The government will have to borrow nearly 50 cents for every dollar it spends this year, exploding the record federal deficit past .8 trillion under new White House estimates.

Budget office figures released Monday would add billion to the 2009 red ink — increasing it to more than four times last year’s all-time high as the government hands out billions more than expected for people who have lost jobs and takes in less tax revenue from people and companies making less money.

The unprecedented deficit figures flow from the deep recession, the Wall Street bailout and the cost of President Barack Obama’s economic stimulus bill — as well as a seemingly embedded structural imbalance between what the government spends and what it takes in.

http://finance.yahoo.com/news/White-House-Budget-deficit-to-apf-15199183.html?.v=8

Government spending is paid for 1 of 2 ways:

1)monetizing debt ("printing" money) which leads to more inflation (=each dollar bill has less purchasing power)

2)higher taxes & new hidden taxes (carbon taxes, etc)

Well since taxes won’t even begin to cover TRILLIONS in new spending, option one is being used to the max.

Now I want you to watch this 60 minutes interview from 2007. In it, the former comptroller general (nation’s top accountant) says the United States government is bankrupt and that if it were a company if would have failed by now. He also says that at CURRENT spending levels (2007 levels) the U.S. govt. could only afford to pay social security and some medicaid by 2040.

http://www.youtube.com/watch?v=OS2fI2p9iVs&feature=related

Since then we have passed trillion in bailouts, nearly trillion dollars in "stimulus", and Obama has proposed AN ADDITIONAL .5 trillion budget.

Now if the comptroller general thought the U.S. couldn’t afford to pay for Bush’s prescription drug bill (from many years back), HOW is Obama going to pay for all this new spending???

He’ll either have to raise taxes to levels undreamed or hyperinflate the dollar attempting to monetize more debt.
boss h……………probably higher than that.

Technorati Tags: 2 ways, 50 cents, 60 minutes, bailout, barack obama, budget deficit, budget office, comptroller general, dollar bill, economic stimulus bill, federal deficit, finance yahoo, government hands, government spending, option one, prescription drug bill, purchasing power, recession, red ink, trillions

The Detroit auto industry is facing bankruptcy if something doesn’t change soon. As a life-long businessman, I can tell you that adding cash cannot save a business unless it can be re-positioned to make money. Doing so just delays the collapse or becomes a regular handout.

Currently, the cost of labor per car for Honda and Toyota in their American plants is 00 to 00 lower than the Detroit (and UAW) labor cost. GM labor amounts to almost per man hour, and some worker have as much as 120 days of vacation per year. The book value of GM stock is now Negative (thats red ink, in the hole) 2 per share.
Ford is also negative; Chrysler is private but is said to be in similar shape.

Due to the terms of federal labor laws. once the union has an agreement, they can shut down a company that won’t offer them what they want. This literally keeps the business from doing business, blocking deliveries and alternate choices while overhead costs eat them alive. That tactic would be illegal if done under any other conditions except a labor strike, and that ability is how the unions have forced automakers into the agreements that created this competitive handicap. Under the current conditions, Detroit will never be able to be profitable, but continued bailouts could keep them running and thus keep union paychecks coming. At your expense, of course.

In the alternative, if the companies declare bankruptcy the union agreements will be voided. New competitive conditions would be negotiated, and the companies could be re-organized in a competitive and profitable form.

Your politicians are discussing bailouts, but none of them are willing to discuss changing the labor laws to prevent the use of extortion tactics. The unions control a huge vote base and a lot of contribution dollars, and it is dangerous to offend them, so- they just don’t go there.

IF we don’t position the auto industry where profitability is possible, aren’t we just bailing out the UAW?

Technorati Tags: alternate choices, american plants, auto industry, automakers, businessman, collapse, contribution dollars, current conditions, deliveries, detroit auto, extortion, federal labor laws, gm stock, hole 2, man hour, overhead costs, paychecks, red ink, uaw, union agreements