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Friday, July 29, 2011

Aliens and the human genome

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The problem is the debt, not the ceiling

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State of the Union....

Hi, I’m Addison Wiggin.
You may know me as the co-founder of The Daily Reckoning, one of the world’s first financial e-letters.

Our analysts have forecast almost every major financial event of the past decade with unmatched accuracy — the rise and bursting of the tech bubble, the meltdown of the U.S. mortgage market, the collapse of Fannie Mae, the demise of Lehman Brothers, the fall of the U.S. dollar and the rise of precious metals. We nailed them all...

I'm simply providing you with some context for what I believe is an extremely disturbing new crisis that will begin very soon...

What could be at stake in this new crisis?

Nothing short of your quality of life. Your retirement. Your family's future. And the standard of living you've come to expect as an American.

That's not a statement I make lightly.

As this new crisis grows, I expect it to play out on a local level first. Response times for emergency police and fire calls will drastically slow... if not stop. Trash collection will drop from once a week… to once a month, if that. The roads around your home and on the way to work will get worse... as will security in the places you've come to believe are safe.

Then the crisis will get bigger.

If you want to travel outside the country, you'll find getting a passport next to impossible. If you need to relocate to find a new job...that too will become a huge problem.
Health care will become completely unaffordable.

Opening a bank account will become terribly frustrating. And you can forget about trying to get a mortgage loan... or student loans for your children.
Worse still could be our federal government’s response to this crisis…

As they hold late-night sessions and panic for “solutions,” what they decide could wipe out your savings. Destroy your 401(k) portfolio. And eventually even change the ease with which you buy and sell things.

What they choose to do could drive the price of your home DOWN even further... while driving UP the price you pay for everyday items like milk, bread and gasoline.
At the very worst, mobs could erupt in anger and violence. No longer will chaos in the streets be something you see on the news happening in far-off lands. Total economic failure could bring the violence to your city... your neighborhood... your front door.
These things may sound unbelievable to you right now. But I urge you to listen this presentation in full before making up your mind.

First, it’s important to know that I don’t want these things to happen. And I have no interest in stirring up fear. But as you’ll see, I've picked these specific examples because they've already begun to happen.

We can hope I’m wrong about the endgame.

But I’m not willing to hang my future on “hope” alone. I'm speaking to you today because I don't think you are, either.

With a few simple steps you could potentially protect your family and build a "fortress" around the wealth you've already worked hard to accumulate.

I’ll show you all these steps in a moment.

When you first read through this forecast and hear about the potential consequences, you may think what I say sounds “far out there.” But remember...

Years ago when my team of analysts and I put out the simple warning that the housing market doesn’t always go up…that you should steer clear of Fannie Mae and Freddie Mac... people simply laughed at us.

You should have heard the snide voices of commentators on major media outlets as they interviewed us. In 2007, Time magazine even identified me as a member "the Armageddon gang" for my belief the U.S. economy was a house of cards. [2]

You already know what happened after the housing market and economy collapsed. Millions lost their jobs. Many gave up hope of ever finding meaningful employment again.
"[Wiggin] accurately predicted the spike in unemployment, the wave of foreclosures in the housing market and some of the bankruptcies that rocked Wall Street,” financial reporter Brian Sullivan went on to say after the crisis in 2008 had hit full swing. “You called in print. It is verifiable." [3]

When we first urged readers to buy gold as a way of protecting themselves against exploding U.S. government debt and excessive money printing… the mainstream media labeled as “kooks”... “crazy”... "clueless.”

That was a decade ago, when gold was selling for $253 an ounce... today, it's over $1,500 and still going up.

"These guys have been warning about debt crises for years... they've certainly earned their bona fides," says Mark Hulbert, the leading watchdog for the newsletter industry.[4]
Indeed, looking back, the reporters who once laughed at us are now coming back wanting to know more. I’ve recently hired two new public relations professionals just to handle new calls from people asking what we see next.

But our latest forecast may be the hardest one for the mainstream media to swallow. On the surface, it’s so radical and unthinkable that many will label me a “fear monger.” Or worse… they’ll try to dismiss the message by accusing our firm of having a political motive.

We don't.

We're simply using history as our guide to make a simple, but extremely dangerous financial prediction...

In short, because the underlying causes of the previous crises have not been addressed... and because of the enormous amount of debt we’ve amassed as a result,I believe that sometime in the very near future, America's credit card will be cut off.

Below, you’ll see the specific consequences of that catastrophic event.
You’ll also see that this may not be some far-off prediction. The credit crisis is one that’s already playing out in cities and states across America.

Consider the case of Prichard, Alabama…
For many years, city officials knew that they didn't have the funds required to continue to pay the pensions of their public workers.
In 2007, they were even issued a court order requiring the city to immediately begin contributing an extra amount into the fund.
The city's mayor ignored the order.
Then on cue, the pension fund ran dry.
That's when the city did something that's never been done before. They simply stopped sending checks to retired workers. [5]
That's right, officials first chose to ignore a court order... and then they broke a state law requiring them to pay promised retirement benefits in full.
And no one stepped up to enforce the law.
Here's what The New York Times found:
Broken retirement promises are just one of many shocking examples of what America could look like without access to its credit card.
I’ll show you more in a moment.
I have to warn you that many of these examples we point to may seem extreme. But they are already happening across the country.
And while they may alarm you, that's not my intention. In my view, it's better for you to hear it from me first… to be able to prepare in advance… than to wait until the harmful effects take you and your family by surprise.
Let me explain...
It’s no secret that for many years our government has spent well beyond its means here in America. Turn on the news and you hear all kinds of blame being thrown around.
We've used America’s credit card... to fund our excessive lifestyles... to make an ever-expansive set of political promises... to continually expand the American empire overseas...
And all along the way, we’ve relied on foreign countries to lend us that money.
But very soon, I believe we will no longer be able to borrow an endless amount of money. Not easily, anyway. Nor cheaply. No one in the world will lend our government money... except at very expensive rates.

Put simply, I believe America’s credit card will be cut up.

The government "believes" it has a way out of this crisis.
Because of one unique feature of America’s influence in the world, the U.S. government possesses one tool that has allowed it to get away with a spending spree of historic proportions... for far longer than anyone might reasonably expect.
But ironically, it’s this one tool that could cause our creditors to give up on America completely. And that will be the ultimate crisis...

If that happens, it’ll put in motion a cascading set of devastating economic consequences that will cripple the way the U.S. government finances everything.

The crisis will mean the end of the big social programs, like Social Security and Medicare. No longer will you be able to count on retirement checks showing up like clockwork. Or for the government to pay for your blood pressure, diabetes or cholesterol medication.

It could end aid the federal government gives to state and local governments… shutting down health clinics… forcing the release of convicted felons… and laying off hundreds-of-thousands of teachers and firefighters…

In short, the end result will dramatically change your way of life on a day-to-day basis.
And if Americans are caught off guard by these things, they’ll get very, very angry. The transition from a normal society into one bereft of easy credit will lead to massive riots — like the ones we’re seeing in Greece, Egypt and Bahrain right now.
At first, you may deny that this could happen.
But I’ll prove that not only could it realistically happen in your city... your neighborhood... but it already is happening across the country.
Recent peaceful demonstrations — like the Wisconsin teacher protests earlier this year — are only the tip of the iceberg, because the real crisis hasn't even hit yet.
Remember, in Wisconsin the teachers showed up in droves to protect just a small reduction of benefits.
What do you think will happen when credit is shut off for good... and the government is forced to cut thousands of public jobs completely?
What do you think will happen if they’re forced to permanently shut down military bases… veteran’s hospitals… and schools?
What do you think will happen if states are forced to close prisons because they don’t have the money to operate them?
It’ll make the peaceful Wisconsin protests look like child’s play.
In response to this crisis, the government will try anything and everything it can to desperately raise money: they'll pickpocket your wealth through new taxes... they'll propose weird new fees... even conduct "fire-sale" efforts of state-owned roads and buildings.
You think it's maddening getting pickpocketed by airlines for everything from bags to snack fees? Wait until your local government wants to tap into your savings to try to balance its books.
Now, before you dismiss this message as “gloom and doom,” know this: Each and every day, one of the things I’ve just said is already happening in select American cities. I'll show you specific examples in a moment.
I'm not the only one who’s worried about the consequences of a new financial crisis...[7]
Bill Gross, a fund manager who probably knows more about loaning money to the U.S. government than anyone else in the world, is worried too. He’s even assigned a specific date to the beginning of our credit card cutoff. It’s a day he calls financial “D-Day.”
And it’s just around the corner.
Gross warns that the event could simply be “catastrophic.” Interest rates could skyrocket overnight... and the stock market could plunge, says Mr. Gross. [8]
Treasury Secretary Timothy Geithner has his own view of the impending crisis. In a letter to Senate Majority Leader Harry Reid earlier this year, he warned that cutting off America’s credit “would have a catastrophic economic impact that would be felt by every American.”
He continued:
A broad range of government payments would have to be stopped, limited or delayed, including military salaries, Social Security and Medicare payments, interest on debt, unemployment benefits and tax refunds...

