Stocks End Sharply Lower Amid Debt Fears

Stocks End Sharply Lower Amid Debt Fears
Published: Monday, 21 Nov 2011 | 4:05 PM ET Text Size
By: Jeff Cox
CNBC.com Senior Writer

Worries over debt in both the U.S. and Europe overcame Wall Street on Monday, sending stocks into a tailspin as investors flocked for the exits ahead of the Thanksgiving holiday.

Though considerably off the worst levels of the day, the selloff was still good enough to take 2 percent off the Dow industrials and nearly as much from the Standard & Poor's 500 and the Nasdaq.

Financials and industrials were the big losers of the day, with traders worried that mandated spending cuts that come with the failure of the congressional debt supercommittee to reach a deal will eradicate the nascent economic recovery.

http://www.cnbc.com/id/45385447

Supercommittee failure could trigger US credit downgrade, economists warn

Supercommittee failure could trigger US credit downgrade, economists warn


Economists predict dire consequences if committee fails to reach agreement on how to reduce America's massive debt

Economists are warning of dire consequences if US politicians fail to make progress this weekend in tense talks aimed at reducing America's massive deficit ahead of a Wednesday deadline.

The bi-partisan congressional super-committee is charged with drawing up plans for a $1.2tn reduction in the nation's deficit by the middle of next week. Failure to do so will trigger an automatic "sequester" that will make cuts of that size to defence and social welfare programmes starting in 2013. But the two sides seem far from finding a solution after clashing over tax revenues.

While Wednesday is the official deadline for the supercommittee to report back, it has until Monday to tell the Congressional Budget Office about the impact any plan they send to Congress will have on the budget.

http://www.guardian.co.uk/world/2011/nov/18/supercommittee-failure-credit-downgrade-warning

Bill Gross : “debt super cycle.”

U.S.’s $13 Trillion Debt Poised to Overtake GDP

By Garfield Reynolds and Wes Goodman

June 4 (Bloomberg) -- President Barack Obama is poised to increase the U.S. debt to a level that exceeds the value of the nation’s annual economic output, a step toward what Bill Gross called a “debt super cycle.”

http://www.bloomberg.com/apps/news?pid=20601109&sid=aa0cI64Gx.4E&pos=15

The CHART OF THE DAY tracks U.S. gross domestic product and the government’s total debt, which rose past $13 trillion for the first time this month. The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund. The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades.

“Over the long term, interest rates on government debt will likely have to rise to attract investors,” said Hiroki Shimazu, a market economist in Tokyo at Nikko Cordial Securities Inc., a unit of Japan’s third-largest publicly traded bank. “That will be a big burden on the government and the people.”

Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co. in Newport Beach, California, said in his June outlook report that “the debt super cycle trend” suggests U.S. economic growth won’t be enough to support the borrowings “if real interest rates were ever to go up instead of down.”

Dan Fuss, who manages the Loomis Sayles Bond Fund, which beat 94 percent of competitors the past year, said last week that he sold all of his Treasury bonds because of prospects interest rates will rise as the U.S. borrows unprecedented amounts. Obama is borrowing record amounts to fund spending programs to help the economy recover from its longest recession since the 1930s.

“The incremental borrower of funds in the U.S. capital markets is rapidly becoming the U.S. Treasury,” Boston-based Fuss said. “Do you really want to buy the debt of the biggest issuer?”

To contact the reporters on this story: Garfield Reynolds in Sydney at greynolds1@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net.

Last Updated: June 4, 2010 05:06 EDT

http://www.bloomberg.com/apps/news?pid=20601109&sid=aa0cI64Gx.4E&pos=15

CBO: Budget Deficit a post-World War II record at 10.3 percent of the overall economy

National debt to be higher than White House forecast, CBO says

By Lori Montgomery
Washington Post Staff Writer
Saturday, March 6, 2010

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/05/AR2010030502974.html

President Obama's proposed budget would add more than $9.7 trillion to the national debt over the next decade, congressional budget analysts said Friday. Proposed tax cuts for the middle class account for nearly a third of that shortfall.

The 10-year outlook released by the nonpartisan Congressional Budget Office is somewhat gloomier than White House projections, which found that Obama's budget request would produce deficits that would add about $8.5 trillion to the national debt by 2020.

