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alstry (35.69)

10% Interest Rates SOON!!!!!

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June 05, 2009 – Comments (7)

Right now our governmnet is running an ANNUAL deficit of $2 Trillion dollars.  China's total holdings of US Treasuries is only $800 million...plus another $800 million of US demoninated assets.

Our current annual entitlement expenses are $2 Trillion dollars and growing rapidly due to rising unemployment and an aging population.

At this point, since our nation has no savings...we NOW need to borrow $2 Trillion dollars per year against a backdrop of a SHRINKING income.......the income to the higher earners in America is evaporating and they were responsible for over 90% of the tax receipts.....now tax receipts are only trickling into government.

With potential lenders knowing we can simply Quantitatively Ease, or "print money".....at what rate of interest do you think they will demand to loan money to a nation with a shrinking economy and a money supply increasing almost 20% ANNUALLY!!!!!!!

That is right....10% interest will simply be the beginning....then 20%...then 30%....until the system collapses......

If we don't restructure debt SOON....we simply will be unable to find anyone to lend us money at an acceptable rate....and as the rates go up....the cost of servicing the debt will go up...forcing more defaults and even higher rates........

 

7 Comments – Post Your Own

#1) On June 05, 2009 at 7:48 AM, alstry (35.69) wrote:

HIGH INCOME EARNERS PAY 90% OF THE INCOME TAX IN AMERICA.....

Their incomes have contracted dramatically in the last few years where those making millions are now losing money and not paying any taxes.  Finance Workers, Real Estate Agents, Mortgage Brokers, Builders, Trade Contractors, Developers, Small Business Owners, Plastic Surgeons....we could go on and on...

The income of higer earners was the fuel running our country....now many of the above and others are only making a fraction of what they did a few years ago and a significant number are making nothing at all.  The same is true for many corporations.

Once revenues to our government slows to a trickle....we will have to make some dramatic changes...the longer we wait to restructure...the more dramatic the changes....just ask GM bondholders!!!!!

Until we restructure....things will get worse!!!!!

NEW YORK (MarketWatch) -- Business-jet manufacturer Cessna said late Thursday it informed employees of further layoffs as its customers continue to cancel new aircraft orders. The business jet market has taken a severe blow in the economic recession as corporations have scaled back capital spending.

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#2) On June 05, 2009 at 8:31 AM, wrparks (62.92) wrote:

I usually feel like you are a bit too negative, but 10% seems a bit low to me for the next 3 years and hovering around 8 for years after that.  Maybe try 12-15% in the next 3.......Darn, I'm more negative than alstry??????????!!!!!!!!!

 

Is this less negative Alstry the new positive Alstry that Alstry talked about?

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#3) On June 05, 2009 at 8:49 AM, majordm (88.57) wrote:

oh well, no more Entertainment Tonight for you...

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#4) On June 05, 2009 at 10:14 AM, helicopterfool (24.25) wrote:

Tax Receipts drop 44%

For the first time in 26 years, the US had a monthly deficit in April (The month taxes are due).   It was $20.9 Billion.  April 2009 tax receipts dropped 44% compared with those in April 2008.

Tax receipts fell 50% during the Great Depression.   

 

 

 

0.

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#5) On June 05, 2009 at 12:51 PM, davejh23 (< 20) wrote:

I have to agree...we've had a decade of abnormally low interest rates, and our views of what's normal have been skewed.  I don't know if rates go to 10% and continue increasing from there, but I'd guess that rates will top 10% and then settle around a NORMAL 8%.  What happens when mortgage rates skyrocket just as we're slammed with another wave of foreclosures?  Builders haven't seen the worst of the housing market yet, and even individuals that got "great deals" recently on bank owned homes will be underwater in the next few years.  As far as our borrowing costs as a nations...not to be all doom and gloom, but...WE'RE DOOMED...

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#6) On June 05, 2009 at 1:02 PM, tom2727 (< 20) wrote:

Oh I dunno.  It looks to me like the government will just have the Fed print more money like they've been doing.  And fudge the "official" numbers to make inflation appear lower than it is.  Inflation is a good thing for debtors like the US govt which have low rates locked in for 30 years.  Sucks to be China (or an American on a fixed income).

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#7) On June 05, 2009 at 1:17 PM, davejh23 (< 20) wrote:

tom2727 - Inflation may be good to help manage our existing debt, but the loss of confidence from foreign investors could be a huge problem.  We need to maintain our ability to keep borrowing if tax revenues don't come close to covering government spending.  They can only "fudge" the numbers so much...China probably has a better idea of actual inflation than our own government.

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