…. by 17 GOP Senators who shamefully do not have a plan of their own to deal with this national security issue.

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With Plenty Of GOP Help, Senate Shoots Down Rand Paul’s Balanced-Budget Resolution

ZeroHedge, Jun 17, 2023 – Excerpts: 

Every few years, Kentucky Senator Rand Paul puts forth a quixotic proposal to balance the federal budget. It’s not the financial math that makes it a daunting task, but rather Washington’s bipartisan addiction to spending. 

It predictably fails each time, but accomplishes two things in the process. First, it puts senators who’ve espoused fiscal discipline on the record as opposing it when the rubber meets the road. Second, over time, Paul’s proposals illustrate the insidious effect of kicking the can down the road—as each new proposal requires bigger cuts to push Uncle Sam to breakeven.

Paul’s first such budget resolution, in 2011, didn’t even cut spending. By merely freezing it for five years, the budget was projected to reach balance this year. 

…Things have gotten a lot worse. In just the two years since Paul’s last proposal, our federal overlords have added an astounding $11 trillion to the national debt. Interest payments on the now-$30.5 trillion balance have grown by 32%.….

The measure was defeated by a 67-29 vote. Faithful to their big government values, no Democrats backed the measure.

However, 17 “fiscally conservative” Republicans voted against it: Blunt (MO), Boozman (AZ), Burr (NC), Capito (WV), Collins (ME), Cornyn (TX), Graham (SC), Inhofe (OK), McConnell (KY), Murkowski (AR), Portman (OH), Rounds (SD), Sasse (NE), Shelby (AL), Thune (SD), Tillis (NC) and Young (IN).

Dodging Paul’s intent to put everyone’s true fiscal colors on the record, four Republicans skipped the vote altogether: Daines (MT), Moran (KS), Toomey (PA) and Wicker (MS).  

Things were already bleak, but the fiscal math is now taking a sharp turn for the worse. Today’s rising interest rates translate into more money required just to cover interest payments.

According to the Congressional Budget Office’s latest baseline, interest expense will triple from nearly $400 billion in 2022 to $1.2 trillion in 2032—totaling $8.1 trillion over that horizon. As terrible as that sounds, it’s going to be a major understatement.

That’s because CBO’s Treasury rate assumptions are in the midst of being mugged by reality. For its baseline, CBO assumes the 3-month T-bill rate will average 0.9% this calendar year, but it’s already spiked to 1.69%. Similarly, CBO assumes the 10-year will average 2.4% in 2022 and only rise to 3.8% ten years from now.  It was 3.28% on Thursday. 

At least Rand Paul can say he tried. 

_________________________________

While Rand Paul’s latest plan would surely get Republicans ‘crushed’ at the polls in the next major election, the 17 so-called “fiscally conservative GOP senators who voted against it, along with the four Republicans who skipped the vote altogether … should at least present their own politically defensible economic plan to get America’s fiscal crisis back under control.

Washington Democrats have a plan: Increase spending to get as many Americans dependent on government as possible, blow out the budget, destroy the dollar, decimate the free market system, and set America on track for economic and social disaster.

Washington Republicans have no plan: They are content to complain about Democrat policies, twiddle their thumbs, and allow America to hit what the GAO calls “the fiscal cliff.”.

Main Street America Republicans do have a plan, an economically viable, politically defensible plan that will: 1) Generate enormous new tax revenue flows into the U.S. Treasury coffers and yield $619 billion budget surpluses each of the first five years of activation; 2) Pay for itself entirely over a 10-15 year period; 3) Eliminate massive amounts of household and small business debt across America; 4) Reduce dependency on government by millions of citizens; 5) Restore financial security for millions of working-class American families; 6) Strengthen the U.S.Dollar and solidify its position as the world’s most stable and trusted currency; 7) Set America back on track for long-term economic prosperity.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (6856 downloads)

Over the past decade…:

IMF: $12 billion additional funding to shore up Egypt’s ailing economy

Bernanke’s give away to global financial elites: The greatest transfer of wealth in the history of the world.