[It] would lead to sharply higher interest rates and borrowing costs, declining home values and reduced retirement savings for Americans. [9]
Behind the scenes, the U.S. Treasury is already taking "extraordinary measures" to prepare the government for crisis — including raiding federal pensions to borrow money for the U.S. government. [10]

Put simply, when the government loses access to its credit card, the consequences could dwarf every other financial crisis we’ve seen in our lifetime — including the dot-com bubble, the mortgage meltdown and even the stock market crash of 2008.

Because this crisis could extend well beyond the stock market, deep into the American economy, the federal and local government... and the way of life so many have come to expect.

Just as the dot-com bubble morphed into the housing bubble... which morphed again into the recession of 2008... this next crisis morphs into something even bigger.
When credit is shut off for America, it won’t just mean a shutdown and employee layoffs of a few Internet or mortgage companies; it could mean a dramatic decrease in your quality of life...

"One way to wrap one's head around the problem," Boston University professor Laurence Kotlikoff says, "is to ask what adjustments are needed to solve the crisis...
"The answers are terrifying…
"Immediate and permanent doubling of personal and corporate income tax... two-third cuts in Social Security and Medicare benefits... or an immediate and permanent cut in all federal discretionary spending…” [11]

Think about that: Social security checks could slow down... or disappear altogether. Mortgage rates could double or triple from their current levels...

You probably won’t be able to get a loan to start up a small business. And unless you’re paying cash, you won’t be able to buy a new car… or a new house.

Retiring in anything like the comfort you now enjoy will become a greater challenge than it already is. Health care, already a big issue, will become even more expensive.

Most Americans will be caught completely off guard if the United States’ credit card is shut off. Talk to your neighbors. Ask them what they think.

My guess is that none of them will understand just how important our nation’s credit card is. They might feel like something's not right about our economy... but they won't be able to put their finger on it.

Your neighbors won’t know what to do if they can’t get their prescription medications... when they’re forced to pay new taxes and fees...when basic services they've come to rely on, like police, water and garbage, all get cut back...
"It is a very serious problem," the famous fund manager John Paulson warns. "The U.S. does not have the ability of unlimited borrowings." [12]
Will you begin to make your own moves to prepare for the day that America’s credit card is cut off?

I hope so. That’s why I’ve prepared this presentation today.

I’ll explain exactly how we’ve put ourselves in this position... what could be likely to play out in the coming months... and, most importantly, a few steps you can take to protect your family when the crisis kicks into high gear…

