Monday, November 14, 2011

Tax receipts are plunging while government spending is soaring, and that is causing the U.S. annual deficit to explode.  According to the government, the 2011 budget deficit came in at nearly $1.3 trillion, but the true deficit, according to economist John Williams of, was much higher.  In his latest report, Williams says, “. . . the 2011 GAAP-based U.S. deficit likely fell in the $5-trillion to $7-trillion range, a circumstance that is beyond control and appears to be uncontainable in the current political circumstance.  With the economy in ongoing crisis, with no prospect of a turnaround in the foreseeable future, the implications for the federal budget deficit, U.S. Treasury funding needs and prospective banking-system stability, in the year and years ahead, are horrendous.  The current, relatively happy forecasts for each of those areas are based on assumptions of solid economic growth going forward.  That growth simply will not be forthcoming.”

“The sovereign solvency crisis in the United States easily could move to the center of global financial-market attention in the weeks ahead, depending on how the federal deficit reduction negotiations evolve.   The systemic solvency crisis that continues to unfold in the U.S. is of a relative magnitude that eclipses the rolling financial crises in the euro area.”

No comments:

Post a Comment