Obama’s Parting Gift: Trillion-Dollar Deficits As Far As The Eye Can See
Barack Obama came into the White House in 2009 promising a “new era of responsibility.” What he’s left President Trump is a government careening toward fiscal ruin.That’s what the latest report from the Congressional Budget Office shows. The CBO report looks at what federal spending and revenues will look like over the next decade if the government is left on autopilot. The picture is grim. Deficits this year are expected to be $559 billion. By 2023, the government will once again be running trillion-dollar annual deficits that will quickly climb in the following years. Left unchanged, the national debt will worsen by an additional $10 trillion in a decade, equaling almost 90% of the economy.
Big Correction Imminent—-Record Trader Complacency
With the recent performance of the S&P, in which there has not been even a single 1% drawdown since the election, not only is complacency raging but some traders have forgotten what it even means to experience a modest 5% correction, let alone a 20% bear market. How much longer can this go on?For the answer, we turned to a recent report by InvesTech, according to which as the table below shows, a 5% correction has occurred about once every seven months in an ongoing bull market.
Taking The Long View—–The War Party’s Monopoly Is Ending With Trump
That Trump is inconsistent, and an imperfect vessel, hardly needs to be said. That the danger of war still looms over us is also a fact that none can deny. Yet all this is irrelevant in the face of the conceptual victory his winning the White House represents. Here is a candidate who campaigned against GOP foreign policy orthodoxy, explicitly rejecting the legacy of the Iraq war and even going so far as to call out the Bush administration for lying us into that war. Even if he had been defeated in the general election, Trump’s triumph in the Republican primary signaled the end of neoconservatism as a viable political force, at least inside the GOP. What this means is that the War Party’s monopoly on the foreign policy positions of both parties is ended: Garrett’s lament is now outdated, because the voters do have a choice. They can choose between republic and Empire.
Trump Readies a New Pentagon Spending Binge
If you’re John McCain, however, the Pentagon’s rampant waste should be rewarded with even greater spending. In recent weeks, McCain has been playing up the time-worn narrative that the US military budgets have been cut to the bone by the Obama administration. Never mind, of course, that in inflation-adjusted terms, the US is spending more now than under Reagan……Trump has also bought into the myth that the US military is in decline, but it’s not hard to see why. Advocates for more government spending on the military have been bemoaning the state of the military — and the Navy in particular — for many years. In 2007, neoconservative Robert Kagan claimed the US was in danger of losing its position as Naval hegemon and was in a state of “elegant decline.” Kagan’s “evidence” of this was so imaginary, however, that International Relations scholar Robert Farley concluded “Unfortunately, since no actual evidence of U.S. naval decline exists, Kaplan is forced to rely on obfuscation, distortion, and tendentious historical analogies to make his case.”
Budget Showdown Looms As Conservatives Press For Entitlement Reform
Meanwhile, the confirmation hearing of Trump’s pick for the White House Office of Management and Budget, Mick Mulvaney, revealed the deep divisions within the Republican party, and even within the Trump administration, on entitlement reform with Tom Cole of Oklahoma saying that “anybody who is going to balance the budget on discretionary spending [cuts] is on a fool’s errand
Clueless Janet—-When Will She Realize The Fed Is Way Behind The Bubble Curve?
At what point will Janet Yellen realize that Financial Markets are screaming at her that she is so far behind the bubble curve, that we are at Tulip Market Level Status for Behind the Curve Territory? It is obvious that there is too much cheap money sloshing around the Financial System right now! The entire Financial System is at Risk Right Now because of Clueless Central Banks who have no idea the Monster they have Created with This Latest Asset Price Bubble! Really Janet, You Still Don`t Believe That You Are Behind The Curve?
Foreigners Are Dumping U.S. Debt At A Record Pace—–$20 Trillion National Debt Poised For Major Crisis
While most of the country has been focused on the inauguration of Donald Trump, a very real crisis has been brewing behind the scenes. Foreigners are dumping U.S. debt at a faster rate than we have ever seen before, and U.S. Treasury yields have been rising. This is potentially a massive problem, because our entire debt-fueled standard of living is dependent on foreigners lending us gigantic mountains of money at ultra-low interest rates. If the average rate of interest on U.S. government debt just got back to 5 percent, which would still be below the long-term average, we would be paying out about a trillion dollars a year just in interest on the national debt. If foreigners keep dumping our debt and if Treasury yields keep climbing, a major financial implosion of historic proportions is absolutely guaranteed within the next four years.
America’s Putin Derangement Syndrome
The Times may be right about Putin coming out on top, but its bill of indictment against him is over the top. The Russian president is not working to delegitimize America democracy – the U.S. is doing the job just fine on its own – and he’s not destabilizing Europe either since the forces undermining the E.U. are essentially generated by the West (traceable to the austerity medicine administered after the 2008 financial collapse and to the refugee flows created by the U.S.-led invasions of Afghanistan, Iraq and Libya and the “regime change” project in Syria, none of which were initiated by Putin)….This is why Putin came out on top: not because he’s a latter-day Svengali manipulating candidates and overturning elections, but because U.S. policy was leading to disaster and no one else was in a position to clean up the mess.
IBM’s Pathetic Propaganda About Hiring 25,000 Workers
The last thing IBM needs is ending up on the receiving end of a Presidential tweet. So, to forestall this event, it announced in December that it would “hire” 25,000 workers in the US. But current and already laid-off workers are now pooh-poohing this promise. IBM is in trouble. Revenues in the fourth quarter fell to $21.8 billion, the 19th quarter in a row of year-over-year declines, IBM reported last week. Annual revenues fell 2% in 2016, the fifth year in a row of declines that none of the executive hype has managed to stem. These annual revenue declines add up. In 2016, revenues were down 25% from the peak in 2011……She said “hire,” not “create jobs.” IBM hires people all the time as part of the normal turnover. She didn’t promise to increase IBM’s workforce in the US by 25,000. Surely, IBM’s lawyers parsed her draft with a fine-toothed comb before it was published.
They Never Learn—-Massive 2016 Chinese “Stimulus” Generated More Debt, No Economic Boom
The most charitable attribution would be to claim that at least it didn’t get worse in China, which leads last year’s Chinese “stimulus” straight into the class already populated by the ARRA and its version of “jobs saved.” There just isn’t any indication at all it had any effect whatsoever. You may argue lags in that the Chinese economy didn’t have enough time to absorb and reflect upon this massive infusion, and that may be correct.
