The Senate plans to vote on the $700 billion bank rescue plan Wednesday evening -- two days after the House failed to pass it. The bill adds provisions -- including raising the FDIC insurance cap from $100,000 to $250,000 -- and will be attached to an existing revenue bill, according to several aides of Democratic leadership.
Have no fear. With all of the money we are going to make on those asset sales...we'll have a multi-trillion dollar surplus before you can "fascist dictatorship!"
techcrunch is a terrible site .. an ex venture capital guy with a huge ego pumping web2.0 companies, including his own investments, now trying to find a new niche in the news space.
All, I still think without the Fed's borrowing the debt would have been over $10 trillion by January.
theyieldcurve, the unfunded liabilities really need to be considered in terms of future GDP. The structural deficit we now have is probably the largest fiscal problem facing the nation.
Of course I wouldn't argue for huge tax increases - or huge spending cuts - when the economy is in recession (although targeted taxes and spending cuts could make sense). Otherwise we would be repeating the fiscal errors of Hoover who kept trying to balance the budget - and increasing taxes - while the economy was shrinking during the Depression.
The real reason behind paying more and more for crappier healthcare is that we do not allow real competition in that sector. Rather than simply putting a reasonable floor on quality, we tend to allow all sorts of unions, organizations and special interest group to game the system, and create chronic shortages to inflate the prices.
"The structural deficit we now have is probably the largest fiscal problem facing the nation"
Lets have a bake sale.
I still have not found some info on debt, deficit and GDP - where is the pressure point? The IMF has stuff but does not seem to apply to a peg currency...anybody??
theyieldcurve, the unfunded liabilities really need to be considered in terms of future GDP
Future GDP is driven by growth. Growth is driven by cheap energy. Cheap energy is driven by peak oil.
Here we are in a credit crunch/crash, and oil is hovering around $100. I suspect oil would be priced considerably higher if true global economic growth were to kick in again. This is what I call the "Debt Catch-22".
Back to the balout vote... Is anybody else noticing that of all the various "carrots" being proposed to alter the bill (to entice the needed votes) - things like Raising FDIC insurance limits, extending unemployment benefits, reducing the Alternative Minimum Tax....
NONE of them go the the heart of the problem with the old bill. Cloudy selection of pricing, and the supreme authroity by Paulson.
Senate to vote on bailout tomorrow; Obama, McCain to return
The Senate will take up the bailout package tomorrow, aides in both parties' leadership offices tell Crypter Marty Kady. Both John McCain and Barack Obama will return for the vote. A top McCain aide tells Crypter Amie Parnes that McCain is scrapping plans for a Louisiana fundraiser. He'll spend the weekend in Colorado and Arizona.
The proposal will be taken up along with a renewable energy tax credit extension. Aides say the bill will include an increase in the amount of deposits insured by the FDIC from $100,000 to $250,000 -- a provision called for by Sen. Barack Obama (D-Ill.) and earlier offered by House Republicans.
The vote is scheduled for 7:30 pm tomorrow night, after sundown, respecting the Jewish holiday. The chamber will also vote on a millionaires' surtax proposed by Sen. Bernie Sanders, a Vermont independent who caucuses with Democrats.
UPDATE: From Senate GOP leadership:
The Senate will vote on the economic rescue plan tomorrow night after a series of stacked votes starting at 7:30.
The structure is this:
The Senate will call up H.R. 1424, the text of which will be substituted with the economic rescue plan (a Dodd amendment which must have the consent of both the Majority and Minority Leaders). The only other amendment in order will be a Sanders amendment that will be handled by a voice vote.
The bill will be subject to a 60-vote threshold for passage.
UPDATE II: House Republicans are saying the Senate vote tomorrow is the work of bicameral, bipartisan negotiations.
From a House GOP Leadership aide: The Senate moving forward tomorrow with the economic stability package gets us one step closer to the bill becoming law and that is a good thing. The decision is a product of bipartisan-bicameral discussions and we believe that changes to the bill will help us garner more support from House Republicans and smooth the bill to passage.
I agree. Any future growth depends on solving the fossil fuel "wall". The Saudis have peaked. Mexico will cease to be an oil exporter in a matter of single digit years. Canada is re-evaulating it's bitumen exporting model. Etc, etc...
Not a pretty picture. And a picture we've never had to truly deal with before. Welcome to the new paradigm.
MISSION ACCOMPLISHED! US Government is officially a sub prime borrower now, that rating agencies just haven't figured it out yet. Congrats to all the people who voted for Bush in 00 and 04. It just couldn't have worked out better.
I would not be all that surprised at this point if COngress decided to go into closed session and shut off C-SPAN during these votes, in order to get the dirty deed DONE.
Strange, I just tried to email my congressional rep (again) to protest against the bailout plan (again) and the house.gov server won't accept emails, said something about high volume...
"The House of Representatives is currently experiencing an extraordinarily high amount of email traffic. The Write Your Representative function is therefore intermittently available. While we realize communicating to your Members of Congress is critical, we suggest attempting to do so at a later time, when demand is not so high. System engineers are working to resolve this issue and we appreciate your patience."
"Shouldn't they be locking in these rates for like 30- to 50-years?"
The 10- and 30-year yields would explode if they tried. The present panic out of all other kinds of debt (CP, MM, bank deposits) allows short term financing for almost free.
Obama should arrive just in time for the tide to reverse. God help him ...
I think I read somewhere recently that total obligations (including unfunded liabilities) is something like $53 trillion. That comes out to some crazy number like $500,000 per taxpayer.
I think I read somewhere recently that total obligations (including unfunded liabilities) is something like $53 trillion.
The number I've been throwing around in conversations is $50 Trillion. I sincerely hope there a a few undiscovered Ghawars or Cantarells right around the bend.
They raised the debt cap to 11.3 Trillion the other day. Also, Lou Dobbs is apparently telling people to email him and he will have the emails delivered by hand to Congress. They have jammed up their servers apparently so as not to hear from the rabble.