The Great Delusion of America
Many years ago, the United States lived well within its means...
Thomas Jefferson walked to and from his own inauguration ceremony — right down Pennsylvania Ave — and spoke to anyone who came up to him.  [13]
But now when the U.S. president travels, he does so in imperial style...
When President Bush vacationed in Crawford, Texas, the flight on Air Force One alone cost nearly a quarter million dollars. And that didn't include the costs of the cargo planes that shuttled the president's limousines and helicopters... or the salaries of the hundreds of workers who laid the groundwork and organized the trip. [14] [15]
During President Obama's recent trip to India, it was rumored that he brought an entourage of 3,000... that he took with him 40 aircraft and six armored cars (one of which was equipped to even launch a nuclear missile... can you imagine what that car cost?)
Obama and his crew rented out 870 rooms in the five-star Taj Mahal.  Political sites claimed that the trip cost the United States over $200 million per day. [16]
But as I'm sure you're aware, the executive branch isn’t the only one spending like crazy. Like a disease, this spree has spread to every branch of the government…
According to the most conservative numbers from the Bureau of Labor Statistics (BLS), the average federal worker is paid 20% more in salary than their private-sector equivalent. Add in the cost of benefits and the total federal employee’s salary boost is 50% over the private sector worker’s. [17]
One report recently revealed that half of the publicly funded Californian lifeguards are making more than $150,000. [18]
Lifeguards making $150,000? Out of taxpayer money? That’s out of control... wouldn’t you agree?
I've even read recent government audits that found...
The National Institute of Health will spend $2.6 million in U.S. tax dollars studying whether or not alcohol increases a Chinese prostitute's chance at getting AIDS... [19]
The National Science Foundation spent $500,000 studying how sick shrimp recover from treadmill exercise... [20]
The New York's Psychiatric Institute spent $400,000 of government grants studying why gay Argentinean men engage in risky sexual behavior while drunk... [21]
The government even spent $80,000 studying why the same NCAA basketball teams always dominate March Madness... [22]
This wasteful spending sounds made up, I know.
But it's not. You can look it all up for yourself after this presentation... and you'll find that it's all 100% true.
Of course, these spending sprees and lavish salaries wouldn't be a problem if our government used its savings to pay for them.
But that’s the rub: The U.S. government has no savings.
Instead, we’ve relied on the savings of foreign nations... mainly places like China, Japan, India, and the Middle East... to pay for these things.
Until now, these "emerging" countries have been happy to lend us money. They're happy to take part in the “great American economic miracle.”
But it's like they've given a teenager an open-ended credit card. Take a look at this...
Just like a reckless teenager with their parent’s credit card, we’ve chosen to buy just about anything we wanted...
The government bought the world’s smoothest roads... and ensured the safety of our cities and airports....
They bought wireless Internet and put it in almost every government-run building...
They used their credit card to buy welfare and food stamps for anyone that wanted them...
They doled out salaries well above market rates...
They're paying for American soldiers to stand guard in over 130 countries...
And at the same time...  though programs like Social Security and Medicare... they've promised everyone a healthy and financially secure retirement...
To most people, using our nation’s credit card to pay for these things may not seemlike a bad idea... at first. But you must realize that the government has spent so much money... we’ve racked up so many bills... we’ve dug a hole sooo deep...
There’s no possible way we could ever pay our lenders back.
Let me ask you: When you can't pay your bills, what happens?
It's only a matter of time before our credit card is finally shut off for good.
The rating agencies Standard & Poor's and Moody's, as well as the International Monetary Fund (IMF), have all issued warnings that they believe the day the U.S. government's credit card gets shut off is fast approaching. [24] [25] [26] [27]
Even David Walker, the former top accountant of the federal government, has gone on record warning that the U.S. government's credit could be cut off...
"You cannot spend trillions of dollars more than you take in… without someday having a day of reckoning," says Walker. [28]
I'll show you more proof in a moment.
But first, let me show you how it gets worse…
In response to the Great Recession of 2008, the government used its “credit card” to borrow even more money to pay for all the stimulus and bailout programs you hear about in the news... putting us even DEEPER in the hole!
"Bank failures? No problem." Ka-ching!
"Automakers going under? No problem." Ka-ching!
"Extended unemployment benefits? No problem." Ka-ching!
The U.S. government’s financial hole has been getting deeper by the trillions of dollars every year since 2008.
Let's look at one specific item the government’s been charging on its credit card: mortgage loans.
You may not know this, but in the past few years, the federal government has used its credit card to buy up 90% of all mortgage loans. [29]
The government’s goal is to keep mortgage interest rates well below free market rates. They believe this stimulates the housing market.
But what will happen to mortgage loans and home prices when the government can no longer buy mortgages with its own credit card?
Look around the world and you’ll find that mortgage rates are...
  • 30% higher in Canada… 
  • 42% higher in the U.K....
  • 147% higher in Australia...
  • 344% higher in India...
  • 404% higher in Brazil... [30]
Once your government’s credit card is cut off — and they’re unable to fund the entire mortgage industry — mortgage rates will skyrocket.
Imagine what would happen to the price of your home if mortgage rates doubled...
The housing market would crash yet again.
All that needs to happen to crush the housing market is for our foreign lenders to say, “America, you’ve spent too much... we know you will never be able to pay us back... so we’re cutting up your credit card.”
The reality is this...
The government's outstanding "credit card" bill is now more than the entire economic output of China, Japan and Germany — the next three largest economies in the world — combined! [31]
There’s not a snowball’s chance in hell that we will ever be able to pay this money back to our lenders. I say that with 100% confidence.
Consider this fact from the National Inflation Association (NIA):
America’s greatest business success story of the past decade has been Apple Inc. — maker of the iPod, the iPhone and the new iPad.
The U.S would need to see the creation of 700 companies like Apple in the next year just to generate enough tax revenue to balance [this year’s] budget deficit... that's impossible. [32]
Amazing, isn't it?
Think we’ll create 700 new companies like Apple this year?
It took Steve Jobs, the founder of Apple, a lifetime to create the wealth he's built in that company. It's not likely we can just wave a wand and create 700 more companies like that overnight.
But it's not really important what we think, is it?
It's only important what our lenders think. What happens if our lenders — mainly foreign nations — lose confidence in getting any of their money back? Or even getting a portion of it back?
After they finish being mad as hell, they'll stop lending to us. They'll cut off the credit card. They’ll look for better places around the world to park their own money.
Without that open-ended credit card… without being able to borrow more and more money… without our politicians being able to promise anything they want to get elected… the United States would look like a completely different place.
You know the feeling... standing at the register wondering if your credit card will go through. Wondering if you'll have to select a few items to put back on the shelves... all the while holding up the line.
The U.S. government is in the very same predicament... but the stakes are much higher.
All it would take for chaos to erupt is our creditors saying, “Enough is enough… we’re not lending you any more money.”
You may think this will never happen.
But the reality is that the cutoff process is already under way. Look around you. The consequences are easy to spot.
Consider this...
Throughout the property boom of the early 2000s, our state and local governments bet big that housing prices would continue going up. For them, higher home prices meant increased revenue from property taxes.
Based on those increased revenue projections, state and local governments expanded. They spent beyond their means.
When home prices crashed and foreclosures skyrocketed, the property tax revenue they so desperately needed to come in… never showed up. And they couldn’t “unspend” the money they had spent.
That’s why certain cities and states are now in deep financial trouble.
It’s also why the federal government used its credit card to send “stimulus” money directly to the state governments. The hope was to use Uncle Sam’s credit card to bail out the states and local governments.
With “stimulus” money, the states could continue to pay for more teachers... law enforcement officers... firemen... and other workers.
In total, 80% of the total stimulus money the feds borrowed went directly to the state governments. [33]
But now that “stimulus” money has run out. Now no one wants to lend these states money… because they know local governments can’t pay the money back.
And just this month, in a very similar "denial of credit," the United States Treasury itself cut off funding for state and city governments entirely. (The feds can’t afford to extend any more money. As we've shown you, their credit is already in danger!) [34]
So.... what we get is a real-life, in-your-face view of what America looks like without its credit card. Here’s a terrifying example…
* AMERICAN HELLHOLES — Camden, N.J., used to be the home to the entire Campbell's Soup factory. It was home to the world's first color television. They invented the "drive-in" movie theater. With almost full employment, innovation and massive manufacturing output, the mayor once proclaimed the place "the city of contented industries."
But just like what we’re seeing play out right now, they eventually got in over their heads…
The city's workers demanded more. They began to produce less. The politicians in Camden spent and promised too much.
And now lenders have shut off their credit card — giving them no choice but to cut services.
City leaders have been forced to lay off a quarter of the city workers — including nearly half of the police force and one-third of the firefighters. [35]
"The fear quotient has been raised," said Rev. Heyward Wiggins, pastor of the local church. His fellowship once held choir practice on Thursday and Friday evenings. Now he says he's cancelled those. Members are simply too afraid of being out after dark. [36]
Fellow Camden resident George Watson fears for his life... and home.  He told the local news that "[Criminals will] be coming into the houses... they know you can’t call the cops. There won’t be any cops to call."
What’s happening in New Jersey is also happening in California...
After Oakland's police chief was forced to lay off his staff, he informed citizens that the police could no longer respond to various crime calls. Here are just a few things the police won’t show up for anymore…
  • Burglary…
  • Theft…
  • Failure to register as a sex offender…
  • Passing fake checks…
  • Embezzlement…
  • Extortion…
  • Vandalism
  • And the list goes on… [37]
Can you imagine being the victim of a robbery… and knowing the police won’t be there to answer your 911 call?
Then there’s this…
* POOR MAN'S PAVEMENT — In Spiritwood, N.D., they've run out of money for road paving. So they've begun the process of ripping up roads that need repair... and turning them back into gravel.
Sounds unbelievable, I know. But here's what The Wall Street Journal reported:
Paved roads, historical emblems of American achievement, are being torn up across rural America and replaced with gravel or other rough surfaces as counties struggle with tight budgets and dwindling state and federal revenue. State money for local roads was cut in many places amid budget shortfalls...

In Michigan, at least 38 of the 83 counties have converted some asphalt roads to gravel in recent years. Last year, South Dakota turned at least 100 miles of asphalt road surfaces to gravel. Counties in Alabama and Pennsylvania have begun downgrading asphalt roads to cheaper chip-and-seal road, also known as "poor man's pavement." Some counties in Ohio are simply letting roads erode to gravel.
Residents have complained of cracked windshields. They now cough up the dirt stirred up by traffic driving on gravel roads. And they worry about how the lack of roads will affect their businesses.
"When [counties] had lots of money," stated the local county highway superintendent,"they paved a lot of the roads and tried to make life easier for the people who lived out here. Now it's catching up to them."

Just think about that for a second...

Without access to Uncle Sam's credit card, some cities and states in America are already going back to gravel roads... back to the start of the 20th century.

I know these stories sound like they’re from some remote third-world nation. But they’re not. They’re actually happening right now... right here in the U.S. You can check them out yourself.

Here’s another one…

* BROKEN PROMISES — Rather than facing the hard decision of cutting services, certain states have continued to provide them… but just not pay for them.
Consider the story of Tom Miller — a licensed pharmacist and business entrepreneur in the small town of Marion, Ill.
Mr. Miller took a chance. He borrowed money to start his own pharmacy. Eventually, he built the business up to five full-time employees. He’d fill prescriptions for his Medicare customers under the promise that the state would quickly reimburse him for the costs.
But when the state ran out of money, they simply stopped paying their bills. Here’s what the local news reported:
A graduate of St. Louis School of Pharmacy and a native of southern Illinois, Miller saw a harbinger of the end of his 20 years in the pharmacy business in May, when he received a state payment 270 days late. [39]
Eventually, Tom was forced to close his business and lay off his employees.
It’s not just Medicare promises the state is refusing to pay. And it’s not just Illinois, either.
Listen to this out of New York. Stateline.com’s Daniel Vock reports:
New York had been delaying its payments across the board since December, when the state treasury ran out of money for the first time in its history…
As New York fell behind on its bills, that system came close to breaking down. By the time [it hit crisis mode], the state owed [the] county more than the county had in reserve to continue paying for social services.
To deal with its own cash crunch, [the] county started doing to its contractors what the state was doing to the county: skipping payments. At one point, the county owed a local agency for youth roughly $800,000. [40]
Can you imagine a world where all payment promises are broken?

Again, I show you these examples not to scare you, but as proof that America as you know it has been an illusion built during an era of easy credit.

Without that credit card, certain states are already trying every money-grabbing scheme they can dream of...

According to U.S. News & World Report, "Over the last two years, 36 out of 50 states have raised taxes or fees." Aside from already collecting property, sales and income taxes, they’ve also put in place separate streetlight fees... fire hydrant fees... and new booze taxes. [41] [42] [43]

Nevada is even considering a new $5 surcharge on prostitution. [44]

Laughable... I know.

In Ohio they’re looking into selling off their prisons for upfront money. History shows that during previous prison sell-offs, prison officers were so angry that they all simply walked off the job — leaving the prison unmanned. [45] [46]

Could this happen in your city?

