Posts Tagged ‘IOUs’

Preserve and Protect: Mapping The Tipping Points

Preserve and Protect: Mapping The Tipping Points

Courtesy of Gordon T Long of Tipping Points

The economic news has turned decidedly negative globally and a sense of ‘quiet before the storm’ permeates the financial headlines. Arcane subjects such as a Hindenburg Omen now make mainline news. The retail investor continues to flee the equity markets and in concert with the institutional players relentlessly pile into the perceived safety of yield instruments, though they are outrageously expensive by any proven measure. Like trying to buy a pump during a storm flood, people are apparently willing to pay any price.  As a sailor, it feels like the ominous period where the crew is fastening down the hatches and preparing for the squall that is clearly on the horizon. Few crew mates are talgking as everyone is checking preparations for any eventuality. Are you prepared?

What if this is not a squall but a tropical storm, or even a hurricane? Unlike sailors, the financial markets do not have the forecasting technology for protection against such a possibility. Good sailors before today’s technology advancements avoided this possibility through the use of almanacs, shrewd observation of the climate and common sense. It appears to this old salt that all three are missing in today’s financial community.

Looking through the misty haze though, I can see the following clearly looming on the horizon.

Since President Nixon took the US off the Gold standard in 1971, the increase in global fiat currency has been nothing short of breath taking. It has grown unchecked and inevitably has become unhinged from world industrial production and the historical creators of real tangible wealth.

Do you believe trees grow to the sky?
Or, is it you believe you are smart enough to get out before this graph crashes?

Apparent synthetic wealth has artificially and temporarily been created through the production of paper. Whether Federal Reserve IOU notes (the dollar) or guaranteed certificates of confiscation (treasury notes & bonds), it needs to never be forgotten that these are paper. It is not wealth. It is someone else’s obligation to deliver that wealth to the holder of the paper based on what that paper is felt to be worth when the obligation is required to be surrendered. It must never be forgotten that fiat paper is only a counter party obligation to deliver. Will they?…
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California Declares State Of Emergency Over State Finances, Or Arnie Is An Austrian After All (For The Wonks)

California Declares State Of Emergency Over State Finances, Or Arnie Is An Austrian After All (For The Wonks)

Total RecallCourtesy of Tyler Durden

Quite possibly this has something to do with the fact that Arnie just had a very vivid Total Recall from the future in which California had filed Chapter 66 (a brand new invention in honor of the famous route), mere months after he had decided to institute the latest round of furloughs and once again paying using IOUs.

From Reuters:

Increasing pressure on lawmakers to negotiate a state budget that closes a $19 billion shortfall, California Governor Arnold Schwarzenegger declared a state of emergency over the state’s finances on Wednesday.

In the declaration, Schwarzenegger ordered three furlough days per month beginning in August for thousands of state employees to preserve the state’s cash to pay the state’s debt obligations and for essential services.

California’s budget is several weeks overdue and Schwarzenegger and top lawmakers are at impasse over how to balance the state’s books. Analysts say it could be several more weeks before the Republican governor and leaders of the Democrat-led legislature reach an agreement, a delay that may threaten to lower the state’s already weak credit rating, now hovering just a few notches above "junk" status.


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California Students Protest 32% Tuition Hike; State Budget Gridlock II Coming; Massive Deficits In San Francisco

And it’s not like high-school graduates who can’t afford college have JOBS waiting for them…. – Ilene

California Students Protest 32% Tuition Hike; State Budget Gridlock II Coming; Massive Deficits In San Francisco

happy UC students, when it college was affordableCourtesy of Mish

Massive fiscal problems confront California once again. Let’s start with a look at California students hit with 32% hike in tuition.

California undergraduates and their parents just got hit with a 32% increase in tuition by next summer.

With hundreds of angry students chanting outside their meeting at UCLA, the California Board of Regents approved the $2,500, two-step fee hike, which will raise the basic tuition at the 10-campus University of California system to $10,300 a year. That’s three times what it cost a decade ago. Other fees, books, and room and board adds an additional $16,000.

With the state $21 billion in the hole and slashing funding for education, the regents said they had no choice. At the same time, UC is restricting new admissions in a bid to save money.

More increases seem inevitable.

UC President Mark Yudof has asked for $913 million more next year for the UC system and says he "can’t make any promises" to not raise fees again if the state doesn’t come through. "When you have no choice, you have no choice," Yudof said after a regents’ committee endorsed the fee plan Wednesday. "I’m sorry."

California Deficit Hits $21 Billion

California is back in another deep hole. A $21 Billion Fiscal Shortfall Could Mean More Cuts, Higher Taxes and the Return of IOUs to Meet Obligations. Please consider Budget Gap Widens in Sacramento.

California is deep in red ink again, according to a new report projecting that the cash-strapped state faces a $21 billion budget shortfall through June 2011.

Facing so much fiscal red ink, Californians could see another round of spending cuts and tax increases. Since September 2008, state lawmakers have enacted three budgets to close a cumulative $77 billion shortfall. They closed the gap largely through spending cuts and tax increases, but also with federal-stimulus funds and one-time accounting gimmicks. At one point, California was so close to insolvency it was forced to issue IOUs.

The report’s conclusions now raise the likelihood of another lengthy impasse among the state’s hyper-partisan legislators that could threaten California’s solvency and force officials to again


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IOU and State of Emergency

Joe Weisenthal at ClusterStock updating on California’s budget crisis drama.

IOU

schwarzenegger tbiYou know, all this time we’ve been saying that the difference between California and the Federal Government was that California couldn’t print currency to get out of a pinch.

