Posts Tagged ‘Debt Ceiling’

THEY’RE AT IT AGAIN

October 28, 2015

Does anybody remember the financial meltdown of 2008 that began the current depression? (Yes, I mean depression and I’ll explain that in a bit). Does anybody care that it is happening again, but this time on a much, much larger scale?

The United States of America, not just Wall Street, is over-leveraged and operating on what can only be considered pyramid tactics. Continued borrowing to support wasteful deficit spending without a plan in place to do anything but exacerbate the condition is rapidly bringing us to the brink.

Secretary of Treasury, Jacob (Jack) Lew, is calling for yet another raising of the debt ceiling to pay the debts we cannot afford. Why call it a ceiling? Ceiling implies the extent to which something can rise. If we continue to raise the ceiling, there is effectively no ceiling. Why do we make-believe there is a limit for the amount of debt an administration or a country may incur?

There is even a potential plan in place, that could be passed by congress to “suspend” the debt ceiling.  What a great plan!  Don’t even try to set a limit or quantify a spending amount, just allow spending to go on and wait for the collapse of the country.  Now I’m depressed.

The government spins the job reports to make it look like we are in recovery. They put forth that unemployment claims are at a 40 year low. They purposefully fail to state that 37.6% of the eligible civilian workforce is without work and have been for so long that they no longer show on the unemployment rolls.  This number continues to rise.

In 1929, 25% of the workforce was idle and that was called a depression.  The number of people out of work today is increasing as the available jobs continue to decrease.  Among those wage earners fortunate enough to have employment, weekly hours now average just 32 where a 40 hour workweek was the norm just a few years ago.

Today the government sends money straight to people’s bank accounts via EBT and SNAP so we don’t see long bread lines today.  It’s all illusion.

Another round of housing foreclosures is on the horizon.  Fire sale pricing is already underway in some areas of the country. This will only sink us deeper into the “recession” from which the government claims we’re recovering. It will put more people on the Welfare rolls requiring more assistance from the federal government. This won’t be the last request for a debt ceiling increase to pay the bills.

Just a reasoned cutback on wasteful expenditures by our public employees would help the situation tremendously. A few less billion dollar grants to nations sponsoring terrorism might also be a place to start.

WHEN WILL IT END?

October 17, 2015

The government, the news cycles, the debates all continue to pound us with the fact that we now have $18 trillion in debt. That’s scary.   However, what they fail to present is that the United States is suffering under a burden that lies somewhere between $125 trillion to $130 trillion in unfunded liabilities beyond the announced $18 trillion “debt”.

The true amount is difficult to accurately identify because it depends on the accounting method used by the government. The method du jour varies according to what they want to present or hide.

Hellooo!  Unfunded liabilities are debt, too. It is money obligated for contracted purchases of goods, services and programs. It is the government’s credit card spending; obligate the money now and pay for it on time, with interest, hoping that some money will come in to cover it before the next minimum payment comes due.  It’s money promised for Welfare, health care, school subsidies, subsidies to state governments, grants and subsidies to foreign governments, etc. Our government has promised, but has not yet figured out how to pay for, over $127,000,000,000,000 in liabilities.

This is what is known as a national security threat! Climate change will not be a concern when the master banker of the world collapses.

Political Cartoons by Gary Varvel

Unbelievably, a majority of our elected elite are willing to again raise the debt ceiling and continue spending into oblivion. It’s not like the coming chaos is unforeseen. When you have $X coming in and $X+4 being spent and obligated, you’re going to run out of money at some point.

The logical way of easing the problem is to cut back on spending. The current way is continue with status quo; blame the previous president and congress but continue spending. Congress after congress, Democrat controlled and Republican controlled, there has not been a budget passed by congress in over ten years. This country has been operating on continuing resolutions with projected escalation since well before Bush left office. Congress continues to appropriate nonexistent funds.

This is like your neighbor who knew his continued employment was tenuous, had no savings to fall back on, yet continued his extravagant life paying the minimum on his maxed limit credit cards with what he could borrow from friends. He kept asking for higher limits on his accounts until he could no longer make the minimum payments and his car payment so he lost his car…then his house…then his wife before declaring bankruptcy to relieve his burden. All could have been saved if he just quit buying more unneeded stuff and spending frivolously a couple of years earlier.

So, free college for all. Free medical care for all. Free public transportation for all. Free meals for all. Free housing for all. Open the borders and let more people in.  No need to work, the government is here for you.  They’ll just keep borrowing and spending until our creditors cut us off. Enjoy the ride, it’s all free.  IT’S ALL FREE!