Chicago sold off the rights to their parking meters. And because the city needed upfront money so bad, the Wall Street firm with fire-sale pricing paid the city just 50% of what the rights were estimated to be worth. [47]

Wall Street did what it does best, of course. It chopped up the parking meter rights and sold a portion of them to a wealth fund in the Middle East. [48]

How does that grab you?

If you’ve paid to park in downtown Chicago over the past few years, your money no longer goes to the U.S. government. It goes to a Wall Street banker and to oil-rich Middle Eastern rulers.

Cutbacks, broken promises, sell-offs...

We’ve forecast these things for half a decade.

Now they are actually happening.

And unfortunately, I believe these local problems are merely a harbinger for what’s ahead for the entire country.

Luckily, there are a few simple steps you can take right now to avoid the worst of the crisis. These steps could help protect both your family and your wealth. I’ll show you all of them in a moment.

But first, let’s take a look at how bad it really could get…

Take away the federal government's credit card and you will have a similar crisis as these local governments... but on a national scale.

What could happen then?
Let me show you...

The CEO of the National Center for Policy Analysis, Dr. John Goodman — a man who received his Ph.D. in economics from Columbia University and taught classes at Stanford and Dartmouth University — wrote that because of our skyrocketing debt...
  • The federal government will have to stop doing one in every 10 things it has been doing by 2012
  • By 2020, the federal government will have to stop doing one in every four things it has been doing
  • By 2030, about the midpoint of the baby boomer retirement years, the federal government will have to stop doing almost one in every two things it does today.
  • Education, national defense, housing, energy, Social Security — all of these activities of government will have to be put aside...” [49]
My point in showing you all of this is simple:
Very soon you may NOT be able to rely on the federal government to fund your retirement...
To provide you with medical insurance... 

To keep you safe... 

To lend you money to buy a house... 

Or to make goods easily affordable. 
All od things they've promised to do but will no longer be able to afford if the "punch bowl" of easy credit is removed.

Once you review the facts, it’s the only logical conclusion you can reach.
Many of these dramatic revisions in the American way of life would have already happened if it weren’t for one tool the federal government does possess…
It’s the one tool that the federal government “believes” will save us from chaos...
But as you’ll soon see, it’s this one tool that could, ironically, push us over the brink...  into a hellish crisis Americans have never seen before.
Let me explain...
The Only Way Out
Unlike state and local governments, the feds have one tool that has allowed them to get away with overpromising and overspending for a very long time.
It’s a tool that has been unique to the U.S. federal government since the end of World War II. And the U.S. government takes advantage of this tool like no one has before in history.
When the nation’s credit card is cut off... when its ability to borrow money cheaply ends...  the feds don’t have to try to balance the budget through unpopular service cuts…
They don’t have to sell off federal assets. They don’t have to break promises in the way state and local governments do.
All because of this one tool: their ability to print the world’s reserve currency — U.S. dollars — on demand.
This gives the feds what they “believe” is a way out.
If they can’t use their credit card to pay for things, they believe they could simply print more money.
Printing money is something the states and local governments can’t do. And having the world’s reserve currency is something that no other foreign nation can boast.

Did you know that if you travel to a country like Nicaragua, Colombia or Cambodia — all of which I have visited in the past year — you don't need to use the local currency?
You don't even need to learn the name of it or ever see it. Because in every one of these countries — and many more like them  — the local merchants, hotels and vendors on the street all take U.S. dollars.

In many parts of the world, because of the U.S.’ historic legacy as an economic powerhouse, the America's dollar is "as good as gold."

That makes the U.S. dollar the “world’s reserve currency.” Meaning, among other things, it's used for trade... and as a store of wealth for banks and governments everywhere.
Up until recently, the rest of the world has been happy to go along.
But as the government chooses to print more and more dollars — to pay for all the social safety programs, wars, roads, bailouts, and stimulus — each dollar becomes worth less than the one printed before it.

For our foreign lenders, that means the value of each dollar we repay them with goes down.... which makes them even more nervous about the money they’ve already lent us.
But for you, it’s much worse...
When more printed money chases the same amount of goods, prices go up.
That means the price of things like gasoline, meat... milk... bread... all go WAY up. That affects you personally at the gas pump and at the grocery store.

And eventually, the federal government’s choice to print money could, ironically, push us over the brink — causing our lenders to give up on America completely.
Of course, the ability to print currency isn’t new… the U.S. government did not invent it. The Chinese experimented with printing paper money in 800 A.D.. But they gave up after it too caused life-threatening price increases.  [50]

Before paper money, we know the Romans "printed" money, too.
Over the course of 500 years, the Roman Empire had become the most powerful and richest empire the world’s ever seen. Eventually, though, the cost of defending its borders and expanding its bureaucracy became too expensive. The tax revenues collected weren’t enough to cover the empire’s costs.
But rather than cutting back, the Romans choose to simply create more money. They thought that if they could find a way to increase the amount of money, they could continue to fund skyrocketing defense costs and expand the bureaucracy.

They had just one problem: Modern paper currency didn’t exist — money was still 100% gold and silver. They couldn’t just crank up the printing press like our government can today.

They didn’t let that problem stop them, of course. Instead, they slowly reduced the precious metal content in their coins and began to replace the precious metal with worthless metal — like bronze.

This allowed their Roman treasury to produce more coins with the same amount of gold and silver on hand.

One 100% silver coin now became two 50% silver coins (with the same face value). Those two coins eventually became four coins with 25% silver (with the same face value)... and so on...

When they finally stopped reducing the precious metal content in the coins, the currency — called the denarius — had lost 95% of its value.

The Roman money was worthless.

Merchants began to reject the money. Salaries were paid in food and clothing. Taxes were collected in fruits and vegetables.

And eventually, without money to expand and protect, the Western Roman Empire collapsed. [51]

The beginning of the end for the Roman Empire all came down to the lack of a national credit card... and the destruction of their money in its place.

A strikingly similar trend is already under way in America. Right here. Right now.

Here’s one of the more shocking comparisons I’ve seen...

Once the Romans started creating coins out of thin air, it took 200 years for the denarius to lose 95% of its purchasing power.

But look at this.
It has taken the United States about 80 years to do to the dollar what the Romans did to their own money in 200 years.

Now, compared to gold, the dollar’s lost 95% of its value

The "devaluation" of currency happens again... and again... throughout history.
I know it sounds like these terrible events could never happen here. But the shocking fact is what most Americans don’t know… and don't want to know:
The money-printing trend is already in motion in the U.S.
In response to the crisis of 2008, the U.S. government knew that it didn’t have enough room left on its credit card to bail everyone out…
So instead, the federal government began to massively print U.S. dollars. Check out this chart:
After staying relatively steady through 2006 and 2007, the feds kicked the printers into overdrive in late 2008. And they haven't slowed since.

You only need to look at the prices of everyday items to know what the direct impact of this printing policy has been:
  • Oil is up 30% in the past year…
  • Gas is up 45%…
  • Coffee is up 85%…
  • And cotton is up 90%…
And then there are the precious metals. Gold’s up 30% in the past year. Silver’s up 100%.

Those dramatic rises in price were just the response to the panic in 2008.

Now, with government debt rising faster than at any time in our history — and our creditors, rightfully, getting nervous day by day — you have to ask this question:
What will the government's response be
when their credit card is shut off for good?
Recent history already tells us the answer. The federal government will most likely start printing U.S. dollars at a pace our nation never seen.

And the sad fact is they won't have any other choice.

The consequences will be devastating.

The most recent examples we have of a country’s meltdown of this magnitude happened in Eastern Europe within the last 100 years. Taxes weren’t enough to pay for the costs of World War I. But surrendering the war was unthinkable.

So a few governments, Austria and Germany specifically, started down the dangerous path of money printing as a means to continue to fund war efforts...

Consider the story of Anna Eisenmenger, a widow living in Austria at the time, trying to raise her three children and her grandchild...

As soon as the Austrian goverment started printing money, food and fuel costs started to rise. To protect her family from rising costs, Eisenmenger started hoarding coal and meat — an activity strictly outlawed by the state.

Eisenmenger’s diary entries were recently collected by author Adam Fergusson in his book When Money Dies. She writes about the day hell started to break loose at the bank. With massive money printing, the value of everyone’s money was plummeting.

