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Global Debt Exceeds $100 Trillion as Governments Binge

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Photo Credit: APThe amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements.

The $30 trillion increase from $70 trillion between mid-2007 and mid-2013 compares with a $3.86 trillion decline in the value of equities to $53.8 trillion in the same period, according to data compiled by Bloomberg. The jump in debt as measured by the Basel, Switzerland-based BIS in its quarterly review is almost twice the U.S.’s gross domestic product.

Borrowing has soared as central banks suppress benchmark interest rates to spur growth after the U.S. subprime mortgage market collapsed and Lehman Brothers Holdings Inc.’s bankruptcy sent the world into its worst financial crisis since the Great Depression. Yields on all types of bonds, from governments to corporates and mortgages, average about 2 percent, down from more than 4.8 percent in 2007, according to the Bank of America Merrill Lynch Global Broad Market Index.

“Given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers,” according to Branimir Gruic, an analyst, and Andreas Schrimpf, an economist at the BIS. The organization is owned by 60 central banks and hosts the Basel Committee on Banking Supervision, a group of regulators and central bankers that sets global capital standards.

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Marketable U.S. Debt Almost Doubled Under Bush in 8 yrs; More Than Doubled Under Obama in 5

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Photo Credit: AP Photo/Charles DharapakThe marketable debt of the U.S. government has more than doubled–climbing by 106 percent–while President Barack Obama has been in office, increasing from $5,749,916,000,000 at the end of January 2009 to $11,825,322,000,000 at the end of January 2014, according to the U.S. Treasury’s latest Monthly Statement of the Public Debt.

During the eight-year presidency of George W. Bush, the marketable debt of the U.S. government almost doubled–climbing 93 percent–from $2,977,328,000,000 at the end of January 2001 to $5,749,916,000,000 at the end of January 2009.

During the time that Bush and Obama have been in office, the marketable debt of the U.S. government has nearly quadrupled, increasing by $8,847,994,000,000.

However, despite the massive increase in the government’s marketable debt during Bush’s eight years, Obama managed to accumulate more additional marketable debt in his first five years in office than all the presidents who preceded combined.

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U.S. Debt Jumps a Record $328 Billion — Tops $17 Trillion for First Time

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Photo Credit: Jacquelyn MartinU.S. debt jumped a record $328 billion on Thursday, the first day the federal government was able to borrow money under the deal President Obama and Congress sealed this week.

The debt now equals $17.075 trillion, according to figures the Treasury Department posted online on Friday.

The $328 billion increase shattered the previous high of $238 billion set two years ago.

The giant jump comes because the government was replenishing its stock of “extraordinary measures” — the federal funds it borrowed from over the last five months as it tried to avoid bumping into the debt ceiling.

Under the law, that replenishing happens as soon as there is new debt space.

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$3.39T Quantitative Explosion: Fed Owns More Treasuries and MBSs Than Publicly Held Debt Amassed From Washington Through Clinton

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Photo Credit: AP

Photo Credit: AP

The same day that the Federal Reserve’s Federal Open Market Committee announced last week that the Fed would continue to buy $40 billion in mortgage-backed securities (MBSs) and $45 billion in U.S. Treasury securities per month, the Fed also released its latest weekly accounting sheet indicating that it had already accumulated more Treasuries and MBSs than the total value of the publicly held U.S. government debt amassed by all U.S. presidents from George Washington though Bill Clinton.

Since the beginning of September 2008, in fact, the Fed’s ownership of Treasury securities and MBSs has increased seven fold.

As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.

The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.

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Boomtown 2: Taxpayers Have Spent $15 Trillion on 'War on Poverty'

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Photo Credit: Breitbart

Since President Lyndon Baines Johnson declared “war on poverty,” U.S. taxpayers have spent $15 trillion on so-called anti-poverty programs—a figure slightly less than the national debt.

Sean Hannity, Government Accountability Institute President Peter Schweizer, and Breitbart News Executive Chairman Stephen K. Bannon explored the explosive growth of the Supplement Nutrition Assistance Program (SNAP) in a one-hour Fox News special tonight titled “Boomtown 2: The Business of Food Stamps.”

In 1969, just 2.8 million Americans received food stamps. Today, over 47 million Americans are on food stamps. The Fox News special explained that one contributing factor to the massive expansion of the food stamp program is the crony capitalism that has cropped up around the anti-poverty program.

Soda makers, for example, bag an estimated $4 billion a year in taxpayer money through the food stamp program. Efforts to kill the so-called “soda subsidy” have been met with fierce resistance and lobbying by the soda industry.

In Florida, State Senator Ronda Storms (R-Valrico) introduced a bill last year that would keep taxpayer-funded SNAP benefits from being spent on non-essential items like sodas, candy, chips, ice cream, and other junk foods.

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Finally, Some Good News: US Household Debt Burden Hits Record Low

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A measure of the burden of U.S. household debt sank to a record low in the fourth quarter, offering more evidence of improving household finances that should lend support to consumer spending and the economy.
The household debt-service ratio – an estimate of the share of debt payments to disposable personal income – fell to 10.38 percent, the Federal Reserve said on Wednesday.

