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Post by looter on Aug 4, 2011 22:28:44 GMT -5
It was 2017. Clans were governing America. Clans organized around families and individuals who possessed stocks of food, bullion, guns and ammunition. The first clans organized around local police forces. The conservatives’ war on crime during the late 20th century and the Bush/Obama war on terror during the first decade of the 21st century had resulted in the police becoming militarized and unaccountable. As society broke down, the police became warlords. The state police broke apart, and the officers were subsumed into the local forces of their communities. The newly formed tribes expanded to encompass the relatives and friends of the police. The dollar had collapsed as world reserve currency in 2012 when the worsening economic depression made it clear to Washington’s creditors that the federal budget deficit was too large to be financed except by the printing of money. With the dollar’s demise, import prices skyrocketed. As Americans were unable to afford foreign-made goods, the transnational corporations that were producing offshore for US markets were bankrupted, further eroding the government’s revenue base. The government was forced to print money in order to pay its bills, causing domestic prices to rise rapidly. Faced with hyperinflation, Washington took recourse in terminating Social Security and Medicare and followed up by confiscating the remnants of private pensions. This provided a one-year respite, but with no more resources to confiscate, money creation and hyperinflation resumed. Organized food deliveries broke down when the government fought hyperinflation with fixed prices and the mandate that all purchases and sales had to be in US paper currency. Unwilling to trade appreciating goods for depreciating paper, goods disappeared from stores. Washington responded as Lenin had done during the “war communism” period of Soviet history. The government sent troops to confiscate goods for distribution in kind to the population. This was a temporary stop-gap until existing stocks were depleted, as future production was discouraged. Much of the confiscated stocks became the property of the troops who seized the goods. Goods reappeared in markets under the protection of local warlords. Transactions were conducted in barter and in gold, silver, and copper coins. Other clans organized around families and individuals who possessed stocks of food, bullion, guns and ammunition. Uneasy alliances formed to balance differences in clan strengths. Betrayals quickly made loyalty a necessary trait for survival. Large scale food and other production broke down as local militias taxed distribution as goods moved across local territories. Washington seized domestic oil production and refineries, but much of the government’s gasoline was paid for safe passage across clan territories. Most of the troops in Washington’s overseas bases were abandoned. As their resource stocks were drawn down, the abandoned soldiers were forced into alliances with those with whom they had been fighting. Washington found it increasingly difficult to maintain itself. As it lost control over the country, Washington was less able to secure supplies from abroad as tribute from those Washington threatened with nuclear attack. Gradually other nuclear powers realized that the only target in America was Washington. The more astute saw the writing on the wall and slipped away from the former capital city. When Rome began her empire, Rome’s currency consisted of gold and silver coinage. Rome was well organized with efficient institutions and the ability to supply troops in the field so that campaigns could continue indefinitely, a monopoly in the world of Rome’s time. When hubris sent America in pursuit of overseas empire, the venture coincided with the offshoring of American manufacturing, industrial, and professional service jobs and the corresponding erosion of the government’s tax base, with the advent of massive budget and trade deficits, with the erosion of the fiat paper currency’s value, and with America’s dependence on foreign creditors and puppet rulers. The Roman Empire lasted for centuries. The American one collapsed overnight. Rome’s corruption became the strength of her enemies, and the Western Empire was overrun. America’s collapse occurred when government ceased to represent the people and became the instrument of a private oligarchy. Decisions were made in behalf of short-term profits for the few at the expense of unmanageable liabilities for the many. Overwhelmed by liabilities, the government collapsed. Globalism had run its course. Life reformed on a local basis. I just don't see it, a bunch of 40K a year donut eaters having the balls, vision and organizational skills to run warlord game after a collapse? Ain't gonna happen, it's always been the military guys with all three that formed the aristocracy throughout history. Most cops I know couldn't spell Ghengis Khan and would have problems pointing out the year William the Conqueror turned England into his very own semen recepticle. They will make good thugs and hencmen though. Thirsty!!! Welcome aboard!!!! This is a cool place, you can say bitch and slut and Pussy and everything. I sent you a pic of the Russian barmade from the other night in Interior, (Because all Americans are on permanent holiday, we must import people to sell us beer.) But I hadn't told you yet about the bloke who works for XE (Blackwater). This guy gets paid $110,000 per 3 months to grease angry villagers who blow up pipelines in Nigeria. They sit around their barracks, get the call, and cruise in on helicopters guns a blazing. I asked him how a person signs up for such a gig, and he explains you have to do your time in the public military first. Evidently they have no use for agronomists, geologists, drunks, cowboys, or bullshitters. Anyway, they do all sorts of cool stuff, like industrial espionage, government overthrowing, security detailing, whatever you want done. These folks are going to have a field day during the collapse. That particular guy said all the gore turned him into a vegetarian. He had the damndest pictures. The local police will be submissive underlings. I'm very confident I can overpower his ilk once we get the green light to go to wacking one another in earnest. Should be an interesting era we'll live in.
