The Death of the Dollar
Filed under: Jim's Mailbox
Was the State Aid Bill a Bailout? CIGA Eric
More than 30 governors — Republicans and Democrats alike — supported the state aid bill, granting $26.1 billion in fiscal relief to local governments facing yawning budget gaps and signed into law yesterday. Yet only four Republicans — Sens. Susan Collins and Olympia Snowe of Maine, and Reps. Anh “Joseph” Cao (La.) and Mike Castle (Del.) — ended up voting for the deficit-neutral bill.
Was the State aid bill another bailout? Simply follow the money for the answer.
When States run out of money, they must issue debt or reduce spending. As credit ratings decline, debt issuance becomes less an option for States. The best option tends to be reduction in spending, usually in the form of massive layoffs and cutbacks in social programs. These cutbacks, however, curtail economic growth in a consumption driven economy, which in turn, translates into lower revenues for the State and Federal government.
A vicious cycle, described as "The Formula" by Jim, is born. The long-term cycle or formula is illustrated below.
US Federal Budget (Surplus or Deficit As A % of GDP, 12 Month Moving Average) and Gold London P.M. Fixed:
The infusion of money (stimulus) from the Federal level is intended to break this cycle. Unfortunately, the Federal government must issue debt to provide money to the State and local governments. This is nothing more than a shift in debt burden from State to the Federal sector. Moreover, money transfers without investment will do little to increase economic growth in the future. In other words, once the stimulus has been consumed, more will be required.
Source: washingtonindependent.com
Source: maciverinstitute.com
Source: online.wsj.com
Source: nj.com
More…
The Dallas Fed Reminds That The Economy Is Doing Much Worse Than In The Administration's Worst Nightmare
Posted: Aug 12 2010 By: Jim Sinclair Post Edited: August 12, 2010 at 12:36 pm
Filed under: In The News
Posted: Aug 12 2010 By: Jim Sinclair Post Edited: August 12, 2010 at 12:33 pm Filed under: In The News
Jim Sinclair’s Commentary
This is simply not going away. There is no practical means by which it can be drained ever! It is growing in a way that is unsustainable by any measure.
Rather than being contained we are on the threshold of another round of unprecedented paper money creation. The reason it is happening is that it must because there is no real repair in the financial industry, just cartoon valuations of worthless paper.
The possibility of an implosion of the Western World economic system is still a clear and present danger.
Deficit in July Totals $165.04 Billion By JEFF BATER And DARRELL A. HUGHES
AUGUST 11, 2010, 2:54 P.M. ET
The U.S. government spent itself deeper into the red last month, paying nearly $20 billion in interest on debt and an additional $9.8 billion to help unemployed Americans.
Federal spending eclipsed revenue for the 22nd straight time, the Treasury Department said Wednesday. The $165.04 billion deficit, while a bit smaller than the $169.5 billion shortfall expected by economists polled by Dow Jones Newswires, was the second highest for the month on record. The highest was $180.68 billion in July 2009.
The government usually runs a deficit during July, which is the 10th month of the fiscal year. So far in fiscal 2010, the government spent $1.169 trillion more than it made. That figure is about $98 billion lower than during the comparable period a year earlier.
For all of fiscal 2009, the U.S. ran a record $1.42 trillion deficit. Fiscal 2010 might run a little higher—the Obama administration sees $1.47 trillion.
Wednesday’s monthly Treasury statement said U.S. government revenues in July totaled $155.55 billion, compared with $151.48 billion in July 2009.
Spending was higher, totaling $320.59 billion. July 2009 spending amounted to $332.16 billion.
More…
This is simply not going away. There is no practical means by which it can be drained ever! It is growing in a way that is unsustainable by any measure.
Rather than being contained we are on the threshold of another round of unprecedented paper money creation. The reason it is happening is that it must because there is no real repair in the financial industry, just cartoon valuations of worthless paper.
The possibility of an implosion of the Western World economic system is still a clear and present danger.
Deficit in July Totals $165.04 Billion By JEFF BATER And DARRELL A. HUGHES
AUGUST 11, 2010, 2:54 P.M. ET
The U.S. government spent itself deeper into the red last month, paying nearly $20 billion in interest on debt and an additional $9.8 billion to help unemployed Americans.
Federal spending eclipsed revenue for the 22nd straight time, the Treasury Department said Wednesday. The $165.04 billion deficit, while a bit smaller than the $169.5 billion shortfall expected by economists polled by Dow Jones Newswires, was the second highest for the month on record. The highest was $180.68 billion in July 2009.
The government usually runs a deficit during July, which is the 10th month of the fiscal year. So far in fiscal 2010, the government spent $1.169 trillion more than it made. That figure is about $98 billion lower than during the comparable period a year earlier.
For all of fiscal 2009, the U.S. ran a record $1.42 trillion deficit. Fiscal 2010 might run a little higher—the Obama administration sees $1.47 trillion.
Wednesday’s monthly Treasury statement said U.S. government revenues in July totaled $155.55 billion, compared with $151.48 billion in July 2009.
Spending was higher, totaling $320.59 billion. July 2009 spending amounted to $332.16 billion.
