Fred Cederholm: We've learned more is not always better ... especially when it follows a minus sign!

VHeadline commentarist and money market expert Fred Cederholm writes: I've been thinking about the 2008 numbers. Actually I've been thinking about calendar 2008, the national debt, trade deficits, energy imports, and escalations. Last week I discussed calendar 2008s status as potentially the worst year in almost 70 years. No amount of spin or political hyperbole could camouflage that America was tanking. In 2008, denials of a recession finally gave way to an acknowledgement that the US economy began contracting (the nice way of saying -- a recession) in the 4th quarter of 2007!

We've learned more is not always better -- especially when it follows a minus sign.

You see 2008 dawned last January 1 with a national debt of $9.229 TRILLION and 2008 ended with a national debt of $10.553. The "growth" of the national debt as reported grew by $1.324 TRILLION.

This was broken down by an increase in Intergovernmental Borrowings (IG) of $137 BILLION and an increase of Debt held by the Public (DP) of $1.187 TRILLION. The IG increase tells us that the retirement trust funds under the fiduciary stewardship (mostly Social Security) ran a SURPLUS of $137 BILLION.

Unfortunately this surplus was netted against the budget deficit, spent elsewhere, and added to the outstanding National Debt! The DP increase tells us that the additional $1.187 TRILLION came from sales of new US Treasury borrowings from the weekly auctions. It should be noted that roughly 45% of this, or $534 BILLION, came from foreign entities. The four usual suspects are (1). China, (2). Japan, (3). the Arab OPECs, and (4). the EURO Zone including the UK. Uncle $ugar still depends on the largesse of foreigners to cover our ongoing major financial deficits!

As an aside it took ALL the national debt added by the US government from Jan. 01, 1791 to mid 1983 to equal ONLY the increase in the outstanding National Debt in 2008! It must also be noted that significant portions of the war costs in Afghanistan and Iraq are off balance sheet entries. So too for virtually all of the obligations, commitments, loans, bailouts, guarantees, infusions, and the $700 BILLION Troubled Asset Relief Program (TARP) deployed in 2008 to keep the US economy and financial services sector from imploding. These are NOT reflected in the 2008 National Debt increase!

Our eight largest trade deficits for the month of Oct 2008 (and 2008 Year to Date) were made public in December and are as follows: China $27.957 Billion - an all time record ($223.396 Billion YTD), Japan $6.047 Billion ($62.427 Billion YTD), Canada $5.957 Billion, ($68.513 Billion YTD), Mexico $4.804 Billion ($56.781 Billion YTD), Saudi Arabia $4.070 ($39.797 Billion YTD), Germany $3.368 Billion ($36.813 Billion YTD), Ireland $2.795 Billion ($18.858 Billion YTD), and Venezuela $2.660 Billion ($36.299 Billion YTD).
Our hands-down overall biggest dollar denominated imports are for crude oil and petroleum distillates. Our biggest trade surplus in Oct. 2008 of $1.221 Billion ($11.116 Billion YTD) was with the United Arab Emirates. No explanation was given for this anomaly.

We now depend on foreign suppliers for about three fourths of our energy needs. The top eight sources of crude oil imports for Oct. 2008 were: Canada (2.066 Million barrels per DAY--MB/D), Saudi Arabia (1.435 MB/D), Mexico (1.256 MB/D), Venezuela (1.027 MB/D), Nigeria (0.935 MB/D), Iraq (0.577 MB/D), Angola (0.527 MB/D), and Brazil (0.345 MB/D). The top eight sources of total petroleum imports for Oct 2008 were: Canada (2.587 MILLION barrels per DAY--MB/D), Saudi Arabia (1.487 MB/D), Mexico (1.433 MB/D), Venezuela (1.162 MB/D), Nigeria (0.979 MB/D), Iraq (0.577 MB/D), Algeria (0.555 MB/D), and Angola (0.555 MB/D).
The manipulated record spiking of crude oil prices of last summer continued to unravel. October Crude dropped a record $15.56 a barrel.

At the current rate of the escalation in digits, just how much longer before we are confronted by our first QUADRILLION ($1,000,000,000,000,000) of anything?

When we are, I can assure you that it is not going to be in any good context...

Fred Cederholm
asklet@rochelle.net

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Venezuela is facing the most difficult period of its history with honest reporters crippled by sectarianism on top of rampant corruption within the administration and beyond, aided and abetted by criminal forces in the US and Spanish governments which cannot accept the sovereignty of the Venezuelan people to decide over their own future.

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