Wednesday, January 26, 2011

Federal budget deficit for 2011 to be $1.5 trillion

This is going to put a damper on Obama's plan to "invest" his way to prosperity with money borrowed from China.

The federal budget deficit will reach a record of nearly $1.5 trillion in 2011 due to the weak economy, higher spending and fresh tax cuts, congressional budget analysts said, in a stark warning that will drive the growing battle over government spending and taxation.

The grim outlook landed a day after President Barack Obama outlined plans to push for new spending that he said would help keep the U.S. globally competitive in his State of the Union speech, and the data could complicate that effort. Republicans have dismissed the president's plans as ignoring the more pressing need to reduce the deficit.
These deficits are so huge that they are politically impossible to deal with in any manner that will actually matter. We are now at the point where it is impossible to fix these problems. Things will continue until we have another financial crisis and then we will have a bond market and currency crisis. I have been saying for a while that the United States will be a radically different place after this happens. I am still of the opinion that shorting the US Treasury market is still the short of the century. I would also use any pullback in precious metals to add to my position.

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