Posts Tagged ‘Federal debt’

Kyle Bass With David Faber: Bernanke’s ZIRP Is An ‘Inescapable Trap;’ Muni Bond Bloodbath Beckons But “States Will NOT Default”

Courtesy of The Daily Bail  

CNBC Video – Kyle Bass with David Faber – Feb. 16, 2011 

Visit msnbc.com for breaking news, world news, and news about the economy

Video – Part 2

Source – CNBC

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." 


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CBO Director: A Somber Warning

CBO Director: A Somber Warning

Courtesy of Karl Denninger at The Market Ticker 

File this in the "no, really?" box:

With U.S. government debt already at a level that is high by historical standards, and the prospect that, under current policies, federal debt would continue to grow, it is possible that interest rates might rise gradually as investors’ confidence in the U.S. government’s finances declined, giving legislators sufficient time to make policy choices that could avert a crisis. It is also possible, however, that investors would lose confidence abruptly and interest rates on government debt would rise sharply, as evidenced by the experiences of other countries.

So let’s see…. if you buy bonds today there’s a chance you could lose some of your money, or there’s a chance you could lose a whole lot of your money.

That sounds comforting, doesn’t it?

But it’s the next sentence that ought to make you sit up in your chair:

Unfortunately, there is no way to predict with any confidence whether and when such a crisis might occur in the United States.

Right.

This is what history tells us.  It is also what I have been trying to amplify now for the past three years.  The reason is this graph:

What I find amusing is that the CBO is flapping its jaws over only the government’s liabilities.  It, by the way, is also looking only at the debt held by the public (and not the games played with FICA and Medicare):…
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Krugman vs. Greenspan on “That ’30s Feeling”; Calculated Risk Sides with Krugman, I Side with Greenspan

Krugman vs. Greenspan on "That ’30s Feeling"; Calculated Risk Sides with Krugman, I Side with Greenspan

Person's hands along side a turned out pocket

Courtesy of Mish 

Courtesy of Calculated Risk here are a pair of articles, one from Krugman and another from Greenspan on the limits of debt.

That ’30s Feeling

Paul Krugman has That ’30s Feeling

Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere, including the United States, where 52 senators voted against extending aid to the unemployed despite the highest rate of long-term joblessness since the 1930s.

Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession. And here in Germany, a few scholars see parallels to the policies of Heinrich Brüning, the chancellor from 1930 to 1932, whose devotion to financial orthodoxy ended up sealing the doom of the Weimar Republic.

But despite these warnings, the deficit hawks are prevailing in most places — and nowhere more than here, where the government has pledged 80 billion euros, almost $100 billion, in tax increases and spending cuts even though the economy continues to operate far below capacity.

What’s the economic logic behind the government’s moves? The answer, as far as I can tell, is that there isn’t any. ….

How bad will it be? Will it really be 1937 all over again? I don’t know. What I do know is that economic policy around the world has taken a major wrong turn, and that the odds of a prolonged slump are rising by the day.

U.S. Debt and the Greece Analogy 

In sharp contrast to Krugman’s position, Alan Greenspan compares the US to Greece in U.S. Debt and the Greece Analogy 

An urgency to rein in budget deficits seems to be gaining some traction among American lawmakers. If so, it is none too soon. Perceptions of a large U.S. borrowing capacity are misleading.

Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.

How much borrowing leeway at


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About The Jobless Recovery ….

About The Jobless Recovery ….

Courtesy of Jesse’s Café Américain

For the first time we had a ‘jobless recovery’ after the tech bubble bust thanks to the wonders of Greenspan’s monetary expansion and the willingness (gullibility?) of the average American to assume enormous amounts of debt, largely based on home mortgages, the house as ATM phenomenon. Not to mention the large, unfunded expenditures of the government thanks to tax cuts and multiple wars.

household cash less liabilities

national debt
 

Now the pundits are talking about the hopes for another jobless recovery.

Who is going to go deeply into debt this time? It looks like its the government’s turn. And the expectation is that foreigners will continue to suck up the debt.

growth in public debt

Federal Debt (Percentage of GDP)
 

If you think this explosion of Federal debt will facilitate a stronger US dollar you might be suffering from ideological myopia or some other delusion.

Some years ago we forecast that the financiers and their elites would take the world down this road of leveraged debt and malinvestment, and then make you an offer that they think you cannot refuse. They will seek to frighten you with a collapse of the existing financial order, because that is what they fear the most themselves, for their own unique positions of power.

The offer will be a one world currency, which is a giant step towards a one world government, managed by them of course. Once you control the money, local fiscal and social preferences start to matter less and less.

This theory seems more plausible today than it did then.


