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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (16914)	11/27/2004 12:39:42 AM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

"The following highlight the extent of the mounting debt and the risk involved: The total US public national debt now exceeds $7 trillion. When Social Security, Medicare, Medicaid, military and government pensions are added in, the total national debt exceeds $51 trillion, according to Fortune magazine - that's nearly five times the gross domestic product (GDP) . The current year's deficit alone approaches $1 trillion when you add the off-budget items. Derivatives (highly leveraged and enormously risky instruments such as interest-rate futures, options and swaps) now total $180 trillion, 17 times the GDP. Warren Buffet calls derivatives "instruments of mass destruction". Many financial institutions have become highly invested in derivatives. Government-sponsored enterprises such as Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corp) use derivatives heavily. Because of the inherent nature of derivatives, these instruments and those using them are extremely sensitive even to small and moderate interest-rate increases. The total US consumer debt is more than $8 trillion. The Japan Times recently stated, "Stephen Roach, Morgan Stanley's perceptive economist, drew attention to the fact that some of the numbers are nothing short of frightening. The US currently has $38 trillion in debts, and there is a $54 trillion federal funding gap - the difference between what the government is committed to pay out and what it will receive in tax revenues." atimes.com