Oh my god, are you excited or what? I am gonna write about interest payments on the national debt now. I can just feel the excitement from all three of you. Anyway, I never find anything online to explain how this works in a clear way. Every year, the US government gives rich people 100’s of billions of dollars in interest payments on the national debt. This article will discuss the make up of the national debt, where the interest payments actually go and the future implications of carrying such a severe debt burden.
Look at this kitten, doesn’t it make you want to read more?
When I say, “national debt maintenance,” I mean the interest that the US government pays to holders of the national debt.
GAS Type Securities
A large portion of the national debt is held within the government by the welfare trust funds. This debt maintenance falls under the Government Account Series or GAS portion of the national debt. Currently, the trust funds hold about $4.2 Trillion in treasury securities which the taxpayers paid $212 billion dollars during fiscal year 2008 for interest payments. What this means is right now, Medicare and Social Security payroll taxes are bringing in more money than the programs cost. The government decided that instead of this left over “money” just sitting around, it should be earning interest by “buying” treasury securities - or financing the rest of the government. The actual status of this money is up in the air, however. There are essentially two kinds of thinking about the GAS trust funds.
1. The trust fund is a debt the federal government owes to the future beneficiaries of Social Security. This means that when Social Security is no longer “pay as you go” - meaning tax receipts no longer cover the benefits that are due - the trust fund will be drawn upon to make those payments.
2. The trust fund is an accounting gimmick. The federal government collected payroll taxes (in the form of social security and medicare) and instead of rebating the overpayments annually back to taxpayers for money that was not used to cover benefits, the government kept the extra money and spent it on other programs. The GAS’s are worthless pieces of paper that are collecting “interest” in the form of more GAS’s. There is no real value in the trust funds at all. Once payroll tax income no longer covers receipts the government will have to either; create debt to cover this debt (an accounting change), slash benefits to a level in-line with current revenues or raise some other sort of tax to pay back the debts to the trust funds.
Either of the above scenarios essentially mean that the government created a loophole with which they could raise revenue under the guise of social welfare programs to finance the rest of the budget. In other words, the GAS-type security is a figment of our collective imagination. There is no money there, the $212 billion “spent” this past fiscal year on maintenance of this debt is fake too. Even though the government “paid” it out, no money ever changed hands so the transaction didn’t actually mean anything.
Publicly Held Debt
There are several different classes of debt instruments that the Treasury sells to the public, you can read about them here if you want. For my purposes, the only really important information is the lifespan of each instrument and how much of the public debt is held under each lifespan. About $5.8 trillion of the national debt is publicly held. The interest paid on this money in fiscal year 2008 was $238 billion. This means that in the past 12 months, the taxpayers have paid $238 billion in interest payments to investors that are holding and trading treasuries. A lot of talk goes into geographically where the money goes. This is not particularly important to me because rich people are rich people, no matter their nationality. However, roughly $2.4 trillion of the publicly held debt is financed by international investors. Which means that in the last year we have sent about $98 billion out of the country in interest payments.
The securities that are publicly held are broken down into the following different classes of debt instruments:
$1.1 trillion in Bills with 1 year or less life
$2.5 trillion in Notes with 2 to 10 year life
$1.6 trillion in other securities with variable life
$571 billion in Bonds with 10 to 30 year life
The first 3 classes of securities are the ones that matter are the first 3. These three are impacted more severely by the fluctuation of short-term interest rates than the bonds are because of the long lifetime of bonds. In times like the past few years, with low interest rates, the maintenance of these short-term instruments have been relatively inexpensive (if you can consider roughly $180 billion/year inexpensive). If we enter into a period of higher interest rates due to stronger than usual inflation (or in the worst case scenario, hyper-inflation) the cost will be quite a bit more expensive.
Future Problems
Looking to the future, there are three major problems that face the government regarding debt maintenance. In no particular order they are, the impact of inflation and possible hyper-inflation on interest rates (higher), the good rating that Treasuries currently hold could falter (higher), geopolitical ramifications of being a debtor nation.
