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The Problems With “Printing Your Way Out Of Debt” By Bill Bonner 11/07/09 Beunos Aires, Argentina – Governments are running breathtaking deficits…and accumulating alarming debts. Japan has a national debt of nearly 200% of its GDP. Where did that debt come from? It came from 20 years of trying to buy its way out of a slump with borrowed money. Of course, it didn’t work. But now, Britain and America are following the Japanese lead…and the Japanese are still at it! At the present rate, Japan’s government debt will grow to 300% of GDP in 10 years. America’s debt could...

The following is from the 'About' link on the Debt Clock Page) The purpose of the US Debt clock is to inform the public of the financial condition of the United States of America. We are dedicated to bringing the public the most accurate, up-to-date debt information possible. The numbers are laid out in such a way to give a complete real-time snapshot of the country’s balance sheet. Although the numbers involved are enormous, it is still easy to see the relative balance between wealth generated and wealth consumed. All the debt clocks on the site are updated continuously to...

There were, once upon a time, usury laws that generally held any interest rate greater than 10% was illegal. The Federal Reserve under Paul Volcker believed that interest rates needed to be raised to insane levels to stop the runaway inflation, which was the first stone that hit the water sending the shock waves that we are having to pay for today. Once the usury laws were altered so the Fed could fight inflation, it set in motion the doubling of household debt, not to mention the national debt. At 8%, the principle is doubled through interest in less than...

The August Congressional Budget Office budget forecast for the fiscal year that began last month says that Uncle Sam will take in $2.264 trillion from October 2009 through September 2010. That’s an increase of 7.6% over fiscal 2009’s intake of $2.105 trillion. Though it won’t be official until Tim Geithner’s crew releases its Monthly Treasury Statement next week, it’s virtually certain that the government’s collections will open the year in a deep hole compared to last year, and probably well behind what CBO expects. Take a look at this compilation of key items from October’s final Daily Treasury Statement, compared...

White House Budget Director Peter Orszag warned Tuesday that large federal deficits will eventually imperil the U.S. economy because they will lead to higher interest rates and more borrowing from overseas. Orszag, in a speech in New York, said that deficits, expected to add $9 trillion to the current national debt of $12 trillion over the next decade, are "serious and ultimately unsustainable." Orszag said that deficit spending was necessary to help boost the economy when unemployment is hovering around 10 percent. But he said that red ink must be stopped as the economy recovers. During a recovery, private investment...

I don't follow the monetary and fiscal problems of other countries very closely. We've got enough of a crisis here to worry about anywhere else. But during the stim bill debate, you may recall liberals pointing to Japan's "stimulus spending" in the decade of the 1990's as an example of how to get out of a deep recession. Maybe they should have read the fine print as Ambrose Evans-Pritchard of the Telegraph explains: The IMF expects Japan's gross public debt to reach 218pc of gross domestic product (GDP) this year, 227pc next year, and 246pc by 2014. This has been...

As I have repeatedly noted, China has been blowing a bubble with easy credit. MarketWatch's Craig Stephen warns investors to be wary of a potential correction, at least in some sectors: Policy tightening could soon become the dominant market theme, meaning it's time for a rethink. After recent rate hikes in Australia and Norway, tightening is back on the agenda in many countries, including China. And with the U.S. just clocking up 3.5% annualized GDP growth for the third quarter, dollar bears will have something to think about. Nomura says its time to get a little more defensive in the...

<p>The Treasury has been announcing record debt auctions, and yet we see little in the form of increasing interest rates to attract buyers to these securities that are still somehow gobbled up. The Fed's balance sheet, of late, doesn't seem to account for it, as any buying they are doing seems to be sterilized. Are the Chinese so insane that they are buying up anything the Treasury throws up in the air? It appears not.</p>

It is becoming more and more evident, to the astute observer of realistic economics, that the second dip in the "W" global recession is coming up quickly. This is of course, identical to what took place between the 1929 collapse and the 1931 final landing. The world economy fell hard, bounced high and than fell into a deep black hole, that it took it thirty years to climb out of. This time will be worse, at least for the Anglos and more specifically the Americans. ...Now for the Yanks. The Americans, more so than any others are about to find...

It Is Japan We Should Be Worrying About, Not AmericaJapan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending – and allowing it to push public debt beyond the point of no return. By Ambrose Evans-Pritchard Published: 5:33PM GMT 01 Nov 2009 The rocketing cost of insuring against the bankruptcy of the Japanese state is telling us that the model has smashed into the buffers. Credit default swaps (CDS) on five-year Japanese debt have risen from...

