The Show Must Go On
by ilene - July 13th, 2011 7:53 pm
Courtesy of Jim Quinn, The Burning Platform
The Debt Ceiling Reality Show is winding down to its dramatic conclusion on August 2. I think Fox should capitalize on the drama by gathering the American Idol judges to vote on the best performance by a political hack. We can have Ryan Seacrest announce on August 1 at 11:55 pm that the winner is – THE WALL STREET MONIED INTERESTS.
The latest round of kabuki theatre performed by the corrupt lying thieves in Washington DC is being played out every night on the MSM. The volume of misinformation, lies, exaggerations, posturing, and propaganda is staggering. These vile excuses for leaders know that 80% of the American population wouldn’t know the difference between a debt ceiling and a drop ceiling. They use this ignorance to their advantage, as Obama warns that old people won’t get their social security checks and government drones won’t be paid.
According to Gallup, Republicans and Independents don’t want the debt ceiling raised. The poll also indicates that at least one third of Americans don’t care. They are too outraged by the Casey Anthony verdict to focus on the economic future of our country.
I’ll let you in on a secret. The debt ceiling will be raised. Sorry to ruin the surprise, but this entire sordid episode has nothing to do with our dire economic situation. It is solely about the 2012 elections. Both parties are conducting overnight polling on which talking points are working best in convincing the sheeple that their party is less likely to be blamed. Posturing and polling are what passes for leadership in America. It is a disgusting display and will contribute to the ultimate collapse that is headed our way like a Japanese Bullet Train.
Here is a summary of where we stand according to the MSM and the political class in Washington DC:
- The supposedly grand compromise that would have “cut” $4 trillion from future deficits fell apart last week. The Democarats wouldn’t “cut” entitlements and the Republicans wouldn’t “raise” taxes.
- The latest proposal was down to $2 trillion of future “cuts”, but neither side would agree to what and when.
- Now in the ultimate Washington kick the can move, Mitch “Turtle Face” McConnell has proposed that Obama increase the debt limit in three stages, while requiring him to propose offsetting spending cuts, offering a potential path out of the
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DiggKyle Bass With David Faber: Bernanke’s ZIRP Is An ‘Inescapable Trap;’ Muni Bond Bloodbath Beckons But “States Will NOT Default”
by ilene - February 23rd, 2011 3:05 am
Courtesy of The Daily Bail
CNBC Video – Kyle Bass with David Faber – Feb. 16, 2011
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Visit msnbc.com for breaking news, world news, and news about the economy
Video – Part 2
Municipal bond defaults on the local level are likely and investors would be better off avoiding them, according to Kyle Bass, managing director of Hayman Capital.
Bass said he generally agrees with the call by famed banking analyst Meredith Whitney, who said as many as 100 defaults are likely that will cost more than $100 billion in damage.
Though Whitney’s call has prompted substantial backlash from her colleagues in the industry, Bass said the question is more a matter of degree.
"There are going to be a number of muni defaults, but it’s where you draw the line. Will states be allowed to default? Will legislation be introduced to allow states to restructure? I don’t believe that’s the case. I believe states will not default."
The Road to World War III – The Global Banking Cartel Has One Card Left to Play
by ilene - September 28th, 2010 2:19 am
The Road to World War III – The Global Banking Cartel Has One Card Left to Play
By David DeGraw (h/t ZH)
The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.
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Editor’s Note: The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.
I: Economic Imperial Operations
When we analyze our current crisis, focusing on the past few years of economic activity blinds us to the history and context that are vital to understanding the root cause. What we have been experiencing is not the result of an unforeseen economic crash that appeared out of the blue with the collapse of the housing market. It was certainly not brought on by people who bought homes they couldn’t afford. To frame this crisis around a debate on economic theory misses the point entirely. To even blame it on greedy bankers,…
Michael Pento Asks If The Fed Ultimately Controls Interest Rates
by Zero Hedge - September 13th, 2010 7:15 pm
Michael Pento Asks If The Fed Ultimately Controls Interest Rates
Courtesy of Tyler Durden
By Michael Pento of Euro Pacific Capital
Does the Fed Ultimately Control Interest Rates?
