Stockman: "Trump Will Create A Debt Crisis Like Never Before"

Tyler Durden's picture

Having warned that "everything will grind to a halt on March 5th" due to the under-appreciated debt-ceiling debacle that looms over Washington, and exclaiming that "what is going on today is complete insanity," former Reagan Budget Director David Stockman is rapidly losing faith that anything can be done... 

"I've thrown in the towel because he’s not paying attention and he’s not learning anything and he’s making ridiculous statements."

Reflecting on Trump's address to Congress, and what we know of The White House agenda, Stockman told Fox Business' Neil Cavuto:

"We don’t need a $54 billion increase in defense when the budget already is ten times bigger than that of Russia. We don’t need $6 trillion of defense spending over the next decade because China is going nowhere except trying to keep their Ponzi scheme together."

Stockman rejected Trump's dynamic scoring hope...

"Trump is so deep in fiscal la-la-land, he won't even find the wrong envelope... he is saying crazy things."

And wasn’t sold on Speaker Ryan’s Obamacare plan.

“If you look at the Ryan draft that came out over the weekend, it’s basically Obamacare-like. It’s not really repealing anything,” he said.

 

“It’s basically reneging and turning the Medicaid expansion into a block grant, turning the exchanges into tax credits [and] it’s still going to cost trillions of dollars.

Last week, Trump’s Treasury Secretary Steven Mnuchin, told FOX Business the administration is “focused on an aggressive timeline” to produce a tax reform plan by August Opens a New Window. , but in Stockman’s opinion, tax reform won’t happen this year.

He also warned that the administration’s run up against the debt ceiling this summer could lead to a debt crisis.

“I don’t think we will see the tax cuts this year at all,” he said.

 

“There is going to be a debt ceiling crisis like never before this summer and that’s what people don’t realize. They’ve burned up all the cash that Obama left on the balance sheet for whatever reason.”

Stockman added that "...by the time we get to June or July, we are going to see a debt ceiling crisis like never before."

As a reminder, Stockman warned last week: 

“I think what people are missing is this date, March 15th 2017.  That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015.  That holiday expires.  The debt ceiling will freeze in at $20 trillion.  It will then be law.  It will be a hard stop.  The Treasury will have roughly $200 billion in cash.  We are burning cash at a $75 billion a month rate.  By summer, they will be out of cash.  Then we will be in the mother of all debt ceiling crises.  Everything will grind to a halt.  I think we will have a government shutdown.  There will not be Obama Care repeal and replace.  There will be no tax cut.  There will be no infrastructure stimulus.  There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.”

Stockman also predicts very positive price moves for gold and silver as a result of the coming budget calamity.

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AlexCharting's picture

We all know its going to collapse... its all a question of WHEN. 

abyssinian's picture

Another one? Don't we have the biggest debt crisis ever? and stock markets are at record high! So I guess Trump can make the debt crisis even bigger and the stock markets will go even higher!  Not bad!

Stainless Steel Rat's picture

OT 4CHAN is now owned by GOOGLE.  Stay AWAY!

(Or just pop on to post a "4CHAN is now owned by GOOGLE" meme to get instantly banned. ;-)  )

HockeyFool's picture

What would really be interesting is to hear Stockman say anything other than what he has been saying for as long as I can remember: "The Sky is Falling!"

Seriously, this guy has been saying the world will end over and over and over. I guess if he says it long enough eventually he will be correct.

annalee's picture

The debt money has been used to prop up the stock market.  Which stocks went up?  Trump just announced $54 billlions more for military spending.

auricle's picture

Hey Stockman, you forget the Fed and their ability to monitize debt and deficits. 

weburke's picture

the reserve currency MUST go into debt.

prime american's picture

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Escrava Isaura's picture

The conservatives and Libertards level of ignorance of money is astonishing.

"All the perplexities, confusion and distresses in America arise not from defects in the constitution…, as much from downright ignorance of the nature of coin, credit, and circulation" — John Adams, August 25, 1787.  

… it is important to remember that the GOVERNMENT DIFFERS CRITICALLY FROM BUSINESSES AND INDIVIDUALS.

As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills … In this sense, the government is not dependent on credit markets to remain operational. Moreover, there will always be a market for U.S. government debt at home because the U.S. GOVERNMENT HAS THE ONLY MEANS of creating risk-free dollar-denominated assets …

http://bilbo.economicoutlook.net/blog/?p=35506 

 

 

bshirley1968's picture

Those 11 points may be true, and I believe they are but, they are deck chairs on the Titanic compared to the real facts out there that indicate we are in a state of collapse.

How about the fact that we are spending $4 billion a day in interest.

How about the fact that total market debt is 320% of GDP.  If we continue to grow it at our past rates, in 30 years it will be $584 trillion.

Student debt is $1.2 trillion and 45% is delinquent. 

Auto debt is over $1 trillion and repos are on the rise.

Real wages are at 1985 levels.

10 of the wealthiest Americans are worth more than the bottom 3.5 billion people in the world.

Our "budget" (what a joke) deficit is around a trillion dollars, give or take a couple hundred billion.

