Expect Recession in 2013

This is being reported by a left-leaning, Obama praising media organization. 

Tangibles
Prepare
Pray

Debt Ceiling Eliminated

Well, not yet....but it is coming.

Now, if he thinks this will solve the problem he is more of an idiot than I thought. The rest of the world will see that we are fiscally irresponsible (which they are starting to believe) and will sell off any dollars they hold. If that happens the trust in the USD will drop like a rock. You will see runs on banks, but that will be too late. We will head into a hyperinflation where we will be seeing prices changing daily or even every few hours. Look at Zimbabwe, or Wiemar Republic.

Tangibles
Gold
Silver
Food
Ammo
Real Estate

This Is Bad

Well, my teenagers say that math sucks. I disagree. Math when done properly tells the truth. I bet that Spend More Ben is thinking that math sucks though as he tries to figure out another way to offset the truth. It cannot be done as the math will always win.

The UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT came out today. The seasonally adjusted initial claims was 439,000, an increase of 78,000 from the previous week's revised figure of 361,000. The 4-week moving average was 383,750, an increase of 11,750 from the previous week's revised average of 372,000.

Now, they claim that it is because of the Superstorm Sandy. I call B.S. on that. Sure it probably accounts for some of the claims, but I would bet that the majority are from the claims that had been "back-logged" from the few weeks before the election.

Watch these reports through the end of the year, if they continue to decline or plateau, watch how the market reacts. 

Hold on!
Prepare
Food
Pay off bills
Silver

Who Says Crime Doen't Pay

Teenagers Speaking The Truth...

Now if we could only get the politicians to speak the truth as well. If someone would not be afraid of getting up in front of the cameras in America and speak these truths, maybe...just maybe they would get the majority of votes.

Cap and Balance...Will It Work?

Here is a good article I read from the Market Ticker Guy.

"Cut Cap And Balance": Scam Or Real?

 

Let's look at the proposal:

1.  Cut - We must make discretionary and mandatory spending reductions that would cut the deficit in half next year.

2.  Cap - We need statutory, enforceable caps to align federal spending with average revenues at 18% of Gross Domestic Product (GDP), with automatic spending reductions if the caps are breached.

3.  Balance - We must send to the states a Balanced Budget Amendment (BBA) with strong protections against federal tax increases and a Spending Limitation Amendment (SLA) that aligns spending with average revenues as described above.

Ok, so we go from ~$1,700 billion in deficits to $850 billion this coming fiscal year.

That's somewhere between $750 and $850 billion in spending cuts right now, depending on how you're looking at the deficit numbers (that is, if you're cheating or not.)

That will result in at least an immediate 5% hit to GDP.  Is the GOP willing and ready to accept that?  If so, let's see a statement on that, because this is the outcome of such a cut in government spending.  The reason is simple: GDP is defined as "C + I + G + (x-i)" and you're proposing to cut "G" by 5% of GDP.  Bingo.  The flow-through on that will result in an even larger decline (and economists can fight over how much that multiplier is, but it's greater than "1")

The cap does not enforce a maximum deficit size.  It therefore is defective in that the GOP can simply pass tax cut after tax cut and yank deficits back up to "stimulate", which makes the problem worse.

"Balance" fixes it, of course, but is a Constitutional Amendment and requires passage in both houses plus ratification.  It is thus not a "right now" solution.

With one modification I would support "CCB" without reservation: In year two and beyond total government debt, including public and intergovernmental, may not grow faster than GDP, with automatic spending reductions of double any violation if it does.  I would leave only one exception: In the event of Congressionally-declared war, in which case the exception would have to be voted upon and passed by a 2/3rds majority every six months.  Yes, this means that if GDP is declining debt must decline faster (that is, the government must run a surplus!)

The GOP is close on this.  Not there, but close.  Make that one change above and you're actually addressing the problem in a way that will fix it.

Incidentally, if you make that change you permanently fix the problem and avoid S&P and Moody's rating action.

Be aware, however, that such a plan, if enacted, will bring short-term economic pain, and lots of it.  You had better be prepared with a fundamental tax, "free trade" and medical system overhaul because that has to happen in short order once this goes into place as a buffer.

This plan, however, is progress compared to what we've heard from Congress and especially Obama thus far.

