Tag Archives: Time-Bomb

Chicago Tribune: National debt – National voices – MercedSun-Star.com

Decades or centuries from now, scholars will examine U.S. government documents from our time and notice something strange: In four consecutive years around the close of the 20th century, the federal budget was recorded as having a surplus. That hadn’t happened since 1969, it hasn’t happened since, and the way things are going, it may never happen again.

Recent years have seen the collapse of all federal fiscal discipline. At the end of the 2001 fiscal year, the national debt stood at $5.7 trillion. Today, it’s over $12 trillion. With the population at roughly 300 million, your share is, oh, about $40,000. And you ain’t seen nothin’ yet. In the next decade, according to the Obama administration’s own estimates, Washington will pile up another $9 trillion in deficits. …

It’s a crisis that grew gradually for years and is now growing rapidly. It’s one that will force Americans to choose between getting our fiscal house in order or inviting an economic decline of the sort we associate with banana republics. And it’s one that demands action sooner rather than later.

via Chicago Tribune: National debt – National voices – MercedSun-Star.com.

via Chicago Tribune: National debt – National voices – MercedSun-Star.com.

Advertisements

Keep Wall Street risks away from Main Street | islandpacket.com

The four biggest banks — JPMorgan Chase, Citigroup, Bank of America and Wells Fargo –now control more than two-fifths of all bank deposits, more than 66 percent of all credit card accounts and more than half of all mortgages in the U.S.Unfortunately, they also run trillions of dollars in risky trading ventures that could blow up in our faces again.We need to keep risk where it belongs — on Wall Street — and security where it matters — on Main Street. That way, if the derivatives cowboys want to take obscene risks, they can but without driving the rest of us to the brink of financial oblivion.

via Keep Wall Street risks away from Main Street | islandpacket.com.

via Keep Wall Street risks away from Main Street | islandpacket.com.

McCain and Cantwell Want a New Glass-Steagall Law | Newsweek Voices – Michael Hirsh | Newsweek.com

The blinding complexity and interconnections created by modern capital markets—especially because of the way nearly half a trillion dollars in derivatives trades linked the firms to each other—demanded that there be strong firewalls and capital buffers between Wall Street institutions and their affiliates, and between banks and nonbanks and insurance companies. Otherwise there would be no islands of safety—no healthy institutions left to come and rescue the day, as commercial banks traditionally had done since the days of J. P. Morgans famous bailout in 1907. The repeal of Glass-Steagall took things in precisely the opposite direction, eliminating most of the firewalls and inviting staid commercial banks into the buccaneering world of Wall Street trading. Representative Hinchey says it “was a recipe for disaster because these banks were empowered to make large bets with depositors money, and money they didnt really have. When many of those bets, particularly in the housing sector, didnt pan out, the whole deck of cards came crumbling down and U.S. taxpayers had to come to the rescue.”Today the walls between firms still seem low indeed, and trading in derivatives that are “over the counter” that is, out of public sight continues at an astonishing pace, having risen back up to nearly $600 trillion worth. One big danger sign ahead is that the biggest banks have gotten even bigger in the aftermath of the catastrophe, and under the new rules requiring swap dealers to post capital for margin requirements, the big banks are likely to monopolize even more of this derivatives market and become that much richer and more powerful.

via McCain and Cantwell Want a New Glass-Steagall Law | Newsweek Voices – Michael Hirsh | Newsweek.com.

via McCain and Cantwell Want a New Glass-Steagall Law | Newsweek Voices – Michael Hirsh | Newsweek.com.

Harvard Professor Kenneth Rogoff on the Possible Consequences of Federal Deficits from My Documentary: TIME-BOMB