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Market alarm as US fails to control biggest debt in history
The Telegraph ^ | 12/11/2010 | Liam Halligan

Posted on 12/11/2010 10:30:27 PM PST by bruinbirdman

US Treasuries last week suffered their biggest two-day sell-off since the collapse of Lehman Brothers in September 2008. The borrowing costs of the government of the world’s largest economy have now risen by a quarter over the past four weeks.

Such a sharp rise in US benchmark market interest rates matters a lot – and it matters way beyond America. The US government is now servicing $13.8 trillion (£8.7 trilion) in declared liabilities – making it, by a long way, the world’s largest debtor. Around $414bn of US taxpayers’ money went on sovereign interest payments last year – around 4.5 times the budget of America’s Department of Education.

Debt service costs have reached such astronomical levels even though, over the past year and more, yields have been kept historically and artificially low by “quantitative easing (QE)” – in other words, Federal Reserve Chairman Ben Bernanke’s virtual printing press. Now borrowing costs are 28pc higher than a month ago, with the 10-year Treasury yield reaching 3.33pc last week, an already eye-watering debt service burden can only go up.

Few on this side of the Atlantic should feel smug. The eurozone’s ongoing sovereign debt debacle has pushed up Germany’s borrowing costs by 27pc over the last month – to 3.03pc. The market has judged that if Europe’s Teutonic powerhouse wants the single currency to survive, it will ultimately need to raise wads of cash to absorb the mess caused by other member states’ fiscal incontinence.

While the UK isn’t ensnared in monetary union, gilt yields have also spiralled 18pc since the start of November – to 3.55pc. British Government debt is officially £1.05 trillion. We are fast approaching a debt-to-GDP ratio of 100pc, compared to 30pc just a decade ago. If you add off-balance-sheet liabilities to Government estimates, including

(Excerpt) Read more at telegraph.co.uk ...


TOPICS: Business/Economy; Crime/Corruption; Government; News/Current Events
KEYWORDS: deficit; devaluation; inflation

1 posted on 12/11/2010 10:30:29 PM PST by bruinbirdman
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To: bruinbirdman

I say bring back the gold standard, open up the mines in CA, which still have lots of gold in them, and set the price of US Treasury gold at an arbitrary price and keep it there. Also add silver backing to the gold. And STOP borrowing money from every other country in the world, stop spending and stop taxing Americans to death. Do away with the frickin’ welfare state.


2 posted on 12/11/2010 10:39:55 PM PST by calex59
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To: bruinbirdman

I hope everyone likes the taste of ramen noodles. About all we’re going to be able to afford.


3 posted on 12/11/2010 10:42:54 PM PST by Newtoidaho (Liberals are drooling buffoons backed by satanic goons.)
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To: bruinbirdman
What it all boils down to is that we as a Nation are Broke. WE are not only broke but we owe untold amounts of money.Think about all of the things that the Government has to fund that are not on the books like Social Security.We are absolutely flat broke, and the crooks in Washington continue to print more money.
4 posted on 12/11/2010 10:44:00 PM PST by BooBoo1000 (" Let go, and Let God")
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To: bruinbirdman
Photobucket
5 posted on 12/11/2010 10:49:44 PM PST by PanzerKardinal (Some things are so idiotic only an intellectual would believe it.)
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To: BooBoo1000; All

Nah, they can’t even print money. Did you here about the huge printing of $100 bills that had creases in them and all have to be destroyed now.


6 posted on 12/11/2010 10:50:01 PM PST by gleeaikin
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To: Newtoidaho

Well, here ya go... http://www.budget101.com/frugal/ramen-noodle-recipes-1548/


7 posted on 12/11/2010 10:52:01 PM PST by HomersNose
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To: Newtoidaho

That ... may be an unduly optimistic assessment.


8 posted on 12/11/2010 10:56:30 PM PST by Springfield Reformer (Winston Churchill: No Peace Till Victory!)
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To: bruinbirdman
The US government is now servicing $13.8 trillion (£8.7 trilion) in declared liabilities – making it, by a long way, the world’s largest debtor. Around $414bn of US taxpayers’ money went on sovereign interest payments last year – around 4.5 times the budget of America’s Department of Education.

And Republicans have just committed to Obama's massive new stimulus plan in this "Bush-era tax cut compromise". Hundreds of billions in new, useless spending with money we're borrowing. This is after the Republican victory - apparently Republicans like Chuck Grassley and so-called fresh blood like Kristi Noem are too busy oinking for ethanol subsidy pork to worry about the future of this nation or any semblance of commitment to fiscal sanity.

