This month marks the 10th anniversary of the Wall Street/Fed/Treasury created financial disaster of 2008/2009. What should have happened was an orderly liquidation of the criminal Wall Street banks who committed the greatest control fraud in world history and the disposition of their good assets to non-criminal banks who did not recklessly leverage their assets by 30 to 1, while fraudulently issuing worthless loans to deadbeats and criminals. But we know that did not happen.You, the taxpayer, bailed the criminal bankers out and have been screwed for the last decade with negative real interest rates and stagnant real wages, while the Wall Street scum have raked in risk free billions in profits provided by their captured puppets at the Federal Reserve. The criminal CEOs and their executive teams of henchmen have rewarded themselves with billions in bonuses while risk averse grandmas “earn” .10% on their money market accounts while acquiring a taste for Fancy Feast savory salmon cat food.
Total household debt topped out at $14.5 trillion in 2008 and proceeded to fall by almost $1 trillion as a tsunami of foreclosures swept across the land. But a funny thing happened on the way towards Americans approaching debt with the appropriate caution – QE1, QE2, QE3 and propped up Wall Street banks doling out loans to anyone capable of fogging a mirror and scratching an X on a loan document. The Deep State oligarchs realized the only way to keep their ponzi scheme economy afloat was to lure in more suckers with debt that could be re-circulated to make the economy appear solvent.College students, after over a decade of government school indoctrination, were the perfect dupes. From 2009 until today the government has doubled student loan debt from $750 billion to over $1.5 trillion. Everyone likes a shiny new car, so the financial industry took auto lending from $700 billion to over $1.1 trillion over the same time frame. The re-ignition of the housing bubble, through Wall Street engineered supply suppression, has driven prices far above the 2005 peak in most major markets.
In what passes for the normal exercise of crony capitalism in this warped deviant shitshow we call America, the biggest corporations in the world took the free money created by the Federal Reserve and proceeded to “invest” it in their own stock rather than investing it in their operations and workers. Borrowing at near zero rates and using the proceeds to buy back hundreds of billions of your own stock had multiple benefits for greedy feckless Harvard MBA CEOs. Reducing shares outstanding juiced their earnings per share, resulting in a false profit picture to investors, who bid their stock prices higher.Corporate executives tied their compensation to stock performance and reaped extravagant salaries and bonuses. This same scenario played itself out in 2007 – 2009. These brilliant CEOs bought back a record amount of stock just before the financial collapse. Using their borrowings, along with Trump’s tax cut windfall, current day S&P 500 company CEOs are saying “Hold My Beer”. They are on pace to buy back $1.2 trillion of their stock at all-time highs. When stock prices are cut in half again, these greed monkeys will pay no price for their reckless stupidity. All of this idiocy has been aided and abetted by the Fed with their near zero interest rates a decade after the crisis supposedly ended.
Does every new president get brought into a room where they are told what to say about the economy, or else? Mr. Concerned about government spending and deficits signed one of the largest tax cuts in history (mostly to corporate America) while simultaneously ramping up military spending and cutting absolutely nothing. The result is trillion dollar deficits for as far as the eye can see. The fake government data he once scorned, he now boasts about on a daily basis. It seems he now loves low interest rates and bubbles.He threatens the Federal Reserve Chairman about raising rates. Even though the stock market is 45% higher than when he declared it a bubble, he takes credit for its ascension to record highs. Saber rattling and threatening war around the globe is now par for the course. It seems Trump thinks he can run our economy like a NYC real estate mogul. He does have experience with bankruptcies. That may come in handy.
More than 1 million student loan borrowers each year go into default.Outstanding education debt in the U.S. has tripled over the last decade and now exceeds $1.5 trillion, posing a greater burden to Americans than auto or credit card debt.For many, the payments are proving unmanageable. By 2023, nearly 40 percent of borrowers are expected to default on their student loans. That's when a person has not made a payment toward their education debt in roughly a year, triggering it being sent to a third-party collection agency.
Learn how our system of money traps your kids in debt, and how to talk them them about it.
Russia’s $525-billion foreign debt is dwarfed by $7.5 trillion in Britain, $5 trillion in France, $4.8 trillion in Germany and a whopping $21 trillion in the US.This tell-tale ratio was not lost on IMF Managing Director Christine Lagarde who, when speaking at the recent St. Petersburg International Economic Forum, described Russia’s foreign debt as “considerably small” and said that it should borrow more.
The U.S. national debt is owned by Social Security, the Fed, and foreign investors. Here are all the major owners.
Interest on the debt could become the single largest item in the budget.
The single most dramatic effect of today's rising rates is the interest we will pay on our national debt.
Let's engage in some grammar school math. Take the CBO estimate of debt held by the public of $16.5 trillion in 2020. A 5 percent average interest rate on that amount comes to annual debt service of $825 billion, an unfathomable amount. (In 2017, interest on the debt held by the public was $458.5 billion, itself a scary number.)Here's the danger:According to the CBO, individual income taxes produced $1.6 trillion in revenue in fiscal 2017. Under this 2020 scenario, one-half of all personal income taxes will go to servicing the national debt. Annual debt service in 2020 will exceed our newly increased defense budget of $700 billion in FY 2018. Annual debt service would equal our Social Security obligations.
“The ‘bipartisan deal’ means that the politicians get what they want,” Sarwark said. “We, as taxpayers, will pay an extra $400 billion according to the Washington Post. More precisely, because nearly all this extra spending will be funded by borrowing more money, our children, grandchildren, and great-grandchildren will pay. In individual terms, this means that every man, woman, and child in the United States will have $1,238 added to their federal tab. When we combine that with the GOP tax cut of $1.5 trillion, which was not accompanied by reduced spending, our additional federal credit charge adds up to $5,880 per person.”
Unfortunately, after decades of underfunding public pensions (which would probably be criminal, if a private entity did it), the choices in a lot of places are going to be either cut benefits before bankruptcy or cut benefits after bankruptcy.
The status quo delights in celebrating gains, but the costs required to generate those gains are ignored for one simple reason: the costs exceed the gains by a wide margin. As long as the costs can be hidden, diluted, minimized and rationalized, then phantom gains can be presented as real.