In forecasting the consequences of current economic policy, many pundits are downplaying the risks associated with the surging national debt and the rapid expansion of marketable Treasury securities. Their comfort stems from the belief that a staggering debt burden will be manageable as long as interest rates remain extremely low; and, as they believe the Fed is in complete control of setting rates across the yield curve, they see no danger of rates ever rising past the point of comfort. Those who subscribe to this fairy tale forget that, in real life, there are many more hands on the interest rate steering wheel.
The Congressional Budget Office estimates that the 2010 deficit will exceed $1.3 trillion and total US debt now stands at $13.4 trillion (92% of GDP). That’s a lot of debt that needs floating. Yet, the 10-year note is yielding 2.8%-- which is 4.5 points below its 40-year average of 7.3%! Experience teaches that even moderately long-term investors should be expecting rising rates. Regardless of the extreme and obvious misalignment of fundamentals and bond prices, the mantra from the dollar shills remains firm: “The US dollar will always be the world’s reserve currency, and the US bond market will always be regarded as the safe-haven depository for global savings.”
With interest rates having been so low for so long, it’s understandable that many people have forgotten that central banks are not ultimately in control of interest rates. It is true that the Fed can be highly influential across the yield curve and can be especially effective in controlling the short end. But, in the end, the free market has the last word on the cost of money.
Although the Fed has certainly created enough new dollars to send prices higher, recessionary forces are, for now, disguising the evidence of runaway inflation. But when inflation finally erupts into the daylight, it will be impossible for borrowing costs to stay low. No one can realistically be expected to loan money below the rate of inflation. To attract buyers, the Treasury will have to offer a real rate of return.
Since our publicly traded debt level is increasing while our personal saving rate is not, we must inevitably…
‘Call It $130 Trillion or So’
by ilene - June 16th, 2010 9:44 pm
‘Call It $130 Trillion or So’
Courtesy of Michael Panzner of Financial Armageddon
If you’ve ever had to deal with teenagers or IT workers, you know the drill: whatever they tell you something will cost usually turns out to be less — often much less — than you end up paying. Politicians, too, are especially good at this game, which is not surprising given that most don’t expect to be around when the final bill comes in. So, in theory at least, no one should be unsettled by the fact, as the following National Review commentary, "The Other National Debt," by deputy managing editor Kevin D. Williamson, reveals, that the amount of money we (and our ancestors) are currently on the hook for is around ten times what our leaders say it is — right?
About that $14 trillion national debt: Get ready to tack some zeroes onto it. Taken alone, the amount of debt issued by the federal government — that $14 trillion figure that shows up on the national ledger — is a terrifying, awesome, hellacious number: Fourteen trillion seconds ago, Greenland was covered by lush and verdant forests, and the Neanderthals had not yet been outwitted and driven into extinction by Homo sapiens sapiens, because we did not yet exist. Big number, 14 trillion, and yet it doesn’t even begin to cover the real indebtedness of American governments at the federal, state, and local levels, because governments don’t count up their liabilities the same way businesses do.
Accountants get a bad rap — boring, green-eyeshades-wearing, nebbishy little men chained to their desks down in the fluorescent-lit basements of Corporate America — but, in truth, accountants wield an awesome power. In the case of the federal government, they wield the power to make vast amounts of debt disappear — from the public discourse, at least. A couple of months ago, you may recall, Rep. Henry Waxman (D., State of Bankruptcy) got his Fruit of the Looms in a full-on buntline hitch when AT&T, Caterpillar, Verizon, and a host of other blue-chip behemoths started taking plus-size writedowns in response to some of the more punitive provisions of the health-care legislation Mr. Waxman had helped to pass. His little mustache no doubt bristling in indignation, Representative Waxman sent dunning letters to the CEOs of these companies and demanded that they come before Congress to explain
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Tsunami of Red Ink – Global Look at National Debt and Who Owns US Debt
by ilene - April 26th, 2010 1:57 pm
Tsunami of Red Ink – Global Look at National Debt and Who Owns US Debt
Courtesy of Mish
The Chicago Tribune had an excellent set of charts this weekend in A Tsunami of Red Ink regarding US government debt and who owns it, and also a comparison of US debt to the national debt of other countries.
