I think Europe is likely to hit a real wall by the end of 2013 or the middle of 2014, if not sooner. Ditto for Japan. I am afraid that the bond marketeers will look at their losses in Europe and Japan and tell the US government something like this:
"We have already watched the movies about European and Japanese debt. Those did not have happy endings. The US debt movie seems to be based on the same script; so if you don't mind, since we know how this ends, we are going to slip out during intermission."
Related - Chinese banks and companies looking to seize steel pledged as collateral by firms that have defaulted on loans are making an uncomfortable discovery: the metal was never in the warehouses in the first place.
This is an incredible article by Maudlin. Lays it out clearly and fully, that the US must deal with its deficit.
He writes: "I would prefer to get rid of almost all tax deductions, except the earned-income tax credit, and end up with a lower top rate. The large majority of tax deductions favor those with higher income, anyway. If I really got my wish, there would be some type of consumption tax (like a VAT) and much lower income taxes across the board, and perhaps we'd even get rid of the Social Security tax as part of the deal, which would clearly help lower-income citizens. For what it's worth, consumption taxes have less of a negative impact on the economy than income taxes.
Neither the Romney proposed budget nor the budget Obama submitted to Congress (and that did not get even one positive vote from his own party) is politically doable, and both have serious problems in dealing with the deficit.
To get to a real budget solution is going to take a compromise, which means some combination of spending cuts and tax increases. It must deal with entitlements and health care."
Excellent. Obama won't touch the entitlements. Do Americans realize how serious the debt crisis is? I wonder if those on entitlements are aware or are indifferent? It's like the teenager driving 150 km an hour; they believe that accidents can't happen to them.
Will people accept Romney, a private plodder, or will they instead, continue to follow the Boy-King with his waves and laughs and 'shout-outs'?
Speaking missing steel, I was wondering if the missing maple syrup in Quebec was similar. Did somebody steal millions of pounds of the stuff, or was it never there in the first place?
http://www.businessweek.com/articles/2012-08-31/maple-syrup-heist-leaves-quebec-in-a-sticky-mess#r=hpt-ls
Yup there is a pattern here. I was in Vietnam this year and was told by a well informed local, as we looked at the horrifying pollution near one of their coal fired utilities, about how these totalitarian government officials steal from the country.
The General Manager of that utility sells local Vietnam coal for his pocket and then imports coal for the utility from Indonesia.
I can image the generals of Egypt who control the economy are doing the same thing by depriving the local entrepreneurs of the necessary law and order to make commerce viable and employ and build a middle class.
One more time with feeling: until the Bush Doctrine about universal liberty gets championed throughout the world we will have more uncomfortable discoveries that the metal was never in the warehouses in the first place.
Hint: unfunded entitlements used to buy votes in the West is not liberty, the point here is that bond marketers will start viewing sovereign bonds as empty warehouses. The game is coming to an end even if Obama gets re-elected like McGuinty did.
Will people accept Romney, a private plodder, or will they instead, continue to follow the Boy-King with his waves and laughs and 'shout-outs'?
Posted by: ET at September 18, 2012 10:10 AM
And -- you have to admit it -- the mega-smile. Never forget the mega-smile: every psychopathic con artist's principal weapon. Little old lady, bewildered after she has been fleeced of her life savings: "He was such a nice man!".
Someone here the other day said that Obama winning a second term somehow fits the irreversible decline scenario.
Via Drudge:
Randy Newman has a new "satirical" song out: I'm Dreaming of a White President.
I'm shocked! Whole bunch of finger pointing coming to a Chinese SOE - soon and since even the banks are "part" of the government, wonder when someone will root around in their "warehouse" to see if there's any "money" there?
Where did it all go?
We'll get nothing but sunshine and rainbows about the economy from the media who want Obama elected, then once Romney wins the crap will hit the fan and the official Romney Recession Watch(tm) will start.
It will be nothing but doom, gloom, and more doom from the idiot media.
I'm buying puts for after January 2013.
We might as well make some money from their lies.
Romney said he'd punt Helicopter Ben so he knows he has to try to get Obama re-elcted as well.
