Karl Denninger http://market-ticker.org/ with a chart of doom and some harsh words for David Walker and every President since Ronald Reagan. An unsustainable trend will not be sustained. Obama presented his budget today. His forecast is for the deficit to be $1.33 trillion this year. He plans on spending $3.8 trillion next year, while touting $4 trillion of cuts over 10 years. That’s funny. $4 trillion comes to $400 billion per year. He is spending $3.8 trillion this year and $3.8 trillion next year. Where is the $400 billion of “cuts”? See, you need to think like a government drone. The cuts will all come between year 6 and 10. Plus, they won’t actually cut spending. In government speak, spending $4 trillion less than your predicted spending increase counts as a cut in spending. Get it?
David Walker was on CNBC this morning again claiming that we “lost our way” over the last ten years. He’s lying. What we have here is a geometric series in two dimensions (both slope and time) and I’m going to prove it.
Over 20 years, from 1980 to 2000, the slope of the line of debt accumulation was approximately 12 degrees. From 2000 to 2008, or approximately 9 years, it was 26 degrees (more than double the slope over less than half the time) and from 2008 to today it was 64 degrees or again more than double the slope over less than half the time. Note that this is just the public debt — the problems in entitlement programs (internal debt) are even worse!
This is a chart of a runaway geometric series.
There is no solution that comes from “slowing it down” — you must stop this right now.
I recognize that nobody wants to talk about it, say much less do it. But mathematical relationships do not care whether you want to talk about them or not. They just are, and Walker is trying to put this into some sort of perspective that aims at Bush and Obama.
He’s full of crap. The problem goes back to 1980 when we crossed beyond fiscal sustainability. Every President since that time and every Congress has been part of a gigantic Ponzi Scheme that will inevitably blow up unless we act to stop it now.