Congress

Another Quote For The Week

One more QFTW to ponder as the work week kicks off:

I think the American people should know that the members of Congress are underpaid. I understand that it’s widely felt that they underperform, but the fact is that this is the board of directors for the largest economic entity in the world.

-U.S. Representative Jim Moran (D-VA 8th District), in an interview last Thursday with CQ Roll Call

Members of Congress make $174,000 a year and have their travel and work-related expenses covered by American taxpayers.

Gallup reported back on March 10 that only 15 percent of Americans approve of the overall job Congress is doing.

Perhaps other elected representatives to Congress who think along the same lines as the departing Moran should make way for aspiring civil servants willing to make sacrifices when it comes to salary and terms served. After all, from what I understand, I don’t think it was the intention of the Founding Fathers for citizens to make a career out of serving in the national legislature- which is exactly what a number of these politicians are doing.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Economic Fiction

Regular readers of Survival And Prosperity may have noticed I didn’t blog much last week. Truth be told, I was reading and watching a lot of blog-related material that I want to address in the coming weeks. I didn’t pay as close attention to the news as I would a “normal” week. But it was hard not to notice all the “rosy” talk about the U.S. economy. Sure, some decent economic reports have come out. Problem is, I don’t have much faith in them as I saw some years back how they can- and subsequently have been- manipulated to be more positive than if the numbers hadn’t been fudged.

As far as I’m concerned, the United States economy and larger financial system are still in big trouble at the end of 2013. The so-called “recovery”?- primarily the result of massive amounts of “stimulus” and new debt that the Federal Reserve and Washington chose to employ to paper-over an economic disaster that reared its ugly head in 2008.

Come to think of it, the “recovery” reminds me a lot of that scene from the 1994 film Pulp Fiction, where Uma Thurman’s character receives a healthy dose of adrenaline after she OD’s:


(Warning: Squeamish readers may not want to watch)
YouTube Video

Just substitute the economy for Ms. Thurman and massive amounts of “stimulus” for the adrenaline, and you might get an idea of what I’m talking about.

Euro Pacific Capital’s Peter Schiff remarked some time ago about all the stimulus going into the economy. He basically pointed out that since there’s been so much of it, it’s only reasonable to expect the recipient would appear to be recovering. Perhaps even full of vitality. However, remove the stimulus and regression eventually sets in.

And that’s where I think we’re heading.

Now, I’m not just talking about a recession. It’s a little bit more complicated.

As I mentioned before, not only has there been a tremendous amount of stimulus being deployed, but trillions and trillions of dollars worth of new debt accrued as well. The United States was a financial “house of cards” before. All this new debt heaped on top of it has made it even more unstable. Worse- Washington has demonstrated time and time again they have no serious intention of putting a halt to the nonsense.

Therefore, not only am I expecting a U.S. recession, but a financial crash as well.

Regrettably, I just can’t see any way around it at this point in time.

I don’t know how much time we have left before the nation hits the proverbial brick wall, but our “financial reckoning day” is coming.

Washington and the Fed got lucky when they were able to kick the can down the road back in 2008. Eventually, that luck will run out.

Here’s hoping as many Americans as possible are prepared for that inevitable occasion.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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FBI Director: ‘Risk Of That Spectacular Attack In The Homeland Is Significantly Lower’ Than Before 9/11

I heard that FBI Director James B. Comey was on Capitol Hill yesterday speaking before Congress. I was curious to find out what he had to say about potential terrorist threats out there. Timothy M. Phelps reported on the Los Angeles Times website yesterday:

The terrorist threat to Americans is greater overseas than at home and is significantly lower than before the Sept. 11, 2001, attacks, continuing a years-long trend, U.S. officials told a Senate committee Thursday…

“Because we took the fight to the enemy and got our act together in the last 12 years in very, very important ways, the risk of that spectacular attack in the homeland is significantly lower than it was before 9/11,” Comey told the Senate Homeland Security Committee.

(Editor’s note: Italics added for emphasis)

Acting Secretary of Homeland Security Randy Beers shared Director Comey’s assessment and was quoted by the Times as saying:

The dispersion of the Al Qaeda brand in North Africa, in Yemen, in Somalia and in other places- and as it is appearing to manifest in Syria now- means that the kinds of activities that will be undertaken are likely to be undertaken overseas, rather than directed against the homeland.

