Tag Archives: US debt rating

2 Cents Worth On Life Its Ownself

With interest rates at near zero for banks and very low even for consumers perhaps we should increase the price at this point.  But because we consider ourselves a public service we will hold the line at 2 cents for “an extended period of time” or maybe  into mid 2013.

The stock crash of ’87 was much worse than what we have seen in the last couple of weeks on a percentage basis.  The Dow was about 2200 or so and fell to just above 1500 within a day.  That was a huge sell off and shook the markets for a moment.  But the decline was temporary.   The market started a slow but steady slog back up that continued more or less without serious interruption until the Dot Com crash of 2000.  

The parable of the 99 and 1 sheep is all about the shepherd.   The 99 was safe and ok.  It was the one that was lost and needed help.  The Good shepherd couldn’t rest without going out to seek the lost one.  Not because he loved that one more or valued it more.  That sheep was his charge.  You might note that the parable doesn’t make clear whether or not he even found the lost sheep.  It was the looking, the trying, the doing his duty that is important.  Sometimes it is your attempt at something that is as important as the outcome.  If we all depend on positive outcomes all the time to measure our success as humans then we are likely to endure lots of disappointments.  But if we do our duty always we will meet with constant success.

Remember all those pundits who predicted that gold was overpriced at $1500?  Maybe it is overpriced now but folks are willing to pay over $1750 an ounce for it at the moment.  It is not a currency and will not be anytime soon but it sure is treated like one by the buying public around the world.  The politicians couldn’t allow a gold standard because then they would really have a hard time manipulating the books.  If all those borrowed dollars had to be backed up by gold reserves in some amount it would put the brakes on debt growth and the ability to print money.

The bottom line of the recent debt ceiling negotiations is that the Feds have been authorized to borrow another 2.4 trillion dollars in just a little over 16 months or so.  Think about that one for a moment.   Sooner or later those debts have to be paid.  You think they will be paid back with inflated dollars hot off the printing press?  Yep, and you don’t need a PHd in economics to figure that one out.

Should the SEC be investigating the Federal government to determine whether or not it is making “material misrepresentations” in the offering of its Treasury securities?  That is a classic violation of rule 10b5 of the 1934 Act.  How can the Pres. and others in the Administration go public talking about the US having a AAA rating and being sound financially when the underlying numbers show increasing debt and no reduction forever.   The accounting facts don’t gibe with the salesmanship.

We just passed the 66th anniversary of Hiroshima and Nagasaki.  The Japs still weren’t responding to calls for surrender so our naval forces moved in the following week literally to coastal towns of Japan to pound refineries and other infrastructure facilities.  The Navy brought to bear both air power and the big guns of battleships and cruisers.  The Japanese news agencies still wouldn’t acknowledge that we were now literally at their shores and could do so whenever we pleased.  They still retained over a million troops in Manchuria and had thousands of planes in the homeland for last-ditch kamikaze attacks.   Mercifully they finally threw in the towel about a week later.

At this time of severe drought around much of the world we should recall that 97% of all the water on earth is in the oceans.  Only 3% is fresh water and of that 2% is locked in the great ice sheets of the arctic and Antarctica.  Mankind depends for all its water needs on only 1% of the earth’s water and some of that is not reachable for practical purposes.  A thin margin for some 6 billion plus people.  Hot has it is this summer we quickly forget how cold it was over most of the country last winter.  It was really cold for a long time and the snow fall was tremendous in most areas of the nation.   Remember those pics of the folks in the Northeast shoveling out from all the snow even late into March?

Where do you go these days to buy fine stationery?  With the use of email and faxes it seems the art of penmanship is lost or almost so and that receiving a handwritten letter for a family member or loved one will soon be a relic like the wall art in the ice age caves of southern France.  Our grandkids will look at those old faded letters with their sepia tinge and think how quaint we were and how did we have the time to actually sit down and compose a written letter.   Sad but I suppose it is not to be stopped.  Well, not to worry we probably won’t have a post office to deliver them anyway.

