BUDGET DEFICIT FORECASTS FOR NEXT 10 YEARS SHOW UNSUSTAINABLE FINANCIAL COLLAPSE OF THE ECONOMY-NO WORRY IN WASHINGTON AS IT KEEPS SPENDING!

The federal government faces exploding deficits and mounting debt over the next decade, White House officials predicted Tuesday in a fiscal assessment far bleaker than what the Obama administration had estimated just a few months ago.

Figures released by the White House budget office foresee a cumulative $9 trillion deficit from 2010-2019, $2 trillion more than the administration estimated in May. Moreover, the figures show the public debt doubling by 2019 and reaching three-quarters the size of the entire national economy.

THAT SEEMS RATHER IMPLAUSIBLE SINCE EVERY PROGRAM IS UNDERSTATED AND AFTER ALL THESE ARE ONLY PROJECTIONS....AND AS USUAL GOVERNMENT PROJECTIONS TEND TO BE UNDERESTIMATED.

Obama economic adviser Christina Romer predicted unemployment could reach 10 percent this year and begin a slow decline next year. Still, she said, the average unemployment will be 9.3 in 2009 and 9.8 percent in 2010.

"This recession was simply worse than the information that we and other forecasters had back in last fall and early this winter," Romer said.

NO KIDDING...THE GOVERNMENT HAD DONE EVERYTHING TO SCARE AWAY ANY ENTREPRENEURSHIP IN THE BASIC INDUSTRIES IN AMERICA AND THREATENED TO CLOSE DOWN OR TAX TO DEATH OTHERS LIKE ELECTRIC POWER GENERATION, ETC.

Those are NOT policies that will help the economy.

The grim administration projections came on a day of competing economic news. The Congressional Budget Office, which has predicted less economic growth than the White House in the past, was also scheduled to announce revised budget projections on Tuesday.

The deeper red ink and the gloomy unemployment forecast present President Barack Obama with an enormous challenge. The new numbers come as he prods Congress to enact a major overhaul of the health care system — one that could cost $1 trillion or more over 10 years. Obama has said he doesn't want the measure to add to the deficit (oh this must be a magical measure, created by Merlin the magician), but lawmakers have been unable to agree on revenues (called TAXES or MEDICARE CUTS) that cover the cost.

What's more, the high unemployment could ( what do you mean could last?)last well into the congressional election campaign next year, turning the contests into a referendum on Obama's economic policies.

"The alarm bells on our nation's fiscal condition have now become a siren," Senate Minority Leader Mitch McConnell, R-Ky., said. "If anyone had any doubts that this burden on future generations is unsustainable, they're gone — spending, borrowing and debt are out of control." Yes Mitch where were you when the defits were adding to the debt burden when YOU were in charge?

The revised estimates project that the economy will contract by 2.8 percent this year, more than twice what the White House predicted earlier this year. Romer projected that the economy would expand in 2010 ( and how ill it do that when taxes and added health care costs and fees on every industry will rise?), but by 2 percent instead of the 3.2 percent growth the White House predicted in May. By 2011, Romer estimated, the economy would be humming at 3.6 percent growth.

You got to be kidding. Where can I place a bet on this NOT happening?

Both Romer and budget director Peter Orszag said this year's contraction would have been far worse without money from the $787 billion economic stimulus package that Obama pushed through Congress as one of his first major acts as president.

At the same time, the continuing stresses on the economy have, in effect, increased the size of the stimulus package because the government will have to spend more in unemployment insurance and food stamps, Orszag said. He said the cost of the stimulus package — which spends most of its money in fiscal year 2010 — will grow by tens of billions of dollars above the original $787 billion.

For now, while the country tries to come out of a recession, neither spending cuts nor broad tax increases would be prudent deficit-fighting measures. But Obama is likely to face those choices once the economy shows signs of a steady recovery, and it could test his vow to only raise taxes on individuals making more than $200,000.

That's right, raise the taxes on the people who employ other people...smart move to stimulate them hiring other people.

Still, 10-year budget projections can be "wildly inaccurate," (really, I though government figures were always accurate?) said Stan Collender, a partner at Qorvis Communications and a former congressional budget official. Collender notes that there will be five congressional elections over the next 10 years and any number of foreign and domestic challenges that will make actual deficit figures very different from the estimates.

The Obama administration did tout one number in its budget review: The 2009 deficit was expected to be $1.58 trillion, $263 billion less than projected in May. That's largely because the White House removed a $250 billion item that it had inserted as a "place holder" in case banks needed another bailout. WOW, THANK YOU.

Orszag, anticipating backlash over the deficit numbers, conceded that the long-term deficits are "higher than desirable." The annual negative balances amount to about 4 percent of the gross domestic product, a number that many economists say is unsustainable (DOES ANYBODY IN WASHINGTON KNOW THAT WORD?)

These policies tend to destroy the value of the dollar in global markets and domestically; one will be able to buy less goods and services due to the weakened dollar. The government however profits substantially, as it can pay back its debt with weaker dollars while we all suffer the consequences of the government excesses.

Worse things will also happen.

The government has to borrow the needed funds to fund these deficits, foreign countries who now buy our US TREASURY and other government securities will see no reason to buy them as their value will be dubious. RESULT: COLLAPSE OF THE DOLLAR.

There will simply not be enough willing buyers for the debt that will be sold, or in the alternative, in order to sell the debt, the government will have to pay inflated interest rates to make up for the inflation value loss.

If government is sucking up all the available dollars to borrow, how will business borrow money? You guessed it, only at higher and higher rates way above the government borrowing costs.

