The USPS, which is facing a 10% reduction in offices, is running ads saying they are entirely funded by stamps and postage. Bruce Krasting shows how this is nonsense, as USPS is borrowing billions at near zero interest rates from the Fed.
This is an off balance sheet funding vehicle (“SPIV”). Take a look at the balance sheet as of June 30, 2011.
The USPS has borrowed $12 billion and is paying it back at a ludicrous 0.166% and these loans are not counted on balance sheets. More to the point, will they be able to pay it back?
This is a perfect example of what is wrong with America. When faced with a problem what do we do?
(I) Lend money to the problem in the hope it will go away.
(II) Hide the debt in SPIVs.
(III) Bury the problem with zero cost debt.
(IV) Lie to the public and say there is no cost.
(V) Kick the can down the road and declare success.
This is precisely what Congress is doing with the debt ceiling. Pretend and extend, using accounting gimmicks and loopholes to hide the rot.