Former CBO Director: The Fall Will Be “Very Scary”, Expect A Market Crash

Rudy Penner, the former director of the Congressional Budget Office and the person described by MarketNews international as “one of Washington’s most respected fiscal policy experts”, told MNI Wednesday in an exclusive interview that he expects a “very scary” fall 2017 due to fiscal issues, with market-disrupting battles ahead on both the debt ceiling and fiscal year 2018 spending. Penner directed the CBO under president Reagan, worked at high level posts in the White House budget office, and the Council of Economic Advisers. He is currently a fellow at the Urban Institute and sits on the board of the Committee for a Responsible Federal Budget. Continue reading

Coming Soon: The Mother Of All Debt Ceiling Crises

 

[Urgent Note: The nation’s future and a massive debt ceiling hangs in the balance as Trump pushes beyond the Comey hearings. That’s why I’m on a mission to send my new book TRUMPED! A Nation on the Brink of Ruin… and How to Bring It Back to every American who responds, absolutely free. Click here for more details.]

While the Imperial City is frozen in the Second Coming of Comey, it doesn’t mean that the Washington spending machine is on pause. In fact, the Treasury’s cash balance yesterday stood at only $153 billion — down by $130 billion just since the tax season peak was reached on April 25th.

Uncle Sam has been burning cash at a rate of $3.2 billion per calendar day since then and has no more room to borrow. That’s because the public debt ceiling is frozen at its March 15th level ($19.808 trillion) and the mavens at the Treasury Building have run out of borrowing gimmicks.

The countdown to the mother of all debt ceiling crises is now well underway — with the nation’s net debt sitting at $19.69 trillion. That figure, in turn, is up nearly $500 billion since FY 2016 ended on September 30 with the net debt at $19.22 trillion.

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JPMorgan Sounds Alarm On Size Of US Debt, Warns Of Financial Crisis

 

After yesterday Goldman mocked Trump’s budget (ironic as it was Trump’s ex-Goldman Chief Economic Advisor who conceived it) and said it had zero chance of being implemented, today it was JPM’s turn to share some purely philosophical thoughts on the shape of future US income and spending, which as we learned yesterday could balance only if the US grows for 10 years at a 3% growth rate, something it has never done, while slashing nearly $4 trillion in in spending, something else it has never done.

What caught our attention in the note by JPM’s Jesse Edgerton was his discussion on the thorniest issue surrounding the US: its unprecedented debt addition, what America’s debt/GDP will look like over the next 30 years, and whether there is any chance it could decline as conservatives in government hope will happen. Continue reading

Trump Avoid Debt Crisis ? “Extremely Unlikely” – Rickards

Remember to keep an eye on March 15th as mentioned in a previous post, the poison pill left by the Obama administration where “everything will grind to a halt”.

 

The Congressional Budget Office, CBO, estimates that inflation and real GDP will each grow at about 2% per year in the coming ten years. This means that nominal GDP, which is the sum of real GDP plus inflation, will grow at about 4% per year. Since debt is incurred and paid in nominal terms, nominal GDP growth is the critical measure of the sustainability of U.S. debt.

 

Trump Avoid Debt Crisis ? “Extremely Unlikely” says Rickards

The upcoming March 15 U.S. debt ceiling deadline is something that is being largely ignored by markets and most media for now. Despite it being just 9 trading days away. This will change in the coming days and is one of the many reasons why we are bullish on gold.

James Rickards writing for the Daily Reckoning today looks at the important ‘next signal to watch’ and explains that Trump and his advisors believe they can avoid a debt crisis through higher than average growth. Continue reading

Obama said to plan controversial nuclear weapons executive order during last days in office

Taking away America’s “no first use” policy means that America has to be nuked first before it can respond with tactical nuclear weapons itself.

 

As he nears the end of his second term, U.S. President Barack Obama is reportedly preparing a series of executive orders that officials said would weaken the U.S. nuclear deterrent.

