Hiding Bear Posted March 2, 2004 Report Posted March 2, 2004 Good morning and welcome to B4 the Bell! Tanks to all our contributors for making B4 the Bell an interesting place. Two general 'challenging' background stories worth looking into if you have time: Like Japan in the 1980's, China Poses Big Economic Challenge http://www.nytimes.com/2004/03/02/business.../02YUAN.html?hp Medicare and Social Security Challenge http://www.nytimes.com/2004/03/02/business/02retire.html Prediction: Maybe the bears will win today for a change.
machinehead Posted March 2, 2004 Report Posted March 2, 2004 Another challenging story: Antibiotic-resistant staph bacteria run wild The infections have shown up in a curious collection of groups: The one thing that newborns, children, prisoners and athletes have in common is the degree of close body contact they maintain with those around them. They also share common objects with their peers, toys and equipment, for example, or soap and towels. They may have difficulty achieving optimal personal hygiene. Here a new jewel of political correctness has been unearthed. Next time you encounter a ragged homeless person who hasn't bathed in three weeks, explain to your fellow opera-goers that "He has difficulty achieving optimal personal hygiene."
HiHat Posted March 2, 2004 Report Posted March 2, 2004 Over and Over again and again..On BUSINESS NEWS......EISNER... will he be OUT at DISIneyland........Who gives a shyt. Sheepholes facing MASS extinction..focused on the important.
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machinehead Posted March 2, 2004 Report Posted March 2, 2004 Trouble in bond land: Japanese 10-year bonds plunged, driving yields to their biggest gain since December, after stocks rallied and a government sale of 1.9 trillion yen ($17.4 billion) of the securities attracted the lowest demand in eight months. Acid reflux burns Japan is my number-one nomination to go hyperinflationary, maybe even before we do. When nominal yields pop to 3% or so there, the debt service will bury them. They will print and print just to pay the interest. Rotsa ruck ...
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Guest yobob1 Posted March 2, 2004 Report Posted March 2, 2004 The US National Debt = $7 Trillion The US Income (not including funds that go specifically to Social Security and Medicare) = $1 Trillion The US Deficit = $0.5 Trillion Interest Rate on Debt >= 5% (based on $128 Million spent during the first trimester of fiscal 2004; www.publicdebt.treas.gov/opd/opdint.htm) Assume for a moment that the statistics above are reasonably accurate and hold constant for a few years. Also assume the service on debt goes up a mere ? of 1 percent per year. As the graph below shows, by the year 2011, 100% of the revenue the government receives will go straight from the taxpayer's pocketbook to the holders of US debt instruments. There will be no money for any governmental function in the United States of America whatsoever. USA OUT OF BUSINESS
machinehead Posted March 2, 2004 Report Posted March 2, 2004 Good article, yobob. My only cavil is that it's too conservative. The author assumes that the interest rate increases linearly, 0.25% per year. That would be a "best case." More likely, interest rates will go exponential, in a self-reinforcing fashion. 0.25% increase next year, then up another 1%, 3%, 7%, 20%. Once they start printing to pay the debt service, rates soar and debt service takes another leap ...
Guest Posted March 2, 2004 Report Posted March 2, 2004 MH: What impacts do you forsee in the US bond market today? Is it time for the ten year yield to bounce off the bottom of the channel? Housing stocks hit all time highs yesterday...could get interesting today if bonds get dumped.
BearHugs Posted March 2, 2004 Report Posted March 2, 2004 The US National Debt = $7 TrillionThe US Income (not including funds that go specifically to Social Security and Medicare) = $1 Trillion The US Deficit = $0.5 Trillion Interest Rate on Debt >= 5% (based on $128 Million spent during the first trimester of fiscal 2004; www.publicdebt.treas.gov/opd/opdint.htm) Assume for a moment that the statistics above are reasonably accurate and hold constant for a few years. Also assume the service on debt goes up a mere ? of 1 percent per year. As the graph below shows, by the year 2011, 100% of the revenue the government receives will go straight from the taxpayer's pocketbook to the holders of US debt instruments. There will be no money for any governmental function in the United States of America whatsoever. USA OUT OF BUSINESS Well that's scary. It would seem then that revenue must go up. Either by raising taxes or wages/profits go up. I guess they could get wages up by reworking CPI so that it shows inflation. Of course, that assumes employers would rather up someone's pay to reflect current inflation rather than export the job to India or China. What was the max revenue by the US and the trend? Probably too complex of a model but even if other things change, it might be that best case, the US runs out of money to pay for anything but debt by 2020. Just thinking aloud.
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BearHugs Posted March 2, 2004 Report Posted March 2, 2004 MSFT Bill Gates sold 1/2 billion in stock in February. I guess he needs to diversify into TASR or something.
machinehead Posted March 2, 2004 Report Posted March 2, 2004 MH: What impacts do you forsee in the US bond market today? Is it time for the ten year yield to bounce off the bottom of the channel? Housing stocks hit all time highs yesterday...could get interesting today if bonds get dumped. All of the rich-country bond markets (Japan, Europe, North America) are highly correlated, and are down slightly today. Long run, Crazy Al cannot support the bond market by having Fukui-san print currency. Bonds are denominated in currency. One or the other must drop when currency is oversupplied. Not talking about today, but in coming months the zombie bond yields may come clanking out their crypt. "If you can't borrow, nothing else matters."
Guest yobob1 Posted March 2, 2004 Report Posted March 2, 2004 The 3 main variables of the "Out of Business" graph are spending, income and rates. The assumption that spending will be frozen seems the most unlikely. Income on the other hand could as easily fall as rise and so using a constant income may be a reasonable balance. (Will the WB and IMF come in and demand that the US raise taxes or new loans are not forthcoming?) Rates, arguably would seem likely to rise also, though MH, you may be a bit over the top on that count. (Did you in a former life do the projections for PC growth that when carried to the end literally had the planet knee deep in PCs? ) Bottom line it would seem that the assumptions are more likey to be optimistic than pessimistic and therefore the time to a 1:1 match would arrive sooner. Japan is racing towards implosion but we seem to be keeping pace with them at this point. When the real US economy rolls over for real, consumption in the US will plunge. Few seem to appreciate the impact on the rest of the planet when that happens. Everyone's life line is tied to the railing of the USS Titanic II. The bow is down and the props are spinning wildly in the wind as all the forces one can muster are shovelling coal into the boilers at the maximum rate. The tax refunds may be the only bubble providing any remaining bouyancy and they will peter out in the next couple of months.
brian4 Posted March 2, 2004 Report Posted March 2, 2004 Morning crew!-It looks like a down open so far-as I posted after the close yesterday-we are on the verge of a break to the upside, should we fail here again then the lights go out real fast-today will be interesting-window from the bell for an hour and ten minutes. Re the debt -I would bet a national sales tax will be in place in America within one year.
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