ch.annel2-i.s-n.ow-a.ngry

China’s stimulus plan comes on top of more than $4 trillion in government pledges around the world for bank bailouts, credit guarantees and fiscal spending to contain the damage from the worst financial turmoil since the 1930s Great Depression.

It pains me to trot out that old warhorse again but ‘a few trillion here, a few trillion there, now you’re talking about real money.’

Trillions of dollars shouldn’t even come up in polite conversation, but now it wont go away. Oh well, win big, fail big. Swish! 25% of the world’s economy, 25% of it’s fail. Oh well, as long as money is a made up concept, we can just make up some more of it to FIX EVERYTHING.

EVERYTHING!

The nation’s debt as a percentage of all economic activity, while growing alarmingly now, is not at historic highs. The portion held outside the American government, here and abroad, in the form of Treasury securities was $5.8 trillion at the end of last month.

That is a relatively modest 40.8 percent of the nation’s annual income, far below the 109 percent coming out of World War II or the nearly 50 percent in much of the 1990s.

Put another way, if the entire national income were dedicated to debt repayment, the debt would be paid off in less than five months. For most of the years since 1940, paying down the debt would have taken longer, putting a greater strain on income.

It’s like they’re not even listening to what they say. If the entire national income (which I’m guessing they’re basing on GDP, which is on it’s way down) was dedicated to paying off the national debt, it would take at least 8-10 months. You must remember the GDP calculates in ‘phantom money,’ such as the money homeowners would be paying themselves in rent as if they were renting their houses from themselves. I’ll leave it as an exercise of the reader to try to figure out what percentage of GDP that is, the point is the NYT isn’t even listening to themselves.

I think what they meant was the foreign-owned portion of our debt. Anyway, their scenario is unrealistic, because we’re spending at least 400 billion a year in interest, at least according to how the NYT calculated interested on Treasury bills on page one of the article. They say at 4% (what long-ass-term treasuries are selling for, short term are negative percentage or near so), an extra one trillion in debt equals 40 billion a year, and that’s only for new debt, all the debt already sold may have locked in interest rates based on the prevailing rates of the day. They also didn’t calculate how much of our income currently services the debt, which the US makes monthly payments on (and since we’re in deficit-only spending at this point, I can only assume that the debt is serviced with more debt, like paying off one credit card with another, and I assure you that is a wildly losing prospect.)

Also what’s not mention in this article on debt and deficit is the fact that the White House *refuses* to calculate the cost of war borrowing into the deficit. So instead of the deficit being a nice, non-half-trillion $455 billion dollars, the total is more like $562 billion deficit this year, and thusly the deficit has been underreported since at least 2003-4.

At least the poor, unsuspecting NYT flack got torn apart in the comments, rightly so. At first I thought there were no comments, turns out they just hide them on a separate page. Good thing I found them, check this out:

The current aggregate Federal deficit is $10 trillion dollars, and will likely increase by $1 trillion in the current fiscal year. Add to this amount, the unfunded debt obligations of the US government to Social Security ($7 trillion) and Medicare ($34 trillion dollars), and you arrive at a total aggregate government debt of $51 trillion dollars, or about $400,000 per US household. Using these numbers, US government debt is now at epidemic proportions, regardless of what economists say about the debt being a relatively small proportion of GDP. Most people do not realize that the money workers are paying into Social Security and Medicare today is not being placed in a bank for their later use. The government spends that money as soon as it gets it, meaning the government owes people paying into the system today for future benefits when they retire. This years’ cost of living increase for Social Security was 5.8%, and healthcare costs continue to increase at rates above inflation. The impact of Social Security and Medicare obligations on Federal borrowing will increase significantly with time, amplifying US government debt obligations even further

When the US government debt bubble bursts, the magnitude of the consequences will dwarf the pain associated with today’s current global economic crisis. Who will bailout the US government when its creditors cash in their US Treasury bills, and decide not to renew them?

As if the $500+ trillion derivatives market wasn’t scary enough.

 MBAs of the world weep, and head back to school. 

