US Closes 2011 With Record $15.22 Trillion In Debt, Officially At 100.3% Debt/GDP, $14 Billion From Breaching Debt Ceiling
While not news to Zero Hedge readers who knew about the final debt settlement of US debt about 10 days ahead of schedule, it is now official: according to the US Treasury, America has closed the books on 2011 with debt at an all time record $15,222,940,045,451.09. And, as was observed here first in all of the press, US debt to GDP is now officially over 100%, or 100.3% to be specific, a fact which the US government decided to delay exposing until the very end of the calendar year. We wonder, rhetorically, just how prominent of a talking point this historic event will be in any upcoming GOP primary debates. And yes, technically this number is greater than the debt ceiling but it excludes various accounting gimmicks. When accounting for those, the US has a debt ceiling buffer of... $14 billion, or one third the size of a typical bond auction.
The Fun Begins
Good
evening Ladies and Gentlemen:
Today Gold blasted off like a rocket and finished the comex session at
$1599.70 up 33.70 dollars.Silver on a percentage basis fared much better
rising by $1.66 to $29.53. Today we have war of words between the USA
and Iran on ships passing through the Straits of Hormuz. And also we had
rumblings from Greece warning the EU to pay up or else Greece returns
to the
RISK ON!
It certainly appears that hedge fund managers are hungry for gain this year
as they used data coming out of China and India as a reason to plow idled
money into commodities and jettison the Dollar. "SAFE HAVEN" was anathema
to begin the New Year's trading as bonds are being pummelled in today's
session.
The surge in money flows pushed gold and silver sharply higher with Silver
leading the gains (as we have said repeatedly - Silver will outperform gold
anytime the RISK trade is back on) as it is currently trading near $29.60,
up some 6% to start out the New Year. It still remains bel... more »
On The German Triple-C Issue: Culture, Clausewitz And Clausius
The
issue of Germany and its approach to ameliorating the overleveraged
balance sheets of its southern neighbors will dictate the direction of
sovereign spreads in 2012. The direction of sovereign spreads
will also determine the direction of risk premium spreads in the
leveraged finance markets— both bonds and loans. Defaults in the
leveraged finance market will and should be an afterthought to the
systemic risk factors inherent in sovereign and next-of-kin bank credit
spreads. Therefore, forecasting default rates should take a
backseat to a better understanding of German Kultur and thought that
will shape the euro-zone sovereign finance structure in 2012 and beyond.
The most recent European Union summit highlighted that we are left
with some of the same issues that confronted the great empires prior to
World War I—the battle between “English liberalism with its
emphasis on individual freedom and self-determination and Prussian
socialism with its emphasis on order and authority.”Catalyst Arrives: MBIA Wins Summary Judgment Against Countrywide; Bad News For Bank of America
The catalyst so many have been waiting for,
and the nearly 30 million shorts dreading, has arrived. From Judge
Eileen Bransten: "ORDERED that MBIA Insurance Corporation’s motion for
partial summary judgment is granted to the extent that MBIA Insurance
Corporation (“MBIA”) must establish for its claim of fraud that
misrepresentations by the defendant(s) induced MBIA to issue insurance
policies on terms to which it otherwise would not have agreed and
that MBIA is not required to establish a direct causal link between
defendant(s) misrepresentations and MBIA’s claims payments made pursuant
to the insurance policies at issue; and it is further ordered
that MBIA's motion for partial summary judgment is granted to the
extent that MBIA must establish for its claim for breach of the
Insurance Agreement against Countrywide Home Loans that CHL's breach of
warranties in the issued insurance policies' transaction documents
increased the risk profile of the issued insurance policies and MBIA
is not required to establish a direct causal connection between proven
warranty breaches by CHL and MBIA's claims payments made pursuant to
the insurance policies at issue, and it is further
Ordered that MBIA's motion for partial summary judgment is granted to
the extent that MBIA may seek rescissory damages upon proving all
elements of its claims for fraud and breach of representation and/or
warranty." In short, this is core catalyst that Manal Mehta expected
and which BTIG envisioned to justify its $22.50 price target.
It is also the judgment that will make Bank of America's case law life
a living nightmare going forward (naturally following repeated failed
attempts at appealing). Lastly, any and all shorts in the name may have
their work cut out for them.Global Bond Issuance To Top A Staggering $8 Trillion In 2012
As
households are supposedly deleveraging and European nations face
austerity, one might suspect that global debt levels were stabilizing or
even dropping. Think again. It will likely come as no surprise when we
point out that the G-7 nations alone face a massive $7.3
Trillion (with a T) of sovereign-only maturities (and a further $566
Billion in interest payments) in 2012 alone. This
incomprehensible number is worsened only in historical comparison as
it's current level is 125% higher than was 'expected' at the end of 2010
(and 238% higher than was expected for 2012 at the end of 2009). As Bloomberg points out, Japan tops the list with $3.05tn (equivalent)
followed the US at $2.76tn for 2012 as the former peaks in March 2012
(with $678bn due in that month alone) and the latter peaks in this month
with January 2012 seeing over $480bn due to mature (and be rolled).
