Thread: Fed Govt Borrows 40% Of Every Dollar It Spends

Caution: Credit Leads, And People Live In States

Posted 2011-01-14 11:26
by Karl Denninger

This is ugly stuff folks.....

Many charts and a video on this link that will not transfer; go to the link if you wish to view them

This chart is in fact much worse than it first appears - that break has now taken out critical support from 2008 before everything fell apart!

It's not alone either:

I have warned of the potential risk in these funds and municipal bonds as an asset class before.

The fact that no realistic action has been taken to address these issues, and that they may rotate into United States credit - that is, Treasuries, forcing big reductions in spending, is a serious problem.

Folks, the States are absolute pikers when it comes to this - The Federal Government is literally borrowing 40% of every dollar it's spending at the present time. This cannot continue indefinitely, and yet if it is pulled back GDP is going to instantaneous collapse by a double-digit percentage and the stock market will implode as profits go down the toilet immediately.

Is this a "sure things, short the farm" play? No. As we've seen the goofballs in our government are hellbent for leather on continuing to play Ponzi, borrowing ever-more in a furious (although ultimately futile) attempt to prevent recognition of the fact that we simply do not have the final demand and cannot manufacture it via borrowing on a durable basis to support our claimed "output" and "profits."

Bernanke, Obama and Congress think they're Khan - and invincible.

They're all wrong - The Market is in fact Captain Kirk.

http://market-ticker.org/akcs-www?post=177327

Your Government at work! And California will be looking to get more money from them. Guess China could fork over some more money for them.