The U.S. is turning to foreign governments and other overseas investors to buy a good chunk of what could total $700 billion in Treasury debt expected to finance the bailout. Foreign investors also are needed to shore up the depleted capital of the nation’s financial institutions, seen in the plan by Japan’s Mitsubishi UFJ Financial Group to buy a large stake in Morgan Stanley, which is weighed down by bad debt and market distrust.

 Shockingly, the only place this bailout money could come from is DEBT, because our country is BROKE. The only time your debt should exceed your annual income is if you’ve bought a house (or in the case of being a country, perhaps another country). And since everyone in America except the smart rich guys are broke, guess where the money’s gonna have to come from? Foreign countries scared to death our financial collapse will ruin them as well. 

Along with nine other agents, the company recovers up to five boats daily throughout Florida. Each is listed online for auction within a week; most are bought by foreigners.

This is your country on credit. Smoke it if ya got it, because it’s all going overseas and we’re going down the toilet.

First, a truism that NO ONE gets: The only easy money being had is the money going to the guy selling you the plan to make easy money.

Second, a Newsweek quote via the Mishblog:

The federal agency charged with backstopping pension benefits for 44 million Americans has understated the risks of its new investment policy, a congressional watchdog said Monday.

The PBGC said earlier this year that it would take a more aggressive investment approach by investing more in stocks and adding new alternative investments, such as real estate and private equity funds.

The agency, which has assets of $68 billion, hopes the strategy will help it close a $14 billion gap between those assets and its liabilities. Otherwise, taxpayers could be called upon to pony up extra funding, the director of the PBGC has warned.

As a well-educated taxpayer, I would like to call bullshit on this: taxpayers will not be ponying up the extra funding, foreign sovereign wealth funds will be loaning America money to pony up the extra funding. Taxpayers will be ponying up extra debt without any recourse or way to say no.

I say no taxation without at least a kiss on the back of the neck when we are being royally screwed in the asshole.

Housing bill: up to $300 billion, plus “whatever” for Fannie and Freddie.

Stimulus bill: $150 billion

We were already in a deficit when we passed those bills. That’s an extra $450 in debt, assuming Fannie and Freddie don’t get into trillion-dollar trouble. Our debt cap was raised to over 10 trillion to accommodate for possibe Fannie and Freddie fallout - so we have oh I think 800 billion or so more dollars that we could potentially be adding to the deficit this year. Are we really going for a trillion dollar deficit on a budget that used to be only 2 trillion dollars?

Are you fucking kidding me? This money doesn’t really exist, it’s all a shadow play.

Treasury Secretary Henry Paulson sought to reassure an anxious public Sunday that the banking system is sound, while also bracing people for more troubled times ahead.

“I think it’s going to be months that we’re working our way through this period - clearly months,” he said.

Paulson said the number of troubled banks will increase as they struggle to cope with big losses on bad mortgages. The government this month took over IndyMac after a run led it to become the largest regulated thrift to fail.

This strikes me as exactly the line Bear Sterns was speaking right before they went completely and utterly into the shitter. More fuckwittery:

“We’re going through a challenging time with our economy. This is a tough time. The three big issues we’re facing right now are, first, the housing correction which is at the heart of the slowdown; secondly, turmoil of the capital markets; and thirdly, the high oil prices, which are going to prolong the slowdown,” he said.

Forgot: high price of food, dollar in the shitter, waging wars that will cost us trillions more dollars that we really don’t have and can’t get. Our defense budget is now like 2/3rds of our tax revenue, and we’re still in the hole by 400+ billion dollars every year? If there’s justice in history, Bush will be known as the ten trillion dollar man, but that wouldn’t be justice for the American populace (or would it, he did have the highest approval rating of any president, ever, for a while, by sheer fatal accident). If if the budget doesn’t top ten trillion before Bush scoots, his effect on the world will probably keep our debt snowballing until at least fifteen trillion - and even if he doesn’t beat ten trillion, he can still be known as the five trillion dollar man, since five trillion dollars in new debt was wrought under his term - pretty impressive when you consider our debt was going down by a quarter trillion dollars a year by the time Clinton left office, blowjob or not.

