A $2 Trillion federal budget deficit

All these bailouts have a price tag, and its one we can't afford.

Oct. 10 (Bloomberg) -- The global financial crisis is turning into a bigger drain on the U.S. federal budget than experts estimated two weeks ago, ballooning the deficit toward $2 trillion.

Bailouts of American International Group, Fannie Mae and Freddie Mac likely will be more expensive than expected. States are turning to Washington for fiscal help. The Federal Reserve said this week it will begin buying commercial paper, the short- term loans companies used to conduct day-to-day business, further increasing costs. And analysts now say the $700 billion bank- rescue plan passed by Congress last week may have to be significantly larger.

``I always assumed they would be asking for more money along the way if it was necessary, and it looks like it's going to be necessary,'' said Stan Collender, a former analyst for the House and Senate budget committees, now at Qorvis Communications in Washington. ``At the moment, there's nothing happening here that's positive for the budget. Nothing.''

The 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983, according to David Greenlaw, Morgan Stanley's chief economist. Two weeks ago, budget analysts said the measures might push deficit to as much as $1.5 trillion.

I miss Bill Clinton.

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I wrote about the ultimate question of can the US default?

Elephant in the Room.

These deficits are incredible and also sudden. The US still is nowhere near the deficits they ran in the Great Depression WWII but honestly I wonder because they threw away the production economy....so where are future tax revenues going to come from?

Did you see yesterday that the deficit clock in New York ran out of numbers?

The ultimate sign of the times!

Lerning to live with enormous deficits

Between 1939 and 1942, the US economy expanded four fold from GDP of $50 Billion in 1939 to $200 Billion in 1942, on War Bonds, Federal Debt.

All because of the War and because FDR disbelieved JM Keynes when told to expand the federal deficit to get out to the depression. It is not debt that is the issue at this time but the productive use of debt. Will the debt go to the corrupt finance capital or the productive economy?

The crisis of finance will likely soon become the crisis of the base economy 'Main Street'. The question is whether we undestand the difference, know how to finance the industrial base, and provide equity and liquidity rules for finance capital.

At this point of history the important difference between George Bush and Hugo Chavez, who natioanlized the Bank of Venezuala, is that only one speaks good Spanish.

Burton Leed