The Coming Economic Collapse, Currency Induced Cost Push Inflation/Hyperinflation, Weimar Germany, Euro Collapse,
Zimbabwe Hyperinflation, Survival in Economic Collapse, World Economic Collapse, Dollar Collapse,
What Would Happen If the Economy Collapsed,The Coming Economic Depression.
Gold and Silver Will Protect Your Wealth.
Even as the Congressional Budget Office has just released its score of
the proposed Boehner plan, the president's spokesman Jay Carney was
out earlier hemming and hewing for about 9 minutes in front of reports
before it was made clear that Obama does not even have an actual plan
to paper which the CBO can score. Yet surprisingly enough, as the
National Review Online presents, even without actually having any plan,
Obama is still happy to announce he will veto Boehner's plan. It is
one thing to veto one plan over another, if one believe the "another"
is better. But vetoing something on purely ideological grounds, in the
complete absence of "another"... well that we have no idea how it can
possible be spun aside from pure ideological demagoguery.
Aside from a brief dip at the beginning of July, the
US monetary base continues its near vertical trajectory, which tells us
that the Fed continues to print money despite QE 2 ending. It’s...
Submitted by Tyler Durden on 07/26/2011 - 14:50
Just because we needed some fireworks, here is Obama, providing the
catalyst. Watch for a very indignant Boehner TV appearance in T minus
5...4...3... And yes, this will not help the consensus-building effort.
Earlier today, while discussing the implications of a US debt
downgrade on a SIFMA call, JPM head of fixed-income Terry Belton told
listeners that a US downgrade could cost the US an additional 60-70 bps
in incremental interest. That's per year. He also added that US asset
managers are unlikely to sell Treasurys on a downgrade, but that's
irrelevant. Nobody can predict what all the knock off events from a US
downgrade would be, as the Citi presentation from yesterday indicated.
Should there be a downgrade, investors may not sell Treasurys, but they
sure will be forced to sell other lower rated instruments to keep the
overall rating distribution of their portfolio in line with mandated
rating requirements. Which in turn, following margin calls, will result
in, you guessed it, selling of Treasurys. Yet this debate is the topic
of another post. What is more important is that on the same call, Belton
said that a 70 bps increase in interest would result in an incremental
$100 billion in interest expense each year. As a reminder, this is
roughly the amount that the NPV of a realistic deficit reduction plan
over 10 years would chop off from the US deficit on a yearly basis.
Simply said: the US downgrade alone, now virtually taken for granted by
everyone, will offset any beneficial impact from any deficit reduction
that will have to happen for the debt ceiling to be increased. And that,
ladies and gentlemen, is why cash flows matters.
Submitted by Tyler Durden on 07/26/2011 - 16:00CrudeDebt Ceiling
While it is unclear if something said in the Paul-Hoenig hearing is
what spooked the market, one thing is clear: something spooked the
market. As of a few minutes ago, with an increasing average block size,
the ES has just slid to fresh lows after levitating almost in the green
earlier. Oddly enough the sell off in stocks is not being replicated
anywhere else, as both the DXY, the 10 Year and Crude are all at levels
last seen at the start of the sell off. Are stocks, with just 2 days to
go until Thursday, finally starting to get tired of pretending that all
is well with America? And while the dump accelerates we are awaiting
the inevitable headline from Boehner in which he will make it all too
clear that he refuses to compromise with a president who has threatened
a preemptive veto on his "debt ceiling" plan. The soap opera is once
again up front and center.
Complexity works beautifully as self-preservation, because it
actually expands the bureaucratic power of fiefdoms and widens the moat
protecting cartels. Once the fiefdom expands to manage all those new
rules, only a handful of corporations can possibly afford the regulatory
reporting burdens. They are thus free to exploit the populace as an
informal cartel. Put another way: in the competition with the private
sector for scarce capital, the State and corruption always win. That's
why kleptocracies and banana republics are characterized by bloated,
unaccountable State bureaucracies and systemic corruption: sweetheart
deals, no-bid contracts, shadow banking, shadow governance by Elites,
inefficient workforces that cannot be fired or held accountable, and so
on...The single goal is preserving the revenue and reach of concentrated
power centers: State fiefdoms with large constituencies and headcounts,
and cartels with no competition and stupendous profits. The two are
hand in glove. But complexity does have an eventual cost: collapse. Keep
adding decks to the ship and eventually it capsizes and sinks. One the
ship is sufficiently top-heavy, all it takes is a small wave.
Morgan Stanley has released its comprehensive quarterly metals outlook update for Q3, which while traditionally furiously wrong
in its price targets for the assorted metals under consideration,
represents one of the best reference materials for the underlying
fundamentals behind each hard asset including base and precious metals,
steel and bulk commodities, mined energy, rare earths, even such
arcania as zircon and titanium dioxide. We suggest readers avoid the
conclusion by Morgan Stanley which ultimately will be based on the
firm's prop trading bias, and instead focus on the key supply/demand
mechanics in any given product. For the sake of reference, we break
down MS' outlook on gold, silver due to the special place these hold in
the modern geo-political and voodoo economic discussions.
![[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)
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