U.S. taxpayer dollars – ‘to Russia with love’….. (a look back in time)

“The U.N.’s Fat Kleptocrats”.. and why we need the Leviticus 25 Plan – $2.6 Trillion per Year

Bloomberg: “Libya-owned Arab Banking Corp. drew at least $5 billion from Fed in crisis”

……………………………..

More recently...

Biden Wants $8 Billion In Taxpayer Funds To Shut Down Coal Power In South Africa

The green energy scam continues…  DEC 16, 2022

……………………………..

Biden sued for sending half a billion in Palestinian aid that could fund acts of terrorism  Jan 7, 2023

……………………………………

Biden Has Handed Taliban Over $2 Billion In 2 Years; SIGAR Report Finds

ZeroHedge, Aug 09, 2023 – Excerpts:

Authored by Steve Watson via Summit News,

A report by the Special Inspector General for Afghan Reconstruction (SIGAR) notes that the Biden administration has given $2.35 billion to Afghanistan over the past two years, despite the fact that it is now ruled by the Taliban again following the disastrous U.S. withdrawal in 2021.

The Washington Free Beacon shared details of the findings Tuesday, noting that the funds could be propping up the Taliban’s terrorist government.

The SIGAR report found that approximately $1.7 billion “remained available for possible disbursement” at the time writing. The Beacon notes that “it is more than likely that a sizable portion of these funds will end up in the terror group’s coffers.”

____________________________________

America’s financial coffers are being drained, and hard-working, tax-paying U.S. citizens are being fleeced by the U.S. government with these massive giveaways.

It is time now to balance the books.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (6819 downloads)

Federal Debt:  $32.704T

State Debt:      $1.264T

Local Debt:     $2.371T

…….

The Market Ear – Aug 13, 2023

Debt ATH

The US now has $17.1 trillion in household debt….$12 trillion in mortgages….$1.6 trillion in auto loans….$1.6 trillion in student loans….$1 trillion in credit card debt….all of those are all time records.

Plummeting Money Supply Growth will most certainly add negative velocity to the debt load across all sectors of the economy in America.

Lowest ever money supply growth U.S. and ECB M2 money supply growth rates have fallen to their lowest year-over-year levels ever recorded.

__________________________

Washington Democrats and Washington Republicans have no plan, and no clue about how to get America back on track for long-term prosperity.

Main Street America Republicans do have a plan – it is the only economically viable, politically feasible solution to America’s enormous debt dilemma.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (6818 downloads)

Teacher pay is a critically important goal for attracting and retaining dedicated, top notch teachers and providing the best resources for high achievement by America’s school children.

At the same time, rejuvenating financial health for all working American families is a vital cause, all across America.

All working Americans – military, law enforcement, medical / healthcare, maintenance workers, construction, fire and rescue, service workers – are deserving of an opportunity, a comprehensive initiative, to strengthen their families’ financial status and relieve the burden of government interference in their daily lives.

Let’s do some math, and make a comparison between two significant economic initiatives.

Plan 1: The Leviticus 25 Plan – $90,000 per U.S. citizen. $60,000 per U.S. citizen is
electronically deposited into a Family Account and $30,000 per citizen is electronically deposited into a Medical Savings Account.

Who benefits?
Answer: All U.S. citizens and their families.

Who pays?
Answer: The Federal Reserve creates a funding facility, a Citizens Credit Facility, to channel liquidity to American families, in the same way that they set up various credit facilities to fire-hose liquidity out to Wall Street’s financial sector during the great economic crises years (2008-2010). Many of these U.S. and foreign banks and insurers were the very institutions that had precipitated the financial crisis with their financial innovation schemes and leveraged speculation – which ‘bled out’ in the form of gaping balance sheet ‘capital holes’ when the big mortgage default wave hit.

How does the Federal Reserve then get the money back, in order to reduce its balance sheet back down to ‘normal dimensions,’ over time?
Answer: Through a series of simple recapture provisions.

#1. Participating families would be required to give up their tax refunds each year for a period of five years.

#2. Participating families would also be required give up means-tested welfare benefits, income security program benefits, unemployment insurance, workman’s comp, SSI, SSDI, and various other social welfare benefits.

