Who's Next?

The problems at Bear Stearns and the continuing upheavals in global financial markets have left a lot of people wondering: Who's next? Will it be a multi-billion dollar hedge fund, a government-sponsored enterprise like Fannie Mae or Freddie Mac, another Wall Street broker-dealer, or even one of the nation's largest commercial banks?

Maybe everyone is looking in the wrong direction. Based on the following Reuters report, "House Seeks Debt Limit Increase to $10.2 Trillion," maybe it is the U.S. of A. that is poised to face the music.

The government's debt limit would be raised to $10.2 trillion under a budget plan for next year approved by the U.S. House of Representatives.

The House's fiscal 2009 budget, which passed on Thursday, would increase U.S. borrowing authority by $385 billion from the current limit of $9.815 trillion, according to the House Budget Committee.

The Senate on Friday passed its own version of a fiscal 2009 budget that did not address the question of raising federal borrowing authority.

The two chambers in coming weeks are expected to try to work out their differences and then pass a budget for next year that would spend $3 trillion while projecting a deficit in the range of $340 billion to $366 billion for the year.

It is not clear whether negotiators will adjust the House's proposed $10.2 trillion debt limit.

Large annual deficits have caused the federal debt to climb steeply since President George W. Bush took office, rising from $5.6 trillion in January, 2001, to $9.3 trillion on Wednesday.

Congress last approved an increase in Washington's borrowing authority last September, increasing the credit limit by $850 billion.

Some lawmakers recently have estimated that the Treasury Department could bump up against the current $9.815 trillion limit either shortly after November presidential and congressional elections or early next year, depending on revenues and economic performance.

Comments

[Govermint]

The Federal budget seems to be deteriorating quite rapidly. The guys at http://wallstreetexaminer.com/ often comment about it. This news article is relevant:

Feb budget gap balloons to record $175.56 bln
http://news.yahoo.com/s/nm/20080312/bs_nm/usa_budget_dc_2

[John]

Interesting article in the Toronto Star today regarding a strong warning from the International Monetary Fund(IMF). According to the article, the IMF claims that are we headed for the worst financial unravelling since the Great Depression. Trillions of dollars of wealth will evaporate and disintigrate into nothingness! Kiss your retirement, 401k's, and any other investements or equity you might have goodbye... It's game over.

I've seen it coming. I've been saying it's coming(only to be scorned and ridiculed), and everyone, including the Fed and Bush & Co., is powerless to stop it. Well the chickens have finally coming home to roost, nobody's laughing anymore, and I'm starting to think a shovel and a glass jar will be a good investment for the big show down just over the horizon. The party's over folks. The bill has now come due, and nobody can afford to pay it. Good luck!