Where is the US economy headed?

President Barack Obama's stimulus program could have a destabilizing effect on the US-economy. No one is asking who will purchase the $1-trillion of US Treasuries to be offered to the market by September. Once that colossal amount of paper is bought, who will purchase another $5-trillion of Treasury paper over the next four-years, as the US-government plunges deeper into insolvency. The Federal Reserve would be forced to print (monetize) vast quantities of US-dollars to pay the principal and interest on the national debt that is not covered by tax revenue. "

This bites. I have a credit card for my business. Many of my small suppliers prefer to be paid upon shipment with a card. Cash flow and bad debt issues. Fine with me. It costs about $1.50 to write and mail a check and this card offered a 1% rebate each month on my purchases - which averaged about $8000/month. The card has a $25000 limit, which was more than ample. We always paid the full balance on time. Never a late fee or interest.
Today (5/26) I get a "Dear customer" letter that says (in essence): The institution that funds outstanding balances (i.e. "buys" the credit card debt) has suspended operations. Your card is canceled as of 5/31. You have made $X in purchases since your last statement. We will allow an additional $500 of charges. Any charge made later will be declined. Have a nice day.
It matters little to me. I was in it for the rebate and the savings vs writing checks. My cash flow is fine.
The timing of this -just a week or so after Congress passed credit card reform- suggest to me that the bean counters looked at my history and decided they were not making any money off of me and people like me.

Dear customer" letter that says (in essence): The institution that funds outstanding balances (i.e. "buys" the credit card debt) has suspended operations. Your card is canceled as of 5/31

I don't disagree at all, hawk, with your thesis. It was a sweet deal for me. As much as a 30 day or so "float" between the time I made the purchase and when I had to make payment. No interest and a 1% rebate. It makes absolutely no sense. They were losing money having me as a customer.
One of my employees is up to his eyeballs in credit card debt. He and his lady are about 25. They pay the minimum each month and things are fine. I, and some of his coworkers, feel like strangling him. You will never get out of the hole you are in paying the minimum. The new law, as I understand it, will require the credit card companies to disclose, in something other than fine print, how long it will take and how much it will cost in interest.
Which leads me to this rant in an already too long post. I am stunned by how many folks come into my store and pick up an item costing $10 marked down by 50% and say "So how much will it cost? I was never any good at math." That is, to me, down right scary. Sheep, being fleeced.

Which leads me to this rant in an already too long post. I am stunned by how many folks come into my store and pick up an item costing $10 marked down by 50% and say "So how much will it cost? I was never any good at math." That is, to me, down right scary. Sheep, being fleeced.

Everybody who understands our long-term budget problems understands we're going to need a new source of revenue, and a VAT is an obvious candidate," said Leonard Burman, co-director of the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, who testified on Capitol Hill this month about his own VAT plan. "It's common to the rest of the world, and we don't have it."


The surge of interest in a VAT is testament to the extraordinary depth of the nation's money troubles. While some conservatives have long argued that a consumption tax would provide a simpler and more efficient alternative to the Byzantine U.S. income tax code, this time it's all about the money.

The federal budget deficit is projected to approach $1.3 trillion next year, the highest ever except for this year, when the deficit is forecast to exceed $1.8 trillion. The Treasury is borrowing 46 cents of every dollar it spends, largely from China and other foreign creditors, who are growing increasingly uneasy about the security of their investments.