March 12, 2010 – "When debt to GDP reaches 90%, as it looks like it will, growth slows and bad things happen. That’s the potential going forward, not a default." Bill Gross. managing director of PIMCO.
I just finished reading the latest mailing written by my old friend, Sir Harry Schultz of Monaco and most of the nations in Europe. Harry has lived in more countries than I can name, and he has a great international view of the world.
I first met Harry back in 1961. At that time Harry owned a string of newspapers in California. Thus, Harry was a very experienced news man. I’ve been in touch with Sir Harry for half a century. During those years Harry has written a number of books and published his international HSL report. Harry watches and covers just about everything — with special emphasis on gold. Like your editor, Harry is not optimistic about the way the world is heading.
Harry writes, "I’m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt they’ll print more money and then you get a very high inflation rate; then it gets to depression with high inflation and eventually they’ll go to war." I might add that Marc Faber (who is now quoted everywhere) believes social obligations will cause western countries to default. Marc believes that in time all the PIIGS will default. "They just won’t be able to pay." Marc thinks all governments should raise the retirement age to 70 and cut back on social spending.
By the way, Harry Schultz has one great advantage. He publishes his voluminous reports only "when needed." Not so in the case of over-worked Richard Russell and Dennis Gartman. We both publish every day. Dennis provides so much all-around information (politics, commodities, stocks, bonds, opinions) that I don’t know how he does it — and to top it off, Dennis is a constant traveler and speaker. Amazing. Of course, Dennis is younger than I am and probably has a lot more energy than your editor.
As I’m writing, I note this really frightening news — "The US budget deficit for February was a record $221 billion "as the US boosted spending to help revive the economy." Figures show the deficit for this year will likely surpass the record $1.4 trillion in the fiscal year that ended in September."
As I’ve said before, I think the nation would have been better off in the end if the Fed and the administration had backed off and allowed the primary bear market to run to its conclusion. Sure we would have endured a vicious depression, but we would have survived. Wall Street would have suffered numerous bankruptcies and those institution that were "too big to fail" would have received their just treatment — they would have failed. We survived the 1930s, and we would have survived the 2010s. As it is, nobody is certain about what lies ahead. I see a period of deflation ahead, followed by the Fed’s frantic efforts to overcome deflation. How will the Fed fight deflation? They’ll do it "the Fed way" by quantitative easing, better known as printing money, creating more billions (trillions?) of fiat currency "out of thin air" with aid of computers..
Link Here..
The CBO (Congressional Budget Office) has projected that the long term projections that the US will NEVER have a balanced budget ever again. By 2012 our national debt will be 19 trillion(1/3 of the worlds GDP). By 2014 we will spend at least 1/3 of taxpayer dollars just to pay the INTEREST on the debt alone. We are heading towards a debt collapse very soon. We are now at a point where if the U.S. government taxed Americans 100% of their income, the tax receipts generated would not be enough to balance the budget. Likewise, if the U.S. government cut 100% of its spending including defense, but kept paying Social Security, Medicare and Medicaid, we would still have a budget deficit. This is not good at all.the one thing that pisses me off is that the people that say cut spending will not want their benefits be touched or want us stop go to war around the world. this is why we are going to collapse. Americans had 60 yrs of prosperity and have been wired to believe that nothing will change. Not only is our economy collapsing our education system is a mess we can not compete. Dont believe me call an IBM operator and tell me what nationality picks up the phone. We are living on borrowed time. The american people are dumb and frighten easily and will not question their government or political party. We can say cut spending but when you have to tell them they will not get any social security,welfare or unemployment benefits they will riot in the streets. Its going to be very ugly. We have only four years to fix this but there are so many shoes to drop(alt-a option arm resets,commercial real estate resets in 2011,Pension crisis,FDIC,FHA,PBGC bailouts,State debt crisis and bailouts) that we will spend even more until our currency is nothing. as the wise Ludwig Von Mises said "There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
ReplyDeleteSo now they're using Bill Gross to pimp the idea that there will be no default.
ReplyDeleteOk.
Mark Faber thinks all governments should raise the retirement age to 70
ReplyDeleteWhat an ass... ya Mark keep everybody chained and pushing that millstone till they drop in their tracks.
The solution is not in piling more crap on the citizens back.
The solution is purging the corrupt governments.
The solution is Revolution.
Damn was hoping to live and die happy...But it seems my last 30 years or so will be spent learning a new trade and surviving...I'll be okay as for many other?
ReplyDeleteI doubt it too many have lost not only their spirirtual strength but their intelligence...Ever talk to a teen or 20 something year old?
Lack of intelligence, manners, hygiene and skills...Ha well I always did want to live in interesting times...And baby it will get hella interesting...Disasters, wars, famines, economic collapses worldwide.
This is some crazy biblical end of time spooky story coming reality...To all I wish good luck in the near future...See you on the other side.
@ 7:16, Fantastic summary.
ReplyDeleteAfter reading your comment, this popped into my head...
Row, row, row your boat,
Gently down the stream.
Merrily, merrily, merrily, merrily,
Life is but a dream.
.
It just gets better and better. Here is a credit union in Nevada THAT DOESN'T WANT YOUR SAVINGS DEPOSIT. LOL-LOL
ReplyDeleteCredit union: Pul-lease take your money
Nevada Federal Credit Union has a deal for big savers: Withdraw your money and you'll get a bonus.
The credit union, one of the largest in Nevada, figures that deposits from members who don't have a checking account, mortgage loan or any other products are expensive.
...
So the credit union will pay these savers a $25 bonus for withdrawing amounts between $25,000 and $49,999. The bonus jumps to $50 for amounts up to $74,999 and goes to $75 for larger sums.
BWAHAHAHA
10:59,
ReplyDeleteSo I guess you just keep withdrawing and redepositing and withdrawing ad nauseam.
Nice little income stream. :)
Anderson: 2 words - well said.
ReplyDeleteMy elderly next door neighbor has confessed he is completely broke. The only remaining income is Social Security and that is less than his budget requires.
ReplyDeleteMy elderly neighbor on the other side has a car that needs a radiator, he can't afford to fix it. I have offered to fix it, but he has yet to allow me to do so, perhaps it's all about his personal values and not wanting to burden me with his problems.
My other neighbor is nearly broke after a back surgery. He and his wife are not "living", only "surviving". He can't even afford to buy ammo for his .357.
I have been unemployed for 2 years. My garden is not big enough to feed us, only supplement our grocery budget.
I suggest you all read "Patriots" by James Rawles. It's not longer a matter of "if the shit hits the fan", it's WHEN the shit hits the fan" I'll tell you again, look at the LA riots of 1992, there are plenty of videos on YouTube. This will happen on a National scale.
Are you ready?
When it happens, it will no longer be a "black thing"
ReplyDeletehttp://www.youtube.com/watch?v=1bEG2AMaM7w
True enough, it will not be totally a black thing but I promise you it will be mostly a black, hispanic thing since these are the places.....i.e. inner cities, slums that they tend to dwell. Rodney King? Shit, I have said it before and I will say it again, what will probably happen will make the King riots look like a friggin block party by comparison. They will kill each other for food, goods, etc before martial law moves in and the FEMA camps are put into action.
ReplyDeleteof course this will all be viewed on your new apple Iphone at 5 or 6 hundred a pop. can't do without those video phones and your high speed internet service. and I guess it will replace that 5oo buck Ipod, that you can now trash.
ReplyDeleteI guess Steveie is about ready for another front of the line liver transplant.
9:43,
ReplyDeleteCool!
Blogwalking here from Indonesia. How do You do?
ReplyDelete