The Republican class that will take over the House hasn't even taken office yet and it's already clear that it's just going to be business as usual. Our political class, Democrat and Republican, is bent on borrowing and spending the US into second-rank status as a nation.
9 posted on 12/11/2010 10:58:09 PM PST by AnotherUnixGeek
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To: bruinbirdman

So, in layman’s terms, this means that... basically we’re all completely fxxxed?


10 posted on 12/11/2010 11:01:08 PM PST by Jack Hammer
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To: calex59

“open up the mines in CA, which still have lots of gold in them,”

They’re probably full of rare bats and rats that need protecting/s;)


11 posted on 12/11/2010 11:20:15 PM PST by Frank_2001
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To: calex59

Don’t trust the us treasury with a
penny nor the government.They have already destroyed a nation and its currency along with their buds the no federal no reserves.These people are nothing more than crooks!


12 posted on 12/11/2010 11:20:20 PM PST by taxtruth (Don't end the fed,jail the fed!)
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To: Frank_2001

They closed them during WWII to allow the man power to go into the military and then failed to open them after the war. When some people tried to open several of them up again naturally the greenies stopped it saying that the chemicals used for mining were terrible things, thus ensuring that thousands of jobs were never opened up in Northern CA.


13 posted on 12/11/2010 11:23:31 PM PST by calex59
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To: bruinbirdman
Around $414bn of US taxpayers’ money went on sovereign interest payments last year – around 4.5 times the budget of America’s Department of Education.

I love how a problem and a factor in its cause are inadvertently embodied in one sentence. The author has no clue but he wrote it but assuredly doesn't see it.

14 posted on 12/11/2010 11:42:53 PM PST by Hostage
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To: Newtoidaho

My wife and I go to antique malls for fun. I’ve found something interesting. A lot of them have junk silver, and a lot of that junk silver is priced at less than $20 an oz, when calculating the actual silver content. Heck, I even get a lot of it in proof sets.

I’ve found a way to make it actually pay to go antique malling with my wife.

Just sayin’... ;)


15 posted on 12/11/2010 11:51:08 PM PST by RobRoy (The US Today: Revelation 18:4)
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To: BooBoo1000

Everything you need to know is right here:

http://www.chrismartenson.com/crashcourse

This has been brewing for a hundred years. It is literally a hundred year, or maybe a thousand year storm. It is not just national, but international, and it is gonna leave a mark.


16 posted on 12/11/2010 11:55:20 PM PST by RobRoy (The US Today: Revelation 18:4)
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To: AnotherUnixGeek

Kristi Noem and pork. Two words that go well together.

I’m sorry I had to say it, I have a crush.


17 posted on 12/11/2010 11:58:40 PM PST by CommieCutter (A Centrist Democrat is now defined as: between Socialism and Communism.)
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To: bruinbirdman
Yup; the dollar is going down, down, down, down ....

Too bad most of the sheeple are clueless about it and about how to protect themselves and their savings. Very sad.

18 posted on 12/12/2010 12:11:42 AM PST by JustTheTruth
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To: bruinbirdman
US Treasuries last week suffered their biggest two-day sell-off since the collapse of Lehman Brothers in September 2008. The borrowing costs of the government of the world’s largest economy have now risen by a quarter over the past four weeks.

Now, what say you Republican legislators who want to vote for this Tax Bill that's chock full of pork?

Well?

19 posted on 12/12/2010 12:12:09 AM PST by TheThinker (Communists: taking over the world one kooky doomsday scenario at a time.)
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To: bruinbirdman

Meanwhile, Congress debates Don’t Ask, Don’t Tell and DREAM amnesty.

The Obama Administration continues a moratorium on new oil wells offshore, has the EPA restricting CO2 emissions and putting a much tighter restriction on ozone, has OSHA putting much tougher requirements on industrial noise levels, and many more regulations that will cost business a lot of money and make them less competitive internationally.

The Democrats seem bound and determined to destroy this country, and they have just about succeeded. We are in for economic hell.

Don’t let people forget that the Democrats did this.


20 posted on 12/12/2010 12:21:22 AM PST by Rocky (REPEAL IT!)
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To: Rocky
"The Obama Administration Energy/EPA political commissar Carol "ex-Director of Socialists International" Browner continues a moratorium on new oil wells offshore, has the EPA restricting CO2 emissions and putting a much tighter restriction on ozone, has OSHA putting much tougher requirements on industrial noise levels, and many more regulations that will cost business a lot of money and make them less competitive internationally. "

That commie chick sure keeps a low profile while pushing her/Osama's anti-capitalist political agenda.