But really, isn’t printing currency exactly what issuing IOUs is? Granted, it’s not the most solid currency given with the state you’re dealing with, but it’s something.

Anyway, we’ll get to find out, because California has missed (surprise!) its deadline for closing its budget gap and is now set to hand out IOUs instead of actual money.

Reuters: The notes will mark the first time in 17 years the most populous U.S. state’s government will have to resort to the unusual and dramatic measure.

Democrats who control the legislature could not convince Republicans late on Tuesday night to back their plans to tackle a $24.3 billion budget shortfall or a stopgap effort to ward off the IOUs. The two sides agree on the need for spending cuts but are split over whether to raise taxes.

The state still has some cash, but that will be reserved strictly for its bondholders and education spending (the kids!). But vendors, college students, state agencies will get some paper.

Please, please, please let there be an after-market in these IOUs. We’d love to see how they’re valued and how businesses will conduct exchange using them.

STATE OF EMERGENCY

Gov. Arnold Schwarzenegger has now declared a State of Emergency for the sunny state of California.

Meanwhile, former Gov. Grey Davis was on CNBC saying he wouldn’t expect most banks to take California IOUs.

Oh, if only the constitution Article 1 Section 10 didn’t prevent the state from declaring IOUs a legal tender.

See Also:

California, killing dogs

Bail Out California, Or They’re Going To Kill Dogs

***** 

Hotel California – Eagles

 


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Zero Hedge

Picking Up the UK Tab

Courtesy of ZeroHedge. View original post here.

Picking Up the UK Tab

Posted with permission and written by Jeff Thomas, International Man (CLICK FOR ORIGINAL)


Back in the late 90’s, I began saying, “I’ll give the EU twenty years.” At that point, the EU seemed to be going great guns, but I believed that it was an ill-conceived concept th...



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ValueWalk

The Minimum Wage Alternative No One Is Talking About

By insidesources. Originally published at ValueWalk.

Lawmakers and activists have often touted the minimum wage as a way to address poverty, but one tax break could provide an alternative that is less economically risky.

Photo by WageIndicator.org – Pictures from Paulien Osse and

The Earned Income Tax Credit (EITC) is a tax break aimed specifically at lower income households. It helps the working poor by allowing them to keep more of their paycheck when paying income tax. Some experts note the policy could help the poor while avoiding many of the economic shortfalls that the minimum wa...



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Phil's Favorites

Uncertainty Soars in China and UK

Courtesy of Mish.

Global uncertainty is on the rise, led by China and the UK.

In the US and Europe measures of uncertainly are on the decline. I gather this from a chart that ZeroHedge tweeted this morning.

Global Uncertainty

I asked ZeroHedge where the chart came from and he replied “In today’s Citi report from Willem Buiter”.

OK, but where did Buiter get the data?

Although the scales are different, the answer appears to be Economic Policy Uncertainty. The the patterns match precisely.

Economic Policy Uncertainty UK

...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

OMEGA: 'The in-place equity bull market should last a long time' (Business Insider)

It's a good time to be in stocks, according to Omega Advisors' Steve Einhorn.

The stock market should forge ahead on its bull run, Einhorn said in an email Sunday to macro traders that was viewed by Business Insider.

Goldman Sees Pound, Yen and Kiwi Most Exposed to Yellen Shock (Bloomberg)

Goldman Sachs Group Inc. sees the pound, the yen and the New Zealand dollar as most vulnera...



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Chart School

S&P 500 Snapshot: Another Down Day Before Jackson Hole Friday

Courtesy of Doug Short's Advisor Perspectives.

Equity markets around the globe posted losses today, rather minor ones in the US. Our benchmark S&P 500 spent the day in a narrow range between its 0.16% late morning high to its -0.26% intraday low at the beginning of the final hour of trading. It trimmed about half the loss to close at -0.14% for the day. Today's trading range was at the 9th percentile of the 164 market day so far in 2016. Volume was on the light side in advance of the final day of the Jackson Hole event, with Fed Chair Yellen in the spotlight tomorrow morning.

The yield on the 10-year note closed at at 1.58%, up two basis points from the previous close.

Here is a snapshot of past five sessions in the S&P 500.

Here is daily chart of index. We see th...



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Kimble Charting Solutions

Gold Mining stocks could be breaking important support

Courtesy of Chris Kimble.

Gold mining stocks have had a great year 2016. From the lows, GDX is up over 100%, remaining inside of a steep rising channel. The rising channel GDX has been in during this historic sharp rally, could be breaking.

CLICK ON CHART TO ENLARGE

GDX has remained inside of the blue rising channel for the majority of 2016. This channel has contained a 100% rally in the past few months.

The rally took GDX up to an unfilled GAP, just below its 38% Fibonacci retrac...



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Biotech

Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



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OpTrader

Swing trading portfolio - week of August 22nd, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust

 

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust 

By  at Bloomberg

Excerpt:

Stefan Thomas, who introduced millions of people to bitcoin, has had a change of heart.

Blockchain, the ledger software that makes the digital currency possible...



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Mapping The Market

Illusion of Choice

From Jean-Luc:

Looks like we are down to about 10 companies for our consumer goods:

http://www.visualcapitalist.com/illusion-of-choice-consumer-brands/

Just like banks, airlines and cable companies! 

The Illusion of Choice in Consumer Brands

Explore the full-size version of the above graphic in all its glory.

If today’s infographic looks familiar, that’s because it originates from a well-circulated report that Oxfam International puts together to show consolidation i...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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