- It is way past midnight, way too late! The USD crisis is set in stone. The FedRes will continue QE and monetize debts. They have consumed as much as 80% of public debts issued last year. This year will not be any different. Their strategy, despite denials, is to print money out of thin air and hyper-inflate away all the debts. The banksters next move is to own the country.
- Foreclosures are at record highs despite Obama’s administration’s help. This means that banks are now left holding massive amount of property and land. At the moment, these assets are way below their book value, anywhere between 10% to 50% of book value. To get out of this, the banksters will hyper-inflate. Within 2 years, these land and properties will rise way above their book value. Voila! The banksters balance sheet will then look pretty good and they will own most of the country. The sheeple are screwed once again!
- CNBC reports:
The United States must soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs, a panel of experts said on Wednesday.
“It has got to be done. It will be done some day. It may be done with enormous pain. Or it may be done more rationally,” said Rudolph Penner, a former head of the nonpartisan Congressional Budget office who co-chaired the 24-strong Committee on the Fiscal Future of the United States.
The national debt has risen above 50 percent of GDP (gross domestic product) from 40 percent two years ago, and within 20 years will blow past a previous record above 100 percent of GDP set after World War Two without stern official steps.
Mounting debt could sap investor confidence in the economy, and the nation’s ability to honor its obligations, pushing up interest rates and causing a steep fall in the value of the dollar as international creditors seek safer returns elsewhere.
At one end of the options, the committee reviewed a policy mix based on low spending and low taxes. This envisaged payroll and income tax rates staying as they are, around 18-19 percent of GDP, but healthcare and retirement program costs sharply curtailed and defense and domestic spending cut 20 percent.
The other end of the scale looked at a high spending/high taxes policy mix that would maintain the projected growth in Social Security and allow higher spending on federal programs. However, this would see taxes rise above 40 percent of GDP, or in the neighborhood of Denmark or Sweden, in order to hold the national debt to 60 percent, unless a value added sales tax was also introduced to augment government revenue.
Between the two were several intermediary solutions relying on a blend of higher taxes and lower spending. The committee made no recommendations but warned there was no time to waste.
“If action is taken soon, the country has a wide choice of options to help achieve fiscal sustainability. All are difficult; but if action is postponed, the options will be fewer and the choices even more difficult,” they said.
Marc Faber: The Next Thing You Need To Worry About Is The PIIGS! Eurozone Sovereign Debt Default Crisis!
- Take your pick on which country will default first: America, PIIGS, UK or Japan. When one of these major countries declare sovereign debt default, it will be the domino that causes a cascade of defaults. We can basically expect a world financial meltdown, global monetary crisis and banking crisis. I have never in my whole life seen a world situation as bad as this. I am not optimistic and don’t see any way out of this coming financial tsunami! Yahoo Finance reports:
After every financial crisis there’s a sovereign debt crisis, Marc Faber says. Countries that borrowed too much during the boom times start struggling to pay their competitors back, and eventually some of them default.
The countries most likely to blow up this time around are the “PIIGS”: Portugal, Ireland, Italy, Greece, and Spain. One ore more of them, Faber says, will likely default in the next couple of years. And, that could result in the death of the Euro currency. Longer-term, Faber says, Japan and the US are in line for the same fate.
The US crisis won’t hit us this year or next year. But within 5-10 years, the United States will be forced to quietly default on its debt, most likely by printing money and destroying the value of the currency. The main problem comes down to two things: 1) ballooning debts and 2) future interest costs.
As these charts from Faber’s Gloom, Boom, And Doom Report show, in the past decade, the U.S. government’s total debt and liabilities have gone through the roof, especially when Fannie, Freddie, Medicare, and Social Security are taken into account. This trend is unsustainable, and it will correct itself only through a rapid acceleration of economic growth and tax revenues, a new-found financial discipline, or a crisis–or a combination of all three.
The second problem is interest costs. Right now, the government’s debt and deficits aren’t creating an undue burden because the government can borrow so cheaply. Eventually, however, as the country’s financial situation gets weaker, interest rates will likely rise, and our interest costs will go through the roof.
According to Faber, our annual interest costs currently amount to 12% of the government’s tax revenue. Within five years, Faber estimates, these costs will soar to 35% of tax revenue. This will force the government to cut spending (unlikely) and/or frantically print money. See the coming US debt crisis in charts
- Why are central banks accumulating this barbarous relic? As much as 60+% of world reserves are held in USD or USD denominated assets (like American treasury bonds). It is a sign of the lack of confidence in the USD when central banks accumulate gold. They are increasingly dumping the USD in favour of gold. Central banks are not speculators, they buy and hold gold as part of their reserves policy. China itself needs to buy as much as 5000 tons of gold for the next 1-2 years. The Chinese will come to their senses and buy up the remaining 203 tons of IMF gold at $1100+/oz in my opinion. There are a few central banks who will snap it up. Gold is heading alot higher than most people imagine possible. Mineweb reports:
The latest interim Update to the GFMS Gold Survey 2009 reports that, on a quarterly basis, the official sector became a net purchaser of gold during the second quarter of 2009 and has remained so since. GFMS expects that IMF sales will augment official sector sales this year, but that modest purchases elsewhere will constrain volumes overall. The Survey estimates that net sales from the sector were down 90% in 2009 against 2008 levels, although the study does warn that estimates may be revised in the future as a result of the lag that often exists between central bank activity taking place and subsequently being identified.
The sector shifted onto the buy-side of the market during the second quarter and has remained there since. The “collapse” in net sales is largely attributable to the substantial fall in CBGA disposals; these were down by 160 tonnes from the already low level of 2008. The final CBGA year itself (ended 26th September) saw sales of just 157 tonnes, compared with the quota of 500 tonnes. The third CBGA, which followed on seamlessly from the second, has annual quotas of 100 tonnes and will accommodate any on-market sales effected by the IMF. The latest figures from the European Central Bank make very interesting reading; the weekly reports from the ECB imply that the amount of gold held in the Euro system of central banks has fallen by less than five tonnes since the start of the most recent CBGA. This is unprecedented and is a fair reflection of the changed attitudes in the official sector towards gold and its role in the international financial system, stemming both from gold’s positive price performance and from concern over asset risk, especially following the recent crisis.
Many countries within the European group remain ”overweight” in gold. On the basis of the latest reported IMF figures France Germany and Italy all hold more than 65% of their gold+foreign exchange holdings in the form of gold, while Portugal holds over 80% in gold. Swiss holdings are now down to 30% of total, while the ECB’s holding are approximately 20%. The world average is approximately 11%.