Add another "D": DECEIT. and perhaps a 4th: DERELECTION
On Fri, Oct 10, 2008 at 6:06 AM, Lone Wolf <[EMAIL PROTECTED]> wrote:
>
> Well almost......won't be long now.
>
> Cost of U.S. Crisis Action Is Growing, Along With Debt, Deficit
>
> By Matthew Benjamin
>
> Oct. 10 (Bloomberg) -- The global financial crisis is turning into a
> bigger drain on the U.S. federal budget than experts estimated two
> weeks ago, increasing the deficit and the national debt.
>
> Bailouts of American International Group, Fannie Mae and Freddie Mac
> likely will be more expensive than expected. States are turning to
> Washington for fiscal help. The Federal Reserve said this week it will
> begin buying commercial paper, the short- term loans companies used to
> conduct day-to-day business, further increasing costs. And analysts
> now say the $700 billion bank- rescue plan passed by Congress last
> week may have to be significantly larger.
>
> ``I always assumed they would be asking for more money along the way
> if it was necessary, and it looks like it's going to be necessary,''
> said Stan Collender, a former analyst for the House and Senate budget
> committees, now at Qorvis Communications in Washington. ``At the
> moment, there's nothing happening here that's positive for the budget.
> Nothing.''
>
> The 2009 budget deficit could be close to $2 trillion, or 12.5 percent
> of gross domestic product, more than twice the record of 6 percent set
> in 1983, according to David Greenlaw, Morgan Stanley's chief
> economist. Two weeks ago, budget analysts said the measures might push
> deficit to as much as $1.5 trillion.
>
> Yields to Rise
>
> That means a lot more borrowing by Treasury, which will push up
> interest rates, said Greenlaw. ``The Treasury's going to be ramping up
> supply dramatically over the course of coming months to meet this
> enormous federal budget obligation,'' Greenlaw told Bloomberg this
> week. ``The supply will trigger some elevation in yields.''
>
> Payments the government allocated to keep vital companies solvent are
> beginning to look insufficient.
>
> AIG, the giant insurance company that was taken over by the government
> in mid-September, said this week it may access $37.8 billion from the
> Federal Reserve Bank of New York, in addition to the $85 billion the
> government already loaned it to stave off bankruptcy.
>
> ``You're in for a dime, you're in for a dollar on this one,'' said
> David Havens, a credit analyst at UBS AG.
>
> The financial health and earnings prospects of Fannie Mae and Freddie
> Mac -- seized by the government on Sept. 7 to prevent them from
> failing -- worsened in the second and third quarters, the companies'
> government regulator said this week.
>
> Price Declines
>
> The companies and regulators are recalculating the value of all of
> their assets to factor in price erosion. That may mean the government
> will have to spend more to keep the firms solvent.
>
> Earlier this week the Fed announced it will create a special fund to
> buy commercial paper, the credit that businesses use to finance
> payrolls and other ongoing expenses. The Treasury will deposit money
> into the Fed's New York district bank to help set up the new unit. A
> Fed official said Treasury funding for the program could be
> ``substantial.''
>
> California, Alabama and Massachusetts are urging the Fed and Treasury
> to include their securities in rescue plans designed for banks and
> businesses. The $2.66 trillion U.S. market for state and city bonds
> has been all but frozen since Lehman Brothers Holdings Inc., weighed
> down by losses in mortgage-backed bonds, declared history's largest
> bankruptcy on Sept. 15.
>
> California has said it needs to sell as much as $7 billion in notes to
> maintain its schools, health system and other public services. The
> Bush administration said it is reviewing the states' financial
> positions.
>
> Plan for Banks
>
> Meanwhile, Treasury Secretary Henry Paulson indicated two days ago
> that he is considering buying stakes in a wide range of banks in
> coming weeks to help recapitalize them.
>
> Such a move is allowed under the $700 billion bailout package Congress
> passed last week. Edmund Phelps, winner of the 2006 Nobel Prize for
> economics and a professor at Columbia University, said such action is
> necessary -- and will likely turn out to increase the measure's cost.
> Spending beyond the amount set in last week's bill would require
> further Congressional approval.
>
> ``We have to recapitalize the banks,'' Phelps told Bloomberg
> Television this week. ``I don't imagine that there's enough money in
> the first Paulson plan to be able to do all that needs to be done in
> that direction.''
>
> The additional borrowing could push the national debt well past 70
> percent of GDP, the highest since the immediate aftermath of World War
> II, when the U.S. was still paying off war debt.
>
> Debt Limit
>
> Gross U.S. debt, which includes debt held by the public and by
> government agencies, this year reached about $9.6 trillion, or about
> 68 percent of gross domestic product. The rescue legislation increased
> the government's debt limit to more than $11.3 trillion from $10.6
> trillion.
>
> On top of all that, budget watchdogs say the sheer size of the
> interventions is making Washington more profligate than usual. To
> attract votes in Congress, leaders added several costly items to the
> $700 billion rescue, including extensions of some tax credits and tax
> breaks for makers of wooden arrows and stock-car racetrack owners.
>
> Under normal circumstances, there would have been more resistance to
> such expenses, said Robert Bixby, executive director of the Concord
> Coalition, a non-partisan budget watchdog.
>
> The rescue legislation ``creates a mask for all sorts of fiscal
> irresponsibility,'' said Bixby. ``It covers up a multitude of sins.''
>
> To contact the reporters on this story: Matthew Benjamin at
> [EMAIL PROTECTED]
>
>
> >
>
--
*~@):~{>
--~--~---------~--~----~------------~-------~--~----~
Thanks for being part of "PoliticalForum" at Google Groups.
For options & help see http://groups.google.com/group/PoliticalForum
* Visit our other community at http://www.PoliticalForum.com/
* It's active and moderated. Register and vote in our polls.
* Read the latest breaking news, and more.
-~----------~----~----~----~------~----~------~--~---