First, as I mentioned earlier, if inflation is high, interest rates will be high and more interest will have to be paid to treasury holders. Even a one point change in the interest rates (which are currently low, varying between 1% and 8% depending on the type of treasury) will have a drastic impact on total amount paid out every year. The nightmare scenario that will “never happen again” would be the ridiculous rates of the late 70’s (nearly 20%) if this is the worst case scenario.
Second, if the rating of the US Government is downgraded to junk bond status (which is a possibility if confidence falters in the dollar as the world’s reserve currency), interest rates, regardless of inflationary pressures, must go up in order to entice investors. The greatest likely contribution to this decision would be talk of defaulting on the investments held by the government to save money. This is a possibility, the other possibility would be a liquidation of the government held securities (the accounting change I talked about) switching this debt over to private hands. This would lead to a flooded market of government securities with a lack of buyers to pick them up at any reasonable price to the government.
Thirdly, the country also faces a sort of sovereignty crisis due to our foreign debt.
In the short term (2-5 years), I don’t think there will be any major alarm bells. However, beyond that short term window (and particularly as welfare programs are no longer generating surpluses) the outlook for the stability of the US Government is bleak. The government must address the issue of the trust funds as well as continual budget deficits. In the short term, deficit spending beyond even what we experienced this year will be necessary. But if there is any economic recovery, taxes must be increased and spending must be cut drastically in order to relieve the long term problems of the debt.
Broke and screwed,
mike
Friday, January 23, 2009
National Debt Maintenance
Wednesday, January 14, 2009
Israel stuck under my claw
Here is the original copy:
The only definitive way out of the Israeli/Palestinian mess is a major war with massive casualties. At that point, when Israel wins, they need to let the Arabs (Palestinians) they have marginalized for decades to come into the fold.
What Jewish immigrants did with the land of Israel is impressive, but irrelevant. Using westernization as a justification for expelling people from land makes no sense. "Palestine" was an Ottoman-backwater when the Zionist movement began. Of course it wasn't developed to the extent it is now.
That is like saying it is OK for some group of people with no contemporary ties to the land but are loosely descended from some former inhabitants of West Texas that they have the right to take it over and expel current inhabitants that are not OK with the new rulers because they plan to create farms and forests there.
Israel exists, and it is OK for it to kill people in defense of its citizenry. It isn't right, but it should be acceptable given they are a sovereign country.
It is not OK that they "withdrew" from Gaza and have kept it sealed off from the outside world. That is their error. Poverty and isolation only encourages support for the one group (Hamas) willing to stand up to the oppression.
It is a difficult situation, but if you dig through history you will find that Israel dug its own hole. The only part of it I resent is the US sends such a large amount of aid to Israel since it is such an affluent society.
You can thank Kids Prefer Cheese for bringing my attention to your blog. Lucky you...
It's time for the Palestinisns to "get over it"
David Gelertner writes that, after 60 years, it's time to tell the Palestinians to get over themselves.ow, every human being on earth who cares about facts and can tell a lie from a truth knows that there was no such thing as "Palestinian nationalism" until modern Zionism created it out of whole cloth, by placing enormous value on a piece of land that used to seem as precious to its landlords as a rat-ridden empty lot in a burnt-out neighborhood in the middle of nowhere, in the suburbs of nothing. The Jews gradually got possession of an arid stony wasteland (where the sun beats, / And the dead tree gives no shelter, the cricket no relief / And the dry stone no sound of water)--complete with the odd picturesque, crumbling, dirty town; and they loved it. They turned it into a gleaming, thriving modern nation, not only a military but an intellectual powerhouse. And so it is only natural that the former owners' descendants want it back, and remember how much their ancestors loved it, and how the new owners only got possession by wickedness and deceit. Such memories have the strange property of growing clearer instead of cloudier every day.And he has a proposal for what the UN could start debating.
Only one thing can restore the former owners' peace of mind. They must be kicked firmly in the pants and told "stop whining and get lost" so many times that they finally move on to another grievance.
