Shrinking Government -$1Trillion at a time. - Mercedes-Benz Forum

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post #1 of 11 (permalink) Old 12-17-2008, 12:01 PM Thread Starter
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Shrinking Government -$1Trillion at a time.

Note that in the two years that we have had a Democratic Congress and Republican President we have NOT had any large spending bills to "spend up" the budgets, nor have we had any major floor fights and to run up bills. Both sides have been pretty even in calling the 2006 Congress a "do nothing" Congress.

That pretty much puts most of this in the Administrations lap as he is the only other person with a checkbook.


Federal spending soars 25% before bailout
Taxpayers get $1 trillion debt
Jon Ward (Contact)
Tuesday, December 16, 2008

The government's spending commitments exploded by 25 percent in 2008, putting taxpayers more than $1 trillion in the hole even before the astronomical costs of the economic bailout were taken into account, according to an annual report released Monday by the White House.

A joint report by the White House budget office and Treasury Department said that much of the increase in obligations came from an unexpected jump in veterans benefits liabilities, while revenues remained mostly flat because of the recession that began a year ago.

Jim Nussle, director of the White House Office of Management and Budget, called the report "sobering."

The report showed that U.S. debts and liabilities are close to passing the value of the U.S. population's net worth, said Peter G. Peterson Foundation, a nonprofit organization devoted to promoting fiscal responsibility.

"The value of this report is that it shows the long-term cost of expensive commitments we are making today," said Brian Riedl, a budget analyst for the Heritage Foundation.

"The government makes a lot of commitments that cost a little in the short run but a lot in the long run, and this document is one of the only government documents that show the long-term cost of the long-term commitments," Mr. Riedl said. "What it shows is that future trends are completely unsustainable because the government has promised more benefits than the taxpayers can pay for."

The costs of the $700 billion economic rescue package were not included in the report because it covered only the budget year that ended Sept. 30. The bailout was passed and signed into law in early October.

However, the Treasury did borrow $300 billion from taxpayers in fiscal 2008 to "to increase cash balances at the [Federal Reserve] so that the Fed can assist with market stabilization efforts," the report said.

Peterson Foundation President David Walker, the nation's former comptroller, called for President-elect Barack Obama to make "tough choices ... to strengthen the government's financial condition once the economy begins growing again."

The report said current revenues are sufficient to pay only half of what the government will owe in 30 years and that the government's debt has put the country on a path to "create financial sector instability, increasing risk and uncertainty across many sectors of the U.S. economy."

The $1 trillion "net operating cost" in the report - up from $275.5 billion in fiscal 2007 - is different from the federal budget deficit because it uses proper accounting standards to include future spending obligations. The federal budget measures only "dollars in and dollars out" in a given year, Mr. Riedl said.

The deficit in fiscal 2008, which ended Sept. 30, was $454.8 billion, up from $162.8 billion in fiscal 2007. The deficit itself is expected to be about $1 trillion in fiscal 2009.

The increases in spending have prompted many conservatives to criticize President Bush, who ran in 2000 on reducing the size of government and introducing spending restraint. Under Mr. Bush, the size of government has grown by more than under any other U.S. president since President Roosevelt implemented the New Deal and fought World War II.

The Bush administration said much of the increase over time has been because of its spending on defense and homeland security in response to the Sept. 11 terrorist attacks.

But the explosion in total costs in fiscal 2008 was in large part because of an unforeseen spike in the future costs of veterans benefits, which grew by $339 billion.

Federal revenues grew by barely 1 percent, as "the developing recession precipitated a significant decline in corporate tax revenues," which fell from $375 billion in fiscal 2007 to $307.5 billion.

The Peter G. Peterson Foundation said the report showed "an estimated $56.4 trillion in debts, liabilities and promises for Medicare and Social Security versus a total household net worth of $56.5 trillion."

Washington Times - Federal spending soars 25% before bailout


Somehow I thought Conservatives were suppose to be for SMALL Government. Maybe that memo is with all the AG email that got "lost".

