Sticker Shock....

The Obama administration has just upticked it's 10 yr deficit projection (the amount more the government spends than takes in)
from a staggering $7.1 trillion to a more digestible $9.1 trillion *vomits*. But at least they will modify their projection for this year down from $1.84 trillion to $1.58 trillion.....by removing $250 billion set aside for banks (no idea why that isn't included..maybe it makes him feel better.

Maybe he wants the US to default....why is anyone supporting him?

Stimulus wearing off....(China that is).

A great indicator of future markets as well as production comes from the Baltic Dry Index (BDI) which is considered a leading economic indicator. The BDI basically helps track shipping most notably raw materials that go into production of goods. As the BDI goes up that means more companies are making more products due to an increased demand. If it goes down that means production is slowing.

The BDI grew steadily from 2nd Qtr. 2002 to 2nd Qtr 2008 when the economy tanked. It reached a low 4th Qtr 2008 not seen in over a decade. At this time stimulus money, most notably from the Chinese government began to take hold. The Chinese pumped money directly into infrastructure projects (over 60%) versus the US pumping it into pork projects with no production value. This caused a demand for raw materials (thus increase in production) over the last few months with the BDI rising to 2006-2007 levels. Here comes the catch.....once the stimulus was burned through the hope was the economies around the world would have picked up....they haven't. The BDI has slid some 35% since it's high in June and appears to continue this loss.

Here is what worries me...China is the largest holder of US debt. If things get tough for China, who do you think they are going to want money from?...the countries that owe them. If Congress and the President continue to try to bury us in debt, we will either have to default or pay up....since we are already $11.6 trillion dollars in debt...how exactly are we going to do that? The legislative and executive branches are dooming us to economic collapse.

Is anyone awake out there?

U.S. Government continuing down the debt road....

Next week the Treasury will issue a record $75 Billion in new notes and bonds (new debt). The US Government continues to play a shell game with it's debt by issuing new notes and bonds to pay off maturing debt and raise more cash. The problem is these new notes and bonds are debt. One who buys notes and bonds is lending the government money for a certain amount of time. So the government is borrowing new money to pay off old debt. Does no one see a problem with this?

This coupled with the expansion of Cash for Clunkers to now a $3 billion dollar bailout of the auto industry (after already pumping $10's of billions), mostly foreign made..(AFL/CIO you suckers!), defaults on refinanced mortgages as high as 45% , commercial property morgage failures , and continued job losses (during a typical hiring season) bodes for another mounting disaster.

People are grasping for anything positive in an attempt to fake out the consumer and get them spending again. Unfortunately, all that is going on right now is the effects from the injection of debt laden cash (remember the US Government is $11.6 trillion in debt with a combined $55+ trillion public/private debt). Everyone hopes (gambles) that the economy will recover sooner rather than later. Unfortunately, projections have US debt exceeding the GDP in 2 years (this is with a White House projected GROWTH of GDP by 2.4-4%...presently it is contracting). In otherwords...the government could seize ALL money/product made in the US in a year and still be in debt.

At present rates of unemployment, reduction of productivity and heavy debt merely being re-named/re-financed and repackaged I worry we are in for a nasty surprise come fall/winter.

UPDATE: Elizabeth MacDonald at Fox Business is doing a 3 part series on the commercial real estate looming disaster. She explains the situation far better than I could.