$40 Silver?

Submitted by Tyler Durden on 04/06/2011 10:03 -0400

Not quite. Give it a few hours: it just hit $39.70. Then we expect the Hunt High should be taken out shortly thereafter. And not to be left out of the party, gold just hit another all time record as well. At this point, Bernanke is officially panicking. 

Wednesday Pre-Close

posted by Turd Ferguson at Along The Watchtower - 2 minutes ago

First, please read this again and then fully consider your options. Again, this is from yesterday: *Cartoon Blythe has a pretty good handle on things, too, so we should start to consider the second part o...

 

 

 

 

We’re Now Engaging in the Same Disastrous Policies… Only On a National Level Pt 1

 

 

 

Lawrence Kotlikoff - "With The Fiscal Crisis In Spitting Distance Here Is My Proposed Solution"

Submitted by Tyler Durden on 04/06/2011 08:46 -0400

With everyone offering some version of a US budget, one more ridiculous than the other, one thing is certain: nobody has any clue how to fix America's fiscal catastrophe. And while the biggest soap opera rages in D.C. Larry Kotlikoff, who recently served as the only rational contributor to the just released IMF what paper "An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?" summarizes the "progress" so far: "The two parties are having a heated debate over the Republican plan to slice $61 billion off Uncle Sam’s projected $3.6 trillion budget. If the Republicans get their way, the deficit will fall from 9.5 percent of gross domestic product to 9.1 percent. If they don’t, they’ll probably shut the government for a couple of days. Then they’ll compromise on, say, a $40 billion budget cut, having proved they gave it their best shot." And sick of the corrupt petulance in DC, Kotlikoff has decided to propose his own budget. " I launched www.thepurplehealthplan.org last week to solicit endorsements for what I call the Purple Health Plan - - a proposal that offers common ground to both Republicans and Democrats. To date, five Nobel laureates in economics, George Akerlof, Edmund Phelps, Thomas Schelling, Vernon Smith and William Sharpe, have signed on. So have other prominent economists." We have not read it but fail to see how it can be possibly worse, especially since one Paul Krugman has not endorsed said plan.

UK Stagflation Pervasive: Industrial Production Plummets By Most Since August 2009

Submitted by Tyler Durden on 04/06/2011 07:52 -0400

Stagflation: meet economic collapse. The UK basket case is getting very, very ugly, with today's obliteration of Industrial Production putting in doubt expectations of a BOE hike. From AP: "British industrial production fell 1.2 percent in February from January, an official report said Wednesday, marking the largest monthly fall since August 2009 and far worse than analyst expectations for an increase of 0.2 percent. The Office for National Statistics said a 7.8 percent drop in oil and gas extraction was the main reason for the fall, while the manufacturing sector was flat." And the winner: "It may be that the industrial recovery is past its peak," said Samuel Tombs, U.K. economist at Capital Economics. Industrial production accounts for 17 percent of British GDP." That's the bad news; the good news is that with runaway inflation which is now surging at 5%+ the economy has got to be improving: after all where would all this demand be coming from if not from some massive latent recovery. Oh wait, what's that you say: endless liquidity? You don't say. Well, never mind then. In other news GBP crosses get obliterated as rate hike expectations are put on hold. In fact what you can put on the front burner is more money printing, both at the BOE and the Fed because central banks are so much more adept at "controlling" inflation than deflation.

