“Oops, We Meant $7 TRILLION!” What Hank and Ben Are Up to and How They Plan to Pay for It All

The $700 billion that was arm-twisted from Congress in October was just the camel’s nose under the tent. The Paulson/Bernanke team is now prepared to pay $7.76 trillion to rescue the financial system. Prepared to pay how? Congress has not raised its debt ceiling to that level, and the Fed doesn’t have the funds on its books . . .

Read whole article here — http://www.webofdebt.com/articles/oops.php

4 Responses

  1. The situation was quite different in 2004 when this was written – but trhe solusion is still the same:

    “The public debt

    The huge public debt of the U.S.A., which is over 7,000 billion dollars (in 2004), makes every American aware of the urgency to correct the situation. But if politicians do not attack the root cause of the problem, on what causes the debt to increase, all their reforms will be useless, and the situation will even get worse.

    The regular readers of “Michael” know what causes the debt to increase: it is because all the money is created as a debt at interest. Banks create the principal they lend, but they do not create the interest they demand. For example, for every person in the U.S.A., there is $20,000 of money in existence… but there is $64,000 of debt!

    The only thing that can prevent the debt from growing is to strip private banks of their power to create money as a debt at interest, and to have the U.S. Treasury create all the money for America, debt-and-interest-free.

    Balancing the budget or cutting expenses will not solve the problem, since it does not deal with the problem of the creation of money as a debt. In fact, cutting expenses amounts to having less money in circulation, which makes it harder for every American.”

    http://www.michaeljournal.org/plenty50.htm

  2. Some very basic questions, please.
    1) I understand the “concept” of derivatives/credit swaps, somewhat. Are the payments/ante/bets fractional but the payouts require the total exposure sum? Why? Or, do they simply collect the vig to keep the “game” going? Who decides when the hand has played-out?

    2) Is there a derivative’s clearing house … a central “casino” that holds the bets? Given that the house always wins, who/what is the “house”? Who is making all the money? And, does the money ever move out of the electronic column?

    3) If this entire derivative “market” is intended to be obscure and behind-the-curtain, cannot the hapless “looser” simply walk away from the debt? What entity (private? Government?) would go after the looser? Who would break the kneecaps of a major world bank?

    4) If greed (of course)is the motive, and it is all about leverage, who benefits from these enormous exposures if the game continues ad infinitum? Who benefits if the game shuts down?

    Thank you.

  3. The USA is approaching bankruptcy

    As hard is it is to believe, the US may have to default on it’s debt. Public debt has grown by more than 100% with all the bailouts. We currently have a debt level 3 times what the European Union allows it’s members. We are financially in far worse debt as a percent of GDP than Italy. Unfortunately, our Social Security Trust Fund is financed almost entirely by special bonds. Our government loaned themselves the money in the Trust Fund and spent it like drunken sailors at a strip club. We are left holding what may be worthless pieces of paper to guarantee our Social Security checks.

    ASIA – UNITED STATES
    U.S. debt approaches insolvency; Chinese currency reserves at risk
    by Maurizio d’Orlando
    In a few months, America’s public debt has grown to more than 100% of GDP. Fear of a valuation crisis for the dollar, with tremendous consequences for Asian countries, major exporters to the United States.

    Milan (AsiaNews) – In the United States, the danger of debt insolvency is growing, putting at risk the currency reserves of foreign countries, China chief among them. According to new figures published by Bloomberg in recent days (Nov. 25, 2008 [1]), the American government has employed a total of 8.549 trillion dollars to stop the financial crisis. This means a total of about 24-25.4 trillion dollars of direct or indirect public debt weighing on American taxpayers. The complete tally must also include the debt – about 5-6 trillion dollars – of Fannie Mae and Freddie Mac, which are now quasi-public companies, because 79.9% of their capital is controlled by a public entity, the Federal Housing Finance Agency, which manages them as a public conservatorship.

    In 2007, public debt in the United States was 10.6 trillion dollars, compared to a GDP (gross domestic product) of 13.811 trillion dollars. Public debt in 2007 was therefore 76.75% of GDP. In just one year, direct and indirect public debt have grown to more than 100% of GDP, reaching 176.9% to 184.2%. These percentages exclude the debt guaranteed by policies underwritten by AIG, also nationalized, and liabilities for health spending (Medicaid and Medicare) and pensions (Social Security)[2]. By way of comparison, the Maastricht accords require member states of the European Union (EU) to reduce their public debt to no more than 60% of GDP. Again by way of comparison, in one of the EU countries with the largest public debt, Italy, public debt in 2007 was equal to 104% of GDP.

    In 2007, 61.82% [3] of America’s public debt was held by foreign investors, most of them Asian. So the U.S. public debt held by nonresident foreigners is equal to about 109.39% (113.86%) of GDP. According to a study by the International Monetary Fund, countries with more than 60% of their public debt held by nonresident foreigners run a high risk of currency crisis and insolvency, or debt default. On the historical level, there are no recent examples of countries with currencies valued at reserve status that have lapsed into public debt insolvency. There are also few or no precedents of such a vast and rapid expansion of public debt. Link here.

    The United States of America is approaching bankruptcy

  4. Oops article: “We don’t need more consumer debt to keep the economy going. We need more wages and salaries, and that means jobs.” If anything, we would need not more jobs, just higher paying ones, more of the wealth created going to labor vis-a-vis capital. But the heart of capital or capitalism or the economy or growth or development is, as Harry Cleaver brilliantly articulates: imposed labor, something of which we don’t need more of.

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