Government

Articles on the US and foreign governments.

If I wanted America to Fail…

by admin on May 31, 2012 10:43 am · Comments/Link

Written by Morgan Kennedy

It turns out it wouldn’t be so hard to bring America to it’s knees economically, at least that is the viewpoint expressed in this video from Free Market… Simply restrict, overtax, and over-regulate energy and virtually all forms of commerce suffer. Our dependence on fossil fuels from foreign nations makes us increasingly vulnerable to market shocks. (Can anyone say Strait of Hormuz?) Without a constant stream of oil (our drug of choice) America will stop moving in about 3 days. Just imagine, empty store shelves in America, tapped out gas stations, and a complete cessation of vital services like power, water, and garbage. While this situation may be unimaginable to the average blissfully ignorant American, it is a threat that hangs over our heads everyday we remain dependent on foreign nations to supply the vast majority of our energy needs.
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Fiddling while Sacramento burns: California union leaders horrified by use of words “fiscal child abuse”

by Lee on July 25, 2011 22:36 pm · 5 comments

California may be the spot where economic collapse begins and we’re lucky enough have a ringside seat to see it all.

There are days when you wonder if anyone in Sacramento actually comprehends the predicament in which they’ve put the one-time Golden State. Based on a new dispute between legislators, the answer seems to be a resounding no.

Marcia Fritz, CPA and president of the California Foundation for Fiscal Responsibility (which is pushing for major public pension reform) explains:

“I was testifying on problems with using collective bargaining to negotiate pension changes when individuals on both sides gain from benefit changes, and elected officials are bribed through campaign contributions to go along,” Fritz told us. “Since kids can’t vote, and they are the ones who have to pay the unfunded liabilities created by these selfish decisions, it’s a form of abuse.”

So in her testimony, Fritz uttered these words: “It’s tantamount to fiscal child abuse.”

That’s when the feces hit the fan. The state’s social workers are horrified with the supposedy poor choice of words.

“Anyone in the public eye should not be demeaning the plight of victims,” social worker Sarah Taylor says. “It goes against nature, what I see, where the parents are inflicting violence and sexual abuse on children. To compare that to a fiscal system, it’s appalling.”

Of course, the regular cast of characters lined up to denounce Fritz. David Low of the California School Employees Association said Fritz’s simply wants to inflame people’s anger.

California is screwed. Totally, completely, absolutely screwed. No doubt, no question. And yet in these perilous times, a spokesman for the CSEA is worried about offensive words.

What he should be appalled by are the actions of the state legislature.

They’re not guilty of fiscal child abuse. They’re guilty of fiscal murder. First degree.

Source: Orange County Register

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Getting along without government: Can you survive when it all comes crashing down?

by Lee on July 21, 2011 2:00 am · 4 comments

We admit that this is entirely anecdotal and that the Minnesota state government has only been shut down for a few days, but it is nevertheless enlightening to see that chaos doesn’t necessarily ensue when Medium Brother goes away.

The Minneapolis Star Tribune tells what’s happened in the Land of 10,000 Lakes when the state government shut down in a budget dispute between Republicans and Democrats:

Bob Gehlen had a whiskey and Coke in one hand, and a fistful of opinions on the state government shutdown in the other.

“I think we ought to shut down the government for a year,” said the former Marine, standing at the Elks Lodge bar on bingo night. “It really hasn’t had any impact.”

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How do you say “junk” in Gaelic? Moody’s cuts Ireland’s credit rating

by Lee on July 15, 2011 11:00 am · Comments/Link

It’s like watching a magician at work. If you want to see how the trick works, watch everything except what the magician wants you to watch.

In this case, ignore the debt ceiling dispute in Washington, DC and keep your eyes on the rapidly deteriorating situation in Europe and the Euro.

Bloomberg reports:

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And so it begins: Moody’s puts United States on review for possible downgrade

by Lee on July 14, 2011 2:00 am · Comments/Link

Hydra was the terrifying, many-headed monster of Greek mythology. When one of the heads was cut off, two new ones sprouted. For our purposes today, class, let’s think of the problems facing the United States economy as the Hydra.

For those of you who may think the use of anything Greek in this situation is an unfortunate error on our part, feel free to go with a Whack-A-Mole analogy. You can swing that hammer all you want, because the mole is going to pop up somewhere else as soon as you do.

Either analogy works to describe the situation in which the United States currently finds itself. And Moody’s just looked down the hole we dug for ourselves and said, “Sure is deep.”

Moody’s Investors Service put the U.S. under review for a credit rating downgrade as talks to raise the government’s $14.3 trillion debt limit stall, adding to concern that political gridlock will lead to a default.

The Aaa ratings of financial institutions directly linked to the U.S. government, including Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks, were also put on review for cuts, Moody’s said in a statement today.

