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| Our future is not in good hands. |
The US debt ceiling deal was done and the shortly there after debunked as nothing but an utter joke by the Congressional Budget Office. The CBO came up with pretty much the same conclusion when Congress was farting around with the federal budget and risked a federal government shutdown earlier this spring.
Well, in a few short weeks the whole charade will begin again. September 30, 2011, is when the federal budget for 2012 is due and Congress hasn't even started on it yet. Like last year they will most likely pass a series of temporary resolutions instead of a real budget. The strategy will be to push the debate as close to next year's presidential election as possible; then make a big stink of it.
The way the US government is burning through money there is a good chance that the debt ceiling could be breached, again, sometime near the 2012 presidential election. Given the politicians' childish behavior so far, it is almost certain that the Republicans will do what ever they can to make sure the debt ceiling is breached during the next campaign cycle for their own petty, political gains - what's best for the country be damned.
S&P downgraded the US's credit rating to AA+ (with a negative outlook) less because of the fiscal policy and more because of the ludicrous behavior of the policy makers! The politicians' shenanigans got so bad that not only did the international community get fed up with the damn fools but so did Joe and Jane Sixpack-American. Losing international confidence is one thing; losing it at home is even worse.
In the last election cycle the voters were voicing a growing disdain for all incumbents. This next election cycle may see that anger come to fruition.
Last week the markets went through violent convulsions unlike any time before. Down 500 points one day, up 400 points the next, then down 600 points another day followed by another several-hundred point upswing. These were not flash-crashes.
Flash crashes have been occurring more frequently. In March of last year the markets crashed by 1,000 points instantly and then just as fast, instantly recovered. Flash crashes are caused by the computers that are running thousands of trades per second. "SkyNet", "H.A.L." and even "Johnny-5" are running the stock market now. But once in a while the humans reclaim control and override the computers.
That's what happened last week; the humans took control and proceeded to panic. The crashes and recoveries each took an entire day, from start to close of the markets, instead of the mere milliseconds that it would take for a computer algorithm to process.
What is curious is that the recoveries were greater than the typical market "dead-cat-bounce". There is speculation that the government stepped in and covertly manipulated the markets into a false recovery. The government openly manipulates markets every day through regulations, tariffs, and other, known regulatory policies but something about the rebounds of last week smells fishy.
Gold shot up more than $200 in two week's time to over $1,800 per ounce. Only a few years ago gold was priced around $500 per ounce. That was when the US economy and the dollar were strong and stable. The price movements of gold have long been an indicator of bigger things going on. Margin hikes have put a damper on the price of gold for the moment but the reasons for it's rapid price ascent are still very much present. Big moves in gold mean big problems - those, the world economies have in spades.
The Eurozone looks like it is on the verge of it's own "Lehman Brother's" moment. It's not the governments that are (directly) in trouble, it's the banks that are sinking; particularly German and French banks. All the big banks are interconnected through deals and credit default swaps. When the big banks go down they take everyone with them. The big banks are all interconnected - even the big American banks are tied to the European banks.
When Lehman Brother's went under in 2008 it was the main economic trigger for the cascading financial implosion that occurred across the globe (all big banks are interconnected). Since Lehman Brothers was an American-based bank, the US was at the epicenter of the 2008 collapse. Now it is big European banks that are putting the Eurozone at the epicenter of the next global banking crisis.
Or not...
Over on this side of the pond, one of the six, American mega-banks that could take down the entire country (and the rest of the global economy with it - things are that precarious around the globe), Bank of America might turnout to be the next Lehman Brothers.
Already $118 billion of Bank of America's toxic assets have been guaranteed by the US Government (read: bought by the US taxpayer) and now it looks like another $73 billion of Bank of America's toxic assets will be dumped into Fannie Mae (read again: bought and paid-for by the US taxpayer). If that doesn't work maybe JP Morgan-Chase will take over Bank of America. JP Morgan-Chase can afford to do this (even though they had to be bailed out too) because JP Morgan-Chase sits on the board of directors of the Federal Reserve. This grants JP Morgan-Chase direct access to the money-printing presses (read yet again: bought, paid-for and bailed-out by the US taxpayer).
It's a race to the bottom. Which to-big-to-fail bank will scuttle the global economy next?
Oh, and the $800 billion dollar TARP, bank bailout of 2008... seems not all of the money has been paid back... and during the same time period the Federal Reserve was quietly shoveling out trillions of US taxpayer dollars to foreign banks and foreign corporations.
Look at page 205 (page 218 in Adobe Reader page search) of the GAO (US Government Accountability Office) Fed Investigation Report. See that $10,057 total at the bottom of the table 24 and the upper left corner of the table state that the figures are "Dollars in billions"? That means the $10,057 isn't ten thousand, fifty-seven dollars... it means the amount is ten trillion, fifty-seven billion dollars! ($10,057 x 1 billion)
$10,057 dollars in billions?
No wonder the government can't figure out a budget! It sees $10,057 when the figure is really $10,057,000,000,000!
How many American taxpayers would think it's OK to bail out foreign banks with $10 trillion US taxpayer dollars while millions American taxpayers have lost their jobs and lost their homes? (Oh, and don't forget that America is in an additional $15 trillion dollars of debt.)
How many American taxpayers, jobless, homeless, or otherwise, would think it's OK to bail out the Central Bank of Libya with US taxpayer dollars? (Which the Federal Reserve did.)
A misallocation of US capital?
A misrepresentation of the American people's will?
A big mistake?
Oh, yeah. Definitely.
Comments
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Related Links:
Zero Hedge - Bank Of America Continues Firesales To Shore Up Liquidity, Sells Canadian Credit Card Business To TD Group
http://www.zerohedge.com/news/bank-america-continues-firesales-shore-liquidity-sells-canadian-credit-card-business-td-group
The Stock Market Watch - Bank of America is the 2011 Lehman Brothers (Debt Man Walking)
http://thestockmarketwatch.com/newsletters/2011/08/10/bank-of-america-is-the-2011-lehman-brothers-debt-man-walking/
Wikipedia - Troubled Asset Relief Program (T.A.R.P.)
http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
Bernie Sanders, US Senator for Vermont (I) - The Fed Audit
http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3
Wikipedia - Government Accountability Office (GAO)
http://en.wikipedia.org/wiki/Government_Accountability_Office
Bernie Sanders, US Senator for Vermont (I) - (pdf file of Fed Investigation) GAO Report to Congressional Addressees, FEDERAL RESERVE SYSTEM, Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance
http://sanders.senate.gov/imo/media/doc/GAO%20Fed%20Investigation.pdf
Bernie Sanders, US Senator for Vermont (I) - Release: Why Did the Fed Bail Out the Bank of Libya?
http://sanders.senate.gov/newsroom/news/?id=ece720e4-d5d6-4eff-937c-dcada784c3f9
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