Debt & Deficit --- Bailout & Trillion

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source : http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/26/MNVN14C8QR.DTL

via : http://www.stormfront.org/forum/showthread.php?t=548474

Paulson announced that 100s of banks are in trouble and being reviewed. No bailout money was allocated to these NEW troubled banks. More money will be requested to help them.
What does this mean? Keep money in Treasury securities? In the mattress? Use it to buy property now or wait to buy property much cheaper later on?
Hal Turner expects the economy to collapse by the end of February/early March 2009. By June 2009 at the latest.


From Hal Turner

December 2, 2008

U.S. FALLING APART! "HUNDREDS OF BANKS" APPLY FOR FEDERAL HELP


The march toward complete financial collapse of the USA is accelerating out of control. According to the US Treasury, "hundreds of banks" have asked for emergency help from the government.

To help you understand the frightening implications of this, consider the following:

Since the "financial crisis" began in September, The Treasury Department has injected $150 billion in capital by buying preferred shares in 52 institutions. 52 banks, $150 billion.

Todays news that "hundreds of banks" are now in danger of failing caught my attention, so I contacted my sources inside the Treasury and I almost fell over when they told me: "Five hundred twenty additional banks are failing; ten times the number of banks that have already been bailed out."

Do the math: If 52 banks needed $150 billion, 520 banks could translate into one point five TRILLION.

That isn't the worst of it. The chart below (click image to enlarge) shows that our nation has already committed EIGHT POINT FIVE TRILLION to the financial mess and of that, they've already disbursed THREE POINT TWO TRILLION.
Ask yourself this simple question: Where are they getting this money? The simple answer: They're printing it.

Let's not forget that the money listed above is ON TOP OF the ten trillion dollars the government already owes from past deficit spending!

Do the math again:
$1.5 Trillion needed for another 520 failing banks
$8.5 Trillion committed to more financial bailouts
$10 Trillion in national debt from years of deficit spending.
__________
$20 TRILLION dollars in total (so far)

Let me put this in better perspective for you. $20 Trillion dollars divided up among each of our 300 million citizens amounts to sixty-six-thousand, six-hundred sixty-six dollars ($66,666.) for every man, woman and child! Wow. That's like a satanic number!

Need further perspective? If you took a loan for the $66,666 at one percent (1%) interest per year for ten (10) years, you would need to pay $584.06 per month for you, your wife/husband and each one of your children! For my family (Me, Wife, one son) that would be 1752.08 per month for ten years!!

You're a smart person. I know you're smart because you read this blog! As a smart person ask yourself: How long is it going to be before the rest of the world says to themselves "The USA is totally bankrupt, they can't even hope to repay all the money they've borrowed, the US dollar isn't worth the paper its printed on because they printed so much of it, we're not going to accept it as money anymore."

I'll tell you how long it will be: The end of February or early March 2009. Best case? Late June, 2009. That's it.

At this point I think it is worth reminding all of you that in December 2007 and January, 2008, I warned everyone via my radio show and web site that "September is going to see major financial upheaval." I told everyone when and why. It happened exactly as I warned. So I hope you heed my warning about total financial collapse early next year.

That's when the **** is really gonna hit the fan and this nation will fall into complete, total, economic collapse. A collapse brought about by our own federal government spending us into oblivion.

Why do you think they re-deployed an active duty Army Combat Brigade with 4700 troops and support personnel from Iraq back here to the USA? Why do you think the Pentagon announced yesterday they are going to increase the number of combat troops inside the US from its present 4700 up to 20,000? They KNOW the ****'s gonna hit the fan.

When the economy fails -- and it will -- they are terrified about what We The People might do.
They are afraid we might (rightfully) blame the government for wrecking our nation and that we might take retribution upon them by force.

It's good they're afraid. They ought to be.

I have compiled a compete list of the home addresses of every member of the House of Representatives, every member of the U.S. Senate, all nine Justices on the Supreme Court and a slew of other federal Judges in the various Circuit Courts of Appeal and District Courts.

I have the home addresses of all the members of the Federal Reserve Board of Governors and every key person at every regional federal reserve bank.

When the **** hits the fan, I am going to publish those addresses so the folks out here in the real world who have suddenly found they've lost everything, can pay a visit to those responsible for it!

Oh, and in case you folks in law enforcement think you can grab me up and throw me into some dungeon to prevent the release of that info. . . . . . I've already distributed CD's with the info to quite a number of people whom I trust. They, in turn are making copies and sending those to people they trust.

The CD's were sent with instructions to IMMEDIATELY disseminate that info as soon as they hear I have been grabbed.

So there is no way at all the government can prevent "being held accountable."

I am also presently researching the home addresses of all the Bankers and other financial hot shots involved in stocks, bonds, money markets, mutual funds and the like. Their home addresses are going out too!

When the whole system collapses, it won't just be government types that get paid a visit; it will be the financial hot shots too.