(Editor’s note: Italics added for emphasis)

While what Comey and Beers said makes sense concerning terrorist activities are more likely to be directed at American interests overseas, I can’t help but think this is only for the time being. From what I’ve taken away from Middle East terror experts, it’s just a whole lot easier for the bad guys to stay local and fight Americans in Afghanistan, for example, than attempting to infiltrate the U.S. homeland and pull something big off there. And according to the Associated Press on November 3:

Washington is expected to keep about 10,000 troops in Afghanistan after 2014, provided the security agreement is signed and includes immunity from prosecution by Afghan courts.

So this scenario might continue on for a while.

Still, it must remembered that Al-Qaeda’s stated objective still remains the following (as noted by the Director of Harvard’s Belfer Center for Science and International Affairs, Graham T. Allison, in a Council on Foreign Relations debate back on April 20, 2007):

Al-Qaeda spokesman Suleiman Abu Gheith has stated al-Qaeda’s objective: “to kill 4 million Americans—2 million of them children—and to exile twice as many and wound and cripple hundreds of thousands.”

(Editor’s note: Italics added for emphasis)

Which, if you think about, really leaves Al-Qaeda no choice but to attack the U.S. ‘homeland” sooner or later in order to achieve such numbers, provided they have the capability of doing so of course.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Phelps, Timothy M. “Officials say terrorist threat on U.S. soil is declining.” Los Angeles Times. 14 Nov. 2013. (http://www.latimes.com/world/worldnow/la-fg-wn-us-terrorist-threat-declines-20131114,0,2603061.story#axzz2kj9HI8Ps). 15 Nov. 2013.

“American, NATO officials offer mixed reports on readiness of Afghan troops ahead of withdrawal.” Associated Press. 3 Nov. 2013. (http://www.foxnews.com/world/2013/11/03/american-nato-officials-offer-mixed-reports-on-readiness-afghan-troops-ahead/). 15 Nov. 2013.

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Quote For The Week

“If you didn’t notice, gold shot higher by 4% in the wake of Congress announcing its non-solution to the government shutdown and the debt ceiling. The circus clowns did nothing more than agree to temporarily raise the debt ceiling and push the fight back a few months. The gold market sees this for what it is: a continuation of the same American fiscal imprudence that got us to this place to begin with. Nothing ever changes in Washington. Same crap; different day. Gold prices have come down in the last year because the speculators fled and the price fell to its natural level. But want to know why the price hasn’t crashed? Look no further than your local congressional chimp.”

-Erika Nolan and Jeff Opdyke in the October 20 issue of the Sovereign Digest, a weekly publication from The Sovereign Society, a Delray, Florida-based organization which provides its global membership trusted sources of information about overseas investing, asset protection, and currency trading

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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U.S. Treasury: Debt Limit Reached By Mid-October

U.S. Treasury Secretary Jacob Lew warned Congress yesterday that the United States will hit its $16.7 trillion debt ceiling in mid-October. Lew wrote in a letter addressed to Speaker of the House John Boehner:

I am writing to provide additional information regarding the Treasury Department’s ability to continue to finance the government, and the extraordinary measures we have undertaken in order to avoid default. On May 17, I wrote to inform you that the U.S. government has reached the statutory debt limit and had begun to implement extraordinary measures. As I stated in that letter, Congress should act as soon as possible to protect America’s good credit by extending normal borrowing authority well before any risk of default becomes imminent.

Based on our latest estimates, extraordinary measures are projected to be exhausted in the middle of October. At that point, the United States will have reached the limit of its borrowing authority, and Treasury would be left to fund the government with only the cash we have on hand on any given day. The cash balance at that time is currently forecasted to be approximately $50 billion…

You can read Secretary Lew’s entire letter on the Treasury Department’s website here (.pdf file).

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Peter Schiff: Fed Creating Another Housing Bubble, ‘Day Of Reckoning’ Early In Obama’s Second Term

First it was “crash prophet” Jeremy Grantham warning:

Courtesy of the above Fed policy, all global assets are once again becoming overpriced.

Now, Peter Schiff is saying the same about housing.

And that America’s “day of reckoning” is right around the bend.