Now explain to me again how all this will stimulate the economy and create (or save!) jobs?

US DOLLAR-IS IT A WORLD RESERVE CURRENCY OR PAWN IN INTERNATIONAL POLITICS AND LOSING LONG TERM VALUE DUE TO OUT OF CONTROL DEFICIT SPENDING ?

China holds US TREASURY securities variously estimated at $800 billion, plus another similar amount of various other agency securities. As a result, the USA usually has little to say about Chinese freedom restrictions, errant satellite shoot-downs, and of course rights abuses in Tibet.

The Treasury Secretary traveled to China and continued to urge them to buy US TREASURY securities stating that the dollar is strong ( to laughter ) of the listeners, all of whom spoke English.

Is the dollar under attack? Yes, and it will continue to be a target as long as the government continues its spending spree, budget deficits, high taxes and experiences rising unemployment.

The daily and weekly analysis does little to change the long term fundamentals about the USA which is terribly mismanaged fiscally, and now with the significant and unnecessary tax related to energy (global warming) all US taxpayers will be that much less wealthy.

The dollar declined the most against the euro in a month and dropped versus the yen after China repeated its call for a new global currency.

The Swiss franc declined against the euro and dollar this week as foreign-exchange analysts said the central bank sold its currency three times to support the economy. The greenback fell against most of its major counterparts after the People’s Bank of China said yesterday the International Monetary Fund should manage more of members’ foreign-exchange reserves.

“The dollar’s status as a reserve currency is being questioned,” said Benedikt Germanier, a foreign-exchange strategist in Stamford, Connecticut at UBS AG, the second- largest currency trader. “There are reasons to sell the dollar.”

The U.S. currency fell 0.9 percent to $1.4056 per euro this week from $1.3937 on June 19, the swiftest depreciation since the five days ended May 29. The dollar fell 1.1 percent to 95.18 yen from 96.27, its third consecutive weekly drop. The euro decreased 0.3 percent to 133.85 yen from 134.18.

Federal Reserve policy makers said on June 24 inflation “will remain subdued for some time” and that the economy warrants an “extended period” of low rates.

The 10-year Treasury yield fell the most since March as investors bet the Fed will keep interest rates close to zero for the rest of the year. The difference in yield, or spread, between 2- and 10-year yields decreased this week to 2.43 percentage points, near the narrowest level since May 20.

Stronger Real

Brazil’s real gained 2 percent to 1.9363 versus the greenback, its biggest weekly increase in June, as the sale of shares in Visa Inc.’s local credit-card processing affiliate attracted foreign investors to the world’s biggest initial public offering in more than a year.

The dollar depreciated 2.6 percent to 7.8926 South African rand and 1.4 percent to 7.8002 Swedish krona as the People’s Bank of China said in its 2008 review there’s a need for a global reserve currency “delinked from sovereign nations.”

The Swiss franc declined against the euro and dollar as strategists said the Swiss National Bank sold its currency twice on June 24 and once more a day later to support the economy. Nicolas Haymoz, an SNB spokesman, declined to comment on June 25 on whether the bank acted in foreign-exchange markets.

‘Unwelcome’ Strength

“The SNB has to convince markets that it considers a strong franc as unwelcome,” Unicredit SpA analysts Armin Mekelburg in Munich and Roberto Mialich in Milan wrote in a report yesterday. “We fear that franc bulls will start further attempts to wipe out the line in the sand of 1.50.”

The franc fell 1 percent to 1.5230 against the euro and 0.2 percent to 1.0834 compared with the dollar this week. The Swiss currency declined on June 24 to 1.5380 versus the euro, the weakest level since the mid-March period when the SNB said it intervened to weaken the franc.

The ICE’s Dollar Index fell below 80 on the call from China for an alternative to the dollar as the world’s main reserve currency. The gauge tracking the greenback versus the currencies of six leading trading partners decreased 0.5 percent to 79.90.

“To prevent the deficiencies in the main reserve currency, there’s a need to create a new currency that’s delinked from the economies of the issuers,” the People’s Bank of China, or PBOC, said. China is the biggest foreign holder of U.S. Treasuries, with $763.5 billion in April.

Russia’s Stance

Russian Finance Minister Alexei Kudrin said on June 13 after the Group of Eight meeting in Italy that his country had full confidence in the dollar and that it’s “too early” to speak of alternative reserve currencies. Japan has “unshakable” trust in the strong-dollar policy of the U.S., Finance Minister Kaoru Yosano said in Tokyo yesterday.

China called on the U.S. to guarantee the safety of its assets in March, when Premier Wen Jiabao said the nation was “worried” about its holdings of Treasuries.

People’s Bank Governor Zhou Xiaochuan urged the IMF that month to expand the functions of its unit of account and move toward a “super-sovereign reserve currency.” Russian President Dmitry Medvedev proposed on June 5 that nations use a mix of regional reserve currencies to reduce reliance on the dollar.

“There may be signs here of tensions mounting between the PBOC’s economic concerns over China’s holdings of dollars and the Chinese government’s diplomatic reasons for doing so,” Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London, wrote in an e-mail.

Venezuela’s bolivar plunged yesterday to a seven-week low in unregulated trading after the government said investors won’t be able to use a new $3 billion corporate bond offering to obtain dollars until 2011.

The bolivar fell 4.1 percent to 6.90 bolivars per dollar in the parallel market, traders said. The currency tumbled 20 percent this year in the unregulated market as the government pared dollar sales at the official exchange rate of 2.15 after oil, which accounts for 93 percent of the country’s exports, plunged from last year’s record high.