There's going to be retribution for the destruction of our financial system and our country. Nothing can prevent that retribution -- except if they find some way to stop the financial catastrophe they have caused. I wish them luck.

[tags] Bailout Trillion

[Vorsprung durch Technik]

think of it.. so what if petrol is cheap, car is cheap. livelihood is also cheap now

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CREDIT CRISIS - THE WORST IS YET TO COME
http://www.celicasg.org/index.php?topic=4966.0

World faces "total" financial meltdown: Bank of Spain chief
http://www.celicasg.org/index.php?topic=5006.0

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A new report shows the federal budget deficit is expected to hit $1.2 trillion this fiscal year, making another massive stimulus bill hard to stomach for some analysts and officials.

Wednesday, January 07, 2009


President-elect Barack Obama, flanked by Budget Director-designate Peter Orszag, left, and Deputy Budget Director-designate Rob Nabors, speaks to reporters after a meeting with his top economic advisers at his transition office in Washington, Tuesday, Jan. 6, 2009. (AP Photo/Gerald Herbert)

Barack Obama, flanked by Budget Director-designate Peter Orszag, left, and Deputy Budget Director-designate Rob Nabors, talks to reporters in Washington on Tuesday. (AP Photo)


After betting the farm, the Benz, the Rolex and the college fund, Congress is about to take another $800 billion economic stimulus gamble. But economists say it may be time for an intervention.

The federal budget deficit already is projected to reach an unheard of $1.2 trillion this fiscal year, and President-elect Barack Obama's economic stimulus package, under review by lawmakers, would only add to the deficit.

That's on top of a $700 billion financial rescue, a $17 billion auto bailout and the first $150 billion stimulus (that's the one approved right before the worst economic crisis since the Great Depression).

So where does it end?

Obama said Tuesday he anticipates "trillion-dollar deficits for years to come." But even the cascade of economists calling for a big package say the country cannot sustain such deficits much longer.

The national debt already has topped $10 trillion -- or $35,000 per person. And the bigger it gets, the more the country has to pay in interest every year.

"In the end, Beijing is gonna become Obama's banker," said Peter Morici, a University of Maryland business professor who testified at the auto industry hearings in November.

The prescriptions for establishing a long-lasting economic health are wide-ranging. But while the passage of Obama's stimulus might seem a foregone conclusion, some are warning that the president-elect and the new Congress had better invest this money wisely or be faced with the need for more and bigger stimulus packages in the future.

Morici, who thinks the standing stimulus pitch is already about $200 billion bigger than it needs to be, said the government must send money to infrastructure projects like roads, schools and Internet.

That is part of the plan, according to officials.

House Speaker Nancy Pelosi emphasized the infrastructure components of the recovery package Wednesday, saying, "This is not your grandfather's public works bill."

And Mark Zandi, chief economist at Moody's Economy.com, said at an economic forum in Washington on Wednesday that the package should focus on spending since projects like infrastructure yield more "bang for the buck" than tax cuts. But he said tax cuts should be part of the recovery package, something Obama has endorsed.

Morici, though, said the last stimulus package in February, which was heavy with tax rebates, proved that sending spurts of money to individuals does little to stimulate the economy and does not even guarantee that the money will be spent inside the country.

"(Obama is) not talking about fixing what's broken," he said. To ensure long-term health, Morici said, the government needs to prop up the banking system and close the trade deficit.

Ross Eisenbrey, vice president of the Economic Policy Institute, said there "simply is no alternative" to a large stimulus package.

But he said this should be the final rescue package and that once the economy starts to turn around, potentially in two years or so, it's time to start filling in the gaping budget hole.

"At some point, the economy will be growing again, and we'll be adding jobs," he said. "And at that point, we're going to have to raise taxes."

Eisenbrey said the tax increases will have to go hand-in-hand with spending reductions, specifically overseas. He, too, said the United States must reduce its trade deficit and stop sending so much income overseas.

"That's a fundamental thing that we have to change," he said.

The economists and lawmakers talking up the stimulus plan are taking a sober tone, assuring the public that the deficit spending is a short-term tactic.

Pelosi stressed the need for "fiscal discipline and long-term economic prosperity" in a written statement reacting to the deficit projections from the Congressional Budget Office.

Obama, too, promised long-term fiscal discipline Wednesday, while stressing that the government needs to run deficits in order to jump-start the economy in the short term and create three million jobs. Since falling tax revenues are contributing to the deficit, he said the government must take decisive action or "we will continue to see red ink as far as the eye can see." But he said his administration will address bringing the deficits to a "manageable level." He said entitlement programs will factor into that plan.

Harvard University economics professor Martin Feldstein, who spoke alongside Zandi at the economic forum, also said there needs to be an "exit strategy."

"The spending should not create a political dynamic that makes it hard to stop," he said.

