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U.S. Treasury Secretary Admits U.S. Default is Imminent
By James West
Timothy Geithner, U.S. Treasury Secretary, admitted in a letter to congress dated January 6th, that the United States Treasury would be forced to default on its credit obligations without clearance from congress to raise the amount of money tha the treasury is allowed to borrow.
After citing a list of “extraordinary measures” congress has had to resort to int he past to avoid entering a state of defualt, Geithner stated, “Once these steps have been taken, no remaining legal and prudent measures would be available to create additional headroom under the debt limit, and the United States would begin to default on its obligations. The extraordinary measures include, “suspending sales of State and Local Government Series (SLGS) Treasury securities; suspending reinvestment of the Government Securities Investment Fund (G-Fund); suspending reinvestment of the Exchange Stabilization Fund (ESF); and determining that a “debt issuance suspension period” exists, permitting redemption of existing, and suspension of new, investments of the Civil Service Retirement and Disability Fund (CSRDF).
That the United States has already defaulted on its obligations is beyond dispute, at this point, as its the rate at which its debt service obligations is growing exceeds the rate at which the United States GDP could possibly grow, meaning that, without drastic cuts to governmenbt spending, the debt can only continue to grow.
Before our very eyes, the so-called leadership of the world’s largest economy is intentionally bankrupting the country and devaluing its currency in what can only be a precursor to rampant inflation. Since the integrity necessary to manage this problem does not exist within the United States political system, the rest of the world has no choice but to stand by and watch the value of their United States Treasury Bills diminish incrementally on a daily basis. Selling them will only exacerbate the problem, but the question must be asked, how long until the remedy is preferred over the miserable condition?
Geithner goes on to say, in a remarkable baring of the national soul,
However, if Congress were to fail to act, the specific consequences would be as follows:
The Treasury would be forced to default on legal obligations of the United States, causing catastrophic damage to the economy, potentially much more harmful than the effects of the financial crisis of 2008 and 2009. Read more…
Fed chief expects high unemployment, economic growth in 2011
Vicki Needham
Unemployment will remain high, the nation’s economy could expand by 4 percent and interest rates may need go up, Federal Reserve Bank of Philadelphia President Charles Plosser said Monday.
“If economic growth in the United States continues to gain traction and the prospects begin to look ever better, it might be time for us to begin thinking about how do we begin to gradually take our foot off the accelerator,” Plosser told reporters after a speech at the Central Bank of Chile in Santiago, according to news reports.
Plosser said he may favor a rate increase if economic growth necessitates a change.
“It might. I’m not going to rule that out,” he said.
The central bank has said that it plans to keep short-term interest rates low for an “extended period.”
During Monday’s speech, Plosser also predicted that the U.S. could grow between 3 percent and 4 percent this year.
The Fed’s plan to purchase $600 billion in government debt will probably continue through June while the nation’s 15 million unemployed look for work, although Plosser didn’t rule out pulling the stimulus funds back earlier.
“It could end earlier if economic conditions call for it, but right now I’m not sure that that’s the most likely outcome,” he told reporters. “It obviously creates challenges for some countries because of appreciating currencies. But I think that will pass. Those are short-run issues.”
Plosser has expressed concern about whether the Fed’s quantitative easing, also known as QE2, will spur economic growth while lowering the jobless rate that has remained above 9 percent for 20 months.
“Monetary policy is not going to be able to speed up the adjustments in labor markets or prevent asset bubbles, and attempts to do so may create more instability, not less,” he said.
“Expecting too much of monetary policy will undermine its ability to achieve the one thing that it is well-designed to do — ensuring long-term price stability.”
QE2 has brought harsh criticism from some lawmakers on Capitol Hill who argue that the plan could devalue the dollar and cause inflation.
China’s coming fall
Like the Soviet Union before it, much of China’s supposed boom is illusory — and just as likely to come crashing down
In 1975, while I was in Siberia on a two-month trip through the U.S.S.R., the illusion of the Soviet Union’s rise became self-evident. In the major cities, the downtowns seemed modern, comparable to what you might see in a North American city. But a 20-minute walk from the centre of downtown revealed another world — people filling water buckets at communal pumps at street corners. The U.S.S.R. could put a man in space and dazzle the world with scores of other accomplishments yet it could not satisfy the basic needs of its citizens. That economic system, though it would largely fool the West until its final collapse 15 years later, was bankrupt, and obviously so to anyone who saw the contradictions in Soviet society.
