What's Another Trillion - CBO Deficit Forecast...

[GRG55]

No comment needed...

US deficit tops Obama forecast by 1.2 trillion dollars: CBO

(AFP) WASHINGTON — US President Barack Obama has underestimated the government budget deficit for the next decade by 1.2 trillions dollars, estimates by Congress showed Friday.

Under Obama's latest budget projections, the cumulative deficit over the 2011-2020 period would be 8.532 trillion dollars, or 4.5 percent of gross domestic product, the nation's economic output.

But the Congressional Budget Office estimated Friday the deficit would snowball to 9.761 trillion dollars or 5.2 percent of GDP.

The CBO expects a deficit "1.2 trillion dollars greater over the 2011-2020 period than what the administration anticipates under the president?s budget," CBO director Douglas Elmendorf said in a report Friday.

The CBO said it also estimated a deficit that was 75 billion dollars higher than projected by the White House for the next fiscal year, which ends on September 30, 2011.

The White House had projected that deficit falling to 1.267 trillion dollars, from a record 1.556 trillion dollars in the current 2010 fiscal year.

The CBO also said that Obama's debt projections were optimistic.

By 2020, the federal debt would balloon to 20.3 trillion dollars, or 90 percent of GDP, the CBO said, compared with 18.5 trillion dollars projected by the administration.

Obama, who inherited a flood of red ink from his predecessor George W. Bush, has promised to halve the 1.3-trillion-dollar deficit he took on by 2013.

The president's budget predicts the deficit will tumble to 727 billion dollars, or four percent of GDP, by the end of his term in 2013.

[jpatter666]

Re: What's Another Trillion - CBO Deficit Forecast...

Feeling more JTABEB everyday....

...are you accelerating the bunker construction timetable?

[audrey_girl]

Re: What's Another Trillion - CBO Deficit Forecast...

thanks for the post, but respectfully disagree - comment is needed.

There is a similar article on Bloomberg:

http://www.bloomberg.com/apps/news?p...d=abu_W64CzGy4

which is similar to your post with one significant addition to the story:

"...The nonpartisan agency said yesterday the deficit will remain above 4 percent of the nation’s gross domestic product for the foreseeable future while the publicly held debt will zoom to $20.3 trillion, amounting to 90 percent of GDP by 2020. By then, interest payments on the debt will have quadrupled to more than $900 billion annually, the report said."

Using my limited math skills, it looks like they are using a 5% i-rate here - what happens to the equation if i-rates jump to 8 or 10 or 15%?

Unusual that the reporter for your post would not include this to the story.

[skidder]

Re: What's Another Trillion - CBO Deficit Forecast...

thanks for the post, but respectfully disagree - comment is needed.

There is a similar article on Bloomberg:

http://www.bloomberg.com/apps/news?p...d=abu_W64CzGy4

which is similar to your post with one significant addition to the story:

"...The nonpartisan agency said yesterday the deficit will remain above 4 percent of the nation’s gross domestic product for the foreseeable future while the publicly held debt will zoom to $20.3 trillion, amounting to 90 percent of GDP by 2020. By then, interest payments on the debt will have quadrupled to more than $900 billion annually, the report said."

Using my limited math skills, it looks like they are using a 5% i-rate here - what happens to the equation if i-rates jump to 8 or 10 or 15%?

Unusual that the reporter for your post would not include this to the story.

Ummm??? The U.S. defaults????

[GRG55]

Re: What's Another Trillion - CBO Deficit Forecast...

Ummm??? The U.S. defaults????

Since the USA can print its own currency there is zero risk of an outright default.

[gnk]

Re: What's Another Trillion - CBO Deficit Forecast...

Since the USA can print its own currency there is zero risk of an outright default.

True.

However, as these annual deficits add to the growing national debt, and the cost of rolling over the debt becomes a larger part of tax receipts, there is a significant risk that consistent and growing QE will be the only option. And I mean in a very big way - enough to affect future "legitimate" bond sales. A viscious cycle could develop where growing QE kills demand.

What then? Isn't severe devaluation a de facto default?

And if we look to the end of Bretton Woods under Nixon - wasn't that a de facto default that spurred the debt fueled FIRE economy bull market?

So... private debts get shifted to sovereign balance sheets, and sovereign balance sheets seem to be getting shifted to the IMF thru the creation of SDRs... where does that leave the dollar in terms of reserve status?

I just don't see inflation being managed over the next decade. I think it will get out of hand one day, and quickly at that.

[jpatter666]

Re: What's Another Trillion - CBO Deficit Forecast...

True.

However, as these annual deficits add to the growing national debt, and the cost of rolling over the debt becomes a larger part of tax receipts, there is a significant risk that consistent and growing QE will be the only option. And I mean in a very big way - enough to affect future "legitimate" bond sales. A viscious cycle could develop where growing QE kills demand.

What then? Isn't severe devaluation a de facto default?

And if we look to the end of Bretton Woods under Nixon - wasn't that a de facto default that spurred the debt fueled FIRE economy bull market?

So... private debts get shifted to sovereign balance sheets, and sovereign balance sheets seem to be getting shifted to the IMF thru the creation of SDRs... where does that leave the dollar in terms of reserve status?

I just don't see inflation being managed over the next decade. I think it will get out of hand one day, and quickly at that.

Well, now you know why iTulip likes gold.... :cool:

[Chris Coles]

Re: What's Another Trillion - CBO Deficit Forecast...

Well, now you know why iTulip likes gold.... :cool:

But as another thread today shows the potential for a failure to deliver gold, perhaps the real problem is the whole thing is about to collapse.

[gnk]

Re: What's Another Trillion - CBO Deficit Forecast...

But as another thread today shows the potential for a failure to deliver gold, perhaps the real problem is the whole thing is about to collapse.

I would think failure to deliver would benefit those holding physical. The price would skyrocket. Central Banks have a love/hate relationship with gold. Most in the west know they have to devalue against it, so they prefer the price to rise slowly over time. The CBs of the East are in no hurry for the price to rise, because they are still accumulating. There's a huge shift going on. The Euro CBs have been slowing down the pace of gold sales for a decade now, while the Russian and Asian CBs have been accumulating.

I don't see the process being a smooth one over the next few years. Economies can tank suddenly and affect markets. Bernanke will monetize if he has to... his recent words are not indicative of what he will do - he was just trying to threaten Congress and affect the Markets. Even though CBs are 800 lb gorillas, the global markets still have a lot of pull and occasionally tell the CBs what costs what.

[LargoWinch]

Re: What's Another Trillion - CBO Deficit Forecast...

But as another thread today shows the potential for a failure to deliver gold, perhaps the real problem is the whole thing is about to collapse.

That is why I believe iTulip always recommended physical gold over paper gold or miners.

[Slimprofits]

Re: What's Another Trillion - CBO Deficit Forecast...

Does Obama have a math problem or a lying problem?

The bumper sticker that I saw a few times this weekend ~ "Obamunism"

In all seriousness, that's a good one. Very catchy.

[c1ue]

Re: What's Another Trillion - CBO Deficit Forecast...

The bumper sticker that I saw a few times this weekend ~ "Obamunism"

It is catchy, but it is wrong.

Obama is clearly on the side of Capital - defined today as FIRE.

So really he is a bourgeoisie puppet :p