Debt & Deficits

The S&P 500 is near a record high, and global bonds have rallied for 5 straight months. The benchmark 10-year Treasury yield, at 2.20%, is close to its 2017 low. One of those investor groups has to lose. The US Treasury will be under-financed by as much as $4.5 trillion over the next 5 years, and will have to issue more debt. To find enough demand, interest rates would have to climb 120 basis points from current levels, or equity prices would have to plunge 30%.

Stockman explains why the economy could go off the rails this year, after our government endures a major budgetary crisis.

Financial markets tend to lead economic expectations so it begs these questions:

While Washington is buried in bungled health care reform and Wall Street is vexed about possibly jinxed tax reform, both seem to have lost sight of the one, giant, intractable monster in the economy that virtually no one talks about any more: Debt.

Now that Canada has been flagged for a recession next year, it’ll be interesting to see how Canadians respond. Will they abstain from further binging, or are they too busy shopping for new homes to hear the warnings.

The rise of the national debt and the gold price are intertwined and the gold price has fallen behind. A huge catch-up may be on the horizon given issues over the debt limit and [with] the Fed and the President potentially on a collision course.

People are missing the significance of March 15, 2017. That’s the day the debt ceiling holiday that Obama and Boehner put together expires. By summer, the government will be out of cash, and there will be the mother of all debt-ceiling crises. Everything will grind to a halt; there may be a government shutdown.

The continuing support for these bubble markets is shocking to a thinking person, but it reveals that MOST leaders/administrators/traders/investors do not think. What is happening today could be reported as dire/ominous to a person of discernment and understanding…but to financial administrators and political leaders who need pumped-up markets to prevent chaos this mindset is unlikely to change.

Mainstream economic indicators aren’t telling the whole story. We looked beyond the headlines to understand how the economy’s really doing and we found something disturbing in our research that almost no one is talking about.

Global debt-to-GDP is now at a record high and the Bank for International Settlements hasbubbles noted that over the last 16 years, debts of governments, households and corporations has gone up everywhere.