The Chinese economy today parallels that of the latter-day Soviet Union — immense accomplishments co-existing with immense failures. In some ways, China’s stability today is more precarious than was the Soviet Union’s before its fall. China’s poor are poorer than the Soviet Union’s poor, and they are much more numerous — about one billion in a country of 1.3 billion. Moreover, in the Soviet Union there was no sizeable middle class — just about everyone was poor and shared in the same hardships, avoiding resentments that might otherwise have arisen.
In China, the resentments are palpable. Many of the 300 million people who have risen out of poverty flaunt their new wealth, often egregiously so. This is especially so with the new class of rich, all but non-existent just a few years ago, which now includes some 500,000 millionaires and 200 billionaires. Worse, the gap between rich and poor has been increasing. Ominously, the bottom billion views as illegitimate the wealth of the top 300 million. Read more…
Australian ‘inland sea’ flood threatens towns
MELBOURNE — Australia’s flood crisis deepened Saturday with a giant “inland sea” threatening more communities in the southeast, as officials continued the grim search for bodies in worst-hit Queensland.
Sandbagging was underway in some villages in Victoria, where weeks of floods have affected as much as one-third of the state, with swollen rivers overflowing in 75 towns and flooding some 1,770 properties.
“We know that this is the most significant flooding in the north west of Victoria since records began… about 130 years ago,” a spokeswoman for the State Emergency Service told AFP.
“We are still on alert for towns in the north of the state.”
Floodwaters which national broadcaster ABC described as a moving “inland sea” covering an area 90 kilometres (56 miles) long and 40 kilometres wide, were threatening towns around Swan Hill, some 300 kilometres northwest of Melbourne.
“In the actual Swan Hill township itself, we are very confident that the levee system around the town is built to a very high grade and will protect the township,” Mayor Greg Cruickshank told ABC radio.
But rural and outlying areas “will have significant amount of inundation through them,” he said.
While thousands of people around the state have been urged to evacuate, emergency services warned that those people who choose to remain on their properties in the rural areas could be stranded by the floods.
“A number of these communities will be isolated for days as this huge amount of floodwater comes through,” SES spokesman Kevin Monk said. Read more…
Einstein Gives Humans 4 years After Bee extinctions
Reuters (Nov 25, 2008) – LONDON – Where in the United States, fruit farmers pay to have bees trucked thousands of miles to pollinate their crops and in parts of China, humans with feather dusters have taken on the task, in Britain most bees go nature’s way… “We are extremely aware of the enormous threat there is to honey bees and the huge reduction in population,” said Adrian Barlow, chief executive of trade group English Apples and Pears. “It is something we are very concerned about.”
www.reuters.com
Albert Einstein said if the honey bees were suddenly gone mankind would have about 4 years left to live. Well, the honey bees are going extinct now and at the present rate in another year or so there will be no more honey bees left on earth. One year from now plus another 4 years gives us the year… Read more…
Powdermill researchers to study ‘alarming’ decline of bees
By Rick Wills
As four previously abundant bumblebee species near extinction in the United States, it is becoming clear how little is known about native bees — which experts say often are more efficient at pollinating some crops than honeybees.
The Powdermill Nature Reserve in Westmoreland County, part of the Carnegie Museum of Natural History, plans to take a hard look at native bees.
“There are 20,000 species of bees in the world, and we know almost nothing about native pollinators,” said John Wenzel, director of the Center for Biodiversity and Ecosystem Management, the second of five Powdermill centers that opened recently. “We have only scratched the surface.”
A Penn State study released last month confirmed agriculturally important bumblebees are not just disappearing here but worldwide. Researchers called the findings “alarming.”
“The disappearance of these species happened very quickly, and no one really knows why,” Wenzell said.
The study found that native pollinators, like wild bees and wasps, are infected by the same viral diseases as honeybees and that these viruses are transmitted via pollen. Read more…
Obama Signs New Executive Order; Congress Officially Irrelevant
Are you ready kids? (Whenever I say this to the RedLemur, he knows it’s gonna be bad…)
Barry Soetoro, current resident of the White House, has signed an Executive Order directing federal agencies to review regulations and produce a plan for changes to the current regulations based on the best science available.
Bye-bye Congress.
(All emphasis from this point on is the editor’s and is meant to highlight portions that require reading!!!)
The White House Office of the Press Secretary
Improving Regulation and Regulatory Review – Executive Order
By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to improve regulation and regulatory review, it is hereby ordered as follows:
Section 1. General Principles of Regulation. (a) Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation. It must be based on the best available science. It must allow for public participation and an open exchange of ideas. It must promote predictability and reduce uncertainty. It must identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends. It must take into account benefits and costs, both quantitative and qualitative. It must ensure that regulations are accessible, consistent, written in plain language, and easy to understand. It must measure, and seek to improve, the actual results of regulatory requirements.
(b) This order is supplemental to and reaffirms the principles, structures, and definitions governing contemporary regulatory review that were established in Executive Order 12866 of September 30, 1993. As stated in that Executive Order and to the extent permitted by law, each agency must, among other things: (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, Read more…
Earthquake hits west of Scotland
The British Geological Survey (BGS) said the 3.5-magnitude quake struck in Glenuig, 25 miles (40km) west of Fort William in the Highlands at about 0600 GMT.
People in Inverness, Skye and Oban, reported feeling tremors, which were experienced across the west Highlands.
The BGS said a such an earthquake might be felt up to 120km (74 miles) away but was unlikely to cause much damage.
It comes two weeks after residents in the North Yorkshire town of Ripon experienced a similar sized quake on 4 January.
Seismologist Davie Galloway said the UK tended to experience such quakes, on average, about once a year.
He said: “This quake was recorded on our instruments in Wales and in Shetland but it was actually felt by people 120km away in Inverness.
“We had a few calls from people who said they felt a vibration in their beds and also from people who said their cats were going mad.”
Mr Galloway said the quake originated from 16km below the ground.
He added: “Britain is criss-crossed by many geological faults but fortunately we are some distance away from the plate edges where most activity is experienced.”
Gold: Major Buy Signals!
Gold and Precious Metals
UUP (US Dollar Proxy) Chart.
US Dollar Analysis:
- The Dollar decline on soft volume over the past few days has given me a buy signal. I use our US dollar signals to play the dollar, and to coordinate your Gold and Gold Stock purchases.
- Let me be clear; the move up here in the dollar is nothing more than a dead cat bounce, so don’t play it too big. When looking at the decline in the dollar from July through November, the dollar dropped nearly 15%. The most troubling sign I see for the USD over the longer term is the distribution in the ensuing rally in the Nov- Dec time frame. The dollar is in a major bear market, and rallies in bear markets tend to be sharp, and can end long before they are “supposed to”.
- The performance of the US Dollar over the last ten years is pathetic. The dollar has lost massive purchasing power against almost every single other asset. Consider: Crude Oil is up over 250%, and the Commodity Agricultural Raw Materials Index is up 57%. Many other commodities are up over 200% against the dollar, in the same timeframe. Why has this happened?
- The answer is: Debt Accumulation. Debt is growing, so the fundamental causes of the dollar bear market are also growing. The financial crisis is not ending. It is getting worse. Read more…
Ireland’s Titanic Bailout at Risk, Iceland looms ahead
The announcement by Brian Cowen that he was resigning as the leader of the Fianna Fail party, but is going to stay on as Taoiseach (Prime Minister) until the March 11 election, has put the Irish bailout into question. The November bailout of the Irish economy consisted of a series of different financing packages being combined into a larger total.
The first funds available under the bailout were provided by the raiding of the Irish retirement fund by its bankers. The next steps were to be funded by the EU and IMF funding sources, once the people of Ireland were legally subjected to the bailout requirements. The bailout never made it to a full vote before the collapse of the Fianna Fáil party.
This leaves Ireland in the unique position of being able to reclaim its future, by denying its past. The citizens of Ireland have not accepted the bailout. The coalition is not expected to be able to put the matter to a vote before the election.
“All we know is we are going to get an election on or before March 11 but that is about it,” said Micheal Marsh, professor of politics at Trinity College Dublin, calling the events of the past week “bizarre.” Read more…
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