Listen to her story...

“Why don’t you think the currency will recover again?” [I asked my banker.] “Recover!” [my banker] said with a laugh... just test the promise made on your currency and try to get, say, silver in exchange.” “Yes, but mine are government securities: Surely, there can’t be anything safer than that?” “My dear lady, where is the state in which guaranteed these securities to you? It is dead.” 
The amount of money in circulation more than doubled in 1920 alone. Then a year later, the amount of money rose fivefold from that!

When it comes to money printing, what starts with good intentions tends to go sour very quickly...

As each Krone bought less and less, the Austrian government continued to print more... and more... and more.

Anna Eisenmenger and her fellow citizens watched horrfied as the value of their savings dissapared. Prices of food and clothing rose to unimaginable levels. Again, here’s one of Anna’s diary entries:

A suit costs about six times what it was in 1913, but some things like food are 100 or 200 times as much... paper clothes are being sold… jealousy and envy flourish in this atmosphere…
The confidence of citizens in the currency administration of the state is shaken to its foundation. The state, which is perpetually printing new banknotes, deceives us with the face value... a housewife who has had no experience of the horrors of currency depreciation has no idea what a blessing stable money is, and how glorious it is to be able to buy with the note in one’s purse the article one had intended to buy and at the price one had intended to pay.
The large numbers of unemployed... are seething with discontent... a mob has attempted to set the parliament building on fire. Mounted policeman were torn from their horses, which were slaughtered in the Ringstrasse and the warm bleeding flesh dragged away by the crowd... the rioters clamored for bread and work...
That’s terrifying... isn’t it?

Here are some other reports from Fergusson’s When Money Dies:
Judith de Marffy-Mantuano recalled:
There was no way to get medical help without money. If you had a toothache, you couldn’t afford a dentist. If you needed to go to the hospital, you might get into a convent: Otherwise, you stayed at home, and got better, or got worse.
And German resident Robert Clive said:
Few families can afford meat more than once a week, eggs are unprocurable, milk terribly scare and bread almost 16 times the price of a few days ago when the maximum price was abolished... no one expects political disturbances, but hunger riots are another matter... and the cold: No one can afford central heating...
Looking back, we can see that whenever a government is unable to borrow money with their national credit card, they resort to printing money to “pay” for things.
And throughout history, the trend always — and I mean always — ends badly.
Spending cuts and broken promises are always ugly. They won’t get politicians re-elected.

And the more severe they are... the angrier the public gets.

Mobs of protesters attacking police lines and looting stores — just like we've seen in Greece, Spain and England and all across the Middle East this year — are not, I repeat not, out of the question in the U.S.

Not by any means.

Firing up the printing presses, on the other hand, provides a stealthy way to keep the illusion going for another day… and to keep politicians in office for another term.

In some ways, what our nation is going through is just the historic order of things.

It happened to the Romans… the Austrians… the Germans… and even more recently to citizens all throughout the Eurozone.

Now we’re in the early stages of it happening right here in America.

It’s unfortunate that most Americans won’t know what to do if the nation’s credit card is cut up. When basic services like fire, ambulance and police protection are cut back.

And when rapid money printing makes it more expensive to heat their homes, fill up their gas tanks, eat at a nice restaurant or buy the things they want at reasonable prices…

I feel now as jittery [about a crisis in America],” says best-selling financial author Nassim Nicholas Taleb, “as when I was in Lebanon, when as a child it was the beginning of civil war. When they started [money] printing, they said, ‘Oh, no, no, no, don’t worry about it, it’s just temporary. These things are never temporary.” [52]

The seeds of this new financial crisis have already begun sprouting. We can see them in the news... many can see them in their own neighborhoods already.

Isn't it time to take a few safe and simple steps to protect yourself and your family? 

I’ll show the steps we recommend taking in just a second. But first, let me explain why your fellow Americans may still not be willing to accept the facts…

The Devastating Effects of Denial
In short, despite the proof that is all around them, I know that most Americans will still choose to simply ignore this message.

That’s because they are still in the very dangerous psychological stage of denial.

Denial is the reason why — despite overwhelming facts and proof — you may not think things will ever get that bad here.

And it’s the reason why you may think that somehow our politicians and officials will always be there to save us.

You see, faced with a major crisis, "denial" is first step programmed into our psyche.

In 1969, psychiatrist Elisabeth Kübler-Ross studied how people deal with a catastrophic loss. Her multidecade studies found that people — no matter their age, sex, race or nationality — have set stages of dealing with loss:
First, they DENY that loss is heading their way.

Then, when loss actually happens and they can't deny it anymore, they move on to ANGER… 
While plenty of Americans are experiencing ANGER about the direction the country is headed, when it comes to the unthinkable — the nation's credit card being cut off — I believe that most Americans and politicians are still in the dangerous denial stage.

Frankly, I don’t think most Americans have the capacity to imagine what life would be like without cheap and easy credit.

A perfect example:

A few years back, when money managers started to catch on to the underlying problems of our housing market, our politicians chose to deny the problem entirely.

Listen to what Federal Reserve Chairman Ben Bernanke had to say just months before the market crashed:

It's a pretty unlikely possibility [for housing prices to decline]. We've never had a decline in house prices on a nationwide basis. So what I think is more likely is that housing prices will slow, maybe stabilize... [This is] not something that will affect the national economy. [53]
Despite undeniable evidence that the housing market was completely out of control, the federal government chose to deny the problem existed.

Of course, we know what happened next. Housing prices did decline on a national level. Rapidly in many places.

People got very angry when they realized they were lied to… and that they were forced to foreclose.

The credit problems that happened in the housing market are now happening on a national level... but with much bigger consequences.

Think about it for a second…

If the government couldn’t keep housing prices from declining… do you really think they’ll be able to save you from an even-bigger crisis — the shut-off of our national credit card?

What about when their money printing leads to the destruction of your savings?

Or your ability to afford the basic things you and your family need?

The fact is this: You can not afford to deny this next crisis.

By the time people move on to anger, it will be too late.

That’s why it's urgent you act right now to prepare for what I've shown you in this presentation. Luckily, you still have time to take a few simple steps.

How long?

It’s impossible to say for sure. But consider this…

Lenders at the Gate
Our lenders’ confidence in our ability to pay our credit card bill is already wavering. I believe that the day when we’re cut off completely is approaching very, very quickly.

Here’s why...

As you may know, China is currently the largest lender to the United States. Month after month, they lend us an enormous amount of money.

But listen to what Chinese Premier Wen Jiabao had to say about our spending sprees...

We have lent huge amounts of money to the United States. Of course, we are concerned about the safety of our assets... To be honest, I am a little bit worried." [54]
Here’s what Eswar Prasad, a former International Monetary Fund official with responsibility for China, had to say...
I worry that we could be at a tipping point... If the Chinese say, “We're not [lending anymore money],” this could act as a trigger around which nervous market sentiment coalesces... People could start wondering how the U.S. is going to finance its deficit. [55]
It’s not just political propaganda, either. China’s already taking protective steps.

According to reports from The Associated Press, the Chinese are already tightening our credit limits… and have lent the United States less and less money over the past five months. [56]

As you’ve seen in this letter…

Cities all across America have already lost their credit cards. They’re going through painful cuts and broken promises right now…

Lenders are becoming increasingly frustrated with our federal government’s reckless spending policies… threatening to cut off our credit card for good. 

And in response to less credit, our federal government is already ramping up massive money printing… sending the price of goods and services soaring…
In short, this could be one hellish financial crisis. And it’s coming. These things are all happening right now.

No… they’re not easy to accept.

But you can continue to deny the consequences. You can continue to hope the government will always be there to save you…

Or you can act now to protect yourself. 
The choice is yours.

If you’re interested in protection, there are a few simple steps I recommend you take immediately.