But the projected $1.2 trillion deficit sets a benchmark, dwarfing last year's record of $455 billion. It's 8 percent of the GDP -- even the big deficits of the '80s and early '90s didn't approach that kind of percentage.

So there are skeptics to the pledges of fiscal responsibility.

Georgia Rep. Tom Price, incoming chairman of the conservative Republican Study Committee, told FOXNews.com he's not convinced the stimulus plan will actually stimulate.

"The record on this type of stimulus package is not good," he said. "The jury's still out on whether we can afford the deficits that we currently have in place, so putting any more deficits on top of the current one is irresponsible activity."

Price sided with Feldstein in saying permanent tax cuts, rather than one-time rebates, are the way to go, provided the government shrinks.

George Mason University economics professor Walter Williams said he has little faith the deficits will be contracting anytime soon.

"Unless you believe in Santa Claus or the tooth fairy, you have to ask the question, 'Where's Congress going to get that money from?'" he said of the stimulus. "It's like you have a swimming pool, and you try to increase the height of the shallow end by taking buckets out of the deep end. It's foolhardy."

FOXNews.com's Judson Berger contributed to this report.

http://www.foxnews.com/politics/2009/01/07/does-end-economists-warn-feeding-trillion-dollar-deficits/

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only 1.2 trillion deficit?
if so, it's getting lower... (from recent memory)

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U.S. offers $2 trillion bank plan but stocks slump
Tue Feb 10, 2009 6:42pm EST



Play me Video
By Glenn Somerville

WASHINGTON (Reuters) - U.S. Treasury chief Timothy Geithner on Tuesday unveiled a new bank rescue plan that would put $2 trillion to work mopping up bad assets and restoring credit, but stock markets plunged on fears it would not work.

Global markets had intensely awaited Geithner's ideas for a plan mixing private and public funding to stabilize a financial system tottering under the weight of bad mortgages, but were disappointed over the scant details provided.

The Dow Jones industrial average ended down 4.6 percent -- its biggest one-day percentage drop since December 1 -- with bank stocks hit particularly hard. U.S. government bonds rose as investors scrambled for safe-haven debt.

In a speech on television and in Capitol Hill testimony, Geithner made his case for how the Obama administration plans to handle the roughly $350 billion left in a $700 billion financial bailout fund approved by Congress in October.

Geithner said the lack of public confidence in prior rescue efforts had made it all the more difficult to stop "a dangerous dynamic" in which a lack of credit undercuts the economy and leads to more weakness among banks, worsening the recession.

"This is very complicated to get it right," he said in an interview on Bloomberg Television. "We are going to try to get it right before we give the details so that we don't add further to uncertainty in these markets."

He steered clear of saying whether the administration might have to ask Congress for more money to fix the banks, restore credit and counter recession, but did not rule it out.

"We're going to consult with the Congress carefully to try to make sure the world understands that the resources necessary to solve this will be available over time," Geithner told CNBC, adding: "The important thing is that ... we send a basic signal, working with the Congress, that we will do what's necessary to fix this."

The lack of details frustrated many market participants.

"Investors want clarity, simplicity and resolution. This plan is seen as convoluted, obfuscating and clouded," said James Ellman, president of Seacliff Capital in San Francisco.

But Thomas Priore, president of ICP Capital in New York, gave Geithner credit for candidly laying out the depth and difficulty presented by the problem of how to restart credit flows when banks are burdened by hard-to-value, weak assets.

"He told it like it is. That's a start," Priore said.

LEVERAGING PRIVATE MONEY

Geithner defended his decision to put forward what he called a framework instead of waiting until a detailed proposal was ready.

"If we wait and we take the approach that we don't lay that out, ever, until we've solved every problem and every detail, then I think that itself will create greater uncertainty," he said, acknowledging he was "very sensitive" to criticism about the approach

The facility will grow from its current $200-billion limit to up to $1 trillion, thanks to a jump in Treasury funding to $100 billion from $20 billion. The lending program would be extended to cover a range of mortgage-related assets.

The Treasury also said it would continue to pump capital into banks, as the former Bush administration did, but Geithner said there will be conditions attached to ensure the money is lent and that top executives heed restraints on their pay.

In return for the capital, the government would receive preferred shares in the banks that could convert to common stock.

BANK FIX PART OF LARGER PLAN

Geithner said it was critically important to restore credit flows in order for a separate $800-billion-plus package of tax-cut and government spending measures to lift the economy.

Shortly after Geithner announced the plan, the U.S. Senate cleared an $838 billion stimulus plan, which needs to be reconciled with a separate bill approved by the U.S. House of Representatives.

The Treasury is tussling with the worst financial crisis since the Great Depression. Careless lending fueled a housing boom that has gone bust and dragged the U.S. economy and much of the rest of the world into deep recession.

President Barack Obama said on Monday that cleaning up banks' balance sheets was a priority and didn't rule out the possibility that it will take more money than the $700 billion Congress already has approved to complete the job.