Debt as a Percentage of GDP
Comparison of US Debt to Other Countries
Click on the link at the top to see foreign holders of US debt country by country. The top three US debt holders are China, Japan, and Canada.
Some will not believe those figures on debt to GDP comparisons. I don’t either. For starters the numbers are from 2009.
The footnote also says, if intragovernmental debt is included the figure is 83%. That number is approximately correct in my opinion (as of 2009).
Some will want to count unfunded Social Security and Medicare liabilities out to 2050 or whatever. This is simply wrong. That would be like counting a car you intend to buy 3 years from now as part of your debt now.
Many things can happen between now and then.
- You may buy a smaller car.
- You may not buy the car at all, opting for public transportation.
- When the time arrives, you may postpone buying a car for a couple more years.
- You may save enough to pay for the car in cash so that you incur no debt.
Likewise, the plans for Social Security and Medicare might change. Costs may go up, or down. The plans may be scaled back by the next generation of US citizens who think our generation was the most greedy in history.
Things We Know
- The current path and current plans are not sustainable.
- The money has not been spent, yet.
- Costs may go up or down.
- Political promises can easily change.
- Taxes may go up dramatically, to pay for the costs.
Wall Street Deficit Hawks Have No Shame
by ilene - April 14th, 2010 1:07 pm
Wall Street Deficit Hawks Have No Shame
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Courtesy of Dean Baker of Center for Economic and Policy Research
Almost 25 million people are unemployed or underemployed right now. This was a completely preventable disaster. This is worth repeating a few hundred billion times so that even the geniuses in Washington can understand it.
The disaster was completely preventable. The reason we had the disaster was that the people controlling economic policy, that would be people like Alan Greenspan and Robert Rubin, either had no clue about the housing bubble or deliberately decided to ignore it.
Nothing about this story is complicated – let’s write this so that even a Wall Street billionaire can understand it. We had an $8 trillion housing bubble. It was inevitable that it would collapse. Bubbles do that. When we get an over-priced housing market then builders build more homes. That’s because it becomes very profitable to build homes when prices are high. If builders keep building lots of homes, then eventually there will not be enough people to buy them at bubble–inflated prices, even with the loony mortgages being pushed at the time by the Wall Street banks.
When people can no longer buy homes, their prices drop. When their prices drop people will default on their mortgages and banks lose lots of money.
More importantly, when prices drop, builders stop building homes. People also stop spending money based on their housing bubble wealth. The falloff in construction and consumption implies more than $1 trillion in lost demand in the economy. This lost demand throws the economy into a serious recession, with tens of millions of people losing their jobs. It’s all very very simple. You probably don’t even need an intro economics course to understand it.
But, the deficit hawks, led by Wall Street investment banker Peter Peterson either did not see the bubble or chose to ignore it. They ran around the country in the peak years of the housing bubble yelling about “fiscal irresponsibility” even as the housing bubble was growing to ever more dangerous levels. They used their money and their political standing to dominate public debate and crowd out those of us who were trying to warn about the bubble. There were numerous television shows, radio shows and news stories devoted to their dire warnings about the deficit. They even persuaded a major documentary maker to put out…
Speculative Premium – And Why The Markets Will CRASH
by ilene - March 1st, 2010 10:13 pm
Karl argues that the "animal idiocy" we’ve seen over the last year is proof that we’ve learned absolutely nothing. Hard to take the other side of that one. – Ilene
Speculative Premium – And Why The Markets Will CRASH
Courtesy of Karl Denninger at The Market Ticker
Yes, I said CRASH, and I meant it.
Why?
SINGAPORE/CAIRO, March 1 (Reuters) – Copper is likely to
climb when trading starts on Monday, lifted by uncertainty over
supply after the world’s top copper producer Chile was pounded
by a massive earthquake, analysts said over the weekend.
