Sunday, July 31, 2011

The Bipartisan Debt Deal Fact Sheet: A "Victory" For The Republicans, The Democrats And, Of Course, The White House

Hot off the presses, here is the White House's very own "debt deal" fact sheet, which is apparently a "win for the economy and budget discipline." Which is great since we already know it is a win for the GOP and the Democrats. In other words, the only thing better than a Win-Win, is a Win-Win-Win... in which the only loser, of course, is America. We caution readers on high blood pressure medication, on blood thinners, those on dialysis, and those prone to incontinence or murderous acts of rage to please skip this post.

Complete Transcript Of Obama's Not So Grand Compromise

My fellow Americans...

Here we go again. IB raises Silver margins.

Go ahead and stop delaying the inevitable. The quicker they all go 100% cash only trades on silver, the quicker we proclaim they have NO MORE FIREPOWER.

Volatility? WTF. Its been basing at $33-35 for 2 months. What volatility. IB just lost my account, I suggest an immediate withdrawal of all of your funds from Interactive Brokers immediately. This is uncalled for. Now I am mad.

The Latest From Political Hollywood

My Dear Friends,

Here is the latest in Political Hollywood.
You can be sure there will be a deal to avoid default. You can be equally sure it will not cure the debt problem.


Leaders Reach Deal to Raise Debt Ceiling

Published: July 31, 2011

WASHINGTON – Congressional leaders of both parties and President Obama said they have agreed to a framework for a fiscal deal that they will present to their caucuses Monday morning, moving Congress closer to taking up a measure that could pass both the House and Senate with bipartisan support and be signed by President Obama, averting a fiscal calamity.
The two Senate leaders, Harry Reid of Nevada and Mitch McConnell on Kentucky, announced the agreement on the Senate floor and President Obama a few moments later. He indicated he would support it, although it was not his preferred approach.
“It will allow us to avoid default,” he said.
All afternoon, after Senate Republicans, as expected, blocked progress on a Democratic plan, Senate Democrats and House Republicans had worked feverishly with White House officials Sunday to iron out the final components of a deal to avoid imminent default, negotiating the design of a mechanism that, after an initial round of spending cuts and debt relief this year, would help force the hand of Congress when the time comes for a second round next year.
The agreement would raise the debt ceiling by $900 billion, enough to last into early next year, with spending cuts of $917 locked in for the first ten years, and an additional $1.5 trillion in cuts to be worked out on a bipartisan basis as the price for another increase in the debt ceiling next year.

Important Debt Ceiling Update

President Obama just announced late this evening that a deal has been reached to cut government spending and raise the debt ceiling in order to avoid a debt default. If the deal is approved on Monday, it will raise the debt ceiling by between $2.1 and $2.4 trillion in three installments: $400 billion immediately, $500 billion this fall subject to a disapproval vote by Congress, and $1.2 to $1.5 trillion more after a special committee agrees on a matching amount of spending cuts that will be in addition to $900 billion in spending cuts proposed in the bill. With no tax increases included in this plan, all of this additional debt will eventually be monetized and paid for through monetary inflation.
Although the deal is supposed to cut as much as $2.4 trillion in spending over the next decade, Obama said that none of the spending cuts will occur anytime soon so that not to derail the phony economic recovery. That's right, none of the cuts will come until early 2013 and by then we will need to once again raise the debt ceiling to north of $20 trillion. If our elected representatives were serious about cutting spending, they would have the bulk of the spending cuts now and not in the future when many of them will be out of office.
This deal is a complete and total sham, and will do nothing to prevent hyperinflation. In no way will these spending cuts be mandated and nothing will force future Congresses to abide by them. Even with these cuts, government spending is going to increase every single year for the next decade. As price inflation spirals out of control in the years ahead causing the purchasing power of the dollar to plummet, all government employees will demand higher salaries and it will cost more to run all parts of the government. Future Congresses will raise spending and make the spending cuts proposed in this deal meaningless.
NIA believes that all of the events that took place in Washington this weekend were scripted in advance. It is likely that both parties knew from the beginning what deal they would ultimately agree to, but came out with these other proposed bills in order to satisfy tea party supporters and make them think that their efforts are making a difference. The reality is, although the tea party movement helped Republicans take over the House of Representatives so that Democrats didn't have free rein in Washington, most of the new Republicans elected to Congress haven't followed through with their promises and have failed to make any kind of a positive difference.
Everybody in Washington assumes that interest rates will remain at artificially low levels for the rest of this decade. The interest rate that the U.S. paid on its total marketable debt in the month of June was only 2.38%. Exactly one decade earlier, in June of 2001, we paid 6.162% interest on our total marketable debt or 159% higher than current average interest rates. On August 15th we owe our next interest payment of approximately $30 billion. Imagine if that payment rises 159% higher to $77.7 billion or $932.4 billion annualized. Later this decade, interest rates will not only rise back to normal levels like we had in 2001, but will likely rise to artificially high levels to balance out the damage being created today from artificially low interest rates.
If this bill is approved by Congress and the President on Monday, it will avoid a short-term honest debt default but just about guarantee a default by inflation later this decade. There is about a 1 in 1,000 chance that future Congresses will stick with the spending cuts in this bill, but even if they do, rising interest payments will not only wipe out the $2.4 trillion in spending cuts, but they will add trillions more to future deficits and the national debt. A new Gallup Poll shows that 53% of Americans oppose raising the debt ceiling compared to only 37% who favor an increase. We pray that millions of Americans march to Washington tomorrow in protest of this bill and that millions more call, email, and fax their elected representatives in the morning demanding that they vote no.
It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at:

Economic Rape of Europe Nearly Complete, Part IV

In the first three installments of this series I documented how U.S. economic terrorism had been unleashed on Euro-zone debt-markets, driving up their interest rates – and thus their deficits – exponentially. I then explained how the bankers and bond parasites had exploited this increased indebtedness to attach legal claims against the national gold-hoards which these Euro-zone economies purportedly possess. Lastly, I pointed out how the “loss guarantees” being imposed on these debts (starting with Greece) represented nothing less than perpetual debt-slavery.
In this final installment I will discuss the last “nail in the coffin” for individual Euro states, and their populations. The ultimate goal of these ruling Oligarchs is nothing less than the full, economic integration of Europe. Not only would this bind every European citizen to the debts of all the individual Euro states, but once full economic integration had been achieved then Europe’s wealth could be plundered as a single entity – much more efficient than their current nation-by-nation looting.
Naturally, this is not something which would be “welcomed” or even tolerated by most Europeans. First of all, national identities remain strong within these countries, and there is no desire for any greater degree of integration. Secondly, the economic atrocities inflicted upon us by Western bankers over the past three years have greatly exacerbated the regional economic disparities within Europe. Simply, the Northern “have’s” are adamantly opposed to what they see as the “subsidization” of the Southern “have not’s”.
Conversely, the banker-terrorists and bond Oligarchs are equally determined to impose a single, economic entity on all of the peoples of Europe. This became utterly imperative in the minds of these economic fascists in order to eliminate “the Iceland option”.
Knowledgeable readers will be aware that Iceland was initially a very eager “pawn” for the Western multinational banksters at the beginning of this millennium. However, after the Crash of ’08 exposed these banksters as the international crime syndicate we now know them to be, Iceland severed its ties with these thugs-in-suits – renouncing the fraudulent debts which the banksters sought to impose on the people of Iceland through loss guarantees.
At that point, the new mantra of these Oligarchs became “no more Icelands”. In part, this has been achieved by tightening their economic choke-hold on individual Euro zone economies – thus gaining added leverage on their weak, incompetent, and traitorous governments. The Oligarchs realized that they had been arrogant and sloppy in their handling of Iceland – never dreaming that the government of that tiny nation would be courageous enough to “call their bluff” and simply walk away from all of that fraudulent debt. They now seek to permanently eliminate the economic sovereignty of Euro states, ensuring that no other European nation can escape from the fascist debt-slavery these Oligarchs seek to impose.
The obvious question is: how can this be achieved? With most Europeans firmly opposed to any greater integration, and increasingly suspicious of the motives and actions of their own governments, it is highly unlikely that any of the current governments in Europe have the “political capital” to muscle-through such a plan.
As with most of the machinations of these villains, it is a multi-stage strategy. The first stage is nearing completion: taking several Euro-zone economies as close as possible to the brink of total economic collapse – without triggering outright bankruptcy/debt-default. The banksters realized that this had been part of their mistake with Iceland. At the time that they sought to impose their massive “loss guarantees” on Iceland (which would allow them to permanently blood-suck that economy), Iceland’s underlying economy was still reasonably prosperous/stable. Thus it was able to absorb the economic “shock” of walking away from the banksters’ debts – and the “penalty” of being shut out of international debt markets.
With Greece’s economy now in total ruin and Ireland, Portugal and likely Spain soon to follow, the banksters want to make these economies so ridiculously over-leveraged with debt, and debt-dependent that “walking away” would result in maximum economic devastation. At this point, there’s no reason to believe that they will fail to do to the other three “PIGS” what they have now accomplished with Greece. Read more: Economic Rape of Europe Nearly Complete, Part IV

Top 8 Cities by GDP: China vs. The U.S.
07/31/2011 - 23:03
Essentially, growth is not the problem for China, but nor is it the solution. 
Now read this quote again...
"We are now in the final stages of what economist Ludwig von Mises termed the “crack-up boom,” with the Fed (and other central banks abroad) printing money frantically to try to stave off the inevitable collapse and hyperinflation. We have been warning about this outcome for several years now, and it is indicative of how dire circumstances have become that the likes of Forbes magazine — not a purveyor of Austrian economics by a long shot — is now frankly acknowledging it." - Charles Scaliger, The New American, July 26, 2011.

The following should help our new visitors get up to speed. Enjoy

If you haven't read this yet...Now would be a good time...
Weimar hyperinflation "When Money Dies" PDF file

And watch this "Must See video"

Economic Armageddon and You...Prepare for the Worst...

Jim Sinclair’s Commentary

Here is the entire story. I would suggest spreading the truth to offset the lies. 

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Obama Says Debt Deal Reached, America To Avoid Default, Or "Hank Gave Us A 3 Page Term Sheet; Boehner Gives Us A 7 Slide Powerpoint"

In a much anticipated statement, Obama just announced that he has struck a deal with Boehner on the debt and the deficit, which will allow the US to avoid default. And also, as Reuters adds, Obama said that spending cuts included in deal to raise the debt ceiling will not happen so quickly that they will drag on the fragile U.S. economy. In other words, there will be no cuts for the immediate future. But there will be a single $2.8 trillion debt ceiling raise just as Obama desired. And of course, there will be no tax hikes. Just as Zero Hedge predicted all along. 

