What Will The Standard and Poor’s bond rating affect?

19 04 2011

Standard and Poor's outlook for US downgradedThe news from The Standard and Poor’s site is, “On April 18, 2011, Standard & Poor’s Ratings Services revised its outlook on its ‘AAA’ long-term sovereign credit rating on the government of the United States of America to negative.”

These are some of the items at stake in the USA: home values and the ability to buy and sell, credit card interest rates, business loans, pension or 401k values, checking or savings account values, life insurance long term values, annuities, college savings …. and so on and so on.

Ok, here’s the big news.  The Obama Administration and the folks in Congress are not stupid (well, most of them).  They are just political cowards or are intent on destroying the United States fundamental economy.  President Obama has said he wanted to fundamentally change the USA and is doing an effective job.

If anyone in Congress says what needs to be said, they are attacked as executioners of senior citizens and pre-school children.  Everyone wants the other guys golden egg.

On my previous post in 2009, I noted that the famous Julian Robertson’s words in 2008 that inflation could hit 15-20%.  Things have not improved since then and have gotten worse.

Depending on who’s doing the math, the US spent more than $400 billion in interest on the approximately $13 Trillion debt in 2010.  The  deficit spending was and still is out of control.  The interest rates paid are at historic lows.  The average interest rate paid on the debt was around 3%.  Most of that debt is short term treasury bills and those historic rates will not last.

Here is what will most likely happen. If the bond rating of US treasuries are downgraded by  Standard and Poor’s 6 months to 2 years from now, interest rates on new Treasury bills or bonds will skyrocket to around 8-12% within 3 months, no matter what Moody’s says.  The overnight bank to bank interest rate will skyrocket.  Rates on loans to businesses will shoot through the roof.  Loans to home purchasers will go sky high causing real estate prices to crash.  The ability of people to move or transfer will be severely hampered.  Those who are upside down on their homes will default and foreclosures will rise again.  The speed of all financial transactions will slow down as will economic growth.  Unemployment rates will go up and either hyper inflation or deflation will kick in full gear.  We could have another round of deflay-inflation, where real estate crashes and commodities prices inflate.

The ability of the USA to pay it’s bond obligations will not be able to be met.  Over a 4 year period the interest on the national debt will average 6-8%, depending on how high the downgrade interest rate on new bonds will be.

By that time, the national debt will be $20 Trillion at least.  But lets say for whatever reason, that the deficit gets reigned by January 2012  and caps out at $16 Trillion (very unlikely before a new election cycle).  If the average interest rate on the debt is 6% instead of 3% in 2010, the interest payment on the debt would be just $40 billion shy of $1 Trillion dollars per year.

Current folks in power are talking of slowing the growth of the debt over 10 years.  Six months to 2 years doesn’t allow for that luxury.  The solution is to radically cut or eliminate spending on all welfare programs including Medicaid/Medicare and Social Security.  The nation is not taking this seriously

Hang on for a wild ride because we are sitting on a time bomb.  The golden goose egg has been replaced with a rotten one about to explode.


National Debt Just Under $14 Trillion

7 12 2010

We’ll fall short of my previous prediction (Don’t Look At This).  That was written almost 2 years ago.  The projection was that by the end of 2010, the national debt would reach 14.5 Trillion.  We will reach just under $14 Trillion.

The national debt ceiling is currently $14.3 Trillion.  In my humble opinion, it is Treason to raise the debt ceiling.  We are ready to implode and collapse as a country.  Take a look at Greece, Iceland, Ireland, Portugal and Spain.

It is Treason to raise the debt ceiling!

Those burying us in debt are traitors.  It does not matter what the political excuse is.  To put us collectively into slavery is treasonous and should be punishable by removal of office.  That goes for any Congressman, Executive, politician or bureaucrat perpetuating and growing the debt.  It should be zero.

The debt should be reduced by 3% compounded every year by statute.

Over 70 welfare programs including Medicare/Medicaid and Social Security are bleeding us to death.  We’re wiping out the sacrifice that patriots fought and died for.  Our freedom is being swallowed as we voluntarily surrender to slavery.  The current deal about to go down is another glut of spending by the Democrats and Republicans.

The Gross National Product is $14.4 Trillion per year currently.  If the debt goes above the GNP, serious implications will follow.  If we continue down the road of fiscal foolishness, our AAA national credit rating will be in jeopardy.  At this rate it will be in 2012 to 2016 that our treasury bonds will be less useful than toilet paper.

It is insanity to try to save people from the black hole of poverty when it will impoverish the whole nation.  Freedom is the only salvation from poverty.  Freedom is not free but the cost is much lower than collective slavery.