From a March 1 entry posted on The Schiff Report YouTube video blog:

The Fed influenced the housing market during the bubble predominantly by influencing the short end, making it easier for people to take out ARMs. Today, the Fed is influencing the housing market not predominantly by influencing adjustable rate mortgages, but by outright buying 30-year fixed-rate mortgages to drive mortgage interest rates down to record lows. But in both cases, it was the Fed’s interference that inflated the prices, inflated the bubbles, and there’s going to be a disastrous consequence when this bubble bursts. Although this bubble, is not going to be, I think, as large as the previous bubble. I think the consequences will be much bigger, as the Fed is not going to succeed in elevating home prices. But what they are succeeding at doing is transferring significant percentages of bad mortgages from the private sector to the Federal Reserve. In fact, the federal government has never been more involved in the housing market than it is today. Not only does the government insure over 90 percent of the mortgages, through the FHA, through Fannie, and Freddie. But now the government owns the mortgages. The Federal Reserve is financing them. The Federal Reserve is buying $45 billion worth of mortgages every month. So the government is the housing market…

Now President Obama, we’s got a bigger bubble going during his presidency, and he ain’t getting out of Dodge either. Only this time, I think, the bubble is going to burst not late in his second term, but early. And the difference is going to be- there are no more bailouts. This is the last bubble. This is the biggest bubble. In my book, The Real Crash: America’s Coming Bankruptcy: How to Save Yourself and Your Countryicon, I call it the “government bubble.” That’s what we have. This is the final bubble, and there is no bailout. We’re finally going to have to deal with the consequences of our profligacy. And the problem is, because we’ve kicked the can down the road for so long, right? We’ve papered it over with so much inflation, that the problems have gotten that much worse, which means when we finally are forced to confront them. And again, we’re going to be forced to do it. We’re not going to do it on our own. We’re not going to voluntarily check into rehab. We’re going to have to be forced to do it, because we’ve hit rock bottom, and the world has done an intervention. This “day of reckoning” is coming. And it’s not because of the sequester. Everybody is making a big deal about how painful this sequester is supposed to be. Well this is nothing compared to what’s really going to happen when we really have to swallow the bitter tasting medicine to restore health to an economy that is virtually going to be on its deathbed as a result of all the bad medicine that has been forced-fed it over the years by the Federal Reserve, by Congress, to mask the symptoms while the underlying disease gets that much worse.


“Bernanke Almost Comes Clean On ‘Exit’ Strategy”
YouTube Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Barack Obama, Democrats Now Own Gun ‘Control’

In case there were still any doubts that U.S. President Barack Obama and his fellow Democrats don’t own the gun “control” issue now, check out this portion of tonight’s State of the Union address:


“Democrats chant ‘Vote!’ as Obama calls for more gun control during State of the Union”
YouTube Video

I was a U.S. Senate aide during the 104th United States Congress (1995-1997). You know, the one where Republicans won majorities in the House and Senate for the first time since the 1950s. And I remember distinctly what a number of Democrats said about their push for more gun “control” and securing a 10-year-ban on “assault weapons” just prior to the “Republican Revolution:”

What the hell were we thinking.

Probably not political hara-kiri, which is what resulted.

Something tells me President Obama and Democrats of the 113th Congress are hoping Mark Twain was wrong about his notion that history doesn’t repeat, but it often rhymes.

They’ll find out soon enough, like on November 4, 2014, when elections are held for 33 out of 100 U.S. Senate seats and all 435 U.S. House seats.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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U.S. Reaches $16.4 Trillion Debt Limit

You may have been distracted by events related to New Year’s Day and negotiations over the “fiscal cliff” to notice that the United States reached its authorized debt ceiling of $16.394 trillion on New Year’s Eve. Rich Barbieri and Jeanne Sahadi reported on the CNN Money website Monday morning:

It’s official: U.S. debt reached its legal borrowing limit Monday, giving Congress about two months before it must raise the debt ceiling or risk causing the government to default on its bills and financial obligations.

“I can confirm we will reach the statutory debt limit today, Dec. 31,” a Treasury Department official said Monday.

As for increasing the nation’s debt ceiling yet again, U.S. President Barack Obama doesn’t want debate from Congress on the subject. From Reuters this morning:

President Barack Obama vowed on Tuesday to avoid a repeat of last year’s divisive fight with Congress over an extension of the nation’s borrowing authority.

“While I will negotiate over many things, I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up,” Obama said in remarks in the White House.

“I will not have another debate.” Hmm. Back on December 5, Zachary Goldfarb wrote on the Post Politics blog on the Washington Post website:

As part of the fiscal cliff negotiations, Obama has proposed effectively ending the need for Congress to periodically raise the debt limit, which Republicans have rejected.

I wonder if this proposal won’t be pushed again in the near future?