China's Answer To Inflation: SkyNet - Foxconn Plans To Replace Workers With Millions Of Robots

SkyNet has taken over the market, it now appears poised to make labor and wages redundant (and while we hardly welcome our new robotic overlords, we doubt anyone would shed a tear if the House and Senate replaced its 535 corpulent windbags with a bunch of Johnny 5s engaged in binary colloquies). The world's biggest non-debt based slave-driver, Taiwanese technology giant Foxconn, also known as the place where all of your iPhones, Pads, etc, are made, has just announced that it will deal with rising wages by doing what US-based quants have figured out years ago: outsource it all to robots. About a million of them. The irony is that the last time we looked at Foxconn, we asked: "what happens when this million realizes it can only buy half a McRib sandwich with the money it makes, courtesy of the primary US export to China, and demands a pay raise. What happens to Apple margins then?" We now have our answer. Per Xinhua: "Taiwanese technology giant Foxconn will replace some of its workers with 1 million robots in three years to cut rising labor expenses and improve efficiency, said Terry Gou, founder and chairman of the company, late Friday. The robots will be used to do simple and routine work such as spraying, welding and assembling which are now mainly conducted by workers, said Gou at a workers' dance party Friday night." As a reminder, with over 1 million workers, Foxconn has enough people on its payroll that if mobilized would be the 5th largest army in the world, and just after WalMart in total number of employees, albeit instead of spread out around the world, are all concentrated in one small space.

Dow futures up 200, LOL.

I write this Sunday night 9 pm EST. THe Dow futures are up a lot. It seems like the duche sacs have given the 'world' a chance. Right.

Question: If the DEBT is the problem, how does adding $2.3 trillion more DEBT, solve the problem, and balance the budget, as OWEbama just told the world live? Please, all the non conspiracy people out there come on out of your hiding and tell us tin foil hat wearing idiots how this is humanly possible.

Get ready for the last pullback in the metals before the September/October godsend, I would encourage a $36 silver price before the week is done, free up some fiat and get ready to buy some Phyzz-last call ALL ABOARD?

I will be trading all day tomorrow as its a holiday here, and will be active on the posts.

Enjoy the CNN shit show.

Here is Schiff on some Debt ceiling clarification.

The Fiat Crack Addict is Convulsing and Headed Straight for The DTs
Cognitive Dissonance
07/31/2011 - 18:59
Consider those power and money hungry people who want more and more. It is not the quantity that matters because the rush from the control and power is no longer fully realized or experienced since... 

Here's a great Quote...

"We are now in the final stages of what economist Ludwig von Mises termed the “crack-up boom,” with the Fed (and other central banks abroad) printing money frantically to try to stave off the inevitable collapse and hyperinflation. We have been warning about this outcome for several years now, and it is indicative of how dire circumstances have become that the likes of Forbes magazine — not a purveyor of Austrian economics by a long shot — is now frankly acknowledging it." - Charles Scaliger, The New American, July 26, 2011.

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Boehner Balking?

Oops. From Washington Wire again: "House Speaker John Boehner (R., Ohio) appears to be balking at the debt ceiling deal that Senate Democratic Majority Leader Harry Reid of Nevada has signed. Mr. Boehner is concerned about provisions in the deal that could lead to sharp cuts in military spending, say people familiar with the situation. House aides have warned that just because Mr. Reid has signed off on the deal doesn’t mean the deal is done." From limit up to limit down in one easy (yet unconfirmed) headline.




Snapshot Summary Of Fluid Compromise Debt Ceiling Deal

With the debt ceiling "compromise" deal still in flux, although at least according to the FX market expected to be approved shortly, despite the protestations of liberal democrats (one wonders if Obama will accuse said group of hostage tactics much as he accused conservative republicans of the same last week), below is what the current shape of the proposed deal looks like courtesy of the WSJ's Washington Wire blog.

Debt ceiling fix could mean problems for states

Eric De Groot at Eric De Groot - 1 hour ago
Does this mean we can't have our cake and eat it too? Headline: Debt ceiling fix could mean problems for states The cost of the compromise needed to raise the federal debt ceiling will likely inflict more fiscal pain on states still struggling to recover from the recession and the end of federal stimulus spending. While the details of the spending cuts to states remain unclear, lawmakers from... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

First Prints Are In: Risk On, Gold Off... At Least For A Few Minutes

The first prints are in and the relief kneejerk is here, as much expected. ES prints +17 at 1306, USDJPY jumps, although the fade is already there, while the Franc is dripping lower although we expect the same fade to come to it soon. Obviously gold is off, by just about 1% to levels last seen... five days ago.  In other news, a Reuters blast just announced that a Senate vote on a debt deal is "highly unlikely" before Monday, confirming that the market will now have to price in what is effectively becoming TARP 2, with the same potential dire consequences to the market if it is wrong as it was last time around. Overall, we expect the computers to create their self-referential momentum buying sprees until such time as the big boys come in and start offloading the big blocks.

Going Postal
Bruce Krasting
07/31/2011 - 17:36
Watch for a big cry of, "Success!!" from DC. I think the markets will fade the politician's glee. 
07/31/2011 - 17:42
From the televised speeches of Obama and Boehner, to the hard-line tactics of the Tea Party, to the pitiful cobbled-together agreement the House put together late Friday - there has been no shortage...

Guest Post: Deconstructing Algos, Part 4 -Phase Space Reconstructions Of CNTY Busted Trades Suggests High Speed Gang-Bangs In The Market

What is going on here? Is there a single algo? Two duelling algos? Something more? The key difference is the "blocky" character of the last several graphs. That" blockiness" arises in phase space from repeated trades at a single price. The blockiness is absent in the bowl of spaghetti as one entity moved the share price around (was this a test?). The blockiness that followed was the result of numerous followers blasting away at the same price. I think (but cannot prove) that the initial strange behaviour in the share price was noticed by other algos, which began to look for short episodes of volatility in the share price to exploit it for very short term gains. The initial bowl of spaghetti was manipulation from a single algo--a signal (perhaps unintentionally) for other algos. The blocky trajectories are the follow-on gang-bang of the stock as the other algos join in.
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Negotiators Chase Debt Agreement,
As Senate Defeats Democratic Plan

URGENT: Senate Majority Whip Dick Durbin (D-Ill.) says furious negotiations are happening behind the scenes among top Democratic leadership after the Senate voted down a Democratic debt plan 50-49.