#3. For participating families, there would be a $6,000 deductible for five years ($30,000 total) for those enrolled in Medicare, Medicaid, VA, TRICARE, FEHB.

The Plan pays for itself over a 10-15 year period.

How much would The Leviticus 25 Plan benefit a typical teacher’s family?
Case 1: Family of four. Mother teaches – salary $50,000 / year.
Father also works. Two school-age children.
$100,000 balance on mortgage – maturing in 20 years.
Two modest car loans.
Monthly health care premiums – fairly substantial.

Through the Citizens Credit Facility, $240,000 would be electronically deposited into their Family Account, and $120,000 would be electronically deposited into their Medical Savings Account.

These liquidity grants are tax-free. The net benefit of these grants would be reduced slightly over the course of time through the loss of income tax refunds for five years (estimate: $5,000 per year for five years: $25,000).

Family pays off $100,000 mortgage balance (estimate: $100,000 at 4% interest / 20-year maturity / principle and interest payment of $605 per month). Total savings / year: $7,260.  This more than offsets the anticipated $5,000 loss from income tax refunds.

Total savings over 20-year maturity: $145,000.  This benefit eliminates $100,000 principle and $45,000 of interest costs on the mortgage.

Family retains $140,000 in Family Account for additional installment debt reduction, discretionary purchases and savings.

With $120,000 in Medical Savings Account, family chooses to purchase a high-deductible ($15,000 / year / family), thereby reducing premium costs by an estimated 40-50%).

Total impact on family financial health: significant. Benefits: powerful

And even more importantly, all families in America would benefit.

…………………….

Plan 2: Raise teachers’ pay by a healthy 15% – via tax increases.

Who benefits?
Answer: Teachers and their families.

Who pays?
Answer: Everyone whose taxes were raised to cover the additional outlay on behalf of teachers. And that would include teachers themselves, whose taxes would also go up – and would therefore slightly reduce the net benefit of a 15% pay raise.

How much would a 15% pay hike actually benefit a typical teacher’s family?
Case 1: Family of four. Mother teaches – salary $50,000 / year.
Father also works. Two school-age children.
$100,000 balance on mortgage – maturing in 20 years.
Two modest car loans.
Monthly health care premiums – fairly substantial.

A 15% pay raise for the teacher in the family would generate additional gross income of $7,500 per year, or $37,500 over a five-year period – before taxes.

This increased income would provide additional resources for some possible modest reductions in mortgage and installment debt, certain discretionary spending, and it might allow for additional modest savings for their children’s future college education.

Teachers and their families alone would benefit financially. Others would not. Mortgage debt reduction: modest.
Health plan premium reduction: none.
Net cash benefit over five years: $37,500.
______________________________________

America needs a comprehensive economic acceleration plan that benefits all Americans – through massive debt reduction and the restoration of economic liberty..

The choice is clear.

The Leviticus 25 Plan will also generate $619.5 billion budget surpluses at the federal level during each of its first five years of activation – compared to trillion dollar deficits each year into the foreseeable future.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (6785 downloads)

How Much Free Money is the Fed Giving Banks and Financial Institutions?

Mishtalk.com – Economics

July 29, 2023 – Excerpts:

The Fed pays interest to banks on all reserves, largely crammed down banks’ throats via past QE. How much free money is that?

Free money to banks based on reserves, reverse repos, and current interest rate paid by the Fed. Chart and calculation by Mish.

Understanding Reserves

The Fed used to pay banks interest on “excess reserves”. Excess reserves are total reserves minus required reserves.

As announced on March 15, 2020, the Board of Governors reduced reserve requirement ratios on net transaction accounts to 0 percent, effective March 26, 2020. This action eliminated reserve requirements for all depository institutions. 

Since there are no reserve requirements on either checking or savings deposits, all reserves are effectively excess reserves, and the Fed pay banks interest on everything. That includes free money crammed down banks throats via QE.

Reverse Repos

The Fed also pay interest on reverse repos. A reverse repurchase agreement (RRP, or reverse repo) is a short-term agreement to sell securities in order to buy them back at a slightly higher price. The primary recipient of reverse repo interest are the money market funds.