yitbos

21 posted on 12/12/2010 12:47:47 AM PST by bruinbirdman ("Those who control language control minds." -- Ayn Rand)
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To: All
Since the Libs mantra is always "tax the rich!", "tax the rich!" and I am getting extremely tired of the "wage envy"...I did a little math.  According to the government there are 2,372,000 households earning more than $250,000.00 per year.  That group's mean income is $426,000.00 per household. So if we were to tax them 100% of their income (Ha!), that would raise a total of $1,010,472,000,000.00 (a little over $1.01 trillion).  The yearly federal deficit for 2009 was $1.42 trillion, for 2010 it was $1.29 trillion, and we are on track for a $1.21 trillion deficit this fiscal year!!!!  Is my math wrong?  Even if I am off by 50%, we are still up a river without a paddle!

http://www.census.gov/hhes/www/cpstables/032010/hhinc/new06_000.htm

http://seattletimes.nwsource.com/html/businesstechnology/2013650100_apusbudgetdeficitglance.html

 

22 posted on 12/12/2010 1:55:55 AM PST by Drago
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To: JustTheTruth

Tell me three currencies you trust. My power company won’t take gold shavings.


23 posted on 12/12/2010 2:08:21 AM PST by Tunehead54 (Nothing funny here ;-)
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To: Tunehead54
This article seems to be fairly well thought out, and they are recommending the Swiss Franc.  I am just starting to look into getting some foreign currency in addition to silver/gold...please post if you find something better or as good.  Even Canadian dollars would probably fair better than U.S. $!

 

http://www.independentlivingnews.com/pdf/Final_days_of_dollar.pdf?AID=2334



24 posted on 12/12/2010 2:28:55 AM PST by Drago
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To: The Comedian

Ping.


25 posted on 12/12/2010 2:39:48 AM PST by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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To: Tunehead54

Keep some ready fiat money on hand to handle your utility bills.

But if you are not invested in previous metals or hard assets when the dollar devalues to 20% of its current value sometime in 2011, you will be wiped out.


26 posted on 12/12/2010 2:39:48 AM PST by agere_contra (...what if we won't eat the dog food?)
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To: RobRoy

Thanks for the link.


27 posted on 12/12/2010 3:10:04 AM PST by Visceral (The more I learn, the less I know)
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To: calex59
I have a fair amount of gold and silver so I would probablydo well in such a scenario; however, there's more to think about than that. We owe so much money to foreign countries right now that if we went to a gold standard, we would quickly find our gold reserves gone. What's worse, even if we did go to a gold standard, nobody else would so we would quickly find ourselves holding a currency backed by gold that we don't have while the rest of the world continues to play with fiat currency AND while China takes possession of all of our gold. It's better to continue with fiat currency until it crashes so hard that it can't be repaired. the key, IMHO, will be managing that crash such that the rest of the world is in the car with us at the time of the big crash if you get my meaning. It's also important to look at what we have turned those worthless scraps of paper into over the years, the most powerful war machine ever assembled on earth. We should keep that in mind as we call out for a gold standard and as we look into our crystal balls at the future coming at us.
28 posted on 12/12/2010 3:13:22 AM PST by RC one (WHAT!!!!)
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To: bruinbirdman

U.S. borrowing costs have risen 28 basis points over the past month, not “28pc” as the academically challenged “journalist” stated. The same applies to his comment about German debt service. This reflects poorly on The Telegraph.


29 posted on 12/12/2010 3:40:04 AM PST by Kennard (io)
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To: RC one

No one will do “well” during a major economic crash—because we take for granted the wide variety of goods and services easily available to us.

You won’t starve with your PMs, but you won’t be a very happy camper either.

Stock up on necessities—because in a crash you never know which ones won’t be available or will become very expensive.

And—rule #1—keep a very low profile.


30 posted on 12/12/2010 4:43:08 AM PST by cgbg (No bailouts for New York and California. Let them eat debt.)
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To: agere_contra

“But if you are not invested in previous metals or hard assets when the dollar devalues to 20% of its current value sometime in 2011, you will be wiped out.”


If you are going the precious metals route you might want to check up on some of the reports that are indicating that the actual stocks of precious metals to paper certificates don’t match.

In fact there are other reports that some people who do have the precious metals and are keeping them at a bank are having to resort to legal threats to get their own assets released back to them by those institutions.


31 posted on 12/12/2010 6:05:22 AM PST by The Working Man
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To: RC one
We owe so much money to foreign countries right now that if we went to a gold standard, we would quickly find our gold reserves gone.

The trick there is to pay off the loans with printed dollars just before going on the gold standard, there after to stay away from borrowing from other countries. One of the stupidest things we have ever done.

32 posted on 12/12/2010 6:30:57 AM PST by calex59
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To: Bullish; CJ Wolf; houeto; Quix; B4Ranch; Whenifhow; Silentgypsy; blam; FromLori; Lurker; ...
"Unexpected" ping.

"Economic Holocaust" ping.