For the fun of it, I went to market to price a LIBOR Cap -- APOLLO, 15:36:32 09/30/08 Tue
A good portion of the $63T in derivatives are caps ranging from 1-7 years over LIBOR (contracts guaranteeing to a borrower by a counterparty that they will cover all costs of LIBOR rising over a certain strike price - like say 6%, to their lender). Most of these caps are tied to commercial real estate loans ensuring that Debt Service Coverage does not spiral out of bounds due to a rise in the base LIBOR contract forcing an inaverdant default on the loan. You can't get a price right now on a LIBOR cap - which means, that those $63T in derivatives are now Level III assets for lack of a better description - so under-water that noone would dare put a price on them for fear of total capitulation as it relates to capital accounts. With this unprecedented spike in LIBOR, noone is willing to price the risk of that payment to any degree of length of time, as things of late have happened that were never suppose to happen - with regards to the LIBOR index. To say that we are in for a whirl-wind of financial destruction is not to overstate. Buffets nightmare is now a reality & that's why Benbo has that look on his face like he's staring into the abyss.
quick question:
if we take warrants against the equity in the bailout, that helps solve the problem of moral hazard, AND helps protect the taxpayer, right?
"I think I read somewhere recently that total obligations (including unfunded liabilities) is something like $53 trillion."
From Comptroller David Walker, 12/15/06
And let me clarify something. The $53 trillion shortfall is expressed as a net present value. That means that in order to make the shortfall disappear wed have to have that amount of cash in the bank today - earning interest (the GAO uses 5.7% & 5.8% as the assumed long-term rate of return). Ill say it again - $53 trillion, in the bank, today. Heck, I dont even know how much a trillion is let alone fifty-three of em.
And next year wed have to put even more into this mythical interest bearing account simply because we didnt collect any interest on money we didnt put in the bank account this year. For the record, 5.7% on $53 trillion is a bit more than $3 trillion dollars so you can see how the math is working against us here. This means the deficit will swell by at least another $3 trillion plus whatever other shortfalls the government can rack up in the meantime.
Remind your congresspeople that the Senate is using a legislative trick (attaching the bailout as an amendment to a bill that passed the house) and it usurps the traditional role of the House to originate spending. Maybe some of them won't like the Senate encroaching on their "turf".
My emails have been going through fine. Congresscritters are responding, but with mixed results (one against, but two for).
Fraud Guy | 09.30.08 - 9:00 pm | #
Maybe they were just having problems earlier today, I read it on another forum earlier.
"If we had a truth-in Government act comparable to the truth-in-advertising law, every note issued by the Treasury would be obliged to include a sentence stating: "This note will be redeemed with the proceeds from an identical note which will be sold to the public when this one comes due."
So $10T in debt divided by the 100 million (or so) households in the US works out to about $100K of debt per household. But what is the percentile distribution of the total tax burden? It's something like 50% of households don't really pay anything (exc SS) and if you make $100K+ you are in the top 10% (or so). So, for those who make $100K (or so), your share of this debt load averages $1 million.
Most likely will be Bush's answer to the 10 trillion.
"We're an empire now, and when we act, we create our own reality. And while you're studying that reality - judiciously, as you will - we'll act again, creating other new realities, which you can study too, and that's how things will sort out.
What's the old saw? "Ten trillion here, ten trillion there, pretty soon..."
You know if that was actual currency we'd be physically running out of space for it. A stack of $100 bills worth ten trillion dollars would be over 5 thousand miles high (if you laid it on its side it would stretch from LA to NYC and back again).
"The surge in the National Debt over the last two weeks has been because of the Supplementary Financing Program (SFP) with the Treasury raising cash for the Fed's liquidity initiatives (announced a couple of weeks ago)."
Well isn't that special. They aren't spending it on gov't ops, they're just sloshing it into insolvent institutions.
I really want to punch one of these asshats.
Why not let them fail? Oh yeah k street lobbying money...never mind.
With all due respect to CR, I think this was predictable within 1, max years of Bush coming to office. All you had to do was look at outlays growing no matter what prediction they assumed about it slowing in 2 more years.
So how about some new predictions:
First covered bonds issued (back by carriers and F22s)
Interest rates stop decreasing and US sovereign borrowing costs begin to increase (for the first time in 20 years?)
Will total debt to GDP make it from 350% to 400%?
I say we pay Dr. Evil the ten trillion dollars. Then we print to 3 more decimals and give it to cash holders and wage earners. That'll teach the paper pushers. In a vise at 6% fixed.
<a href=http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/2791861/RBS-issues-global-stock-and-credit-crash-alert.html">RBS Issues Global Stock And Credit Crash Alert
House Speaker Nancy Pelosi has just released a very cautious statement on the Senate's decision to go first on the bailout, saying little about Harry Reid's decision beyond "Congress will work its will."
Her full statement:
"Ever since yesterday's vote, House leaders have been in frequent communication with each other and the White House to find a plan that can win strong bipartisan approval in the House Many Members have offered ideas to modify the emergency bill narrowly defeated yesterday, and we are discussing those recommendations.
"The Senate has made a decision about how to proceed and what can pass that body. The Senate will vote tomorrow night and the Congress will work its will.
"House Democrats remain strongly committed to a comprehensive bill that stabilizes the financial markets, restores confidence, and protects taxpayers, and we hope Congress can agree on legislation in the very near future."
I say that workers under age 13 pay no taxes of any kind, and that parents can deduct their wages up to $10,000 from their own income.
This will provide fiscal stimulus, as well it will boost the GDP and productivity numbers. I figure the kids are probably doing chores anyway, why not count that work towards GDP by monetizing it and leverage that up to sell some of the cash flow onward to foreigners
THere's something of a trap in exploiting the yield curve to reduce borrowing costs by bulking up on short-maturity debt. Clinton did that successfully in the '90s, but in our situation, it could easily lead to a default. If borrowing costs rise (inflation, downgrade of US debt rating), having loads of low-maturity debt that has to be rolled over could explode borrowing costs, making default more likely.
