ink coming!

Mon, 02/01/2010 - 22:52 | 214277 trav7777
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Bama's sendup is only $3.83T.  Once you get some supplementals for war and some pork, it may highside $4T.

This represents $600B over Busch's worst

Tue, 02/02/2010 - 10:35 | 214615 Commander Cody
Commander Cody's picture


Tue, 02/02/2010 - 12:56 | 214809 trav7777
trav7777's picture

No shit?

I typed Busch because I believe that sums him up appropriately, low rent beer, NASCAR, all of the connotations

Tue, 02/02/2010 - 13:40 | 214859 Commander Cody
Commander Cody's picture

Ah, beer.

Mon, 02/01/2010 - 23:03 | 214280 heatbarrier
heatbarrier's picture

FHLBs leverage about 50:1. 


Another bailout down the road. See footnote b.


PS. Links drive nuts.

Mon, 02/01/2010 - 23:11 | 214290 Anonymous
Anonymous's picture

Another bailout? Problem solved. Why is ZH and Denninger getting so exited? Another bailout will solve everything. And ZH said it couldnt be fixed. Dow to 15,000

Tue, 02/02/2010 - 05:41 | 214489 MarketTruth
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ZH is telling it like it is. Denninger is still drinking the cool aid and getting too high on his reflection in the mirror. His ego is what it is, fine/whatever, and sometime he makes good points. The problem with Denninger is his continual belief in the religion of the bankster/financial system and in the actual following of the rule of law. Obviously the rule of law left the building years ago. So his religious belief in the system are leading him down the wrong path.

For some reason he still seems to believe the system will be fine provided laws are followed. Perhaps he has not been paying as close attention to the lack of law enforcement, no real moves to follow the will of the people, etc. As such, his advice/comments is based on incorrect parameters.

In other words, he is basing some of his writings on dreams and star dust and not the current market reality. Still, i wish Denninger well and file him under "It seems natual for every little girl to dream of owning a pony."

Tue, 02/02/2010 - 07:15 | 214509 Fielding Mellish
Fielding Mellish's picture

Everything Denninger says depends on the outcome of the 2010 election.  Now, Senators are so shielded from public opinion and so exposed to money lobbyists, it may make absolutely no difference what happens in 2010.  On the other hand, they love their jobs.

I have a much higher opinion of Denninger than you do, but he may be wrong.

Tue, 02/02/2010 - 09:18 | 214558 MarketTruth
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Election outcomes may make little difference... like Bush versus BHO. As the song goes, "Meet the new boss, same as the old boss". While Americans could wish for real change, other than new 'seat warmers' and perhaps new rhetoric, the REAL outcome will be no different.

Hate to burst dreams and wishes, yet the USA is done and best advice is to make decisions based on reality and not on laws or hoping the new seat warmers 'do the right thing' because 90% of the phone calls they get tell them what to do (read: no TARP, etc).


Tue, 06/22/2010 - 00:47 | 426228 Roger O. Thornhill
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Denninger would be correct in a world, maybe 50 years ago.

Unfortunately we don't have standards like that anymore. My belief is that we have left objective truth (the world of grown up rules) far behind and now live in a world of relative truth (where the kid's wishes make things come true). This childish world is one where you can justify any fraud as long as your intentions are good. 

Maybe the inevitable crack-up will cause us all to grow up. That is change I can believe in.

Tue, 02/02/2010 - 11:56 | 214721 Anonymous
Anonymous's picture

I got banned by Denninger on his forums in 2008 for continuously mocking all of his "contact your Congressman" nonsense, as if that was ever going to accomplish anything.

Mon, 02/01/2010 - 23:27 | 214299 Cognitive Dissonance
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There comes a point in the insanity when the truth can no longer be hidden. Once this point is reached but the general consensus is that the truth must still not be acknowledged, it is then hidden in plain sight but simply not discussed.