Any competent psychologist will agree: When someone is mooning over a thing he can't have because it belongs to someone else, the responsible and humane course of treatment is not temporizing sweet-talk but a blunt lesson in the facts of life. "No, you cannot have my wife (girlfriend, husband, etc.), and we are not going to negotiate over it; let's talk about something else." (And it really doesn't matter that the two of you used to keep company; you never loved her.) "Know Thyself" was supposedly carved on the ancient Temple at Delphi; "Face Reality" should have been carved right next to it. There is no irreconcilable difference in the fight between Israel and the Palestinians, no bone-deep dispute that will haunt humanity forever. There is only greed and envy. They never disappear, but can easily move from one target to the next. The problem will be solved as soon as the world stops trying to solve it. When the international community moves on to fresh causes, so will the Palestinians.The Bush administration, which has done so many small and medium things wrong and the biggest of all things right, could leave the world a parting gift by introducing some appropriate resolution in the Security Counsel or General Assembly. A proclamation that "anti-Zionism is a form of racism" might be just the thing. (The infamous "Zionism is racism" resolution, passed in 1975 and rescinded in 1991, remains a perfect symbol of depraved worldwide attitudes to Israel.) Or a U.S. resolution might call on the U.N. to take the unprecedented step of enforcing its own charter and booting out members that preach the destruction of Israel. (Article 2 part 4: "All Members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state.") To start the ball rolling, Iran might be designated for immediate expulsion.It shows how absolutely meaningless the United Nations is that they have so many members continually breaking the U. N. charter and that is considered of no significance.
The resolution would be savaged and hooted down. But here and there it might make people think.
Monday, January 12, 2009
Kunstler says...
Kunstler said:Time again for another predictions post looking at what I see ahead for the new year that’s approaching rapidly. I do these posts more for my own amusement rather than to engage in any serious attempt at prognostication. For a more in-depth listing of doomer-ific predictions, please check out Kunstler’s latest post. Lots of good stuff in there.
I’m picking up on a number of the same vibes that Kunstler and others are and think that 2009 will indeed bring in change, although it will not necessarily be the type that people voted in favor of when they elected Barack Obama to the presidency. I’m thinking more along the lines of the old intro tagline for the fourth season of Babylon 5… the year “everything changed.”
The predominant thinking out there is that we are in a short-term economic slowdown or possibly a moderately painful recession. I personally feel that we are only in the opening stages of something longer, harder and paradigm-shifting than most of us have ever expected, and we are poorly prepared for it. 2009 will be eye-opening for a lot of people… many of whom have never had to seriously worry about basic surival before in their lives.
Change is Coming… Except in the Economy
The Obama campaign sold two ideas to the American public: ‘change’ and ‘hope.’ Well, they’ll get one of the two for sure. The markets will likely experience a short term (less than a year) “Obama bounce” as the new stimulus package(s) temporarily flood the markets with more cash. Ultimately, I think this project is doomed to fail in it’s ultimate goal of jumpstarting the economy for another bull cycle. Obama’s incoming economic team come from the same places that the outgoing economic team hailed from, and based on early reports of the stimuli being assembled, they appear to have similar mindsets.
If the Obama team cannot turn around the economy, then ‘hope’ will take on a whole new meaning for most folks. It won’t be the immediate turnaround of fortunes and return to the good times of old that many people bought on November 4th. More likely it will mean a long-term goal that we will have to work hard as hell for, and the end result will look a lot different than the past.
Bankruptcy
2009 will see a lot more bankruptcies… both personal and for businesses. There are already rumblings about a large number of retailers closing their doors after lackluster 2008 holiday sales, and that’s the sort of thing that can snowball as the follow-through effects work their way through the economy. Retailers, financial firms, home builders, restaurant chains… there are many areas of the economy that will get sicker and sicker as Americans keep their wallets shut.
The wave of insolvency will snap up many city, county and state governments as well. California is the early favorite among states to declare early, but they are far from alone.