Obama Tweets as America Burns...Sound familiar?

House Republican to Obama: Stop Tweeting

Things That Make You Go Hmmm - Such As Keeping It Real

Grant Williams summarizes: "So, keeping it real, what happens now? Well, the debt ceiling will get raised - most likely this weekend - and the usual photo-op of sycophants cheering and applauding behind a podium will be all over the news, but the raise will be just another step on the road to financial ruin for the United  States if it continues to layer fresh debt upon existing debt as a way to solve its problems and turns to printing presses and raised ceilings as the balm of choice. In this kick-the-can culture we now live in since the events of 2008, it’s never that difficult to figure out WHAT the powers-that-be will do (simple: whatever short-term fix involves the least short-term pain to banks and to their own chances of reelection), but it seems to be getting harder to ascertain WHEN they will do it. This is all well and good, except sooner or later they will wake up and find that the adults have decided enough is enough and they’ll vote with their money...So tell me - and keep it real - would YOU lend money to a country with THOSE debt dynamics that is being run by a bunch of incompetent, bickering grandstanders if it DIDN’T possess the world’s reserve currency? Me either."

In The News Today

Jim Sinclair’s Commentary

The latest pseudo solution compromise on us debt from Washington.
US debt crisis: deal close to avoid default

Senate due to vote at 1800 BST on compromise thrashed out over weekend before plan passes to House of Representatives 

Ewen MacAskill in Washington and agencies, Sunday 31 July 2011 10.33 BST

Negotiations to raise the US debt ceiling and avert the country’s first ever default continued through the night on Saturday as Republicans and Democrats tried to reach a deal before markets open on Monday. Photograph: Alex Wong/Getty Images
Congress and the White House were closing in on a deal on Sunday to head off huge market falls and the prospect of America defaulting on Tuesday for the first time in its history.
The Senate is scheduled to vote around 1pm (1800 BST) on a compromise thrashed out over the weekend between the Democratic leader in the Senate, Harry Reid, and his Republican counterpart, Mitch McConnell.
McConnell, interviewed on CNN on Sunday, said: "We are very close. We had a good day yesterday. Both the president and vice-president called me … and they understand we have to come together."
The deal would then have to go to the House of Representatives, which could be more problematic given the Republican majority.
There are enough mainstream Republicans, when combined with Democrats, to pass the bill and that is likely to happen. But the Republican House speaker, John Boehner, will be uneasy about alienating the large core of hardline conservatives, mainly Tea Party sympathisers, who will probably vote against it, and may seek last-minute concessions to try to pacify them.

Jim Sinclair’s Commentary

More of the theatrics in Washington on the debt issue.

Senate Blocks Reid’s Debt Ceiling Bill 

Published: July 31, 2011

WASHINGTON — Last-ditch budget talks between top Congressional Republicans and President Obama continued on Sunday, as the top Senate Republican and Democrat both expressed optimism that a $3 trillion deal could be reached to avert the economic and political calamity of a potential federal default.
But without a compromise in hand, the divided Senate could not break a filibuster and went wearily into recess while the leaders resumed their search for something that could pass.
Senator Harry Reid, the majority leader, had convened the Senate at noon, then moved to a procedural vote on his own proposal for raising the debt ceiling. Senate Republicans had been filibustering that plan, which House Republicans rejected on Saturday, and the vote on breaking the filibuster fell 10 votes short of the 60 votes needed under Senate rules. Even so, Mr. Reid said before the cloture vote that he was “cautiously optimistic” that an agreement could be reached today that would make it possible for the Senate to amend his bill and gain bipartisan approval in both chambers.
But Mr. Reid said that “there are a number of issues that must be resolved.”
“Our optimism in days past has been really stomped on,” he said.
Senator Mitch McConnell of Kentucky, the Republican leader, said Sunday that he was “very close” to recommending to his members that they sign on to a debt deal with President Obama and the Democrats.

Jim’s Mailbox

Dear Jim,

Gold stocks should explode upwards. In my opinion, they are extremely cheap versus the Gold price.
They are cheaper than 2008 because the price of gold is up 2.5 times.

CIGA Sequeira


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Goldman's Jim O'Neill "Go On President Obama And Congress; Give Us A Nice Pleasant Summer Surprise!"

While there are some undertones of caution in the latest letter from the head of Goldman's worst performing group ("I suspect the reason why the bond market has rallied and the Dollar and equities have fallen, is because there is going to be a budget deal, which the markets worry will weaken the cyclical GDP growth outlook further"), his bottom line (literally) is precisely what everyone on Wall Street, and everyone else who writes rants against responsible fiscal management (wait, wasn't Congress responsible 1 year ago? or two years ago? No of course not. It became an emergency a week ago) thinks. And it is as follows: "Go on President Obama and Congress; give us a nice pleasant Summer surprise!" Indeed, when you cut out all the hollow rhetoric of all those whose livelihood depends on the status quoTM and on "borrowing" from the future (cold fusion will certainly help with our energy problems one day... so will the tooth fairy), this is what it is all about.



Your going to need Physical Silver and Gold...Buy the Dips

Prepare For A Lost Decade Or More

Admin at Jim Rogers Blog - 4 hours ago
"Prepare for a lost decade or more" - in *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.* 

Highlights From This Morning's "Meet The Press"

Below are the key clips from this morning's Meet The Press which is devoted exclusively to proponents of the status quoTM, whose entire argument boils down to the syllogistic: "cut spending yes... but not today...never today" In fact, it is best to make any cuts the next administration's problem. So assuming Obama gets reelected, and there is another debt ceiling hike, which there will have to be, it means about $7 trillion on top of the currently debated $3 trillion, whoever inherits this mess from Obama (who in turn inherited his mess from Bush, who in turn inherited his mess from Clinton, and so on), will have $24 trillion debt to deal with on day 1, with about $16-17 trillion of GDP. And that person will have to cut spending? What idiot would want that job? Anyway, we fully expect the paid government workers from the rating agencies to shortly upgrade the US to AAA+ on renewed growth prospects courtesy of 140% debt to GDP in 5 years...and that excludes the $7 trillion in off balance sheet GSE debt.