The CBO and the White House are in relative agreement about the short-term budget picture, with both predicting a deficit of about $1.5 trillion this year -- a post-World War II record at 10.3 percent of the overall economy -- and $1.3 trillion in 2011. But the CBO is considerably less optimistic about future years, predicting that deficits would never fall below 4 percent of the economy under Obama's policies and would begin to grow rapidly after 2015.

Deficits of that magnitude would force the Treasury to continue borrowing at prodigious rates, sending the national debt soaring to 90 percent of the economy by 2020, the CBO said. Interest payments on the debt would also skyrocket by $800 billion over the same period.

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/05/AR2010030502974.html

Moody’s warns US of credit rating fears

Moody’s warns US of credit rating fears
By Michael Mackenzie in New York and Gillian Tett in London

http://www.ft.com/cms/s/0/a82cfe04-10f5-11df-9a9e-00144feab49a.html

February 3 2010

Moody’s Investors Service fired off a warning on Wednesday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher actions were taken to tackle the country’s budget deficit.

In a move that follows intensifying concern among investors over the US deficit, Moody’s said the country faced a trajectory of debt growth that was “clearly continuously upward”.

“Unless further measures are taken to reduce the budget deficit further or the economy rebounds more vigorously than expected, the federal financial picture as presented in the projections for the next decade will at some point put pressure on the triple A government bond rating,” the rating agency added in an issuer note.

This week, the White House forecast a $1,565bn budget deficit for 2010, which represents 10.6 per cent of gross domestic product and is the highest such ratio of debt to GDP since the second world war.

http://www.ft.com/cms/s/0/a82cfe04-10f5-11df-9a9e-00144feab49a.html

Failure as an Ideology

The 70's generational worship of FAILURE as an ideology can only lead to crisis and chaos.Recent polls show only 53% of Americans now believe that Capitalism and freedom is better than Socialism and enslavement. That means the 47% of the population now think its Ok for people like New York's Mayor Mike Bloomberg , to tell them what to eat ,drink,smoke, when to sleep and where to go dancing. Some states like tech driven California is looking to BAN large flat screen TV's ,brilliant ! Clearly this is not an atmosphere for leadership

Seems Worshiping of FAILURE has become the new social disease where the power of envy will drive even the most well meaning people to shot the self's in the foot. What amazes me is how many people seem to buying the fantasy's about the Obama administration. Despite the massive tax increases ,unprecedented national debt and despite the massive increase in unemployment many are still blinded by the phony mainstream media Orwellian fantasy of big brother.

REPEAT after me ; all Roads lead to Citibank

Once again as I have repeated many times on this blog that in almost every financial crisis since the 1970's all roads lead to Citibank and with the combo or a very oversold market ,some very unexpected positive news from Citi bank and an increase in auto sales in China ,coupled with no major faux pas from the new administration and the market rejoiced . The key here is follow through accompanied with significant volume building !

answer to failure is do even more of the same.....

So with one swoop of the pen in a huge leap back wards the single greatest achievement of the Clinton Administration ie...welfare reform ,is done away with in the "stimulus package".
Poor Bill looks like the stain on the blue dress will be his only lasting legacy .

A 700 plus billion dollar bacon, eggs and cheese massive government intervention in an already crippled economy looks like a sure fire failure from the get go. As the cover of Newsweek pointed out so eloquently "we are all socialists now" and as I have remarked often on this blog yes with the 70's generation firmly in charge and reshaping the world in its own likeness., and yes they are really a bunch of communist's now as they were then . It is a generation that neither realized the fruits of the free market nor experienced free market prosperity in action.

Past government interventions of any sizable magnitude have all ended in utter failure and this one starting with the initial TARP funds from the Bush administration has failed at every single step of the way ,but in the infinite wisdom of all bureaucrats the answer to failure is do even more of the same .

"Stimulus" Passed Dow sinks!

Apparently bringing home the bacon is not as simulative as once believed. The “stimulus” package gets passed and the DOW is down 382 points. I mean hey lets face it if you destroy the capital markets then people will become ever more dependent on big government for security.

Japan a very willing consumer of US debt

The power of the next administrations stimulus plane lies in the voracious appetite by foreign banks and governments for US treasury securities. Over the Weekend several Japanese banks agreed that they would be willing to buy all the debt the US government can issue .This news of ready and willing customers, and not the stimulus plan it self is what has pushed the market higher since Friday.