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  • The Debt Binge is Here to Stay [Edit or Delete]0 comments
    Jul 31, 2011 5:44 PM
    I guess yields at record lows invalidates the concept of a so called 'debt crisis'.  The bond market is confident economy will come out ahead regardless of outcome of the debt impase. Another media generated crisis averted. Stocks will surge Monday morning upon the mass realization that there there won't be a deflationary spending contration, and that inflation-free 'risk on' trade is here to stay. What that means is commodities, euro, stocks, and even treasuries will rally together (or treasuries will only be flat signifying zero bond inflation despite inflation in everything else). Second, a debt ceiling doesn't mean less spending- it only means a slightly reduced rate of spending. 
    "Over the past 12 months the federal government has spent $3.56 trillion. A typical baseline would project spending to increase about 5.5% a year, reaching some $6 trillion a year by 2021 (budget scoring generally focuses on what happens over the next 10 years). That would equate to total expenditures of $48.4 trillion over the next decade. So when one party proposes to "cut" spending by, say, $4 trillion, what they really mean is that they propose to spend $44.4 trillion over the next 10 years instead of $48.4 trillion. The $4 trillion "cut" they are proposing actually works out to a 4% annual increase in spending, instead of a 5.5% annual increase in spending."
    Fox News is right about the economy- we're still in the Bush recovery thanks to TARP and other unpopular , yet extremely effective programs.

    Acording to a recent article by Businessweek, if we want to cut debt we need to start with social programs like social security, medicare, VA benefits, national parks, public schools and other stuff which hurts growth and holds back America's competitiveness. It's the most economically efficent to fund programs that benefit high earners rather than waste money on welfare programs. I agree, it's time to cut waste, and well all have to pull together to help our economy grow, including the unemployed. The empahsis should be on consumption, not job creation.
    The standoff in Washington has overshadowed an earnings season that has seen per-share profit top analyst estimates at about 78 percent of the 305 companies in the S&P 500 that released results since July 11, data compiled by Bloomberg show. Net income has grown 20 percent and sales have increased 15 percent for the group, the data show. 
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