The U.S., rated Aaa since 1917, was put on review for the first time since 1995 on concern the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody’s said. The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured.

“It certainly underscores the importance of passing the debt ceiling and not putting us in default status, and making sure there’s a longer term fiscal plan to contain spending and the deficit we’ve been running up over the last few years,” said Anthony Cronin, a Treasury bond trader at Societe General SA in New York, one of the 20 primary dealers that trade with the Federal Reserve. “Maybe it’s the impetus to say we’ll need more of a concession.”

Please allow us to translate the phrase “more of a concession”:

“The Americans are about to begin paying through the teeth. We just don’t know if those teeth belong to the Hydra or the mole.”

Source: Bloomberg

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Uncle Sam just flushed another $780 Million down the Greek toilet

by Lee on July 12, 2011 1:00 am · 1 comment

It’s the greatest Greek tragedy since Oedipus Rex. Except in this case, the only incest occurs between bankers and politicians.

We’re broke. So in reality we borrowed $780 million from China to give to Greece which has no hope of ever repaying it. If there’s any rational thought in that sequence of events it totally escapes us.

The IMF is delighted to announce that it just approved a €3.2 billion disbursement of cash for Greece, its fifth, as part of the €12 billion in money that Greece needs in order to continue operating in the months f July and August. And just for what purpose will this money be used, one may ask?

Well, as explained a few weeks ago, in Greek Math: €12 Billion In, €18.2 Billion Out the entire amount will be promptly recycled by global financial institutions in the form of debt maturities and interest payments, which amount to €18.2 billion in the months of July and August. Simply said ECB, EU and IMF money in, money owed to bankers out. The kicker: 17.09% of the money coming from the IMF, comes from, that’s right dear US taxpayer, you (and since 21% of the quota contributions allocated to the IMF are deemed “non-usable”, the actual number funded by the US is likely much higher).

But this plot has a bonus kicker: as we reported on Wednesday, the actual Greek debt is no longer owed by European banks to the extent it had been previously expected: a development that threatens to scuttle the entire second Greek bailout plan as currently proposed.

So as the banks have been selling Greek debt, who has been buying? Mostly hedge funds, such as everyone’s favorite John Paulson. So to recap: US taxpayers have just paid out about $780 million of the $4.6 billion in order to fund interest owed to… hedge funds.

On second thought, there is sex involved in this Greek tragedy. Unfortunately, it’s the American taxpayer that’s getting screwed.

Source: ZeroHedge.com

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More smoke and mirrors: Moody’s warns on China’s local debt

by Lee on July 8, 2011 2:00 am · Comments/Link

Between checking the health of patients who have already achieved room temperature in Europe and trying to peer through the smoke and mirrors obscuring China’s economic health, these are very busy days for the analysts as Moody’s.

“China may have understated the debt load of local governments by Rmb 3,500bn ($541bn), a hole in public finances that is likely to inflict damage on banks, Moody’s Investors Service said on Tuesday.”

Earlier in the year, China reported that provinces, cities and counties owed Rmb10,700bn. Analysts dutifully praised the government’s authoritative reportage and nodded in agreement that the debt levels were manageable.

But now Moody’s is having second thoughts. The rating agency upgraded China’s sovereign rating just last year, but now says its audit may have missed a swath of highly “problematic” loans.

“We conclude that the potential scale of problem loans at Chinese banks may be closer to our stress case than our base case. This is clearly a negative trend for creditors,” said Yvonne Zhang, one of the authors of the report.

Three words: House of cards.

Source: Financial Times

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How do you say junk in Portuguese? Moody’s downgrades Portugal to Ba2 with a negative outlook from Baa1.

by Lee on July 6, 2011 15:39 pm · 2 comments

These are dark days in Portugal. And, unfortunately, the latest news is probably a omen of things to come for the United Sates.

Moody’s has downgraded the Iberian basket case’s long-term government bond ratings. What was Baa1 is now to Ba2. And to make matters even worse, the outlook was downgraded to negative. The government’s short-term debt rating was also downgraded to (P) Not-Prime from (P) Prime-2.

What prompted the downgrades? Two things:

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An interview with Dr. Doom: Marc Faber talks about why the dollar is finished and other interesting subjects

by Lee on July 2, 2011 1:00 am · 3 comments

Dr. Marc Faber is known as Dr. Doom because, unfortunately, he’s a contrarian whose dark forecasts have been right on the money. He publishes a pithy monthly investment newsletter called The Gloom, Boom & Doom Report.