"Maturity-mismatch" --- where the maturity of your debt obligations is much shorter than the timescale of your income-generating assets.
Which leads to a question I wanted to pose to CR:
Is the present distribution of Treasury bill maturities publicly available? I'm just wondering how much resemblance there might be between this aspect of Treasury's balance sheet and that of the now defunct big players in the used-to-be shadow banking sector.
From today's NY Times: Even if Congress refuses to pass the bailout measure, there is more money where that came from. The Treasury Department has already created a series of supplemental Treasury securities to finance the Feds activities, and there is no limit to how many more it can issue and sell.
As I've said before, they'll bury the bodies at the Fed. How about rolling over TAF and TSLF until the underlying assets mature -- sound familiar?
It wasn't that long ago that the Fed recalled those $500 and $1000 notes. I think they even wanted to demonitize the existing ones.
They need to start reissuing those denominations ASAP.
In fact they ought to issue $10,000 FR notes. The only way to get one now is to pay some collector $35,000 for one of the old ones. That wouldn't be prudent.
yogi writes:
I like it Evil Hankie. And since consumption is production, home video games could be metered.
I recall a Gary Larson cartoon from the late '80s w/ a typical fat/geek child playing video games while parents gleefully read off a list of employers that are seeking his skills - made them sound like potentially real jobs (and probably some of them exist now). But very amusing.
Like I said last March,
Im always for less regulation, but I am aware of the view that there is a need for government oversight in situations like the subprime lending crisis - the problem that has cascaded through Wall Street this year. But I am fundamentally a deregulator.
Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.
You can trust me, my friends. I know what I'm doing. Don't vote for the sissy punk.
The number I've been throwing around in conversations is $50 Trillion. I sincerely hope there a a few undiscovered Ghawars or Cantarells right around the bend.
theyieldcurve | 9.30.08 - 8:57 pm | #
Richard W. Fisher (Richard W. Fisher is president and CEO of the Federal Reserve Bank of Dallas.)
Storms on the Horizon
Remarks before the Commonwealth Club of California
San Francisco, California
May 28, 2008
No combination of tax hikes and spending cuts, though, will change the total burden borne by current and future generations. For the existing unfunded liabilities to be covered in the end, someone must pay $99.2 trillion more or receive $99.2 trillion less than they have been currently promised. This is a cold, hard fact. The decision we must make is whether to shoulder a substantial portion of that burden today or compel future generations to bear its full weight.
Medicare part D that Bush signed in was a whopped of a handout to Pharma companies
Pelosi: ...strongly committed to a comprehensive bill that stabilizes the financial markets, restores confidence, and protects taxpayers,...
Politico speak for a bill that makes sure the financial markets go up up up; restores the confidence of K Street, our benefactors, and once again, protects taxpayers from the truth that they will pay the bill.
Ironical that our debt will cross $10 trillion the day the Senate votes to spend another trillion dollars. Talk about fiscal negligence!
I am again urguing you not to spend a Trillion dollars that we don't have.
If you vote for the bailout, I promise my family and I will never vote for you. I will make sure to remind you every opportunity I get of the debt load you are putting on my children
As it relates to how bad it will get if this bailout does not happen, last I checked, the markets rallied, my ATM card worked and my bank was still around.
Please come up with a solution that works and which discourages reckless behavior on part of Wall Street."
Where do I find a schedule of maturities for federal debt? If they are mainly short term, as I remember, the coming surge in interest rates should drive the final stake in our treasury. Default anyone?
I can remember when I was a kid there was a comic strip called "Henry in Lollipop Land". In his dreams Henry visited Lollipop Land where he meets lollipop flowers, tastes lollipop trees, and imagines painting lollipop skies. Henry grows up to "grow" lollipops himself, becoming a lollipop maker. (On Wall Street), emphasis added.
It was a cute story that had Henry wondering what should he be when he grew up, a Doctor, a CEO, Policeman, a Wall Street banker. When Henry falls asleep the trees turn into lollipops, and tell him what fruits they are made out of, ($US) Henry decides when he wakes up that he will make lollipops when he grows up, to make the CEO's, politicians, his friends and Wall Street bankers all happy.
That's just great. The Treasury is now borrowing short and lending long, just like the banks that got themselves into trouble via this practice, but has also rang the tab up to $10T.
GDP is something under 14 trillion, no? So the US total debt will be about 72% of GDP. This is not as good as something a lot lower, but it is not as bad as many others. Italy has debt above GDP and Japan has debt almost twice GDP. I wonder if the Japanese debt load is one reason for its stagnant economy? Any expert opinions?
The US game of squeezing the little guy to run an empire that furnishes a paradise for the rich seems to be running on borrowed time, not to mention far too much foreign money.
Soon -- maybe in this decade or the next -- a virulent populism will take hold in the public mind. No doubt it will resemble that from the era of the great railroad barons.
As a sop to growing discontent today, Obama is meant to defuse the rise of that feeling with his zeal, attractiveness and empty symbolism, ie, "change" that changes nothing, but sounds so good to the ear.
As a delaying tactic, Obamism will buy our oligarchs time; but ultimately, it's a doomed strategy. You can't feed a family on pretty speeches from a servant of Wall Street.
And that's when things will really get interesting. When the money's gone, the speeches ring hollow, and the tempers boil.
Have you noticed that at these levels the US would not qualify to become a member of the Eurozone? Which is funny given that the Maastricht criteria were designed to ensure SOME prudence, but clearly not excessive...
I notice that no one is talking about how 'this' (bailout du jour) isn't going to (or shoudn't) cost anything anymore.