Jobs
If you’ve got one and can manage to keep it, you win. The mass of corporate bankruptcies and generally piss-poor financial results will mean the layoff parade will continue unabated. The Obama stimulus package will create some new jobs, but not in the same areas as the ones lost. I’m sure ex-financial analysts will love their new job pouring cement in an infrastructure project. One area I unfortunately see major job growth in the next year or two? Government.
Oil
Prices will stay low as long as the markets do not totally implode. Equities no longer look safe. If a panic starts over Treasury Bonds (not unlikely as we continue to add to the debt pile), a run to commodities could take place, as there you’re owning something real instead of pieces of paper with only notional value. Overall, though, the economy will stay down, and that will force leaders of oil exporting nations to continue to find the sweet spot between lowering production enough to drive prices up and to avoid being lynched in the meantime by rioting citizens that can’t feed their kids. This will have unfortunate side effects (lower spending on exploration, delaying higher-risk fields, etc.), but we won’t see that for some time. For now, we should have lower oil prices for at least the next six months or so, and peak oil theory will be ridiculed by those who cannot see more than a year or two down the line.
Geopolitics
Lots of interesting things going on in 2009. As we start the new year, Israel is assaulting the Gaza strip again, which is having the predictable results of whipping up anti-Israeli sentiments around the Arab world (and in Europe). If they decide to start an all-out assault to remove Hamas, things could get interesting ina bad way.
Similarly, India and Pakistan appear to be heading for a showdown over the Mumbai terrorist attack back in November 2008. It appears right now that neither side is willing to back down, and if this turns into war, it could go nuclear, since both sides have weaponry. The prospect of a nuclear exchange between these countries scares the crap out of me for a couple of reasons. First it would raise hell with the global economy… especially for those companies who have outsourced to India. Second, we have a number of troops right next door in Afghanistan. What affect would a destabilized Pakistani government have on the Taliban? Finally, there’s just the natural fear of what a nuclear exchange would mean in terms of dead people, wrecked infrastructure, and ruined environments.
Political & economic instability with many of the worlds’ major oil exporters will play a major role in things as well. Mexico, Venezuela, Russia and other producers are having issues due to the sever drop in oil prices, and the big question is how long they can function effectively with oil prices projected to stay for the next 6 months or more in the same general area as they are now.
To sum up, the operating word for 2009 around the world will likely be ‘instability.’
China
I don’t think China will be immune from econmic problems. They are still tied very closely to the US consumer, and as long as we have problems, they will have problems. I have read that the Chinese need their economy to grow at least 8-9% yearly to keep all of the young people migrating to the factories from the heartlands employed and happy. If they “only” have 5% growth, the prospects for civil unrest will increase.
Another thing to wonder about is the massive number of US Dollars the Chinese are holding, and what they will do with them. If we continue to throw stimulus package after stimulus package at every field of business that lines up for a handout, sooner or later people will start thinking that their dollars are worth more as detailed & durable toilet paper rather than as a medium of exchange. If it comes to this, it will be interesting to see if the Chinese telegraph their moves out of the dollar or not. I suppose it depends on how fast things develop.
The Dollar
Long-term prognosis: not good. We are issuing way too many of them, and their attractiveness to foreign investors looks to be dropping. We have this huge mountain of debt crushing companies, governments, and individuals, and the best idea the new administration has is to add to this pile of debt. Sooner or later the day of reckoning will come, and other nations will tire of funding our lifestyles. Perhaps the new administration will put that day off for another year or more.
For what it’s worth, if the dollar goes south, it will take most of the other fiat currencies in the world with it, in my opinion. There are simply too many dollars out there compared to other currencies.
Short Takes
- Christmas 2009 will look a lot different than previous ones. See Charles Hugh Smith’s article on the end of the consumer Christmas for some details. There’s a lot I agree with in his essay, though I also think that many people will cut back on everyday living expenses but still do their best to splurge on the holidays. Trying to keep some semblance of normalcy in an otherwise strange new world of less.
