Quantum Leap

This country certainly took a 'quantum leap' electing Barak Obama as our 44th president.  I did not believe that my generation would live long enough to see a black or woman president.  It seems like destiny stepped and said that it is time.  The first biggest plus that I can see is that world is already looking at us in a more benevolent way in comparison to what our current administration created through arrogance and the belief that military might is stronger than communication and spiritual strength.  

I want to discuss debt again as I did in my last blog.  I read that the Federal balance sheet began in 2008 with $890 billion in assets made up on 100% in treasury bills..  Currently, the assets are $1.9 trillion, and treasury bills now account for less than 1/3 of the assets. 2/3s are the toxic mortgage securities.  By January 2009, it is estimated that the balance sheet will be around $3 trillion.  As a former accountant, this is quite startling, to see how quickly we went from being risk averse to being giant risk takers with questionable assets as to their value.  

The dollar has recently strengthened against other currencies, but I think this is only temporary because of the amount of money we are investing and loaning financial institutions, plus the programs to come from a Democratic congress that will need funding.  This is all added to our $10-13 trillion debt.  As I have said before, there is an 'unknown' point where our debt load will be so large that selling treasury bills will be more difficult because there will not be enough buyers here and abroad.  That means printing more money to make up for it.  This is where I have my focus, looking for signposts of what appears the inevitable.  If and when this occurs, our dollar will no longer be considered a safe haven.

My hope would be that the president elect shows fiscal constraint in an environment of immense pressure to spend because of the financial struggles of the top and bottom.  We need to keep contracting and paying off debt or having it written off.  This will strengthen our country's balance sheet and also our individual ones.