Hopefully it is clear that the interest in 10 trillion dollars represents a large net present cost to taxpayers, one which far exceeds any mythical social security deficit. With a raise in interest rates (due to say, the treasury and fed taking junk on their books) the interest payments will exceed even the defense department budget.
Good old GOP -- lies, cons, and pandering. The "good" news for all you GOP voters is that the only true plank they ever had is closing in on reality: The US Government is closing in on it doom.
Unfortunately longer term the national debt is set to go even higher; thanks to funding needs for the ongoing government intervention and regulatory activities. This means $10 trillion will be old news by the end of the year, with $15 trillion (or $150,000 per household) in range by the end of 2010 if we keep up the current pace of spending. Fully funded social security and universal health care are fast becoming pipe dreams. Our future generations will have a heavy burden on them indeed.
But a dollar is only worth a tenth of a cent (OK, OK, I'm a cockeyed optimist... I'll be more realistic and say one hundreth of a cent)... so our debt is...carry the one....
hmmm... Well, I get my zeros mixed up (there are so, so many...)
so with real money its probably only 100 billion or so.
first
amazing
Woo hoo! Party at the RiskDome!
sometimes it is not a good thing to be right..
Even unborn grandchildren will end up paying for Bush--what a legacy.
Well, slightly OT, but earlier someone posted having an argument about the bailout with one of James Moran's staffers.
Does anyone know (or can find out) about his connection to the credit card industry? This is 10 years old, but I noticed that he has a history:
Page Not Found | National Legal and Policy Center
I'm happy to help defeat this guy especially if he has any connections to the financials that need to be brought to light.
So we know who's selling. So, who's buying???
So...who's buying at these auctions? I'm curious about the nationality/institutional breakdown.
Gold Star to CR.
Mediocre minds think alike, RK.
But doesn't that exceed the current debt ceiling?
Two great sites:
1)http://www.techcrunch.com/2008/09/29/september-madness/
2) Theyrule.net
they are all tools of the moneychangers see zeitgeist bye bye
Heck of a Job Bush!
FYI...
01/19/2001-- 5,727,776,738,304.64
When will the remaining commercial banks publicly declare insolvency and become nationalized..
Any guesses?
I don't suppose anyone cares to factor in the cost of unfunded liabilities? Anyone? Shall we start the bidding at $30 Trillion dollars?
$15 trillion by 2011?
Congrats CR!
a significant part of underfunded liabilities are due to market distortions by the "healthcare" industry?
You called it, CR. Nicely done!
I'm still going to be closer on new home sales in '08. Just sayin'.
The Senate plans to vote on the $700 billion bank rescue plan Wednesday evening -- two days after the House failed to pass it. The bill adds provisions -- including raising the FDIC insurance cap from $100,000 to $250,000 -- and will be attached to an existing revenue bill, according to several aides of Democratic leadership.
Of course that doesn't count the Fannie / Freddie debt.
Have no fear. With all of the money we are going to make on those asset sales...we'll have a multi-trillion dollar surplus before you can "fascist dictatorship!"
Who is bringing cake?
unsecured creditors do not feel secure.
we are printing greenbacks to buy our own bonds....
bond market is sniff sniff sniffing it out...
risk is very, very high.
sovereign vigilantes.
At 4% a year, the interest on 10 trillion dollars is a billion a day.
Deficits don't matter
I mean.. Think about it.. Are you getting better healthcare for the money you are paying?
why are we paying more for less?
@ Satan
Because we are stoopid.
Who is bringing cake?
Cake...and pony rides.
but the gays want to marry!
techcrunch is a terrible site .. an ex venture capital guy with a huge ego pumping web2.0 companies, including his own investments, now trying to find a new niche in the news space.
Who is bringing cake?
--The cake is a lie.
here's a prediction:
2009 is the last year of the penny.
TedP | 09.30.08 - 8:28 pm |
You got a link for that?
All, I still think without the Fed's borrowing the debt would have been over $10 trillion by January.
theyieldcurve, the unfunded liabilities really need to be considered in terms of future GDP. The structural deficit we now have is probably the largest fiscal problem facing the nation.
Of course I wouldn't argue for huge tax increases - or huge spending cuts - when the economy is in recession (although targeted taxes and spending cuts could make sense). Otherwise we would be repeating the fiscal errors of Hoover who kept trying to balance the budget - and increasing taxes - while the economy was shrinking during the Depression.
Best to all.
this sucker could go down.
Do you know I can fit 10 trillion dollars end to end electronically in my little yellow laptop? and that they are highly unedible?
The real reason behind paying more and more for crappier healthcare is that we do not allow real competition in that sector. Rather than simply putting a reasonable floor on quality, we tend to allow all sorts of unions, organizations and special interest group to game the system, and create chronic shortages to inflate the prices.
"The structural deficit we now have is probably the largest fiscal problem facing the nation"
Lets have a bake sale.
I still have not found some info on debt, deficit and GDP - where is the pressure point? The IMF has stuff but does not seem to apply to a peg currency...anybody??
Lessee:
Market Caps:
JPM $160B
GS $55B
C $112B
MS $26B
BAC $160B
For $700B you could buy all these companies and still have $187B remaining.
theyieldcurve, the unfunded liabilities really need to be considered in terms of future GDP
Future GDP is driven by growth. Growth is driven by cheap energy. Cheap energy is driven by peak oil.
Here we are in a credit crunch/crash, and oil is hovering around $100. I suspect oil would be priced considerably higher if true global economic growth were to kick in again. This is what I call the "Debt Catch-22".
3.81+ on the ten year.
they are moving higher....
get used to it.
The adjustment is going to be quite painfull. The big scare on Monday is not going to change the fact that we are on the cusp of crossing the rubicon.
Maybe the USG got drunk at the party, too.
@ theyieldcurve
Yep. Return to trend line growth and you bump up against economy pounding escalating energy / commodity prices.