By Christopher E. Hill, Editor
Survival And Prosperity (http://www.survivalandprosperity.com)

Sources:

Barbieri, Rich and Sahadi, Jeanne. “It’s official: U.S. hits debt ceiling.” CNN Money. 31 Dec. 2012. (http://money.cnn.com/2012/12/31/news/economy/debt-ceiling/) 2 Jan. 2013.

“Obama Debt Ceiling Statement: Limit Increase Not Up For Debate After Fiscal Cliff Showdown.” Reuters. 2 Jan. 2013. (http://www.huffingtonpost.com/2013/01/02/obama-debt-ceiling-fiscal-cliff_n_2394164.html). 2 Jan. 2013.

Goldfarb, Zachary A. “Obama on debt ceiling fight: ‘I will not play that game.’” Post Politics. 5 Dec. 2012. (http://www.washingtonpost.com/blogs/post-politics/wp/2012/12/05/obama-on-debt-ceiling-i-will-not-play-that-game/). 2 Jan. 2013.

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U.S. House Voting On ‘High-Capacity’ Ammunition Magazine Ban Friday?

Well that was fast. Patricia Zengerle reported on the Reuters website earlier today:

Democratic legislators said on Wednesday they had seen a groundswell of opposition to the continued sale of high-capacity ammunition magazines and pushed Republicans in the House of Representatives to vote to ban them this week.

House Minority Leader Nancy Pelosi and other Democrats called for a vote on Friday at a news conference announcing a new Gun Control Task Force that was attended by more than two dozen House Democrats.

(Editor’s note: Italics added for emphasis)

This latest proposed firearm-related ban comes as President Obama urged Congress on Wednesday to vote on banning the sale of “assault weapons” and requiring background checks before any firearm sale. Philip Rucker and Scott Wilson reported on the Washington Post website tonight:

The potential gun-control measures, which will be the focus of a working group led by Vice President Biden, mark the most specific proposals to date from Obama to deal with what he called a gun violence epidemic plaguing the United States.

The move pleased gun-control advocates and many Democrats who have been disappointed with Obama’s inaction on the issue during his first term…

Obama told reporters at the White House that he expected the group, which will feature key Cabinet secretaries, to bring him recommendations in January. He said he intends to discuss the issue in his State of the Union address.

(Editor’s note: Italics added for emphasis)

Regarding these “high-capacity” magazines and “Obama’s inaction,” this brings to mind a piece from the same media outlet in which Jason Horowitz reported on April 11, 2011:

On March 30, the 30th anniversary of the assassination attempt on President Ronald Reagan, Jim Brady, who sustained a debilitating head wound in the attack, and his wife, Sarah, came to Capitol Hill to push for a ban on the controversial “large magazines.” Brady, for whom the law requiring background checks on handgun purchasers is named, then met with White House press secretary Jay Carney. During the meeting, President Obama dropped in and, according to Sarah Brady, brought up the issue of gun control, “to fill us in that it was very much on his agenda,” she said.

“I just want you to know that we are working on it,” Brady recalled the president telling them. “We have to go through a few processes, but under the radar.”

Not only are Obama and many of his fellow Democrats now working out in the open these days towards more gun “control” in America. They own this baby now.

Sources:

Zengerle, Patricia. “Democrats push for vote on high-capacity ammunition.” Reuters. 19 Dec. 2012. (http://www.reuters.com/article/2012/12/19/us-usa-shooting-connecticut-congress-idUSBRE8BI1AA20121219). 19 Dec. 2012.

Rucker, Philip and Wilson, Scott. “Obama calls on Congress to ban assault weapons, high-capacity magazines.” Washington Post. 19 Dec. 2012. (http://www.washingtonpost.com/politics/obama-launches-gun-violence-task-force/2012/12/19/90ff2d52-49f9-11e2-b6f0-e851e741d196_story.html). 19 Dec. 2012.

Horowitz, Jason. “Over a barrel? Meet White House gun policy adviser Steve Croley.” Washington Post. 11 Apr. 2011. (http://www.washingtonpost.com/lifestyle/style/over-a-barrel-meet-white-house-gun-policy-adviser-steve-croley/2011/04/04/AFt9EKND_story.html). 19 Dec. 2012.

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Democrats To Push Gun Ban On First Day Of New Congress

“In the coming weeks, I will use whatever power this office holds to engage my fellow citizens- from law enforcement to mental health professionals to parents and educators- in an effort aimed at preventing more tragedies like this.”

-U.S. President Barack Obama at a prayer vigil in Newtown, Connecticut, last night

A person who’s only just tuned-in to U.S. current events in the last week or two would probably have a pretty good idea of where the country looks to be heading:

More attacks on religion, more drugs, more government regulation, more government spending (and waste), more taxes.

Oh, add more gun “control” to that list. In the form of a gun ban, no less.

Amanda Sakuma reported on the MSNBC TV web site Sunday:

Sen. Dianne Feinstein of California, said on Meet the Press Sunday morning that she would introduce an assault weapons ban on the first day of the next Congress. “It’s a first-day bill I’m going to introduce in the Senate and the same bill will be introduced in the House, a bill to ban assault weapons,” Feinstein said. “It will ban the sale, the transfer, the importation and the possession–not retroactively but prospectively–and it will ban the same for big clips, drums or strips of more than 10 bullets.”

(Editor’s note: Italics added for emphasis)

Another top Democrat in the Senate discussed what’s hoped to be accomplished with up-and-coming gun control legislation. Sakuma added:

Feinstein’s Democratic colleague, New York Sen. Chuck Schumer, said on CBS’ Face the Nation that the U.S. had finally reached “tipping point where we can actually get something done.” Schumer outlined what he said were the top three areas that Congress will focus on with legislation.

“One is to ban assault weapons, try and reinstate the assault weapons bans,” he said Sunday. “Second is to limit the size of clips to maybe no more than 10 bullets per clip, and third is to make it harder for mentally unstable people to get guns.”

(Editor’s note: Italics added for emphasis)

“Third is to make it harder for mentally unstable people to get guns.”

I can’t help but wonder if gun owners who’ve ever seen a shrink or veterans who’ve been diagnosed with anxiety disorders like PTSD wouldn’t be affected by this. That’s one way of wrestling a lot of guns away from the masses (in the politicians’ minds, at least).

Meanwhile, at the White House, Gary Fields and Laura Meckler reported on the Wall Street Journal website last night:

President Barack Obama is also likely to propose gun-policy changes, according to two administration officials

The White House is looking at various options, and the scope and details of the president’s approach aren’t clear. One possibility likely to be considered is a ban on high-capacity magazines, the devices attached to firearms that store large numbers of bullets and reload them rapidly…

No White House proposal is imminent, and it remains to be seen whether it would be legislative or administrative and how hard the president would push for any legislative initiative.

(Editor’s note: Italics added for emphasis)

“Administrative.” As in Executive Order? Time will tell.

Regardless of the horrific event that took place in Newtown last week, the push for more gun control- and a gun ban- by the Democratic Party should come as no surprise to regular Survival And Prosperity readers. Back on September 6, 2012, I noted that the Democratic Party’s 2012 National Platform approved at the Democratic National Convention included talk of “reinstating the assault weapons ban and closing the gun show loophole.” And on October 17, 2012, I blogged about President Obama announcing at the second presidential debate:

But I also share your belief that weapons that were designed for soldiers in war theaters don’t belong on our streets. And so what I’m trying to do is to get a broader conversation about how do we reduce the violence generally. Part of it is seeing if we can get an assault weapons ban reintroduced, but part of it is also looking at other sources of the violence, because frankly, in my hometown of Chicago, there’s an awful lot of violence, and they’re not using AK-47s, they’re using cheap handguns.

(Editor’s note: Italics added for emphasis)

That remark by Obama about “looking at other sources of the violence” and “handguns” have left some to speculate these firearms are also in the cross-hairs of Democrats.

I live at “ground zero” of gun control (Chicago, Cook County, Illinois). And plenty of you know just how well that’s working out as it’s probably only a matter of days before the city reaches 500 “official” murders for the year. By the way, Connecticut has some pretty strict gun control laws as well. Henry D’Andrea wrote on the Washington Times website Sunday:

Connecticut has some of the strictest laws in the nation. To obtain a gun there, you must be 21. You must apply for a local permit with the town’s police chief and be fingerprinted for a state and federal background check. The process includes a 14-day waiting period, and the state requires a gun safety course for anyone who purchases a handgun.

The shooter in Connecticut wasn’t eligible to own a gun, as he wasn’t 21. He stole the weapons from his mother, who legally obtained them.

Plus, I understand the state already has an assault “weapons” ban on their books.

According to the National Rifle Association, there are already more than 20,000 gun laws in the United States.

With more to come, if Democrats get their way.

Sources:

Sakuma, Amanda. “Dems promise: First day of new Congress, a new gun law.” MSNBC TV. 16 Dec. 2012. (http://tv.msnbc.com/2012/12/16/dems-promise-first-day-of-new-congress-a-new-gun-law/). 17 Dec. 2012.

Fields, Gary and Meckler, Laura. “New Calls for Gun Limits.” Wall Street Journal. 16 Dec. 2012. (http://online.wsj.com/article/SB10001424127887324677204578183781498008140.html). 17 Dec. 2012.

D’Andrea, Henry. “Sandy Hook: Gun control wouldn’t have stopped it.” Washington Times. 16 Dec. 2012. (http://communities.washingtontimes.com/neighborhood/conscience-conservative/2012/dec/16/why-gun-control-wouldnt-have-prevented-connecticut/). 17 Dec. 2012.

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Peter Schiff Warns Obama Debt Limit Proposal Could Shock America’s Creditors ‘Into Reality’

“The U.S. runs out of federal borrowing authority around the end of the year, but the Obama administration can use special measures to extend borrowing through late February or early March. As part of the fiscal cliff negotiations, Obama has proposed effectively ending the need for Congress to periodically raise the debt limit.”

-Washington Post website, December 5, 2012

Peter Schiff, President and Chief Global Strategist of Euro Pacific Capital, talked about the looming U.S. “fiscal cliff” and a White House proposal to give the President the power to raise the nation’s debt “ceiling” as needed in his December 3 entry on The Schiff Report YouTube video blog. Schiff, who correctly-predicted the bursting of the U.S. housing bubble and 2008 global economic crisis, zeroed in on the debt limit proposal:

This could be a moment where our creditors maybe get shocked into reality. To understand the situation that they are in, that we are in. That there is no limit. That we will borrow money until we can’t do it anymore. That we’re not going to do anything about this crisis. We’re not going to do anything to diffuse this ticking bomb. It’s simply going to go off. And I think our creditors are going to want to put as much distance as they can between themselves and the explosion. They’re going to want to sell dollars. They’re going to want to sell debt denominated in dollars. What is that going to mean? A weaker dollar and higher consumer prices for Americans. It ultimately means higher interest rates for Americans. It means the rug is going to be pulled out from the slowing economy. It means we’re going to go over the Mother of All Fiscal Cliffs, and one that is impossible to avoid.

So, my advice is don’t wait for that. Get out of your dollars. I’ve been saying this for a while, but I think the urgency, and the time with which to do it, is going to be running out. So you get out of your dollars. Get out of any debt denominated in any dollars. Because we’re not going to pay our bills, we’re going to inflate them away, which is the same thing as default. So you don’t want to ride out that inflation. You want to get out of U.S. currency. You want to look at foreign currencies where the governments are much less irresponsible. Look at real money. Look at gold and silver. Look at foreign stocks if they’re suitable that pay dividends. Do whatever you can to get out of Dodge, because just when the government assures you that there’s nothing to worry about, that’s the time where you need to worry the most.


“Debt Ceiling & the Fiscal Cliff”
YouTube Video

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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S&P: U.S. Has 20 To 25 Percent Chance Of ‘Double-Dip’ Recession, Eurozone Enters New One

The economists over at well-known American financial services company Standard & Poor’s (S&P) are warning about a possible “double-dip” recession for the United States, and are saying the Eurozone has entered a new one. Agustino Fontevecchia wrote last Friday on the Forbes website:

There’s a 20% to 25% chance that the U.S. economy will suffer a double-dip recession, according to a report by Standard & Poor’s. The credit rating agency which downgraded the U.S.’ sovereign credit rating last year noted unemployment could peak above 9%, real GDP would contract 0.9%, and housing markets would once again collapse under their adverse scenario. The catalyst: Congress failing to reach an agreement to avoid the fiscal cliff.

No matter what happens, a strong economic recovery is “a long ways away,” explained S&P’s deputy chief economist, Beth Ann Bovino. A poor labor market, with businesses adding a paltry 97,000 jobs per month over the last six months, has kept the economic recovery in “slow gear.” (During the winter, the economy added an average 240,000 jobs per month, she noted).

(Editor’s note: Italics added for emphasis)

This warning of an economic slowdown echoes what S&P economists were saying a month prior. From the AFP website on August 21:

The odds the United States will slip back into recession next year have risen, ratings agency Standard & Poor’s said, citing risks from the European debt crisis and budget tightening at year-end.

The US ratings firm raised the chance of the US falling into recession to 25 percent, up from a 20 percent chance estimated in February, as the world’s largest economy struggles to recover from a severe 2008-2009 slump.

(Editor’s note: Italics added for emphasis)

Just this morning, S&P said the Eurozone was entering a new recession. Steve Gelsi wrote on the MarketWatch website:

The data are confirming our view that the [Eurozone] region is entering a new period of recession, after three quarters of negative or flat growth since the final quarter of 2010,” according to Jean-Michel Six, the rating agency’s chief economist for Europe, the Middle East and Africa.

(Editor’s note: Italics added for emphasis)

Sources:

Fontevecchia, Agustino. “Double-Dip Recession 20% To 25% Likely If Fiscal Cliff Hits, S&P Warns.” Forbes. 21 Sep. 2012. (http://www.forbes.com/sites/afontevecchia/2012/09/21/double-dip-recession-20-to-25-likely-if-fiscal-cliff-hits-sp-warns/). 25 Sep. 2012.

“Risk of US double-dip recession rises: S&P.” Agence France-Presse. 21 Aug. 2012. (http://www.google.com/hostednews/afp/article/ALeqM5hUW6S9xn4PTe3Oy6FaZ5SqADbALw?docId=CNG.9261c794f17a86efcc8
014d16fa164f9.121). 25 Sep. 2012.

Gelsi, Steve. “S&P says new recession hitting euro zone.” MarketWatch. 25 Sep. 2012. (http://www.marketwatch.com/story/sp-says-new-recession-hitting-euro-zone-2012-09-25?reflink=MW_news_stmp). 25 Sep. 2012.

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Poll: U.S. Congress Approval Rating Ties All-Time Low

You’d think Congress would get a clue by now. Mark Murray wrote on the NBC News website yesterday:

The latest NBC News/Wall Street Journal poll finds that the approval rating for Congress has tied its all-time low in the history of the survey, while its disapproval rating has tied its all-time high.

According to the poll, only 12 percent of registered voters approve of the legislative branch’s job. The only other time it was that low was in Oct. 2008.

In addition, a whopping 82 percent disapprove of Congress’ job, and the only other time it reached that level was in Aug. 2011 — which was right after the bruising debt-ceiling fight.

(Editor’s note: Italics added for emphasis)

Despite this situation, a significant number of eligible Americans probably won’t vote in the next presidential election. Susan Page wrote on the USA TODAY website on August 15:

Even in 2008, when turnout was the highest in any presidential election since 1960, almost 80 million eligible citizens didn’t vote. Curtis Gans, director of the non-partisan Center for the Study of the American Electorate, predicts that number will rise significantly this year. He says turnout could ebb to levels similar to 2000, when only 54.2% of those eligible to vote cast a ballot. That was up a bit from 1996, which had the lowest turnout since 1924.

This year, perhaps 90 million Americans who could vote won’t. “The long-term trend tends to be awful,” Gans says. “There’s a lot of lack of trust in our leaders, a lack of positive feelings about political institutions, a lack of quality education for large segments of the public, a lack of civic education, the fragmenting effects of waves of communications technology, the cynicism of the coverage of politics — I could go on with a long litany.”

(Editor’s note: Italics added for emphasis)

Sure, a sitting U.S. president might not be able to influence the direction this country is heading as much as we’d like to think they can. And those aforementioned issues might be big turn-offs to casting our votes. But as American citizens we have a responsibility to exercise this civic duty.

If only because of the millions who fought – and died- to secure and protect our right to vote.

If one feels not voting is actually exercising their civic duty- so be it. I respect that. But as for the rest of us, take pride in also being civic-minded Americans and vote this November for the candidates that we, as United States citizens, have taken the time to educate ourselves about and choose to lead this great country.

As the American journalist George Jean Nathan once said:

Bad officials are elected by good citizens who do not vote.

Sources:

Murray, Mark. “NBC/WSJ poll: Approval of Congress hits bottom.” NBC News. 21 Aug. 2012. (http://firstread.nbcnews.com/_news/2012/08/21/13396651-nbcwsj-poll-approval-of-congress-hits-bottom?lite). 22 Aug. 2012.

Page, Susan. “Why 90 million Americans won’t vote in November.” USA TODAY. 15 Aug. 2012. (http://www.usatoday.com/news/politics/story/2012-08-15/non-voters-obama-romney/57055184/1). 22 Aug. 2012.