More…
Filed under: Jim's Mailbox
Was the State Aid Bill a Bailout? CIGA Eric
More than 30 governors — Republicans and Democrats alike — supported the state aid bill, granting $26.1 billion in fiscal relief to local governments facing yawning budget gaps and signed into law yesterday. Yet only four Republicans — Sens. Susan Collins and Olympia Snowe of Maine, and Reps. Anh “Joseph” Cao (La.) and Mike Castle (Del.) — ended up voting for the deficit-neutral bill.
Was the State aid bill another bailout? Simply follow the money for the answer.
When States run out of money, they must issue debt or reduce spending. As credit ratings decline, debt issuance becomes less an option for States. The best option tends to be reduction in spending, usually in the form of massive layoffs and cutbacks in social programs. These cutbacks, however, curtail economic growth in a consumption driven economy, which in turn, translates into lower revenues for the State and Federal government.
A vicious cycle, described as "The Formula" by Jim, is born. The long-term cycle or formula is illustrated below.
US Federal Budget (Surplus or Deficit As A % of GDP, 12 Month Moving Average) and Gold London P.M. Fixed:
The infusion of money (stimulus) from the Federal level is intended to break this cycle. Unfortunately, the Federal government must issue debt to provide money to the State and local governments. This is nothing more than a shift in debt burden from State to the Federal sector. Moreover, money transfers without investment will do little to increase economic growth in the future. In other words, once the stimulus has been consumed, more will be required.
Source: washingtonindependent.com
Source: maciverinstitute.com
Source: online.wsj.com
Source: nj.com
More…
The Crisis Of Middle-Class America
Geithner's Claptrap About "The Recovery" Exposed
Banking Insanity (The Mogambo Guru)
U.S. electricity blackouts skyrocketing.
Posted: Aug 11 2010 By: Jim Sinclair Post Edited: August 11, 2010 at 8:20 pm
Filed under: In The News
Jim Sinclair’s Commentary
When a government plan fails, further government and agency programs will be initiated based on the same game plan.
Here we go down that slippery slope of bailing out homeowners without jobs and yesterday’s states without necessary income.
This period will consume as much and more than the first bailout of Wall Street – one trillion or more. Gold will trade $1650 and beyond.
New Treasury/HUD Program Targets Help For Unemployed Homeowners By: David Dayen Wednesday August 11, 2010 10:15 am
The Treasury Department and the Department of Housing and Urban Development have announced a new foreclosure-prevention program, aimed to provide up to $3 billion dollars between the two agencies for targeted aid to unemployed borrowers.
The Treasury Department will add $2 billion dollars to their “Hardest Hit” fund, specifically providing assistance to jobless Americans struggling to pay their mortgages. HUD will offer a $1 billion dollar “Emergency Homeowners Loan Program” that will give 24 months of assistance to the same class of homeowners, those experiencing unemployment or underemployment or an inability to work because of a medical condition.
The Treasury program is doled out to the states experiencing the highest unemployment, at or above the national average, over a 12-month period. Nineteen states and the District of Columbia are eligible for the funding, but curiously, Arizona, one of the biggest foreclosure states, was left off the list. On a conference call, Assistant Treasury Secretary for Financial Stability Herb Allison said that Arizona’s unemployment rate just missed the cutoff for these funds. The program enables states to assist eligible borrowers to pay their mortgages while they find a new job or undertake job training. Funds range from $7 million for DC to $476 million for California.
HUD’s program seems to be potentially more effective.
The program will work through a variety of state and non-profit entities and will offer a declining balance, deferred payment “bridge loan” (zero percent interest, non-recourse, subordinate loan) for up to $50,000 to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes and hazard insurance for up to 24 months.
No-interest loans makes more sense than interest-only reductions or other attempts with the HAMP program that only end up making borrowers more indebted. HUD has not yet determined which areas of the country will have access to these loans.
More…
Jim Sinclair’s Commentary
Yes, most unfortunately it is. However, it will take a form very few understand. That form is "Currency Induced Cost Push Inflation."
THIS IS IT is only the second chapter of the singular destruction of Western World finances by their OTC derivative manufacturers and distributors.
Is this finally the economic collapse? By Keith R. McCullough, contributorAugust 11, 2010: 2:07 PM ET
FORTUNE — The Great Depression. Wall Street in 1987. Japan in 1997. Points of economic collapse are generally crystal clear in the rear-view mirror. Professional politicians in Japan have been telling stories for 20 years as to why they can prevent economic stagnation. In the US, the storytelling started in 2007. All the while, stock market and real-estate prices have repeatedly rallied to lower-highs, then collapsed again, to lower-lows.
Despite the many differences between Japan and the US, there is one similarity that continues to matter most in the risk management model my colleagues and I use at Hedgeye, our research firm — debt as a percentage of GDP. Now that the US can’t cut interest rates any lower, the only option left on the table is what the Fed just announced it would start doing — buying Treasury debt. And that could lead the country to the brink of collapse: According to economists Carmen Reinhart & Ken Rogoff, whose views we share, crossing the 90% debt/GDP threshold is the equivalent of crossing the proverbial Rubicon of economic growth. It’s a point from which it’s almost impossible to return.
More…
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
No comments:
Post a Comment