"We don't know yet whether we're going to need additional money or how much additional money we'll need until we see how successful we are at restoring a level of confidence in the marketplace," Obama told a news conference.

(Additional reporting by David Lawder and Mark Felsenthal; Editing by James Dalgleish)

via : http://www.singsupplies.com/showthread.php?t=17724

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$78.8 Trillion; United States Debt Obligations exceed world GDP; Monetary Collapse Looming?
[youtube]oVOuC0qSrR8[/youtube]
http://www.youtube.com/watch?v=oVOuC0qSrR8

How in the world are we going to pay off all of this debt? Raising taxes to do it will burden our economy, and then the situation would only get worse. To me the solution is obvious, cut spending.

For too long in this country we've had the give me stuff people standing there with their hand out, and the government putting something in it. Does the idea of small government ring a bell? It is what our founding Fathers had in mind when they gave us our constitution. That is why there is a list in the constitution that quite clearly spells out the powers of the federal government, and also what it is not allowed to do. So basically if it was not listed as a power, then they are to stay away from it, and allow the States to handle it.

Just take a look at federal laws. At the very beginning they will state their authority in enacting the law, and it is almost always the commerce clause. I'm sure they even think that just because your computer is hooked up to the internet, and therefore has contact with other computers in other States, that they then would have the constitutional right of regulating your computer, and thereby your internet communications; they are out of control.
jbranstetter04


Federal obligations exceed world GDP
Does $65.5 trillion terrify anyone yet?

As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.
The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.
The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the "2008 Financial Report of the United States Government" as released by the U.S. Department of Treasury.
The difference between the $455 billion "official" budget deficit numbers and the $5.1 trillion budget deficit cited by "2008 Financial Report of the United States Government" is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.
But the numbers in the 2008 report are calculated on a GAAP basis ("Generally Accepted Accounting
Practices") that include year-for-year changes in the net present value of unfunded liabilities in social insurance programs such as Social Security and Medicare.
Under cash accounting, the government makes no provision for future Social Security and Medicare benefits in the year in which those benefits accrue.
"As bad as 2008 was, the $455 billion budget deficit on a cash basis and the $5.1 trillion federal budget deficit on a GAAP accounting basis does not reflect any significant money [from] the financial bailout or Troubled Asset Relief Program, or TARP, which was approved after the close of the fiscal year," economist John Williams, who publishes the Internet website Shadow Government Statistics, told WND.
"The Congressional Budget Office estimated the fiscal year 2009 budget deficit as being $1.2 trillion on a cash basis and that was before taking into consideration the full costs of the war in Iraq and Afghanistan, before the cost of the Obama nearly $800 billion economic stimulus plan, or the cost of the second $350 billion in TARP funds, as well as all current bailouts being contemplated by the U.S. Treasury and Federal Reserve," he said.
"The federal government's deficit is hemorrhaging at a pace which threatens the viability of the financial system," Williams added. "The popularly reported 2009 [deficit] will clearly exceed $2 trillion on a cash basis and that full amount has to be funded by Treasury borrowing.
http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=88851

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Classic case of "THE WATER NEEDS THE FISH and the FISH NEEDS THE WATER too "

==========================================================
BEIJING : US Secretary of State Hillary Clinton Sunday urged China to keep buying US debt as she wrapped up her first overseas trip, during which she agreed to work closely with Beijing on the financial crisis.

Clinton made the plea shortly before leaving China, the final stop on a four-nation Asian tour that also took her to Japan, Indonesia and South Korea, where she worked the crowds to try to restore America's standing abroad.

In Beijing, she called on authorities in Beijing to continue buying US Treasuries, saying it would help jumpstart the flagging US economy and stimulate imports of Chinese goods.

"By continuing to support American Treasury instruments, the Chinese are recognising our interconnection. We are truly going to rise or fall together," Clinton said at the US embassy here.

Clinton had sought to focus on economic and environmental issues in Beijing, saying Washington's concerns about the human rights situation in China should not be a distraction from those vital matters.

Beijing's human rights record emerged nonetheless as an issue, as Chinese activists on Saturday reported being harassed or intimidated by Chinese authorities in a bid to stop them speaking out or meeting Clinton while she was here.

"Plainclothes police blocked me from leaving my home. They were afraid I would try to meet with Hillary Clinton or others in her delegation," democracy campaigner Jiang Qisheng told AFP by phone on Sunday.

Clinton and Chinese Foreign Minister Yang Jiechi largely agreed to disagree on human rights as they pledged future joint action on the economy and climate change.

The goodwill, also on display in her talks with President Hu Jintao and Premier Wen Jiabao, could raise hope for a new era of cooperation between the two largest greenhouse gas emitters and two of the world's top three economies.

"Now it is more important than any time in the past to deepen and develop China-US relations amid the spreading financial crisis and increasing global challenges," Hu told Clinton, according to state media.