Surging Oil And Deepening Inflation - Gold & Silver Rise To Record Nominal Highs At $1,459 And $39.50

Submitted by Tyler Durden on 04/06/2011 07:37 -0400

In trading in London this morning, gold reached a new record nominal high ($1,459.07) and silver a new 31 year nominal high ($39.50) as investors bought the precious metals to hedge deepening sovereign debt risk (in the EU but also in the US with the threat of a federal budget shutdown), geopolitical risk and deepening inflation. Brent crude reached $123.00 a barrel this morning and looks set to challenge the high seen in July 2008 of $145.49. Anemic economic growth, extremely loose monetary policies, sovereign debt risk, geopolitical risk and surging oil and commodity prices is a recipe for stagflation which would see the precious metals replicate their performance of the 1970’s when gold rose 24 times in value (from $35 to $850) and silver by over 32 times (from $1.55 to $50). Silver over $100/oz is not as outlandish as once thought with dealers in Hong Kong mooting that possibility. Strong demand for silver is being seen in Asia (see news). Inflation has taken hold in much of the developing world and is taking hold in developed world markets now. Despite very significant price increases in vital commodities, particularly the essentials of food and energy, there remains much denial about the threat of inflation and indeed the threat of stagflation. 

 

 

 

More Details On What Government Shut Down Would Look Like

Submitted by Tyler Durden on 04/06/2011 13:01 -0400

• *DJ Obama Admin Says IRS Would Shut Down If Budget Not Passed
• *DJ Obama Admin Says National Parks, Smithsonian Would Close
• *DJ Obama Admin: Cherry Blossom Festival Wouldn't Happen If Budget Not Passed
• *DJ Obama Admin: Roughly 800,000 Govt Employees Would Be Affected By Shutdown
• *DJ Obama Admin: EPA Permitting Would Stop If Budget Not Passed
• *DJ Obama Admin: Social Security Beneficiaries Would Continue To Receive Payments
• *DJ Obama Admin: Electronic Tax Refunds, Collections Would Continue
• *DJ Obama Admin: Military, Law Enforcement Will Continue To Function
• *DJ Obama Admin: Military Personnel Would Earn Paychecks, But Not Receive Them Immediately
• *DJ Obama Admin: White House Staffing Would Be Lower During Shutdown
• *ZH: POMO will continue come rain or snow: Russell 36,000 will not be denied, US bankruptcy notwithstanding

IMF Issues Biggest Criticism Of US Policy To Date: Says Treasury Should Put GSE Obligations On Balance Sheet

Submitted by Tyler Durden on 04/06/2011 11:52 -0400

In another confounding episode of biting the biggest hand that feeds it, the IMF has just issued another criticism of US fiscal policy, and in its just released Global Financial Stability report says that the US should include in its budget the "cost of mortgage loan guarantees and other housing supports." Not only that but the fund also urges that the Treasury should immediately make its support for the GSEs explicit and carry Fannie and Freddie's roughly $7 trillion in debt on the books: a move that would send US debt to well over $20 trillion and make the ratio of marketable debt (the lowest common debt denominator) to GDP well over 100%. To wit: "Government guarantees should be explicit and fully accounted for on the government's balance sheet... There is a need for better-defined and more transparent government participation in the housing market, with all such policies, including strict affordable housing goals, transparently shown in the government's budget." Of course this won't happen for many years as otherwise the US would effectively confirm that it is insolvent per various Reinhart-Rogoff ratios, and instead the administration will continue pushing with its misguided plan of offloading GSE obligations on the balance sheets of private institutions. As if that will change anything: it only means that the next taxpayer funded bailout will save the TBTFs once again, instead of leading to a run on the Treasury. End result: same thing.

Fukushima Reactor 2 Core Has Melted Through Reactor

Submitted by Tyler Durden on 04/06/2011 11:00 -0400

This will not be news for most objective Zero Hedge readers as we indicated this is a distinct possibility on several occasions, but some of those more "skeptical" about reality would be interested to know that according to Reuters "the core at Japan's Fukushima nuclear reactor has melted through the reactor pressure vessel", Democratic Congressman Edward Markey told a hearing on the nuclear disaster on Wednesday. "I have been informed by the Nuclear Regulatory Commission that the core of Unit Two has gotten so hot that part of it has probably melted through the reactor pressure vessel," said Markey, a prominent nuclear critic in the House of Representatives. Surely there is some bullish spin to this. We are too tired to look for it though.