Contract and our highly levered credit system implodes.
I think we are in a box.
¿ʎןןɐǝɹ op noʎ uɐɔ ʇɐɥʍ ʇnq 'pɐs ʎʇʇǝɹd
When crossing the Rubicon, be sure to wear the Rubislippers.
Back to the balout vote... Is anybody else noticing that of all the various "carrots" being proposed to alter the bill (to entice the needed votes) - things like Raising FDIC insurance limits, extending unemployment benefits, reducing the Alternative Minimum Tax....
NONE of them go the the heart of the problem with the old bill. Cloudy selection of pricing, and the supreme authroity by Paulson.
From the Crypt:
Senate to vote on bailout tomorrow; Obama, McCain to return
The Senate will take up the bailout package tomorrow, aides in both parties' leadership offices tell Crypter Marty Kady. Both John McCain and Barack Obama will return for the vote. A top McCain aide tells Crypter Amie Parnes that McCain is scrapping plans for a Louisiana fundraiser. He'll spend the weekend in Colorado and Arizona.
The proposal will be taken up along with a renewable energy tax credit extension. Aides say the bill will include an increase in the amount of deposits insured by the FDIC from $100,000 to $250,000 -- a provision called for by Sen. Barack Obama (D-Ill.) and earlier offered by House Republicans.
The vote is scheduled for 7:30 pm tomorrow night, after sundown, respecting the Jewish holiday. The chamber will also vote on a millionaires' surtax proposed by Sen. Bernie Sanders, a Vermont independent who caucuses with Democrats.
UPDATE: From Senate GOP leadership:
The Senate will vote on the economic rescue plan tomorrow night after a series of stacked votes starting at 7:30.
The structure is this:
The Senate will call up H.R. 1424, the text of which will be substituted with the economic rescue plan (a Dodd amendment which must have the consent of both the Majority and Minority Leaders). The only other amendment in order will be a Sanders amendment that will be handled by a voice vote.
The bill will be subject to a 60-vote threshold for passage.
UPDATE II: House Republicans are saying the Senate vote tomorrow is the work of bicameral, bipartisan negotiations.
From a House GOP Leadership aide: The Senate moving forward tomorrow with the economic stability package gets us one step closer to the bill becoming law and that is a good thing. The decision is a product of bipartisan-bicameral discussions and we believe that changes to the bill will help us garner more support from House Republicans and smooth the bill to passage.
I think we are in a box.
I agree. Any future growth depends on solving the fossil fuel "wall". The Saudis have peaked. Mexico will cease to be an oil exporter in a matter of single digit years. Canada is re-evaulating it's bitumen exporting model. Etc, etc...
Not a pretty picture. And a picture we've never had to truly deal with before. Welcome to the new paradigm.
NONE of them go the the heart of the problem with the old bill. Cloudy selection of pricing, and the supreme authroity by Paulson.
and clarity of exactly what the taxpayer will be given for ownership.
To celebrate this milestone, I suggest we add another trillion this week. Well, at least 700 billion.
"NONE of them go the the heart of the problem with the old bill. Cloudy selection of pricing, and the supreme authroity by Paulson."
I think for the congress critters that is a feature not a bug.
I am personally glad the bailout failed to pass.
ʞ2ɹ
What happens if:
- other folks balt at low rates and want a risk premium on US papaer
- Russia can hang onto US paper
- the AAA rating is lost
They're not going to release a text of the bill until just before the vote. No chance for a real debate.
MISSION ACCOMPLISHED! US Government is officially a sub prime borrower now, that rating agencies just haven't figured it out yet. Congrats to all the people who voted for Bush in 00 and 04. It just couldn't have worked out better.
We should borrow 10 billion more and put it into a WaMu CD.
Yes, unions are the reason for spiraling insurance costs. And people who voted for George Bush twice still think they're entitled to a vote in 2008.
This is why I now take an Eliminationist view on these debates. More are joining me every day.
I would not be all that surprised at this point if COngress decided to go into closed session and shut off C-SPAN during these votes, in order to get the dirty deed DONE.
"But doesn't that exceed the current debt ceiling?"
I think the F/F bail-out bill raised the ceiling to over $10B. That is some ceiling.
It must be held up by super turbo debt flying buttresses.
Going once, going twice, who'll gimmee $12 Trillion?
You sir, tall guy there in the little rimless glasses - thank you!
Do I hear $14 Trillion?
Nasdaq adjusts Google's closing price - Sep. 30, 2008
just make the numbers whatever you want.
the deciders have spoken.
Is a CNBC National Debt Exceeds $10 Trillion Promo in the making? Party like there's no tomorrow! (a probable outcome anyway :})
Why is the Fed selling such short-term notes? Shouldn't they be locking in these rates for like 30- to 50-years?
sorry, I meant trillion, of course!
Strange, I just tried to email my congressional rep (again) to protest against the bailout plan (again) and the house.gov server won't accept emails, said something about high volume...
"The House of Representatives is currently experiencing an extraordinarily high amount of email traffic. The Write Your Representative function is therefore intermittently available. While we realize communicating to your Members of Congress is critical, we suggest attempting to do so at a later time, when demand is not so high. System engineers are working to resolve this issue and we appreciate your patience."
Comrades,
Soon all of your discretionary spending are belong to interest payments.
Nostrovia,
"Shouldn't they be locking in these rates for like 30- to 50-years?"
The 10- and 30-year yields would explode if they tried. The present panic out of all other kinds of debt (CP, MM, bank deposits) allows short term financing for almost free.
Obama should arrive just in time for the tide to reverse. God help him ...
Good news, I think we are finally getting our ponies.
Bad news, I think they are dead
http://i33.tinypic.com/2rlzq4z.jpg
I think I read somewhere recently that total obligations (including unfunded liabilities) is something like $53 trillion. That comes out to some crazy number like $500,000 per taxpayer.
I'm going to let Warren Buffet pay my share.
