Yesterday while surfing the TV channels I came across an interview on CNBC with David Cote, Honeywell CEO and a member of America's National Commission on Fiscal Responsibility and Reform.
His comments caught my ear and I rewound the PVR to write down what he said.
If you have any doubt about my post yesterday about Quantitative Easing and even more money printing in our immediate future, consider Cote's comments.
- "I consider myself a fiscally conversant CEO and the thing that surprised me is that I had no idea of the magnitude of the problem coming in the next 10 years.
I was disturbed by where we are, I had no idea what was going to happen over the next 10 years, largely because my generation, the baby boomers, are going to be retiring, going though social security, medicare and medicade.
And when that happens we are crushing the system, it can't handle it. We go from $9 Trillion in public debt today to $20 Trillion 10 years from now, even if GDP grows at 4.6% per year.
I told the commission that if you spent $1 million dollars a day, every day, since Jesus Christ was born you still would not have spent a Trillion dollars. And by 2021 that will be our annual interest bill alone.
Serving on the debt commission has been eye opening. We need to deal with this before we are forced to deal with it like they are being forced to in Europe.
This is going to be a crisis on a scale we have never seen before."
Cote went on to say that the reforms the commission are proposing will allow America to achieve a BALANCED budget in a few years.
It does NOTHING to address paying down the debt, it just stops adding to it.
And that's if the commission is successful in getting it's reforms implemented. I can guarantee you that this commission, just like all before it, will fail to get Congress to achieve a balanced budget.
The contagion you are seeing in Europe is only a preview to what is coming to North America.
Cote said it best. "This is going to be a crisis on a scale we have never seen before."
Massive QE and ultimately massive interest rate hikes as the bond market forces discipline on goverment (just as is happening now in Europe).
Anyone who sits down and does the math can see it coming. Can you?
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