Debt Risk

The PRC’s debt, at various levels, is a well-known risk to the country’s economic health. Existing loans to companies and households amounted to 207% of GDP at the start of this summer. Households had in the region of 38% of that debt as of last year. Municipal debt is approaching $25 trillion yuan ($3.9 trillion).

Now the People’s Bank of China is moving to cut the down payment required to get a loan to buy a house. The public claim the PBOC is making is that this is supposed to spur house buying and through that the economy. While it’s true enough that the cut—from 30% down to 25% down—seems like small potatoes, it still will result in an increase in household debt.

Even the AP Is Catching On

They fact-checked President Barack Obama’s State of the Union speech, and they found these things.

OBAMA: At this moment—with a growing economy, shrinking deficits, bustling industry and booming energy production—we have risen from recession freer to write our own future than any other nation on Earth.

THE FACTS: Job growth has been…fueled in part by lower-paying jobs…which have replaced many higher-paying positions…. Part-time jobs also remain elevated: there are still 1.7 million fewer workers with full-time jobs than when the recession began in December 2007.

Never Met a Tax Increase

…he didn’t like, this Progressive. President Barack Obama wants $320 billion in tax increases over the next 10 years in order to give tax credits to his version of “the middle class.”

This is rank, stinking wealth transfer. Nothing else. He doesn’t even intend to use the revenue to pay down the national debt he’s exploded over the last six years. The worst part of this is that Obama and his Democratic Party accomplices actually think this is right. The rich should “pay their fair share,” and government needs to spend the money. Never mind that “the rich” already pay 70% of the US’ income tax bill, while the bottom half(!) pay 3%-4%. Conveniently, these…Democrats…never get around to specifying what a “fair” share might be. Meanwhile, the debt keeps growing.

Another Argument for Disbanding Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac on Monday announced details of a controversial plan to allow some first-time homeowners to obtain a mortgage while putting down just 3% of the price of the home.

We’ve not finished recovering from the Panic of 2008, and these entities want to resume an underlying component of the last housing bubble and burst that contributed so heavily to that.

But wait:

Fannie Mae said the loans that allow for 3% down payments will be held to the same eligibility requirements as other Fannie loans, including underwriting, income documentation and risk management standards.

A Political Party’s Fiscal Philosophy in Microcosm

The Wall Street Journal has the tale.

Today, a year and a half after the 2012 elections, the Democratic National Committee owes its creditors $15 million.  It closed out the 2012 election season owing $22 million, and after all this time, it’s only paid down a third of that debt.

Today, a year and a half after the 2012 elections, the Republican National Committee owes its creditors…zip.  Nada.  The RNC has no debt.  It also closed out the 2012 election season with…wait for it…no debt.  The RNC, in fact, had $3 million cash on hand.

Really, What Default?

President Barack Obama and his…colleagues…in the Senate keep threatening national default if those Evil, Anarchist, Terrorist Jihadi Republicans don’t promptly shape up and pass a budget, raise the debt ceiling, and otherwise give him a blank check.  One of his more recent threats is this:

…if Republicans aren’t willing to set aside their partisan concerns in order to do what’s right for the country, we stand a good chance of defaulting.

Let’s look at some numbers:

A Thought on Government Spending

I’m prompted by Treasury Secretary Jack Lew’s testimony before the Senate Finance Committee Thursday.

The Wall Street Journal paraphrased him, in part, with this:

Given current spending and tax levels, the government would probably have to cut spending by at least 30%—or $100 billion—a month if the borrowing limit wasn’t increased.

Musings on Debt Ceiling “Negotiations”

Supposedly, they’re under way.  Or not, depending on the credibility of major players: Senate Majority Leader Harry Reid (D, UT), Treasury Secretary Jack Lew, and President Barack Obama.

In testimony before the Senate Finance Committee, Lew had a number of things to say.  Some might call them threats:

[H]e will be unable to guarantee payments to any group—whether Social Security recipients or US bondholders—unless Congress approves an increase in the federal debt limit.

What Americans Are Saying

…about the Democrat-manufactured debt ceiling impasse:

A Fox News national poll asks voters to imagine being a lawmaker and having to cast an up-or-down vote on raising the debt ceiling:  37% would vote in favor of it, while 58% would vote against it.

That includes majorities of Republicans (78%), Independents (57%), and Tea Partiers (88%, and which includes a considerable overlap with Republicans).  It’s only the Democrats who are willing to borrow and borrow and borrow with debt moving on in its rapid pace (57% of them).


President Barack Obama often publicly chants his mantra of “[I] will not negotiate over the terms of debt limit legislation…[I am] willing to discuss a range of issues once the government is reopened and the Treasury able to borrow freely again.”

Given Obama’s credibility, though, on what basis can he be trusted to negotiate in good faith when there’s no pressure on him?  More, recall that in the last debt ceiling fiasco just a couple of years ago, Obama personally (and cynically, say I) blew up one deal very near to completion with a deliberately late demand for $1 trillion in higher taxes.