"short term financing for almost free."
This puzzles me. Why don't the investors keep money in FDIC insured savings account instead of treasuries at low or no return?
I think I read somewhere recently that total obligations (including unfunded liabilities) is something like $53 trillion.
The number I've been throwing around in conversations is $50 Trillion. I sincerely hope there a a few undiscovered Ghawars or Cantarells right around the bend.
They raised the debt cap to 11.3 Trillion the other day. Also, Lou Dobbs is apparently telling people to email him and he will have the emails delivered by hand to Congress. They have jammed up their servers apparently so as not to hear from the rabble.
From another board:
For the fun of it, I went to market to price a LIBOR Cap -- APOLLO, 15:36:32 09/30/08 Tue
A good portion of the $63T in derivatives are caps ranging from 1-7 years over LIBOR (contracts guaranteeing to a borrower by a counterparty that they will cover all costs of LIBOR rising over a certain strike price - like say 6%, to their lender). Most of these caps are tied to commercial real estate loans ensuring that Debt Service Coverage does not spiral out of bounds due to a rise in the base LIBOR contract forcing an inaverdant default on the loan. You can't get a price right now on a LIBOR cap - which means, that those $63T in derivatives are now Level III assets for lack of a better description - so under-water that noone would dare put a price on them for fear of total capitulation as it relates to capital accounts. With this unprecedented spike in LIBOR, noone is willing to price the risk of that payment to any degree of length of time, as things of late have happened that were never suppose to happen - with regards to the LIBOR index. To say that we are in for a whirl-wind of financial destruction is not to overstate. Buffets nightmare is now a reality & that's why Benbo has that look on his face like he's staring into the abyss.
2bill writes:
We should borrow 10 billion more and put it into a WaMu CD.
LOL....
quick question:
if we take warrants against the equity in the bailout, that helps solve the problem of moral hazard, AND helps protect the taxpayer, right?
"I think I read somewhere recently that total obligations (including unfunded liabilities) is something like $53 trillion."
From Comptroller David Walker, 12/15/06
And let me clarify something. The $53 trillion shortfall is expressed as a net present value. That means that in order to make the shortfall disappear wed have to have that amount of cash in the bank today - earning interest (the GAO uses 5.7% & 5.8% as the assumed long-term rate of return). Ill say it again - $53 trillion, in the bank, today. Heck, I dont even know how much a trillion is let alone fifty-three of em.
And next year wed have to put even more into this mythical interest bearing account simply because we didnt collect any interest on money we didnt put in the bank account this year. For the record, 5.7% on $53 trillion is a bit more than $3 trillion dollars so you can see how the math is working against us here. This means the deficit will swell by at least another $3 trillion plus whatever other shortfalls the government can rack up in the meantime.
Comrade Kristina,
My emails have been going through fine. Congresscritters are responding, but with mixed results (one against, but two for).
Congrats, in advance, again.
The $53 trillion shortfall is expressed as a net present value.
Got a link? I want to add that tidbit to my dinner party arsenal...
The astonishing thing will be hitting $11T in just 3 short months....
Remind your congresspeople that the Senate is using a legislative trick (attaching the bailout as an amendment to a bill that passed the house) and it usurps the traditional role of the House to originate spending. Maybe some of them won't like the Senate encroaching on their "turf".
Link for David Walker
FSU Editorial: "The United States is Insolvent" by Dr. Chris
Mortenson 12/17/2006
Comrade Kristina,
My emails have been going through fine. Congresscritters are responding, but with mixed results (one against, but two for).
Fraud Guy | 09.30.08 - 9:00 pm | #
Maybe they were just having problems earlier today, I read it on another forum earlier.
Comrade Tanya Stafel,
"AND helps protect the taxpayer, right?"
Erm...You think there is any interest in that? These asshats mean to rob you. They have NO concern for you. And never had.
You could find used car salesmen with more concern for you than these thieves.
Hell Guido and Vinnie would likely have more concern for you.
Nostrovia,
Something interesting to consider:
"If we had a truth-in Government act comparable to the truth-in-advertising law, every note issued by the Treasury would be obliged to include a sentence stating: "This note will be redeemed with the proceeds from an identical note which will be sold to the public when this one comes due."
Walter Wriston, former Chairman of Citicorp Bank
So $10T in debt divided by the 100 million (or so) households in the US works out to about $100K of debt per household. But what is the percentile distribution of the total tax burden? It's something like 50% of households don't really pay anything (exc SS) and if you make $100K+ you are in the top 10% (or so). So, for those who make $100K (or so), your share of this debt load averages $1 million.
Plantagenet writes:
Link for David Walker
Thanks. That's truly beyond frightening. I think I'll open that bottle of Pinot Noir now...
Most likely will be Bush's answer to the 10 trillion.
"We're an empire now, and when we act, we create our own reality. And while you're studying that reality - judiciously, as you will - we'll act again, creating other new realities, which you can study too, and that's how things will sort out.
What's a trillion dollars between friends? Oops! | Chris Martenson
What's the old saw? "Ten trillion here, ten trillion there, pretty soon..."
You know if that was actual currency we'd be physically running out of space for it. A stack of $100 bills worth ten trillion dollars would be over 5 thousand miles high (if you laid it on its side it would stretch from LA to NYC and back again).
Forget unfunded liabilities, promises are not contracts for a reason.
The US debt to income will not improve until creditors downgrade or market participants effectively downgrade and demand extra risk premium.
A weighted 6% interest rate would certainly bring problems to a head quickly. Double digit interest rates would be instant death
...so you can see how the math is working against us here.
Next thing you know Congress will be passing a law outlawing math and the El Presidente will be adding mathematicians to the list of known terrorists.
Most likely will be Bush's answer to the 10 trillion.
More likely:
"Damn, where did Laura hide the key to the liquor cabinet?"
