Monday, July 25, 2011
Make It Go AWAAAAAAYYYYYY!!
They say that -0.70 is the line, but if you look at where we were at the end of 2007, you can see it's a little tighter than that.
At least for a service economy. Years back, you could get an inventory adjustment that would take it down without a recession, but no more.
We really have been in recession for a couple of months.
I have been struck by the unrealistic tone of reporting on the debt limit. It is not so much the debt limit that matters. It is whether we go on running our massive deficits that will determine whether we lose our credit rating or not.
The debt limit is controversial because we are so close to the line. The reason the deadline was set at August 2nd is not because we will actually default, but because Treasury really didn't want the debt limit raised before then. You can read S&P's recent update on various scenarios for the US debt picture. Beginning on page 5 you get various scenarios - note that under any reasonable trajectory from our current policies, by 2020 we are Greece at 130% Debt/GDP:
If you go Treasury Direct Debt to the Penny, you see that right now adding the Intragovernmental (trust funds = future debt) Debt + Debt Held by the Public we are at 14.3 trillion. As soon as Congress raises the debt limit that's going to pop up to 14.8 trillion minimum, and well, Q1 nominal was 15.1 trillion. So we are very close to 100% Debt/GDP ratio right now.
Therefore, Treasury needed at least one Q2 GDP release to make it look better.
By 2015, continuing our current trajectory, the situation will be essentially irretrievable.
German ten year bunds were carrying a lower yield this morning than US treasuries last I looked. In the short term, there's no danger. But we only have a few years!
So the debt limit is not at all an artificial crisis. Without real changes, we are apt to get one credit downgrade late this year, as the extent of the economic problems become obvious. If you look at the president's budgets submitted this year, they all have huge deficits.
What's artificial is the president stomping around like a teenager, trying to shut down this debate so he won't have to deal with it while campaigning. He can't afford to be signing on to entitlement cuts during the campaign season, you see.
But it's suicide for the country if that happens. We are not going to grow our way out of this one.
No we're not. Which makes the Democrats position - more spending, no cuts to entitlements, and higher taxes - about as bad as it gets. What are they thinking? It's as if they have all invested their life savings in gold and Swiss Francs. Their actions are driving those prices up as people seek safe harbor from the madness.
IMO, with both spending cuts and pro-growth policies, the course can be successfully corrected. Time is running short, though.
Too bad the elections aren't this November.
"we are apt to get one credit downgrade late this year"
We already got downgraded by Dagong:
The country's rating now stands at A+ in domestic and foreign currency on Dagong's list, with negative outlooks to its future, much lower than the result of the US rating agencies. Dagong's rating was downgraded from AA on Nov 9 after the US government announced a second round of quantitative easing (QE2).
And they're probably not done downgrading:
The US' sovereign credit rating is likely to be downgraded regardless of whether the US Congress reaches an agreement on raising its statutory debt limit
I would not want to be one of the US ratings agencies about now. Maintaining the AAA rating from them may be considered a matter of "national security", in which case attempting an actual downgrade may get one dead or framed.
And I find their postion somewhat surreal:
The three major international rating agencies, Moody's Investors Service Inc, Fitch Inc and Standard & Poor's Financial Services LLC (S&P) each warned in June that they would downgrade the US sovereign credit rating in the event of a default.
What use is a ratings agency that doesn't downgrade at all until AFTER a default?
If that happens we will have a brand, spanking new definition of "Pyrrhic victory".
Mind you, he is willing to let the cuts go through - he is not willing to take the blame for them, or to push them. He really wants to sign a bill that makes the cuts but then campaign saying he had nothing to do with it.
He is interested in preserving his narrative, but as long as he does that, he doesn't really care about anything else. Therefore, in an odd way, he is a good president for those who wish to bring this budget under SOME semblance of control.
The reason I linked the S&P doobie is that a lot of people don't understand that simply raising the debt limit without addressing our ballooning debt won't prevent a ratings downgrade.
