See this Bloomberg article:
http://www.bloomberg.com/apps/news?pid= ... J5uNs8bNc#


//////////////////////
This is basically a message to our creditors. A pre-packaged Chapter 11 if you will.

While this SOUNDS like a good thing, it really means we are MUCH closer to a
sovereign debt default that I had anticipated.

This would only be floated if they thought we couldn't roll over the existing
sovereign debt, or be able to service the existing debt with anticipated tax receipts and
borrowing.

Something wicked this way comes.........

Guano - Thanks for the heads up!

Is China begininng to tighten the screws?

China Targets Inflation as Economy Runs Hot

BEIJING—China took further steps to discourage bank lending Thursday, signaling the government's growing concerns about inflation on a day Beijing announced economic growth numbers for 2009 that outstripped its expectations.

Asian markets fall on concerns China will tighten credit, as the latest economic data out of Beijing confirm the risk of rising asset prices and inflation. Dow Jones Newswires' Puja Rajeev reports.
snip

The central bank has also been adjusting policies to curb loan growth, after banks nearly doubled their new lending in 2009 to 9.59 trillion yuan ($1.4 trillion). The People's Bank of China has been guiding money-market interest rates higher and recently raised the amount of deposits that banks must keep on reserve, effectively making the funds unavailable for lending. It also said it will direct banks to balance out their lending through the year.

The central bank said Wednesday it expects a substantial drop in new yuan lending this year to about 7.5 trillion yuan,

snip
http://online.wsj.com/article/SB10001424052748704320104575015900325556896.html?mod=WSJ_Markets_LEFTTopNews

Thanks, Guano, for the info. Here is an excerpt from a Dec. 18th article in the WSJ.



http://online.wsj.com/article/SB1000142 ... 51824.html

If that's not the truth, I don't know what is.

I also agree with the professor that taxes are getting ready to go through the roof! We simply cannot sustain this massive debt - well, I guess we could hock our nation more than it already is and let our great-grandchildren pay for it.

Puhlease!

Great call, guano!

You know what's odd about this story? I have YET to see it in MSM AND it's not even on the front page of my local newspaper's web site. I actually first read it this morning in the actual newspaper - front page! Hmmmmmmmmmmm

Obama to propose budget freeze to reduce the deficit
By LORI MONTGOMERY
Washington Post
Jan. 25, 2010, 10:00PM

WASHINGTON — Under mounting pressure to rein in mammoth budget deficits, President Barack Obama will propose in his State of the Union address a three-year freeze on federal spending that is not related to national security, a concession to public concern about government spending that could dramatically curtail Obama's legislative ambitions.

The freeze would take effect in October and limit the overall budget for agencies other than the military, veterans affairs, homeland security and certain international programs to $447 billion a year for the remainder of Obama's first term, senior administration officials said Monday, imposing sharp limits on his ability to begin initiatives for education, the environment and other areas of domestic policy.

Although the freeze would shave no more than $15 billion off next year's budget — barely denting a deficit projected to exceed $1 trillion for the third year in a row — White House officials said it could save significantly more during the next decade. They view the initiative as a critical component of a broader deficit-reduction campaign intended to restore confidence in Obama's ability to control the excesses of Washington and the most lavish aspirations of his own administration.

“You can't afford to do everything that you might have always wanted to do. That's the decision-making process that the president and the economic team went through,” said a senior administration official, speaking on the condition of anonymity to describe the speech the president will deliver Wednesday night. “We're not here to tell you that we've solved the deficit. But you have to take steps to control spending.”

Massachusetts shocker
The announcement comes less than a week after Massachusetts voters sent shock waves through the Democratic establishment by handing Republicans a crucial 41st seat in the Senate and the power to block Obama's legislative agenda. After spending much of his first year in office pursuing expensive measures to revive a faltering economy and overhaul the health-care system, Obama has pledged to devote much of the next year to reducing budget deficits, which have forced the Treasury Department to increase borrowing, driving the accumulated national debt to dizzying levels.

Obama's commitment to that goal will be an important theme of his address to Congress, administration officials said, and will be fully detailed in the budget he is due to submit to lawmakers early next week. Administration officials have declined to say specifically how Obama plans to reduce deficits projected to add more than $9 trillion to the national debt during the next decade. But the president has endorsed several measures aimed at meeting that goal, including the adoption of stringent pay-as-you-go budget rules that would bar lawmakers from passing programs that increase deficits and the creation of a bipartisan commission to work toward a balanced budget. Pfffttt

The Senate is scheduled to vote Tuesday on a plan to create a budget commission, though supporters say they lack the 60 votes needed for adoption. Obama has told lawmakers that if the measure fails, he will issue an executive order creating such a task force and ordering it to develop a plan that would raise taxes while restraining spending on big entitlement programs, such as Medicare, Medicare and Social Security, which threaten to drive the nation's debt toward levels not seen since World War II.

Two-thirds of budget
Spending on those programs — known as “mandatory” or “entitlement” programs, because the law requires everyone eligible to receive benefits — constitutes nearly two-thirds of the nation's $3 trillion budget. The remaining third is known as “discretionary” spending, because it falls under congressional control. The spending freeze Obama plans to announce Wednesday would affect only the non-security portion of discretionary spending, or about one-eighth of the overall budget.

The freeze is likely to be met with a mixed reaction on Capitol Hill. Conservative Democrats, including Sen. Evan Bayh of Indiana and members of the House Blue Dog Coalition, have been calling for a spending freeze backed by the threat of a presidential veto. But liberals have resisted freezing spending, particularly on social programs, and are likely to call on Obama to extend any freeze to military programs.

“I think it's entirely possible to do,” said Senate Budget Chairman Kent Conrad, D-N.D., a strong proponent of balanced budgets. “It's relatively modest in terms of overall deficit reduction. But it sends an important signal that everything is on the table.”

Republicans mocked the idea, which comes after a year in which Obama sought and won a $787 billion fiscal stimulus package and has pursued a far-reaching overhaul of the health-care system expected to cost about $900 billion over the next decade.

“Given Washington Democrats' unprecedented spending binge, this is like announcing you're going on a diet after winning a pie-eating contest,” said Michael Steel, spokesman for House Minority Leader John Boehner, R-Ohio.

The White House quickly fired back, noting that non-security discretionary funding nearly doubled between 1995 and 2006, when the House — and periodically the Senate — was in Republican control.

It was not clear Monday which programs would be most affected by a freeze. Democrats are eager to authorize programs to create jobs as part of an effort to lower a 10 percent jobless rate.

http://www.chron.com/disp/story.mpl/nation/6835111.html