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Zero Hedge

$13.6BN Money Manager Launches 3X Leveraged "Robotics And Artificial Intelligence" ETF

Courtesy of ZeroHedge. View original post here.

CTAs and quantitative funds are just starting to recover from the historic drubbing they endured during the February "volocaust" when stocks and bonds fell simultaneously in defiance of the funds' carefully calibrated assumptions about asset-price correlations.

And with speculative traders still s...



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Chart School

Weekly Market Recap Apr 22, 2018

Courtesy of Blain.

Strong start to the week; a weaker end – final tally was a modest move up.   #TRADEWARS(tm) dived down this week as earnings took center stage.

Naeem Aslam, chief market analyst at Think Markets U.K., in a note to investors said fears around a potential trade war and geopolitical concerns “have faded very much.”

The yield on 10 year Treasuries rose to about a 4 year high — still low by historical levels but these have been suppressed for ages so any movement up looks gigantic.   Here is one opinion… but inflation has been a non starter for years by government measures at least.

“Had bonds yields risen because the underlying economy is accelerating, then, we would see higher stock prices too. But Friday’s weakness in stocks suggests that...



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Phil's Favorites

Why marijuana fans should not see approval for epilepsy drug as a win for weed

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

 

Why marijuana fans should not see approval for epilepsy drug as a win for weed

Small vials of CBD, which some believe could be a cure for many ailments. Roxana Gonzalez/Shutterstock.com

Courtesy of Timothy Welty, Drake University

A Food and Drug Administration panel recommended approval of a drug made of cannabidiol on Ap...



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Biotech

Why marijuana fans should not see approval for epilepsy drug as a win for weed

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

 

Why marijuana fans should not see approval for epilepsy drug as a win for weed

Small vials of CBD, which some believe could be a cure for many ailments. Roxana Gonzalez/Shutterstock.com

Courtesy of Timothy Welty, Drake University

A Food and Drug Administration panel recommended approval of a drug made of cannabidiol on Ap...



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Digital Currencies

"The House Always Wins": These Funds Made A Killing As Bitcoin Plunged

Courtesy of ZeroHedge. View original post here.

Volatility, neutral exposure and market making can still pay - at least for crypto hedge funds.

Despite the fact that cryptos have collapsed across the board so far in 2018, one investing axiom still holds true to this day: the house always wins. Those who have been making a market, keeping neutral net exposure and benefiting from exotic methods of trading cryptocurrencies have continued to have a positive year this year despite the fact that a lot of the underlying cryptocurrency assets have had a terrible year.

...



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Insider Scoop

Cowen Says The Big Sell-Off In Skechers Is A Buying Opportunity

Courtesy of Benzinga.

Related SKX 25 Stocks Moving In Friday's Mid-Day Session Mid-Day Market Update: Skechers USA Falls After Weak Q2 Guidance; Ericsson Shares Climb...

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ValueWalk

Buffett At His Best

By csinvesting. Originally published at ValueWalk.

Bear with me as I share a bit of my history that helped me create SkyVu and the Battle Bears games. The University of Nebraska gave me my first job after college. I mostly pushed TV carts around, edited videos for professors or the occasional speaker event. One day, Warren Buffet came to campus to speak to the College of Business. I didn’t think much of this speech at the time but I saved it for some reason. 15 years later, as a founder of my own company, I watch and listen to this particular speech every year to remind myself of the fundamentals and values Mr. Buffett looks for. He’s addressing business students at his alma mater, so I think his style here is a bit more ‘close to home’ than in his other speeches. Hopefully many of you find great value in this video like I have. Sorry for the VHS...



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Kimble Charting Solutions

The Stock Bull Market Stops Here!

 

The Stock Bull Market Stops Here!

Courtesy of Kimble Charting

 

The definition of a bull market or bull trends widely vary. One of the more common criteria for bull markets is determined by the asset being above or below its 200 day moving average.

In my humble opinion, each index above remains in a bull trend, as triple support (200-day moving averages, 2-year rising support lines, and February lows) are still in play ...



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Members' Corner

Cambridge Analytica and the 2016 Election: What you need to know (updated)

 

"If you want to fundamentally reshape society, you first have to break it." ~ Christopher Wylie

[Interview: Cambridge Analytica whistleblower: 'We spent $1m harvesting millions of Facebook profiles' – video]

"You’ve probably heard by now that Cambridge Analytica, which is backed by the borderline-psychotic Mercer family and was formerly chaired by Steve Bannon, had a decisive role in manipulating voters on a one-by-one basis – using their own personal data to push them toward voting ...



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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

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All About Trends

Mid-Day Update

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Click here for the full report.




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