Wednesday, May 12, 2010

Obama Leads US Into Perfect Storm of Debt

US to be hit with perfect storm of debt

US Debt shock to hit as soon as 2013

April 2010 US govt. deficit 4 times higher than April 2009 deficit -- alarming trend.

US is following in Greece's footprints

California is already Greece

No sign of recovery at retail or employment levels in private sector

US commercial real estate to get slaughtered in 2010

President Obama subscribes to the "spend your way out of debt" philosophy. He, along with the lipsticked PIIGS of Europe, believe that there is no economic problem which cannot be solved by doubling down on spending.

If interest rates rise, little by little, the US government may find itself in the situation where over half its budget is devoted to interest on its debt. The other half will be devoted to entitlement spending. The next half will have to pay for the military -- as a number of new wildfire wars are likely to break out across the landscape. And the final half will pay for discretionary spending. As you can see, a budget with four halves will involve a lot of defict spending. Which means that the interest on US govt. debt will keep climbing from 55% to 60% to 65% and on and on until the rickety structure collapses -- or something else gives.

There is no wisdom nor discipline to restrain spending, within the Obama Pelosi government. The US government -- as it stands -- will only continue to make things worse at an accelerating rate.

What you do, knowing what the US government is doing, will determine how you ride the coming perfect storm of debt.

1 comment:

Anonymous said...

If men like us do get control of the US government we could pay down the debt by selling the US radio spectrum.

You should do a post on the benefits of privatizing the radio spectrum. I think one of the benefits of privatization would be that we could use the radio waves for broadband internet access.

The other benefit is that there would no longer be a centralized media system feeding lies to the people.