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Metalworking (rec.crafts.metalworking) Discuss various aspects of working with metal, such as machining, welding, metal joining, screwing, casting, hardening/tempering, blacksmithing/forging, spinning and hammer work, sheet metal work. |
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#1
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We be in deep ****.....blymie!!
"Gunner Asch" wrote in message ... New York Times: U.S. Racing Toward Debt \ufffdShock\ufffd Monday, November 23, 2009 1:51 PM Article Font Size A page one, top-of-the-fold New York Times report Monday warns that U.S. debt is rising so fast that the federal government is careening toward a "payment shock" in the not-too-distant future. The Times lead headline read: \ufffdFederal Government Faces Balloon in Debt Payments: At $700 Billion a Year, Cost Will Top Budgets for 2 Wars, Education, Energy.\ufffd The Times headline appears eerie just as the Senate moves to push forward on a radical healthcare reform \ufffd with CBO estimates for a final bill costing nearly $1 trillion dollars over the next year. The national debt now stands at over $12 trillion and the White House estimates that the cost of servicing the debt will rise to more than $700 billion a year in 2019, up from $202 billion this year. The Times suggests that $700 billion annual payment cost may be conservative. The additional $500 billion a year in interest payments would surpass the combined budgets this year for education, energy, homeland security, plus the wars in Iraq and Afghanistan, the Times observes. Treasury officials face not only huge new debts incurred in response to the economic meltdown but a balloon of short-term borrowings coming due in the months ahead, and interest rates that are certain to return to normal levels when the Federal Reserve concludes that the fiscal emergency has passed. "Even as Treasury officials are racing to lock in today's low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages," The Times reported on Monday. Interestingly, the alarming Times analysis comes as the nation is in the midst of a debate over healthcare reform proposals that could add many billions of dollars to the overall debt. Record deficits have arrived just as payments for Medicare and Social Security benefits are set to explode, with the oldest Baby Boomers approaching age 65. This will result in what experts have long warned will be a "fiscal nightmare" for the government, the Times article notes. "What a good country or a good squirrel should be doing is stashing away nuts for the winter," William H. Gross, managing director of the Pimco, a bond management firm, told The Times. "The United States is not only not saving nuts, it's eating the ones left over from the last winter." As for the balloon of short-term borrowings coming due, that debt now accounts for 36 percent of overall debt, compared to the historic average of less than 25 percent, and more than $1.6 trillion is due by March 31. Another problem: The Federal Reserve's purchases of Treasury bonds and mortgage-backed securities to prop up the economy pushed down long-term interest rates by about half of a percentage point, but the Fed is set to reverse those policies \ufffd that alone could add $40 billion to the government's annual debt service expense. The Treasury Borrowing Advisory Committee, a group of market experts that advises the Treasury on debt management, declared this month: "Inflation, higher interest rate and rollover risk should be the primary concerns. Clever debt management strategy can't completely substitute for prudent fiscal policy." And The Times warns: "There is little doubt that the United States' long-term budget crisis is becoming too big to postpone." I firmly believe that nothing will start the coming revolt faster than when all of the governemnt workers who were enticed into following the Pied Piper start getting stiffed on their checks. "OOOOOOO, Mr. Obama gonna pay my mortgage, gonna pay mah cah payment, gonna buy mah gas." I wonder where that bitch is today. I'd like to see an interview with her. But mostly, I want to see all the recent government hires that were voting shills and voting registration goons start having their checks bounce. With that crowd, it ain't gonna take long for someone to go give the man an attitude adjustment. BWAHAHA. The feces are approaching the spinning fan blades. Steve |
#2
Posted to rec.crafts.metalworking
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We be in deep ****.....blymie!!
I believe that you guys are referring to this newsMax article:
http://moneynews.newsmax.com/headlin...23/289782.html That article is a very simplified and editorialized paraphrasing of a another article from NY Times (much more detailed), which is a must read for anyone who actually has some money at risk, like, let's say, SteveB. http://www.nytimes.com/2009/11/23/business/23rates.html That NY times article builds on top of a theme that was initiated by Warren Buffett in August of this year in another NY Times editorial: http://www.nytimes.com/2009/08/19/op...19buffett.html Yours truly wrote about this "debt shock" several years ago, in this newsgroup IIRC, when I pointed out that an increase in interest rates will increase debt servicing costs and deficits, and that could have increase interest rates even further, leading to "snowball effect" of increasing debt servicing costs that raise decicits, which leads to higher interest rates, ad infinitum. This is not a new problem, in other words, this is the old problem that is made continually worse by the ongoing deficits. The fear, of course, is that unsustainable debt would lead to devaluation of currency. TO evaluate that devaluation risk properly, we need to consider it in the context of other countries. The debt problem is not a US only problem. As the NY times article points out, other countries such as Japan, Germany, Britain and so on, have even worse debt loads in relation to GDP. Those countries are as much, if not more, at risk of having to debase their currencies, as is the US. Thus, to someone who wants to hedge their dollar exposure, converting dollars to other currencies may be a wrong answer, as those currencies face the same risks. This may partly be an explanation for the current mad rush into gold. Gold is a physical asset that, unlike paper money, cannot be diluted due to limited supply of gold. Would gold be a good vehicle for preserving purchasing power? I cannot know the future, but am not at all convinced of this, and will not be participating in the current gold rush. My main concern about this is that gold presently generates too much interest among the investing public, including people whom I consider fools. What I do know is that I personally avoid 1) Buying any long term debt at current interest rates 2) Owing any substantial money on a rolling short term basis. I recently refinanced by mortgage from 15 years fixed to 30 years fixed due to inflation concerns. Most, though not all my assets are in forms that should not lose value due to inflation. The best summary of the situation is that the US debt is not unmanageable, but is at risk of becoming so. i |
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