by Doug Casey, CaseyResearch.com:
Everyone knows that the US government is bankrupt and has been for many years. But I thought it might be instructive to see what its current cash-flow situation actually is. At least insofar as it’s possible to get a clear picture.
As you know, the so-called Super Committee recently tried to come up with a plan to cut the deficit by $1.5 trillion and failed completely. To anyone who understands the nature of the political process, the failure was, of course, as predictable as it was shameful. What’s even more shameful, though, is that the sought-after $1.5 trillion cut wasn’t meant to apply to the annual budget but to the total budget of the next 10 years – a fact that is rarely mentioned.
Now whenever the chattering classes talk about cuts, it’s always about cuts over the course of 10 years. Which is a dodge, partly because most of the supposed cuts will be scheduled for the end of the period, but also because new programs, new emergencies and hidden contingencies will creep in to offset any announced cuts. So the numbers below aren’t a worst case; they’re the rosiest possible scenario. People have thought I was joking when, asked how bad the Greater Depression was going to be, I answered that it would be worse than even I thought it would be. But I haven’t been joking.
Read More @ CaseyResearch.com
Everyone knows that the US government is bankrupt and has been for many years. But I thought it might be instructive to see what its current cash-flow situation actually is. At least insofar as it’s possible to get a clear picture.
As you know, the so-called Super Committee recently tried to come up with a plan to cut the deficit by $1.5 trillion and failed completely. To anyone who understands the nature of the political process, the failure was, of course, as predictable as it was shameful. What’s even more shameful, though, is that the sought-after $1.5 trillion cut wasn’t meant to apply to the annual budget but to the total budget of the next 10 years – a fact that is rarely mentioned.
Now whenever the chattering classes talk about cuts, it’s always about cuts over the course of 10 years. Which is a dodge, partly because most of the supposed cuts will be scheduled for the end of the period, but also because new programs, new emergencies and hidden contingencies will creep in to offset any announced cuts. So the numbers below aren’t a worst case; they’re the rosiest possible scenario. People have thought I was joking when, asked how bad the Greater Depression was going to be, I answered that it would be worse than even I thought it would be. But I haven’t been joking.
Read More @ CaseyResearch.com
The Real Dark Horse - S&P's Mass Downgrade FAQ May Have Just Hobbled The European Sovereign Debt Market
from The Economic Collapse Blog:
The European debt crisis has just gone to an entirely new level. Just when it seemed like things may be stabilizing somewhat, we get news of huge financial bombs being dropped all over Europe. Very shortly after U.S. financial markets closed on Friday, S&P announced credit downgrades for nine European nations. This included both France and Austria losing their cherished AAA credit ratings. When the credit rating of a country gets slashed, that is a signal to investors that they should start demanding higher interest rates when they invest in the debt of that nation. Over the past year it has become significantly more expensive for many European nations to borrow money, and these new credit downgrades certainly are certainly not going to help matters. Quite a few financially troubled nations in Europe are very dependent on the ability to borrow huge piles of cheap money, and as debt becomes more expensive that is going to push many of them over the edge. Yesterday I wrote about 22 signs that we are on the verge of a devastating global recession, and unfortunately that list just got a whole lot longer.
Over the past several months we have seen quite a few credit downgrades all over Europe, but we have never seen anything quite like what S&P just did. Standard & Poor’s unleashed a barrage of credit downgrades on Friday….
Read More @ TheEconomicCollapseBlog.com
The European debt crisis has just gone to an entirely new level. Just when it seemed like things may be stabilizing somewhat, we get news of huge financial bombs being dropped all over Europe. Very shortly after U.S. financial markets closed on Friday, S&P announced credit downgrades for nine European nations. This included both France and Austria losing their cherished AAA credit ratings. When the credit rating of a country gets slashed, that is a signal to investors that they should start demanding higher interest rates when they invest in the debt of that nation. Over the past year it has become significantly more expensive for many European nations to borrow money, and these new credit downgrades certainly are certainly not going to help matters. Quite a few financially troubled nations in Europe are very dependent on the ability to borrow huge piles of cheap money, and as debt becomes more expensive that is going to push many of them over the edge. Yesterday I wrote about 22 signs that we are on the verge of a devastating global recession, and unfortunately that list just got a whole lot longer.
Over the past several months we have seen quite a few credit downgrades all over Europe, but we have never seen anything quite like what S&P just did. Standard & Poor’s unleashed a barrage of credit downgrades on Friday….