I was most amused by the news that the administration was asking S&P why they were suddenly making all this commotion - the ratings firms have been quite transparent.
This is going to be painful for everyone, but we all have a stake in not being Greece in 2020.
A big one. That's why the administration's rhetoric, and the failure of the press to correct it, is so irritating to me. The only reason why we would all give up something is that we realize that if we don't, we're going to be in an even worse situation.
Ron Paul is one of the few telling the truth!
First, try 40 million added to Medicaid. Second, the Deficit Commission came up with a workable basic structure. Fund the very bottom, because in fact that's the cheapest way to do it. Cut benefits to the intermediate financial groups.
Widen the tax base (cut exemptions) and lower marginal rates. Lower marginal rates will produce more tax revenue over time.
If we are really going to try to jack up tax rates on smaller businesses, we can all start prepping our cardboard condos right now. It would also be wise to stake out a steam vent near a government building. They'll go fast.
Making debt service payments clearly is not our immediate concern given high unemployment with the average duration of unemployment just shot up to a new high: 39.9 weeks. And there are now more than 2 million 99ers–folks who have been out of work for more than 99 weeks. Large layoffs are continuing as Cisco, Texas Instruments and even Microsoft along with a slew of other companies handed out 75K pink slips in June but both political parties have decided to have a debt service fight while the economy slips into outright recession.
In other words, our dingleberry Progressives think if you throw enough WORDS at Reality, it obligates Mr Reality to contort himself into the picture the words conjure up.
These folks have all lived exceedingly sheltered and fortunate lives, haven't they? And they've come to believe (I think I touched on this once before) that peace and prosperity are the default setting of the universe. (And if somebody doesn't have his "fair share" of all that peace and prosperity, it's their job to call more P-&-P into being via the correct incantations, ie verbose legislation to seize the "good" away from those selfish folks who are hogging it all.)
"Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as “bad luck."
Obama seems to fit this description.
As long as Obama refuses to go back to pre- Obama spending levels people will correctly assume that their taxes will somehow be jacked through the roof to close the trillion and a half plus gap between taxes and spending. Not even the US gov can live on the cc forever, and we all know it will not go away on it's own. It's a shame the President refuses to bow to reality, swallow his pride, and admit he was utterly mistaken in his explosion of Federal spending.
I'm feeling much more human today, although I have zero stamina. It's odd; I'll be going along just fine and then I hit a wall, and after that I can barely keep my head up. All of the tests came back negative, but thanks to the information you supplied, that's not a big surprise. There's not any doubt I have Lyme, and since the others are also treated with Doxy, I should be okay.
Very often some of the ricksettial infections don't test positive for four-six weeks. Eight weeks is more reliable.
If you picked up babesia, you wouldn't test positive for that probably for a few weeks either depending on the degree of infection and the test used.
However if you have babesia you need to be treated with another medicine as well as the doxy. Babesia can attack your red blood cells. Some of the others attack your white blood cells.
I do not want to alarm you, but the acuteness of your illness is somewhat atypical for pure Lyme.
Rest. You would be well advised to rest before you hit the wall. Good nutrition, plenty of Vitamin B, rest.
And in six weeks, unless you feel superb, you need to be retested on the complete panel. Even if you don't test positive, you may need additional medicines based on clinical evidence.
I checked with SuperDoc on some of this. After doing some research I realized why he would be doing so much followup testing.
Please read that. You were seriously ill, and the bacteria that causes Lyme Disease is relatively slow-growing. It is possible that you had an idiosyncratically strong immune response. It is possible that you were infected before, and so you had an abnormally strong response. It is probably more likely that you have some additional infection.
The additional infection need not have been transmitted by the same bite. It might be from a prior bite or it might have been sitting in your body previously, and erupted when you became ill.
But something a bit odd appears to be going on. If fatigue persists for another week, the probability that you have another infection gets considerably higher.
Don't assume that you do not have babesia because the test came back negative.
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