Clinton began her day Sunday by attending a Protestant church service in western Beijing at which an AFP journalist saw plainclothes police taking away some visitors who attempted to enter the church.

Their identities could not be confirmed.

Later, Clinton met Chinese women's rights advocates at the US embassy but continued to steer clear of speaking on contentious human rights issues.

Instead, while taping an interview on a Chinese talk show, she focused on the need for China to help finance the massive 787-billion-dollar US economic stimulus plan by continuing to buy US Treasuries.

"Because our economies are so intertwined the Chinese know that in order to start exporting again to its biggest market, the United States had to take some very drastic measures with this stimulus package," Clinton said.

"We have to incur more debt. It would not be in China's interest if we were unable to get our economy moving again."

Clinton added: "The US needs the investment in Treasury bonds to shore up its economy to continue to buy Chinese products."

The US secretary of state had said on Saturday after meetings with China's leaders that Beijing was still confident in US Treasury bonds and expressed Washington's appreciation for the investments.

China is the top holder of US Treasury bills, with 696.2 billion dollars worth of the securities in December followed by Japan with 578.3 billion dollars, according to the latest official data from Washington.

China's economic growth is at its slowest rate in about two decades as foreign demand for its exports, including in the recession-hit United States, has dried up.

Yang indicated Saturday that China would not deviate drastically from its US Treasury policies, but gave no overt promises either way.

via : http://www.singsupplies.com/showthread.php?t=18813

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something from a couple of months back. but does it still holds?
    * NOVEMBER 30, 2008, 1:36 P.M. ET
China Will Keep Buying U.S. Government Debt
Its trade surplus depends on it.
http://online.wsj.com/article/SB122806735083967109.html

By MICHAEL PETTIS | From today's Wall Street Journal Asia

Worries about China's finances are once again resurfacing in America. Commentators from Newsweek's Fareed Zakaria to British economic historian Niall Ferguson argue that Washington needs China to buy U.S. Treasury bonds to fund U.S. fiscal spending. And with Beijing embarking on a public spending plan of its own, the argument goes, China can't afford to play the role of America's lender of last resort anymore.

This fearmongering grossly misrepresents the U.S.-China economic relationship. For starters, China's two trillion dollars in reserves is already invested, so it cannot be used to fund future U.S. deficits. China can only invest future reserve accumulation in U.S. debt, and the only way it can accumulate new reserves is by running a trade surplus.

These new reserves cannot be spent at home. China's currency regime, in which the central bank intervenes to set the value of the yuan by buying dollars and selling yuan, does not permit it to convert any of those dollars back into yuan. If it did, reversing its role from buyer of dollars to seller would cause the currency to soar, and if that happened, Chinese exports would collapse -- not something Beijing wants.

Even if China wanted to invest outside the U.S., it couldn't. If China recycled its foreign currency into, for instance, the European Union or Japan, it would effectively force those trading partners to run large trade deficits with China, which neither can absorb. The rising yen and rising euro would slow both economies enormously. That leaves only the U.S. as an investment destination. As long as China wants to keep its exports to the U.S. strong, it must recycle the trade surplus back into the U.S. It is a symbiotic relationship that is unlikely to change anytime soon.

The U.S. government may also not need external financing anyway -- from China, or anywhere else -- to fund its fiscal spending program. As U.S. consumers save more, they will have to invest those savings. That additional investment will likely be more than enough to fund the higher fiscal deficit. The money that used to go toward financing private U.S. consumption will now go to financing public U.S. consumption.

Most importantly, there is no tradeoff between China choosing to finance its own fiscal spending or American fiscal spending. As the U.S. heads into recession, its consumers will save more and consume less. That creates a problem for China, which has overinvested in export businesses and infrastructure. The more the Chinese spend in China to stimulate consumption there, the less the U.S. government needs to spend in the U.S. to jumpstart American consumers.

In the short term, some U.S. fiscal expansion may be necessary to slow the pace of the U.S. and global economic adjustment and to give traction to Chinese fiscal expansion. In the long term, it is much healthier for the Chinese side of the economic imbalance also to be reduced, by an increasing Chinese consumption. The more China is able to boost demand in China, whether by increased household spending or fiscal expansion, the better off both countries will be.

U.S. and Chinese economic policies today are not incompatible. Both countries desperately need the same thing -- economic growth -- and both are trying to achieve just that. Worries about China's finances or intentions are not grounded in fact, and misrepresent a cooperative, complementary relationship.

Mr. Pettis is professor of finance at Peking University's Guanghua School of Management.

===========

would China want to fall along with USA? or would they break rank and go for it themselves?

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Clinton Urges China to Keep Buying U.S. Treasury Securities
Email | Print | A A A

By Indira A.R. Lakshmanan

Feb. 22 (Bloomberg) -- Secretary of State Hillary Clinton urged China to continue buying U.S. Treasury bonds to help finance President Barack Obama’s stimulus plan, saying “we are truly going to rise or fall together.”