And consider that for a second - if we had stayed on the path Clinton (a Republocrat) had charted, we would, after eight years, only be two trillion dollars in debt. Even assuming the attacks on the Trade Centers had still happened, and our economy had been knocked back a step, with good, conservative fiscal policy, we could have at least broke even or charted a course back to the budget surplus and maybe even ended up with only three trillion in debt eight years on, anything less than the penultimate step to ten trillion. Now, we turn back to Paulson for a second for some more dreaming:

“But remember, our economy has got very strong long-term fundamentals, solid fundamentals. And you know, your policy-makers here, regulators, we’re being very vigilant.”

Long term fundamentals, the same 8 year long term fundamentals we’ve had, more than doubling our debt? Sure, our economy has “grown,” but more than our debt?

click for larger version

You be the judge.

So there are apparently some financial gymnastics that have allowed banks to keep up to $5,000 billion (yeah, 5 trillion) worth of assets off their balance sheets, assets they would normally have to hold reserve capital (cash) on hand for (only a percentage, but they have to hold something like at least 6% - 6% of $5 trillion is a fucking lot), and now they are about to have to put them back on the books. Shedlock, wizard of the dollars, will tell you what that means.

The absurdity is not $5 trillion coming back on bank balance sheets. Rather the absurdity is with accounting rules that let banks hold this much stuff off balance sheets in the first place. It makes a mockery of stated leverage, value at risk, and capitalization ratios. Banks claim to be well capitalized but the ratio is a mere 6% and that 6% does not include the effects of hiding $5 trillion off balance sheets.

And that 6% is 6% of your money that they have lent out. Lets say a bank has $5 million in total deposits from you and me. They’re only currently required to actually keep 6% of that on hand in case we want to cash out. The rest is lent to Joe Shmoe, or Joe Shady and Jill Sketchy, mostly subprime borrows but sometimes just ‘investors’ and speculators (if you’re an ‘investor’ why do you have a loan?) with little intentions of paying back that cash now that the housing market has died.

Some reckonings of the annual US Military dollar input, including ‘emergency’ war time funds for Iraq and Afghanistan and everything that’s not reported in the actually claimed amounts being close to $750 billion, which is a nice number so let’s work with that.

According to the Whitehouse’s web propaganda, (remember kids, public relations is the newspeak term for propaganda to make it family-friendly), our military budget is projected to be $553 billion, up around $50 billion for the year before, and we’re now “actually winning” the war or something (though our troop drawdown has, you guessed it, started failing just in time for them to say “oh look the surge fails when the men are gone” and start bucking to bump the troop numbers back up. For what? Gas that’s $3.76 at Safeway, one of the cheapest in town? Gas costs so much now it boggles me to think of it at $1.40 the day Clinton passed from office. And if you’re telling me that’s inflation adjusted, then my dollars are now worthless, so what sort of comfort do you expect me to get from that? I made $15 an hour in 2001, and I make the same now. Gas used to eat 10% of my hourly wage per gallon, now that’s up to almost 25%.

$553 billion + $157 billion already requested for the “Global War on Terror,” yes, that is the actual line-item from the United States budget. It still sounds to me like something from the cartoons I watched as a child. Still in request status for last year is $90 bil for the GWT, so $553 + $157 + 90 = $800 billion . So, assuming I don’t know exactly what we’re talking about when it comes to what this fantasy land budget actually means, we can at least guarantee $710 billion of that is asked for. And considering how badly things have gone thus far, the longer we keep troops there the more likely that is to increase.

Our war bills are up, our economy is down, and the deficit is supposed to shrink by $4 billion this year, after we’ve sent back $162 billion in tax rebates, just ‘cuz ? Our war bill is 3x our deficit, our tax rebate is more than half of what our projected deficit is going to be.

Imagine what $750 billion could mean for America if we were spending that money for the troops to fix our country, not bomb another, innocent, country?