Can You Say Ponzi Scheme?

Tim Geithner's response to Senator Jim DeMint's May 26th letter.

I especially like this part...
If investors chose not to purchase a sufficient volume of new Treasury securities, the United States would be required to pay the principal on maturing debt, and not merely the interest, out of available cash. Yet the Treasury would be unable to make these principal payments without the continued confidence of market participants willing to buy new Treasury securities.

America...A Third World Country? Is It Coming?

Well, I hope not, but reading this it sure sounds like we are heading towards trouble.

http://gainspainscapital.com/

Are You Ready For 3rd World America?

The US economy is literally on the ledge of a cliff.
Today, the Federal Government accounts for 35% of incomes and salaries in the US. That’s over one third of all income in the US coming from the Government’s ability to dole out funds.
What supports this largesse?
Money printing and our ongoing debt-orgy. And today, these are one and the same. The US Federal Reserve and Treasury have enacted policies so insane that the US Federal Reserve is now the single largest holder of US Debt with a balance sheet of  $2.8 trillion.
Let’s give that number some perspective. Germany, the world’s FOURTH largest economy is only $3.3 trillion in size. At $2.8 trillion the Fed’s balance sheet is larger than the economies of France, the UK, and Brazil.
Why is the Fed’s balance sheet so huge? Because US Treasuries are so unattractive to foreign Governments that the Fed has had to pick up the slack and buy our debt (usually within a week or two of it being issued).
Let me rephrase that: the US Fed is now printing money so it can buy US Debt because other investors are no longer interested in buying it.
This is just one of the various schemes Washington is employing to maintain its fiscal insanity. Another is the active raiding of pension funds to buy new US Debt (YES, the Treasury is doing this).
So… the US Government is now paying over 1/3^rd of US incomes… and it’s financing this by having the Fed buy new debt from the Treasury.
Do you think this entire system might end up collapsing in a horrific manner?
And this is just ONE ASPECT of the nightmare that is the US Financial system. I’m not even detailing the $600 TRILLION in derivatives, the clear insolvency of the big banks (you know who I’m talking about), the FDIC running a deficit (are our deposits REALLY insured?), erupting inflation in food and energy prices, (Fed data CLAIMS prices FELL in the last four months) and the hundred other issues all of which will end very, VERY badly.
Regardless of how we look at the US’s current situation, it is clear that 2008 will NOT go down in history as THE Financial Crisis for the US. No, 2008 will be considered the “warm-up.”
The reason for this is simple. 2008 was primarily the collapse of the private banking system in the US. The Fed’s response to this was to transfer the garbage debts that nearly took down the banks ONTO the US’s balance sheet.
Put another way, the Fed allowed the systemic risk to spread from private bank balance sheets ONTO the US’s public balance sheet… which means the next Crisis will involve not only Wall Street and the banks but the US as a whole.
I’m talking about a sovereign debt Crisis. The kind of collapse we’re now seeing in Greece… only for the single largest economy in the world as well as its reserve currency.
So what happens when this Crisis hits and a partial if not complete Government shutdown occurs? What happens when that 35% of incomes and salaries stops being paid? What happens when prisons and other Government paid services run out of money? What happens when the next major banking run reveals that there is no WAY on earth the FDIC can truly insure all the deposits in the US (other than more money printing from the Fed)? What happens when the US defaults on its debts?
THEN and only then will we experience the REAL Crisis of the US Financial system. It is coming. There is no doubt about it. And people are only just starting to wake up to it (nearly half of Americans now believe we’re going to have a Great Depression).
Smart investors and independent thinkers are already taking steps to get ready for this. With just a few key moves and strategies it WILL be possible to not only survive but thrive during the coming disaster.
On that note, I’m currently preparing my subscribers for what is going to be a REAL Crisis. We’re doing this by protecting our families, savings, and portfolios via several  high-impact protection strategies designed to keep these areas of our lives safe during the coming fall-out.
All in all, we’ve taken to prepare for any eventuality whether it be food shortages, hyperinflation, a stock market collapse, a government shutdown… ALL the disastrous outcomes I’ve described above.
So if you’ve yet to take action to prepare yourself and your loved ones for what’s coming… it’s not too late yet… but we’re getting close to it.
To find out more about how to prepare and even thrive during the coming economic fall-out…
Click Here Now
Graham Summers

The Federal Reserve

You want to know about the Federal Reserve....

