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Gibson raided
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<blockquote data-quote="John Roberts" data-source="post: 35753" data-attributes="member: 126"><p>Re: Gibson raided</p><p></p><p></p><p></p><p>Politicians should change their positions when the facts change, and I hope nobody argues this is just a routine recession. We need more adult behavior from government. How about a budget for a change? They sure didn't stop spending, despite that little detail. </p><p></p><p>While I don't doubt that politicians may have said that "deficits don't matter", that is an over-simplification for public consumption. As I have offered before deficit spending is manageable when it is A) a modest sized supportable percentage of GDP, and B) the economy is enjoying an average growth rate adequate to support that deficit spending. Effectively borrowing against future expected revenue. However for this to be sustainable long term, good years need to make up for the bad years when there is no growth, so this averages out and total debt doesn't grow out of proportion. </p><p></p><p>The brouhaha over the recent debt ceiling increase was unseemly, and the whole concept of even having a debt ceiling target that they routinely ignore, seems like more DC comics. If the intent is to generate a line in the sand for partisan debate about spending, they got much more than they bargained for this time around. Such conflicts are not unique or new to Washington, some may recall Newt Gingrich shutting down the government over a federal budget battle 1995/96. The new crew seems to have avoided the budget process and that conflict by postponing that reckoning several months at a time with continuing resolutions. So in my judgement the borrowing authority** became hostage to the unresolved budget debate that never happened. </p><p></p><p>This is amplified in the public's eye as the whole threat to shut down government must be credible to be taken seriously, while no one really wants to be the bad guy who actually shut down government and gets all the negative political fallout. So a huge game of chicken played out on the big stage, but with consequences as the credit ratings agency couldn't ignore how dysfunctional the budget process and fiscal policy has become. The downgrade of our sovereign debt should be a wake up call, but already the special commission we set up to deal with this is in conflict over military spending. </p><p></p><p>I'll tell you what I am afraid of, "interest rates". Right now interest rates are the lowest that I can remember in my lifetime, and we are borrowing hand over fist, lots of it short term debt. What happens when interest rates go up, and they surely will? Our costs to service this mountain of debt will not increase incrementally but exponentially. The difference between 2% and 1% interest rates is not 1% (well it is) but 2/1 or +100%. I recall high double digit interest rates, so the potential debt burden increases are huge. We will be OK for a while since Europe looks worse than we do, for now. Greek 2 year debt just sold with 16% interest rates. We should be locking in current rates for longer terms for a bunch of this debt, and behaving more responsibly for our nation's long term fiscal health, while that will increase our cost vs, the silly low short term raters. Note: another elephant in the room is government guaranteed debt from quasi government agencies like Fannie and Freedie that we taxpayers are also on the hook for. Now there is talk about an infrastructure bank that won't cost us anything... yeah right. </p><p> </p><p>JR</p><p></p><p></p><p>** FWIW I was complaining the last time they raised the borrowing authority, but i don't write for a major newspaper, and the public rarely pays attention to what they consider the behind the scenes business of running Washington. Only when it threatens them, do people pay any attention, based on what the news pukes tell them is important.</p></blockquote><p></p>
[QUOTE="John Roberts, post: 35753, member: 126"] Re: Gibson raided Politicians should change their positions when the facts change, and I hope nobody argues this is just a routine recession. We need more adult behavior from government. How about a budget for a change? They sure didn't stop spending, despite that little detail. While I don't doubt that politicians may have said that "deficits don't matter", that is an over-simplification for public consumption. As I have offered before deficit spending is manageable when it is A) a modest sized supportable percentage of GDP, and B) the economy is enjoying an average growth rate adequate to support that deficit spending. Effectively borrowing against future expected revenue. However for this to be sustainable long term, good years need to make up for the bad years when there is no growth, so this averages out and total debt doesn't grow out of proportion. The brouhaha over the recent debt ceiling increase was unseemly, and the whole concept of even having a debt ceiling target that they routinely ignore, seems like more DC comics. If the intent is to generate a line in the sand for partisan debate about spending, they got much more than they bargained for this time around. Such conflicts are not unique or new to Washington, some may recall Newt Gingrich shutting down the government over a federal budget battle 1995/96. The new crew seems to have avoided the budget process and that conflict by postponing that reckoning several months at a time with continuing resolutions. So in my judgement the borrowing authority** became hostage to the unresolved budget debate that never happened. This is amplified in the public's eye as the whole threat to shut down government must be credible to be taken seriously, while no one really wants to be the bad guy who actually shut down government and gets all the negative political fallout. So a huge game of chicken played out on the big stage, but with consequences as the credit ratings agency couldn't ignore how dysfunctional the budget process and fiscal policy has become. The downgrade of our sovereign debt should be a wake up call, but already the special commission we set up to deal with this is in conflict over military spending. I'll tell you what I am afraid of, "interest rates". Right now interest rates are the lowest that I can remember in my lifetime, and we are borrowing hand over fist, lots of it short term debt. What happens when interest rates go up, and they surely will? Our costs to service this mountain of debt will not increase incrementally but exponentially. The difference between 2% and 1% interest rates is not 1% (well it is) but 2/1 or +100%. I recall high double digit interest rates, so the potential debt burden increases are huge. We will be OK for a while since Europe looks worse than we do, for now. Greek 2 year debt just sold with 16% interest rates. We should be locking in current rates for longer terms for a bunch of this debt, and behaving more responsibly for our nation's long term fiscal health, while that will increase our cost vs, the silly low short term raters. Note: another elephant in the room is government guaranteed debt from quasi government agencies like Fannie and Freedie that we taxpayers are also on the hook for. Now there is talk about an infrastructure bank that won't cost us anything... yeah right. JR ** FWIW I was complaining the last time they raised the borrowing authority, but i don't write for a major newspaper, and the public rarely pays attention to what they consider the behind the scenes business of running Washington. Only when it threatens them, do people pay any attention, based on what the news pukes tell them is important. [/QUOTE]
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