Skip to comments.Expert: Rates to Soar on Huge U.S. Debt
Posted on 12/18/2009 12:34:52 PM PST by FromLori
he buildup in government debt threatens to push interest rates higher, says Hans Blommestein, head of public debt management at the Organization for Economic Cooperation and Development.
Gross borrowing needs of OECD governments will likely reach almost $16 trillion in 2009, up from an earlier estimate of about $12 trillion, he writes in the Financial Times.
That would represent a post-World War II high of 8.25 percent of GDP. That by itself is not good, of course.
A looming additional challenge is the risk that, when the recovery gains traction and risk aversion falls further, yields will start to rise, Blommestein says.
An unwinding of the massive central bank stimulus around the world also could push rates higher, he says.
It could rock government securities markets by pushing up strongly longer-term rates on government bonds and perhaps also long-term mortgage rates, Blommestein writes.
In the end, governments must get their budget deficits under control, he says.
Over time, a return to a prudent medium-term fiscal strategy is an essential element of any credible exit strategy to bring debt service costs under control.
Former Federal Reserve Chairman also is concerned about budget deficits and interest rates.
The critical issue that economists worry about is a vicious cycle of rising debt, debt service costs and interest rates, Greenspan said in congressional testimony.
The debt service becomes explosive and that moves directly into the budget deficit.
When this occurs, how long before Mr. Obama says it’s not his fault?
may want to read
Calling on Congress to stop the debt tsunami
U.S. Treasury and Fed Determined to Destroy Dollar and Force Savers to Spend: Investing in a Government Hoping for a U.S. Dollar Collapse.
4 Big Mortgage Backers Swim in Ocean of Debt
I think they already said it in advance.
“When this occurs, how long before Mr. Obama says its not his fault?”
This is why he will push to renew Bernenke....he’ll need to use him as bus fodder.
Also check out
Will Fed plans undercut stimulus?
This is their plan. Spend/borrow until they break the capitalist system. The elites are protected. The rest will fight in the streets for food, water and everything else.
The hard left and the elites are out to destroy us. They succeeded.
There is no positive end. Obama and the others have committed treason and we are now Argentina, Venezuela, Mexico and any African third world hell hole. Thanks to Socialism.
More monetary info, Lori:
More sickening food for thought...
Americans owe over 11 Trillion dollars in home mortgage debt (that’s just 1 - 4 family, not including multi-family and commercial mortgage debt!). That number was only 2.6 Trillion in 1990.
AND we owe over 2.5 Trillion in other consumer credit related debt (cars, boats, RV’s, credit cards). Credit cards make up a little less than 1 Trillion of that 2.5 Trillion total. That number is up from 800 Billion in 1990.
So, just in home mortgage and consumer related debt, we owe almost 14 Trillion dollars (on assets that are very likely worth less than we paid for them)!
What’s worse, we do not pay the low, low interest rates on our debt that the gov’t pays on its debt.
1 Trillion (just ONE) is $1 per second for 32,000 years, and that’s without interest!!
I continue to see articles where people are freaking out about the national debt, but at least the gov’t can tax and print money.
The avg debt ratio for an American citizen is now 130%... and unemployment is going to continue to climb and will probably stay high for years to come (especially if Obama gets his way on healthcare, cap and trade, card check, etc.)
We need job-friendly, business-friendly, PROFIT-friendly policies that lure jobs back to the U.S. and keep people from going out of business and encourage people to start businesses! What they are proposing is just the opposite. Scary, scary stuff indeed.
Source: U.S. Census bureau.
Home mortgage debt: http://www.census.gov/compendia/statab/2010/tables/10s1155.pdf
Consumer credit debt:
We need to drill here and now...for CHEAP US oil, coal and gas...drive the dollar down so we can export to the world.
the cheap dollar handcuffs us currently by forcing us to buy expensive energy from overseas. The “climate bill” in the end was the world’s attempt to prevent the US from getting cheap energy to recover its manufacturing base. Cheap energy is how we built the 20th century world...and its how the US will build the 21st century...and pay its debts. This is why Palin is so big...and so reviled. She will make it happen.
My pleasure Lori, I’m here to serve.