Round Up Of This Morning's Key Political Soundbites

With a debt ceiling deal now a given and purely a matter of dotting i's and crossing t's, potentially pending a several day debt "breathing room" extension to be approved by Obama, whose TV appearance we expect shortly to provide a conclusion to this "grand compromise" farce, here are some of the key soundbites from the three primary constituents as of their media appearances this morning.

Key Macro Catalysts In The Upcoming Week

Goldman's Themistoklis Fiotakis summarizes the main events in the upcoming week, which will likely see a very short term bout of buying frenzy on the debt ceiling deal, following by the realization that America can kiss fiscal stimulus goodbye and that real GDP is set to contract over the next quarter to a negative print as the last benefits from QE2 vanish and are replaced by nothing. Also, with the upcoming weekly earning focusing on financial companies as announced yesterday, there will be little help from the only bright spot in the so-called economy, especially with the flashing red sign of the July Nonfarm Payroll Print (consensus +95K, Goldman +50K, even LaSagna +50K) due on Friday. The half life of Europe's second bailout was under 5 days. We give America about the same.

By now everyone has seen this. And if the haven't, they should.

In The News Today

My Dear Friends,

The two most likely resolutions to the political debate over the US debt are:

1. A compromise that does nothing meaningful to cut entitlement spending and other set government spending.

2. A downgrade of US debt by major rating agencies.

Either choice is extremely bullish for Gold

Enjoy your weekend,


Jim Sinclair’s Commentary

Today’s events in the political circus of US Debt.

Late stab at debt-limit deal to avert US default
By DAVID ESPO , 07.30.11, 08:43 PM EDT
WASHINGTON — After weeks of intense partisanship, Republican congressional leaders and President Barack Obama made a last-minute stab at compromise Saturday to avoid a government default threatened for early next week.
But there was no undisputed evidence of progress by day’s end, only expressions of anxiety among lawmakers that a potentially crippling blow to the nation’s economy was drawing uncomfortably close. The deadline for raising the nation’s debt limit and averting an unprecedented U.S. default was just three days away.
“We are now fully engaged, the speaker and I, with the one person in America out of 307 million people who can sign a bill into law,” Senate Republican leader Mitch McConnell said at a joint news conference with House Speaker John Boehner.
“I’m confident and optimistic that we’re going to get an agreement in the very near future and resolve this crisis in the best interests of the American people.”
But McConnell’s upbeat assessment triggered an unusually pointed rebuttal from Senate Majority Leader Harry Reid.

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Breaking News

McConnell: 'Very Close' to Debt Deal



Moody's Chief Economist Says Proposed Deal Will Avoid US Downgrade

And there you have it. Mark Zandi, better known for predicting at least 18 occurrences of a US recovery in the past 4 quarters, and being as wrong on the shape of the US growth curve as everyone else on Wall Street (although being Moody's head economist that is a perfectly normal track record), just told CNN's State of the Union that the deal is substantive enough to where Moody's will not move to downgrade the US' AAA rating. Naturally, the fact that this is merely another massive can kicking exercise which will see the US debt ceiling raised by $3 trillion with actual cumulative cuts of about $100 billion tops by November 2012 at which point yet another debt ceiling hike will have to be planned is irrelevant. All that matters is to get the S&P back to the year's highs, 120% debt/GDP (same as Greece) be damned.


Adam Smith Would Neither Recognize Nor Approve Of Our Financial, Monetary, Economic Or Legal Systems

George Washington
07/31/2011 - 00:33
Got gold? 

'By every metric' gold is cheap, Rickards tells King World News



You might get a great chance to Buy The F!@#ing Dip...

Gene Arensberg: Market signals turning against gold

Section: 11:53p ET Saturday, July 30, 2011
Dear Friend of GATA and Gold:
The Got Gold Report's Gene Arensberg finds market signals turning against gold even as he acknowledges that geopolitical events could explode everything. His advice is caution. You can find it here:

Haynes, Norcini review precious metals' week



Items from

In his latest subscribers-only newsletter, veteran market analyst Porter Stansberry describes a U.S. sovereign debt downgrade as "inevitable". JWR's comments: Make your plans with the assumption that there will be a rating downgrade by all of the credit ratings agencies. The current AAA rating for U.S. paper is just a convenient fiction. Obviously a debt downgrade will mean higher interest rates. This will in turn ratchet down the U.S. economy in general and the residential and commercial real estate markets in particular. This will delay any recovery for many years. Plan on a riding through a depression that could last for decades!

John R. recommended this commentary by Jim Quinn: This Country Defaulted Long Ago

U.S. Economic Data Disappoints Immensely, QE3 Readies

KAF sent this: Downgrade Day: What It Will Look Like

US Army proposes new retirement plan. (Would "save" $400 Billion, by breaking promises made for generations.)

The Debt-Ceiling-Debacle: The Surprising Way a Default or Downgrade Could Crush the Global Economy

G.G. sent this: U.S. regulators close three small banks, bringing total bank closures this year to 61

Items from The Economatrix:

US Debt Deadlock Hits World Shares

Citi's Top Economist Says The Water Market Will Soon Eclipse Oil

Job Listings Say Unemployed Need Not Apply

Gold Breaches $1,625, US Credit Ratings Downgrade Now Almost Certain
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Saturday, July 30, 2011

Breaking News

ABC Reports Tentative Debt Ceiling Deal Reached Between GOP And Obama

This could very well be another red herring like the NYT article from two weeks ago that proved to be a dud, but for what it's worth according to ABC's Jonathan Karl, the White House and the GOP have just reached a tentative deal as follows...