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mfs
Hired Hand
Posts: 163
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Post by mfs on Aug 4, 2011 22:34:27 GMT -5
SIF, I could not agree more for the day of reckoning. I would think all in agricultural especially vigilant as the true resource of wealth in this country other than coal. My son in Italy called asking about the markets and told him a consequence of the increase of debt limit. He knows Europe is broke and EU is a complete joke. They will always be fractured for personal interest and no cohesion. The good of the nation would invoke responsibility and no further debt and living within means. Our debt increased $254 billion TODAY with the auction. We are void of leadership and ability. This is most inane admins and speeding the train to the cliff.
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Post by thirsty on Aug 4, 2011 22:45:54 GMT -5
Most of you fellows are already ahead of the curve. You think it is any kind of coincidence that the succesful military caste's throughout history had a substantial background in Ag? From the founding fathers to the Prussian military tradition, production is where you learn organizational skills, that is the one missing element most of your mercenaries will be lacking. Balls and vision are one thing, but logistics is what wins major campaigns, figuring out how to get x amount of whatever to wherever and doing it on a budget while getting shot at. Industrialists in the post modern era also have a knack for organization. House flippers and lawyers, not so much.
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Post by sandbox on Aug 4, 2011 22:59:18 GMT -5
Bwahahahaha!
Interesting we seem to only have former agwebbers as doomers. Figured for sure we would pick up some more here.
Maybe we really are THAT crazy.
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Post by glowplug on Aug 5, 2011 7:31:44 GMT -5
Here's some ag. DOOOOOOM. We may have higher grain prices but slimer margains. F'n fertilizer companies got themselves a monopoly. Glowplug
Strong demand for potash fertilizer is leading to record profits for the three of the world’s largest fertilizer companies — Agrium Ltd., Potash Corp. of Saskatchewan and Mosaic Company. All three companies recently reported record profits and bullish outlooks as potash supply is expected to remain tight after India signed a contract for 700,000 tonnes of potash after China signed multiple deals in July. India’s purchase has significantly tightened global supplies.
“Now that India has joined the foray, no new significant capacity is expected for several months, and potash inventories are very low, there may not be enough supply to satisfy all the demand, and [potash] prices, we expect, will rise even further,” said Richard Kelertas, an analyst at Dundee Securities Ltd., said in a research note, according to The Globe and Mail.
In the United States, potash prices have risen to about $550, which is still below the record high price reached in 2008, but it is still above last year’s prices by approximately 20 percent.
Mosaic chief executive officer Jim Prokopanko reported that Mosaic had a $649.2 million quarterly profit, up 64 percent from the same period a year ago.
In July, Potash Corp. posted a 75 percent increase in second quarter profit of $840 million.
On Aug. 3, Agrium announced it had a $718 million second quarter profit, which is up 40 percent from the same period last year. Reuters recently reported that based on current projections, “Agrium expects robust demand for nitrogen, phosphate and potash-based nutrients in the latter half of 2011. It also expects nutrient markets to be tight, due to below-average inventory levels and strong demand.”
According to The Globe and Mail, “All of the company results were better than most analysts expected, in part because prices for some agricultural commodities had been falling in recent weeks. That was due largely to record planting by farmers, particularly corn farmers in the United States who were expected to produce one of the largest crops in history this year. But a wet spring and hot July have weakened those expectations and corn prices have now moved back above $7 a bushel, or roughly 70 percent higher than a year ago. Even if farmers do pull in a massive harvest, the U.S. Department of Agriculture says demand for corn is close to an all-time high and supplies will be extremely tight.”