Reporting from Los Angeles and Sacramento - Starting Sunday, cash-strapped California will dig deeper into the pocketbooks of wage earners -- holding back 10% more than it already does in state income taxes just as the biggest shopping season of the year kicks into gear. Technically, it's not a tax increase, even though it may feel like one when your next paycheck arrives. As part of a bundle of budget patches adopted in the summer, the state is taking more money now in withholding, even though workers' annual tax bills won't change. Think of it as a forced, interest-free loan:...

FRANKFURT (Dow Jones)-Greek and Portuguese government bonds came under pressure Thursday after rating agency Moody's Investors Service issued fresh warnings on the countries' sovereign credit ratings. Moody's placed Greece's A1 currency ratings on review for possible downgrade, and it also changed the outlook on Portugal's Aa2 rating to negative, citing serious fiscal deterioration in Greece and structural economic challenges and a lack of will to challenge them in Portugal.

Selling U.S. debt was a bit harder than expected today. Today's treasury auction came in a bit below expectations, with the 7-year yield hitting 3.14% after initial expectations of 3.11%. The bid to ask, which is the total value tendered over the total accepted, as shown below, came to 2.65. This was lower than the average of the last four auctions.

A major shortcoming in an otherwise thoughtful post on deficit spending is a traditional mistake in which analysts seek to analogize the expenditures of government with that of a private household or business. The government is sovereign. This fact gives to government authority that households and firms do not have. In particular, government has the power to tax and to issue money. The power to tax means that government does not need to sell products, and the power to issue currency means that it can make purchases by emitting IOUs. No private firm can require that markets buy its products...

In 12 years, Antoine Walker(notes) made more than $110 million playing professional basketball moderately well. Take away taxes, throw in some adidas endorsement money and a "NBA Live 99" cover, and he's left with, what, $60-to-65 million? Whatever the details, it was a big chunk of change, which, amazingly, wasn't enough. "[Walker] liked to move in an outsized entourage; his mother estimates that, during his playing days, he was supporting 70 friends and family members in one way or another. And speaking of his mother, he built her a mansion in the Chicago suburbs, complete with an indoor pool, 10...

This latest instance sees the financing of up to 150 million dollars for Islamic “selected projects and funds.” Not anything specific, just throw a big wad of taxdollars in the direction of the Islamic World to show what a big-hearted guy he is. It’ almost like how he spends mega-dollars on his personal with business connections trips all around he globe on lavish luxury trips, complete with shopping side trips for his family. Of course the White House is quoted as saying that “The Global Technology and Innovation Fund will ‘catalyze and facilitate private sector investments’ throughout Asia, the Middle...

I have been talking about the Job Loss Recovery for quite some time. Here are a few recent examples. July 14: Bernanke Sees Chance of Jobless RecoveryGiven that the Fed's first mission is to delay, confuse, hope, and otherwise attempt to buy time while engaging in wishful thinking along the way, that Bernanke is willing to admit this may be a jobless recovery is a sign that things will likely be at least that bad. In other words, prepare for a job loss recovery.August 3: Thoughts On The "Recoveryless Recovery" Most know that I am in favor of an "L...

or over more than 18 months we have watched the gold price churn below $1,000 and in the process forming three tops, before breaking out to above $1,050 in early October 2009. Why will it not fall back to well below $1,000 and possibly as far as $850 this time? We say this because the moves occurred at a time when many facets of the gold market were absent from the gold market, such as investment demand, low jewelry demand and central bank demand. Traders held sway over the gold price and it is they that decided that the moves...

In the Obama White House, the new adage “never let a crisis go to waste” has highlighted the President’s overwhelming domestic agenda. So much so, in fact, that it is clear the President is missing opportunities to make real changes, and is instead delivering empty promises, growing problems, and enlarging the national debt. Set against the backdrop of some $12 trillion in debt, the President is calling for even more spending in the form of health care reform, which the CBO estimates will cost upwards of $1 trillion. While health care reform is an important issue, the President has failed...

Roughly $211 billion separates what the country owes and its self-imposed credit limit. And by Friday, after another week of massive debt sales by the Treasury Department, that gap will likely have narrowed considerably. It is now expected that the $12.104 trillion debt ceiling could be breached by the end of November. It is also expected that lawmakers will raise the ceiling, as they have done more than 90 times since 1940 -- eight of them since 2002. If they don't, the government could be forced to shut down. But that's not the worst that could happen. In fact, the...