Here are five questions and answers we plucked from a recent interview with the Daily Bell:

Question #1:

Daily Bell: Do you still expect hyperinflation?
Marc Faber: In my view, the debt level, especially in the US, if we include the unfunded liabilities of Medicare, Medicaid, Social Security and these entitlement programs, is beyond repair. And this will necessitate printing more money. Also, in my view, there is no real political will to address the issues, because who ever would cut entitlements, will not be re-elected. So we have a tyranny of the masses.

[Read the other 4 interesting questions and answers...]

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Oil price jumps: So much for that release of oil from the Strategic Petroleum Release

by Lee on July 1, 2011 1:00 am · Comments/Link

Just a week ago, we were told that releasing oil from the Strategic Petroleum Reserve was the answer to all our problems.

It would, we were told, cause oil prices to drop dramatically, giving consumers a little extra jingly in the pockets and cause the economy to rebound with a vengeance.

So much for that theory. Zero Hedge explains:

… the IEA’s action has now been fully priced in and WTI is back to precisely where it was before the IEA announcement on Thursday. Which means that what some said was a shadow QE (and don’t get us started on all the mainstream media “journalists”, among which Bloomberg and CNN, who continue to confuse QE Lite with something they call QE 2.5) had a half life of just over 3 days. Expect future intervention half lives to continue declining, as the criminal banking cartel’s ammunition is now down to just one thing, the only thing, printing.

In other words, we’re in a gunfight and we’re out of bullets.

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Source: Zero Hedge

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Greek documentary says the rest of Europe is “torturing” Greece

by Lee on June 29, 2011 9:59 am · 2 comments

The Greeks are not happy that they’re being asked to live within their means. In fact, as far as they are concerned, such a request is tantamount to torture.

Debtocracy is a documentary that gives Greek artists and activists – two groups never known for their attachment to reality – the chance to say that the bailout is a scam designed punish the Greek people in order to protect French and German banks.

Pity the poor Greeks, forced to work until the age of 50 and then expected to scrape by on their meager $100,000 a year pensions while their German counterparts continue working into their dotage to make it all possible.

Torture, indeed.

Here’s the entire 75-minute documentary, complete with English subtitles.

H/T: Business Insider

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Socialism at work: A graphic explanation of why Greece is screwed

by Lee on June 29, 2011 1:00 am · 3 comments

Remember the old Dire Straits song “Money For Nothin’”? I think it should become the official Greek national anthem.

As you can see in this chart, the Greek Parliament is dominated by socialists, communists and other leftists who seem to think it’s possible for every Greek citizen to get their money for nothing’. No word on whether they also get their chicks for free, but we wouldn’t be surprised.

Maggie Thatcher said, “The problem with socialism is that you eventually run out of other people’s money.” In this case, the money Greece is running out of is French and German.

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Source: Global Macro Monitor

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21 countries most likely to bring down the financial sytem by defaulting on their debt

by Lee on June 24, 2011 1:00 am · Comments/Link

The good news, we suppose, is that the United States didn’t make the list. Of course, from our point of view that’s more the result of how screwed up other economies are than any glowing recommendation of our fiscal lunacy.

The countries are ranked in order of the cost to insure each country’s debt. Business Insider admits it may not be a perfect method, but they trust in the market’s ability to judge risk.

The list crosses all economic systems, the poor and the wealthy, communists, socialists, Islamic republics, democracies. But you’ll note that it doesn’t include is any Asian countries.

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PIMCO honcho predicts that Greece will default and others will follow

by Lee on June 23, 2011 1:00 am · Comments/Link

PIMCO has an unparalleled record predicting bond movements. They didn’t get to be the world’s largest bond fund by being wrong.

Mohamed El-Erain, PIMCO’s Chief Executive, is now predicting that Greece will be the first, but definitely not the last, European to attempt to solve its problems by default on its debts.

CNBC reveals El-Erain’s thinking:

“For the next three years, we’re going to see different economies work out different problems. For European economies, especially Greece, it would be through default,” Mohamed El-Erian, chief executive of PIMCO, told reporters in Taipei on Wednesday via a video conference.

This isn’t the first time El-Erian has predicted that Greece would default. He thinks the other European nations (read: Germany) are pounding billions down a rat hole by putting more money into the wastrel nation.

And on an even less cheerful note, El-Erain said it was “unlikely but not impossible” that a Greek default would trigger another global financial crisis.

Listen carefully to what El-Erain says. Betting against him and Bill Gross is not a wise investment strategy.

Source: CNBC

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S&P warns again: The US might lose its AAA rating

by Lee on June 22, 2011 15:16 pm · Comments/Link

In case you weren’t paying attention a couple months ago when S&P warned that the United States was in real danger of losing its AAA rating, they decided say it again. In even stronger terms.

The risks of the U.S. losing its prized triple-A rating over the medium term have increased as the country faces a political impasse and nears its debt ceiling, Standard and Poor’s said on Tuesday.

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