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Post by sandbox on Aug 5, 2011 14:55:43 GMT -5
Article interesting mostly for the massive numbers by which the developed nations are adding debt: money.cnn.com/2011/08/05/news/economy/europe_debt_crisis/index.htm?iid=HP_LNEuropean fear: The wolves are at the gate 0 PrintComment By Charles Riley @cnnmoney August 5, 2011: 2:53 PM ET NEW YORK (CNNMoney) -- A sharp drop in manufacturing, a towering debt-to-GDP ratio and a jaw-dropping decline in equity markets. No -- not the United States. Europe! Many of the underlying tremors that led to this week's steep sell-off in the U.S. have been festering in plain sight in Europe for a year or more. Consider a few figures: European indexes have been hammered over the past month, with the main exchanges of England (UKX) off 12.9%, France (CAC40) 17.6% and Germany (DAX) 16.7%. The economies of Italy and France -- two of the continent's largest -- expanded by only 0.3% and 0.2% in the second quarter. The problem? Developed countries piled on massive amounts of debt during the recession. Advanced economies worldwide increased their debt burden from $18.1 trillion in 2007 to $29.5 trillion in 2011, according to researchers at the Brookings Institution. And that's not the half of it. The number is projected to grow to $41.3 trillion by 2016. The bill collector has already come for some. Billions have been spent propping up Ireland and Greece, and investors have not been shy about sending yields through the roof when they smell blood in the water. Investors lending money to Spain are now demanding interest rates of 6%, while Greek bonds carry a 15% rate and yields on Italian notes spiked this week to 5.5%. Coupled with weak growth, the sharp increase in interest rates only adds to the countries' debt and makes it even more difficult for them to lower their debt-GDP-ratio. There is some evidence that politicians are waking up to the scale of the crisis. German Chancellor Angela Merkel and French President Nicolas Sarkozy planned to interrupt their summer vacations -- a hiking holiday in Italy and a three-week excursion to the French Riviera -- to confer by phone about the growing economic unease. That's welcome news, because while the crisis started at the continent's periphery, it has now arrived at the gates of Italy and Spain. And that, according to Domenico Lombardi, a senior fellow at Brookings and former International Monetary Fund executive board member, should worry policymakers in the United States. "Italy has been hit," Lombardi said. "It's the third largest economy in the euro area, and there is no organization that can bail Italy out. It's just too big to swallow." If the situation in Italy were to worsen, the impact could lead to weakening demand for U.S. exports, uncertainty in global currency markets, and consequences for U.S. banks that are exposed to the European banking system. The timing couldn't be worse for the United States, which is about to engage in some fiscal belt-tightening as a result of the debt ceiling deal negotiated in Washington. With the government pumping less money into the economy, policymakers need to find a way to increase demand for U.S. exports, Lombardi said. "But this is certainly not going to come from Europe," he said. The tremendous instability in Europe is yet another drag on an already weak U.S. economy and could increase uncertainly, spark a rush to safe-haven assets or delay major investments by American businesses. "The economic recovery in the U.S. is inherently fragile," Lombardi said. "And this could have a dramatic effect on the job market outlook." On Friday, EU Economic and Monetary Affairs Commissioner Olli Rehn tried to calm the swirl of rumors as markets bucked up and down. "The market unrest witnessed in the last few days is simply not justified on the grounds of economic fundamentals," he said, having broken off his holidays to return to Brussels. "It is not justified for Italy. It is not justified for Spain." But try telling that to bond markets.
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Post by sandbox on Aug 5, 2011 22:45:08 GMT -5
S&P Cuts U.S. Rating for First Time on Deficit Reduction Pact
QBy John Detrixhe - Aug 5, 2011 7:09 PM MT
The U.S. had its AAA credit rating downgraded for the first time by Standard & Poor’s, which slammed the nation’s political process and said lawmakers failed to cut spending enough to reduce record deficits.
S&P dropped the ranking one level to AA+, after warning on July 14 that it would reduce the rating in the absence of a “credible” plan to lower deficits even if the nation’s $14.3 trillion debt limit was lifted. The U.S. was awarded the top credit ranking by New York-based S&P in 1941. It kept the outlook at “negative” amid the failure to end Bush-era tax cuts.
“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” S&P said in a statement today.
Demand for Treasuries has surged even with the specter of a downgrade as investors saw few alternatives to the traditional refuge during times of risk as concern increased global growth is slowing and Europe’s sovereign debt crisis is spreading.
Downgrade Fallout The action may still hurt the U.S. economy over time by increasing the cost of mortgages, auto loans and other types of lending tied to the interest rates paid on Treasuries. JPMorgan Chase & Co. estimated that a downgrade would raise the nation’s borrowing costs by $100 billion a year.
S&P said it may lower the long-term rating to AA within the next two years if spending reductions are lower than agreed to, interest rates rise or “new fiscal pressures” during the period result in higher general government debt.
“It’s a reflection of the fact that we haven’t done enough to get our fiscal house in the order,” Anthony Valeri, market strategist in San Diego at LPL Financial, which oversees $340 billion, said in an interview before the downgrade. “Sovereign credit quality is going to remain under pressure for years to come.”
Moody’s Investors Service and Fitch Ratings affirmed their AAA credit ratings on Aug. 2, the day President Barack Obama signed a bill that ended the debt-ceiling impasse that pushed the Treasury to the edge of default. Moody’s and Fitch also said that downgrades were possible if lawmakers fail to enact debt reduction measures and the economy weakens.
S&P’s Assumptions The measure raised the nation’s debt ceiling until 2013 and threatens automatic spending cuts to enforce $2.4 trillion in spending reductions over the next 10 years.
Even with the agreement, S&P said the nation’s debt may rise to 74 percent of gross domestic product by the end of this year, to 79 percent in 2015 and 85 percent by 2021.
The rating may be lowered further if spending reductions are lower than agreed to, interest rates rise or “new fiscal pressures” result in higher general government debt.