Obama's Final Loophole: The "Catastrophic Emergency" Clause?

Politico's Ben White has pointed out something interesting, namely that while the 14th Amendment may or may not be practical under the current situation (especially not without a full blown constitutional crisis), one potential loophole that Obama may have comes from none other than former president Bush, in the form of the Homeland Security Presidential Directive-20, one which deals with such trivia as "Catastrophic Emergency", "Continuity of Government", "Continuity of Operations", and lastly, and perhaps somewhat ironically, "Enduring Constitutional Government." Considering the amount of doom and gloom spun by the government is bigger than anything seen even under Hank Paulson, could this "crisis" be interpreted by the constitutional scholar as one that merits the invocation of Homeland Security privileges? Is America's maxing out its credit card comparable to a nuclear or terrorist attack on the continent? We may find out in less than 48 hours.

Meanwhile The Global Economy...

While the biggest winner of the ongoing political melodrama is C-SPAN, whose ratings have likely never been higher, and the broad audience is logically largely distracted by the hourly lack of development out of the White House, what we do know is that QE2 has failed to generate any growth in the economy, with both Q2 and Q1 GDP crashing spectacularly to a point where post another revision Q1 will be the inflection point where America re-entered another recession. Furthermore, we have seen a stark example of the economic snake eating its tail, whereby the more than proportional increase in the price of commodities, courtesy of Bernanke's policies, has offset any potential incipient growth germs that may have been lingering in the economy in Q3 2010 through Q2 2011. Yet all of these are backward looking indicators. The question is what happens to the global economy going forward? For the answer we again turn to Sean Corrigan, who remarks on some very disturbing developments in the global macro arena, which when tied in to core tenets of the Austrian Business Cycle theory, indicate that the global soft landing may be a mirage, and that the downslope we are already in, may convert into a stall from which the global airborne Titanic does not recover.

 On More QE and the Recession that won’t end
Bruce Krasting
07/30/2011 - 17:51
The recession still has not ended, but Bernanke's hands are tied by inflation. 
Luc Vallee
07/30/2011 - 19:53
Economists will long debate the efficacy of our traditional policy response but, whatever the results so far, there are constraints that place severe limitations on the effectiveness of such policy... 

Obviously the GDP Number Was A Lot Worse Than Expected

by the overpaid geniuses on bubblevision TV and Wall Street.  Most of them really missed the boat badly on this one.  If a REAL inflation number was used to adjust nominal GDP into the number that was reported, I'd bet my last 1 oz. silver eagle that real GDP was negative by quite bit.

Here's a couple of other real economy news reports that should explain just how weak the economy is and just how imminent QE3 is:

Container-Ship Plunge Signals U.S. Slowdown - Plunging rates for chartering container vessels that carry sneakers, furniture and flat-screen TVs may signal a U.S. consumer slowdown and losses for shipping lines in what is traditionally their busiest time of the year.  LINK

Juniper Sends Grim Signal - Juniper Networks Inc. offered some new clues that the U.S. economy is stalling, warning of slowing sales growth that sent its stock plunging 21% in trading Wednesday.  LINK

Merck to Cut Up to 13,000 Jobs - Merck is cutting costs, expanding in emerging markets and spending on research and development...LINK

Good to see that Merck is following the example set by Obama's jobs Czar - GE's Jeffrey Immelt - and cutting jobs here and shifting the workforce to emerging markets.  I'm guessing this is Obama's implicit yet official jobs policy now.

And here is what a former Chinese central banker is now advising Chinese policy-makers:  Yu Yongding Says China Needs to Hold Less Treasuries as Safety a ‘Mirage’ - “U.S. bonds are not safe, but people think they are safe,” Yu, a researcher at a Beijing institute under the Chinese Academy of Social Sciences, told reporters at a briefing in Mumbai, India, today. “That is a mirage.”  LINK

It will be just wonderful if we get a new debt-limit deal - and we will.  But who the hell is going to buy all the new Treasury bonds that have to issued if our largest financier - the Chinese - decide to stop being the monetary crack dealer for our abusively reckless Government?  Are you?  I'm not...

Anyone not moving most of their investible money into gold and silver right now is an idiot.  I have 90% of my net worth in the physical metal and in mining stocks.  Everyone needs to understand that the dollar is going a LOT lower.  Knowing that, why on earth would you want to own anything denominated in dollars?  And that includes any metals ETF other than PHYS and PSLV.  Yes, technically mining stocks are dollar assets, but I anticipate that because their business is gold and silver, the price performance of mining stocks will far outpace the rate of decline in the dollar.

Here's a good illustration of my point, with a chart from Sharelynx that shows how the value of your house is declined when you price it in terms of gold:


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Guest Post: White House Playbook: Arbitrary Numbers and Financially Ignorant Sloganeering

President Obama this Tuesday stated his case for increased taxes on “the rich” as part of his solution to balance the deficit. “Keep in mind,” he assured the American people, “that under a balanced approach, the 98% of Americans who make under $250,000 would see no tax increases at all.” I have a very basic question that I am not sure anyone has pressed Mr. Obama to answer: Where did this figure of 250k, north of which one is considered by him to be among “the rich” even come from? Its very roundness tells me that it was the result not of a detailed actuarial analysis but rather some sort of arbitrary caprice that only those completely isolated from any private sector experience can conjure up. I almost get the feeling it was something as off-hand as: “Hey 250k sounds right to me. Nice number. So whattya think?” Sure write it in there.

