Saturday, July 3, 2010

What the heck, we can't keep Fibbing forever

This excerpt is from Kaimu, a fellow Hawaiian, posting on Bill Cara's blog which is the first blog I ever read.   Cara is top notch, but stressed by recent market behavior and manipulation.   Who isn't?   I got a solid 7 hours sleep, great sleep, and by the end of Friday, I was, well fried by everything including market shenanigans.

On June 30th, Wednesday, the US PUBLIC DEBT as subject to STATUTORY LIMITS flew past $13TRIL in a mighty MOONSHOT! Now this is different than the DEBT CLOCK, which has already reported numbers past $13TRIL, because the Statutory Limits apply at the US TREASURY, not the CLOCK. I have been eying this flirtation with $13TRIL USD for a month or so and there has been this "dance" right up to $13TRIL and then back down. A month or more of this ... Well finally the $13TRIL mark was broken with a one day $166BIL MOONSHOT to $13.15TRIL. That is the most I have ever seen the US PUBLIC DEBT move up in one days time. Prior BIG DAYS was around $80BIL USD. This day, on June 30th, was DOUBLE the past BIG DAYS! More than DOUBLE!!
The "redemptions" just completely broke down in the face of yet another big weekly $111.2BIL USD debt issuance on June 30th, whereby redemptions only covered $33.2BIL. Every week there is this $110BIL+ debt issue, usually every Wednesday or Thursday. This is the same debt issuance that Niall Fergusen has spoken about recently that will collapse the US TREASURY within two years.
Monetary history is replete with debt destroying confidence in currencies. If anyone should know about that phenom its Niall.
Could that have anything to do with the USD crash of late? I mean seriously, with days like June 30th and every seven weeks the US TREASURY prints up way more than a new TARP($700BIL) is the USD and, more to the point, the "debt derivative" really a "safe haven"? Its an IOU for Christs sakes! Its never been anything more than that and it will never be anything more than that, but the safe bet is that it will be much less than an IOU in the future because it will be an IOU ZERO!
So lets now go over and take a "look-see" at how much REVENUES came into the US TREASURY in order to pay for all those outlays, which were recorded at $70.4BIL, along with the $111.2BIL in new debt, Treasury Notes to be exact. Hummmm ... okay gross tax revenues minus refunds equals a "net" tax revenue of $8BIL USD on June 30th. Are tax revenues useless or what? My God ... $8BIL is a pimple on an elephants ass at the US TREASURY! Income tax is a complete waste of time! Anyone who says any different needs to step up to the plate and explain why income tax matters in the face of this much daily debt and out of control spending. Why? Where is the benefit? I'd love to be convinced there is a benefit ... Yep, that's me asking ...
The C WORD is approaching, warp speed, Captain!


  1. well, not that it isn't a serious situation, because it is. and not that, as a country, we aren't de facto bankrupt, 'cause we are. but in global terms, we're the prime example of 'too big to fail'. nobody wants that, not china, not europe, not japan, not the penguins in antarctica (well, ok, they may not care...much). of course, chunks of europe and, I think, china are going to be in dire straits themselves. at the worst, it's a fine recipe for a major war--which happens during big economic blowouts--but at best, we're all flailing around yelling at each other and pointing fingers, none of us with the wherewithal or the will to do anything physically aggressive.

    at the end of the day, the dollar may end up sucking against other major currencies, even though they'll all be sucking pretty badly in their own right, but as to the debt....well, let's look at it this way. britain repaid the last of its WWII rebuilding loan from the u.s. in 2006. on the last business day of the year for some reason...I guess the idea of owing for a 62nd year was just too much to bear.

    the problem I have with people whose hair catches on fire over the debt is that they look at it out of context, just like they do the dollar. in context, which is as part of the rest of the world, the possibilities are very complex and interesting. makes for less lively commentary, though, since 'the sky is falling' has always been a sure crowd-pleaser! hahahahha

    have a great 4th, steve, and god bless america and it's copious red ink.

  2. One of them smart market observers once said....the USD is the currency that I hate the most, except for all the others. Personally, I am thinking that real gold is the currency that I like the most, however, it is hard to pull the trigger and buy at this time, since Big Daddy Pretcher's deflation could kick in. Maybe Pretcher will be right, and in 7 years after gold goes to 5000, it will drop back to 3000 and he will write "See, I told you, deflation"

  3. now, that's one of the funniest things I've read in a while! sounds exactly like prechter's reasoning sometimes. worst-worst case, of course, it could come down to something a lot more valuable than gold....water, for instance. keep your eyedropper handy when you go shopping and never carry more than 2 ounces to avoid

  4. Yeah, not sure if we go directly to MadMax days, but a lifestyle that provides for access to food and water is not, in my humble opinion, overly conservative.


Insightful and Useful Comment!