S&P also changed its assumption that the 2001 and 2003 tax cuts would expire by the end of 2012 “because the majority of Republicans in Congress continue to resist any measure that would raise revenues.”
“More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating,” S&P said.
‘Grand Bargain’ S&P put the U.S. government on notice on April 18 that it risks losing its AAA rating unless lawmakers agree on a plan by 2013 to reduce budget deficits and the national debt. S&P indicated last month that anything less than $4 trillion in cuts would jeopardize the rating.
“A grand bargain of that nature would signal the seriousness of policy makers to address the fiscal situation in the U.S.,” John Chambers, chairman of S&P’s sovereign rating committee, said in a video interview distributed by the ratings firm on July 28.
Earlier today the Treasury Department found fundamental flaws in S&P’s analysis, according to a person familiar with the situation who declined to be identified because the talks were private. S&P miscalculated future deficit projections by $2 trillion, said a Treasury spokesman who commented on condition of anonymity.
Consumer Costs Obama has said a rating cut may hurt the broader economy by increasing consumer borrowing costs tied to Treasury rates. An increase in Treasury yields of 50 basis points would reduce U.S. economic growth by about 0.4 percentage points, JPMorgan said in a report, citing Federal Reserve research and data.
“The hope is that we could keep Treasuries pure, limited to interest rate risk,” Mohamed El-Erian, chief executive and co-chief investment officer at Pacific Investment Management Co., said in a Bloomberg Television interview before the announcement. “The minute you start downgrading away from AAA, you take small steps toward credit risk and that is something any country would like to avoid.”
Treasury yields average about 0.70 percentage point less than the rest of the world’s sovereign debt markets, Bank of America Merrill Lynch indexes show. The difference has expanded from 0.15 percentage point in January.
Foreign Investors Investors from China to the U.K. are lending money to the U.S. government for a decade at the lowest rates of the year. For many of them, there are few alternatives outside the U.S., no matter what its credit rating.
“Yields are low in the face of a downgrade because there is nowhere else for people to go if they don’t buy Treasuries because they want to be in safe dollar assets,” Carl Lantz, head of interest-rate strategy at Credit Suisse Group AG, one of 20 primary dealers that trade directly with the Federal Reserve, said before the announcement.
Ten-year Treasury yields fell to as low as 2.33 percent in New York today, the least since October. Yields for the nine sovereign borrowers that have lost their AAA ratings since 1998 rose an average of two basis points in the following week, according to JPMorgan.
The committee of bond dealers and investors that advises the U.S. Treasury said the dollar’s status as the world’s reserve currency “appears to be slipping” in quarterly feedback presented to the government on Aug. 3. The U.S. currency’s portion of global currency reserves dropped to 60.7 percent in the period ended March 31, from a peak of 72.7 percent in 2001, International Monetary Fund data show.
Borrowing Committee “The idea of a reserve currency is that it is built on strength, not typically that it is ‘best among poor choices’,” page 35 of the presentation made by one member of the Treasury Borrowing Advisory Committee, which includes representatives from firms ranging from Goldman Sachs Group Inc. to Pimco. “The fact that there are not currently viable alternatives to the U.S. dollar is a hollow victory and perhaps portends a deteriorating fate.”
Members of the TBAC, as the committee is known, which met Aug. 2 in Washington, also discussed the implications of a downgrade of the U.S. sovereign credit rating. “None of the members thought that a downgrade was imminent,” according to minutes of the meeting released by the Treasury.
A U.S. credit-rating cut would likely raise the nation’s borrowing costs by increasing Treasury yields by 60 basis points to 70 basis points over the “medium term,” JPMorgan’s Terry Belton said on a July 26 conference call hosted by the Securities Industry and Financial Markets Association. The U.S. spent $414 billion on interest expense in fiscal 2010, or 2.7 percent of gross domestic product, according to Treasury Department data.
“That impact on Treasury rates is significant,” Belton, global head of fixed-income strategy at JPMorgan, said during the call. “That $100 billion a year is money being used for higher interest rates and that’s money being taken away from other goods and services.”
To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
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Post by linsal on Aug 6, 2011 5:51:17 GMT -5
Marc Faber: Brace for a "global reboot" and war
Markets could rebound after Thursday's global market sell-off, but investors should see any bounce as a selling opportunity, as the world economy rolls towards total collapse, Mark Faber, editor and publisher of the Boom, Doom and Gloom Report, told CNBC Friday.
Axel Griesch | ASFM | Getty Images Dr. Marc Faber --------------------------------------------------------------------------------
A mooted third round of quantitative easing (QE3) in the U.S. and more money printing elsewhere is merely deferring a crisis that will be bigger and could end in war, Faber said.
The Dow Jones Industrial Average [.DJIA 11444.61 60.93 (+0.54%) ] suffered its worst losses in three years Thursday, shedding more than 500 points.
"My view is that the market has experienced everywhere huge technical damage," Faber said. "As of today, all markets are extremely oversold, so a rebound is going to happen (Friday) or on Monday, but the damage technically is so great that the rebound, no matter whether QE3 happens right here, it's unlikely to lift markets above the May 2 high of the (S&P 500)[.SPX 1199.38 -0.69 (-0.06%) ] at 1370."
Faber thinks that by the end of the fall, the S&P 500 will have slid to around 1150, and investors will be hoping that further round of monetary easing will stabilize markets.
"In general, I would be using rebounds as a selling opportunity," Faber said.
Buying Treasurys as a safe haven is no longer a smart play, he added.
"I think Treasurys are perceived still as a safe haven because everybody knows the U.S. has an endless ability to print money. The interest will be paid," he said. "The trouble is that governments can default in two ways. Either they just stop paying the interest and there is a debt restructuring, like Argentina went through; or they just pay the interest and the principle eventually, in a worthless currency. That's the way the U.S. will likely do it."
Gold [GCCV1 1651.80 -7.20 (-0.43%) ] and silver have been overbought, and may see a correction in the coming weeks, but Faber believes that should be seen as a buying opportunity as investors begin to shun paper assets.
"Gold miners are hit very hard and the gold price went up. People don't trust paper anymore. That is one of the problems," he said.
However, temporary upturns and the artificial boost to markets given by printing money only disguise the coming threat to the world economy, Faber warned.
"You have a computer. Occasionally the computer will crash and you have to reboot it. That will happen to the global economy. Before this happens there will be much more money printing because basically the central banks are willing to do that," he said. "By printing money, problems are not solved, but they can be postponed, and they become larger. It's like the recession in 2001. Had there not been massive money printing, it would have been steeper than what we had, but equally, we would have avoided probably the financial crash in 2008."
The next crisis will be far bigger, according to Faber.
"The next time we have a global economic crisis, it will be much worse than 2008. Before this happens there will be money printing and there will be war. The whole system will collapse," he said. "That's why I'm advising people that they have to think it through. In a total collapse you don't want to own government bonds and cash."
He added: "Equities—they don't perform well, but at least you have the ownership of companies. Precious metals in that environment do relatively well. And of course, oil would do well if there was a war."
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Post by linsal on Aug 6, 2011 10:09:35 GMT -5
The Debt Supercycle By John Mauldin 08/05/11 It started when a friend gave Senator Dan Coats a copy of Endgame. He read it and underlined, highlighted, and scored it. The Senator Rob Portman took it off his hands and read it. They asked me to come to DC and meet a few Senators. You don’t say no to such a request… I flew to Washington and met with nine of them for about 90 minutes and Senator Cornyn (from Texas) privately beforehand for an hour. I offered him a copy of the book, but he said he was already reading it on the iPad he was carrying. I gave him one anyway. Evidently, Coats and Portman had worked the room, because nine guys showed up more or less on time. Two Democrats, six Republicans, and an independent (Lieberman). Jon Kyl was there, as well as Gang of Six member, Tom Coburn from Oklahoma. Also Corker, Lugar, Coats, Portman, and Mike Lee, the Tea Party senator from Utah, who took the most notes. But there were a lot of them taking notes. And asking questions, some rather pointed. Overall, I was very impressed with the level of knowledge in the room and the candor. I started by explaining what I meant by the debt supercycle and how deleveraging recessions are fundamentally different from business-cycle recessions, which is why we are not seeing a normal recovery. And it is happening all over the developed world. I think I surprised them by jumping to Europe first, noting that Europe appeared to be imploding even as we were meeting. I made the point that we could see a banking and credit crisis coming from Europe that might be worse than the subprime crisis. I noted that it was not just Greece, Ireland, and Portugal. Spain and Italy have their own share of problems, and the markets have taken their interest rates up by 1% in just the last month, just as a large rollover of debt is coming due. Italy’s average debt duration is quite short, as illustrated in the chart below. (Thanks to London partner, Niels Jensen, for bringing this fact to my attention). Within Europe, only the UK has really long average debt duration (about 13 years). Most countries are averaging 5-7 years. Italy is no exception. Then today I get this note from Bluemont Capital Advisors, written by Harald Malmgren, Global Economic Strategist, and Mark Stys, Chief Investment Officer. It is short but important, so I am going to quote it liberally: Italian and Spanish interbank lending is freezing up. French Finance Ministry officials and banks have been in emergency meetings regarding Eurozone interbank market stress. IMF and EU officials are warning that France might also face downgrade if greater spending cuts are not made. Finance Ministry staff have been warned