Thread: Where's It All Come From

Originally Posted by nonsqtr

Here's the overview: Federal Budget Spending and the National Debt

"Most" of what you're talking about, ends up in the national debt.

9.3 trillion and climbing. Figure, Iraq is about 1 trillion of that. This little bailout, just cost us another 2 trillion. It won't be on the books "right away", but that's essentially the story.

So, now, to put this in perspective, the United States is a debtor nation. That means, ... think of it like a credit card. If you're paying high interest, and your minimum monthly payments are LESS than the interest charges, then your bill is gonna keep growing even if you're makin' all the payments on time! And that's exactly what's happening to the United States.

How that actually works in practice, is, we sell "treasuries", and other people buy 'em. (And notes, and bonds, and a whole buncha other stuff too). Well, the people buyin' those things, are the people who have a lot of CASH (like China), and are lookin' for someplace to put it with a good return - so, they effectively loan it back to the US, at the prevailing treasury rates.

So, the reason the debt keeps growing, is that now we're paying China MORE in debt service, than the money we're taking in from all these sales.

It's not "real" money, like hard cash. All of THAT, is going out the window to things like Iraq. The money we're talking about, is "funny money" - virtual money, just like a credit card.

So, what we're effectively doing now, is borrowing from PRIVATE lenders too! That's exactly what insurance is - private lenders. And now, the government owns the largest insurance company in the world.

So, we take IN money from taxes, and also by raising money from the sale of treasuries, and we pay OUT money for things like defense, and entitlements, and so on. This little bailout, was done like one of those Wall Street mergers, with "creative financing". The government ended up with 80% of assets and somehow they managed to convince (or more likely strong-arm) a few private guys to put up the rest.

So, the only reason I'm saying all this, is, look at the numbers. That 3 trillion out of 9 trillion, that's 30%, right? Well, we just added 30% to the national debt. That's where the bailout money came from.

And, what's likely to happen, is that if they're SMART, the gov will wait for the dust to settle and then get rid of those assets QUICK-like, probably sell 'em off piece-meal or something (probably take a loss, too). BUT, that turnaround will cost the taxpayers PLENTY - it would be, like doing TWO mergers on Wall Street, and the people who do that stuff make PLENTY of money off it.

But, it sounds like some of it is come from foreign countries that may or may not be our friends.

Originally Posted by Tick

But, it sounds like some of it is come from foreign countries that may or may not be our friends.

True.

Two things usually happen -

The more common, is that one or the other country ends up getting in trouble, economically. And then, they either go bankrupt, or they start a war. One or the other.

The less common, is that the "economic entanglement" results in increased dialog between the two nations, leading to eventual friendship.

The one way, you get something resembling econoimc "mutually assured destruction", and the other way, you get something resembling "united we stand".

Could go either way....

Originally Posted by Tick

Well, that sucks.

Do you think we should bail out and (in essence) reward the mismanagement and gambling with money that is not theirs to gamble with. Would not prudent investing and insuring the soundness of risk not be the proper management stratagy?

We should re-write the laws of incorporation in one important respect:

Currently the salaries and other golden options the CEO and corporate officers take home cannot be touched by the stockholders if the company crashes.

Clearly I have absolutely no objection to any company paying it's officers as much as they want to in their compensation packages. None of my business.

But if the taxpayer has to bail out these companies, then it becomes my business. Jamie Gorelick walks home with $75 million dollars from Freddie Mac (or Fannie Mae, does it matter) while the company was sinking into insolvency. The creditors should be able to claim that such packages were excessive, unwarranted, and should be seized as part of the company's assets.

That's ability to recover such values from insolvent companies would be the limit of what I'd find acceptable in any discussion of CEO compensation.

Add up the officers, and there's a fair amount of cash to be recovered.

One would have to be careful how it's done, both to close loopholes and to prevent overzealous socialists from stealing what was rightfully earned.

Originally Posted by nonsqtr

Here's the overview: Federal Budget Spending and the National Debt

"Most" of what you're talking about, ends up in the national debt.

9.3 trillion and climbing. Figure, Iraq is about 1 trillion of that. This little bailout, just cost us another 2 trillion. It won't be on the books "right away", but that's essentially the story.

Oh, don't sugar coat it. Tell the whole story.

The US has an unfunded Social Security burden of something like 40T dollars.

And suddenly we're talking about REAL MONEY.

Germany had that problem after WWI. Brazil had that problem. All nations with similar problems always turn to the same solution.

Printing presses and hyperinflation.

Zaire's up to circulationg 500,000,000,000 bills, isn't it?

Originally Posted by Freedom for All

Oh, don't sugar coat it. Tell the whole story.

The US has an unfunded Social Security burden of something like 40T dollars.

And suddenly we're talking about REAL MONEY.

Germany had that problem after WWI. Brazil had that problem. All nations with similar problems always turn to the same solution.

Printing presses and hyperinflation.

Zaire's up to circulationg 500,000,000,000 bills, isn't it?

True. Good point.

:beatenup: