The U.S. Is Bankrupt

Jim Rogers Blog - 4 hours ago

It seems to me it's physically, humanly impossible for the U.S. to ever pay off its debt. They can roll it over and continue to play the charade, but the U.S. is bankrupt. - *in CNBC* *Related ETFs: SPDR Gold ETF (GLD), ProShares UltraShort 20+ Year Treasuries (ETF) (TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (TLT)* *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.* 

Futures Surge Overnight Following Accelerating Central Planning Takeover Of Global Capital Markets

Anyone just waking up and noticing futures trading just barely below the closing print may get the impression that things are fine. They are not. Here is what has happened overnight as the global central planning cartel does everything in its power to prevent the global market rout, which has so far wiped out $7.8 trillion in market value around the world, from morphing into the catalyst that ends the status quo. To wit: ECB resumes buying Italian and Spanish bonds (UniCredit says the bank is losing a “game of chicken” with lawmakers by not holding out for budget cuts and higher taxes, and may eventually need to print money), the G-20 is prepared to take joint measures to stem a global crisis, Brazilian Finance Minister Guido Mantega said. Greece’s securities regulator banned all short-selling on the Athens exchange for two months starting today. Taiwan’s government bought stocks yesterday and this morning through four funds it controls. South Korea’s regulator asked pension funds, brokerages and asset-management companies to step up efforts to stabilize the market. South Korea also bans short selling for three months starting August 10. And lastly, rumors of an emergency Fed announcement are ripe. So... after all this global cartel intervention, is it any wonder that futures staged a near vertical move up overnight?

South Korea Joins Greece In Banning Short Selling

Yesterday Greece, today Korea, tomorrow the world. The traditionally last ditch attempt by a regulator losing control of events: making short selling illegal, is starting to appear in random places, first showing up in Greece, and now in South Korea, where the capital markets commissioner just said no most shorting for 3 months. South Korea’s Financial Services Commission will also temporarily ease daily limit on amount of shares companies can buy back. This latest short selling ban has put many on edge, and following Italy's move to ban naked short selling several weeks ago it is now expected that at least several more European countries will follow in these footsteps, further eliminating price discovery and destabilizing market confidence and more.

Two Previews The FOMC Rate Decision Later Today, In Which Goldman Says "A Little More Easing May Be Needed"

For today's preview of the FOMC rate decision (which should really be called a QE3 decision), we go to RanSquawk which highlights the push and pull mechanics of today's events, and to Goldman which once again makes the explicit clarification that it needs QE3 with the statement that "A bit more easing might be needed in the near term." Yes Goldie, we know you want another year of record bonuses.

S&P Cuts AAA Rating On Thousands Of Municipal Bonds

The much awaited cut by S&P of thousands of municipal bonds following its August 5 downgrade of the US has arrived. Per Bloomberg: "The rating company assigned AA+ scores to securities in the $2.9 trillion municipal bond market including school- construction bonds in Irving, Texas; debt backed by a federal lease in Miami; and a bond series for multifamily housing in Oceanside, California. Olayinka Fadahunsi, an S&P spokesman, said he couldn’t provide a dollar figure on the affected debt. “It’s expected, but nobody is happy about it,” Bud Byrnes, chief executive officer of Encino, California-based RH Investment Corp., said in a telephone interview. “No one that I know thinks it was justified to cut the U.S. bonds to AA+. Once that happened, you knew that any prerefunded bonds or escrowed bonds would be downgraded too. It’s a domino effect.”" Well, Bud, if you really have so few acquaintances, we suggest you go out more. There are some fun bars on Ventura: give us a call for the low down. As for people who do go out more, here's one: "Chris Mier, a managing director at Loop Capital Markets LLC in Chicago who follows the municipal bond market, said the downgrades made sense, given the federal rating cut. “In order to keep the system logical and coherent, there are going to be a lot of downgrades,” Mier said in a conference call with reporters and clients." Matt Fabian, a managing director of Concord, Massachusetts- based Municipal Market Advisors, a financial research company, said in a telephone interview that he expected “hundreds and hundreds of municipal downgrades,” which may hurt investor confidence. “Treasuries may be able to shake off a real impact from the downgrade,” he said. “Munis, I’m less sure about." That's ok, while nobody has any idea what is coming, that won't stop 99.9% of those on Comcast's financial comedy channel from opining anyway.

European CDS Rerack

European CDS rerack:

• MAIN  141.25/142.5   +.75   XOVER 590/593  +10.5
• ITALY  -4
• SPAIN -13
• PORT -5
• IRELAND    -
• GREECE     -
• BELG  -2
• FRANCE +2
• AUSTRIA  -1
• UK  +5
• GERM  +4
• SOVX  245/250   -

The Central Bankers' Dilemma Bubble Chart

Bloomberg has come out with the most succinct and descriptive chart summarizing the "Central Bankers' dilemma" in which everyone is currently caught in either of four states: inflation, stagflation, recession and debt trap. Nobody wants to be in the lower left or the top right. Unfortunately, America's future is precisely one of the two, and anything the Fed does will only accelerate America's adverse transition appropriately.

Bank Of America CDS Update

BAC default risk at 265-270 bps as of this morning. About 30 tighter from yesterday's epic rout which saw the final bid/asl around 290/310, or well over 100 wider on the day. The longer BAC keeps mum, the worse this will get, and we expect the bleed wider to resume shortly, slowly at first, then very fast if no curve steepening QE3 Operation Twist is announced.

Frontrunning: August 9

• Rogoff: Fed Will Embark on QE3, Act ‘Decisively’ (Bloomberg)
• China Inflation Quickens to 6.5%, Limits Policy Response to Global Crisis (Bloomberg)
• ECB Puts Pressure on Italy (WSJ)
• Chinese Fault Beijing Over Foreign Reserves (NYT)
• Senate to probe S&P downgrade (FT)
• Cameron Back to U.K. for Emergency Meeting on Riots (Bloomberg)
• Trichet Turns ‘President of Europe’ as Debt Crisis Stuns Political Leaders (Bloomberg)
• Hong Kong Sells Land 33% Below Surveyors’ Estimates Amid Market Turmoil (Bloomberg)

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