- The Yankees will have spent $425 million on three players in the offseason and still won’t win their division.
- Speaking of sports, the economic contraction will mean the start of the end of the massive corporate sports era. One juicy rumor: The Dallas Cowboys are building a new pigskin palace funded in large part through the sale of ‘personal seat licenses,’ which are bought to allow you the right to buy season tickets. Rumor has it most PSL down payments are not due until 1/1/2009… oops.
- Another active hurricane season, but unless a big one plows into a major metropolitan area, it will not stick in the news very long, since the few billion dollars’ worth of damage will seem like peanuts compared to the various stimulus packages being doled out.
- By the end of the year, the word ‘billion’ will not have much economic shock effect anymore.
- Obama’s popularity numbers will start to slide later in the year with the stock market. This will not be his fault for the most part. The scope of the problems he has to deal with and the hype that swept him into office will simply be too big to live up to.
- Frugality will not replaced conspicuous consumption just for show. Many of us will be able to purchase less, and hopefully hold those things we do decide to spend money on in higher regard.
Those are the things that jump out at me right now. 2009 is looking to be a very exciting year in a bad way, I think. We’ll revisit this at the end of the year and see how things stack up.
I
Good post, MEOW
Time again for another predictions post looking at what I see ahead for the new year that’s approaching rapidly. I do these posts more for my own amusement rather than to engage in any serious attempt at prognostication. For a more in-depth listing of doomer-ific predictions, please check out Kunstler’s latest post. Lots of good stuff in there.
I’m picking up on a number of the same vibes that Kunstler and others are and think that 2009 will indeed bring in change, although it will not necessarily be the type that people voted in favor of when they elected Barack Obama to the presidency. I’m thinking more along the lines of the old intro tagline for the fourth season of Babylon 5… the year “everything changed.”
The predominant thinking out there is that we are in a short-term economic slowdown or possibly a moderately painful recession. I personally feel that we are only in the opening stages of something longer, harder and paradigm-shifting than most of us have ever expected, and we are poorly prepared for it. 2009 will be eye-opening for a lot of people… many of whom have never had to seriously worry about basic surival before in their lives.
Change is Coming… Except in the Economy
The Obama campaign sold two ideas to the American public: ‘change’ and ‘hope.’ Well, they’ll get one of the two for sure. The markets will likely experience a short term (less than a year) “Obama bounce” as the new stimulus package(s) temporarily flood the markets with more cash. Ultimately, I think this project is doomed to fail in it’s ultimate goal of jumpstarting the economy for another bull cycle. Obama’s incoming economic team come from the same places that the outgoing economic team hailed from, and based on early reports of the stimuli being assembled, they appear to have similar mindsets.
If the Obama team cannot turn around the economy, then ‘hope’ will take on a whole new meaning for most folks. It won’t be the immediate turnaround of fortunes and return to the good times of old that many people bought on November 4th. More likely it will mean a long-term goal that we will have to work hard as hell for, and the end result will look a lot different than the past.
Bankruptcy
2009 will see a lot more bankruptcies… both personal and for businesses. There are already rumblings about a large number of retailers closing their doors after lackluster 2008 holiday sales, and that’s the sort of thing that can snowball as the follow-through effects work their way through the economy. Retailers, financial firms, home builders, restaurant chains… there are many areas of the economy that will get sicker and sicker as Americans keep their wallets shut.
The wave of insolvency will snap up many city, county and state governments as well. California is the early favorite among states to declare early, but they are far from alone.
Jobs
If you’ve got one and can manage to keep it, you win. The mass of corporate bankruptcies and generally piss-poor financial results will mean the layoff parade will continue unabated. The Obama stimulus package will create some new jobs, but not in the same areas as the ones lost. I’m sure ex-financial analysts will love their new job pouring cement in an infrastructure project. One area I unfortunately see major job growth in the next year or two? Government.