Where has individual independence gone?  Are we to become a nation of slaves and serfs?

Are we as a Nation going to climb the cliff or jump off?

Illegal Alien Population and Crime Drops in Arizona

26 09 2010

One of the reasons I and my family left Phoenix was the refusal of the mayors, councilmen and women, county supervisors and governors to enforce the law on the books.  Our daughter in first and second grade was a minority.  80-90% of her classmates were illegal aliens.  That destroyed that school district.  So much time and money was being spent on the situation that our daughter was an after thought.

Another example.  My wife was driving our car.  I was in the passenger side and our baby in the back seat.  The light turn green and my wife pulled into the intersection.  We didn’t see the other driver running the red light.  Our lives were in slow motion as the drivers side near the front wheel was rammed with stunning force.  The sound was horrific and the action freeze framed as the terror shot through all of us.  My first thought after gasping for air was, “Dear God, I hope my wife and my baby are alright!”

The car was rammed so hard that we were spun almost 180 degrees around and our front wheels landed on the sidewalk.  I checked on my wife and the checked our baby who thankfully was buckled in correctly.  I took her out and tried to calm her. We all were miraculously unharmed.  For a while afterward our baby would scream when we took her in the car.  If our car had been 2 or 3 feet further into the intersection my wife would have been seriously injured or killed.

The driver of the offending vehicle didn’t speak English.  When I tried asking for insurance information a numb and dumbfounded look was all I got in return.  When the police officers arrived at the scene they shared with me that the driver was an illegal alien and the only identification he had was a Mexico student ID.  They had no drivers license, current address information or insurance documentation.  The car registration had expired and was registered to someone else.

I asked the officer what they could do about the situation.  They informed me that there was nothing that they could do.

I got the information of the registration and went to the address listed with a friend of mine that was fluent in Spanish.  Even though someone was there they refused to answer.  The information that had been given to the police was bogus and any attempt I made with the police or detectives was met with a yawn or “Sorry, there’s nothing we can do.  It happens all the time.”

Our car didn’t survive the wreck.  The insurance adjuster determined the costs to repair the car were more than it was worth.  I lost my deductible, my insurance rates went up, lost time off of work and no one could do anything because there was no will so there was no way.

Of course this was before the current law was passed in Arizona.  Previously many of our leaders were simply unwilling to uphold the laws of the land for selfish political reasons.

I support the State of Arizona’s law to UPHOLD THE LAW.  Those who do not support upholding the law are aiding and abetting criminals and promoting injustice. The Fed for too long has simply turned a blind eye and been derelict in their duties.

Read this article and watch the newscast and tell me what you think about enforcing the law.

Sheriff Joe has always been on the right side of this issue.  He’s kicking himself that he endorsed Janet ‘Roll Over And Play Dead’ Napolotalo for Governor who is now the lapdog Secretary of Homeland Insecurity for the Obama Negligent Homicide Administration.  It seems as the Secretary all she is capable of doing is taking dictation from our Slanderer in Chief.

Lucky Number 13?

10 06 2010

What’s the deal with 13?  Some people think it’s a bad number.  It’s just a number.  There was even a Thirteen Club started in the 1800’s to dispel superstition.

Well, we are at a unique time in history and the number 13 is a pivot point.

The United States National Debt is over $13 Trillion now.  I hope the Sleeper has awakened.

The National Debt and the out of control spending are leading our country to economic devastation.  At this rate we will be semi-defunct like Greece very soon.  Unfortunately, we won’t have the EU to bail us out.  No one will be able to bail the US out.

As reported in Bloomberg news, the United States National Debt will exceed our Gross Domestic Product in 2012.

The US currently receives the highest rating for its Treasury Bonds.  As soon as that rating drops you will see interest rates go through the roof.  Calculations of when that will happen is between 2013 and 2018.  If the debt goes up as fast as it is now look for 2013 to be the tipping point.

A Reuters news story on June 8th stated that according to a Treasury Department report to Congress, the National debt will reach $19.6 Trillion by 2015.  If that becomes true, the interest on the debt at only 4% would be almost 800 Billion.  Say for example we have to sell the bonds at a higher rate, say 6%, the interest rate payment will be almost 1.2 Trillion per year.

We are at the tipping point right now.  We need to eliminate the debt not add to it.