“A little sleep, a little slumber, a little folding of the hands to rest, and poverty will come upon you like a robber.”  Proverbs  www.ocranky.wordpress.comlra

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Numbers

Numbers have always played a significant role in the news of the day.  If there is a natural disaster we want to know how many people were injured or killed, how many homes were destroyed, etc.  If there is a war going on we like to have the casualty reports of dead and wounded.   The world of sports is nothing but filled with stats and numbers for every conceiveable aspect of every sport and each game and season.   Take a look at your typical daily paper or news source on the internet and pay attention to how much of each news item is related to a number.  Many times those numbers are mere curiousities and sometimes they are the very heart of the story and have a great bearing on our lives and futures.  The questions regarding our economy and the disputes about the reality or fiction of Global Warming are all about numbers.  Our economy is doing better if you believe certain numbers and the earth is perilously close to an extinction tipping point if you believe numbers of the Al Gore’s.  What is striking is that so many of the numbers are given with no supporting data and background as to their source or methodology of creation, yet they are accepted as the gospel truth by the average Joe.  Others are plain and true as the nose on your face yet we pass by them without every thinking through the implications of them.

Let’s review some of the numbers that recently have been in the headlines and ponder their impact on our lives.  First we had the AIG rescue.  We know that the number for that Government, Inc. mission is 180 billion give or take to date.  Are you convinced we are better off having advanced that money?  The insurance companies were  sound according to all reports.  No one would have lost their life insurance payments or health benefits or property damage claim reimbursement.  That is a lot of money going to investors, many overseas.  Second, we have the infamous TARP plan which was a smooth 700 billion.  Last report I saw all but 132 billion has been doled out to various banks, not to buy their toxic assets but to purchase preferred stock and warrants in the banks.  Last week we got back 68 billion from 9 of the banks and the Treasury said they would retain the funds for further use with other banks in need.  It has become a revolving line of credit for banks apparently.   Government, Inc. now owns 34 % of Citibank and controls everything that bank does as lender, regulator and majority owner.  Even after the return of the 68 billion Government, Inc. still owns the warrants to acquire common stock in those nine banks as of today.  Next we have the program announced by the Fed to buy over 500 billion of mortgage backed securities in the market to free up money for new lending.  I haven’t seen any accounting of how much of that money has been spent, have you?  What did we get for the money.  Don’t forget the TALF money which  is another reported 650 billion.  Some of that money was to be used to buy credit card debt, student loans and car loans.  Where did it go?  Of course we have lent about 10 billion from last I saw to GMAC for its financing pr0grams. 

Then there is the money for GM and Chrysler–to the tune of 50 billion and counting so far.  Does anyone believe it will top out at that number?   Both entities are now owned by Government, Inc. and the unions to the extent there is any difference between the two.  I am sure the unions believe they bought their politicians fair and square and are merely getting their due. 

Next up is the announced plans of the Treasury to sell notes and bills to support the almost 2 trillion in deficit spending for the current year.  That number alone is staggering when you consider the deficit for this year alone will be 1.7 trillion and counting.  Remember that it has already been reported that tax revenues are down some 44 billion from prior years to date.  Combined with this issuance of Treasury notes is the program of the Fed, in addition to all its other buying programs, to buy 300 billion in Treasury bills this year alone; additionally the Fed is buying as much as 1 trillion in mortgage securities, this is different from their earlier program and in addition to that.  The Fed Reserve has printed up at least 1 Trillion since last September in new money.  Just turned on the printing presses and let them run.   That money has been used to buy some of those Treasury bills.

We have a proposed cap and trade law that will raise taxes by 650 billion over ten years.  The tax will be on anything and everything that consumes energy in its manufacture, transport or use.   That is a tax added to the already existing taxes on gasoline and diesel fuel.  The latest number floated for the health care overhaul is 1 trillion and I believe the administration threw out that number with their fingers crossed behind their back.   

I will let you pick your own number about the unfunded debts for medicare, medicaid and the social security administration.  There have been so many estimates thrown around you have lots to choose from.   Lastly, we are projected to have as much as trillion dollar deficits as far as the eye can see.  When you read the fine print the talk about reducing the deficit is really an intention to reduce the growth of government programs, not a real dollar reduction in anything. The Federal budget will continue to grow.  Almost one in five Americans are now on some type of government payroll be it local, state or the Federal level. 

As an intellectual exercise I would love to know how this story will end.  Be nice to know exactly who is going to pay for all of this.  Won’t be me, I will be pulling on harp strings while others are dealing with this debt.  The short term answer is pretty clear.  The Fed is printing money fast enough to satisfy every drunken sailor in port, but how long can they do that before the drunken sailors destroy the port?

Another day we will talk envoirnmental numbers.   www.olcranky.wordpress.com

“In framing a government which is to be administered by men over men the great difficulty lies in this: You must first enable the government to control the governed, and in the next place, oblige it to control itself. ”  Alexander Hamilton.

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