Debt Limit Breeched!

Bet you haven't heard this on the MSM!

Here are some excerpts...

Yesterday the Treasury sold 29 billion in bonds bringing the total U.S. debt to 14.311 trillion, the current debt ceiling is 14.294. Now with a 52.2 billion dollar buffer for the total debt, a technical default should happen within the next 10 trading days, let's see if that makes any news.

Bill Gross, the largest bond fund manager in the world, recently had this to say regarding U.S. debt, "unless entitlements are substantially reformed, I am confident that this country will default on its debt; not in conventional ways, but by picking the pocket of savers via a combination of less observable, yet historically verifiable policies - inflation, currency devaluation, and low negative real interest rates."

Folks, read that again! This guy is not a fly by night guy, but a well respected person in the industry!

There are clues people, open your eyes and look. We have industry experts telling us what is coming. If only more people would stop worrying about who will be the next one voted off and learn what freight train is heading toward them.

Oh well, at least you are watching.

Is The Fed In Panic Mode?

Look at this graph...

Look at the two spikes. The first one was in October 2008. If you remember that was at the time QE1 was started. You might say that the second spike is just QE2, but if that was the case it should have spiked in October 2010.

Now, I don't know why we have seen a spike of close to $500 billion in just a couple months. Is there something happening that we don't know about? Is there a panic happening at the Fed?

Keep your eyes open, because when you hear about what is happening through the MSM it will be too late

You Heard Of Sam Zell?

He is a Billionaire! I have highlighted some comments I feel are very telling.

Look at what he is saying:

ZELL ON THE DOLLAR LONG:
"YOU ASK ME ME WHAT IS MY BIGGEST SINGLE FINANCIAL CONCERN IS THE LOSS OF THE DOLLAR AS THE RESERVE CURRENCY I CAN'T IMAGINE ANYTHING BEING MORE DISASTROUS TO OUR COUNTRY THAT IF THE DOLLAR LOST ITS RESERVE CURRENCY STATUS."

Zell: Dollar's Global Fall Will Be 'Disastrous’ for US Living Standard

Thursday, 03 Mar 2011 12:27 PM
Billionaire real-estate magnate Sam Zell warns that Americans should brace for a "disastrous" 25 percent decline in the standard of living if the U.S. dollar’s reign as the global reserve currency ever ends.

He says that there are signs in the market that it could eventually happen. As it is now, a Korean manufacturer who wants to sell to Brazil must first buy dollars to complete the deal. If countries decide to bypass the dollar, the effect would be a disaster, Zell says.
Sam Zell
"Frankly, I think we’re at a tipping point. What’s my biggest single financial concern is the loss of the dollar as the reserve currency," he told CNBC in an interview. "I can’t imagine anything being more disastrous to our country than if the dollar lost its reserve-currency status."

Although he is "hoping against hope" the dollar remains the standard for international exchange, he warns that "you’re already seeing things in the markets that are suggesting that confidence in the dollar is waning."

If that happens, the impact on the United States would be deep. "I think you could see a 25 percent reduction in the standard of living in this country if the U.S. dollar was no longer the world’s reserve currency," Zell said "That’s how valuable it is."

Zell says that the bond market seems remarkably complacent about the risk. But that could turn on a dime, he warns.

"The worry in the bond market is never there until it’s there. The dollar has gone down 20 percent in the last three or four years," Zell says. "I don’t know who is buying 30-year fixed-rate debt. I don’t understand TIPs (Treasury inflation-protected bonds) that are projecting 30 years of benign inflation."

Benchmark 10-year Treasury note yields are around 3.48 percent. TIPs maturing in 2041 have a yield of 1.96 percent.

Once the world turns on the U.S. dollar, if it does, things will change fast, Zell warns. "How could interest rates not go up? Either they go up or the dollar goes down, one or the other," Zell says.

As for inflation, he estimates that actual inflation is between 5 percent and 7 percent right now, despite government figures showing the CPI flirting with low single digits. Fear of deflation — prices falling out of control — has been the primary motivator at the Federal Reserve to pump up money supply by more than $2 trillion in recent months.

