Eeyores news and view

We are on the brink, the only time we have ever spent this far in a deficit was never. Even during the wars when we went deep into debt, it was never this far and never did we give away so much of the money. In the past the money always went into local economies not to subsidies the rest of the world. We are mortgaging not only our futures but that of great grand children. It is not the fault of either party, it is the mind set on capital hill. Governments are not any different then private individuals, it just may take longer before they go bankrupt, or before it becomes public.

Budget deficit tops $1 trillion for first time
Jul 13, 8:20 PM (ET) By MARTIN CRUTSINGER
WASHINGTON - The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall, intensifying fears about higher interest rates, inflation and the strength of the dollar.
The deficit has been widened by the huge sum the government has spent to ease the recession, combined with a sharp decline in tax revenues. The cost of wars in Iraq and Afghanistan also is a major factor.
The soaring deficit is making Chinese and other foreign buyers of U.S. debt nervous, which could make them reluctant lenders down the road. It could also force the Treasury Department to pay higher interest rates to make U.S. debt attractive longer-term.
"These are mind-boggling numbers," said Sung Won Sohn, an economist at the Smith School of Business at California State University. "Our foreign investors from China and elsewhere are starting to have concerns about not only the value of the dollar but how safe their investments will be in the long run."
The Treasury Department said Monday that the deficit in June totaled $94.3 billion, pushing the total since the budget year started in October to $1.09 trillion. The administration forecasts that the deficit for the entire year will hit $1.84 trillion in October.
Government spending is on the rise to address the worst financial crisis since the Great Depression and an unemployment rate that has climbed to 9.5 percent.
Congress already approved a $700 billion financial bailout for banks, automakers and other sectors, and a $787 billion economic stimulus package to try to jump-start a recovery. Outlays through the first nine months of this budget year total $2.67 trillion, up 20.5 percent from the same period a year ago.
There is growing talk among some Obama administration officials that a second round of stimulus may eventually be necessary.
That has many Republicans and deficit hawks worried that the U.S. could be setting itself up for more financial pain down the road if interest rates and inflation surge. They also are raising alarms about additional spending the administration is proposing, including its plan to reform health care.
President Barack Obama and Treasury Secretary Timothy Geithner have said the U.S. is committed to bringing down the deficits once the economy and financial sector recover. The Obama administration has set a goal of cutting the deficit in half by the end of his first term in office.
In the meantime, the U.S. debt now stands at $11.5 trillion. Interest payments on the debt cost $452 billion last year - the largest federal spending category after Medicare-Medicaid, Social Security and defense.
The overall debt is now slightly more than 80 percent of the annual output of the entire U.S. economy, as measured by the gross domestic product. During World War II, it briefly rose to 120 percent of GDP.
The debt is largely financed by the sale of Treasury bonds and bills.
Many private economists say the administration had no choice but to take aggressive action during the financial crisis.
"We have a deep recession hammering tax revenues and forcing the government to provide a lot of help to the economy," said Mark Zandi, chief economist at Moody's Economy.com. "But without this help, the downturn would be even more severe."
History shows the dangers of assuming too soon that economic downturns have ended.
President Franklin D. Roosevelt made that mistake in 1936. Believing the Depression largely over, he sought to reduce public spending and to balance the federal budget, but that undermined a fragile recovery, pushing the economy back under water in 1937.
Japanese leaders made a similar mistake in the 1990s when they temporarily withdrew government stimulus spending, prolonging Japan's recession into one that lasted a full decade.
Republicans in Congress are seizing on the deficit - and the persistence of the recession - to attack Democrats.
"Washington Democrats keep borrowing and spending money we don't have," said House Republican Leader John Boehner of Ohio.
So far, interest rates have remained low.
This is partly because the Federal Reserve has kept a key short-term rate at a record near zero. Also, all the economic troubles in housing and the rest of the economy have depressed demand for credit by the private sector, meaning the government's borrowing costs are relatively low.
The benchmark 10-year Treasury security has risen by about a percentage point in recent weeks, but analysts note it is still trading at historically low levels of around 3.35 percent.
Geithner travels later this week to Saudi Arabia and the United Arab Emirates, where he is expected to face questions about the U.S. deficit. As he did during a visit to China last month, Geithner will try to reassure investors in the Middle East that their U.S. holdings are safe from a calamitous bout of inflation.
The deficit of $1.09 trillion so far this year compares to an imbalance of $285.85 billion through the same period a year ago. The deficit for the 2008 budget year, which ended Sept. 30, was $454.8 billion, the current record in dollar terms.
Revenues so far this year total $1.59 trillion, down 17.9 percent from a year ago, reflecting higher unemployment, which cuts into payroll taxes and corporate tax receipts.
Under the administration's budget estimates, the $1.84 trillion deficit for this year will be followed by a $1.26 trillion deficit in 2010, and will never dip below $500 billion over the next decade. The administration estimates the deficits will total $7.1 trillion from 2010 to 2019.
http://apnews.myway.com/article/20090714/D99DSUG00.html

Boost in Food Stamps Helps Economy - Obama's stimulus plan has put more money into the hands of the poorest Americans by boosting monthly food-stamp http://beltwayblips.dailyradar.com/article/boost_in_food_stamps_helps_economy/

The Economy Is Even Worse Than You Think
The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.
The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.
... read the rest at
http://online.wsj.com/article/SB124753066246235811.html

U.S. mulling mortgage aid for unemployed
NEW YORK/WASHINGTON (Reuters) - President Barack Obama is mulling new ways to delay foreclosure for jobless homeowners who are unable to keep up with monthly payments, an administration official said on Monday.
The official told Reuters it was reasonable for policymakers to consider options for loan forbearance -- allowing borrowers to delay, defer or skip payments -- that are more effective than those currently available in the private sector.
The number of failing home loans has been climbing for three years as risky borrowers have defaulted on their easy-to-get loans, property values have sunk and the unemployment rate has climbed.
But the official said the idea, which is still evolving, was difficult from a policy perspective and carries potential hazards. It could help more people struggling with economic difficulty, but it also could create perverse incentives that distort the housing market, said the official, who did not want to speak on the record about internal administration debates.
The official said such a program would be in keeping with other measures to help workers who have lost jobs in the current recession.
http://www.reuters.com/article/newsOne/idUSTRE56D04920090714



Down the Mississippi: Barack Obama effect ends white rule in Deep South town
A tiny Mississippi delta town has elected its first black mayor after the white incumbent, unopposed for 30 years, faced a young challenger inspired by President Barack Obama's feat in winning the White House.

Here are a few quotes from the article, it is the problem with the way America thinks
...
Mr Brown was the first black man ever to stand for Mayor of Alligator and it took Mr Obama’s election to galvanise him into action. “Obama was a major influence on everybody,” he said, almost drowned out by the chirping of crickets in the sweltering afternoon heat. “He inspired me. I’m not going to take that from him.
...
"If we don’t look after our youth, what do we have? The population is dying out and I want more people here. I want better living conditions.
I just want the people to be comfortable. Small towns like this depend on government funding and that’s what we’re seeking."
...
The town’s facilities were substandard, he said, gesturing towards the humble town hall, where a “No Loitering” sign is nailed next to the door. “There isn’t even a phone or a fax machine in there. How can we communicate with the outside world and ask for things?" There was jubilation among the town’s blacks after Mr Brown’s victory.
(read the whole article link below, bolds are added by me) http: //www.telegraph.co.uk/news/newstopics/crossingamerica/5810701/Down-the-Mississippi-delta-town-elects-first-black-mayor.html