Friday, September 11, 2009

Budgetary concerns...

SO, I had a nice, long holiday weekend, and then had some work and family obligations over the past several days, and I apologize for my short absence.

Talking to a friend the other day, who works as a CFO for a large corporation, and showed me some interesting data from the Institute for Trend Research, a company he uses from time to time.

We were discussing the deficits, and the economic implications of ramped up deficit spending. These numbers are a little mind boggling.

Based on the current CBO estimates of future deficits, If there is a 1/2 of 1 % increase in real market interest rates (50 basis points), the governments debt service as a % of total budget outlays will grow to approximately:

13.0% in 2009
25.5% in 2012
34.1% in 2015

This excludes any effect from a change in Health care.

That's scary, like REALLY scary. 34.1% possibly in debt service obligations within 6 years??? WTF?? OH, and we haven't even touched on inflation yet. Which could become rampant if US debt obligations accelerate, which, in turn, could devalue the dollar.

This is multifactorial, and due to the deficit spending of the last administration, the Afghanistan/Iraq wars, and the recent stimulus package.


1 comment:

ERP said...

Bend over and grab ankles. We are going to get screwed no matter what happens with the health care debate.