to be available 24/7 (irrespective of sacred August holidays!), as contagion may soon affect French banks and sovereign debt. Italian and Spanish sovereign debt yields have resumed escalation this week. Moreover, the Italians had to cancel issuance of longer maturity debt, as demand was insufficient… Meanwhile, US money market funds have been withdrawing from Eurozone bank commercial paper, leaving Eurozone banks with a big gap in availability of short-term funding and a severe shortage of dollars. In the background, the Fed has quietly advised the ECB and some other central banks that Congress has warned the Fed not to repeat the huge liquidity support to Europe and Asia that it provided in 2008. European officials believe the Fed would be less able to come to the rescue again with increased swap lines and direct loans to Eurozone banks, as it did post-Lehman. Thus, the Eurozone appears to be entering into renewed crisis of breakdown in interbank trust and escalating borrowing costs for Italy and Spain, and maybe even France…It is increasingly possible that the ECB may not be able to function as lender of last resort on the scale required to cope with an interbank lending breakdown. Demand for dollars will likely escalate, while confidence in Eurozone financial institutions falls. This could force Eurozone banks to purchase dollars in the open market and drive the dollar higher. I made some similar points to the Senators about why the euro is going to parity if it survives. Then I went into my “Japan is a bug in search of a windshield” spiel, pointing out that the yen will fall in half. All this to say is that the bond markets are going to get spooked sooner than we are prepared for. If the US does not show up with a credible deficit-reduction program by the end of 2013, we could see interest rates rising even in the face of a deflationary recession. If we do nothing, we become Greece. We need $10-12 trillion in cuts over ten years, which I explained would put us into a slow-growth-at-best, muddle-through economy with high unemployment and tough tax policies. I pointedly showed Senator Mike Lee why we could not cut spending too fast (as the Tea Party wants) unless we want “Depression 2.0” and 20% unemployment. It has to be my glide-path option. It was a very sober group as we ended the meeting. They all politely thanked me for coming and talking frankly. But the Senators made it clear that cutting spending in a meaningful way was going to be very hard, and would take real commitment from them to get us through this. They all noted that their mail was running 100 to 1 against cutting Medicare. Every one of them. They know that they cannot close the deficit gap just with the elimination of the Bush tax cuts. We are at an impasse. We need a massive restructuring of our entire tax code to be more encouraging of creating jobs. But that is another story for another week. Well, just one brief commercial. If Senators are reading Endgame, maybe you should be! Get it at your local bookstore or from Laissez Faire Books, right here. Regards, John Mauldin, for The Daily Reckoning Read more: The Debt Supercycle dailyreckoning.com/the-debt-supercycle/#ixzz1UGHgSEaZ
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Post by Hobbyfarmer on Aug 6, 2011 12:10:21 GMT -5
What have we learned in 2,064 years?
"The budget should be balanced, the Treasury should be refilled,
public debt should be reduced, the arrogance of oficialdom should
be tempered and controlled, and the assistance to foreign lands
should be curtailed lest Rome become bankrupt. People must again
learn to work, instead of living on public assistance."
- Cicero - 55 BC
Evidently nothing.
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Post by linsal on Aug 7, 2011 21:25:39 GMT -5
The U.S. doesn't deserve a AA-plus credit rating, much less triple-A, commodity bull and noted investor Jim Rogers told CNBC on Monday.
Getty Images -------------------------------------------------------------------------------- Rogers said the country was unlikely to be able to pay off its debt and Standard and Poor's rating cut had come too late and should have happened long ago.
"It seems to me it's physically, humanly impossible for the U.S. to ever pay off its debt," Rogers said. "They can roll it over and continue to play the charade, but the U.S. is bankrupt."
Rogers’ comments came during a CNBC interview with the head of sovereign ratings at Standard and Poor's, David Beers.
Beers said that according to S&P's calculations, total U.S. public debt, which includes local, state and federal government debt, will be $11 trillion this year, and will rise to $14 trillion in 2015 and to $20 trillion by 2021.
To put those numbers into perspective, according to the U.S. government's Bureau of Economic Analysis, U.S. annual gross domestic product (GDP) totaled $15 trillion in the second quarter of 2011.
Rogers, who has been critical of the U.S. economic policies for some time, said he remains short 30-year Treasurys, emerging markets and U.S. technology stocks but was long safe havens such as the Swiss franc, the yen and the dollar.
Rogers said he was also long commodities, especially gold and agriculture, and accepted that some of his long commodity positions may suffer in a selloff. Still, he won’t be selling.
"You should nearly always buy into panic just like you should sell hysteria," Rogers said. "I own gold, I'm worried about gold, it's going so up so much, I'm not going to sell it but it looks like it's setting itself up for a nice correction. I hope so then I can buy more."