Below is the list of our Senators vote to raise the debt ceiling to 14.3 Trillion.  It’s simply raising the line of credit to ourselves.  Those who voted for it are the YEA’s and those against of the NAY’s

YEAs —60
Akaka (D-HI) Baucus (D-MT)  Bayh (D-IN) Begich (D-AK) Bennet (D-CO) Bingaman (D-NM) Boxer (D-CA) Brown (D-OH) Burris (D-IL) Byrd (D-WV) Cantwell (D-WA) Cardin (D-MD) Carper (D-DE) Casey (D-PA) Conrad (D-ND) Dodd (D-CT) Dorgan (D-ND) Durbin (D-IL) Feingold (D-WI) Feinstein (D-CA) Franken (D-MN) Gillibrand (D-NY) Hagan (D-NC) Harkin  (D-IA) Inouye (D-HI) Johnson (D-SD) Kaufman (D-DE) Kerry (D-MA) Kirk (D-MA) Klobuchar (D-MN) Kohl(D-WI) Landrieu (D-LA) Lautenberg (D-NJ) Leahy (D-VT) Levin (D-MI) Lieberman (ID-CT) Lincoln (D-AR) McCaskill (D-MO) Menendez (D-NJ) Merkley (D-OR) Mikulski (D-MD) Murray (D-WA) Nelson (D-FL) Nelson (D-NE) Pryor (D-AR) Reed (D-RI) Reid (D-NV) Rockefeller (D-WV) Sanders (I-VT) Schumer (D-NY) Shaheen (D-NH) Specter  (D-PA) Stabenow (D-MI) Tester (D-MT) Udall (D-CO) Udall (D-NM) Warner (D-VA) Webb (D-VA) Whitehouse (D-RI) Wyden (D-OR)

NAYs —39
Alexander (R-TN) Barrasso (R-WY) Bennett (R-UT) Bond (R-MO) Brownback (R-KS) Bunning (R-KY) Burr (R-NC) Chambliss (R-GA) Coburn (R-OK) Cochran (R-MS) Collins (R-ME) Corker (R-TN) Cornyn (R-TX) Crapo (R-ID) DeMint  (R-SC) Ensign (R-NV) Graham (R-SC) Grassley (R-IA) Gregg (R-NH) Hatch (R-UT) Hutchison (R-TX) Inhofe (R-OK) Isakson (R-GA) Johanns (R-NE) Kyl (R-AZ) LeMieux (R-FL) Lugar (R-IN) McCain (R-AZ) McConnell (R-KY) Murkowski  (R-AK) Risch (R-ID) Roberts (R-KS) Sessions (R-AL) Shelby (R-AL) Snowe (R-ME) Thune (R-SD) Vitter (R-LA) Voinovich (R-OH) Wicker (R-MS)

Not Voting – 1
Enzi (R-WY)

The vote was down party lines this time but when Republicans were in power they were not responsible spenders either.  There must be a moratorium on the deficit then gradually eliminate the debt.  Let’s have Congress pass a law that the national debt ceiling is lowered to $13 Trillion and gradually lower it at least 5% each year after that.  Lots of sacred cows will have to be slaughtered and there will be citizens complaining but if we are to survive surgery is required.

13 is a great number.  It is the number of colonies that joined to form the United States and the original number of stars on the US flag.  In the Great Seal of the United States there are: 13 olive leaves (with 13 olives), 13 arrows, and 13 stars, all forming a triangle over the eagle with the number 13 on each point.  On the pyramid there are 13 levels.

The Apollo 13 mission failed, but is one of the most inspiring space adventures in history.  All three astronauts returned safely to Earth.  I recommend the movie of the same name.

13 Trillion can be a turning point for America,  We can return safely to sound economics, yes we can, but not with the current spending intoxication.

Word Up Obama

3 02 2010

Bad Economics Kill Economies!

Artificial manipulation in the short run kills stability in the long run.

People of the United States of America….Your current President has an unsustainable philosophy!  After reading this post, watch to video to see what philosophy he subscribes to.

Your only real power in the US government is to pester, pester, pester your Senators and Congressional Representatives.  That’s it.  Kill this new proposed budget by the Obama Administration if you disagree with it by being a Congressional Pest.  It is so bloated it’s reaks like a pack of swollen dead skunks on the side of the road.  A one year deficit of 1.56 Trillion at least.  If revenue doesn’t meet expectations then its worse.

The total budget is $3.8 Trillion.  So, 41% of the proposed budget is provided by hawking some Treasury bills to the pawn shop, selling out our country.  Our national debt will be over $14 trillion if approved.

Call your Congressional leaders to say no on your behalf to such an outrageous glut.

We are as a people participating in one of the seven deadly sins – GLUTTONY – “the over indulgence and over consumption of anything to the point of waste.”

We the people are wasted, intoxicated with self indulgent spending and it’s coming to the point of no return.  A reversal must happen drastically and quickly.  If the deficit is eliminated that’s a start, then work on the debt.  In the long run our country will be extremely strong when it doesn’t have to pay $500 billion (and growing) for interest per year.  At current projections it will be a trillion a year soon just for Congresses credit card interest.