South Florida homeowners walking away from underwater mortgages By MONICA HATCHER Miami Herald Sunday, October 25, 2009 Andres Duque thought he got a real steal when he paid $125,000 for his Little Haiti condo. But four years later, similar units are selling for $35,000 and even less. And so, faced with the prospect of being underwater on his mortgage — owing more than the unit is worth — for the next 20 years, Duque, 33, made what seemed to him like a rational choice: to cut and run. He stopped paying the mortgage, basically forcing the lender to take the...

Land of Rising Debt: Falling Tax Revenue Forces Japan to Sell More Bonds By Bob Blandeburgo Associate Editor Money Morning Japan’s government will have to sell more bonds – and grow the country’s record debt – in the face of declining tax receipts. The central government’s tax revenue may fall below $442 billion (40 trillion yen) considerably less than the $439 billion (46 trillion yen) forecast a year ago, Japanese Finance Minister Hirohisa Fujii told The Wall Street Journal. “This is due to the global recession that began last year, and we will deal with this through the additional issuance...

The charade in NYC and Washington goes on. There is no question that our government is controlled by the unelected that lurks behind the scenes or are appointed as bureaucrats to run our country. It was never more evident than when administrations changed last January. Team A replaced Team B, all of whom just happen to be members of the Council on Foreign Relations, the Trilateral Commission and the Bilderberg Group. There is no debate. There is only one plan and that is for one-world government. These are the Illuminists who will Shepard us into final bondage. This is what...

The unprecedented, improbable and indeed almost unimaginable global financial crisis has virtually put an end to the comfortable notion that American and Western capitalism would dominate the world economy. In turn, the financial meltdown threatening another Great Depression has been the rationale for a phenomenal expansion of government spending to prop up demand and fend off economic disaster. As a result, the deficit quadrupled from $459 billion in 2008 to $1.85 trillion this year. It has gone from 3.2% of gross domestic product to 13.1%, twice the post-World War II record of 6% in 1983 under President Reagan. What's more,...

Online spending down as holiday season nears Recession puts brakes on fast-paced growth of e-commerce By Ylan Q. Mui Washington Post Staff Writer Saturday, October 24, 2009 Online retail's runaway growth has hit a wall as consumers have cut back on the discretionary spending that drives the industry's sales. According to research firm comScore, e-commerce sales have been steadily declining this year, with spending not including travel dropping 2 percent in the third quarter. That has set the stage for a tough holiday season, which can account for as much as half of annual sales. "It's not pretty at all...

Most of us are gathered at the station, watching for the Inflation Express to come rumbling in. But we've been waiting for a while now. Just when should we expect the big locomotive to arrive and start pushing the prices of most things uphill? We'd all like to know the exact date, of course, but no one can know for sure. Not even a careful reading of the Mayan calendar will help. What we can do is estimate a time range for price inflation to show up, and that alone should have some important implications for investment decisions. Why It's...

Around 2005, I wrote an article that predicted that when the US housing bubble broke, there would be a stock/financial crash - and this: "When markets collapse, the US Fed and other central banks will end up having to buy up the markets, and basically monetize them...in the $trillions" I don't remember the exact quote but that is what I said. Well, here we are. The Fed has spent $3-4 trillion directly, and another roughly $19 trillion buying/guaranteeing bad assets and giving mortgage bonds and such support. The ECB also did roughly $4-6 trillion of market bailouts/backstopping. Japan and other...

How much debt can an industrialized country carry before the nation’s economy and its currency bow, then break? The question looms large in the United States, as a surging budget deficit pushes government debt to nearly 98 percent of the gross domestic product. But it looms even larger in Japan. Here, years of stimulus spending on expensive dams and roads have inflated the country’s gross public debt to twice the size of its $5 trillion economy — by far the highest debt-to-G.D.P. ratio in recent memory. Just paying the interest on its debt consumed a fifth of Japan’s budget for...

By ALLAN H. MELTZER The United States is headed toward a new financial crisis. History gives many examples of countries with high actual and expected money growth, unsustainable budget deficits, and a currency expected to depreciate. Unless these countries made massive policy changes, they ended in crisis. We will escape only if we act forcefully and soon. As long ago as the 1960s, then French President Charles de Gaulle complained that the U.S. had the "exorbitant privilege" of financing its budget deficit by issuing more dollars. Massive purchases of dollar debt by foreigners can of course delay the crisis, but...