Call it the "crazy aunt May locked in the attic" phenomenon, where every family member knows that aunt May is completely off her rocker and is actually stark raving mad. Because no one (for whatever reason, be it money or shame etc) wants to do anything about aunt May, she is locked up in the attic, out of sight and mind except for each family member, where she is hidden in plain sight and out in the open.

While each family members takes turns bringing food and drink to crazy auntie, laundering her clothes, cleaning her space, changing her sheets, even having conversations with her, no one talks to each other about what they are collectively doing or even why, for to do so would force the family to do something about her.

This behavior, albeit on a less extreme level, is actually quit common in a dysfunctional society and is a measure of the health of that society. If this type of split or separated mind continues for very long, it can actually drive others in the family (and society) into severe mental distress.

This also happens in the general society (consider the children's story about " the King has no cloths" or how we as a society can continue to destroy our environment while doing little to nothing to stop doing so) this dysfunction can lead to violent and unsocial behavior in it's individual members as the stress of the open lie takes its toll. I believe this is one of the reasons behind the rise in school shootings, teenage suicide, a general population becoming increasingly obese at an alarming rate and so on. The signs of general mentally instability is everywhere if you wish to look closely.

But of course, if we aren't going to talk about crazy aunt May locked up in the attic, we certainly aren't going to talk about the metal stress and emotional disorder that the open "secret" is causing among us, now are we?

Mon, 02/01/2010 - 23:52 | 214340 Anonymous
Anonymous's picture

yep that budget busting debt requiring more
debt in a world where the marginal productivity
of debt is negative is not to be discussed....

you know the deal - don't discuss the imbecility
of that zig-zagging bullet which [wink wink] killed

tell aunt may i said hi....

Tue, 02/02/2010 - 10:35 | 214614 Winisk
Winisk's picture

I find it curious that we have moved so far in terms of medicine, technology, and knowledge, yet it seems our collective health and education are trending the other way.  Illiteracy, rudeness, obesity, asthma, depression and a host of other mental and physical disorders are trending upwards. Children are being raised in a toxic environment.  Yes it's polluted, but the conditions to nurture young healthy minds is also lacking as a result of divorces, absent working parents, and stress in the home.  To top it off the enslaving debt being foisted on the children is unconscionable.  Parents should be ashamed. They let their narcissistic attitudes usurp their moral obligation to care for their children.  It's sad to witness the mass delusion.  TBTB can manufacture the numbers to suit their purposes but there is a human cost.  One need only look around to see it.

Tue, 02/02/2010 - 10:38 | 214621 Commander Cody
Commander Cody's picture

Reminds me of the fall of the Roman Empire.

Tue, 02/02/2010 - 10:47 | 214634 Cognitive Dissonance
Cognitive Dissonance's picture

It's so much easier to rule a population when "Illiteracy, rudeness, obesity, asthma, depression and a host of other mental and physical disorders are trending upwards."

This is the fatal flaw for the grunts, meaning you and I. As long we refuse to recognize that the people we regularly turn the house and car keys over to are out to screw us, harm us, sicken us, this mess will only get worse.

In order to deny responsibility for running the show, to ignore our own individual responsibility for fixing this mess, we must delude ourselves into believing that the people we do put in charge will be acting in good faith and in our best interest. If this means participating in a mass deception, so be it. Ironically, as this mess gets worse, less and less people will wake up because the problems will become that much more horrifying.

This is a well know form of positive feedback loop know as denial. In fact, the sleeping with desperately fight you and anyone else who tries to shake them awake. The sleeping deep-in-denial population is the best friend of a Fascist and oppressive government. The powers-that-be understand human psychology extremely well. The average Joe is woefully ignorant of human psychology.

We lose. 

Tue, 02/02/2010 - 19:14 | 215352 Anonymous
Anonymous's picture

why do you think russians had revoliucion in 1917?

Tue, 02/02/2010 - 12:02 | 214730 Anonymous
Anonymous's picture

That's a pretty fair synopsis of our present situation. The US is, in fact, broke. Not tomorrow, but today, as in, right now. There's no getting around it, but to deny it. Denial is the first stage, right?

