I believe what I found worrisome was the fact Wall Street isn't paying attention to itself.
I thought this was interesting.
Fed Says Spending Down $7,300 per Person From ‘Bubble’ Pace (click here)
July 11, 2011, 4:17 PM EDT
By Vivien Lou Chen
July 11 (Bloomberg) -- The 18-month U.S. recession that ended in June 2009 has so far cut spending by more than $7,300 per person, or about $175 a month, from the pace that prevailed during the housing boom, said a Federal Reserve Bank of San Francisco researcher.
The $7,300 figure reflects the period from December 2007 to May 2011, and was calculated by comparing the inflation-adjusted path of consumer purchases to pre-crisis levels, senior economist Kevin Lansing wrote in a paper released today. Per- capita consumption is still 1.6 percent below its pre-recession peak, 42 months after the recession started, he said.
“The purpose of the paper was to give an idea of how much stimulus was coming from the housing bubble,” Lansing said in a phone interview. “People are wondering why consumer spending is so slow these days. What they should be asking is: Why was it so strong in previous years?...
...You’re comparing it to an artificial economy that was driven by debt.”...
After realizing the Bush/Cheney economy was one of debt, just as Reagan's economy and H. W. Bush, I thought I would help the Senator DeMint with some insight from his favorite investment firm, Goldman Sachs. It might help him understand 'missing payments' is a little different than missing payments on any Tiffany Revolving Credit Account.
a research note just out from Goldman Sachs (bold is mine - journalist - click title of entry - thank you):
There are essentially two plausible outcomes. One is that the two sides agree on a deal in coming weeks, with headline cuts of $2+ trillion over a 10-year horizon, probably mostly composed of discretionary spending caps that gradually squeeze projected outlays in a highly back-end loaded fashion...
... The other outcome – whose probability has unfortunately risen in recent weeks – is that there is no deal by August 2. Even in this case, we continue to believe a default is extremely unlikely, as the Treasury would likely prioritize interest payments, Social Security and Medicare payments, and “essential” defense payments over other types of spending, and should have enough revenues to cover the essentials....
...But make no mistake: the negative consequences of failing
to make other payments would be very severe....
In the month of August, projected outflows exceed projected inflows by about $150bn (not annualized), or about 12% of GDP. Even if we allow for a further decline in cash holdings in the Treasury’s account with the Fed, this means that a failure to reach a deal would imply a huge, immediate fiscal retrenchment. The economic consequences of such a retrenchment would likely force a deal within a few days....
I think this is where Senator DeMint gets somewhat confused. The journalist goes on to state:
...Again, the issue is a government shutdown, not a default.
A government shutdown. Hm. That sounds like a familiar tune from the Tea Baggers. They don't the government and dearly want to rid the USA of it. It took over 200 years to build this nation and the Tea Baggers want it destroyed in two decades. If that isn't treason, don't ask me what is.
At any rate the statement, "Again, the issue is a government shutdown, not a default." is playing with semantics. If the government shuts down there will be no payments at all and the country will default for lack of employees that work to produce those payments at the US Treasury and otherwise. Shutting down the government is not an option at any time. Any time !!!
