Mon, 12/11/2012 - 10:14
TrimTabs Investment Research says the Obama White House and the Bernanke Federal Reserve are putting the US on the road to financial ruin because their main approach to dealing with America’s economic problems since the financial crisis began has been pretty simple – borrow and print.
In a special report to clients, Trimtabs notes: “Over the past five years a combination of lower after-tax income and exploding government borrowing are putting the US on course for fiscal disaster. The debt-to-income ratio of the US—the ratio of total federal debt to after-tax income of everyone in the US who pays taxes—nearly doubled in the past five years, rising from 1.4 in 2007 to an estimated 2.5 in 2012.”
TrimTabs chief executive Charles Biderman says: “We want to emphasise that total federal debt is already 2.5 times the annual after-tax income of everyone in the US who pays taxes. Moreover, this ratio is likely to keep rising unless President Obama suddenly changes course.”
The report points out that in 2008 — right before President Obama took office — the after-tax income of everyone in the US who pays taxes was USD6.80trn. This figure includes both after-tax wage income and after-tax non-wage income from sources such as capital gains and rental income. After-tax income tumbled to USD5.97trn in 2009. Trimtabs estimates, based on data through October, that after-tax income will reach USD6.60trn in 2012.
TrimTabs says: “Total federal debt was USD10.70trn at the end of 2008 — the year before President Obama took office — and we estimate based on year-to-date data that it will reach USD16.47trn in 2012. In other words, total federal debt will have shot up USD5.77trn, or 54 per cent, in four years.”
Says Biderman: “After-tax income, is down in nominal terms and down even more in real terms since President Obama took office.
“Despite the constant chatter about ‘recovery,’ after-tax income in 2012 is on track to be three per cent below its peak n 2008, even before adjusting for inflation. After adjusting for inflation—even using the government’s understated measure—after-tax income is on track to be more than 10 per cent below its peak.”
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