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post #2 of 11 (permalink) Old 12-17-2008, 05:27 PM
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We're now spending (borrowed) money at a rate never before seen in human history. And, as this article indicates, most of our budget numbers don't even take the multi-trillion-dollar bailouts into account. Sort of like the off-budget Iraq War items. The Moonie Times is actually being slightly responsible lately with its financial reporting, which is kind of weird. I guess they're gearing up for Barack.
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post #3 of 11 (permalink) Old 12-17-2008, 06:32 PM Thread Starter
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I think they are in the McCain/Palin "throw everything against the wall and see what sticks" mode of journalism. It is virgin territory for them so they might seem addled at times.

I don't know what is more disturbing, the fact that this news just gets published and no longer makes an input into the horrors that are our everyday economic datagoo or that journalists are just so tired of talking about it that they have given up thinking.

The bad stories are still coming in daily but most folks have just given up, totally resigned that we are, as Bushie said Monday "I mean, this is -- we're in a huge recession". When the Captain of the Titanic finally admits that you are going down cold and fast, you know you have a problem.

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post #4 of 11 (permalink) Old 12-17-2008, 07:55 PM Thread Starter
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And the hits just keep on coming

Dollar No Longer Haven After Fed Moves Rate Near Zero (Update2)
By Kim-Mai Cutler and Bo Nielsen

Dec. 17 (Bloomberg) -- The world’s biggest currency-trading firms say the dollar’s appeal as a haven amid the financial crisis all but evaporated.

The U.S. currency slid to a 13-year low against the yen today and had its biggest one-day decline versus the euro after the Federal Reserve reduced its target interest rate yesterday to a range of zero to 0.25 percent, the lowest among the world’s biggest economies. CMC Markets said today the currency’s prospects appear “ominous.” State Street Global markets said the dollar’s outlook has been “undermined.”

“The dollar has been under heavy downward pressure,” said Robert Minikin, a senior currency strategist in London at Standard Chartered Bank Plc. “This move is very well-justified and has a long way to run.” Standard Chartered is preparing to cut its dollar forecasts, Minikin said.

Yesterday’s rate cut brings the Fed’s target to below the Bank of Japan’s for the first time since January 1993. U.S. policy makers repeated plans to buy agency debt and mortgage- backed securities and said they will study buying Treasuries, a policy known as quantitative easing.

The dollar fell to 87.14 yen, the lowest since July 1995, before trading at 87.45 yen as of 3:51 p.m. in New York, from 89.05 yesterday. It depreciated to $1.4437 per euro from $1.4002 and traded at $1.4366, the weakest since Sept. 30.

‘Ominous’ Outlook

The dollar is likely to decline “longer term,” analysts including New York-based Ashraf Laidi at CMC Markets wrote in a report. “Prospects ahead appear particularly ominous for the world’s reserve currency once global economic stability starts to build up.”

The Fed’s debt purchases will cause the dollar to weaken to $1.4860 per euro, analysts led by Robert Sinche, New York-based head of global currency strategy at Bank of America Corp., wrote in a report yesterday. The Fed reduced the scarcity of dollars and investors slowed the deleveraging process, which drove the currency to a 2 1/2-year high against the euro in October, Sinche said.

“Those temporary supports for the dollar appear to have eroded,” Sinche wrote. “Aggressive quantitative easing by the Fed should add to U.S. dollar supply globally and undermine the value of the dollar.”

State Street Global Markets, a unit of the world’s largest money manager for institutions, said the Fed’s move is “perilous” for the dollar as investors accumulated an “extreme” long position on the currency, or bets it will climb.

Record Low Yields

“This implies a significant potential for a dollar unwind if the real money community attempts to chase price,” Hong Kong-based strategist Dwyfor Evans wrote today in a report. The shift toward quantitative easing “has undermined the U.S. dollar significantly over recent weeks.”

The dollar’s decline against the euro compares with a similar move in the early 1990s, indicating the U.S. currency may weaken to a record low of $1.65 late next year, Citigroup Inc. strategists Tom Fitzpatrick in New York and Shyam Devani in London wrote in a research note.

“If it walks like a duck and talks like a duck … it’s a duck,” Fitzpatrick and Devani wrote. “The dollar walks and talks like a currency going back into its bear market.”

The dollar declined 11 percent against the euro and 8 percent against the yen this month as yields on two-, five-, 10- and 30-year Treasuries fell to record lows, encouraging investors to look outside the U.S. for higher returns.