The best part is this: If I’m wrong… and believe me when I say I hope I am... you won’t lose anything but the time it takes you to take these steps:

The first thing you need to do to prepare is to find someplace safe for your family to work and live.
As I mentioned earlier, that doesn’t require leaving your family behind and moving overseas. And no, you don’t have to dig a “gold and guns” bunker and stock it with six years of canned goods, either.
But you want to make sure you’re not in a state that relies on credit to keep going.
And you want to make sure you’re not in a state that has made promises to the masses it can’t keep.
The deadly combination of low tax revenue and massive pension and retirement promises has forced certain states into a “lose-lose” situation. They’ll be the first to cut police... try desperate money grabs... and break promises.
It’s a process that’s already starting right now...
Soon, I predict these could be the first cities to see riots, crime spikes and massive unemployment.
Believe me, it won’t be any fun to live in a city like that when the proverbial chickens come home to roost.
Remember the crime-ridden Camden, N.J.?  Remember those retirees struggling for food and water in Prichard, Ala.?
The good news is that I’ve done months of research to find a select few American cities that have managed their spending best.
Each of these American cities boasts low tax rates for entrepreneurs, high employment, low crime rates and the most well-funded retirement programs.
I’ve put together all of the details in a new report called American Oases — Five Spots to Find Paradise in the Midst of Crisis.
If you’re worried about a debt crisis in your city or state, I urge you to read this report immediately. Not only does it detail the five best cities... it also shows you the five worst.
In a moment, I’ll show you how you can download and print this report at no charge.
But first, let’s move to another urgent step...
Did you hear the nasty rumors flying around last year about the government seizing control of private 401(k)s? [57]
Financial researcher Jeff Schneider writes:
Americans have $4 trillion saved in 401(k) plans and another $8 trillion in IRAs and pension plans...
If the U.S. government forces investors to invest 50% of their IRAs in government bonds, that would raise $6 trillion. [58]
As you see, the idea was that politicians would take control of your retirement accounts... and then forcefully loan your money to the government.
All in hopes to continue our consumption-driven way of life.
Whether or not this will happen is anyone’s guess. But here’s something that HAS been confirmed...
As I record this presentation for you. Treasury Secretary Geithner has announced that he will start tapping into federal pensions to borrow money for the government. [59]
When times get tight, governments have a history of seizing control of retirement accounts and savings accounts and controlling money flow in and out of the country.
Most people don’t remember this, but in 1982, the Mexican economy was suffering through its worst recession in over 60 years.
Unemployment was running at 40%. Massive money printing resulted in the prices of goods and services going up by 100% in just five months.
Everything is so high,” said Trinidad Angeles, a widow living in Mexico during this time, “I can’t afford anything anymore. Even the price of water has doubled.”
When Mexicans began trying to trade in worthless pesos for other currencies, the Mexican government promptly outlawed the trading.
Here’s the report from a local paper, the Sept. 11, 1982, edition of The Evening Independent:
In a surprise move Friday, the Commerce Department announced Mexicans will not be allowed to take pesos from the country...
The controls, expected to curtail trading in the peso on the international market, are an attempt to maintain the artificially high value of the currency set by the government last week.
The announcement… also included a long list of silver and gold items, jewelry and gems that cannot be taken from Mexico without government authorization. [60]
The same thing that happened in Mexico during a currency crisis also happened in Malaysia, Venezuela, Russia... and other countries.
For you, of course, it doesn’t matter what happened in other places. What matters most is the answer to this question: Will it happen here?
No one can say for sure. But I suggest you don’t wait around for a “surprise”...
To help you prepare for such an event, I recently travelled halfway around the world to visit a few little-known private vaults.
These vaults allow you to convert U.S. dollars into real money like gold and silver. Then they store your precious metals in custom-free zones — all outside the hands of the U.S. government.
In some cases, you won’t have to report any of the assets to the government (until you sell them, of course). And you can visit your holdings anytime you like.
I know storing your wealth in custom-free zones may sound a little “out there” right now. But when governments begin to implement capital and currency controls, it often tends to be a very slippery slope. It’s a funny thing... but new “rules” about your money tend to pop up quicker than you can actually move your money.
That’s why I recommend you begin looking into overseas asset storage as soon as possible.
To help you get started, I’ve written up all my findings in a report called How To Move Your Money Safely Out of Harm’s Way.
Inside this report, you’ll find details on all three gold storage sites I’ve found — including names and contact numbers to call if you decide you’re ready.
Making any one of these moves is still 100% legal... for now. But I can’t guarantee they’ll stay that way forever.
Like the first report I told you about, I’d also like to send you this report free of charge.
I’ll tell you how to get this report in just a minute. But first, a warning...
I don’t recommend you lock up all your assets in an overseas account.  You still need easy access to the short-term cash to buy and sell the things you need.
So here’s another idea I have for you...
For your short-term savings and transaction needs, I suggest you go “underground.”
“Underground” banking is like a normal savings account, but with one big advantage...
You don’t have to hold U.S. dollars.
With one simple call to the “underground bank” I’ll introduce you to, you can diversify your savings out of the dollar and into things like commodities... foreign currencies... and precious metals.
There’s nothing illegal about this “underground” bank. I call it that because most people I’ve met have absolutely no clue it exists.
Unlike Bank of America, SunTrust or any of the big commercial banks, the “underground” bank has only a dozen or so branch offices. They’re all located in one state. They barely advertise. In fact, I don’t think I’ve ever seen a television commercial or heard a radio advertisement.
I also call it “underground” banking because they offer savings products way outside the normal CDs and traditional accounts.
For example — right now they’re offering a way to turn your savings account into a basket of commodities. If those commodities go up as the feds print worthless dollars, you get to enjoy the upside.
But if I’m wrong and commodities lose value over the next few years, this “underground” bank will return 100% of your initial deposit. It truly is one of the ONLY “no risk” investment opportunities available in the world today.
The people I’ve introduced “underground” banking to love it. They’re written to me to say...
Overall, I am quite pleased with the success of [underground banking]... and I am happy they make t hese options available, as they would be difficult to arrange in the financially backward USA otherwise.
— Matt H.
Very pleased with [the Underground Bank’s] Gold CD.  Five- year investment matured in December 2010... returned about 80% over initial investment.  Got some dry powder — looking forward to their next no-downside opportunity.
— Stephen M.
I currently own the [underground bank’s] Debt-Free CD... and am up 33% since then.  I also own [one of the bank’s gold investments] and am up 32% since February 2009.  Thanks for the ideas.

— Doug K.

I haven't found anything available in the U.S. that's as simple and accessible as their [underground banking] CD products. I started with an Australian dollar CD about five years ago and have just let it roll over every quarter since then. That's up about 50% on what I started with. Others have been less exciting, but have shown steady appreciation and help me sleep well at night knowing that if there is a crash in X, Y, or Z, I've got a decent level of diversification and relatively low risk.
— Matt P. 
If you’re interested, I’d love to tell you more about “underground” banking...
Simply complete the form I’ll show you in a second and you’ll get a free copy of my third special report, Underground Banking — Radical New Ways to Save and Grow Your Money. 
But first, let’s talk about the final step I recommend you take...
As I said, I hope I'm wrong about the trend that's in place.
If so, we'll all breathe easier and feel good about ourselves. But even if I'm right, our research shows there will be ways to grow your wealth. If you know what to do...
If you’re interested in learning how, first I suggest you immediately STOP doing everything you’ve learned through the mainstream. I also recommend you forever quit watching TV programs like Mad Money... Squawk Box... or any other so-called “investment shows.”
Growing wealthy over the long term — during both boom and bust times —  doesn’t involve day trading at your computer. Nor does it involve buying leveraged option bets... and it doesn’t have to do with the ability to read balance sheets, predict earnings or front-run news.
After 20 years in the financial industry I know this much is true.
“Set it and forget it wealth” involves only two “secret” steps...
Both of which have been used to secure every major family fortune in America. The du Ponts family, the Waltons family, the Mars family... they’ve all taken advantage of these two simple steps.
The secrets have nothing to do with starting a multimillion-dollar business... hiring employees... or anything like that. And they don’t have anything to do with networking or going to Ivy League schools, either.
The strategy works in both boom times... and times of crisis.
Take advantage of the secrets and your wealth grows...
It’s a simple as that.
My guess is that when you first hear about this secret, you’ll laugh. It’s easy. It’s a proven way to wealth. Yet most Americans never think to actually use this secret.
But what really makes the strategy work is secret No. 2...
It involves making a simple wealth move at the START of each year. The move itself is always the same... but there’s a small trick that means everything to this secret.
You won’t need a calculator to do what I’m suggesting — just a pen and a napkin.
How’s this secret “set it and forget it” strategy performed?
Well, that’s the best part...
In the past 39 years, this simple strategy has suffered only two down years. In 1981, it lost 4%. And in 1994, it lost 2.5%.
Throughout the other 37 years — throughout booms and busts — it continued to churn out gains.
In total (including the two losing years), the secret compounded wealth at nearly 10%.
Had you invested just $10,000 into this secret in 1972 for example, you’d be sitting on over $315,000 today. Without ever having to worrying about timing an option move or analyzing a balance sheet.

hostgator coupon 2011

Republicans cancel vote on debt bill


WASHINGTON - An intensive endgame at hand, Republican leaders abruptly postponed a vote Thursday night on legislation to avert a threatened government default and slice federal spending by nearly $1 trillion.

