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B4 The Bell Wednesday Septemeber 8


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Morning Crew- The NY Times is running a feature article this morning whereby Crummy and that Amiable Nit-Wit Myers concede that the "Rebels" control large parts of Iraq including Ramadi, Falluja, Baquba and Samarra. The U.S. won't be ready to assault those areas until the end of the year which could pose a threat to early Iraqui elections. So the Quagmire deepens Huh! Sounds like Nam all over again doesn't it. Get this in the article it states..."Attacks against U.S. Forces rose to 2,700 in August from 700 in March." 400% increase for Gods sake..that means we have lost the battle for hearts and minds folks and are now on the run-Sad very Sad. Window at the Bell on Fibo day for 60 minutes we are going down! ;)

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MH I was reading that while you were posting.  Makes Japan look like one hell of a good credit risk in comparison to the US.

 

In searching World Bank data, I couldn't find any nation with a debt-to-GDP ratio worse than the United States' GAAP obligations ratio of 334%. The closest found is for the West African state of Guinea-Bissau at 224%, but Guinea-Bissau is not rated.

 

Looks like Guinea-Bissau debt is an outright "buy" in comparison.

Yobob,

 

That was the only part of Williams's essay that I didn't agree with. Most governments are using cash accounting, and failing to set aside cash now to fund their future obligations. They are all in bad shape.

 

The other factor that comes into play is demographics. Countries such as Germany, Italy, Spain and Japan face outright population declines, which will destroy their welfare states.

 

That's the one bright note for the U.S. (strictly in a financial sense): population growth is expected to continue at 1% annually.

 

Much as you often say about the fiat currencies, all of the "rich country" governments are in deep negative net worth, with grim financial futures.

 

But because the U.S. currency has been pumped out all over the world for use in trade ... and artificially supported by Mad Al's bond/dollar pool ... the U.S. potentially faces more of a currency and interest rate shock than Europe and Japan.

 

Although they kept an admirable stiff upper lip about it, Britain was knocked to its knees after World War II. The rationing, shortages, and exchange controls on the pound sterling went on for years. The empire was but a shadow of its former self.

 

This would be a shocking adjustment for the USA, but the 'world policeman' role will have to be jettisoned in the wake of the dollar collapse, as scarce forex is husbanded to pay for essential imports such as $100/barrel crude oil.

 

The Arabian nightmare of America imposing democracy on the Middle East is a kind of secondary Bubble, accompanying the post-2000 financial/real estate Bubble II.

 

In E-wave terms, it's a Wave 2 retracement ... just before Wave 3 to the downside takes out ALL of the little Bubble IIs -- the dollar, bonds, real estate, stocks, consumerism, global domination, and BABY BUBBLER DREAMS.

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MH, he did include some off the cuff estimates for some of the "advanced" (senility?) countries and they still fail to fully measure up the level the US has reached.

 

The risk of a US currency / rate shock is very real. So real in fact that those outside the US that have infested in US paper have a very large stake in maintaing the status of the doolar and it's paper. Simultaneously they all have a very large interest in preventing their own currencies from becoming any "stronger". The US is the global consumer, the very heart of the machine. As it falters many of these miracle growth stories out of Asia will go cold. China in particular is in a very precarious position, somewhat similar to where the US was in the late 1920s. In turn the other prospering Asian region (like Australia, Japan, Korea) countries are mostly dependent on either the US directly or indirectly via China. Europe is a side show for the moment.

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The bearishness everywhere on the metals is at ATHs

Is there anyone here, who likes silver or gold, right here right now?

LLD;

 

Read that federal deficit stuff for which Machinehead provided a link.

 

We are rapidly approaching, and may have already reached, the point at which physical survival, rather than pursuit of trading profits, is the primary objective.

 

There's a place for PM possession in the plans of everyone who's serious about making it.

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MH I was reading that while you were posting.? Makes Japan look like one hell of a good credit risk in comparison to the US.

 

In searching World Bank data, I couldn't find any nation with a debt-to-GDP ratio worse than the United States' GAAP obligations ratio of 334%. The closest found is for the West African state of Guinea-Bissau at 224%, but Guinea-Bissau is not rated.

 

Looks like Guinea-Bissau debt is an outright "buy" in comparison.

Yobob,

 

That was the only part of Williams's essay that I didn't agree with. Most governments are using cash accounting, and failing to set aside cash now to fund their future obligations. They are all in bad shape.

 

The other factor that comes into play is demographics. Countries such as Germany, Italy, Spain and Japan face outright population declines, which will destroy their welfare states.

 

That's the one bright note for the U.S. (strictly in a financial sense): population growth is expected to continue at 1% annually.

 

Much as you often say about the fiat currencies, all of the "rich country" governments are in deep negative net worth, with grim financial futures.

 

But because the U.S. currency has been pumped out all over the world for use in trade ... and artificially supported by Mad Al's bond/dollar pool ... the U.S. potentially faces more of a currency and interest rate shock than Europe and Japan.

 

Although they kept an admirable stiff upper lip about it, Britain was knocked to its knees after World War II. The rationing, shortages, and exchange controls on the pound sterling went on for years. The empire was but a shadow of its former self.

 

This would be a shocking adjustment for the USA, but the 'world policeman' role will have to be jettisoned in the wake of the dollar collapse, as scarce forex is husbanded to pay for essential imports such as $100/barrel crude oil.

 

The Arabian nightmare of America imposing democracy on the Middle East is a kind of secondary Bubble, accompanying the post-2000 financial/real estate Bubble II.

 

In E-wave terms, it's a Wave 2 retracement ... just before Wave 3 to the downside takes out ALL of the little Bubble IIs -- the dollar, bonds, real estate, stocks, consumerism, global domination, and BABY BUBBLER DREAMS.

Great summary. This problem will have an accelerating and dramatic impact over time. Because of this, eventually sometime within 10 years if not much sooner, the US$ will lose its status as a reserve currency.

 

GWB riding high on the $1.5 trillion 'dollar pool' created by foreign central banks, has no intenetion of even beginning to address the fiscal problems ahead.

 

On another subject, the Fed reduced its repo pool - from a very high level - by $4.B. However with 2 Treasury auctions scheduled today and one tommorow, they have ample opportunity to make additional permenent additions to the monetary base there. Or in other words they are still trying to accelerate the monetary aggregates - with only limited success recently if you look at something like the MOGuage report.

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Rog, been causally observing the announcements of the advertisers and my thoughts were in line with yours regarding the election spending not showing much of a boost to the revenue projections and therefore connecting the dots meant normal commercial advertising had to be a best flat. Observing more local advertisers it has been apparent that there is a definite lack of advertising and a good portion of the advertising has been from people in the construction industry and the requisite suppliers. If things were as strong as they have been touted in construction, there would have been no need for that advertising. Like I said things are not what they seem to be.

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We are rapidly approaching, and may have already reached, the point at which physical survival, rather than pursuit of trading profits, is the primary objective.

Two possible theories as the U.S. stumbles toward an economic Doomsday:

 

1. It's not a conspiracy, just a regretable case of perverse incentives, money illusion, and failure of individual actors to understand what's happening to the group.

 

2. The people at the top are planning for a global financial collapse.

 

But does it really matter? In either case, a massive population cull is implied, since a crippled economy will no longer be able to support 7.5 billion people.

 

Others have advanced this hypothesis in greater detail, and yobob has provided links before.

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