Psssst France: Here Is Why You May Want To Cool It With The Britain Bashing - The UK's 950% Debt To GDP

While certainly humorous, entertaining and very, very childish, the recent war of words between France and Britain has the potential to become the worst thing to ever happen to Europe. Actually, make that the world and modern civilization. Why? Because while we sympathize with England, and are stunned by the immature petulant response from France and its head banker Christian Noyer to the threat of an imminent S&P downgrade of its overblown AAA rating, the truth is that France is actually 100% correct in telling the world to shift its attention from France and to Britain. So why is this bad. Because as the chart below shows, if there is anything the global financial system needs, is for the rating agencies, bond vigilantes, and lastly, general public itself, to realize that the UK's consolidated debt (non-financial, financial, government and household) to GDP is... just under 1000%. That's right: the UK debt, when one adds to its more tenable sovereign debt tranche all the other debt carried on UK books (and thus making the transfer of private debt to the public balance sheet impossible), is nearly ten times greater than the country's GDP. To call that "game over" is an insult to game overs everywhere. So here's the bottom line: France should quietly and happily accept a downgrade, because the worst that could happen would be a few big French banks collapsing, and that's it. If, on the other hand, the UK becomes the center of attention (recall this is the same UK that allows unlimited rehypothecation of worthless assets, and the same UK that unleashed the juggernaut known as AIG-FP's Joe Cassano - after all there is a reason why the UK has 600% its GDP in financial liabilities - financial innovation always goes there where it is least regulated), then this island, which far more so than the US is the true center of the global banking ponzi scheme, will suddenly find itself at the mercy of the market. At that point the only question is whether the vigilantes will dare to take down the UK, as said take down will result in an implosion in the very fabric of modern finance, much more so than what even a full collapse of France could ever achieve, or if due to the certain Mutual Assured Destruction that would follow a coordinated UK onslaught, the market will simply very quietly proceed to ignore the elephant in the room.

North Korean Leader Kim Jong Il Has Died Aged 70, South Korea On Emergency Footing

Just out on Yonhap:

• North Korea says its leader Kim Jong-il has died.
• N. Korean leader died of fatigue at 8:30 a.m. Dec. 17 during train ride: KCNA

And Reuters confirms:

• NORTH KOREA STATE TELEVISION SAYS KIM JONG IL HAS DIED

Great. More geopolitical uncertainty. Because as the Arab Spring has shown us there is nothing quite as stable as a transitory military government to fill a power vacuum (also see Thermidorian reaction during the French Revolution).
As expected the South Korean response is immediate.

• S. Korean gov't shifts to emergency footing on news of N.K. leader's death

Fed May Inject Over $1 Trillion To Bail Out Europe

As first reported here, two weeks ago European banks saw the amount of USD-loans from the Fed, via the ECB's revised swap line, surge to over $50 billion - a total first hit in the aftermath of the Bear Stearns failure prompting us to ask "When is Lehman coming?" However, according to little noted prepared remarks by Anthony Sanders in his Friday testimony to the Congress Oversight Committee, "What the Euro Crisis Means for Taxpayers and the U.S. Economy, Pt. 1", we may have been optimistic, because the end result will be not when is Lehman coming, but when are the next two Lehmans coming, as according to Sanders, the relaunch of the Fed's swaps program may "get to the $1 trillion level, or perhaps even higher." As a reference, FX swap line usage peaked at $583 billion in the Lehman aftermath (see chart). Needless to say, this estimate is rather ironic because as Bloomberg's Bradely Keoun reports, "Fed Chairman Ben S. Bernanke yesterday told a closed-door gathering of Republican senators that the Fed won’t provide more aid to European banks beyond the swap lines and the discount window -- another Fed program that provides emergency funds to U.S. banks, including U.S. branches of foreign banks." Well, between a trillion plus in FX swap lines, and a surge in discount window usage which only Zero Hedge has noted so far, there really is nothing else that the Fed can possibly do, as these actions along amount to a QE equivalent liquidity injection, only denominated in US Dollars. Aside of course to shower Europe with dollars from the ChairsatanCopter. Then again, before this is all over, we are certain that paradollardop will be part of the vernacular.

You Won’t Believe How Hard it is to Find & Refine Silver!

STASI Alert: Government to Track Extremist Behavior With Help From Schools & Communities

 

Glenn Beck Explains To a Lost NeoCon Why Even He Would Endorse Ron Paul Over Newt Gingrich

 

U.S. Economy Center Cannot Hold, Where Is My Return to the Mean?

by John Mauldin, MarketOracle.co.uk:

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
– The Second Coming, by William Butler Yeats (1865-1939)
This coming week we shall likely see Congress pass an extension of the “temporary” payroll tax cut, first enacted as a stimulus to the economy in January of 2011. As I write, the extension is just for two months. We’ll leave aside the politics and look at the economic implications of the extension, and then go on to examine the deficit in the US. That will give rise to some thoughts about Europe and what would have to happen for a country to leave the euro. We’ll finally close with some thoughts and graphs about the more controversial part of the tax cut extension, the Keystone XL Pipeline. Just how radical is it to build such a pipeline in the US? And what are the implications for the deficit? I think looking at a few maps might surprise some readers. It should all make for a rather controversial letter, but then controversy is my middle name. (Note, this letter will print longer as there are lots of charts.)
Read More @ MarketOracle.co.uk

 

Report: 82% Chance California Pensions Are Going Under and You’ll Be Next

by Mac Slavo, SHTFPlan.com:

“Socialism works only until you run out of other people’s money.”–Margaret Thatcher

According to a recent study there’s an 82% chance that California pensions will run out of money.
Who didn’t see this one coming?

Well, my fellow Californians, looks like we’re all pretty much screwed.

The evidence: a new study by theStanford Institute for Economic Policy Research finds that California’s struggles with giant pension obligations for state workers is getting worse. Much worse. The report finds that unless reforms are taken, pension obligations are almost certainly going to crowd out non-mandated spending for things like education and social services.

The study, conducted by Stanford Professor Joe Nation along with California Common Sense, covered all three of the state’s largest pension systems.

Read More @ SHTFPlan.com

Silver Analysis W/ David Morgan ‘$60 Silver And $2,500 Gold For 2012′

 

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