It’s not important to understand these functions, just follow the math below.

Target Fed Funds Rate

The New York Fed explains: The New York Fed conducts repo and reverse repo operations each day as a means to help keep the federal funds rate in the target range set by the Federal Open Market Committee (FOMC).

In order to suppress a free market in interest rates and to help control the mess the Fed created via Quantitative Easing (QE), now Quantitative Tightening (QT), the Fed is handing out free money left and right.

To calculate free money, we need to watch three things: Interest rates, reserves, and reverse repos.

Reserve Balances at the Fed, Reverse Repos, Interest Rate

Reserve Balances at the Fed, Reverse Repos, Interest Rate, data from the Fed, chart by Mish

Understanding the Free Money Forces

• In isolation, rising interest rates add to the free money given to financial institutions.
• QT reduces bank reserves and thus free money.
• Reverse Repos are now slowly declining. This also reduces free money payouts.

The net impact of these forces has been pretty stable for about six months, roughly between $250 billion and $280 billion in free money given to banks at an annual rate.

The impact of QT is moving faster than rate hikes so net free money will decline over time.

Free Money at Taxpayer Expense

My numbers are approximate, using end of month interest rates and monthly average balances. In practice, this is all calculated daily. But within a few billion dollars, the Fed is giving banks about $273 billion annually at the current rate.

It’s important to note that free money that should be going to taxpayers. Instead the Fed gives it to banks because its QE/QT programs made a huge mess out of monetary policy.

Thank former Fed Chair Ben Bernanke for this. He is the one who lobbied Congress for the right to send out all of this free money. He said it was necessary for the QE program he launched, and every Fed president since maintained.

Continue reading…

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The Fed’s current liquidity flow schemes does nothing to: 1) Shrink the federal government debt profile; 2) Nothing to restore financial health for millions of American families; 3) Nothing to revitalize long-term economic growth; 4) Nothing to strengthen the U.S. Dollar’s status as the global reserve currency.

The Leviticus 25 Plan corrects these glaring deficiencies by re-targeting Fed liquidity flows through the hands of tax-paying U.S. citizens — and then on to the banks through household debt and consumer debt elimination.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (6784 downloads)

A brief review…

During the peak of the housing boom, mortgage tranches were packaged and securitized as Mortgage Backed Securities (MBS)  –  and peddled as income-producing investments by major investment houses.  Participating parties like Goldman Sachs and others also purchased ‘insurance’ to hedge their risk profiles in the event of a housing market ‘swan dive’ – and a potential collapse of the underlying payment streams supporting the value of these MBS investments vehicles.

 The ‘insurance’ was purchased (primarily from AIG) in the form of Credit Default Swaps (CDS).  And, thanks to some nifty deregulation orchestrated by Robert Rubin (Treasury Chief under Clinton), AIG was not required to carry any meaningful level of reserves to back the Credit Default Swaps – to pay their counterparties if the Mortgage Backed Securities market… ‘went south.’ 

It did just that, and the rest is history.  Housing tanked.  MBS’ tanked.  And AIG had no reserves  with which to pay Goldman and others.  Had normal bankruptcy proceedings prevailed, Goldman Sachs would likely have received just pennies on the dollar in settlement – for placing a huge ‘blind bet’ on an investment that had no reserves backing it up.

But – the U.S. Government stepped in, and through an arbitration process, brokered a settlement of 100 cents on the dollar, amounting to a direct cash transfusion of a cool $12.9 trillion – from the U.S. taxpayer – to Goldman Sachs.  

And then the real ‘fun’ began.  The investment banking heavyweights, Goldman Sachs and J.P. Morgan, were ‘fast-tracked’ for “federal bank charters.’  Their newly acquired status as commercial banks allowed them to joined in with “Bank of America, Citigroup, J.P. Morgan Chase and other banking titans who could go to the Fed and borrow massive amounts of money” at near-zero percent interest. 

“The ability to go to the Fed and borrow big at next to no interest was what saved Goldman, Morgan Stanley and other banks from death in the fall of 2008.  “They had no other way to raise capital at that moment, meaning they were on the brink of insolvency,” says Nomi Prins, a former managing director at Goldman Sachs. “The Fed was the only shot.”