DEFICIT v. DEBT

February 16, 2014

A few nights ago, I had C-SPAN on for background while I was concentrating on something else. The discussion on the floor of the House was about raising the debt ceiling. I got tennis neck from whipping my head around when I heard one of the House members, a Democrat, (I apologize, I did not get his name) say that raising the debt ceiling will not add to the deficit.

Of course raising the debt ceiling won’t have a negative affect on the deficit. That statement definitely got my attention. The inverse is true, but not the statement he made.

I didn’t know if it was a legitimate mistake or if he really thought he was making a remarkable point. If the former is true, he needs to take Econ. 101 before he makes an idiot of himself again. If the latter was his intent, it should offend every person who does understand the relationship between debt and deficit. He obviously believes the rest of us should wear pointy little hats with DUNCE written across the front.

Just as my senses returned, another representative was given the opportunity to speak. I’ll be damned if he didn’t repeat the very same drivel. I then realized this was a talking point written and distributed by someone thinking he or she had all the intelligence and the rest of us had none.

Many people who are not familiar with the terms may have the two terms muddled. Certainly, statements like the one above will do that to an ordinary mind. The differences are simple, however.

Deficit is the negative difference between income and expenditures. E.g. Your income is $100 and you spend $110. Debt, on the other hand, is the result of overspending your income or the accumulation of deficit spending. E.g. If you pay the $100 you have and defer payment on the $10, you have a debt of $10. If you do that two months in a row, you have a debt of $20 plus interest on the first $10.

Another example: You have a credit card with a $10,000 spending limit. Your charges to date are $9,500. That is your debt. The interest on the debt is 18%. If you make the minimum payment required each month, you pay only the interest on the debt and 1% of the principal (aka the amount owing, balance, debt). Your payment this month is $237.50. Of that payment, the interest is $142.50 and the debt reduction is $95.

Now you want to buy a 60” H.D. flat screen TV. The cost of that toy is $2,500. You don’t have the cash to pay for it and you don’t have enough credit left to buy it so you call Bank of America and ask for a credit increase (you want your debt ceiling raised). Because your history shows that you regularly make the minimum required payment, BofA grants your request and you can make that purchase.

With that purchase, you just increased your deficit spending and your debt by $2,500 because you could not afford it.

CONGRATULATIONS AMERICA! The duly elected idiots in Congress granted themselves a $512 billion debt ceiling raise last week so they can continue to spend beyond your means. This move will allow the president a few more multi-million dollar vacations at your expense before he leaves office and more distribution of your wealth to Democratic donors and voters. It may mean a small raise in your taxes, but that’s okay because you are a wealthy, greedy and productive member of society. You need to share with those people who have less because the “government” doesn’t provide them with enough.

MEET YOUR NEW MASTER

July 6, 2011

President Clinton was not and is not always wrong.  Now that he’s been out of political office for over a decade, he might be starting to see the light.  In a recent gathering, he threw out the notion that our corporate tax rate is “uncompetitive”.  However, he wanted a reasonable lowering of that rate to be in conjunction with a rise in the debt ceiling.  He’s half right, here.  The corporate tax rate should be lowered; loop holes plugged and let the corporations flourish.

Many people will remember 90s and his tenure in office.  The first few years of the decade were slow recovery from an economic down turn.  Then prosperity returned.  Jobs were available and those who chose to work could and did.  Credit card companies were willing to raise limits for people with some assurance of being repaid.

As individuals spent more and more on things they wanted, but truly didn’t need in many cases, Bank of America, Citi, Sears and others would allow them to spend more and only make a $10, $15 or sometimes as much as $30 payment.  As long as the minimum payment was met, the ten thousand dollars owed was forgotten and they could borrow more.  Then there was another hiccup in the economy.  Interest rates rose causing minimum payments to also increase.  People became aware that they could no longer afford their mortgage, car and boat payment and put out $400-$600 a month in minimum payment obligations.

Thanks to the bankruptcy laws, many people were able to get out from under their self-created madness.  The courts would simply wipe away the contracts and obligations into which consumers had entered.  Great for the consumer, bad for the creditors.  Many of the financial institutions that awarded credit to companies and consumers declared bankruptcy, some were taken over by larger or more stable competitors and yet some got bailouts from the government.  People no longer make their mortgage payment to Countrywide; they don’t exist.  That payment is now made to Bank of America, the new master.  That is, if the home hasn’t been foreclosed.

Congress and the current administration are displaying the same greed and idiocy that consumers showed not so long ago.  They are continuing to spend and asking for the credit limit to be raised.  They won’t part with the political boat or big screen.  In fact, they want to replace the boat with a bigger, faster and shinier yacht even though it sits at the dock 90% of the time.  What the heck, it’s your money that’s paying for it, raise the ceiling and they’ll continue spending.

We keep borrowing from countries that would like to see the U.S. default.  Are you ready to meet your new master?