Read More @ TheEconomicCollapseBlog.com
“Adherence To the Oath”
The Ron Paul Plan
Faber's Latest Rant On Global Monetization Wars
There
is a little for everyone in Marc Faber's latest appearance on CNBC.
The infamous boomer (and doomer) believes (as we do) that today's
downgrades are less significant for stocks (at least until the
realization that banks and more importantly insurance companies are
about to be cut as well - keep a close eye out on Allianz and Generali
(of ASSGEN fame) - it is not incidental that they are abbreviated to
A&G, just one letter away from our own AIG) as it is largely priced
in but the equity market's rally of the last few weeks (with its lack
of breadth and volume) is strongly suggestive of a bear-market rally
(as opposed to the decoupling bull market that so many hope for). His
view quite simply is that the ECB has undergone a backdoor monetization and without this the EUR would be significantly stronger
especially given the huge short-interest (though he sees the trend for
EUR is down). Some highlights include: EUR weakness may help exports
but the debt servicing costs of major European firms with huge US
denominated debt wil suffer greatly, most European nations should be
CCC-rated, nominally European stocks will outperform and holding quality
dividend paying companies is preferred, valuation is practically
impossible given ZIRP, and finally noting the irony, the worse
the global economy gets (and the Chinese economy suffers), the more
money printing will occur lifting nominal equity prices while real
economies stumble and standards of living drop, so hold gold.
from Tekoa Da Silva’s Bull Market Thinking:
Deeply
bothered by the MF Global(MFG) collapse, I spent the entire month of
December researching a report which I’ve now released, entitled, “BulletProof Shares” – How To Protect Your Stock Investments From Broker Bankruptcy & Theft.
The reason I began researching and ultimately put this paper together was simple: fear. As a stock investor, I became afraid to continue holding my stock investments in the financial system. My investigations into this matter were both shocking and relieving as I’ve previously reported, for the reason that all the financial “safe guards” to protect investors from losses are flimsy at best. I’m indirectly referring to the SIPC when I say that by the way. I discovered that in the economic “good times”, the SIPC carries around a billion dollars in capital, which is raised from annual member company dues. But in bad economic times such as we’re in now, member companies go bankrupt and many fall behind in their annual contributions–while at the same time broker bankruptcies increase, putting a tightening financial noose on the entire organization.
Easily Severing Broker Dealer Counter Party Risk and Removing Your Shares From The Financial System
Read More @ BullMarketThinking.com
Deeply
bothered by the MF Global(MFG) collapse, I spent the entire month of
December researching a report which I’ve now released, entitled, “BulletProof Shares” – How To Protect Your Stock Investments From Broker Bankruptcy & Theft.The reason I began researching and ultimately put this paper together was simple: fear. As a stock investor, I became afraid to continue holding my stock investments in the financial system. My investigations into this matter were both shocking and relieving as I’ve previously reported, for the reason that all the financial “safe guards” to protect investors from losses are flimsy at best. I’m indirectly referring to the SIPC when I say that by the way. I discovered that in the economic “good times”, the SIPC carries around a billion dollars in capital, which is raised from annual member company dues. But in bad economic times such as we’re in now, member companies go bankrupt and many fall behind in their annual contributions–while at the same time broker bankruptcies increase, putting a tightening financial noose on the entire organization.
Easily Severing Broker Dealer Counter Party Risk and Removing Your Shares From The Financial System
Read More @ BullMarketThinking.com
Ratings Actions Out
Not sure why they felt the need to wait until 430 since most of it was leaked already. Germany back to stable outlook is good. Austria and France chance EFSF but guess that is what LTRO is for. Italy and Portugal would be in trouble in the real world but so long as ECB views them as money good the countries and banks can keep printing money (sorry use LTRO). Roughly in line with expectations. I think the need to redo the EFSF and ESM concept is an issue that will need to be digested. Is BBB+ for Italy and junk for Portugal enough to cause some collateral provisions to be triggered or force some sellers? I don't think it will in any meaningful way but needs to be watched. I'm surprised Belgium got by but then again it is a rating agency.Stock Futures Close Almost Green Even As Protection Costs Jump
The
post-European-close rally-monkey was in full force today, with
somewhat average (though NYSE volume is 30% lower than last January's
average!) volumes in stocks, as ES (the e-mini S&P 500 futures
contract) made it almost back to unchanged in a post-cash-close squeeze
(on notably lower than average trade size). However, close-to-close,
the cost of protecting equity and credit (in options
volatility, implied correlation, and CDS) all rose (underperformed)
significantly. It seems everyone believes everything bad
(event-wise) is priced in but perhaps they are missing the reality of
mundane macro data and earnings.It's Official: France Cut To AA+ From AAA By S&P, Outlook Negative
Today's worst kept secret just hit the wires, as S&P announces that it has officially downgraded France- FRANCE CUT TO AA+ FROM AAA BY S&P, OUTLOOK NEGATIVE
- "we believe that there is at least a one-in-three chance that we could lower the rating further in 2012 or 2013"
- "we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating,"
Everyone Hates The Euro - EUR Shorts Hit New Record High
Presented with little but incredulous comment as the net short-interest speculative commitment of traders in EUR futures breaks to yet another record with no squeeze in sight yet...Habituating to Contraction
Americans have been conditioned for three generations to expect the Savior State to "do something" during downturns to "make it right." The idea that systemic problems are now beyond the reach of the Federal government does not compute; there must be something the government can do to "fix" everything. This notion that the Central State is effectively omniscient and all-powerful is central to the belief system of Americans now. The concept that the government cannot fix the problem, or that government central-planning has made the problem worse, is anathema to everyone conditioned to believe government intervention will "save the day." The basic reality is the Federal government has already pulled out all the stops in the past four years to "make the economy recover," and all its unprecedented actions have accomplished is to maintain the Status Quo via unsustainably gargantuan borrowing, spending and backstopping. If we scrape away the rhetoric and bogus statistics, at heart the current fantasy that the U.S. has "decoupled" from the global economy and will remain an island of "permanent prosperity" in a sea of recession boils down to this belief: the Federal government "won't let us stay in recession." In other words, it's within the power of the Central State to make good every loss, guarantee every debt, maintain the Empire, solve every geopolitical challenge and find technological or military solutions to potential energy shortages. All we need is the "will" to force the government to use its essentially unlimited power to "fix everything." A people conditioned to this expectation will have great difficulty accepting that their government has already done everything possible, and that these stupendous debt-based expenditures are simply not sustainable going forward. Some problems are not fixable by more government intervention; indeed, government intervention in the marketplace is like insulin: the system begins to lose sensitivity to Central State manipulation and intervention.JPM Explains Why The US Economy Is About To Hit A Brick Wall
JPM's head economist Michael Feroli just joined the bandwagon of other Wall Streeters in cutting Q4 GDP, trimming his prior forecast of 3.5% to 3.0%. However, as this is backward looking, it is largely irrelevant if confirming what we already knew: that the economy was certainly not growing as fast as the market implied it was (yes, the manipulated market is not the economy, no matter how much the Fed would like that to be the case). A bigger question is what should one expect from the future. Yes - an in vitro future, isolated from the daily rumor mill of what may or may not happen to the French rating tomorrow or the day after. It is here that there is nothing good to expect: 'we think growth will downshift from 3.0% in 4Q11 to 2.0% in 1Q12. Looking beyond the first quarter, we expect a growing private domestic sector will contend with a fading drag from the external sector and a persistent drag from the public sector." Yet where JPM falls short, is its optimistic view on the private sector. As David Rosenberg showed yesterday, the ratio of negative to positive preannouncements just hit a multi-year high, with the primary culprit being the strong dollar. Unfortunately for Feroli's bullish angle, the private sector will not do all that well at all if the EURUSD remains in the mid 1.20s or falls further. In fact, corporate earnings will likely be trounced, which in combination with everything else that JPM lists out, correctly, could make the second half of 2012 a perfect storm for economic growth, an event which Obama's pre-electoral planners are all too aware of. What is the only possible recourse? Why more QE of course. The only unknown is "when."Greek Debt Likely Unsustainable Even With Haircuts, Barclays Complete Q&A On PSI
As
we discussed earlier, the bigger news of the day (as opposed to the
ratings actions which are well-discounted) is the new reality that PSI
talks are going nowhere. The lack of incentives for an increasingly
'hedged' community of GGB holders as the banks reduce exposure and shoot
themselves in the foot leaves a glaring hole in the dis-union that is
the EMU. Barclays Capital is out with a very complete Q&A on
'everything you wanted to know about Greek PSI Talks and implications
but were afraid to ask' and while they remain more positive on the
probability of a successful outcome than us, one thing we agree on is
that even with 100% participation Greek debt is not likely to be
sustainable in the absence of substantial fiscal and structural
adjustment in the years ahead.
by Stephen Lendman:
On January 13, Cynthia McKinney said Obama has 12,000 US troops in Malta heading for Libya.
Throughout 2011, Washington and rogue NATO partners committed Nuremberg level crimes. They made Libya a charnel house.
