the spending fight explained

fuck me, it worked. usually i have a tough time reproducing a graph. i guess somebody up there likes me today. i often see pro obama articles that show some sort of a graph depicting him as the most frugal president in modern times and of course there are anti obama articles that depict him as satan incarnate spending the country into oblivion. so what's the real story?

who the fuck knows what the real story is but the graph above defines the problem quite clearly in my eyes. in 1963 discretionary spending was 67.6% of total spending but now the figure has shrunk to 24.2% and mandatory spending (health and social security) has risen to 61.8% from 25.4%. discretionary spending is the money the politicians can spend on pet projects, reward supporters, feather their own nests etc and mandatory spending is the stuff they have very little control over, the money must be spent. one of my favorite quotes is, "when the watering hole gets smaller, the animals get meaner." can you see where i'm heading?

in this case discretionary spending is the watering hole and it is getting smaller every year with no end in sight as the demographics change with the ratio of workers to retirees shrinking and obesity skyrocketing. simply put, there isn't enough free money to go around these days. in the past politics was like pro rasslin, a good show when the cameras are on but when the cameras go off the politicians would retreat to their inner sanctums, light their cigars then divide the money. there was enough to go around. now there is not enough to go around so they no longer can play nicely. the gloves are off.

another very interesting point on the graph is the percent spent on interest. at the present time it is at 14%, a doubling of the figure from 1963. right now interest rates are almost at zero. they could easily double or triple in the next few years. it's not a question of IF rates rise, it's a question of WHEN rates rise. every increase in interest spending, means a corresponding decrease in discretionary spending. and one day, the watering hole may be completely dry.

here is a graph of historic 10 year rates for mr bananas, i think there is room for an increase.

"With regards to Quantitative Easing, unlike Goldman Sachs and Morgan Stanley, I believe that the spending isn’t about creating new jobs. It’s about the fact that the Federal Government spends about 1.2 trillion dollars more than they take in per year. They appear able to ‘hoodwink’ bond-buyers into buying about 750 billion dollars’ worth of bonds… which leaves them about 450 billion shy."

bottom line, we will be living in interesting times very soon. but all the preceding analysis might be total bullshit and we are the brink of enlightenment.

i love you sons of bitches.