“In fact, the Fed became not just a source of emergency borrowing that enabled Goldman and Morgan Stanley to stave off disaster — it became a source of long-term guaranteed income. 

Borrowing at zero percent interest, banks like Goldman now had virtually infinite ways to make money. In one of the most common maneuvers, they simply took the money they borrowed from the government at zero percent and lent it back to the government by buying Treasury bills that paid interest of three or four percent. It was basically a license to print money — no different than attaching an ATM to the side of the Federal Reserve.”

“You’re borrowing at zero, putting it out there at two or three percent, with hundreds of billions of dollars — man, you can make a lot of money that way,” says the manager of one prominent hedge fund. “It’s free money.” 

(Source:  Wall Street’s Bail out Hustle – Matt Taibbi,  2-17-10)

And that is one of the primary justifications for the Leviticus 25 Plan  – granting U.S. citizens the same direct access to the Federal Reserve discount window – that was bestowed upon Goldman Sachs, J.P. Morgan, and certain other banking titans. 

After all, it is ‘our money.’  And granting U.S. citizens direct access to liquidity extensions from a Federal Reserve special “U.S. Citizens Credit Facility,”  would clean up liquidity issues at the family level: $90,000 per U.S. citizen at zero percent interest – with a specified  ‘recapture provision.’

The Leviticus 25 Plan pays for itself over a 10-15 year period.  It would generate $619.5 billion federal budget surpluses each of the first five years.  It would reignite a powerful economic growth cycle for America’s main street small businesses, restore financial security for millions of American families, eliminate massive tracts of household and government debt, and restore economic liberty in America.

America, currently, has no other viable option.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizens – Leviticus 25 Plan 2023 (6749 downloads)

America’s well-paid Democrats, Republicans, and Independents in the U.S. Congress are running up the national debt and have no economically viable plan to address this national security issue.

Note – Main Street America Republicans do have a plan…

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Fitch Downgrades US Credit Rating on Fiscal Deterioration, Government Debt Burden, and Debt Ceiling Standoffs

by Wolf Richter • Aug 1, 2023 – Excerpts:

Second major US ratings agency to downgrade the US to ‘AA+’. The first rating agency got whacked by the US government.

Following the shocker of an announcement by the Treasury Department yesterday that it would have to borrow $1 trillion in the quarter through September and another $852 billion in the quarter through December, on top of the $32.6 trillion the government already owes,  Fitch Ratings threw in the towel today and became the second major US rating agency to downgrade the US of A.

Fitch cut the long-term credit rating of the US to ‘AA+’ from ‘AAA’. It already had the US on negative outlook, meaning a downgrade was possible. With the downgrade today, Fitch removed the negative outlook and assigned a stable outlook.

As reason for the downgrade, Fitch cited a litany of issues, which it summarized:

• “The expected fiscal deterioration over the next three years
• “High and growing general government debt burden
• “Erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.”

Here are some key points that Fitch made:

“Erosion of Governance”: Fitch cited “a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management.”

“The government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade.”

…..

Rising Government Deficits: Fitch said that it expects the general government (GG) deficit to reach 6.3% of GDP this year, from 3.7% in 2022, “reflecting cyclically weaker federal revenues, new spending initiatives and a higher interest burden.” Fitch forecasts the deficit to reach 6.6% of GDP in 2024 and 6.9% of GDP in 2025.

Rising Government Debt: Fitch said that the debt-to-GDP ratio at 112.9% in 2023 is “well above the pre-pandemic 2019 level of 100.1%.” It expects the ratio to reach 118.4% by 2025. “The debt ratio is over two-and-a-half times higher than the ‘AAA’ median of 39.3% of GDP and ‘AA’ median of 44.7% of GDP,” it said.

“Fitch’s longer-term projections forecast additional debt/GDP rises, increasing the vulnerability of the U.S. fiscal position to future economic shocks,” Fitch said.