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Post by linsal on Aug 7, 2011 21:34:00 GMT -5
WEST ALLIS, Wis. -- Local law enforcement agencies are investigating several incidents near State Fair Park late Thursday night. Embed this VideoxEmailFacebookDiggTwitterRedditDelicious Link Share Milwaukee police said that around 11:10 p.m., squads were sent to the area for reports of battery, fighting and property damage being caused by an unruly crowd of "hundreds" of people. One officer described it as a "mob beating." Police said the group of young people attacked fair goers who were leaving the fair grounds. Police said that some victims were attacked while walking. They said others were pulled out of cars and off of motorcycles before being beaten. The Milwaukee Police Department, West Allis Police Department and Milwaukee County Sheriff Department all responded to the area. Police dispatched squads to State Fair Park shortly after 11 p.m. Thursday because of reports a large, unruly crowd was causing property damage and fighting. Police outside the park said they received four complaints of battery with all the victims having non-life threatening injuries. They said they are in the process of identifying suspects. Norbert Roffers of Wind Lake told The Associated Press he was waiting with his wife to cross at an intersection near the fair when he was hit in the back of the head. "I got my bell rung," Roffers said. Roffers said another man was lying in the street after being attacked until someone came along to help him. West Allis police said they sent a rescue squad to one of the scenes, but that their crew did not treat anyone. Police said the incidents happened in various areas near the fair grounds, including near the intersection of 84th and Adler streets. Read more: www.wisn.com/news/28774396/detail.html#ixzz1UOuhxnX4
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Post by linsal on Aug 8, 2011 16:22:55 GMT -5
If the economy falls back into recession, as many economists are now warning, the bloodletting could be a lot more painful than the last time around.
Given the tumult of the Great Recession, this may be hard to believe. But the economy is much weaker than it was at the outset of the last recession in December 2007, with most major measures of economic health — including jobs, incomes, output and industrial production — worse today than they were back then. And growth has been so weak that almost no ground has been recouped, even though a recovery technically started in June 2009.
“It would be disastrous if we entered into a recession at this stage, given that we haven’t yet made up for the last recession,” said Conrad DeQuadros, senior economist at RDQ Economics.
When the last downturn hit, the credit bubble left Americans with lots of fat to cut, but a new one would force families to cut from the bone. Making things worse, policy makers used most of the economic tools at their disposal to combat the last recession, and have few options available.
Anxiety and uncertainty have increased in the last few days after the decision by Standard & Poor’s to downgrade the country’s credit rating and as Europe continues its desperate attempt to stem its debt crisis.
President Obama acknowledged the challenge in his Saturday radio and Internet address, saying the country’s “urgent mission” now was to expand the economy and create jobs. And Treasury Secretary Timothy F. Geithner said in an interview on CNBC on Sunday that the United States had “a lot of work to do” because of its “long-term and unsustainable fiscal position.”
But he added, “I have enormous confidence in the basic regenerative capacity of the American economy and the American people.”
Still, the numbers are daunting. In the four years since the recession began, the civilian working-age population has grown by about 3 percent. If the economy were healthy, the number of jobs would have grown at least the same amount.
Instead, the number of jobs has shrunk. Today the economy has 5 percent fewer jobs — or 6.8 million — than it had before the last recession began. The unemployment rate was 5 percent then, compared with 9.1 percent today.
Even those Americans who are working are generally working less; the typical private sector worker has a shorter workweek today than four years ago.
Employers shed all the extra work shifts and weak or extraneous employees that they could during the last recession. As shown by unusually strong productivity gains, companies are now squeezing as much work as they can from their newly “lean and mean” work forces. Should a recession return, it is not clear how many additional workers businesses could lay off and still manage to function.
With fewer jobs and fewer hours logged, there is less income for households to spend, creating a huge obstacle for a consumer-driven economy.
Adjusted for inflation, personal income is down 4 percent, not counting payments from the government for things like unemployment benefits. Income levels are low, and moving in the wrong direction: private wage and salary income actually fell in June, the last month for which data was available.
Economy: Complete Coverage Consumer spending, along with housing, usually drives a recovery. But with incomes so weak, spending is only barely where it was when the recession began. If the economy were healthy, total consumer spending would be higher because of population growth.
And with construction nearly nonexistent and home prices down 24 percent since December 2007, the country does not have a buffer in housing to fall back on.
Of all the major economic indicators, industrial production — as tracked by the Federal Reserve — is by far the worst off. The Fed’s index of this activity is nearly 8 percent below its level in December 2007.
Likewise, and perhaps most worrisome, is the track record for the country’s overall output. According to newly revised data from the Commerce Department, the economy is smaller today than it was when the recession began, despite (or rather, because of) the feeble growth in the last couple of years.
If the economy were healthy, it would be much bigger than it was four years ago. Economists refer to the difference between where the economy is and where it could be if it met its full potential as the “output gap.” Menzie Chinn, an economics professor at the University of Wisconsin, has estimated that the economy was about 7 percent smaller than its potential at the beginning of this year.
RELATED LINKS Current DateTime: 12:39:04 08 Aug 2011 LinksList Documentid: 44057467 Roubini: Recession ComingGeithner: S&P Downgrade 'Terrible Move'Japan Says Market Trust in Dollar, Treasurys Unshaken Unlike during the first downturn, there would be few policy remedies available if the economy were to revert back into recession.
