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LWW
03-28-2010, 05:59 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"><u><span style='font-size: 17pt'>Bond Markets Reflect the True Cost of Obamacare</span></u>
A Commentary By Michael Barone
Saturday, March 27, 2010 Email to a Friend ShareThis

Not many people noticed amid the Democrats' struggle to jam their health care bill through the House, but in recent weeks U.S. Treasury bonds have lost their status as the world's safest investment.

The numbers are pretty clear. In February, Bloomberg News reports, Berkshire Hathaway sold two-year bonds with an interest rate lower than that on two-year Treasuries. A company run by a 79-year-old investor is a better credit risk, the markets are telling us, than the U.S. government.

Buffett's firm isn't the only one. Procter & Gamble, Johnson & Johnson and Lowe's have been borrowing money at cheaper rates than Uncle Sam.

Democrats wary of voting for the health care bill may have been soothed by the Congressional Budget Office's report that it would reduce federal deficits over the next 10 years. But bond buyers know that the Democrats gamed the CBO system to get a good score.

The realities, as former CBO Director Douglas Holtz-Eakin pointed out in The New York Times, are different. The real cost is disguised by the fact that the bill includes 10 years of revenue but only six years of spending. It includes $70 billion in premiums for long-term care that will have to be paid out later. It excludes $114 billion in discretionary spending needed to run the program. It includes nearly half a trillion dollars in unrealistic Medicare savings.

Holtz-Eakins's bottom line: The bill will not lower deficits, but will raise them by $562 billion over 10 years. Treasury will have to borrow that money -- and probably pay much higher interest than it's paying now.
Moreover, once the bill is fully in effect, the Cato Institute's Alan Reynolds points out, its expenses are likely to grow at least 7 percent a year -- significantly faster than revenues. At that rate, spending doubles every 10 years.

No wonder that Moody's declared last week that the Treasury is "substantially" closer to losing its AAA bond rating.

It's not only the federal government that is heading toward insolvency. State governments will have to spend more under the health care bill -- $735 million in Tennessee alone, according to Democratic Gov. Phil Bredesen.

And state governments are already facing a huge problem called pensions. The Pew Charitable Trusts estimates that state government pensions are underfunded by $450 billion. My American Enterprise Institute colleague Andrew Biggs argues in The Wall Street Journal that the real figure is over $3 trillion.
The reason: State governments set aside cash to invest in pensions, but they typically assume that their investments will rise 8 percent a year indefinitely. They haven't been getting such high returns and are not likely to do so in the future. But they are under legal obligations, which courts won't allow them to escape, to pay the pensions. Retirees get paid off before bondholders, which means that states are going to have to pay more interest when they borrow.

Back in the 1990s, Clinton adviser James Carville said that if he was reincarnated he would like to come back as the bond market -- "because you can intimidate everybody." Governments, like all organizations, need to borrow routinely. But investors won't lend unless they think they will be paid back. And they will demand higher interest rates as their loans become riskier.

On Sunday, 219 House Democrats, soothed by their leaders' gaming of the CBO scoring process, voted in reckless disregard of what the bond market has been telling them. Some may share Speaker Nancy Pelosi's optimism that the government's looming fiscal disaster can be avoided by imposing a value-added tax -- in effect, a national sales tax.

But, as we know from the experience of high-tax Western Europe and relatively low-tax America over the last three decades, higher taxes tend to retard economic growth. Lower economic growth means less revenue for government than in CBO projections. Less revenue means more borrowing -- and at some point lenders are going to call a halt.

Barack Obama's project of transforming the United States into something like Western Europe is, according to the CBO, raising the national debt burden on the economy to World War II levels. I see train wrecks ahead -- as the bond market forces huge spending cuts or tax increases first on states and then on the federal government. It will make what happened in the House Sunday look pretty.