In The News Today


Jim Sinclair’s Commentary

Three bank closures so far this weekend.

July 29, 2011 

These links contain useful information for the customers and vendors of these closed banks.

Integra Bank, National Association, Evansville, IN
BankMeridian, N.A., Columbia, SC
Virginia Business Bank, Richmond, VA

Deficits don't matter -- till China says they do

NIA Exposes Debt Ceiling Truth
NIA hasn't written about the whole debt ceiling issue over the past few weeks because in our minds it is completely irrelevant. Our elected representatives in Washington along with the mainstream media have been wasting thousands of hours of time and hundreds of millions of dollars debating a topic that has no meaning at all. The President, Senate, and House of Representatives are putting on a show to make it look like they care about cutting spending and balancing the budget. Except for a select few elected representatives like Ron Paul who care about protecting the U.S. Constitution and preserving what little purchasing power the U.S. dollar still has left, every other politician in Washington is putting on a complete charade in order to trick their constituents into believing there is a difference between the proposals from the Republicans and Democrats.
While our incompetent and corrupt mainstream media has been proclaiming there are major differences between the two bills proposed by House Speaker John Boehner and Senate Majority Leader Harry Reid, NIA believes John Boehner might as well be a Democrat and Harry Reid could easily pass himself off as a Republican. There are absolutely no meaningful fundamental differences between Boehner's plan that was approved by the House of Representatives yesterday evening, before being killed by the Senate two short hours later, and Reid's bill, which was just rejected by the House today in a pre-emptive vote before the Senate even had a chance to vote on it.
Both bills are estimated to reduce the U.S. budget deficit by approximately $900 billion over the next 10 years. Of the $900 billion only about $750 billion are actual discretionary spending cuts with the rest being an expected reduction in interest payments on the national debt as a result of either bill passing. When you have an unstable fiat currency that is rapidly losing its purchasing power and could collapse at any time, it is impossible to accurately project what our budget deficits will be 5 or 6 years from now, let alone 9 or 10 years from today. As far as the next two fiscal years are concerned, both proposed bills from Boehner and Reid are estimated to only cut spending by a total of about $70 billion in fiscal years 2012 and 2013 combined.
The budget that former President Bush submitted to Congress in early-2007, projected the deficit to decline in each of the following four fiscal years. Not only did the deficit not decline the next four years in a row, but it nearly tripled in 2008 and from there more than tripled in 2009. Shockingly, Bush's budget actually projected a $61 billion surplus in fiscal year 2012, but instead we will have a budget deficit of $1.1 trillion based on President Obama's latest budget, which takes into account unrealistic GDP growth next year of 4.86%.
U.S. GDP growth for the first quarter of 2011 was just revised down yesterday by 81% from 1.91% to 0.36%. The advance estimate of second quarter GDP growth came in at 1.28%, well below the consensus estimate of 1.8%. NIA is going to really go out on a limb and predict that second quarter GDP growth will soon be revised downward as well. If this is the highest GDP growth the U.S. could muster after the Federal Reserve's $600 billion in QE2 money printing, this should prove once and for all that monetary inflation does not create real economic growth and employment.
The U.S. Treasury as of Thursday night had $51.6 billion in cash, with its cash position declining by $15.2 billion during the previous 24 hours. It expects to bring in $172.4 billion from August 3rd through August 31st in tax receipts, but is scheduled to pay out $306.7 billion during this time period for an estimated deficit of $134.3 billion. The U.S. is scheduled to make its next interest payment on the national debt on August 15th and it will equal approximately $30 billion. Over the last 9 months the U.S. has spent a total of $385.9 billion on interest payments on the national debt, which means it is on track to spend a record $514.5 billion this year on interest payments alone. Just a tiny 30 basis point increase in the interest rate on the national debt would totally wipe out the deficit reductions proposed by both Boehner and Reid.
The U.S. Treasury has been able to pay its bills in recent weeks by using many different accounting gimmicks. However, come Tuesday, there will be no more accounting tricks left to play and the U.S. won't be able to meet all of its obligations. Without a raise in the debt ceiling, the U.S. government will have to prioritize who it pays using the tax receipts coming in, which will probably include the $30 billion interest payment on the national debt (to avoid a default), $49.2 billion in Social Security payments, $50 billion in Medicare/Medicaid payments, $31.7 billion in defense payments, and $12.8 billion in unemployment benefits. With $23 billion of the $49.2 billion in Social Security payments due to be paid on August 3rd and $59 billion in t-bills due on August 4th, the U.S. Treasury's remaining cash balance could dissipate very quickly.
The 10-year bond yield reached a new 2011 low yesterday of 2.785%, its lowest level since November 30th of last year. It is approaching its record low of 2.08% from December of 2008 during the middle of the financial crisis. With threats of a U.S. debt default making headlines across the world, investors are once again rushing into U.S. bonds as a safe haven. It is almost as if the whole world has gone insane. The world is fearful of the U.S. government defaulting on its debt and not being able to pay off maturing bonds, so as a safe haven let's just all rush into the very asset that will soon be worthless due to either an honest default or default by inflation. The U.S. dollar bubble is the largest and longest running bubble in world history and U.S. bonds are currently mispriced big time.
U.S. dollar-denominated bonds should be the last asset in the world to benefit from fears of a U.S. debt default. One positive sign that NIA members are having success at spreading our message to the world is that gold reached a new all time high yesterday, rising $15 to $1,631 per ounce, with silver rising $0.31 to $40.10 per ounce. Thanks to the efforts of NIA members who worked tirelessly to spread the word about NIA's economic documentaries including 'Meltup', 'The Dollar Bubble', and 'Hyperinflation Nation', a larger percentage of the global population than ever before is educated about the global currency crisis that is ahead.