Mon, 02/01/2010 - 23:27 | 214309 ShankyS
ShankyS's picture

Possibly your best post yet. Thanks TD. We're so screwed its sad.

It would seem a little presumptuous that an amount representing more
than half of the total US sovereign debt is conveniently swept under
the rug.


Mon, 02/01/2010 - 23:29 | 214312 dumpster
dumpster's picture

trillion here , trillion there .. pretty soon they will be spending real money lol

Mon, 02/01/2010 - 23:36 | 214322 Anonymous
Anonymous's picture

It's only a rounding error.

Mon, 02/01/2010 - 23:37 | 214323 OutLookingIn
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"A nation is not going mad when it does extravagant things, so long as it does them in an extravagant spirit. But whenever we see things done wildly, but taken tamely, then the state is growing insane..."

-Gilbert Keith Chesterton 1910

Mon, 01/31/2011 - 23:13 | 922645 QQQBall
QQQBall's picture

Now that is a great and appropriate quote

Mon, 02/01/2010 - 23:38 | 214324 Anonymous
Anonymous's picture

Correct me if I'm wrong, but hasn't the $6.3 trillion already been spent? Thus, shouldn't it be part of last year's budget? Even then, isn't it more of a reallocation of balance sheets rather than a budget item? Just wondering...

Mon, 02/01/2010 - 23:42 | 214331 Anonymous
Anonymous's picture

I see the Feds grow a "TARP Inspector General" in 2010 at a mere $25 million ($50 million in 2011).

Low pay by GS standards, but I'm willing to sign up.

Mon, 02/01/2010 - 23:45 | 214335 Eally Ucked
Eally Ucked's picture

And you worry about Greece induced Euro crisis? Let's start printing!!!

Tue, 02/02/2010 - 00:02 | 214351 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Aussie aussie aussie!!!!

Mon, 02/01/2010 - 23:46 | 214336 OutLookingIn
OutLookingIn's picture

Once everyone realizes that they have been lied to, at which point the governments leadership credibility evaporates - leaving the populace with no jobs, no money, no services, no backstop, no justice, no faith, no hope, and no effective government for 300 million people who are armed to the teeth...


Tue, 02/02/2010 - 00:07 | 214361 Anonymous
Anonymous's picture

simple cycle - at some point the majority realizes that "they" are laughing at them and not with them and those that still say, a man as underprivileged as we are is representing us realize that their chips taste like shit. I'm not down with Focker, nobody is going to milk me like a cat.

Ravi Batra is a good source for this social trend. We are such a vain society, everything ends and I would argue that there is a peak for everything from a macro perspective - I cant find one thing associated with this piggy empire that hasn't peaked out.

Mon, 02/01/2010 - 23:56 | 214343 Anonymous
Anonymous's picture

so from an accounting perspective what is the multi-year impact of the 6.3t usd?....is it expensed in one year? i doubt it....is it capitalized? maybe....is loan loss reserves which should be established and if so how much per year? this number needs more analysis....it's not pretty but assuming that it should be expensed next year is nonsense....unless of course there are 6.3t usd in losses expected in one year...

Mon, 02/01/2010 - 23:59 | 214347 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I am not buying an ipadddddddddddddd.  O.  Buy Silver.

Tue, 02/02/2010 - 00:57 | 214405 Dburn
Dburn's picture


Tue, 02/02/2010 - 01:19 | 214422 Anonymous
Anonymous's picture

Fook that little cute runt iPad. I am ordering parts to build for myself a last remaining example of a Crossfire gaming computer to take advantage of a dying video game market as I seek to escape a failing society that does not have anything to do when this is all over.

They can take thier iPads and shove it. I build my own, just never heavier than I can physically lift.

Tue, 02/02/2010 - 00:36 | 214389 Daedal
Daedal's picture

This reminds me of a co-worker who, when questioned about why his number was off by $10million, responded with: "Immaterial."

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