Wall St drops on economic worries

NF Reporter · 05-10-2007, 02:57 PM

Reuters - Stocks slid on Thursday as disappointing April retail sales and a widening trade deficit raised worries about the economy's health a day after the Federal Reserve reiterated their unease about inflation.

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waltky · 10-11-2008, 01:04 AM

An even bigger financial meltdown in the offing...

Former Comptroller General Cites $53 Trillion Shortfall: ‘No One Will Bail Out America'
Friday, October 10, 2008 : America is headed down “the wrong path" economically and neither Congress nor the presidential candidates are providing the leadership needed to right our financial course, former U.S. Comptroller General David Walker warned.

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“We need leadership, not lag-ship,” Walker said. “No one is going to bail out America.” In a briefing at the National Press Club on Wednesday, Walker, concerned about the $700 billion bailout of the financial sector, sounded an alarm that the federal budget deficit has already exceeded $400 billion. Worse, if the U.S. isn’t careful, Walker said “increasing entitlement benefits” – with unfunded liabilities of Social Security and Medicare now estimated at $53 trillion--could trigger a tsunami of debt--and whopping tax increases--could drown our economic future.

An unfunded liability is the amount that taxes would have to be raised to cover the shortfall between what current payroll taxes cover and what future payouts to recipients will require. “The federal government’s finances have been out of control,” Walker, now the president and CEO of the Peter G. Peterson Foundation, told reporters. Neither Congress nor the presidential candidates “are doing anything to address America’s real economic woes,” he said. Congress, he added, “is broken, but so are other branches, as well.” Walker blamed our economic woes in part on “career politicians” who, he said, “do not want to lose their job, so (they) take few to no risks.”

Even though “good questions” about the nation’s financial situation were asked at Tuesday night’s presidential debate, Walker also said “neither candidate” offered sufficient answers or “showed how they would implement their plans to (reform) Social Security and Medicare.” “The next president must be willing to admit to the problems and work in a bipartisan way to find a solution,” Walker added. The leadership deficit and the budget deficit are two of the “deficits” explored in a new documentary video created by the Peterson Foundation that Walker previewed for reporters, called “I.O.U.S.A.” In addition, the U.S. faces a deficit in personal savings and a trade deficit – all of which are working against the nation’s economic health.

More CNSNews.com - Former Comptroller General Cites $53 Trillion Shortfall: â€˜No One Will Bail Out America'

waltky · 10-20-2008, 05:35 AM

Deficit gonna bury us...

U.S. Close to $1 Trillion Deficit: Now What?
The Government's Financial Rescue Plan Comes at a Steep Price

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The US government's extraordinary effort to rescue the banking system may have pulled America's economy back from the brink, but it comes at a cost – helping to push an already bloated deficit up to an estimated $1 trillion for this fiscal year. That would be a record in today's dollars – and would represent the highest level of federal red ink as a share of the overall economy of any US budget since the 1940s. For each household, this year's deficit would pile on an extra $8,620 of federal debt.

As a result, future presidents may have to rein in spending and raise taxes to pay down that debt. If they don't, foreign lenders at some point could scale back their purchases of US debt, sending interest rates soaring. "There are times when you need to run up the deficit and this is one of them," says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan group in Washington that came up with the $1 trillion estimate. "But we ran them up when we did not need to, and we have no plan to stop running them up. We have become serial deficit spenders."

It could be worse. The rising estimates of the deficit are based in part on the calculation that tax revenues will shrink as the economy contracts and unemployment rises. If the recession is less severe because of the bank rescue, then the deficit will be smaller. If Congress enacts a new economic stimulus package, the deficit could go up. Another unknown is the actual costs of the $700 billion financial rescue bill. In the first year of the three-year program, the US Treasury might spend $400 billion, estimates Stanley Collender, managing director at Qorvis in Washington and a budget expert. But the Congressional Budget Office is not likely to count it as a direct expense since it might be considered a loan or an investment.

More ABC News: U.S. Close to $1 Trillion Deficit: Now What?