Mark Grant @ Zero Hedge:
We live in a world now which may be described as, “Nothing Matters.”
“Nothing matters until the day that it does and then everyone asks why it didn’t matter before.”
The money pours in each month from America, Europe and Japan and overrides anything and everything else. With pre-payments and calls the estimated amount of money provided by the Fed for the world’s monetary supply is approximately $100 billion every month. It is not just the American banks that are the recipients of the hand-out but the foreign ones who ship it back to Europe or buy European sovereign debt courtesy of Mr. Bernanke. I suspect that if the American taxpayers were aware of the scheme that the citizens would not be pleased but then what the Fed is doing is not generally part of polite conversation in America and so it is not discussed.
Yields on European sovereign debt are at incredibly low levels given the underlying economies. Europe trumpets the cause as renewed faith in the European Union but that is a highly unlikely conclusion. Again, it is the “Central Banks Effect” that feeds that stove of consumption and lowers yields, raises the stock markets and has created a world-wide bubble in every asset class on earth. The economies in Cyprus, Greece, Spain, Slovenia, Portugal, Ireland and Italy are all in serious decline but; “Nothing Matters.”
The “Stalin Axiom” has taken over the world. It is not the data but how the data is counted!
The unemployment rate in America is not 7.7% but 11.6% if all you do is add in the people that have supposedly left the workforce. Did you think these people had retired? Gotten rich in the stock market and were making plans for St. Tropez this summer? Moved to Costa Rico for the winter? No, they have left the workforce because they are now on the public dole and those that are working are picking up their tab.
In Europe sovereign debt ratios do not include guaranteed liabilities, contingent liabilities and every asset under the sun is marked, “Risk Free.” The problem, of course, is that many of these liabilities, oft times called “investments” by the Europeans, are now coming around for payment and the “not counted” does not change the “not paid,” I can assure you.
Still, “Nothing Matters!”
The financial crisis of 2008/2009 was caused by Easy Money. Too much credit, too many undocumented loans, too much cash available that could be used for stupid schemes; this was the root of it. Sub-prime mortgages were the trigger but the core of the problem was copious amounts of cash that had to be utilized somewhere. The machine ran and ran and kept running right up until the day when it broke and then the good intentions were the pavers for Hell.
Now the world will not wake up.
Another way to look at this….
Can the Fed keep interest rates at near zero percent for the next ten years?
Not very likely.
BUT….Obama’s ”budget” considers that a given.
Because EVEN IF we could keep interest rates at zero, our interest payment on our debt become a bigger part of our budget than any other part by 2023.
Barack Obama’s latest budget would mean that in just ten years, interest payments alone on the national debt would begin pushing the trillion-dollar mark: $763 in 2023.
The largest single spending item in 2011, Social Security, amounted to only $725 billion.
$38 billion less.
Department of Defense spending was only (only!) $700 billion.
$63 billion less.
All non-defense discretionary spending combined amounted to only $646 billion.
$117 billion less.
Interest payments on the national debt amount to about 7 percent of all federal spending right now!
Of course no Obama budget has ever passed, some got zero votes from DEMOCRATS!
Obama’s latest pretense of a budget is proof he is work averse.
He dithered until he was two months late then turned in an F paper.