Oil
Prices will stay low as long as the markets do not totally implode. Equities no longer look safe. If a panic starts over Treasury Bonds (not unlikely as we continue to add to the debt pile), a run to commodities could take place, as there you’re owning something real instead of pieces of paper with only notional value. Overall, though, the economy will stay down, and that will force leaders of oil exporting nations to continue to find the sweet spot between lowering production enough to drive prices up and to avoid being lynched in the meantime by rioting citizens that can’t feed their kids. This will have unfortunate side effects (lower spending on exploration, delaying higher-risk fields, etc.), but we won’t see that for some time. For now, we should have lower oil prices for at least the next six months or so, and peak oil theory will be ridiculed by those who cannot see more than a year or two down the line.
Geopolitics
Lots of interesting things going on in 2009. As we start the new year, Israel is assaulting the Gaza strip again, which is having the predictable results of whipping up anti-Israeli sentiments around the Arab world (and in Europe). If they decide to start an all-out assault to remove Hamas, things could get interesting ina bad way.
Similarly, India and Pakistan appear to be heading for a showdown over the Mumbai terrorist attack back in November 2008. It appears right now that neither side is willing to back down, and if this turns into war, it could go nuclear, since both sides have weaponry. The prospect of a nuclear exchange between these countries scares the crap out of me for a couple of reasons. First it would raise hell with the global economy… especially for those companies who have outsourced to India. Second, we have a number of troops right next door in Afghanistan. What affect would a destabilized Pakistani government have on the Taliban? Finally, there’s just the natural fear of what a nuclear exchange would mean in terms of dead people, wrecked infrastructure, and ruined environments.
Political & economic instability with many of the worlds’ major oil exporters will play a major role in things as well. Mexico, Venezuela, Russia and other producers are having issues due to the sever drop in oil prices, and the big question is how long they can function effectively with oil prices projected to stay for the next 6 months or more in the same general area as they are now.
To sum up, the operating word for 2009 around the world will likely be ‘instability.’
China
I don’t think China will be immune from econmic problems. They are still tied very closely to the US consumer, and as long as we have problems, they will have problems. I have read that the Chinese need their economy to grow at least 8-9% yearly to keep all of the young people migrating to the factories from the heartlands employed and happy. If they “only” have 5% growth, the prospects for civil unrest will increase.
Another thing to wonder about is the massive number of US Dollars the Chinese are holding, and what they will do with them. If we continue to throw stimulus package after stimulus package at every field of business that lines up for a handout, sooner or later people will start thinking that their dollars are worth more as detailed & durable toilet paper rather than as a medium of exchange. If it comes to this, it will be interesting to see if the Chinese telegraph their moves out of the dollar or not. I suppose it depends on how fast things develop.
The Dollar
Long-term prognosis: not good. We are issuing way too many of them, and their attractiveness to foreign investors looks to be dropping. We have this huge mountain of debt crushing companies, governments, and individuals, and the best idea the new administration has is to add to this pile of debt. Sooner or later the day of reckoning will come, and other nations will tire of funding our lifestyles. Perhaps the new administration will put that day off for another year or more.
For what it’s worth, if the dollar goes south, it will take most of the other fiat currencies in the world with it, in my opinion. There are simply too many dollars out there compared to other currencies.
Short Takes
- Christmas 2009 will look a lot different than previous ones. See Charles Hugh Smith’s article on the end of the consumer Christmas for some details. There’s a lot I agree with in his essay, though I also think that many people will cut back on everyday living expenses but still do their best to splurge on the holidays. Trying to keep some semblance of normalcy in an otherwise strange new world of less.
- The Yankees will have spent $425 million on three players in the offseason and still won’t win their division.
- Speaking of sports, the economic contraction will mean the start of the end of the massive corporate sports era. One juicy rumor: The Dallas Cowboys are building a new pigskin palace funded in large part through the sale of ‘personal seat licenses,’ which are bought to allow you the right to buy season tickets. Rumor has it most PSL down payments are not due until 1/1/2009… oops.
- Another active hurricane season, but unless a big one plows into a major metropolitan area, it will not stick in the news very long, since the few billion dollars’ worth of damage will seem like peanuts compared to the various stimulus packages being doled out.