Obama, in meetings with national security Cabinet members known as the Principals Committee, reviewed his options for executive actions on nuclear policy. None of the options require formal congressional approval. Continue reading

The western pillars that have supported Israel are crumbling

On the plus side, Israel’s position in the Middle East has improved, despite the chaos that has overtaken the region since the so-called “Arab Spring” of 2011. Not only is Israel militarily stronger, but due to the threats from Iran and Islamic State, Israel’s relations with its Sunni Arab neighbors have undergone a dramatic transformation, as those countries realize that Israel can be an important asset. Thus far this rapprochement has been largely behind the scenes, but no less marked because of that. Continue reading

Clouds on US Horizon: Greek Debt Crisis Knocking on Washington’s Door?

While Greece is suffering from a protracted debt crisis, facing new tough reforms, the question arises whether if the United States will soon become incapable to handle its own growing debts, asks Romina Boccia, the Heritage Foundation’s Grover M. Hermann Fellow in Federal Budgetary Affairs.

“The United States differs from Greece in important ways. The US economy is much larger and better diversified. More than half of the US debt is held by creditors within its borders, rather than by foreign entities. Moreover, the United States also creates its own money, enabling it to devalue its currency and debt to avoid defaulting on payments for a lack of cash,” the analyst underscored.

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CBO: Debt Headed to 103% of GDP; Level Seen Only in WWII; ‘No Way to Predict Whether or When’ Fiscal Crisis Might Occur Here

(CNSNews.com) – Testifying in the U.S Senate yesterday, Congressional Budget Office Director Keith Hall warned that the publicly held debt of the U.S. government, when measured as a percentage of Gross Domestic Product, is headed toward a level the United States has seen only once in its history—at the end of World War II.

To simply contain the debt at the high historical level where it currently sits—74 percent of GDP–would require either significant increases in federal tax revenue or decreases in non-interest federal spending (or a combination of the two).

Historically, U.S. government debt held by the public, measured as a percentage of GDP, hit its peak in 1945 and 1946, when it was 104 percent and 106 percent of GDP respectively.

In 2015, the CBO estimates that the U.S. government debt held by the public will be 74 percent of GDP. That is higher than the 69-percent-of-GDP debt the U.S. government had in 1943—the second year after Pearl Harbor. Continue reading

U.S. debt headed toward Greek levels

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United States’ projected debt over the next 25 years looks a lot like Greece’s over the past 25.

With all the chaos unravelling in Greece, Congress would be wise to do what it takes to avoid reaching Greek debt levels. But it’s not a matter of sticking to the status quo and avoiding bad decisions that would put the budget on a Greek-like path, because the budget is on that path already. Continue reading

Obama Calls for Highest Sustained Taxation in U.S. History

(CNSNews.com) – In the budget proposal he presented to Congress last month, President Barack Obama called for what would be the highest level of sustained taxation ever imposed on the American people, according to the analysis published last week by the Congressional Budget Office.

Under Obama’s proposal, taxes would rise from 17.6 percent of Gross Domestic Product in 2014 to 19.2 percent in 2024. During the ten years from 2015 to 2024, federal taxation would average 18.7 percent GDP.

America has never been subjected to a ten-year stretch of taxation at that level. Continue reading

Once known as America’s ‘ace in the hole,’ US nuclear missiles are now a force in distress

 

WASHINGTON — The hundreds of nuclear missiles that have stood war-ready for decades in underground silos along remote stretches of America, silent and unseen, packed with almost unimaginable destructive power, are a force in distress, if not in decline.

They are still a fearsome superpower symbol, primed to unleash nuclear hell on a moment’s notice at any hour of any day, capable of obliterating people and places halfway around the globe if a president so orders.

But the number of intercontinental ballistic missiles, or ICBMs, is dwindling, their future defense role is in doubt, and missteps and leadership lapses documented by The Associated Press this year have raised questions about how the force is managed. Continue reading