Actually inflation adjusted to 1908, it's only 300 million with glod at $20/oz.
The thrill of big numbers!
It'll be paid back with proceeds of sales of longer-maturity notes, presumably.
Someone has been impersitating me. I would never use the word "judiciously." And I wouldn't do it if I said it.
My bad. Make that 300 Billion.
I hope your McMansion was worth it.
It's official, it's not a "bailout" Senator McCain said it isn't. I suppose we should look at as an "investment opportunity" for American...
Comrades,
"The surge in the National Debt over the last two weeks has been because of the Supplementary Financing Program (SFP) with the Treasury raising cash for the Fed's liquidity initiatives (announced a couple of weeks ago)."
Well isn't that special. They aren't spending it on gov't ops, they're just sloshing it into insolvent institutions.
I really want to punch one of these asshats.
Why not let them fail? Oh yeah k street lobbying money...never mind.
Nostrovia,
With all due respect to CR, I think this was predictable within 1, max years of Bush coming to office. All you had to do was look at outlays growing no matter what prediction they assumed about it slowing in 2 more years.
So how about some new predictions:
With rates as low as they are does anyone think they should start auctioning 30yr Treasuries again?
I say we pay Dr. Evil the ten trillion dollars. Then we print to 3 more decimals and give it to cash holders and wage earners. That'll teach the paper pushers. In a vise at 6% fixed.
Remember this piece from a few months ago?
<a href=http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/2791861/RBS-issues-global-stock-and-credit-crash-alert.html">RBS Issues Global Stock And Credit Crash Alert
Comrade Mike in Long Island,
"With rates as low as they are does anyone think they should start auctioning 30yr Treasuries again?"
You unpatriotic snot. Are you trying to destroy the market. Hush up.
Nostrovia,
Why does "adding an extra zero" suddenly go from math to metaphor.
More Crypt news:
Pelosi: 'Congress will work its will'
House Speaker Nancy Pelosi has just released a very cautious statement on the Senate's decision to go first on the bailout, saying little about Harry Reid's decision beyond "Congress will work its will."
Her full statement:
"Ever since yesterday's vote, House leaders have been in frequent communication with each other and the White House to find a plan that can win strong bipartisan approval in the House Many Members have offered ideas to modify the emergency bill narrowly defeated yesterday, and we are discussing those recommendations.
"The Senate has made a decision about how to proceed and what can pass that body. The Senate will vote tomorrow night and the Congress will work its will.
"House Democrats remain strongly committed to a comprehensive bill that stabilizes the financial markets, restores confidence, and protects taxpayers, and we hope Congress can agree on legislation in the very near future."
yogi,
I say that workers under age 13 pay no taxes of any kind, and that parents can deduct their wages up to $10,000 from their own income.
This will provide fiscal stimulus, as well it will boost the GDP and productivity numbers. I figure the kids are probably doing chores anyway, why not count that work towards GDP by monetizing it and leverage that up to sell some of the cash flow onward to foreigners
Mike in LI,
THere's something of a trap in exploiting the yield curve to reduce borrowing costs by bulking up on short-maturity debt. Clinton did that successfully in the '90s, but in our situation, it could easily lead to a default. If borrowing costs rise (inflation, downgrade of US debt rating), having loads of low-maturity debt that has to be rolled over could explode borrowing costs, making default more likely.
"Maturity-mismatch" --- where the maturity of your debt obligations is much shorter than the timescale of your income-generating assets.
Which leads to a question I wanted to pose to CR:
Is the present distribution of Treasury bill maturities publicly available? I'm just wondering how much resemblance there might be between this aspect of Treasury's balance sheet and that of the now defunct big players in the used-to-be shadow banking sector.
ok just ignore everything I said about gdp, time for coffee
EHPaulson,
Can they at least may social security contributions?
For $700B you could buy all these companies and still have $187B remaining.
I think he's on to something there.
From today's NY Times:
Even if Congress refuses to pass the bailout measure, there is more money where that came from. The Treasury Department has already created a series of supplemental Treasury securities to finance the Feds activities, and there is no limit to how many more it can issue and sell.
As I've said before, they'll bury the bodies at the Fed. How about rolling over TAF and TSLF until the underlying assets mature -- sound familiar?
I like it Evil Hankie. And since consumption is production, home video games could be metered.
It wasn't that long ago that the Fed recalled those $500 and $1000 notes. I think they even wanted to demonitize the existing ones.
They need to start reissuing those denominations ASAP.
In fact they ought to issue $10,000 FR notes. The only way to get one now is to pay some collector $35,000 for one of the old ones. That wouldn't be prudent.
yogi writes:
I like it Evil Hankie. And since consumption is production, home video games could be metered.
I recall a Gary Larson cartoon from the late '80s w/ a typical fat/geek child playing video games while parents gleefully read off a list of employers that are seeking his skills - made them sound like potentially real jobs (and probably some of them exist now). But very amusing.
10,000,000,000,000th!
First!
SRC,
I looked around and found this webpage
It seems to contain what you are looking for.
The good news is that none of our debt is in Amero's.
Like I said last March,
Im always for less regulation, but I am aware of the view that there is a need for government oversight in situations like the subprime lending crisis - the problem that has cascaded through Wall Street this year. But I am fundamentally a deregulator.
Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.
You can trust me, my friends. I know what I'm doing. Don't vote for the sissy punk.
The number I've been throwing around in conversations is $50 Trillion. I sincerely hope there a a few undiscovered Ghawars or Cantarells right around the bend.
theyieldcurve | 9.30.08 - 8:57 pm | #
Storms on the Horizon - Richard Fisher Speeches - News & Events - FRB Dallas
Richard W. Fisher (Richard W. Fisher is president and CEO of the Federal Reserve Bank of Dallas.)