Medium-term Fiscal Challenges Unaddressed: “Over the next decade, higher interest rates and the rising debt stock will increase the interest service burden, while an aging population and rising healthcare costs will raise spending on the elderly absent fiscal policy reforms,” Fitch said.

But the US of A still has some strengths, Fitch said: a “large, advanced, well-diversified and high-income economy, supported by a dynamic business environment.” And of course, inevitably, the US has the dollar, “the world’s preeminent reserve currency, which gives the government extraordinary financing flexibility.”

Continue…

………………………………………………..

The Main Street America Republicans’ plan not only eliminates mushrooming annual federal government deficits, it generates hundreds of billions of dollars in surplus each of the first five years of activation.

It also eliminates massive amounts of household debt for millions of American families; revitalizes long term economic growth; restores economic liberty; puts the U.S Dollar on track for long-term strength and stability.

The Leviticus 25 Plan – Economic Scoring:

 ·    The Leviticus 25 Plan – 2024 Generates $619.5 billion Federal Budget Surpluses (2024-2028) Part 1: Overview, Deficit Projection

 ·    The Leviticus 25 Plan Generates $619.5 Billion Federal Budget Surpluses Annually (2024-2028). Part 2: Federal Income Tax Recapture; Economic Security / Means-Tested Welfare Recapture.

 ·    The Leviticus 25 Plan Generates $619.5 Billion Federal Budget Surpluses Annually (2024-2028). Part 3: Medicaid, Medicare, VA, TRICARE, FEHB, SSDI Recapture.

 ·    The Leviticus 25 Plan Generates $619.5 Billion Federal Budget Surpluses Annually (2024-2028). Part 4: Interest Expense Recapture, Totals Summary

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (6748 downloads)

Credit Markets Are Creaking, Creating Economic Uncertainty

July 26, 2023 | News

Excerpts:

Moody’s Investors Service has estimated that defaults on risky debt will peak at 5.1 percent globally early next year, up from relatively low levels currently.

But in a sign of the uncertainty over the severity of debt distress on the horizon, the Moody’s forecast also suggested that in a “severely pessimistic” scenario defaults on risky debt could jump to 13.7 percent in a year, higher than the 13.4 peak reached during the 2008 financial crisis.

“You don’t know when it’s going to happen, or to what degree,” Mr. Zandi said, explaining that while financial risk may not be the Fed’s top concern today, “it’s one of those things that goes immediately to the top of the list when something breaks, when that gasket blows.”

The post Credit Markets Are Creaking, Creating Economic Uncertainty appeared first on New York Times

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US Corporate Debt Defaults In 2023 Surpass Last Year’s Total: Moody’s

ZeroHedge, Jul 21, 2023 – Excerpts:

Authored by Bryan Jung via The Epoch Times,

The total amount of corporate debt defaults in the United States this year have already exceeded the amount seen in 2022.

Experts have been warning of a wave of defaults to hit the economy for some time due to higher borrowing rates.

At least fifty-five American-based companies defaulted on their loans in the first half of 2023, according to data from Moody’s Investors Services.

That is a 53 percent increase from the total number of defaults last year, when just 36 companies said they would fail to repay their debt obligations to lenders.

Moody’s blamed higher borrowing costs and tight lending standards for adding pressure on companies reliant on credit. In May alone, there were 16 corporate debt defaults worldwide, up from 12 in April.

Economic uncertainty and higher interest rates have made it more difficult for borrowers to refinance existing loans or mature their debt, and has them with few options because they lack the cash to repay their creditors.

The aggressive monetary-tightening policies of the Federal Reserve have been a major factor in pushing many companies into default by making it harder to pay back their loans.

The spike in interest rates and the growing number of banks unwilling to issue new loans in the wake of the regional bank crisis this spring has exacerbated the situation.

Firms unable to repay their creditors are prevented from restructuring and forced to file for bankruptcy.

“Banks are battening down the hatches, hogging their bailout money instead of lending it out,” said Pete St. Onge, a Heritage Foundation economist, in a recent podcast.

“That credit crunch means not only do we get bankruptcies like in any recession, on top of that, we get a lending wall that cuts off even the healthy businesses. Of course, their jobs go down with them.”