During the financial crisis of late-2008/early-2009, gold and silver prices declined along with all other assets. Today, NIA estimates that half of the world's investors seeking a safe haven are buying dollar-denominated assets like U.S. Treasuries and the other half are seeking safety in precious metals. By mid-2012, investors will most likely no longer look at U.S. bonds and other dollar-denominated assets as a safe haven. During future times of uncertainty, NIA believes that precious metals will receive nearly 100% of safe haven buying, just like the U.S. dollar received 100% of safe haven buying in late-2008/early-2009.
Once the debt ceiling is inevitably raised, the U.S. Treasury will have a lot of catching up to do in order to get its house in order, and we will likely see the largest amount of debt ever sold by the U.S. government in a single month. With QE2 having finished at the end of June, the U.S. will be relying on foreigners in these upcoming record Treasury auctions. In our opinion, we are likely going to see interest rates rise at an unprecedented rate that will shock the world.
Don't believe the mainstream media's laughable claim that there is a shortage of U.S. Treasuries. It was just reported yesterday that Cambodia, one of the most rapidly growing emerging market economies with GDP growth this year of 6.5%, is moving away from the U.S. dollar, which currently accounts for 90% of their currency in circulation, in favor of its own currency the riel. NIA believes it is only a matter of time until China ends its currency peg with the U.S. dollar. The world is flooded with trillions of dollars in U.S. Treasuries that will soon have no buyers except the Federal Reserve. There is no chance of yields falling below record lows from December of 2008.
The mainstream media has been reporting all week that if the U.S. defaults on its debt as a result of a failure to raise the debt ceiling, it will be the first time that our nation has defaulted on its debt obligations. Most NIA members know that the real U.S. debt default already occurred in 1971 when President Nixon closed the gold window and stopped allowing foreign governments to convert their U.S. dollar holdings into gold. Since then, the U.S. currency system has been completely fiat and the national debt has increased by 3,400%.
For the past 40 years, the U.S. government has been running on fumes left over from when countries were able to convert their paper U.S. dollars into gold. The price of gold has increased by 3,900% during this time period, meaning the U.S. dollar has lost 97.5% of its purchasing power. Meanwhile, the median household income has only increased by 384%. In terms of gold, the median U.S. household is earning 87.9% less income today than they did in 1971. The U.S. debt default of 1971 was many times more significant than the pending debt default, because back then our foreign creditors expected to receive real money and not a piece of paper with no real value that we print. The average American family has experienced a dramatic decline in its standard of living since 1971. The U.S. dollar and its reserve currency status is currently serving as the last thread that is keeping our "house of cards" economy propped up.
The U.S. debt ceiling is very similar to a publicly traded company's authorized shares. When a public company consistently loses money like the U.S. government does, they print new shares just like the Federal Reserve prints dollars and when its total outstanding shares reach the shares authorized, the company's Board of Directors simply raises the shares authorized, which allows it to continue issuing shares and diluting shareholders. Since 1962, the U.S. has raised its debt ceiling 74 times. Any public company that needed to raise its authorized shares 74 times would likely have seen its stock price decline by 99.99% from above $10 to below 1 penny.
NIA is strongly against an increase in the debt ceiling because there are ways for our country to stay afloat and continue operating without getting deeper into debt. The U.S. is currently supposed to have 8,133.5 tonnes of gold reserves at Fort Knox. We don't know for sure if these gold reserves still exist because the last audit of our gold reserves took place in 1954 and we had the little minor issue of our real debt default in 1971. Assuming that all of our gold is still there, this gold is worth $426.5 billion at the present time, enough to cover our U.S. government's deficit spending for almost four whole months. The U.S. government also owns valuable land, buildings, monuments, and other types of Real Estate, that could also be worth hundreds of billions of dollars. Although we don't support selling all of our gold and Real Estate, if the U.S. government isn't going to implement real spending cuts that will lead to a balanced budget, we rather sell our assets than see the dollar-denominated savings and incomes of all Americans lose its purchasing power.
If we continue raising the debt ceiling and getting deeper into debt in order to pay back the debts we already have, we are defaulting on our debts through inflation. With gold at a record high of $1,631 per ounce, the market is clearly telling us that a default through inflation is coming. As the Chinese, Japanese, and our other creditors are paid back in U.S. dollars that are rapidly losing their purchasing power, they will be reluctant to increase their purchases of U.S. Treasuries in the future, which we desperately need them to do in order to fund our spending increases. With the Federal Reserve likely to become the Treasury buyer of last resort, the world will lose their confidence in the U.S. dollar and hyperinflation could potentially break out as soon as 2013.
NIA believes it is very likely that U.S. GDP will begin declining again in late-2011, which will officially put the U.S. in double-dip recession territory. In our opinion, the U.S. is still in the early stages of a hyperinflationary depression and the so-called economic recovery reported by the government and mainstream media has been completely phony and only due to misleading and manipulated economic statistics that don't factor in the real rate of U.S. price inflation. We expect Federal Reserve Chairman Ben Bernanke to do everything in his power to avoid a double-dip recession at all costs.
By the end of 2011, we are confident that not only will we see QE3 under a new name, but the Fed will act to force banks to lend their $1.6 trillion in excess reserves. It is a joke that we are debating spending cuts of $70 billion over the next two years, when only very dramatic across the board spending cuts of 50% or more of the total budget will give the U.S. any hope of balancing the budget and avoiding hyperinflation. Best case scenario, if the U.S. government cuts spending by 50% or more in all areas of the budget including entitlement programs and is able to prevent hyperinflation, NIA still believes we will see the U.S. dollar lose 90% of its purchasing power this decade with the price of gold rising to above $16,000 per ounce.
It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at:
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