Yet another busy day leads to be missing out on the events of the world, let us jump in on a few things that came out today..

Treasure thinks Congress will raise the U.S. Debt Ceiling

Just stop!  Really.

The debt levels in the United States are growing to the point where they will become unsupportable by the Government.  Literally.  The CBO has already reported that, in a few short years (8-ish) the Government may be in a position where paying interest on the debt outstanding will be impossible.

Translation – the country will be bankrupt.

Someone needs to remind Geithner (and Congress) why the debt ceiling is in place.

One more thought on Swine Flu and the Ukraine

Yesterday I had written about the Ukrainian Swine Flu response – it seemed a bit drastic to me for roughly 4% of the population. What I had thought about but didn’t express was, due to the economic conditions of the country,  the Ukraine doesn’t have necessarily have the technology, education and/or to treat and react to an unknown outbreak let alone the swine flu.

Thanks for taking me to task on that.

And this is sad – U.S. Army Suicides reach a new high

The aftermath of the Vietnam war wasn’t the political change, it was the thousands of troops that ended up with untreated mental illness and substance abuse issues.  After putting their lives on the line for a war that, in a number of cases, they did not believe in their government simply left them to fight for themselves when returning to the ‘real world’.

When I see that the Army Suicide rate is higher than the general population I have to wonder if the government is not providing the support the troops deserve – regardless of the active status of the person.

Really, just call it the Titanic

This is one of those stories you read and simply say – “Oh, you know, this isn’t going to end well.”

The largest cruise ship in the world, the 16-deck Oasis of the Seas, found a port of call  in Ft. Lauderdale today.  I know we live in a world of excess but, really, this ship is 40% larger than any other ship on the high seas today.

While I haven’t heard anyone say the ship is unsinkable, with a capacity for 6,300 passengers and 2,100 crew this is almost like a bad made for TV moving waiting to happen.

First India, now NASA

In case you missed it, NASA has confirmed they have found large amounts of water beneath the Moon’s surface.  The first report issued by the Indian space agency stated water was “locked in the soil” and would come and go during the course of a day.  It is interesting to see NASA specifically say beneath…

Without a doubt life is out there, I’m just waiting for the day when NASA (or another space agency) finds life off earth.  I’m not saying aliens, just the very basic definition of life.

I have no real easy way to begin this post, so I will be direct and to the point: The stress on the economy is worse now than it was last year at this point, and I fear the situation will become significantly worse in the very near future.

While I am not an economist, nor do I claim to have any economic knowledge others do not, looking at the data presented in the public domain really makes me to question what is going on in our economy – and – it makes me believe something isn’t right.

The media will point to improving economic numbers, but what is being reported as “improving” is less than encouraging. How about we look at what is improving by focusing on what is NOT improving.

Negative

• Port traffic is down 15% YoY (less goods going in and out)
• Hotel occupancy down 15% YoY
• Auto Sales down to spring 2009 levels after cash for clunkers ended
• Chicago and Dallas manufacturing activity down
• Debit 12T
• Unemployment roughly at 20% when looking at all stats and removing government assumptions
• GDP -.07 for the last quarter
• Dollar falling
• Oil at 72
• New Housing Orders Down

Positive

• Retail sales better than expected
• Higher Consumer sentiment
• Service Sector Grew last month

With all seriousness I have to ask the obvious question – How can economists say that we are currently improving? Just about everything is point to poor economic performance.

Do you happen to remember the trigger for our recession / depression? It was the banking crisis that started in late 2007 and came to a head in 2008. Has that underlying, fundamental, issue been addressed?

No.

Joseph Stiglitz, the Nobel Prize- winning economist, said the U.S. has failed to fix the underlying problems of its banking system after the credit crunch and the collapse of Lehman Brothers Holdings Inc.

“In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” Stiglitz said in an interview today in Paris. “The problems are worse than they were in 2007 before the crisis.”

…

Stiglitz, former chief economist at the World Bank and member of the White House Council of Economic Advisers, said the world economy is “far from being out of the woods” even if it has pulled back from the precipice it teetered on after the collapse of Lehman.

“We’re going into an extended period of weak economy, of economic malaise,” Stiglitz said. The U.S. will “grow but not enough to offset the increase in the population,” he said, adding that “if workers do not have income, it’s very hard to see how the U.S. will generate the demand that the world economy needs.”

The Federal Reserve faces a “quandary” in ending its monetary stimulus programs because doing so may drive up the cost of borrowing for the U.S. government, he said.

“The question then is who is going to finance the U.S. government,” Stiglitz said.

The potential nail in the coffin is the U.S. debt. Remember the 12 Trillion number above? Yea, that. The Congressional Budget Office is well aware the debt is out of control and has waved the warning flag – the United States may be unable to service its debts.

If the ratio of debt to GDP continues to rise, lenders may become concerned about the financial solvency of the government and demand higher interest rates to compensate for the increasing riskiness of holding government debt. Eventually, if the debt-to-GDP ratio keeps increasing and the budget outlook does not improve, both foreign and domestic lenders may not provide enough funds for the government to meet its obligations. By then, whether the government resolves the fiscal crisis by printing money, raising taxes, cutting spending, or going into default, economic growth will be seriously disrupted.
…
The systematic widening of budget shortfalls projected under CBO’s long-term scenarios has never been observed in U.S. history.

The government is basically telling use that the United States is on the path to bankruptcy, if it is not already there.

Just to recap – The underlying banking issue is not under control, the government debt is nearly unsustainable, and our economic numbers do not point to a turn for the positive.

From my perspective, the economic reality we live in points to the United States sitting on the brink of economic hardship unlike anything this nation has ever faced.  As the US is the largest consumer economy in the world, the collapse would send shockwaves to every corner of the globe.

So, what could be the cause?

Since the banking system is basically bankrupt, and the FDIC is out of money, the collapse of a “too big to fail” bank could easily be the trigger…  As could a massive decline in the price of the dollar… or other world government deciding they will no longer loan money to the U.S. Basically major market event that would stress the financial institution has the potential to be the trigger for the next leg down in this economic cycle.

Such an event could come at any time, and what scares me the most is my fear that the trigger may be sooner than later.