Tag Archives: government debt

Moody's downgrades China, warns of fading financial strength as debt mounts

Source: Reuters

"Moody's Investors Service downgraded China's credit ratings on Wednesday for the first time in nearly 30 years, saying it expects the financial strength of the economy will erode in coming years as growth slows and debt continues to rise. The one-notch downgrade in long-term local and foreign currency issuer ratings, to A1 from Aa3, comes as the Chinese government grapples with the challenges of rising financial risks stemming from years of credit-fueled stimulus. … While the downgrade is likely to modestly increase the cost of borrowing for the Chinese government and its state-owned enterprises (SOEs), it remains comfortably within the investment grade rating range. World stocks inched lower after the move, though Shanghai's main index .SSEC recouped early losses to end marginally higher." (05/24/17)


The return of the naive supply-sider

Source: National Review
by Kevin D Williamson

President Donald J. Trump has produced a very silly budget proposal. Thankfully, presidential budget proposals have all the effect of a mouse passing gas in a hurricane — Congress, not the president, actually appropriates funds and writes the tax code. Presidential budget proposals are not received as actual fiscal blueprints but as statements of priorities, and so we must conclude that President Trump’s top priority is refusing to deal with reality." (05/24/17)


Trump's budget is the ultimate con

Source: The Atlantic
by Derek Thompson

"In the biggest picture, the Trump budget is a multi-trillion-dollar transfer of post-tax income from the poor and sick to the richest 1 percent. This not only explicitly reverses many of the president’s campaign promises. Even stranger, it represents an extraordinarily unpopular vision for government by a president who is obsessed with demonstrating his own popularity." (05/22/17)


Poor Greece, the fat lady ain't singing yet

Source: Adam Smith Institute
by Tim Worstall

"As with the opera not being over until the Fat Lady has sung about her youth, beauty and slenderness the Greek debt saga is not going to end until the one important decision is taken — how much debt should Greece repay? We've been making this point for a number of years now in a number of venues. There is just this one question that must be answered …" (05/22/17)


A big fat freak-out over Donald Trump's "skinny budget"

Source: Reason
by Katherine Mangu-Ward

"Presidential budgets have all the legal force of a letter to Santa — they're essentially the White House asking Congress for a pony. The 'skinny' blueprint released by the Office of Management and Budget in March is the result of even less consultation and collaboration than usual with the legislators who hold actual budget-making power, which makes wish fulfillment even more unlikely. Nevertheless, when President Donald Trump announced $54 billion in cuts to several federal agencies, the press immediately got to work on its own form of slash fiction, fetishizing the appropriations status quo and moaning over any possibility of budgetary restraint." (for publication 06/17)


"Starve the Beast" enables the Bankrupt-in-Chief

Source: Niskanen Center
by Will Wilkinson

"Other than containing less detail, Donald Trump’s notes toward a sketch of a 'tax plan' is similar to his campaign tax proposal, which analysts estimated would add $3-5 trillion to the budget deficit. That is to say, Trump does not have a corresponding plan to reduce spending. Republicans often rail against deficits, but when the rubber hits the road, they reliably increase deficit spending by cutting taxes. This has often been rationalized by the idea that reducing revenue and driving up deficits creates pressure to 'Starve the Beast' and reduce spending. But big tax cuts create no pressure at all to balance the books. On the contrary, they ease the main pressure that keeps spending and the size of government in check. In the hands of a big-spending, serial bankrupt like Donald Trump, Republican supply-side fiscal policy dogma, of which Starve the Beast is a central element, poses a serious threat to the growth and stability of the American economy." (05/10/17)


Trumped or stumped? The tax cut, the debt ceiling and riding the gravy train

Source: Cobden Centre
by Colin Lloyd

"The current US debt ceiling is set at $19.8trln. Debt levels are already close to that level and special accounting measures have already been implemented by the US Treasury. This year alone total federal expenditures will be $3.7trln — leaving a tax shortfall of $559bln. Meanwhile, last week, Treasury Secretary, Mnuchin announced the long awaited tax cut plan. It included a proposal to reduce the US corporate tax rate to 15% from the current level of 35%. This, it is estimated by the Committee for a Responsible Federal Budget, will increase the government deficit by $5.5trln over the next decade. The Trump administrations other spending plans remain on the agenda, including $1trln for infrastructure, $54bln for the military and — assuming the Mexicans can’t pay and won’t pay — $10bln for the Southern Border Wall. How can this possibly add up? Through spending cuts, is the simple answer." (05/11/17)


Is the Greek public [sic] debt actually "unpayable?"

Source: EconLog
by Scott Sumner

"When it comes to public debt and deficits, I sometimes feel like people go to one extreme or the other. Japan has a public debt equal to about 250% of GDP, but many people wave it away as a minor inconvenience, even calling for more fiscal stimulus, despite the failure of previous efforts. In contrast, the Greek debt is often assumed to be obviously unpayable, despite being a far lower percentage of GDP. And maybe it is, but I'm not entirely convinced. Of course my opinion does not matter—what does matter is the view of bond market participants. And they are becoming increasingly optimistic about Greek debt." [editor's note: "Public debt" is a propagandistic term intended to imply that "the public" borrowed the money. In fact, "the politicians" borrowed it and want to stick "the public" with the check – TLK] (05/10/17)


US government posts $182 billion surplus in April

Source: Reuters

"The U.S. government had a $182 billion budget surplus in April, confounding market expectations for a deficit, according to Treasury Department data released on Wednesday. The budget surplus was $106 billion in April 2016, according to Treasury's monthly budget statement. The fiscal 2017 year-to-date deficit was $344 billion compared with $353 billion in the same period of fiscal 2016." (05/10/17)


Puerto Rico's $123 billion bankruptcy is the cost of US colonialism

Source: The Intercept
by Juan Gonzalez

"Puerto Rico is the largest overseas territory still under the sovereign control of the United States, and it is the most important colonial possession in this nation’s history. That relationship produced uncommon profits for American subsidiaries on the island for more than a century, even as the federal government kept claiming that the Commonwealth of Puerto Rico, created in 1952, was a self-governing territory. But now, with a Washington-appointed board directly overseeing the island’s economy, and with a pivotal Supreme Court decision last year affirming that Congress continues to exercise sovereign power over Puerto Rico, the mask of self-governance has been removed. The old commonwealth is effectively dead. Absent a huge infusion of U.S. public dollars to prop up its collapsing economy, a scenario that is nearly impossible with a Trump White House and a Republican-controlled Congress, that relationship cannot be revived." (05/09/17)