“The dollar is going to struggle while it has low yields,” said Roddy MacPherson, the Edinburgh-based head of currency strategy at Scottish Widows Investment Partnership Ltd., which manages the equivalent of $152 billion. “We’re looking to add to our short dollar position if U.S. yields continue downward.”

UBS Stays Bullish

MacPherson said he moved toward a short dollar position, or a bet it will depreciate, against the euro in the past four days. The currency may end next year at $1.40 per euro, he said.

For UBS AG, the world’s second-largest foreign-exchange trader, demand for cash amid the freeze in bank lending will support the currency. The Libor-OIS spread, a gauge of cash scarcity favored by former Fed Chairman Alan Greenspan, was at 140 basis points today, or about 14 times its average in the five years before the credit crisis began.

“There is still a premium on liquidity, which will be supportive to the dollar even in the current environment,” said Geoff Kendrick, a senior strategist in London at UBS.

Goldman Sachs Group Inc. said investors can profit from the dollar’s decline by selling the currency for its Canadian counterpart.

The U.S. currency’s drop is becoming “broader-based,” Jens Nordvig, a New York-based strategist for the U.S. securities firm, wrote today. “Temporary dollar demand from deleveraging and funding flows has come to an end. The prospect of aggressive quantitative easing is starting to have a significant negative impact on the dollar.”

Last Updated: December 17, 2008 15:57 EST

Bloomberg.com: News

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post #5 of 11 (permalink) Old 12-17-2008, 11:05 PM
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I think they are in the McCain/Palin "throw everything against the wall and see what sticks" mode of journalism. It is virgin territory for them so they might seem addled at times.

I don't know what is more disturbing, the fact that this news just gets published and no longer makes an input into the horrors that are our everyday economic datagoo or that journalists are just so tired of talking about it that they have given up thinking.

The bad stories are still coming in daily but most folks have just given up, totally resigned that we are, as Bushie said Monday "I mean, this is -- we're in a huge recession". When the Captain of the Titanic finally admits that you are going down cold and fast, you know you have a problem.
You know what it reminds me of? The notion of 'learned helplessness'. The whole nation. Our Founding Fathers would string the lot of us up.
Quote:
The world’s biggest currency-trading firms say the dollar’s appeal as a haven amid the financial crisis all but evaporated.
At least this time, I was ready for it. Happy times Chez Marsden

Oh snap'ems. Now I've bragged, so I'll get slaughtered

Don't knock poetic justice. It's about the only kind we have left
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post #6 of 11 (permalink) Old 12-22-2008, 12:19 AM
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"Black Box" - Frank Rich's trope referring to the impenetrable financial arcana of derivatives and securitization...
"Incredibly enough, as we careen into 2009, the very government operation tasked with repairing the damage caused by Wall Street’s 'black boxes' is itself a black box of secrecy and impenetrability.

Last week ABC News asked 16 of the banks that have received handouts from the Treasury Department’s $700 billion Troubled Asset Relief Program the same two direct questions: How have you used that money, and how much have you spent on bonuses this year? Most refused to answer.

Congress can’t get the answers either. Its oversight panel declared in a first report this month that the Treasury is doling out billions “without seeking to monitor the use of funds provided to specific financial institutions.” The Treasury prefers instead to look at “general metrics” indicating the program’s overall effect on the economy. Well, we know what the “general metrics” tell us already: the effect so far is nil. Perhaps if we were let in on the specifics, we’d start to understand why.

In its own independent attempt to penetrate the bailout, the Government Accountability Office learned that “the standard agreement between Treasury and the participating institutions does not require that these institutions track or report how they plan to use, or do use, their capital investments.” Executives at all but two of the bailed-out banks told the G.A.O. that the “money is fungible,” so they “did not intend to track or report” specifically what happens to the taxpayers’ cash.

http://www.nytimes.com/2008/12/21/opinion/21rich.html
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post #7 of 11 (permalink) Old 12-22-2008, 12:24 AM
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And if there's anyone who hasn't gotten a share of the bailouts yet, I have just one word for you: SUCKER!

Oh, for me too

Hedge funds gain access to $200bn Fed aid
By Krishna Guha in Washington
Published: December 20 2008 05:01 | Last updated: December 20 2008 05:01

Hedge funds will be allowed to borrow from the Federal Reserve for the first time under a landmark $200bn programme intended to support consumer credit.