The front-month contract opened up more than 8%.
This, despite the fact that the earthquake was hundreds of miles away from the mines in Chile and there was zero damage to them. Some were offline for a few hours due to power failures, but none suffered any physical or structural damage, nor did their export points and the transportation network between the two.
So why did price spike more than 8% even though all this was known by the market before it re-opened for trading?
No part of the markets are trading on fundamental values, nor on forward business expectations. They are instead trading as "hot money" repositories where speculators rotate in and out of various instruments literally on a minute-by-minute basis.
This is how crashes happen.
When there is no fundamental value underlying a market there is no floor on price. Price then becomes one thing and one thing only – the number at which you can find another sucker to take your position from you.
This is how tulip bulbs went nuts in Holland, it is how houses went nuts in California in 2005, it is how tech stocks went nuts in 1999 and it is how oil went nuts in 2008.
But now literally everything has gone this way.
Take European national debt. We now know that Italy, for example, was cooking their books as early as 1995. This means that bond buyers overpaid for their bonds and took less coupon than they should have. This should have resulted in an immediate destruction in the value of those bonds when discovered, but it did not.
Why?
Because there was still a bigger fool.
Tech stocks were the same thing in 1999. These "companies" claimed the…
AMERICAN PIE
by ilene - October 21st, 2009 10:14 pm
Jim Quinn presents a most dire prediction of our national journey into a hellish nightmare, the worst yet to come.
Was it all foretold in this incredible song? – Ilene
Don McLean – American Pie – Live On Imus In The Morning
AMERICAN PIE
Courtesy of Jim Quinn at The Burning Platform
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I can still remember
How that music used to make me smile
And I knew if I had my chance
That I could make those people dance
And maybe they’d be happy for a while
But February made me shiver
With every paper I’d deliver
Bad news on the doorstep
I couldn’t take one more step
I can’t remember if I cried
When I read about his widowed bride
But something touched me deep inside
The day the music died
Drove my Chevy to the levee but the levee was dry
And them good old boys were drinking whiskey and rye
Singing this’ll be the day that I die
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Stock Market Crash – Year One Review II – The Next 30% Down
by Phil - September 7th, 2009 5:39 pm
The nice thing about decimation is it’s a fractional way to die.
The word decimation is derived from Latin and means "removal of a tenth." The Romans would "decimate" their deserters as well as soldiers who performed poorly in battle by dividing the men up into groups of 10 and having them draw lots. The losing group was then killed by the winners, who were still punished only they felt like winners by virtue of still being alive. As I said, the system has it’s advantages as a General who has to decimate 1,000 men must put 100 to death but a General with less to work with, say 100 men, only needs to mark 10 to die.
Does this system leave the remaining 90% healthier? Well, it certainly means there’s more food left, more medicine, more weapons, more supplies for the remainder. Decimation is exactly what happened to the Financial Sector as 119 Financial Institutions have failed and dozens of others merged out of existence since NetBank kicked off our current crisis on Sept 28th, 2007. There are currently another 416 "troubled" banks as of Aug 27th and that number was revised up from a count of 305 given in May. Sill, there are over 8,246 Financial Institutions remaining with $13.5Tn in cash assets and the FDIC has a $500Bn line of credit to draw on should the need arise. So, to put things in perspective – we haven’t even lost one in 10 and almost all that we’ve lost has been absorbed by another functioning institution. I wanted to put this up front on this section because this is the fulcrum of the misconception that started this crisis.
$1,000,000,000,000 is a lot of money. It’s very hard for a person who has worked their whole lives to save $100,000 to wrap their heads around a number that is 10,000,000 times bigger than that and seeing our government talk about bailouts that START at $700Bn and grow to, arguably, $7,000,000,0000,000 in a matter of months is certain to push some emotional buttons. As a fundamentalist, I try to give our members perspective on the markets and perhaps the best way to view what happened to the economy is to think about an accident victim.
The GDP of the United States is roughly $14Tn a year. Usually, that money cycles around through the body of the…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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