…..

“Capital is much more expensive now,” Mohsin Meghji, chairman of the restructuring advisory firm M3 Partners, told CNBC on June 24.

“Look at the cost of debt. You could reasonably get debt financing for 4 percent to 6 percent at any point on average over the last 15 years. Now that cost of debt has gone up to 9 percent to 13 percent,” he said.

…….

Meanwhile, Bank of America warned in May that a tougher credit environment combined with a full-blown recession could result in nearly a $1 trillion in corporate debt defaults.

Total loan defaults in the United States could rise to 11.3 percent in a credit crunch, just below the all-time-high of 12 percent seen during the Great Recession, according to Deutsche Bank.

…….

Moody’s analysts noted that the five sectors with the most defaults in 2023 were business services, health care and pharmaceuticals, retail, telecommunications, and the hospitality sector.

U.S. corporate debt defaults account for the most of the total defaults worldwide this year, with 81 firms in total failing to make payments on their debts in the first half of 2023.

…….

There were 340 bankruptcy filings by July of this year, not far behind the total of 374 in 2022, according to S&P Global Market Intelligence.

Standard & Poor’s reported more than 230 bankruptcy filings through April of this year, the highest rate for that period since 2010.

_________________________________

Question: Does the Federal Reserve or the Department of the Treasury have a plan to clean this mess up and get America back on track:

Answer: No

Question: Do Washington-based Democrats and Republicans have a plan.

Answer: No. Both parties are clueless.

Main Street America Republicans do have a plan:

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. Citizen – Leviticus 25 Plan 2023 (6717 downloads)

Washington Democrats are by any measure oblivious to America’s looming debt catastrophe.

Washington Republicans, shamefully enough, have no economically viable, politically feasible plan for solving the national debt crisis and getting America back on track.

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Endgame: US Federal Debt Interest Payments About To Hit $1 Trillion

ZeroHedge, Jul 14, 2023 – Excerpts:

There was a shocking number in today’s latest monthly US Budget Deficit report. No, it wasn’t that US government outlays unexpectedly soared 15% to $646 billion in June, up almost $100 billion from a year ago…

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… while tax receipts slumped 9.2% from $461 billion to $418 billion, resulting in a TTM government receipt drop of over 7.3%, the biggest since June 2020 when the US was reeling from the covid lockdown recession; in fact never have before tax receipts suffered such a big drop without the US entering a recession.

Needless to say, surging government outlays coupled with shrinking tax revenues meant that in June, the US budget deficit nearly tripled from $89 billion a year ago to $228 billion, far greater than the consensus estimate of $175 billion. One can only imagine which Ukrainian billionaire oligarch’s money laundering bank account is currently enjoying the benefits of that unexpected incremental $50 billion US deficit hole: we know for a fact that the FBI will never get to the bottom of that one, since they can’t even figure out who dumped a bunch of blow inside the White House – the most protected and surveilled structure in the entire world.

And with the monthly deficits coming in higher than expected and also far higher than a year ago, it is also not at all surprising that the cumulative deficit 9 months into the fiscal year is already the 3rd highest on record, surpassed only by the crisis years of 2020 and 2021: at $1.393 trillion, the fiscal 2022 YTD deficit is already up 170% compared to the same period last year.

…[T]he one number that was truly shocking was found all the way on page 9, deep inside Table 3 of the latest Treasury Monthly Statement: the only highlighted below, and which shows that in the 9 months of the current fiscal year, the US has already accumulated a record $652 billion in gross debt interest.

This number was more than 25% higher compared to the Interest Expense payment for the comparable period a year ago, which amounted to $521 billion.

Soaring interest rates, driven by the panicked Fed’s scramble to undo its epic policy failure of 2020 and 2021 when the Fed kept rates at zero for far too long while injecting trillions into various asset bubbles, have been the key driver of the deficit, with the Federal Reserve boosting its benchmark rate by 5% since it began hiking in March last year. Five-year Treasury yields are now about 3.96%, versus 1.35% at the start of last year. As lower-yielding securities mature, the Treasury faces steady increases in the rates it pays on outstanding debt: that’s right – even when the Fed starts cutting rates, due to the delay of rolling over maturing debt, actual interest payments will keep rising for the foreseeable future.