That was the lowest since the series started in 1980. In comparison, the ratio, which takes into account outstanding mortgage and consumer debt, was 10.56 percent in the third quarter. It peaked in the third quarter of 2007, shortly before the U.S. economy fell into recession.

“Household balance sheets are improving and that lays the foundation for more spending, which in turn can lead to a virtuous cycle of more business investment and hopefully more jobs,” said Dana Saporta, director of U.S. economics research at Credit Suisse in New York.

U.S. households built up a massive debt load as the housing bubble expanded. Efforts to pay down those debts have been a restraint on spending and the economy’s recovery.

Now, it appears that process of deleveraging may have run its course. Data from the Fed last week showed household debt rose at a 2.5 percent annual rate in the fourth quarter, the fastest since early 2008, while a report last month from the New York Federal Reserve Bank said consumer debt rose in the last three months of 2012 for the first time in four years.

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Fed’s Ivory Tower Just Got Smaller

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Photo Credit: fbobolasToday’s weaker than expected GDP report shows just how out of touch most professional economists remain with respect to the fundamental weakness of the US economy. After more than four years of nearly never ending monetary stimulus and more than $5 trillion worth of new federal debt, the economy remains stuck in a serious recession.

The report shows that federal stimulus and deficit spending can’t create sustainable economic growth.

Although the tepid data shocked many economists, I was not surprised. I believe zero growth is consistent with the state of the real economy. The stronger growth numbers that we saw in the second half of 2012 were likely inflated due to pre-election hopes.

The disappointing economic data takes on an even gloomier tone when considered against factors that will make recovery that much more difficult. Interest rates are making their first strong upward move in nine months. Yields on 10 year Treasury bonds are up 60 basis points since the end of July, and are over 2.00% for the first time since April 2012.

The dollar is falling against most currencies except the Japanese yen (it is down more than 11% against the Euro since July), and energy prices are rising (crude oil is approaching $100 per barrel). Although these conditions are not promising, the stock market seems blissfully out of touch. As of yesterday, the S&P 500 had advanced for 8 days in a row, its longest daily winning streak in eight years.

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U.S. Credit Downgrade: Another Obama First!

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Three years ago, many well-meaning Americans suspended concerns about Barack Obama’s experience, judgment, and associations in order to vote for an “historic” president. To paraphrase H.L. Mencken, they got one — good and hard. Friday night, for the first time in history, Standard & Poor’s downgraded the U.S. credit rating from AAA to AA+. The United States earned the top rating the moment such rankings began in 1917 — which means we maintained our AAA rating through the Great Depression, stagflation, malaise, and the 1982 recession. Thirty months of Barack Obama, and it is gone for the first time in history. Change we can believe in!

The retrogression is neither surprising nor is it the only “historic” first The One has perpetrated against the United States. Obama cajoled Congress for weeks that it had to pass a debt ceiling compromise by August 2 to avoid just this occasion. But as Rep. Tom McClintock, R-CA, pointed out, “The purported cuts, even if realized, are far below the $4 trillion deficit reduction that credit rating agencies have warned is necessary to preserve the Triple-A credit rating of the United States government.” S&P used precisely this language in its statement about downgrading the United States, saying the resultant cuts fall “short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.” It faults political gridlock and the lack of “containment” of entitlements. The same administration experts who insisted GOP sellouts on the debt compromise would stave off Friday’s downgrade also insisted passing a stimulus plan would hold unemployment below eight percent.

Even less surprising is the fact that the Obama administration actually believed its rhetoric could stop the inevitable. When Standard & Poor’s began hinting at its actions, anonymous officials began a whisper campaign that the agency’s math was off. Jake Tapper reported Friday evening, “Because of the pushback, the Obama administration is preparing for the downgrade but is not 100% positive it’s going to happen, officials said. And if the downgrade does happen, officials are not sure when it will happen.” S&P downgraded the U.S. hours later. Choosing talk over action has consequences, at home and abroad.

The consequences of his actions are unknown and foreboding. The new credit rating may cause inflated interest rates to trickle down to states and localities, or make all borrowing rates rise.

Economic growth would shrink the importance of the national debt — but such growth is not expected as long as Obama is president. Economists expert growth in debt, and its attendant economic disintegration, in the years to come. Under most estimates, debt would amount to 88 percent of GDP in ten years. S&P warns under its pessimistic scenario, debt will reach 101 percent of GDP in 2021. (AFP news service reported on Wednesday, that U.S. borrowing topped 100 percent of GDP.) Carmen Reinhart of the Peterson Institute for International Economics testified before the House Budget Committee in March that growth begins to slow noticeably once debt crosses the 90 percent threshold. The European Central Bank suggested negative impacts begin at the 70-to-80 percent level. Even the adoption of the debt compromise spooked the stock market, causing a decline for nine out of the past ten sessions, a streak not seen since 1978 when Jimmy Carter was president.

Read More at Floyd Reports By Ben Johnson, The White House Watch

How Big is the U.S. Debt?

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