One trillion, four hundred twenty billion dollars. It’s an astounding number. It’s more than the entire economy of India and enough to give every man, woman, and child in the United States $4700. It is also our country’s federal budget deficit for 2009. That means that in the fiscal year 2009, which runs from October 1, 2008 through September 30, 2009, the federal government spent $1.42 trillion more than it took in. To put this in perspective, last year’s deficit was $459 billion – still an astounding number, but less than half the deficit for this year. When our nation...

At least since the end of World War II, sovereign debt risk has been a very real problem, but one confined mostly to the developing world. Sure, there was the risk that the government might decide to inflate away the value of your loan, that risk abated in most places. (Though obviously not all--I'm looking at you, Italy!) Places where it didn't abate were increasingly forced to borrow in other currencies, leaving default as their main option--inflating away domestic denominated debt tended to make your dollar denominated debt problems worse. Oh, conservatives made noise about sovereign debt risk and inflation,...

Stocks now pay way less than bonds once again, but neither pay much... BLINK and you missed it. US equities offered a greater yield on investment than did US Treasury bonds for less than five months... And from the day this oddity struck, 18 Nov. 2008, the S&P still had another one-fifth to fall. "When this inversion occurred, my two older partners assured me it was an anomaly," wrote the late Peter Bernstein in Nov. 2008. The inversion Bernstein referred to had occurred five decades earlier...back when the dividend yield offered by US equities slipped below the yield offered by...

A federal plan to bring renewable energy retrofits within the reach of middle-class homes, announced Monday by President Joe Biden, gave a jolt to local pilot programs with the same goal. The Recovery Through Retrofit report that Biden unveiled is in part a plan to let homeowners dodge hefty financial barriers to retrofits such as installing solar paneling on their roofs, U.S. Department of Energy spokeswoman Jen Stutsman said. The program shares that aim with Berkeley FIRST, a pilot program launched a year ago that allows property owners, over a 20-year period, to finance the large upfront expense of installing...

Democratic Senators sound alarm on red inkBy Walter Alarkon - 10/19/09 08:16 PM ET Senate Democrats are pressing Majority Leader Harry Reid to address the nation’s rising debt with a special legislative process, despite reluctance from the White House and House leaders. Nine Democrats and Sen. Joe Lieberman (I-Conn.) called on Reid (D-Nev.) last week to support the process, which would ensure any legislation aimed at curtailing debt gets serious consideration by lawmakers. Proponents have argued for a special panel to seriously consider fiscal policy changes, such as major tax hikes or spending cuts, that they fear wouldn’t survive the...

No law, including the Credit CARD Act that has started to take effect, prevents banks from closing down credit accounts without warning. Credit card issuers all maintain the right...

The Government Accountability Office (GAO) has released updated information on the nation’s fiscal outlook, based on the projections from the non-partisan Congressional Budget Office (CBO). On October 7, CBO announced that the nation's budget deficit for 2009 was $1.4 trillion, triple 2008's, which was the worst in history at the time.

"The first thing they do is laugh. They think it is one of the most ridiculous things out there." Gordon Hageman is talking about a credit card offer that just came in the mail, an offer he could hardly believe. "I think they are trying to take advantage of me. I think that's what's going on right now with the economy, maybe just trying to see what they can get away with," says Hageman. And this card comes with an interest rate you won't believe. Not 20 or 30 percent, not even 50 or 60 percent, the Mastercard offer from...

The Senate Finance Committee recently approved Senator Max Baucus's bill to reform the nation’s health-care system. Every Democrat on the Committee voted to approve this big government plan; all but one Republican opposed it. I opposed it because it not only won't reduce health-care costs (which is the number one goal), but, for many Americans, it will actually make things worse. Many Americans, including middle-income families and the chronically ill, will see their insurance premiums go up and their taxes increased. Others, like seniors, will see their health-care choices eliminated. And everybody should be concerned about rationing of health care...

Here is video of Sen. Judd Gregg yesterday telling CNN that the United States is on its way to a "Banana-Republic" Financial Situation thanks to the massive debt being run up by the Obama Administration. Gregg said "you just can't keep doing that" and think it will not have dire consequences for the future of the nation. Instead of America's public debt being 40% of GDP, Gregg said we are on our way to it being 80% of GDP - which is "Banana-Republic" territory. . . . (VIDEO)

Gordon Hageman couldn’t believe the credit card offer he got in the mail. "My first thought, it was a mistake," Hageman said. The wine distributor called the number on the offer, gave them the offer code and verified his information. Sure enough, it was right: the pre-approved credit card came with a 79.9 percent APR. Yes, 79.9 percent.

