Debt & Deficits

Did you know that financial institutions all over the world are warning that we could see a mega default on a very prominent high-yield investment product in China on January 31st? We are being told that this could lead to a cascading collapse of the shadow banking system in China which could potentially result in sky-high interest rates and a precipitous plunge in credit. It could be a Lehman Brothers moment for Asia and, since much of that "hot money" has flowed into stocks, bonds and real estate in the United States, that would be very bad news for the U.S. as well. [Let me explain.]

Only when derivatives are discussed by one of the ‘Real Housewives of Atlanta’ posing nude in bed with one of the cast members of ‘Duck Dynasty’ will derivatives receive the attention they deserve.

It now seems like the U.S. might be getting closer to acknowledging that it has a serious fiscal problem; or at least this is what one might infer from the strong support from Congressmen and Senators from both sides of the aisle, thousands of business leaders and economists from all stripes, as well as from fifteen Nobel Laureates in Economics, for a new bill called the Intergenerational Financial Obligations Reform Act or “Inform Act” - in spite of the fact that the proposal is being totally ignored by the mainstream media and, as evidenced by the case of Detroit, the longer we wait, the worse it gets.

The People’s Bank of China is reported by Bloomberg to have said that it will rein in dollar purchases as the country no longer benefits from increases in its foreign-currency holdings...What implications will this have? I believe that we'll see the start of a U.S. dollar collapse. Here's why

Fed Chair Bernanke vehemently denies that the Fed “monetizes the debt,” but our research shows the Fed may be increasingly doing so. We explain why and what the implications may be for the dollar, gold and currencies.

It appears that the American economy — capital management division — has found the long-wished-for magic alternative energy source: horseshit. It is fueling the conversation all over the Web and over the senile mainstream media megaphones. [Let me explain.]

The Fed continues to assert that its Quantitative Easing bond purchases will boost economic growth by lowering borrowing costs for businesses and consumers but the evidence shows that QE bond purchases have actually coincided with increases in long-term interest rates.

Don't believe these big lies - the following charts illustrate just what IS reality. Take a look and then get prepared for when the ---- hits the fan!

Leading up to the short term resolution of the debt ceiling crisis there were many articles about the extent of the national debt of the U.S.. the likelihood of default and, as such, the overall credit-worthiness of the once proud U.S. of A. The fact is, however, that while the U.S. does not rank in the top 10, it is far more financially sound than most other countries. Take a look at where it ranks compared to 47 other countries.

If the debt ceiling deadline (approximately October 17th) passes without an agreement that would be extremely dangerous - and if the U.S. government is eventually forced to start delaying interest payments on U.S. debt (which could potentially happen as soon as November), that would be absolutely catastrophic.