Thursday, October 22, 2015
The Sky is the limit.......
Even as the bond market has been rather concerned about another possible debt ceiling showdown as we showed before, and which earlier today prompted the Treasury to announce the purposefully dramatic step of postponing the auction of 2 Year Notes next week, the reality is that one way or another, with an equity-driven wake up call for the GOP or without, the debt ceiling will be raised.
The only question is how much.
As a reminder, the reason why the total US debt held by the public hasn't budged from $18.1 trillion since March 16, 2015 is because that is when the last debt ceiling limit was hit. In the seven month since, the US Treasury has been cruising along on emergency cash measures, even as the total debt - if only for reporting purposes - has not budged (in reality it has grown by about half a trillion).
It will budge very soon, because no matter what the outcome of the upcoming week of debt ceiling negotiations, one thing is certain: the US has to be able to borrow more in order to survive.
And as The Hill reported, when one gets beyond the traditional posturing, the outcome will be the following:
The House is expected as early as Friday to vote on a conservative debt-limit proposal even though chances are slim that the plan can pass the Senate.Speaker John Boehner (R-Ohio) told the GOP conference on Wednesday that he is expecting a vote on the Republican Study Committee (RSC) plan that would raise the debt limit to $19.6 trillion from $18.1 trillion and would run through March 2017.
Who will be the Republican to submit the unpopular measure? Most likely the outgoing speaker John Boehner, who will seal his tenure with this final act: "With only two weeks to go, the pressure is on the House to pass a measure that raises the nation’s $18 trillion debt ceiling amid a search for the next Speaker."
Yes, the republicans will pretend to demand concessions, such as a balanced budet and other "sound money" conditions...
The proposal would require a House vote on a balanced-budget amendment by Dec. 31, would implement a short-term freeze on federal regulations through July 1, 2017, and would compel the House to remain in session without a break if spending bills aren't done by Sept. 1.
... but they won't get them because the corporations pulling the strings of every D.C. politicians are the biggest beneficiaries from US debt-funded largesse, especially if one throws in the occasional contained or not so contained war.
This means another victory for the Demorats who have required a "clean" debt raise. This is precisely what they will get, and why it will have to take place under John Boehner as Paul Ryan would surely tarnish his reputation with the Freedom Caucus if his first act is one seen as submission to the left.
Which means that the only certain outcome from the melodramatic debt ceiling fight over the next several days, is the following: the US is about to have a brand spanking new debt ceiling, one that should last it until March of 2017: $19,600,000,000,000.
If the chart below looks increasingly exponential, that is not a coincidence.
Credit to Zero Hedge
Mike Adams, a True Visionary
A Secret Space Program
A Craft That Renders All Others Obsolete
Where is the Proof?
Massive Scientific Cover-Up
Credit to Common Sense
Millions of Americans were gearing up for some huge event to happen in September, but the world didn’t end and now many of them have given up entirely on prepping. Of course the truth is that some absolutely earth-shattering events did take place last month, but because September did not play out exactly as some were anticipating, a lot of people feel very let down. My contacts in the emergency food industry tell me that sales have dropped off dramatically, and yesterday I was told by someone that I trust that the same is true for those that sell precious metals. But this should not be happening. What we witnessed in August and September was just the warm up act, and all of the numbers are absolutely screaming at us that we are right on track for a major global crisis. In this article I am going to focus on economic and financial issues, but there are so many other things going on around the planet right now that threaten to throw our world into turmoil. Anyone that thinks that it is safe to “relax” now is simply not paying attention. The following are 20 reasons why all the people that quit prepping after September are dead wrong…
#1 U.S. exports are down 11 percent for the year so far. The only other times they have fallen this dramatically since the turn of the century were during the last two recessions.
#2 Since March, the amount of stuff being shipped by truck, rail and air inside the United States has been falling every single month on a year over year basis. This is a clear indication that economic activity is really slowing down.
#3 Wholesale sales in the U.S. have fallen to the lowest level since the last recession.