Nevertheless, oil is rising fast and food riots are breaking out in developing countries. The United States has been less affected until recently. Zell points out that our Consumer Price Index tends to hide inflation by counting depressed home prices at 42 percent of the index.

"If you adjusted the CPI to reality you’re probably looking at 5, 6, 7 percent inflation today," Zell says.

"The reality out there is the costs are going up. The fact that we’ve been massive beneficiaries of Chinese mercantilist policies that have allowed us to buy goods at much less than their fair value. That has hurt us on the manufacturing side, but it has been a subsidy to America. That subsidy is coming to an end."

Others agree with Zell that the dollar’s world dominance will soon fade.

Ray Dalio, founder & CIO of Bridgewater Associates, told CNBC that it is "inevitable that the dollar's role as the world's currency will diminish from the dominant world currency to one of a few."


"It will fade probably fairly quickly so the United States which accounts for almost two-thirds of the reserves will probably go down to 50 percent of the world's reserves and it will have an effect on lending," he added.

Meanwhile, Bill Gross, found of bond giant Pimco, recently told investors that the Fed’s heavy thumb on the scales on behalf of low interests was perhaps necessary given the magnitude of the crisis. The second round of easing known as "QE2," perhaps, also had a role to play.

However, as the deadline for the second round to end looms — it is set to expire in June — there are serious questions about whether a smooth transition to private demand for U.S. debt will appear, Gross said.

Stocks have doubled from the March 2009 bottom and marked steadily upward since the second round was announced in August, which has given some stock investors pause.

"Investors should view June 30, 2011 not as political historians view Nov. 11, 1918 (Armistice Day — a day of reconciliation and healing) but more like June 6, 1944 (D-Day — a day fraught with hope for victory, but fueled with immediate uncertainty and fear as to what would happen in the short term)," Gross said in recent commentary online.

"Bond yields and stock prices are resting on an artificial foundation of QE2 credit that may or may not lead to a successful private-market handoff and stability in currency and financial markets."

-END-


People, I have said this before (pretty much from the start of this blog) you need to PREPARE. We have seen inflation (just look at your grocery bill and gas bill) and after QE2 is finished (June 30, 2011) we may see hyperinflation. If you think things are expensive now, wait until hyperinflation hits. You will need food and supplies. Here is a good place to start http://www.jrhenterprises.com/.

Is Another Financial Crash Certain?

After reading this article, it would seem we are in serious financial trouble.

Why Another Financial Crash is Certain

Here is some excerpts. Look at some of the numbers the author quotes. I had not heard of number this high!

On August 9, 2007, an incident took place at a bank in France that touched-off a financial crisis that that would eventually wipe out more than $30 trillion in capital and thrust the world into the deepest slump since the Great Depression. The event was recounted in a speech by Pimco's managing director Paul McCulley, at the 19th Annual Hyman Minsky Conference on the State of the U.S. and World Economies. Here's an excerpt from McCulley's speech:

"If you have to pick a day for the Minsky Moment, it was August 9. And, actually, it didn’t happen here in the United States. It happened in France, when Paribas Bank (BNP) said that it could not value the toxic mortgage assets in three of its off-balance sheet vehicles, and that, therefore, the liability holders, who thought they could get out at any time, were frozen. I remember the day like my son’s birthday. And that happens every year. Because the unraveling started on that day. In fact, it was later that month that I actually coined the term “Shadow Banking System” at the Fed’s annual symposium in Jackson Hole.

“It was only my second year there. And I was in awe, and mainly listened for most of the three days. At the end....I stood up and (paraphrasing) said, ‘What’s going on is really simple. We’re having a run on the Shadow Banking System and the only question is how intensely it will self-feed as its assets and liabilities are put back onto the balance sheet of the conventional banking system.’”