Our money is debt based and printed at will by a private bank that uses our dollars to bail put it's banking cartel around the world, thereby inflating (devaluing) our money, thereby devaluing our lives......and there's not a damn thing anybody can or will do about it.

Pension plans nationwide are in t he hole $2 trillion dollars.

And you think insurance premiums are  big deal?  If those 94 million people were working, it wouldn't generate enough economy to cover the deficit.  So what 43 million are on food stamps, that JPMORGAN skims millions off of by administering the "ebt" debit cards.  What the hell is 43 million?  That ain't jack shit!

Think about this: If you had  trillion dollars, you could spend a million a day for 2,740 years.  If you counted to 16 trillion one second per number, it would take over 522, 000 YEARS!  If you took 16 trillion dollars and lined them up end to end, you could make a line to Mars. .....and back........3 times. 

Trump is still playing little league if that list is the best he can do.

Troy Ounce's picture

 

 

Nothing will happen. Everything will stay the same. The debt ceilings will be increased from US$20T to US$100T and a repeat of Baywatch series 2 will make sure the proles will sleep tight.

Repeat: the can will be kicked down the road. Nobody will take responsibility for our financial system. They can't.  

 

 

Another regional indian.'s picture

Interest on debt can be paid back. Old debt can be paid bakc with new debt. People's asset values (that are used as collateral for the debt they take) have been increasing. There is no limit to how many treasury bonds can be created. A 20 trillion coin can be minted to pay off the debt if debt grinds the economy to a total halt or debt/part of debt can be pardoned. Anybody welcome to correct me if i am wrong.

Miss Informed's picture

I would approve of that as long as I can be the issuer of the $20 trillion dollar coin. While I'm at it I will mint a few more for later.

Miss Informed's picture

Can I get a trillion on my "good faith and credit" and put my payments off for 2,740 years?

johnofRandI's picture

Yes, Stockman is smart, has experince and a past.  But he's aying the stock market discounts the past.  NOT

The stock market discounts Stockmans wall of worry. Maybe.  But that means Stockman is wrong.  Markets climb walls of worry.

Trade like the house.  trust nothing.  be mercinary.  Worries like Stockman's opinions will cloud your judgement.  This is about math and money.  Not understanding shit..

The stock market discounts the next 6 to 9 months... Prolly.  WTF is THAT saying????

It's great to be a smart broke bear. NOT

Oldwood's picture

I have no doubt that Stockman is a smart and knowledgeable man, but since when did that matter? Our reality is that we are fucked, that attempting to straighten ourselves out through fiscal responsibility at this late date will only cook what's left of our goose. Unfortunately our only hope is a hail Mary pass, a burst of optimism that incentivizes us to throw caution to the wind and actually BELIEVE we can succeed at a time when everything in our gut says we can't.

In the end, what are the risks? We tried the socialist, black nationalist, collectivist, globalist, hope and change shit. We wasted trillions of dollars and eight years of compounded depression. Let our quarterback try.

Stockman can always write another book.

GUS100CORRINA's picture

A lot of insightful comments on ZH.

For the last 8+ years, I have viewed the markets with utter amazement.

Stockman, while experienced and intelligent, is NOT saying anything new for those who have eyes to see and ears to hear and understand.

The DEBT thing has been going on for 2 decades. 

America's problem is its MORAL foundation. Debt is simply a symptom of deeper moral and spiritual problems. If we do find ourselves in a difficult situation, I am sure the solution will not be financial, but spiritual and moral in nature.

There are a lot of smart BEARs who are NOW BROKE!!

 

post turtle saver's picture

hey, Stockman, we get it... what I want to know is, where were you when the whole debt ceiling political pandering went down back in '81?

the debt ceiling is pure political theatre and serves no purpose other than to introduce US credit risk, lower our rating, and cause us to pay more interest on borrowing... in short, it compounds the effects of debt with no return other than allowing Congresscritters to grandstand every time it's hit...

the debt ceiling should be abolished, period end of story... quit creating false crises out of thin fucking air that waste everyone's time and get back to the business of running a fucking budget...

Sonny Brakes's picture

It'll end when those victimised by economic terrorism bring their wrath to the heads of the banks and mogadishu them down Wall street.

Mr.Sono's picture

It's OK we got printing press 

runswithscissors's picture

What ever happened to the idea of the treasury minting trillion dollar coins...problem solved!

tmosley's picture

It might be too late to do anything about debt, or taxes, or Obamacare, but it is never too late to stop paying government regulators. They are the single greatest impediment. Lower taxes are nice, but it is the huge, non-scaling compliance costs that kill small business and thus the economy.

Suspect a gold/silver standard is closer than most people think. Let it crash, use crash as an excuse to quickly purge everyone, the people will beg for a solution, and we can bring in the new currency in this way, while also renegotiating our foreign debts.

This is a bankruptcy proceeding, and Trump knows how to handle bankruptcy proceedings.

Bill of Rights's picture

Ya ok asshole like there's not already a global debt crises... way before Trump, again asshole.

