Beware the light at the end of the tunnel…Its A Train

Thursday, August 12, 2010
By Paul Martin

Commentary: It’s a debt train about to collide with federal obligations

David Stockman served in the House of Representatives and was President Reagan’s budget director. He was a founding partner at The Blackstone Group and now runs Heartland Industrial Partners, a private-equity fund. This article first appeared on Minyanville.com

By David Stockman
MarketWatch.com

GREENWICH, Conn. (MarketWatch) — The federal deficit is no longer an abstract long-term problem; it’s a financially critical freight train hurtling down the track at alarming speed.

Here’s a dramatic way to look at it: Nominal GDP is only $100 billion higher than it was back in the third quarter of 2008. That means it has been growing at only $4 billion per month, while new federal debt has been accumulating at around $100 billion per month.

Yes, this period represents the worst of the so-called Great Recession, but never in history has the federal debt grown at a rate of 25 times GDP for two years running! See “The Road to Recovery: Are We There Yet?”

The Rest…HERE

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