Subprime was the spark that lit the fuse, but subprime wasn't big enough to bring down the whole financial system. That would take bigger ructions in the shadow banking system.  Here's an excerpt from an article by Nomi Prins which explains how much money was involved:

"Between 2002 and early 2008, roughly $1.4 trillion worth of sub-prime loans were originated by now-fallen lenders like New Century Financial. If such loans were our only problem, the theoretical solution would have involved the government subsidizing these mortgages for the maximum cost of $1.4 trillion. However, according to Thomson Reuters, nearly $14 trillion worth of complex-securitized products were created, predominantly on top of them, precisely because leveraged funds abetted every step of their production and dispersion. Thus, at the height of federal payouts in July 2009, the government had put up $17.5 trillion to support Wall Street's pyramid Ponzi system, not $1.4 trillion." ("Shadow Banking", Nomi Prins, The American Prospect)

Dodd-Frank – the financial reform act -- is riddled with loopholes and doesn't really resolve the central issues of loan quality, additional capital, or risk retention. Banks are still free to issue bogus mortgages to unemployed applicants with bad credit, just as they were before the meltdown.

President Barack Obama understands the basic problem, but he also knows that he won't be reelected without Wall Street's help.  That's why he promised to further reduce "burdensome" regulations in the Wall Street Journal just two weeks ago. His op-ed was intended to preempt the release of the Financial Crisis Inquiry Commission's (FCIC) report, which was expected to make recommendations for strengthening existing regulations. Obama torpedoed that effort by coming down on the side of big finance. Now, it's only a matter of time before another crash.

So, between $4 to $7 trillion vanished in a flash after Lehman Brothers blew up.

Ironically, the New York Fed doesn't even try to deny the source of the problem; deregulation. Here's what they say in the report: "Regulatory arbitrage was the root motivation for many shadow banks to exist."

What does that mean? It means that Wall Street knows that it's easier to make money by eliminating the rules....the very rules that protect the public from the predation of avaricious speculators.

The only way to fix the system is to regulate all financial institutions that act like banks.  No exceptions.

After reading the whole article you will see why we are still up to our eyes in trouble.

Prepare.....

The Big Fed Con

To understand how the Fed works, how the big banks work and how our politicians work, watch these two videos.

Look Here...

Here are a couple things that should have you concerned....

Federal Government Debt

Federal Surplus or Deficit



Money Stock (money in ciculation)

Trade Balance (looks like we are losing about $40 billion a year)

Non performing loans at banks

Makes you say...hmmm.

Keep your eyes open and start preparing.

Are You Kidding Me?

http://news.yahoo.com/s/ap/20101117/ap_on_bi_ge/us_fed_stimulus

In the above article, Ben Bernake was quoted as saying the latest QE2 stimulus of  $600,000,000,000 will create 700,000 jobs over two years. WOW, that is only $857,142.86 per job created. If it takes that much to create a job, then with about 14 million people that is jobless, we will need about 12 Trillion dollars to put everyone back to work.

Is that a good use of YOUR money?

Q.E. Explained

For those that wish to understand Quanitative Easing, here is a short video.

Video You Should Watch

This gives you a little insight into how the markets can be manipulated by the Fed. It is only 29 minutes long. Take some time and view it.

WHAT Did He Say?

At about 0:13 into the video, you can here him say, "Things were being done which were certainly illegal and clearly criminal in certain cases..."




Alan Greenspan, the former Federal Reserve Chairman tells us there was criminal activity happening, so tell me why there are no bankers wearing the shiney nickel plated handcuffs.

Now go back and watch Ben Bernake, the current Federal Reserve Chairman, when Mr. Greenspan mentioned the "illegal and criminal" words.

Quantitative Easing is Economic Suicide

This is a must read article. I will highlight some key parts of it for those that don't want to read the whole article (it's not that long, so just read it).

Quantitative Easing is Economic Suicide.

"Quantitative easing is nothing more than a euphemism for printing money out of thin air. Its one-and-only purpose is to destroy the currency being printed. It is pure dilution and absolutely no different than a corporation vowing to improve its fiscal performance simply by printing a lot of new shares."

"Visit Shadowstats.com, operated by respected U.S. economist John Williams, and you will hear that U.S. inflation has been in the range of 8.5% - 9.5% all this year. Williams performs his calculations using the exact same methodology used by the U.S. government a generation ago, before the U.S. government intentionally incorporated various statistical lies into this measurement."