"The votes obviously were not there," conceded Rep. David Dreier, R-Calif., after Speaker John Boehner and the leadership had spent hours trying to corral the support of rebellious conservatives.

Democratic leader Nancy Pelosi issued a statement after the delay of the vote: "Hopefully, now the Republicans will come back to the table to negotiate a bipartisan, balanced agreement that is overwhelmingly supported by the American people.

"Republicans have taken us to the brink of economic chaos. The delay must end now so we can focus on the American people's top priority: creating jobs and growing the economy."

GOP leaders are scheduled to meet Friday morning at 10 to discuss the path forward.

A GOP Leadership aide commented: "There will be guidance on tomorrow's schedule from the Majority Leader's Office later tonight. When we took the majority we promised to end the practice of forcing substantial bills through the House in the dark of night, and we take that pledge seriously."

The decision created fresh turmoil as divided government struggled to head off an unprecedented default that would leave the Treasury without the funds needed to pay all its bills. Administration officials say Tuesday is the deadline for Congress to act.

President Barack Obama has threatened to veto the House bill, and the White House taunted Republicans as they struggled.

"Another day wasted while the clock ticks, now is the time to compromise so we can solve this problem and reduce the deficit," tweeted communications director Dan Pfeiffer.

Senate Democrats stood by to scuttle the bill -- if it ever got them -- as a way of forcing Republicans to accept changes sought by Obama.

The first sign of trouble for the House's supporters occurred after hours of routine debate, when the GOP leadership suddenly halted work on the measure.

As the evening slipped by Boehner summoned a string of Republican critics of the bill to his office. Asked what he and the speaker had talked about, Rep. Jeff Flake, R-Ariz., said, "I think that's rather obvious. ... There's negotiations going on."

Based on public statements by lawmakers themselves, it appeared that five of some two dozen holdouts were from South Carolina. The state is also represented by Sen. Jim DeMint, who has solid ties to tea party groups and is a strong critic of compromising on the debt issue.

Others said conservatives wanted additional steps taken to try to send a constitutional balanced-budget amendment to the states for ratification.

A few first-term conservatives slipped into a small chapel a few paces down the hall from the Capitol Rotunda as they contemplated one of the most consequential votes of their careers.

Asked if he was seeking divine inspiration, Rep. Tim Scott, R-S.C., said that had already happened. "I was leaning no and now I am a no."

Many more congregated in the office of the chief GOP vote counter, California Rep. Kevin McCarthy, perhaps drawn to the 19 boxes of pizza that were rolled in. Boehner joined them but did not speak to reporters.

Earlier, Boehner had exuded optimism.

"Let's pass this bill and end the crisis," said the president's principal Republican antagonist in a new and contentious era of divided government. "It raises the debt limit and cuts government spending by a larger amount."

President Barack Obama has threatened to veto the measure, and in debate on the House floor, Rep. Debbie Wasserman Schultz of Florida savaged it as a "Republican plan for default." She said the GOP hoped to "hold our economy hostage while forcing an ideological agenda" on the country.

Despite the sharp rhetoric, there were signs that gridlock might be giving way.

Special report: America's debt battle
Reid plans for quick defeat of Boehner debt plan
Trouble? House GOP delays debt limit vote

"Around here you've got to have deadlock before you have breakthrough," said Sen. Kent Conrad, D-N.D. "We're at that stage now."

Wall Street suffered fresh losses as Congress struggled to break its long gridlock. The Dow Jones industrial average was down for a fifth straight session.

The Treasury Department moved ahead with plans to hold its regular weekly auction of three-month and six-month securities on Monday. Yet officials offered no information on what steps would be taken if Congress failed to raise the nation's $14.3 trillion debt limit by the following day.

Administration officials have warned of potentially calamitous effects on the economy if the country defaults on its obligations -- a spike in interest rates, a plunge in stock markets and a tightening in the job market in a nation already struggling with unemployment over 9 percent.

White House press secretary Jay Carney outlined White House compromise terms: "significant deficit reduction, a mechanism by which Congress would take on the tough issues of tax reform and entitlement reform and a lifting of the debt ceiling beyond ... into 2013."

The last point loomed as the biggest obstacle.

The House bill cuts spending by $917 billion over a decade, principally by holding down costs for hundreds of government programs ranging from the Park Service to the Agriculture Department and foreign aid.

It also provides an immediate debt limit increase of $900 billion, which is less than half of the total needed to meet Obama's insistence that there be no replay of the current crisis in the heat of the 2012 election campaigns.

An additional $1.6 trillion in borrowing authority would be conditioned on passage of spending cuts of a greater amount.

The GOP bill's $917 billion in upfront spending cuts was trillions less than many tea party-backed rank-and-file Republican lawmakers wanted but a total that seemed nearly unimaginable when they took power in the House last winter with an agenda of reining in government. Numerous Republicans grumbled that the legislation didn't cut more deeply, and Boehner and the rest of the GOP leadership have spent their week cajoling reluctant conservatives to provide the votes needed to pass it.

Until evening, it appeared they were succeeding.

"It gives us a little bit of heartburn because it doesn't go big enough," said Rep. Sean Duffy, R-Wis., a first-term lawmaker who said he would vote for the bill as the best one available.

Another first-term Republican, Rep. Martha Roby of Alabama, said the bill was "far from perfect. But I don't have the luxury of writing the plan by myself, and neither does Speaker Boehner."

While the White House and Democrats objected to the House bill, they readied an alternative that contained similarities.

Drafted by Senate Majority Leader Harry Reid, it provides for $2.7 trillion in additional borrowing authority for the Treasury. It also calls for cuts of $2.2 trillion, including about $1 trillion in Pentagon savings that assume the end of the wars in Iraq and Afghanistan.

Even before the House voted, Reid served notice he would stage a vote to kill the legislation almost instantly.

"No Democrat will vote for a short-term Band-Aid that would put our economy at risk and put the nation back in this untenable situation a few short months from now," he said.

With the House and Senate focused on debt-limit legislation at opposite ends of the Capitol, 11 religious leaders protesting budget cuts were arrested in the Rotunda midway between the two chambers.

Democratic Rep. Chellie Pingree of Maine said on the House floor that they were praying for those who will be "hurt the hardest" by the bill being considered.

Rep. David Dreier, R-Calif., countered that he, too was praying -- to avoid a default.

The day's events marked the climax of a struggle that began last winter, when the Treasury Department notified Congress it would need additional borrowing authority, and Boehner said any increase would have to include steps to reduce future spending.

At first the White House balked at the terms, then relented. That gradually morphed into a series of bipartisan negotiations, one led by Vice President Joe Biden, then another by Obama, and finally, a round of golf that led to stab at a "grand bargain" between the president and Boehner.

Boehner announced last Friday he was calling off the talks, setting in motion a frantic week of maneuvering as the default deadline grew near.

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Blast hits Iran-Turkey gas pipeline, cuts supplies

TEHRAN — A blast early Friday hit a pipeline carrying natural gas from Iran to Turkey, forcing a cut in supply, an Iranian oil official said.

"The export of gas to Turkey has been temporarily halted after an explosion struck the pipeline" in northwestern Iran, spokesman for National Iranian Gas Company (NIGC) Majid Boujarzadeh told the oil ministry's news agency SHANA.

According to Boujarzadeh, the explosion occurred near the Bazargan border crossing, in Iran's West Azarbaijan province.

He said an investigation had been launched into the cause of the blast.

