http://www.silverdoctors.com/niall-ferguson-us-unfunded-liabilities-top-238-trillion/#more-14981
and....
http://soberlook.com/2012/10/cutting-tree-with-hammer-goldman.html?utm_source=BP_recent
1. It is not clear what impact asset purchases will have on consumer confidence.
2. We've had extraordinarily low interest rates for quite some time now, yet improvements in job growth have been limited.
3. Lowering mortgage rates from 3.5% to 3% is not going to have a significant impact on home affordability or materially reduce consumers' interest expense (see this discussion).
4. Raising bank excess reserves is not going to accelerate credit expansion.
5. Fed's unemployment targets are unrealistic - it's going to be an exercise in "squeezing blood from a stone" (see discussion).
6. US real median household income has basically been unchanged since 1994. The Fed' program is unlikely to improve this metric and could actually impair incomes further by elevating inflation levels.
7. The market "euphoria" effect is fleeting.Central bank balance sheet expansion is a blunt instrument that is simply inappropriate for addressing economic issues the US currently faces. QE is good for dealing with frozen credit markets (such as in 2008) or lowering interest rates. In the current environment however it's the equivalent of using a hammer to chop down a tree - one would need a very large hammer and a great deal of time (to drive this point we include a video of someone actually attempting to do such a thing.) The hammer here is the $2trn increase in Fed's balance sheet and the timeline extends into 2015. In the mean time one can do some "unintended" damage.
http://soberlook.com/2012/10/reaching-164-trillion-debt-ceiling.html?utm_source=BP_recent
NIALL FERGUSON: US UNFUNDED LIABILITIES TOP $238 TRILLION!!
and....
http://soberlook.com/2012/10/cutting-tree-with-hammer-goldman.html?utm_source=BP_recent
FRIDAY, OCTOBER 5, 2012
The Fed is cutting a tree with a hammer: Goldman projects $2trn of additional asset purchases through 2015
Given that the Fed's current expansionary policy is expected to have only a limited effect on US labor markets, the program may end up being in place for years. That's because slow growth will be met with additional asset purchases that become increasingly less effective over time. Here are some reasons for the program's ineffectiveness as applied to the current environment:
1. It is not clear what impact asset purchases will have on consumer confidence.
2. We've had extraordinarily low interest rates for quite some time now, yet improvements in job growth have been limited.
3. Lowering mortgage rates from 3.5% to 3% is not going to have a significant impact on home affordability or materially reduce consumers' interest expense (see this discussion).
4. Raising bank excess reserves is not going to accelerate credit expansion.
5. Fed's unemployment targets are unrealistic - it's going to be an exercise in "squeezing blood from a stone" (see discussion).
6. US real median household income has basically been unchanged since 1994. The Fed' program is unlikely to improve this metric and could actually impair incomes further by elevating inflation levels.
7. The market "euphoria" effect is fleeting.Central bank balance sheet expansion is a blunt instrument that is simply inappropriate for addressing economic issues the US currently faces. QE is good for dealing with frozen credit markets (such as in 2008) or lowering interest rates. In the current environment however it's the equivalent of using a hammer to chop down a tree - one would need a very large hammer and a great deal of time (to drive this point we include a video of someone actually attempting to do such a thing.) The hammer here is the $2trn increase in Fed's balance sheet and the timeline extends into 2015. In the mean time one can do some "unintended" damage.
GS: - Our analysis suggests that the Fed’s asset purchases work mostly through the stock of announced purchases and only to a lesser degree through the week-to-week flow of actual transactions. This is consistent with the observed impact on bond yields around or in advance of announcement days. It also means that the impact from a cessation of purchases on the level of bond yields and financial conditions should be minor, so long as this cessation does not come as a surprise to the market. While no explicit “stock” of purchases has been announced under QE3 given the open-ended nature of the program, the Fed’s published economic forecasts suggest QE3 would run through mid-2014 and total $1.2trn. Our own less upbeat economic forecasts suggest that QE3 should run through mid-2015 and total just under $2trn.
 |
| Source: GS |
This is the Fed trying to improve US labor markets:
http://soberlook.com/2012/10/reaching-164-trillion-debt-ceiling.html?utm_source=BP_recent
THURSDAY, OCTOBER 4, 2012
Reaching the $16.4 trillion debt ceiling carries significant downside risks
The topic of the US debt ceiling is covered widely in the media and the blogosphere. It is often accompanied by a great deal of finger pointing. Let's try to take an unbiased look for a second. The map below shows how total government debt level increased under either the Democrats' or the Republicans' controlled White House, the Senate, or the House.
Both parties had a hand in this nightmare - potentially for different reasons. The long-term risks to the US prosperity from these debt levels are enormous, particularly given slow economic growth possibly for years to come. But there are also short-term risks. None of this is news to most people, but it is still important to point out the following facts:
Michael McDonough (Bloomberg): - A rapidly increasing U.S. debt load, approaching the $16.4 trillion ceiling, amplifies downside risk. In 2011, failure to raise the debt ceiling led to the first-ever downgrade of the U.S. by Standard & Poor’s. This year, U.S. debt has increased by an average 0.6 percent a month. At that rate, the current ceiling may be breached by January, risking further downgrades and substantial volatility in financial markets.
The MSCI World Index dropped almost 20 percent between April 18, 2011, when S&P placed the U.S. on negative outlook, and Oct. 4, 2011, its year-low; 30-day volatility rose to 29.4 from 14.6 during the same period. The U.S debt ceiling has been raised 17 times since 1993 by an average of 8.5 percent. Four of those increments came during Bill Clinton’s presidency. Seven were during President George W. Bush’s time in office. Since President Obama took office, the debt ceiling has been increased six times.
and...
https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=w&fname=12100400.txt
TABLE III-C Debt Subject to Limit
___________________________________________________________________________________________
Opening balance
Closing ______________________________________
Balance Transactions balance This This
today Today month fiscal
year
____________________________________________________________________________________________
Debt Held by the Public $ 11,314,031 $ 11,311,360 $ 11,269,586 $ 11,269,586
Intragovernmental Holdings 4,847,848 4,841,959 4,796,656 4,796,656
Total Public Debt
Outstanding 16,161,880 16,153,318 16,066,241 16,066,241
Less: Debt Not
Subject to Limit:
Other Debt 486 486 486 486
Unamortized Discount 31,110 31,093 31,130 31,130
Federal Financing Bank 7,112 7,112 7,112 7,112
Hope Bonds 493 493 493 493
Plus: Other Debt Subject to Limit
Guaranteed Debt of
Government Agencies 0 0 0 0
Total Public Debt
Subject to Limit $ 16,122,679 $ 16,114,134 $ 16,027,021 $ 16,027,021
Statutory Debt Limit $ 16,394,000 $ 16,394,000 $ 16,394,000 $ 16,394,000
Act of 8/2/11, operated to permanently increase the statutory debt limit to $16,394
billion after 1/27/12.
Unamortized Discount represents the discount adjustment on Treasury bills and zero-coupon
bonds (amortization is calculated daily).
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