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Wednesday, August 22nd, 2012 Government 1 Comment

IMF’s Lagarde: U.S. Fiscal Cliff Is ‘Risk Number One’ To Global Economy

Washington policymakers have seen Europe’s ongoing sovereign debt crisis as a welcome distraction away from America’s financial woes. But Christine Lagarde, Managing Director of the International Monetary Fund, recently pointed out the danger our economic ills pose to the global economy. From MNI (a leading provider of global foreign exchange and fixed income markets news/intelligence) last Thursday:

The looming US fiscal cliff is the number one risk globally at present, followed by the Eurozone and then the threat of another oil price surge, IMF head Christine Lagarde says.

Lagarde, speaking at the Global Investment Conference here, said the Eurozone is clearly at the epicentre of the crisis right now but is far from the only risk at present.

Risk number one … is clearly the fiscal cliff in the United States of America, where the deficit and debt to GDP ratios are actually worse than in the Eurozone,” she said.

Although the US does not face the Eurozone’s challenge of trying to secure accords with a host of states, its legislators are also struggling to take action.

“There is great uncertainty as to how Congress is going to actually deal with this fiscal cliff,” she said.

(Editor’s note: Italics added for emphasis)

According to Reuters on Sunday, Congress will try to work something out concerning this “fiscal cliff”- after the November elections. From their website on July 29:

The U.S. Congress is unlikely to resolve looming tax and spending issues before the Nov. 6 elections, a top Senate Democrat said on Sunday, but lawmakers are working on a proposal to tackle the issue after the elections.

Dick Durbin, the No. 2 Democrat in the Senate, said a bipartisan group of eight lawmakers is in talks to develop a solution to the steep tax increases and spending cuts, known as a “fiscal cliff,” that take effect at the end of the year if no action is taken.

Stay tuned…

Sources:

“IMF Lagarde: US Fiscal Cliff Key Global Risk; Oil A Worry.” MNI. 26 July 2012. (https://mninews.deutsche-boerse.com/index.php/imf-lagarde-us-fiscal-cliff-key-global-risk-oil-worry?q=content/imf-lagarde-us-fiscal-cliff-key-global-risk-oil-worry). 1 Aug. 2012.

“Durbin: US ‘fiscal cliff’ solution unlikely before election.” Reuters. 29 July 2012. (http://www.reuters.com/article/2012/07/29/usa-congress-fiscalcliff-idUSL2E8IT1AZ20120729). 1 Aug. 2012.

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U.S. Budget Deficit Really $5 Trillion In FY 2011?

The federal budget deficit will continue at historically high levels, hitting $1.3 trillion in fiscal 2011, congressional budget analysts said Wednesday.

-Washington Post, August 24, 2011

According to a different set of accounting rules, the U.S. budget deficit in FY 2011 was not $1.3 trillion, but almost 4 times that amount. From Dennis Cauchon on the USA TODAY website last Thursday (hat tip Peter Schiff):

The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, a USA TODAY analysis finds.

Under those accounting practices, the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported under unique rules set by Congress.

A U.S. household’s median income is $49,445, the Census reports.

The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.

The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government’s books.

(Editor’s note: Italics added for emphasis)

Back in March, the nonpartisan Congressional Budget Office predicted that the U.S. budget deficit for FY 2012 would amount to $1.2 trillion. Brian Faler wrote on the Bloomberg website on March 13:

The budget shortfall for 2012 will be $1.2 trillion, about $93 billion more than forecast two months ago, according to the nonpartisan Congressional Budget Office…

The revised estimate means the government will run a trillion-dollar deficit for the fourth consecutive year, though the gap will narrow slightly from last year’s $1.3 trillion.

“The fundamental story about the federal budget has not changed: Although the deficit is starting to shrink, it remains very large by historical standards,” the agency said yesterday in a report.

(Editor’s note: Italics added for emphasis)

“The government will run a trillion-dollar deficit for the fourth consecutive year.”

Something to think about the next time somebody mentions the U.S. economic “recovery.”

Sources:

Cauchon, Dennis. “Real federal deficit dwarfs official tally.” USA TODAY. 24 May 2012. (http://www.usatoday.com/news/washington/story/2012-05-18/federal-deficit-accounting/55179748/1). 30 May 2012.

Faler, Brian. “U.S. Budget Deficit Revised Upward to $1.2 Trillion for 2012.” Bloomberg. 13 Mar. 2012. (http://www.bloomberg.com/news/2012-03-13/budget-deficit-to-total-1-2-trillion-this-year-cbo-says.html). 30 May 2012.

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