I have read Mauldin for years and he has warned about Euroland for at least that long. The irony that the social engineers don't quote their standard European examples of progressive nirvana anymore escapes most people.
The familiar struggle between left (Obama) vs right (Romney) is mostly BS. Human weakness and the ever lasting desire for something for nothing usually wills out. It makes no difference the 'stripe' of the politican that is making that promise. It has been pretty equal down thru the generations. I might have a little more faith in Romney doing 'the right thing' but won't be surprised if he does not.
Like many on here have stated I will prepare for the worst and not trust government to do the best.
"...the metal was never in the warehouses in the first place."
In other news, people of the progressive Left continue to mock Christians for their quaint notion that lying is a sin.
People with money in gold ATFs would be advised to go have a look at -their- warehouses, methinks. Remember folks, gold-plated lead bars have a different specific gravity than actual gold bars.
Sounds like the federal reserve, there is no reserve of gold to justify the american dollar, but most wrongly think there is.
Phantom Gold is not magnetic, if a magnet sticks to your gold, it's not, it's a base metal. Same with silver..
Re Phantom, "gold-plated lead bars have a different specific gravity than actual gold bars". Discovered supposedly by Archimedes.
Mauldin is wasting his time, and so is Kate in quoting from him. While he - and she - is correct,
the US and Europe are always going to fail "next month", never now, and any sense of alarm is dulled with repetition.
Do we need more variations on the same theme? Those who get it have got it; those who don't, will understand perhaps when "next month" actually arrives; or probably not.
The only reason things haven't gone right to hell is that everywhere everything sucks, so there's no sure place for investors to take their money. That will change as second world nations shape up. You can't prop up a broken house of cards for too long.
I hearn rumblings from the Fed that they have abandoned the policy of QE-3 for ongoing (read: endless) Quantitative easing - and endless stream of worthless paper dollars and debt instrument assets - now there's stability for ya.
Insider predictions are the next president will preside over long term crippling stag-flation. Get yer wheelbarrows ready folks, you'll need 'em to cart all the cash it takes to buy a loaf of bread.
Reminds me of the scene in Fargo when the guy finances a loan with non-existent inventory and then has to come up with the VINs. I guess some places don't get that fussy about collateral.
Any liberals who keep saying "this is how the US should operate" want to speak up now?
So is the Zero coming out with the first 10B yank dollar bill before or after the election?
"I think Europe is likely to hit a real wall by the end of 2013 or the middle of 2014, if not sooner."
They hit it long ago they are now wearing the engine out trying to drive through.
"People go broke slowly, then all at once" Hemingway
sovereigns too...
I don't think it's possible to state how offensive it is to have a Fed offering QE-3.
to have a Fed offering QE-3.
They built a boat?!
Seriously, if you have a strong stomach, look up 'rehypothecation', which I was astounded to learn, is allowed to be done 'infinitely' in the UK. If you think the Central Banks are running a ponzi, they're pikers to these guys.
Copper, a very high value hard commodity, may also have gone poof along with the steel in warehouses.
Copper is the largest, most vastly held and leveraged commodity in China.
I'm sure inventories are just ducky.
@The Phantom:
Interesting that a fake gold bar scandal has just hit New York's jewelry district:
http://www.zerohedge.com/news/tungsten-filled-10-oz-gold-bar-found-middle-manhattans-jewelry-district
Tungsten weighs close to what Gold does, and like gold isn't magnetic.
"What makes [this] so devious is a real gold bar is purchased with the serial numbers and papers, then it is hollowed out, the gold is sold, the tungsten is put in, then the bar is closed up. That is a sophisticated operation.
MTB, the Swiss manufacturer of the gold bars, said customers should only buy from a reputable merchant. The problem, he admits, is Ibrahim Fadl is a very reputable merchant."
So just how much fake gold is out there? And how do you tell if that gold bar you're buying is real?
Jesus said that "a house divided against itself cannot stand".
A world where everyone is trying to game the system -- and everyone else -- cannot stand. Let's hope people start to realize that.
antelope @ 11:18PM
...as in a pure tungsten bar has a specific density only 0.37% less than a pure gold bar.
New gold bars and coins bigger than one ounce should not be trusted unless precision-weighed first.