“Our economies are so intertwined,” Clinton said in an interview today in Beijing with Shanghai-based Dragon Television. “It would not be in China’s interest” if the U.S. were unable to finance deficit spending to stimulate its stalled economy.

The U.S. is the single largest buyer of the exports that drive growth in China, the world’s third-largest economy. China in turn invests surplus earnings from shipments of goods such as toys, clothing and steel primarily in Treasury securities, making it the world’s largest holder of U.S. government debt at the end of last year with $696.2 billion.

China’s leaders understand that “the United States has to take some very drastic measures with the stimulus package, which means we have to incur debt,” Clinton said. The Chinese are “making a very smart decision by continuing to invest in Treasury bonds,” which she called a “safe investment,” because a speedy U.S. recovery will fuel China’s growth as well.

China boosted purchases of U.S. debt by 46 percent last year to a record. The Chinese government said last week it plans to keep buying Treasuries, adding that future purchases will depend on the preservation of their value and the safety of the investment. China’s currency reserves of $1.95 trillion are about 29 percent of the world total.

‘No Viable Alternative’

JPMorgan Chase & Co. predicted in a Feb. 6 report that China will keep buying Treasuries “not only for the near-term stability of the global financial system, but also because there is no viable and liquid alternative market in which to invest China’s massive and still growing reserves.”

Chinese attempts to diversify from Treasuries into more risk-oriented assets have not fared well. It has lost at least half of the $10.5 billion it invested in New York-based Blackstone, Morgan Stanley and TPG Inc. since mid-2007.

Asked by Dragon TV about the “Buy American” provision in the $787 billion stimulus package, Clinton downplayed worries that it would be a step toward protectionism, saying the provision “must be compliant with our international agreements.”

“Protectionism is not in America’s interest,” she said.

Clinton also said today that Treasury Secretary Timothy Geithner will co-chair an expanded bilateral dialogue on strategic and economic issues. The framework of that dialogue will be announced in April, when Obama and Chinese President Hu Jintao meet at the Group of 20 forum in London.

Treasury, State

Under the Bush administration, the U.S. and China held a Strategic Economic Dialogue run by the Treasury Department, without the assistance of the secretary of state.

Clinton said the Obama administration felt that model was “very heavily dominated by economic concerns and by traditional Treasury priorities. They are very important, but that is not the only high-level dialogue that needs to occur.”

Clinton was in China to meet with senior Chinese officials yesterday, including Hu, Premier Wen Jiabao and Foreign Minister Yang Jiechi.

Today Clinton privately attended services at the Haidian Christian Church. She also met in the U.S. Embassy with 23 women activists in law, gender equality, poverty, AIDS and children’s rights, a continuation of similar gatherings she held when she visited China as first lady in the 1990s.

Human Rights Groups

She didn’t meet with any dissidents during her stay, and was criticized by overseas human rights groups for saying that U.S. concerns about restrictions on freedoms in China must not interfere with cooperation on financial crisis, global warming, negotiations about North Korean nuclear program and terrorism.

China was the last leg of her first overseas trip as the top U.S. diplomat, which included stops in Japan, Indonesia and South Korea.

“World events have given us a full and formidable agenda,” Clinton said yesterday at a Beijing press conference with Yang following a 90-minute meeting. “It is essential that the United States and China have a positive cooperative relationship.”

Yang will visit the U.S. on March 9 for further discussions about the new strategic and economic dialogues.

The Chinese government’s 4 trillion yuan ($585 billion) stimulus plan is an opportunity for global businesses to take part in the country’s infrastructure construction, Yang said.

China’s Economy

China, which surpassed Germany in 2007 as the world’s third- largest economy, is confident of meeting this year’s 8 percent growth target, an achievement Yang says is “China’s contribution to the world economic recovery.”

Clinton and Chinese officials also discussed how to restart stalled talks, hosted in Beijing, aimed at getting North Korea to eliminate its nuclear weapons program.

Clinton said she had raised the issue of human rights in her talks with Yang, calling those concerns “an essential component of our global foreign policy.”

The U.S. State Department accuses China of political repression in Tibet and restrictions on worship throughout China. Groups including Amnesty International and Human Rights Watch said that Clinton shouldn’t set those concerns aside while talking with Chinese officials about other issues.

Power Plant Visit

After meeting Yang, Clinton and her special envoy for climate change, Todd Stern, visited the year-old Taiyanggong power plant, a gas-fired low-emission facility powered by General Electric Co. generators and turbines which provides heat for 1 million homes and buildings in Beijing, including the U.S. embassy. The tour was aimed at highlighting opportunities for the world’s two biggest emitters of greenhouse gases to cooperate on clean energy.

Clinton noted that China, with its rapid industrial development, has surpassed the U.S. as the largest source of carbon emissions and said collaboration on green energy would offer a business opportunity.

