Tuesday, September 9, 2008

US federal government will run a record deficit in 2008

Estimates say fed budget deficit nearing $407B

And this is before the F&F bailout. That will go on next years budget deficit, estimated at $482 billion. Now tell me again all the reasons for the $ rally?

Posted by mountain goat @ 03:33 PM (1211 views)
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10 thoughts on “US federal government will run a record deficit in 2008

  • You left out the most relevant bit- ” The numbers represent about 3 percent of the size of the economy, which is the deficit measure seen as most relevant by economists. That’s considerably smaller than the deficits of the 1980s and early 1990s, when Congress and earlier administrations cobbled together politically painful deficit-reduction packages.”

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  • the post FM & FM bailout rally only lasted one day! All mojor bourses down today.

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  • well yes that’s 3% per year – it’s the cumulative total as a proportion which is important – and that’s $9 trillion at the moment, which is about 60%? We’re about to break through 40% and that’s seen as bad.

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  • 2007 public debt to GDP ratios – Japan 195%; Italy 104%; Singapore 101%; Belgium 85%; Norway 75%; Canada 68%; France 64%; Germany 63%. US 62% and UK 37% – not quite what the doomsters would have us believe.

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  • 2007 public debt to GDP ratios: Japan 195%; Singapore 101%; Belgium 85%; Norway 75%; Canada 68%; France 64%; Germany 63%. Meanwhile US 61% and UK 38% – not quite white the doomsayers would have us believe.

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  • mountain goat says:

    @ Buctootim

    I left out the GDP comparison for good reason. It is fictitious. The statistics are not trustworthy, using imputations, hedonics and the GDP deflator adjustment for inflation, which is equally fictitious. See this fuzzy number crash course to get an idea of this. The actual deficit is a less manipulated value and is at a record high this year.

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  • Great stats buctootim, apart from the fact that 70% of US GDP is consumption. Sustainable? Only if you force the rest of the world into buying US Treasuries indefinitely. Will that happen? No.

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  • Interesting stats all round though.

    Also it’s relative – 60% is a lot of debt if you’re talking the world’s biggest economy, because it requires others to buy that debt. Hence China ‘owning’ the dollar as some say, actually it’s a group of countries that own big volumes of US debt, but any could cause real problems by stopping buying, let alone flogging their dollars on the market.

    I think the fact that the markets are already going south indicates that people know the US market is in big trouble.

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  • Harold. Erm yes. GDP in all countries is constituted from personal consumption, government spending, corporate investment and exports. In developed nations personal consumption is always by far the largest part. The point is?

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  • it_is_going_with_a_bang says:

    Hmmm not sure about this 1980’s comparisonbeing made???

    When Mr. Reagan entered office the percent of US debt relative to GDP was down to 33.3% (1980’s?)

    Mr. Clinton began to get government spending under control. The US debt peaked at 67.3% of GDP under his administration. By the end of the Clinton administration this percentage had dropped to 57.6%. Debt as a percent of GDP dropped almost 10% in four years under a Democratic President with a hostile Republican Congress. (1990’s?)

    Mr. Bush II inherited a shrinking government and debt in 2001. With his first budget he managed to increase the debt to GDP ratio to 60.0%, by cutting taxes but not spending. By 2004 this ratio had risen to 63.7%, as a result of additional tax cuts but no significant corresponding cuts in spending. Government estimations (which are notoriously low) predict that the debt to GDP ratio will grow to 69.3% by end of 2008. From that point predictions go off the chart.

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