But it gets worse for supply - global corporations (dominated by Financials relative to non-Financials), as noted by S&P today, have used the low interest rate environment to modestly relever and face almost $1 Trillion (again with a T) of maturing debt that will need to be rolled in 2012 (with January and March also topping the list) and over $3.1Tn in the next four years. So in the next four years,
amid a slowing demand picture thanks to European worries, global
corporate debt combined with G-7 sovereign debt maturing is an incredible $18.48 Trillion that will need to be rolled, rehypothecated, and have capital allocated to it (or not).
January 3, 2012, at 7:55 pm
by Jim Sinclair in the category In The News |
Print This Post | 
Email This Post
by Jim Sinclair in the category In The News |
Print This Post | Email This Post
Jim Sinclair’s Commentary
Sad, but true.
Jim Sinclair’s Commentary
The Fed bails out the Euro.
Jim Sinclair’s Commentary
Absolutely yes! They fain friendship while they spin the evil webs to steal.
Cohan: Did Psychopaths Take Over Wall Street? By William D. Cohan Jan 2, 2012 7:01 PM ET
Jan. 3 (Bloomberg) — William Cohan, author of "Money and Power: How Goldman Sachs Came to Rule the World" and a Bloomberg View columnist, talks about an article in a recent Journal of Business Ethics that blames the financial crisis on corporate psychopaths at the helm of financial institutions. Cohan speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s "InsideTrack. (Cohan is a Bloomberg View columnist. The opinions expressed are his own. Source: Bloomberg)
It took a relatively obscure former British academic to propagate a theory of the financial crisis that would confirm what many people suspected all along: The “corporate psychopaths” at the helm of our financial institutions are to blame.
Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”
As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”
More…
Sad, but true.
Jim Sinclair’s Commentary
The Fed bails out the Euro.
Jim Sinclair’s Commentary
Absolutely yes! They fain friendship while they spin the evil webs to steal.
Cohan: Did Psychopaths Take Over Wall Street? By William D. Cohan Jan 2, 2012 7:01 PM ET
Jan. 3 (Bloomberg) — William Cohan, author of "Money and Power: How Goldman Sachs Came to Rule the World" and a Bloomberg View columnist, talks about an article in a recent Journal of Business Ethics that blames the financial crisis on corporate psychopaths at the helm of financial institutions. Cohan speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s "InsideTrack. (Cohan is a Bloomberg View columnist. The opinions expressed are his own. Source: Bloomberg)
It took a relatively obscure former British academic to propagate a theory of the financial crisis that would confirm what many people suspected all along: The “corporate psychopaths” at the helm of our financial institutions are to blame.
Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”
As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”
More…
January 3, 2012, at 3:28 pm
by Jim Sinclair in the category General Editorial | Print This Post | Email This Post
by Jim Sinclair in the category General Editorial |
Print This Post | Email This PostDear Extended Family,
The incoming negativity on gold last week reached epic levels. Friends of mine and gold for more than 40 years were looking for a towel to throw into the gold ring. When fear overtakes your intellect and you call, it is like molten magma spewing out of the phone or email.
If I dared to remind the caller that nothing has changed except the algorithms and then only for the short period of time I made the caller angry. I will admit anger is better than total depression but there is no necessity for either.
The advent of splinter parties to challenge the staid old Democrats and Republicans has put Washington into a total freeze frame. There is no mandate for anything, but don’t rock the boat. All that can get done there is nothing whatsoever.
All the “can kicking” hopes for a strong economic recovery to heal the can bouncing damage have not and will not materialize. The Fed will not let the euro fail. Already the US Fed has provided the swap lines (loan mechanisms) to the ECB (a beard) to loan the Euro banks the liquidity they lost when the Greek bonds were cut 50% (declared not a default by the Board of Appointed Wizards on CDSs from the banks who wrote the useless bond insurance who are the official shot callers on the default word).
You will never hear any of the "D" words, be that default or deflation. You will hear "rescheduling" which is a default whereby the credit default swap does not have to function so the worthless insurance is camouflaged.
Arab spring is turning out to be the disaster we knew it was. Remember all the cheering on financial TV as Egypt imploded? Spontaneous outbreaks of democracy were simply a really dumb reaction.
Some people can only be ruled by strongmen. It was good the strongmen were all on the payroll of the West. The West fired the strongmen into holes in the ground with candy bars, and flood pipes with unused gold .45cal pistols. Now the true believers are taking over. Arab Spring will be seen as the rise of the Muslim Brotherhood as the most influential replacement.
Energy is in as much trouble from the Arab Spring as the Strait of Hormuz is from Iran. Yes, the Wunderkinds took advantage of the gold fear circumstances, but in terms of gold related items have overstated their accomplishments.
When you bully something to go your way you must not assume you are a genius and called the direction. You made it happen, and it will gobble you up the minute you are out of aces. Those gold shares and gold bullion holders that maintained reason over emotion are committed people that no squirt is going to force out of their positions to benefit worthless puts and large new very low priced shorts. At times old fashioned retail can have more staying power than hedge funds.
Please make note:
Gold will bounce off $2100 and react. Try to keep an even course as Alf is right. Gold has a better chance of seeing $4500 than $1400.
Throw away your razor blade kits provided by famous but mercurial gold commentators who have no mindset whatsoever other than to sell subscriptions or seminars.
Sincerely,
Jim
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