Storms on the Horizon
Remarks before the Commonwealth Club of California
San Francisco, California
May 28, 2008
No combination of tax hikes and spending cuts, though, will change the total burden borne by current and future generations. For the existing unfunded liabilities to be covered in the end, someone must pay $99.2 trillion more or receive $99.2 trillion less than they have been currently promised. This is a cold, hard fact. The decision we must make is whether to shoulder a substantial portion of that burden today or compel future generations to bear its full weight.
Medicare part D that Bush signed in was a whopped of a handout to Pharma companies
USA! USA! USA! We're number 1!
$50 trillion is also the amount of total debt outstanding (federal, state, municipal, household) in the United States
SRC,
First glance it appears that the bulk of the Treasury issuance as at the short end of the curve notes and bills...
Pelosi: ...strongly committed to a comprehensive bill that stabilizes the financial markets, restores confidence, and protects taxpayers,...
Politico speak for a bill that makes sure the financial markets go up up up; restores the confidence of K Street, our benefactors, and once again, protects taxpayers from the truth that they will pay the bill.
so, we gonna dish out $ 450 billion
to just service the sucker ?
Now I understand what that douchebag
Jerry Bowyer meant by the "Bush Boom."
I,ve had a bad week!Can you spare a billion or two.
Sending this to as many senators as I can. Urge you all to do the same:
"Dear Senator:
FYI.....
Debt to the Penny (Daily History Search Application)
Ironical that our debt will cross $10 trillion the day the Senate votes to spend another trillion dollars. Talk about fiscal negligence!
I am again urguing you not to spend a Trillion dollars that we don't have.
If you vote for the bailout, I promise my family and I will never vote for you. I will make sure to remind you every opportunity I get of the debt load you are putting on my children
As it relates to how bad it will get if this bailout does not happen, last I checked, the markets rallied, my ATM card worked and my bank was still around.
Please come up with a solution that works and which discourages reckless behavior on part of Wall Street."
Woo-hoo! 14 figures, baby!
Do you think the U.S. government can get some kind of work-out when the Chinese foreclose on the White House?
Re: Pelosi: "restores confidence?"
Does she mean "successfully covers up?"
Restoring confidence would require far more than handing a wad of cash over very carefully.
Where do I find a schedule of maturities for federal debt? If they are mainly short term, as I remember, the coming surge in interest rates should drive the final stake in our treasury. Default anyone?
I can remember when I was a kid there was a comic strip called "Henry in Lollipop Land". In his dreams Henry visited Lollipop Land where he meets lollipop flowers, tastes lollipop trees, and imagines painting lollipop skies. Henry grows up to "grow" lollipops himself, becoming a lollipop maker. (On Wall Street), emphasis added.
It was a cute story that had Henry wondering what should he be when he grew up, a Doctor, a CEO, Policeman, a Wall Street banker. When Henry falls asleep the trees turn into lollipops, and tell him what fruits they are made out of, ($US) Henry decides when he wakes up that he will make lollipops when he grows up, to make the CEO's, politicians, his friends and Wall Street bankers all happy.
That's just great. The Treasury is now borrowing short and lending long, just like the banks that got themselves into trouble via this practice, but has also rang the tab up to $10T.
Only thing is more debt will be required to pay back this debt.
This number will never go down until our country implodes.
GDP is something under 14 trillion, no? So the US total debt will be about 72% of GDP. This is not as good as something a lot lower, but it is not as bad as many others. Italy has debt above GDP and Japan has debt almost twice GDP. I wonder if the Japanese debt load is one reason for its stagnant economy? Any expert opinions?
OT Stiglitz on Italian TV predicing an Obama win and a LONG US recession.
This is a time for celebration. 13 is such an unlucky number. Much better to have the debt at 14 digits right?
Now, an expert accountant could devise a new economic model that could reduce the the deficit from $10,000,000,000,000.00 TO $1.99.
The US game of squeezing the little guy to run an empire that furnishes a paradise for the rich seems to be running on borrowed time, not to mention far too much foreign money.
Soon -- maybe in this decade or the next -- a virulent populism will take hold in the public mind. No doubt it will resemble that from the era of the great railroad barons.
As a sop to growing discontent today, Obama is meant to defuse the rise of that feeling with his zeal, attractiveness and empty symbolism, ie, "change" that changes nothing, but sounds so good to the ear.
As a delaying tactic, Obamism will buy our oligarchs time; but ultimately, it's a doomed strategy. You can't feed a family on pretty speeches from a servant of Wall Street.
And that's when things will really get interesting. When the money's gone, the speeches ring hollow, and the tempers boil.
Have you noticed that at these levels the US would not qualify to become a member of the Eurozone? Which is funny given that the Maastricht criteria were designed to ensure SOME prudence, but clearly not excessive...
I notice that no one is talking about how 'this' (bailout du jour) isn't going to (or shoudn't) cost anything anymore.
Hopefully it is clear that the interest in 10 trillion dollars represents a large net present cost to taxpayers, one which far exceeds any mythical social security deficit. With a raise in interest rates (due to say, the treasury and fed taking junk on their books) the interest payments will exceed even the defense department budget.
Good old GOP -- lies, cons, and pandering. The "good" news for all you GOP voters is that the only true plank they ever had is closing in on reality: The US Government is closing in on it doom.
For the rest of us -- uh oh, look out below.
Unfortunately longer term the national debt is set to go even higher; thanks to funding needs for the ongoing government intervention and regulatory activities. This means $10 trillion will be old news by the end of the year, with $15 trillion (or $150,000 per household) in range by the end of 2010 if we keep up the current pace of spending. Fully funded social security and universal health care are fast becoming pipe dreams. Our future generations will have a heavy burden on them indeed.
Are we there yet?
But a dollar is only worth a tenth of a cent (OK, OK, I'm a cockeyed optimist... I'll be more realistic and say one hundreth of a cent)... so our debt is...carry the one....
hmmm... Well, I get my zeros mixed up (there are so, so many...)
so with real money its probably only 100 billion or so.