"Understand the enormous "rewards" which a government receives for lying, by grossly under-stating the rate of inflation. Payouts on $100's of billions of U.S. government benefits per year are indexed to the rate of "official" inflation. By grossly understating inflation (and cheating all of the recipients of those benefits), the U.S. government can get an instant, multibillion dollar windfall from that one lie, alone (every year)."

"Here are the facts. Previously, the U.S. government was able to find (real) buyers for its Treasuries, due to the need of other governments to recirculate/reinvest the money from their trade surpluses and fiscal surpluses. Thanks to the Wall Street-engineered "Crash of '08," the vast majority of those surpluses have disappeared.
At the same time, the U.S. government is cranking out much more "supply" than at any other time in the history of the United States. Thus, we are told by the U.S. government (and the Federal Reserve) that there are more "buyers" for U.S. Treasuries than at any time in history -- despite the fact those buyers have no money. But that is literally less than half of this farce.
Not only are we being told that buyers-with-no-money are purchasing more Treasuries than at any other time in history, we're also told that these buyers are joyfully paying the highest prices in history (by a large margin) for these debt instruments. However this still doesn't capture the absurdity of this scenario.
Buyers-with-no-money are (supposedly) buying far more Treasuries than at any time in history, at the highest prices (by far) -- while publicly, all of these "buyers" are expressing severe doubts about the creditworthiness of the U.S. (i.e. its ability to ever make good on this $trillions in new bond debt). Would any sane individual buy the greatest quantity of anything (at the highest prices in history), while publicly expressing severe doubts about the value/quality of that good?
Don't answer that question yet. Since "quantitative easing" must (and does) destroy the value of a currency, for every 1% the dollar loses in value, all of those $trillions in U.S. Treasuries (which are denominated in U.S. dollars) lose the same amount of their own value.
Thus, with U.S. bond-prices at their highest level in history (and at their maximum, theoretical price), it is 100% inevitable that those prices can only fall. This means that buyers-with-no-money are supposedly buying the most "supply" of Treasuries in history, at the highest prices in history - while being 100% certain of losing money on those Treasuries due to their inevitable fall in price and the loss of value of the U.S. dollar. Clearly, there are few buyers for U.S. Treasuries. Instead, "The Three Amigos" of debt (the U.S., UK and Japan) are playing the bond-market equivalent of musical chairs. The UK "buys" U.S. Treasuries, Japan buys UK debt, and the U.S. government buys Japanese bonds -- and all with the "quantitative easing" funny-money they are printing out of thin air. Then all three governments pretend their bond-auctions are "covered."
This brings us to the final element of this charade: U.S. bond market "auctions." At the same time that the U.S. government reported the "economic miracle" of buyers-with-no-money buying more of something they don't want (at the highest prices), just so they can lose money, the U.S. government removed all "transparency" from these bond-auctions. Even bond traders with decades of experience report that they have no idea of who is actually buying these bonds. This is like an amateur magician who is so clumsy in performing his magic that he needs to turn out the lights while executing his tricks so that the audience doesn't immediately spot the ineptitude of his fraud."

"Why has the Federal Reserve been so adamant about fraudulently concealing its actions in the U.S. bond-market, and the quantitative easing that makes that fraud possible? First, in printing up money, but not acknowledging it, the Federal Reserve is literally counterfeiting trillions of dollars of U.S. currency."

"With the obvious fact that the U.S. government never stopped its quantitative easing, this brings us to the current scenario. The entire reason why the Fed is "announcing" something which it is already doing is because even doctored U.S. government statistics can't hide the fact that the U.S. economy is once again collapsing.
Obviously, quantitative easing is not, does not, and cannot "fix" any of the U.S. economy's problems, which (ironically) have all been caused by too much new debt, and new money-printing. So why is the Fed "coming out of the closet" (even just temporarily)?  Simply, with the intensifying weakness of the U.S. economy, the Federal Reserve (and the U.S. government) feel an intense need to be seen to be "doing something" (even something it was already doing) -- and neither the U.S. government nor the Fed have any other ideas."


People, it is time to get out of the dollar and into tangibles. If you have not thought about gold or silver, it is past time. Even though gold and silver have increased, I don't think we are anywhere near the top, so you still have time. (I am not a financial advisor, so do your own research and invest as you feel comfortable).


Get prepared, more inflation is on it's way (maybe even hyperinflation).