National Debt Clock Ticks On

The results of 'fiscal conservatism'...

National Debt Grows $1 Million a Minute

The AP has an excellent article out today highlighting our ever growing national debt.

Like a ticking time bomb, the national debt is an explosion waiting to happen. It's expanding by about $1.4 billion a day — or nearly $1 million a minute.

What's that mean to you?

It means almost $30,000 in debt for each man, woman, child and infant in the United States.

Even if you've escaped the recent housing and credit crunches and are coping with rising fuel prices, you may still be headed for economic misery, along with the rest of the country. That's because the government is fast straining resources needed to meet interest payments on the national debt, which stands at a mind-numbing $9.13 trillion.

And like homeowners who took out adjustable-rate mortgages, the government faces the prospect of seeing this debt — now at relatively low interest rates — rolling over to higher rates, multiplying the financial pain.

Surprisingly, our national debt has not been a major campaign issue in the presidential primaries so far. In my opinion, candidates would be wise to speak up about this ticking time bomb or else be blamed when the house of cards comes tumbling down...

Clouds on the Horizon

In his recent article entitled "The Takeover Boom, About to Go Bust" Stephen Pearlstein, economic writer for the Washington Post, talks about the recent spate of company buyouts and the amount of debt versus the operating profits of companies that have been bought out. He writes “It is impossible to predict when the magic moment will be reached and everyone finally realizes that the prices being paid for these companies, and the debt taken on to support the acquisitions, are unsustainable. When that happens, it won't be pretty. Across the board, stock prices and company valuations will fall. Banks will announce painful write-offs, some hedge funds will close their doors, and private-equity funds will report disappointing returns. Some companies will be forced into bankruptcy or restructuring. Falling stock prices will cause companies to reduce their hiring and capital spending while governments will be forced to raise taxes or reduce services, as revenue from capital gains taxes declines. And the combination of reduced wealth and higher interest rates will finally cause consumers to pull back on their debt-financed consumption. It happened after the junk-bond and savings-and-loan collapses of the late 1980s. It happened after the tech and telecom bust of the late '90s. And it will happen this time."

And just who are the winners in such a scenario? One of the players appears to be the Carlyle Group. This group includes many high profile investors, many of whom have inside government connections. In a memorandum dated January, 2007, founding partner William E. Conway stated when the current “liquidity environment” (the end of cheap credit) ends “the buying opportunity will be a once in a lifetime chance.”

And the losers? Millions of ordinary people (like me) who are loaded down with debt. Mortgage debt, student loans, credit card debt just to name a few. Also, workers who have their pensions tied to the stock market through their 401(K) will feel the blow.

This 'business go-go party' will come to an unpleasant end and the results will not be fun. I have written about this before and will probably do so again. Stay tuned....

Let The Market Decide

I came across a great read today that goes in depth about the state of our economy today. It discusses deregulation, the 'market economy', monetary policy, the Federal Reserve and much more. It was written by Richard C. Cook, who worked for 21 years in the U.S. Treasury Department. It's a very well researched and thought provoking article.

So You Say You Are A Cyberbeggar?

You may wonder--how can someone who is a cyberbeggar possibly have a blog that deals with economic issues of any sort? Well, let me tell you. I was at the top of my game a couple of years ago. I did all the things you are 'supposed' to do- graduated from college, worked hard, got a great job in the health care field and bought a house all by the time I was in my early 30's. Kept my economic house in order, paid all of my bills on time and in general was the model 'Tax Paying Citizen'. What happened? Well, foolishly I thought the idea of owning my own business was a great thing to do. You know the lines--work hard, sacrifice and you can create your own future. Blah. Blah. Blah. Long story short. I sold the house and invested the money (and some) to start my own little restaurant. The problem was the 'and some' as this was financed with credit cards. No problem I told myself- the profits will be used exclusively to pay these off and then go on. One thing I didn't plan on in this great global economy of ours was that with the decline in disposable income, businesses such as mine have been affected. With decreased projections, this credit card 'financing scheme' has not turned out to be one of my own best decisions. The business does well (although I had higher expectations of the market) but these damn credit cards and high interest rates eat a significant portion of my revenues. I know some will say that I was crazy to try this scheme at all. Fine- we all make mistakes (mine was great, I agree) but I want to talk here about the underlying issues that we have today in the domestic and world economies and the political decisions being made that are important to all of us. No I'm not an economist but I do know what does and does not impact my financial life.

Credit Card Debt

Credit Card Debt- these very words strike fear into the hearts of the many people that have it. I know because I do (alot to be honest) and let me tell you, the subject fills much of my waking day. The credit card industry makes big bucks off of such things as high interest rates and various 'fees'. To get an idea of just how much money is being made, take a look at the recent quarterly earnings of MasterCard. Profits rose an astounding 70%! It's sad but true that more and more people have taken on exterme amounts of credit card debt just to get by. Add to this the inability of many people to pay these cards off due to job loss, foreclosure, stringent loan requirements, etc. Have a credit card story?