Michael Barone is senior political analyst for The Washington Examiner. </div></div>
&gt;&gt;&gt;OH DEAR&lt;&lt;&lt; (http://www.rasmussenreports.com/public_content/political_commentary/commentary_by_michael_barone/bond_markets_reflect_the_true_cost_of_obamacare)

LWW

pooltchr
03-28-2010, 07:00 AM
so those of us who said the law was going to cost us much more than the administration have been suggesting were correct???????

Steve

LWW
03-28-2010, 07:56 AM
Government does nothing efficieintly.

LWW

cushioncrawler
03-28-2010, 03:05 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Barack Obama's project of transforming the United States into something like Western Europe is, according to the CBO, raising the national debt burden on the economy to World War II levels. I see train wrecks ahead -- as the bond market forces huge spending cuts or tax increases first on states and then on the federal government. It will make what happened in the House Sunday look pretty.</div></div>Hmmmmmmm -- Wooow -- there must hav been a blooody big train wreck after WW2 i bet -- but i must hav missed it -- but no worryz, krappynomicysts will soon dig around and find some evidence of it i bet -- karnt wait.
I hope they get this new wreck on tape -- there woz allmost a big collision in 2008 i hear -- it must hav been a near'miss, or praps it woz just a lil'wreck -- so this one coming will be a beauty i bet -- karnt wait.
madMac.

cushioncrawler
03-28-2010, 03:21 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">It's not only the federal government that is heading toward insolvency. State governments will have to spend more under the health care bill -- $735 million in Tennessee alone, according to Democratic Gov. Phil Bredesen.</div></div><div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Chapter 11 in general
When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11.

In Chapter 7 the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors. Any residual amount is returned to the owners of the company. In Chapter 11, in most instances the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court.[1]

[edit] Features of Chapter 11 bankruptcy
Chapter 11 bankruptcy retains many of the features present in all, or most bankruptcy proceedings in the United States. It also provides additional tools for debtors as well. Most importantly, 11 U.S.C. 1108 empowers the trustee to operate the debtor's business. In Chapter 11, unless a separate trustee is appointed for cause, the debtor, as debtor in possession, acts as trustee of the business.[2]

Bankruptcy affords the debtor in possession a number of mechanisms to restructure its business. A debtor in possession can acquire financing and loans on favorable terms by giving new lenders first priority on the business' earnings. The court may also permit the debtor in possession to reject and cancel contracts. Debtors are also protected from other litigation against the business through the imposition of an automatic stay. While the automatic stay is in place, most litigation against the debtor is stayed, or put on hold, until it can be resolved in bankruptcy court, or resumed in its original venue.

If the business's debts exceed its assets, the bankruptcy restructuring results in the company's owners being left with nothing; instead, the owners' rights and interests are ended and the company's creditors are left with ownership of the newly reorganized company.

All creditors are entitled to be heard by the court.[citation needed] The court is ultimately responsible for determining whether the proposed plan of reorganization complies with the bankruptcy law.

One controversy that has broken out in bankruptcy courts since 2007 concerns the proper amount of disclosure that the court and other parties are entitled to receive from the members of the ad hoc creditor's committees that play a large role in many such proceedings. [3]</div></div>If China iz the main creditor then China will own and run the usofa. Things will change.
madMac.

Qtec
03-28-2010, 08:16 PM
You don't think the massive debt the US has is having an effect?


Afghanistan is still in chaos , costing a fortune [ $400 a gallon for gas! ]
Iraq, after GW flying in on his jet announcing "Mission Accomplished" 7 yrs later the US is still there......costing a fortune.

When are you guys EVER going to go after Bush for the claim that "the Iraqi oil will bear the burden of the cost."



Also,there is plenty of money.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">[5]Defense-related expenditures outside of the Department of Defense constitute between $216 billion and $361 billion in additional spending, bringing the total for defense spending to between<span style='font-size: 20pt'> $880 billion and $1.03 trillion in fiscal year 2010.</span>[6] </div></div>


Its all about priorities.

Q

Q