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Paulson Plan May Push National Debt to Post-World War II Levels
Matthew Benjamin
Bloomberg
Tuesday, Sept 23, 2008
Treasury Secretary Henry Paulson’s $700 billion proposal to stabilize the banking system may push the national debt to the highest level since 1954, threatening an erosion of foreign appetite for U.S. bonds.
The plan, which asks Congress for funds to buy devalued securities from financial institutions, would drive the debt above 70 percent of gross domestic product and the annual budget gap to an all-time high, possibly exceeding $1 trillion next year, economists estimated.
“This is sobering, absolutely sobering, even to someone who doesn’t drink,” said Stan Collender, a former analyst for the House and Senate budget committees, now at Qorvis Communications in Washington.
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At risk for the world’s largest economy: a jump in interest rates prompted by the glut of additional Treasuries needed to finance the plan, and a diminished desire among international investors to add to their holdings. The dollar yesterday slid the most against the euro since the European currency’s 1999 introduction.
Paulson may be questioned on the borrowing impact of his plan at a hearing at the Senate Banking Committee today that begins at 9:30 a.m. He’s asking lawmakers to lift the legal ceiling on the federal debt to a record $11.3 trillion from the current $10.6 trillion.
Treasuries fell in the past two trading days after Paulson signaled Sept. 18 a sweeping rescue was needed, with the 10-year note yield rising 29 basis points to 3.84 percent. The two-year note climbed 47 basis points on Sept. 19, the most in 23 years. A basis point is 0.01 percentage point.
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6 Responses to “Paulson Plan May Push National Debt to Post-World War II Levels”
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September 23rd, 2008 at 4:17 am
This sounds like too much debt. “Poor people are slaves of the rich. Borrow money and you are the lender’s slave.” (Proverbs 22:7)
September 23rd, 2008 at 6:00 am
not a national debt, but rather a Congressional debt, hold them accountable !!!!!!!!!!!!!!
http://www.youtube.com/watch?v=e7vb1ZtmMIE
September 23rd, 2008 at 6:42 am
I guess if a criminal’s highest goal is to steal the most money, these villians are some of the world’s most successful criminals. At the end of the day its all fraudulent debt that is being levied on the innocent public so it doesn’t mean anything. Its just a made up fantasy to convince the con fed cattle that they should be jailed. If this were a movie we were watching it would be about time to hit eject and put in different movie in the DVD player.
September 23rd, 2008 at 6:53 am
in the end its not like we are going to pay anything.. default is coming at the rate we are going by 2011 anyway
September 23rd, 2008 at 7:08 am
Planet X will take care of this situation. 2012 ain’t far off……
September 23rd, 2008 at 12:31 pm
Big deal. I don’t plan to live in the US a whole lot longer anyways. The ship is sinking and the rats are fighting over who gets the biggest piece of cheese. We need a French style revolution.