“The international financial crisis is having a big impact on the entire world,” Wen told Clinton at their meeting. “I very much appreciate your comment that people should work together like passengers in a boat.”

At an earlier meeting, State Councilor Dai Bingguo told Clinton that she looked “younger and more beautiful” than she appears on television.

“Well, we will get along very well,” Clinton laughed.

To contact the reporters on this story: Indira Lakshmanan in Beijing at ilakshmanan@bloomberg.net
Last Updated: February 22, 2009 13:19 EST

via : http://www.bloomberg.com/apps/news?pid=20601103&sid=apSqGtcNsqSY&refer=news

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would China be able continue without the massive consumption from USA?

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8:04 GMT, Friday, 20 February 2009
Global downturn: In graphics

This is one of the most tumultuous times on record in the global financial markets.


TRILLION-DOLLAR BAIL-OUTS

Huge amounts of money have been committed in financial support for banks.

Packages

BILLION-DOLLAR STIMULUS PACKAGES

Governments are spending billions of dollars to kick-start economic growth. Measures include tax cuts and building projects.

Map

VICTIMS

The financial landscape has changed dramatically, with several giants of the business world disappearing.

Company logos

UK BANK BAIL-OUT PACKAGE

The UK has spent £81bn to prop up Royal Bank of Scotland, HBOS and Lloyds TSB as well as nationalised Northern Rock and parts of Bradford & Bingley.

The Treasury and the Bank of England have pledged hundreds of billions of pounds of further support for the fragile banking system.

A £250bn credit guarantee scheme announced in October is being expanded to encourage banks to lend more, with a commitment of up to £50bn.

UK rescue plan


Pie chart showing price comparisons


US BANK BAIL-OUT PACKAGE

There has been an array of measures to provide support to the battered US financial system.

A $700bn scheme approved last year, known as the Troubled Asset Relief Programme, was used to help lenders like Citigroup and Bank of America as well as the automobile industry.

Major changes to the programme have been announced by the new administration, including a partnership with the private sector to buy toxic assets from banks.

US breakdown

ECONOMIES HIT

World economic growth is expected to slow sharply, with the UK among the hardest hit. Developing countries such as China and India should fare better.

GDP forecasts


LEGACY OF DEBT

As countries try to spend their way out of recession, debt levels are forecast to rise.

Debt exposure

via : http://news.bbc.co.uk/2/low/business/7893317.stm

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By courtesy of CNNmoney.com

Fed program promises $1 trillion lending
Central bank will accept assets backed by auto, credit card, student and small business loans, government says.

Last Updated: March 3, 2009: 11:45 AM ET

WASHINGTON (Reuters) -- The U.S. Federal Reserve and Treasury on Tuesday extended a new securities loan program to include equipment and vehicle fleet leases and said a future expansion to $1 trillion may also include some of the riskier mortgage and debt securities now plaguing banks.

Launching the long-awaited $200 billion Term Asset-backed Securities Loan Facility, or TALF, the Fed and Treasury said the program will start offering loans on March 17.

As collateral, the TALF will accept triple-A rated asset-backed securities supported by new and recently originated auto loans, credit card loans, student loans and government-guaranteed small business loans.

The Fed and Treasury also said they were considering accepting a broader range of securities that would be supported at a later date. These include commercial mortgage backed securities as well as "private label" residential mortgage backed securities and collateralized debt obligations.

The TALF is designed to give frozen securitization markets a jolt by offering financing for investors to encourage them to buy AAA-rated asset-backed securities. In February, Treasury Secretary Timothy Geithner announced plans to expand the program to up to $1 trillion by increasing the Treasury's backing for the program with $100 billion of federal bank bailout funds.

"Ultimately, the program should bring down the cost and increase the availability of new credit to consumers and businesses," the Treasury said in a position paper.

Adding commercial mortgage backed securities to the program could head off major problems in commercial real estate by providing new financing options.

"We know right now there's a looming crisis in commercial real estate whereby owners of shopping malls, hotels, rental properties and many other types of buildings are unable to refinance or pay for new construction because the CMBS securitization market has completely shut down," Fed Chairman Ben Bernanke told the Senate Budget Committee on Tuesday.

Deep freeze
Markets for the securitization of loans have broadly ground to a halt since the financial crisis worsened in October, making it difficult for would-be new-car buyers to get loans or to conclude other basic consumer transactions.

By April, the Fed and Treasury anticipate that the loan program will include asset-backed securities backed by small ticket equipment, heavy equipment and agricultural loans and leases. These include items ranging from office copiers for small businesses to giant construction cranes and farm harvesters.

Treasury and Fed said their teams are analyzing "appropriate terms and conditions" for CMBS and are "evaluating" other types of triple-A-rated securities.

If the program includes private-label mortgage-backed securities and collateralized loan and debt obligations, the program could help lift some of the most illiquid assets from banks' books, taking pressure off their balance sheets.