Increasing volume ping list watching the slow motion Economic Holocaust.

FReepmail me if you want on or off
The Comedian's "Economic Holocaust" ping list...


Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

33 posted on 12/12/2010 7:38:01 AM PST by The Comedian (Government: Saving people from freedom since time immemorial.)
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To: calex59

There’s a gold miner less than ten miles from my home. It’s owned by foreigners.


34 posted on 12/12/2010 8:23:36 AM PST by B4Ranch (Do NOT remain seated until this ride comes to a full and complete stop! We're going the wrong way!)
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To: Hostage

He knows it but doesn’t recognize that fact.


35 posted on 12/12/2010 8:28:37 AM PST by B4Ranch (Do NOT remain seated until this ride comes to a full and complete stop! We're going the wrong way!)
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To: The Comedian

“Unexpected” by whom? The ignorant perhaps or did you have someone special selected for that honor?


36 posted on 12/12/2010 8:37:15 AM PST by B4Ranch (Do NOT remain seated until this ride comes to a full and complete stop! We're going the wrong way!)
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To: bruinbirdman

bttt


37 posted on 12/12/2010 8:56:28 AM PST by Just mythoughts
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To: Tunehead54
"Tell me three currencies you trust."

* Australian Dollar

* Canadian Dollar

* Swiss Franc

38 posted on 12/12/2010 9:59:38 AM PST by blam
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To: B4Ranch

Have you never noticed how every report on the economy by the MSM lately resorts to the “unexpected” meme? As you pointed out, only the ignorant are not expecting the markets to implode now, yet the MSM continues to act like economics is some kind of mystical art where anything could happen.


39 posted on 12/12/2010 12:26:07 PM PST by paladin1_dcs
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To: paladin1_dcs

To them economics is some kind of mystical art.


40 posted on 12/12/2010 1:39:48 PM PST by B4Ranch (Do NOT remain seated until this ride comes to a full and complete stop! We're going the wrong way!)
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To: Kennard
Oct 8, 2010 close 2.38%
Dec 10, 2010 close 3.30%

The two month swing has been 38.6 percent, and 92 bps.

CBOE Interest Rate 10-Year T-No (^TNX)

41 posted on 12/12/2010 2:47:18 PM PST by DeaconBenjamin (A trillion here, a trillion there, soon you're NOT talking real money)
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To: bruinbirdman
Around $414bn of US taxpayers’ money went on sovereign interest payments last year

That is slightly less than the entire GDP in 1957.

42 posted on 12/12/2010 2:54:05 PM PST by Glenn (iamtheresistance.org)
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To: B4Ranch

Sadly, it’s a mystical art to most Americans now. I know most of my wife’s family has no understanding what so ever of economics and while they’re not great thinkers, they’re not below average either. It’s just something that they were never taught as to how it matters to people on a daily basis.


43 posted on 12/12/2010 3:57:09 PM PST by paladin1_dcs
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To: DeaconBenjamin
Thank you. I shot from the lip.

Note that the 10-year rate is back to where it was six months ago and 53bps below eleven months ago.

Dec 10/10 3.32%

Nov 10/10 2.65%, 67bps increase, 25.3%

Oct 8/10 2.41%, 91bps increase, 37.8%

Jun 15/10 3.32%, same as Dec 10/10

Jan 11/10 3.85%, 53bps decrease, (13.8%)

So with demand from current, and likely expanded, POMO volume, will the yield decline again, or will long-term inflation concerns control? History says supply and demand wins.

data per:

http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2010

44 posted on 12/12/2010 4:31:06 PM PST by Kennard (io)
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To: B4Ranch
“Unexpected” by whom?

You know, the usual "experts" to whom every predictable and inevitable reaction to well-studied actions is a friggin' surprise.


Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

45 posted on 12/12/2010 7:39:13 PM PST by The Comedian (Government: Saving people from freedom since time immemorial.)
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To: bruinbirdman
REPEAL THE TAX CODE! The Federal Reserve and Tax Cheat Geithner have proved beyond a doubt that the Federal government can now just print and spend money. No need to further burden the tax paying public. Just pull a Federal budget out of the executive's *ss, have Congress pass the thing, have the Treasury whip up some bond documents and sell them to the Fed! Who needs tax payers anymore?!?!?! Or, Chinese lenders for that matter!
46 posted on 12/12/2010 10:15:23 PM PST by April Lexington (Study the Constitution so you know what they are taking away!)
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To: gleeaikin
Nah, they can’t even print money. Did you here about the huge printing of $100 bills that had creases in them and all have to be destroyed now.

Just wait until they start running the health care system!

47 posted on 12/12/2010 10:18:01 PM PST by April Lexington (Study the Constitution so you know what they are taking away!)
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