For context, the weighted average interest for total outstanding debt at the end of June was only 2.76%, a level that’s not been surpassed since January 2012, according to the Treasury. That’s up from 1.80% a year before, the department’s data show, and if the Fed indeed keeps rates “higher for longer”, the blended rate on the debt will surpass 4% in one year.

That would be a complete disaster for the US, and it would mean that interest payments on total US debt of $32.3 trillion would hit $1.3 trillion within 12 months, potentially making interest on the debt the single biggest US government expenditure and surpassing social security!

But we don’t even have to wait that long until the exploding interest on US government debt becomes a major talking point ahead of the coming presidential elections. According to the St Louis Fed’s FRED and the BEA, the interest payments by the Federal Government have now surpassed $900 billion for the first time ever, and within a quarter will hit probably rise above $1 trillion, a historic benchmark that will probably begin the countdown to the US Minsky Moment.

Source

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In short, the endgame has now arrived, and all the US can do now is rearrange the deck chairs.

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The endgame has not arrived, and there is no fatalistic need to “rearrange the deck chairs.”

It is all a simple matter of re-targeting Fed liquidity flows…

Main Street America Republicans have just such a plan – the most powerful, debt-busting, outside-the-box, economic acceleration plan in the world.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (6609 downloads)

America’s federal debt is being properly recognized as “a national security issue.”

GAO June 2023:  The federal government faces an unsustainable long-term fiscal future. At the end of fiscal year 2022, debt held by the public was about 97 percent of gross domestic product (GDP). Debt held by the public is projected to grow at a faster pace than the size of the economy and reach its historical high of 106 percent of GDP within 10 years, then continue to grow at an increasing pace.

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Peter G. Peterson Foundation, June 7, 2023: The country’s fiscal trajectory got notably worse over the past year, according to projections from the Congressional Budget Office (CBO) released in May. Federal deficits will total $19.0 trillion over the 2023–2032 period if no new legislation targeting spending or revenues is enacted — a $3.3 trillion increase from the agency’s projections made in May 2022. The stark changes in CBO’s baseline projections, which do not reflect the enactment of the Fiscal Responsibility Act of 2023, show a worsening of the country’s fiscal outlook resulting from legislation over the past year, a less-favorable economic outlook, and other factors.

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Wolff Street, May 29, 2023 : Interest expenses on the national debt spiked to $232 billion in Q1 (not seasonally adjusted), a new record obviously, because of the mix of the ballooning national debt and the much higher interest rates on newly issued Treasury securities that replace maturing securities or fund the new deficits.

After the debt ceiling is raised this week, the Treasury department will issue a tsunami of Treasury bills, with interest rates well above 5%, and they will add to that interest expense in short order:

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If Washington Republicans have a plan, they should present it now. If they don’t have a plan for addressing this critical national security issue, then they have no business collecting their paychecks.

America’s Main Street Republicans have a plan – one that will generate $619.5 billion budget surpluses annually, during its first five years of activation (2024-2028); stimulate long-term economic growth; rejuvenate a free market business cycle; and restore financial security for America’s hard-working, tax-paying U.S. citizens:

2023 Economic Scoring:

 ·    The Leviticus 25 Plan – 2024 Generates $619.5 billion Federal Budget Surpluses (2024-2028) Part 1: Overview, Deficit Projection

 ·    The Leviticus 25 Plan Generates $619.5 Billion Federal Budget Surpluses Annually (2024-2028). Part 2: Federal Income Tax Recapture; Economic Security / Means-Tested Welfare Recapture.

 ·    The Leviticus 25 Plan Generates $619.5 Billion Federal Budget Surpluses Annually (2024-2028). Part 3: Medicaid, Medicare, VA, TRICARE, FEHB, SSDI Recapture.

 ·    The Leviticus 25 Plan Generates $619.5 Billion Federal Budget Surpluses Annually (2024-2028). Part 4: Interest Expense Recapture, Totals Summary

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The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (6606 downloads)