Terror bombing caused massacres, mass destruction and human misery. Libya remains wracked by violence, instability, and illegitimate governance.
Occupation, colonization, pillaging and exploitation intend raping Libya for profit.
America’s Marines Hymn begins with the lines, “From the Halls of Montezuma to the shores of Tripoli.”
Read More @ SJLendman.Blogspot.com
On January 13, Cynthia McKinney said Obama has 12,000 US troops in Malta heading for Libya.
Throughout 2011, Washington and rogue NATO partners committed Nuremberg level crimes. They made Libya a charnel house.
Terror bombing caused massacres, mass destruction and human misery. Libya remains wracked by violence, instability, and illegitimate governance.
Occupation, colonization, pillaging and exploitation intend raping Libya for profit.
America’s Marines Hymn begins with the lines, “From the Halls of Montezuma to the shores of Tripoli.”
Read More @ SJLendman.Blogspot.com
from WealthWire.com:
OWNING GOLD should make financial crises fun. Which alongside silver, it has surely done to date, 20% and 50% plunges aside.
But if you already own physical bullion – or you’re about to consider it – spare a thought for everyone else. Because pointing and laughing at the misfortune of others is an ugly habit. It only makes us “gold bugs” more boring at parties as well. A little sympathy, and a stab at empathy too, could go a long way to redeeming us socially. And it would be far better than taking a pratfall of our own, you’ll agree.
Crowing about being so right, so early is understandable, of course. Hitting a 22-year low in July 1999, the price of investment gold has since risen sharply – pretty much year after year – against the Euro, Yen and Sterling, as well as every other currency you can name.
Silver bullion has done better still over the last decade – that decade straddling both the Tech Stock Crash and its offspring, the Cheap-Money Bubble, sired by meek academics wielding godlike powers at the big central banks. The permanent emergency following the inevitable blow-up has only accelerated gold’s outperformance against pretty much every other financial asset you can name, too.
Read More @ WealthWire.com
OWNING GOLD should make financial crises fun. Which alongside silver, it has surely done to date, 20% and 50% plunges aside.
But if you already own physical bullion – or you’re about to consider it – spare a thought for everyone else. Because pointing and laughing at the misfortune of others is an ugly habit. It only makes us “gold bugs” more boring at parties as well. A little sympathy, and a stab at empathy too, could go a long way to redeeming us socially. And it would be far better than taking a pratfall of our own, you’ll agree.
Crowing about being so right, so early is understandable, of course. Hitting a 22-year low in July 1999, the price of investment gold has since risen sharply – pretty much year after year – against the Euro, Yen and Sterling, as well as every other currency you can name.
Silver bullion has done better still over the last decade – that decade straddling both the Tech Stock Crash and its offspring, the Cheap-Money Bubble, sired by meek academics wielding godlike powers at the big central banks. The permanent emergency following the inevitable blow-up has only accelerated gold’s outperformance against pretty much every other financial asset you can name, too.
Read More @ WealthWire.com
from King World News:
With
continued volatility in gold and silver, today King World News
interviewed one of the legends in the gold world, Keith Barron. Keith
consults with major gold companies around the world as well as major
brokerage houses and Keith is responsible for one of the largest gold
discoveries in history. Here is what Barron said about a coming mania:
“Oh yes, that’s coming. I met with a gentleman last week, I’m not
going to mention his name because a lot of listeners would know who he
is and he was saying to me, ‘Look, we haven’t even got to first base
yet.’ He thinks gold is going to between $3,500 to $5,000. You get all
of this talk in the media, especially on CNBC, saying that gold is in a
bubble. Every time it goes up a couple hundred dollars it’s in a bubble
again. It’s not in a bubble because the average Joe is not buying.”
Keith Barron continues: Read More @ KingWorldNews.com
With
continued volatility in gold and silver, today King World News
interviewed one of the legends in the gold world, Keith Barron. Keith
consults with major gold companies around the world as well as major
brokerage houses and Keith is responsible for one of the largest gold
discoveries in history. Here is what Barron said about a coming mania:
“Oh yes, that’s coming. I met with a gentleman last week, I’m not
going to mention his name because a lot of listeners would know who he
is and he was saying to me, ‘Look, we haven’t even got to first base
yet.’ He thinks gold is going to between $3,500 to $5,000. You get all
of this talk in the media, especially on CNBC, saying that gold is in a
bubble. Every time it goes up a couple hundred dollars it’s in a bubble
again. It’s not in a bubble because the average Joe is not buying.”Keith Barron continues: Read More @ KingWorldNews.com
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