Congress VOTE NO.  Protest the Obama Administration’s budget by burning your martini’s at lunch, slap your favorite lobbyist, wear t-shirts on the floor of the house and senate that says “Down with the Deficit and Debt!”

The new American Motto must be “Pay Down As You Go” not just pay as you go.  We individually and collectively must get out of debt, the new bondage.  We are soon to be worse off than we were under the rule of King George.

A Second American Revolution must take place – a revolution of thought and action.

To remedy our sorry situation means hard choices.

1.  Cut the spending radically.  A serious spendectomy will be painful but necessary.

2.  Zero tax cuts until the National Debt is substantially reduced.

I propose scrapping ALL Federal Welfare and unconstitutional expenditures! – Wipe out Medicare/Medicaid, eliminate Social Security (pay back all that was paid in plus adjusted for inflation) and all unconstitutional expenditures (See the enumerated powers of Congress in the Constitution.  If it isnt in there SCRAP IT).  A gradual approach is always better but we are almost out of time for a gradual approach.

I propose a phased elimination of the of Social Security and Medicare/Medicaid taxes only when those programs are eliminate and only when the National Debt is seriously diminished.

Place the burden squarely back where it belongs – on the individual.  The individual then can go to their family, local community, church or charitable organizations, and their city or state if they want to assume the roll of charitable organization.  A much stronger social network exists rather than the monolithic impersonal cradle to grave approach.

Governments roll is that of governance and common defense.  Charity belongs with individuals, families and HMMM… charitable organizations.  Stop the raid on the Treasury!

My buddy Thane showed me this entertaining version of the economic theory battles raging today.  Thanks Thane!

Which Would You Scrap?

17 01 2010

Those above items are the largest items on the budget.  The fourth one, the interest on national debt is enjoying the lowest interest rates in decades.  That will not last.  The time soon will come when no one will want to purchase anymore treasury bonds or promisary notes from the US.

When that happens you will see the interest rates go up fast unless we start paying down the debt.  The US is already in danger of losing its AAA credit rating.

In 2010, for every interest rate percentage increase, the US, will have to pay $120 billion more per year on the national debt.  A 4% interest rate increase would increase the annual interest payment to over $880 billion.  That is assuming we have no more deficit spending.  When’s the last time that happened??  1969.

Every decision will be unpalatable and downright painful.  Every American will scream that their Ox is being gored.  The federal government has no constitutional business running Social Security, Medicare/Medicaid, welfare and many other things its doing but seduction politics works.  It’s a Titanic heading for the iceberg and our politicians are having a party in the ballroom.

There is still time but I don’t see the political will from Americans and their politicians.

The people have proven they won’t vote for anyone who will take away their candy even if they have diabetes.

Disaster is imminent unless we get some real leadership in congress.

You Can Fool Some of the People Some of the Time

16 01 2010

Are you a fool?  We’ve all been suckers but are you one right now?

I respect, admire and love Abraham Lincoln.  I love his statement:

You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.

What percentage of the people do you need to fool to be totally effective?

The Answer —— 80% for a fool proof con job.  The closer you are to 80%, the less the minority matters.  Once you get to 80% the effect I call ‘The Reverse Pareto Principle’ kicks in.   In business, the Pareto Principle is basically that 80% of the effects come from 20% of the causes.

In politics, if you can convince 80% of the participating public of anything, the other 20% doesn’t matter.

For example, right now the American people are seduced into believing that they deserve or are entitled to Social Security, Medicaid/Medicare, etc.  As I’ve said before, theft in the name of charity is still theft. The governement has no business playing Robin Hood.  By the way, was Robin Hood sincerely trying to change the system or gaming the system?

Over 80% of the people believe they are entitled to what is outside of the Constitutional guidelines.   Yes, we are violating the spirit and the letter of the Constitution regardless of what certain Communistic Supreme Court judges rationalize.

Here’s where we’re being fooled:

  1. “I’ve paid into the system for years”
  2. “It’s my right as an American (to get something for nothing)”
  3. “It’s set up for me so why not take advantage of it”

Until the national debt and national deficits are wiped out, there is no reason for a tax cut.  Cutting taxes at this point without eliminating more than what is being spent is recklessly irresponsible and dangerous.  We are taxed too much but until we shake off the Socialism entrenched into the fabric of our country.

We must eliminate the Federal Dependency System.  Independence and Freedom must rule.

Here’s a nice website showing our collective irresponsibility.  The image below is as of 1-16-2010

Click on the image to get the latest shock.

US Debt Clock

All our collective Irresponsibility

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