Private label MBS not backed by Fannie Mae (FNM, Fortune 500) or Freddie Mac (FRE, Fortune 500) helped fuel the U.S. home price bubble that burst in 2007, bringing some financial institutions to their knees.

"The expanded program will remain focused on securities that will have the greatest macroeconomic impact and can be most efficiently added to the TALF at a low and manageable risk to the government," they said.

In addition, the Fed and Treasury said they might include non-auto floor loans as well as securities backed by mortgage-servicer advances.

But the Fed warned that increased TALF lending and other actions to stabilize the financial system "have the potential to greatly expand" the Fed's balance sheet, already bloated to nearly $2 trillion by other lending and liquidity programs.

Therefore, it needs more ability to manage its balance sheet and therefore, the level of reserves in the banking system. Treasury and the Fed said they will seek legislation to give the Fed additional tools needed to manage the level of reserves while providing necessary funding for TALF and other liquidity programs.

via : http://forum.channelnewsasia.com/viewtopic.php?t=224631

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how many more trillions to go?

*1000 billion = 1 trillion.

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US deficit to hit new high

-- PHOTO: ASSOCIATED PRESS

WASHINGTON - THE US budget deficit could hit US$1.84 trillion (S$2.79 trillion) this year under the budget proposed by President Barack Obama, quadrupling the 2008 record shortfall, a new forecast showed on Friday.

The Congressional Budget Office, a nonpartisan agency of Congress, said its latest budget deficit estimate for fiscal 2009, which ends on September 30, would amount to 13.1 per cent of the country's entire economic output.

Since its early January estimate of a US$1.2 trillion gap, the CBO said, the enactment of stimulus legislation such as the US$787 billion stimulus plan and other measures to revive the economy, and other factors had added more than US$400 billion to deficit projections for 2009 and 2010.

The new projections were based on a sweeping US$3.55 trillion multiyear budget proposed by President Barack Obama's administration to Congress in February.

Mr Obama has acknowledged the size of his budget's US$1.752 billion deficit in 2009 would require 'some hard choices' on spending priorities. The White House said the new CBO forecasts would not trim the Democratic president's objectives or thwart his plan to halve the shortfall by 2013.

Republicans grabbed the ammunition to push back against Mr Obama's massive budget package that teams tax cuts and heavy spending. 'It's worse than even the most pessimistic predictions for this budget,' said Senate Republican Leader Mitch McConnell.

'The shortfall in the nation's output relative to its potential is comparable with what occurred during the recession of 1981 and 1982 and will persist for significantly longer - making the current recession the most severe since World War II,' the CBO said.

The CBO estimated that for the current fiscal year, spending would soar 34 per cent from the past year, to US$4 trillion dollars, and revenues would plunge 15 per cent, to US$2.16 billion.

The deficit would remain high in the 2010 fiscal year, at US$1.38 billion, before falling below the trillion-dollar mark in 2011, to US$970 billion. Deficits then would shrink to about 2.0 per cent of GDP by 2012 and remain in that region through 2019, it said.

The CBO warned that its current forecast, particularly for the near term, was subject to an unusual degree of uncertainty. 'The possibility that financial markets might not stabilize represents a major source of downside risk to the forecast,' it said. -- AFP

source: US deficit to hit new high

via  : http://forums.vr-zone.com/world-news-singapore-affairs/407438-news-us-deficit-hit-new-high.html

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The total exposure of the US government to the financial crisis could hit $23.7 trillion (£14.3tn), according to a watchdog report.

Neil Barofsky, overseeing the Troubled Asset Relief Programme (Tarp), made the estimate in prepared remarks to a House of Representatives committee.

The worst-case estimate represents the maximum exposure if all parties offered support requested maximum assistance.

The figure includes all government and Federal Reserve initiatives.

'Repeated failure'

"From programmes involving large capital infusions into hundreds of financial institutions, to a mortgage modification programme, to public-private partnerships using tens of billions of taxpayer dollars to purchase 'toxic' assets from banks, Tarp has evolved into a programme of unprecedented scope, scale and complexity," said Mr Barofsky, special inspector general of Tarp.

However, he said the programme was only part of the wider effort to rescue the US economy.

"As massive and important as Tarp is on its own, it is just one part of a much broader federal government effort to stabilise and support the financial system.

"The total potential federal government support could reach $23.7tn," he added.

Mr Barofsky said any judgement on the effectiveness of Tarp should be made in the context of the government's overall efforts to revive the economy.

He also criticised the government for "repeatedly" failing to adopt recommendations from his office regarding transparency.

via : http://news.bbc.co.uk/2/low/business/8160282.stm

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something from digg.
http://digg.com/political_opinion/And_the_GOP_thinks_1_Trillion_is_too_much_for_a_healthy_US

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via : http://digg.com/business_finance/US_Trade_Partners_Around_the_Globe_INFOGRAPHIC