Interest rates cannot be pushed down further — they are already at zero. The Fed has already flooded the financial markets with money by buying billions in mortgage securities and Treasury bonds, and economists do not even agree on whether those purchases substantially helped the economy. So the Fed may not see much upside to going through another politically controversial round of buying.
“There are only so many times the Fed can pull this same rabbit out of its hat,” said Torsten Slok, the chief international economist at Deutsche Bank.
Congress had some room — financially and politically — to engage in fiscal stimulus during the last recession.
But at the end of 2007, the federal debt was 64.4 percent of the economy. Today, it is estimated at around 100 percent of gross domestic product, a share not seen since the aftermath of World War II, and there is little chance of lawmakers reaching consensus on additional stimulus that would increase the debt.
“There is no approachable precedent, at least in the postwar era, for what happens when an economy with 9 percent unemployment falls back into recession,” said Nigel Gault, chief United States economist at IHS Global Insight. “The one precedent you might consider is 1937, when there was also a premature withdrawal of fiscal stimulus, and the economy fell into another recession more painful than the first.”
There is at least one factor, though, that could make a second downturn feel milder than the first: corporate profits. Corporate profits are at record highs and, adjusted for inflation, were 22 percent greater in the first quarter of this year than they were in the last quarter of 2007.
Nervous about the future of the economy, corporations are reluctant to make big investments like hiring. As a result, they are sitting on a lot of cash.
While this may not be much comfort to the nation’s 13.9 million unemployed workers, it may be to their employed counterparts.
“In the financial crisis, when markets were freezing up, the first response was, ‘I’ve got to get some cash,’ ” said Neal Soss, the chief economist at Credit Suisse. “The fastest way to get cash is to not have a weekly payroll, so that’s why we saw such big layoffs.”
Corporate cash reserves today, he said, could act as a buffer to layoffs if demand drops.
“There are arguments that another recession would be worse, and there are arguments in the other direction,” Mr. Soss said. “We just don’t know at this juncture. But ultimately it’s a question you don’t want to know the answer to."
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Post by glowplug on Aug 8, 2011 18:45:46 GMT -5
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Post by sandbox on Aug 10, 2011 12:37:38 GMT -5
Apparently things are getting baaaaad.
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Number of sheep thefts doubles in six months as meat prices soar
By Matt Blake, Crime Correspondent
Monday, 8 August 2011
Sheep rustling is booming as the price of meat soars, according to figures obtained by The Independent, with thieves targeting British farms at almost double the rate they were six months ago.
Meat prices and the recession have been blamed for the disturbing crimewave that has seen thieves go to increasingly greater lengths to round up their plunder, dead or alive.
Already 32,926 sheep have been stolen from farmyards and fields across Britain since January, compared with 38,095 taken throughout 2010, say NFU Mutual, the insurance wing of the National Farmers' Union.
But the numbers could be even higher as the company represents only two-thirds of British farmers.
"This is a very worrying and growing trend," said Phil Hudson, the National Farmers' Union head of food and farming. "The theft of livestock results in an obvious financial cost for farmers, but more than that there are also real concerns for the health and welfare of the animals that are stolen from fields."
The price of minced lamb has risen by almost 30 per cent since 2008, from £6.59 to £8.50 a kilogram, while the National Sheep Association says sheep now sell for an average of £75, more than double the price three years ago. Prize breeds can sell at auction for thousands of pounds.
Sheep rustling marked the start of Dick Turpin's notorious life of crime, but nearly 300 years on, the highwayman been replaced by organised gangs with dogs, bolt-cutters and trailers. Many, however, still carry guns. Two weeks ago, farmer Vernon Phipps, 53, who runs 1,000-acre Westhill Farm, near Banbury, Northamptonshire, awoke to find a gang had executed his entire flock by shooting them in the neck to preserve the meat. The raiders had bundled 26 of the best carcasses into a van to sell on the black market. The ones they didn't want they left dead and dying on the grass.
Mr Phipps said: "We think the gunman used a silencer, otherwise someone would have heard the shots. They were also careful to take away the rifle shells. They even shut the gate when they left."
Farms are also being targeted by thieves for their pigs, cattle, bees and there have even been incidents where swans and carp have been plundered from lakes and rivers.
But sheep tend to be their booty of choice because the animals usually live in remote fields far from the farmhouse.
PC Claire Salmon, Northamptonshire Police's Wildlife and Countryside Liaison Officer, who investigated the Westhill Farm shootings, said: "We think organised crime gangs are behind most incidents of sheep rustling but it is often impossible to catch the culprits because they can be very stealthy," she said. "We believe the sheep were taken as dead stock and probably sold from the back of a van. And high meat prices must make it more attractive than before."
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