Boujarzadeh said repair work on the pipeline was under way and expressed hope for a speedy resumption of the gas flow.

It is not the first time gas supplies to Turkey have been disrupted; in August 2010, the pipeline was damaged in a blast blamed on separatist armed Kurdish rebels.

Iran, which has the second largest proven gas reserves in the world after Russia, exports about 30 million cubic metres of gas to Turkey annually, according to deputy oil minister and chairman of the NIGC, Javad Ouji.

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DEBT TO ME: Uncle Sam Writes 212 Million Checks a Month

With a potential government shutdown looming, members of the Obama administration have been frequently warning Americans about just how many people are counting on federal programs and payouts.

During a recent White House briefing, Press Secretary Jay Carney noted the payments “include bills to contractors, small businesses, big businesses that do work with the government, the people who manufacture the ammunition that we send to our troops in Afghanistan.”

“We write 80 million checks a month,” Treasury Secretary Timothy Geithner said on “Fox News Sunday” this week. “There are millions and millions of Americans that depend on those checks coming on time.”

Those 80 million checks are just the ones from the Treasury. In total, the government sends out nearly 212 million checks or electronic payments on a monthly basis. The top five categories are: Medicare claims, Social Security payments to older Americans and the disabled, food stamps and payments to active and retired military personnel.

Irvin Faunce, who served as a Deputy Commissioner of the Financial Management Service within the Treasury Department, worries that the sheer volume of the payments may have dulled lawmakers and agencies in Washington to the reality of exactly what the government is spending.

“I don't believe that there really is a realization that this is really real money,” he told Fox News.

Faunce also notes that once a government check is issued, it’s literally as good as cash. “There is no stop payment capability; it's not like a commercial check that can be stopped.”

Say, for instance, that you take a tax refund check to your bank. According to Faunce, the bank must give you cash – even if it has some institutional worry that the U.S. government doesn’t actually have the funds to reimburse the bank. “Then if it bounces, from the standpoint that the Treasury can’t reimburse banks for the money that they paid, then the banks are out of the money.”

Faunce notes that some banks might be willing to tap into their own reserves, fully believing the government will eventually made good on the debt. However, that would mean the banks couldn’t use the money to earn interest – a move they certainly hope they won’t have to make.

Read more: http://www.foxnews.com/politics/2011/07/28/debt-to-me-uncle-sam-writes-212-million-checks-month/#ixzz1TVdnuXaI

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US economy: GDP growth much weaker than thought

US economic growth chart

US economic growth is much weaker than first thought, government figures show.

The economy grew at an annualised rate of 1.3% in the second quarter, the Commerce Department said. Economists had forecast growth of 1.8%.

And in a surprise move, first-quarter growth was revised down sharply from 1.9% to 0.4%.

This evidence of economic weakness increases the pressure on the government as it attempts to increase its borrowing limit.

Slow growth makes it more difficult for the US to tackle its deficit.

If Congress does not raise the debt limit by 2 August, the US government could face funding shortfalls that it cannot meet by extra borrowing.

Businesses can't hire until consumers start spending, but people won't spend unless they're sure they have jobs”Carl RiccadonnaEconomist, Deutsche Bank
Why has the US economy stalled?

President Barack Obama urged Democrats and Republicans in the Senate "to find common ground" on a plan to address the debt crisis.

"There are plenty of ways out of this mess. But we are almost out of time.

"If we don't come to an agreement, we could lose our country's triple A credit rating," he said. "That is inexcusable."

"On a day when we've already been reminded how delicate the economy is, we can end [this crisis] ourselves."

US markets opened lower, with the Dow Jones, the S&P 500 and the Nasdaq all falling 1% in early trade.

European markets, which were already in negative territory, saw further falls after the figures were released.'Shocking'

After the revision, the US growth figures now correspond to a quarterly increase of just 0.1% in the first three months of 2011, followed by a 0.3% rise in the second quarter.

Economists had expected steady growth in the second quarter, now that supply constraints from Japan after the earthquake and tsunami are easing.
The White House will see a silver lining in today's grim GDP figures, if they help to remind the negotiators on Capitol Hill of the fragility of the US recovery”
The main reason for the lower-than-expected second-quarter figure was that consumer spending virtually ground to a halt, growing by just 0.1%, compared with 2.1% growth in the first quarter.

The large downward revision to the first quarter's growth figure was made as a result of lower capital investment and higher imports than first thought, and adjusting how seasonal factors are taken into account.

In addition, growth for the fourth quarter of 2010 was revised down from 3.1% to 2.3%, indicating that the economy had already started slowing before the end of last year.

Tim Ghriskey, chief investment officer at Solaris Asset Management, said the figures were "shocking".

"Clearly this is evidence of a mid-cycle slowdown. The only question now is do we see a pick-up in the second half and so far the economic data to date doesn't suggest that.

"You might have some analysts come out and talk recession, talk about a double dip. Right now none of the forecasts even come close to that but this is weak data."Worse recession

The Commerce Department's Bureau of Economic Analysis makes annual revisions to its GDP estimates every July, incorporating more complete and detailed data.

It now says that the US recession of 2007-2009 was more severe than previously reported, with the economy shrinking by 5.1% over that period, rather than 4.1%.

Titanic Rivalry: China - US

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IMF chief warns of dollar decline if no US debt deal

Failure by the United States to raise the debt ceiling by the Aug 2 deadline could lead to a fall in the value of the dollar and raise "doubts" among those using it as a reserve currency, the head of the IMF said.

"It would probably entail a decline of the dollar relative to other currencies, and probably doubts in the mind of those people who reserve currencies as to whether the dollar is effectively the ultimate and prime currency of reserve," Christine Lagarde told PBS NewsHour in an interview on Thursday.

Lagarde, a former French finance minister, said it was difficult to predict what the market fallout would be if the US did not reach an agreement and the country defaulted. "There are so many counterparties that are invested in US Treasury funds, it would be very difficult and very dramatic," she added.

In Washington, a Republican plan to cut the budget deficit stumbled toward a vote in Congress on Thursday and its expected demise could force a compromise to avert an imminent and unprecedented debt default by the world's largest economy.

With the measure short of as many as four votes, according to aides, the Republican-led House of Representatives abruptly delayed a vote as Speaker John Boehner struggled to overcome objections from conservative rebels in his own party.

The Telegraph

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U.S. threatens to stop sharing ballistic missiles intelligence with Turkey

U.S. threatens to stop sharing ballistic missiles intelligence with Turkey

PanARMENIAN.Net - Ankara would have to operate without NATO’s intelligence information on incoming ballistic missiles if it chooses to buy Chinese or Russian systems for its national air and missile defense program, officials of the Western alliance have warned Turkey, according to Hürriyet Daily News.

Participating in the ongoing competition to win Turkey’s national air and missile contract are the U.S. partnership between Raytheon and Lockheed Martin, with their Patriot air defense systems; Russia’s Rosoboronexport, marketing the S300; China’s CPMIEC (China Precision Machinery Export-Import Corp.), offering its HQ-9; and the Italian-French Eurosam, maker of the SAMP/T Aster 30. Turkey is planning to make its selection late this year or early next year.

Many Western officials and experts say that since the Russian and the Chinese systems are not compatible with NATO systems, their potential eventual victory might provide them with access to classified NATO information, and as a result may compromise NATO’s procedures.

But despite this criticism, Turkey so far has ruled against expelling the Chinese and Russian options, saying there is no need to exclude them from the Turkish competition.

One Western expert countered that “if, say, the Chinese win the competition, their systems will be in interaction, directly or indirectly, with NATO’s intelligence systems, and this may lead to the leak of critical NATO information to the Chinese, albeit inadvertently. So this is dangerous.”

“NATO won’t let that happen,” another Western official told the Hürriyet Daily News on Monday. “If the Chinese or the Russians win the Turkish contest, their systems will have to work separately. They won’t be linked to NATO information systems.” This was the first time NATO has strongly urged Turkey against choosing the non-Western systems.

“One explanation is that Turkey itself doesn’t plan to ultimately select the Chinese or Russian alternatives, but still is retaining them among their options to put pressure on the Americans and the Europeans to lower their prices,” the Western expert said. Turkey’s long-range air and missile defense systems program (T-Loramids) has been designed to counter both enemy aircraft and missiles.

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