I think there was a time when Chris Matthews wasn't stark, raving mad, but it's hard to remember for sure. Here, he invites the head of the Texas Tea Parties on to his show, and then attacks him with a series of bizarre questions involving birtherism, etc. It turns out that what Matthews really wants to do is argue about New Deal history, of which he is evidently ignorant (he doesn't seem to understand that Hoover raised taxes). The Tea Party guy, Phllip Dennis, does an admirable job of not only maintaining his dignity but talking sense to craziness: CLICK...

China gets tough over America’s ballooning debt Irwin Stelzer: American Account Americans should be hoping that the Chinese will be kinder to us than we were to the Brits after the second world war. Readers of a certain age will remember, and the younger ones who study history will have learnt, what creditor Uncle Sam did to debtor John Bull when Britain sent John Maynard Keynes to Washington to negotiate a loan from us. Britain had spent blood and treasure to beat the Nazis, and was hoping for a gift of $3 billion, a credit line of $5 billion, and...

"A dollar is worth only 70¢ now," my Dad jabbered as we worked in the backyard. "And they say it'll only be worth 50¢ in a few years." It was the mid-‘70s. I was helping my Dad build a dirt road to our barn and he wasn't happy. Not about the hard work or humidity, but from what was happening to the dollar. Inflation was starting to kick into high gear, grabbing headlines that even a girl-chasing teenager could understand. I remember being appalled by the thought of going to the store and having the clerk demand $1.30 for an...

Q: Is it true that if I use my credit card at fast food places, my credit score will decrease or that it will affect my score in some way because it looks like I cannot afford to buy food? I pay my bill in full every month. -- Burger and Fries Lover A: Dear Burger: The fast answer is no, where you eat doesn't have an impact on your credit score, but that's not the full story. Your credit score is just one of the many factors that issuers use when making lending decisions, and while paying plastic for...

If the U.S. can come to the assistance of banks and homeowners, surely it could offer a helping hand in the form of lower interest rates for students. Like many recent college grads, Los Angeles resident Steven Lee finds himself unemployed in one of the roughest job markets in decades and saddled with a big pile of debt. He owes about $84,000 in student loans for undergrad and grad-school costs. But what Lee's angry about isn't the slings and arrows of an outrageous economy, and it isn't the idea that he owes a ton of money for all the schooling...

Debt can become a real liability for a superpower. Recall what happened to postwar Britain. The dollar's sharp drop over the past few weeks has led to considerable anxiety about the status of the United States as the dominant force in the global economy. Closely related to this fear is constant worry about the rise of China and the evermore complicated relationship between Beijing and Washington. Most people are now aware that China is the largest creditor to a heavily indebted U.S. government. It holds close to a trillion dollars of U.S. Treasurys and has invested hundreds of billions more...

With everyone lately focused on China's foreign reserve position, analysts have forgotten that America also has an International Reserve account consisting of foreign currency positions, as well as gold reserves and equivalents. And while the total combined holdings as of the most recently reported period are a joke compared to China's $2+ trillion, the most recent number of $133.6 billion does raise red flags, particularly when one traces this number's level throughout the year. We present a graphic representation of the US International Reserve Position over the past year:

LONDON (AFP) – Prime Minister Gordon Brown announced on Monday a 16-billion-pound sale of state assets including a high-speed railway and a betting service to cut soaring debt caused by the economic crisis. Brown -- facing a likely election defeat next year by David Cameron's Conservative Party -- wants to halve Britain's deficit in four years. But opposition politicians derided the asset sale as a political gimmick and compared it to a "national car boot sale" and "selling the family silver." The planned disposals, which also include a 33-percent stake in European uranium consortium URENCO and the Student Loan Company....

Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen. Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. This doesn't put the same pressure on the dollar as panic selling out of the dollar, but it is not a positive. The big question is how will Treasury find funding for...

S&P: Dubai Is Nearly Out Of Cash Joe WeisenthalOct. 11, 2009, 12:07 PM Don't assume that the economic comeback means Dubai is out of the woods. Holders of its debt may be in trouble, unless the Emirate can raise more money. DUBAI, United Arab Emirates (AP) — An analyst at credit rating firm Standard & Poor's says Dubai has "insufficient" funds to pay back billions of dollars worth of debt coming due, putting added pressure on the city-state to raise additional cash. Farouk Soussa, S&P's head of Middle East government ratings, said Sunday that the sheikdom has about $4 billion...