This is really interesting.
- The Bush Administration refuses to put a price tag on the war as budget deficits approach all-time record levels and the tax base is shrinking. Both the U.S. government and its people are awash in debt. Unemployment is skyrocketing as consumer confidence crashes. State and local governments are screaming for money and facing their worst budget shortfalls in sixty years.
- Writing at The Ether Zone, http://www.etherzone.com/, Ed Henry notes that with the national debt at over $6 trillion the U.S. government is bouncing along the debt ceiling which means that it legally cannot borrow any more money. Its options are to sell more bonds (not likely with an anemic dollar, bad management, and an expanding trade deficit) or liquidate assets. One of the few assets available to Treasury Secretary John Snow is the stock portfolio of the Federal Employees Thrift Savings Plan which has about $44 billion in stock investments. What do you think would happen on Wall Street if Uncle Sam dumped $40 billion in stock?
- Backbones of the housing mortgage market Fannie Mae and Freddie Mac which, according to the New York Posts' brilliant reporter John Crudele, own or guarantee $3.1 trillion or 45 per cent of outstanding residential debt, are in serious trouble. They don't have enough cash to handle what might be a serious economic shock as the housing bubble collapses. Their collapse could imperil the entire economy and Crudele observed that the Federal Reserve was taking serious note of the way these "mortgage cowboys" had managed their business in inflating share prices which are now in steep decline.
- Market Oracles Warren Buffet and George Soros are issuing dire predictions about the U.S. and world economies. Soros is blasting at George W. Bush's management style and Buffet is warning of derivatives time-bombs in what Britain's Telegraph calls an "apocalyptic warning."