NoDebt's picture

FFS, David, we passed "way too fucking late" about 8 exits back already.  Just fucking enjoy the ride for what it is.  It's the last one, after all.  And you won't get your money back just because you bitch and complain about it the whole time.

 

 

 

BingoBoggins's picture

Wrong. Continue with criticism based in experience and with presented with a modicum of expertise. Allow debate to refine the argjument.

Otherwise ... NoDebt? The Committee has determined you're no longer a good fit for The Club. Pick up your tools and go home. Bill of Rights will escort you to the door.

What? He's been let go, too?

NoDebt's picture

"Continue with criticism based in experience and with presented with a modicum of expertise"

I just did.  

 

Don Sunset's picture

2 thumbs for a reality check reresh  Ain't it so true?

order66's picture

The real question is: How long is Stockman gold and silver?

rejected's picture

He is long on gold,,, he said to Greg Hunter in an interview last week, I think.

mpcascio's picture

How do you know we don't need the increased defense budget ? Stop talking  like you have all the answers. 

OckhamsRazr's picture

yes everything is going to grind to a halt!  Just like Trump would never win the election.  There would never be a Trump rally and the plan was to SELL THE INAUGURATION.

 

Do people actually still fall for this stuff? I mean it has been 6 years and a move of basically 20,000 points UP  in the DOw and these morons keep missing the boat. When the markets are ready to sell off these analysts will be on Food Stamps if they aren't already.

 

The only analyst I know of who has been calling the ups and down in stocks, oil and in GOLD is SHEPWAVE.  I am So sick of analysts who guess at what is going on. Shepwave proves their calls. Here is a link to just a couple of their past calls. They change these up every so often. 

https://t.co/f3mU9N8rc4         

FemDayTrader's picture

That is too funny. I have been saying the same thing for years now. All of this so-called excellent analysis for nothing.  People on here have basically been wiped out because of listening to this garbage.

You are right, SHEPWAVE has a consistent and correct record. I wish they did more than just analysis on the US equities, old and gold.  Years ago they would give day by day silver trades too. that was good. I think they may need to start that again too.

 

 

desirdavenir's picture

Stickman is indeed a voice of sanity, and it tells a lot to realize that sanity is not rewarded. And it has been going on for so long that one now wonders whether the developed countries can withstand economic reality.

Another regional indian.'s picture

Given that ZH itself tells people here not to make financial decisions (including stock market purchases/sell off) based on what they read here, if people did it....they only have themselves to them. 

How st*pid people need to be to still believe a site that tells them not to to believe what they read here.

Irvingm's picture

There are a lot of  stupid people  here. You said it right.

Irvingm's picture

There are a lot of  stupid people  here. You said it right.

P Christmas Carole's picture

ShepWave is a matter of fact kind of site. Strict analysis. That is why they do so well. They are only focused on the actual movements of the markets and they can pin point them to a tee like every time. When analysts like Stockman get stuck on their own personal feelings and political agendas their analsyis suffers., That is what has happened to Stockman and ZH.    

rejected's picture

Stockman is missing what many of us are and that is you can't rely on real numbers in manipulated bot markets.

They'll probably just pass another debt moratorium or similar schemes.  The crash will come when they can no longer fake it.

GRDguy's picture

The problem isn't that they would ever stop faking it?

The problem is will the 99% survive the faking.

shimmy's picture

He's correct in what he is saying other than thinking there is going to be some debt ceiling drama. They'll just raise it up like they do every single year.

runswithscissors's picture

How stupid...yeah, Trump is going to create the debt crisis after the commie brown clown just added 10 trillion to the national debt

jomama's picture

You going to blame Ofailure for four years?

How long until you're ready to own some responsibility?

GRDguy's picture

Is Stockman ever going to own up to some responsibility for what's happened since 1981?

GRDguy's picture

Sometimes I get the feeling that Stockman opened Pandora's Box of relentless federal debt.

It started during Reagan's era from 1981 to 1989. See the Fed's graph.

https://fred.stlouisfed.org/series/GFDEBTN

Trouble is, he couldn't close the lid.

Miss Informed's picture

Like getting a lecture from Allen Greenspan about gold and fiscal discipline.

American Gorbachev's picture

Stockman knows personally and intimately, how the political tug-of-war distorts and/or disables economic policy proposals

therefore i pay close attention to what he has to say (and more importantly what he does not say, but seems to imply)

big things (wars, bubbles, market crashes, power struggles etc) run on political timetables for maximization of gain

i get the impression that David is trying to warn us that the PTB are going to use the debt-ceiling to castrate the Trump administration's legislative goals

(indeed, tho last night's speech was very impressive, over the past few weeks i have begun to refer to him as "President Gulliver", for they are regularly, methodically it seems, throwing ropes over him and beginning to tie them down)

and if the legislative goals are rendered moot (tax cut, aca repeal, infrastructure plan etc.) then all Trump is left with is the "pen and phone" and/or to acquiesce to giving the PTB (Neocons ?) a war somewhere

maybe they'll be satisfied with the destruction of Yemen ?

that should get the game on for the mid-term elections next year