The Fed said on Friday it would offer low-cost three-year funding to any US company investing in securitised consumer loans under the Term Asset-backed Securities Loan Facility (TALF). This includes hedge funds, which have never been able to borrow from the US central bank before, although the Fed may not permit hedge funds to use offshore vehicles to conduct the transactions.

(continued on link)

FT.com / US / Economy & Fed - Hedge funds gain access to $200bn Fed aid

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post #8 of 11 (permalink) Old 12-22-2008, 12:52 AM Thread Starter
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Originally Posted by Marsden View Post
"Black Box" - Frank Rich's trope referring to the impenetrable financial arcana of derivatives and securitization...
"Incredibly enough, as we careen into 2009, the very government operation tasked with repairing the damage caused by Wall Street’s 'black boxes' is itself a black box of secrecy and impenetrability.

Last week ABC News asked 16 of the banks that have received handouts from the Treasury Department’s $700 billion Troubled Asset Relief Program the same two direct questions: How have you used that money, and how much have you spent on bonuses this year? Most refused to answer.

Congress can’t get the answers either. Its oversight panel declared in a first report this month that the Treasury is doling out billions “without seeking to monitor the use of funds provided to specific financial institutions.” The Treasury prefers instead to look at “general metrics” indicating the program’s overall effect on the economy. Well, we know what the “general metrics” tell us already: the effect so far is nil. Perhaps if we were let in on the specifics, we’d start to understand why.

In its own independent attempt to penetrate the bailout, the Government Accountability Office learned that “the standard agreement between Treasury and the participating institutions does not require that these institutions track or report how they plan to use, or do use, their capital investments.” Executives at all but two of the bailed-out banks told the G.A.O. that the “money is fungible,” so they “did not intend to track or report” specifically what happens to the taxpayers’ cash.

http://www.nytimes.com/2008/12/21/opinion/21rich.html
I think that Congress is going to hold the last $350B until someone grabs a squeegee and Windex and gains a bit of transparency on this whole thing.

It is bad enough that Paulson laid out Plan X to Congress an immediately moved to Plan Y. But that Congress did not have the Balls to yank his checkbook is an egregious error. Not only do we expect oversight but we certainly expect adherence to the agreed to contract, or a damned good reason to modify it.

Paulson needs to simply go now. As a lame duck, he and lex luther have lost their effectiveness and credibility. They can't make promises and they, at this point don't have the backing to write checks.

I understand the need for an orderly transfer of power but considering the magnitude of this economic issue, this lame duck season could not have come at a worse time.

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post #9 of 11 (permalink) Old 12-22-2008, 03:23 AM
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I think that Congress is going to hold the last $350B until someone grabs a squeegee and Windex and gains a bit of transparency on this whole thing.

It is bad enough that Paulson laid out Plan X to Congress an immediately moved to Plan Y. But that Congress did not have the Balls to yank his checkbook is an egregious error. Not only do we expect oversight but we certainly expect adherence to the agreed to contract, or a damned good reason to modify it.

Paulson needs to simply go now. As a lame duck, he and lex luther have lost their effectiveness and credibility. They can't make promises and they, at this point don't have the backing to write checks.

I understand the need for an orderly transfer of power but considering the magnitude of this economic issue, this lame duck season could not have come at a worse time.
And for that, they will have FOX to thank...........

Fox Business Network Sues Treasury for Failing to Release Bailout Information - TVWeek - News
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post #10 of 11 (permalink) Old 12-22-2008, 11:55 AM
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The $1 trillion "net operating cost" in the report - up from $275.5 billion in fiscal 2007 - is different from the federal budget deficit because it uses proper accounting standards to include future spending obligations. The federal budget measures only "dollars in and dollars out" in a given year, Mr. Riedl said.

Somehow I thought Conservatives were suppose to be for SMALL Government. Maybe that memo is with all the AG email that got "lost".
Government accounting is on a cash basis. This report converts to accrual which is what real businesses, esp public ones, must use because it is generally considered a more accurate way to check the status. Using accrual in the government would be enough to make all the politicians quit and go home when they saw what they had actually done.

Why the political swipe, McBare?

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Last edited by bottomline1; 12-22-2008 at 12:00 PM.
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