- By the end of the year, the word ‘billion’ will not have much economic shock effect anymore.
- Obama’s popularity numbers will start to slide later in the year with the stock market. This will not be his fault for the most part. The scope of the problems he has to deal with and the hype that swept him into office will simply be too big to live up to.
- Frugality will not replaced conspicuous consumption just for show. Many of us will be able to purchase less, and hopefully hold those things we do decide to spend money on in higher regard.
Those are the things that jump out at me right now. 2009 is looking to be a very exciting year in a bad way, I think. We’ll revisit this at the end of the year and see how things stack up.
I am a funny guy
In light of the election of favorite son Barack Obama to President and the pending indictment of the second governor in a row, there are grumblings at Illinois’ state tourism authority to change course to attract new visitors. “We are looking at Illinois’ current events and the past for connections” Lee Alstap, board member of the Illinois tourism board and assistant curator at the Lincoln Presidential Library and Museum.
Although plans are still in their initial phases, the ITB and LPLM are working together to celebrate the changing nature of the state and its political sphere. “Here in Illinois, we have historically sent our black men to prison, and our white men to Washington” Mr. Alstap explains. “But now things seem to be changing, not in the penal system as a whole, but quite notably with our politicians. It is for this reason that we are tentatively calling a new program at the LPLM ‘Bizarro Illinois - whites to the jailhouse and blacks to the White House.’”
The plan at this point is to have interactive displays where youths can both learn about the campaign of the President-Elect and also listen in on archived wire taps of the present and former governors while they were under surveillance. “It seems like a strange combination, I know, but we are trying to capture the spirit of the moment” curator emeritus Gloria Smith said. “Initially, I was a little disturbed by playing up the two notable white people that Illinois will be sending to jail, but if thats what it takes to get an Obama exhibit in here, I am all for it.”
Not all Illinois residents have responded so reasonably. “I do not like the idea, and I resent that the ITB and LPLM would get involved in ongoing criminal investigations” embattled Governor Rod Blagojevich said on the speaker phone from his home in Chicago. “I am expecting some royalties from this shit at least, but all I am getting back from the ITB at this point is more fucking appreciation for my cooperation with the exhibit.” The governor went on to recite a poem by noted 20th century bathroom graffiti author Mr. Smelty T Deltit at which time this reporter hung up.
Mr. Obama’s staff was unable to comment beyond their blanket statement that there is “only one president at a time” and “neither the President-Elect nor his staff had taken part in any wrong-doing in the matter.”
Reporting from Bizarro-Illinois, Mike Mayberry
Saturday, January 3, 2009
3 things worth watching in 2009
National Debt and treasury bills - It took W 8 years to almost double the national debt. My guess is O will be able to do it in 4. Treasuries have become quite popular lately, but at some point investors will start looking at the long term solvency of the government and take it into account when deciding whether or not the secondary market will be able to continue to finance treasuries. As an aside, it will also be interesting to watch what will happen to interest rates - which are at record lows - as the stock market starts to rally. The reason I am interested is because a big portion of federal debt is securitized in short term bonds and as interest rates climb, these could get very expensive. Fiscal year 2008 the government gave $450 billion to bond holders in interest payments, and that was with fairly low interest rates.
Food security - As America continues its slow slide into joining the global south, will we continue to be able to maintain and afford our complex food supply lines?
The real economy - At some point, Americans are going to wake up and realize that there will be no further credit extended to them to keep up unrealistic levels of personal consumption. Credit cards are already cutting back up to 40% of their credit lines, car and home loans are in limbo waiting for another shoe to drop. I am interested to see what happens with student loans as I think the higher education racket might be the next bubble to give way. If the economy gets worse and more student loans go into default, something will have to give eventually. I think that will be the point when Americans pick up on the fact that we are overeducated in all the wrong stuff (fewer engineers and agricultural experts, more financiers and specialists in pointless unsustainable fields).