#4 The inventory to sales ratio has risen to the highest level since the last recession. This means that there is a whole lot of unsold inventory that is just sitting around out there and not selling.
#5 Industrial production declined for five months in a row during the first half of 2015. That is something that has never happened outside of a recession.
#6 Wal-Mart is projecting that its earnings may fall by as much as 12 percentduring the next fiscal year.
#7 Don’t expect U.S. consumers to rush in and save the day. According to brand new numbers from the Social Security Administration, 51 percent of all American workers make less than $30,000 a year.
#8 And remember, there are 102.6 million working age Americans that do not even have a job of any kind.
#9 According to Challenger Gray, layoffs at major firms have risen to the highest level that we have witnessed since 2009.
#10 The number of job openings in the United States declined by 5.3 percentduring the month of August. That was a huge plunge for just one month.
#11 According to British banking giant HSBC, the world is already in a “dollar recession“. Global trade has fallen 8.4 percent so far this year, and global GDP expressed in U.S. dollars is down 3.4 percent.
#12 In September, Chinese exports were down 3.7 percent compared to one year ago, and Chinese imports were down a staggering 20.4 percent compared to a year ago.
#13 During the month of August, we witnessed the 8th largest single day stock market crash in U.S. history on a point basis and the 10th largest single day stock market crash in U.S. history on a point basis. It was the first time ever that the Dow Jones Industrial Average declined by more than 500 points on two consecutive trading days.
#14 On August 24th, we also witnessed the greatest intraday stock market point swing of all time. From the high point of the day to the low point of the day, the Dow Jones Industrial Average plummeted 1,089 points before recovering.
#15 At one point in September, approximately 11 trillion dollars of stock market wealth had been wiped out around the globe.
#16 At one point in September, Chinese stocks were down about 40 percentfrom the peak of the market.
#17 At one point in September, German stocks were down about 25 percentfrom the peak of the market.
#18 Since the last financial crisis, the global economy has added another 50 trillion dollars to our colossal pile of debt. That means we are far more vulnerable to a crisis than we were the last time around.
#19 The list of global financial giants that are rumored to be in very serious trouble includes Deutsche Bank (the biggest bank in Germany), UBS (the biggest bank in Switzerland) and three of the largest commodity trading firms on the entire planet: Glencore, Trafigura and the Noble Group. The total collapse of any one of them would easily be another “Lehman Brothers moment” for the global financial system.
#20 Stocks are still in a massive bubble. In fact, stocks in the U.S. are going to have to fall more than 30 percent from the current levels just to get back to what is considered “normal” or “average”. The following is an extended excerpt from one of my previous articles…
In recent years, stocks have soared to unbelievably unrealistic levels. One of the most popular methods of measuring the true value of stocks is something called the cyclically-adjusted price to earnings ratio. It was developed by economist Robert Shiller of Yale University, and it attempts to accurately show how much we are paying for stocks in relation to how much those corporations are actually earning. When this number is very high, stocks are overvalued, and when this number is very low stocks are undervalued.
Earlier this year, CAPE hit a peak of about 27, and by the beginning of August it was still sitting up around 26. The only times CAPE has been higher have been just before other stock market bubbles have burst…
It would take a total drop of about 40 percent from the peak of the market just to get back to average. So far the Dow has fallen about 10 percent or so, so it is going to take another 30 percent crash just to get to a point where stock prices are considered “normal” once again.
In this day and age, we are so impatient and our attention spans are pitifully small. We live in a world of instant coffee, video on demand, and 48 hour news cycles. Very few of us are willing to take a long term view of things because we have all become accustomed to “living in the now” and focusing on what is in front of us this very instant.
Yes, the headlines are not screaming about a “stock market crash” or an “economic depression” on this particular day in October.
But that doesn’t mean that we are out of the woods by any stretch of the imagination.
The biggest bank in the western world (HSBC) says that a global recession has now begun, and the pain that we have experienced so far is just the tip of the iceberg.
So please don’t think that it is time to relax.
The month of September was not “the end” of anything.
Rather, it was just the beginning…
Credit to Economic Collapse