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Meredith Whitney: State finances are worse than estimated

By Shawn Tully, senior editor-at-large June 6, 2011: 1:44 PM ET The outspoken municipal bond bear follows up with more evidence that the fiscal troubles in many states are far greater than we've been told.

FORTUNE -- Meredith Whitney is issuing a fresh warning to mutual funds, banks, and politicians: The state of state finances is far worse than what you think, or at least than what you've been willing to tell the investors and taxpayers who will eventually carry the burden. In a new report released today to her clients, Whitney summons what appears to be the most comprehensive set of data ever assembled on state budgets and debt.
Meredith Whitney, still focused on state finances.



Her conclusion is that the future deficits that need to be closed, either by new taxes or draconian cuts in social services, are far bigger than the official numbers show, and that debt levels, when all liabilities are counted, vastly exceed the official estimates.


Late last year on 60 Minutes, Whitney predicted hundreds of billions in defaults on municipal bonds in the next five years. That controversial call was widely condemned, especially on Wall Street, where the muni market is an enormous profit spinner.


Now, Whitney tells Fortune she never meant to make more than a general forecast. "I never intended on framing the scale of defaults as a precise estimate, but I continue to believe that degree of municipal defaults will be borne out over the cycle. I meant to point out that the state debt problem is a massive headwind for the U.S. economy, second in importance only to housing."


Whether you agree with it or not -- and she's still getting little support from rating agencies or anywhere else -- the numbers she's assembled, and the risks they pose, are daunting.


Whitney's latest report is even more thorough than last year's analysis that started the uproar. It covers 25 of the largest states, adding ten new ones to the list, including Arizona, Nevada, Connecticut, and Wisconsin.



The problem starts with spending. Since 2003, state governments have raised annual outlays from $1.5 trillion to almost $2.2 trillion, or $700 billion, yet tax receipts have risen only $400 billion or $300 billion less, to $1.4 trillion. In fact, spending kept surging all during the recession, while income from sales, income and corporate taxes went totally flat in 2007.

Three big problems, no solution


But 46 states are obligated to balance their budgets each year. So how are they bringing receipts in line with spending when taxes fall 36% short of revenue? And remember, this gap is growing despite big tax increases that are becoming more and more difficult. The states are getting that extra money from three sources.



First, the federal government enormously increased aid to the states under the stimulus or American Recovery and Reinvestment Act. Since 2009, the ARRA has delivered $480 billion in grants and contracts, padding over one-third of their combined deficits. But the last stimulus dollars expire this month.


Even with a historic increase in federal assistance, the states have relied on two additional measures to plug the remainder of the shortfall -- measures that will be harder and harder to repeat. The states tapped "rainy day" funds or surpluses reserved for emergencies. Their governments used $9 billion of that cash in 2010, with Connecticut totally exhausting its $1.4 billion in reserves, and Pennsylvania tapping its emergency savings for $755 million.


Second, the states have immensely increased their issuance of General Obligation bonds that fund what corporations strive to avoid -- paying operating expenses with long-term debt. Those securities are backed exclusively by state tax revenue. In 2000, the states issued $67 billion in GO securities; last year, they raised $148 billion from those bonds. While Whitney acknowledges that this class of securities is unlikely to see defaults, they still place a huge burden on the future.



The reason: Fixed interest expenses are absorbing a bigger and bigger share of state budgets, leaving a shrinking portion for everything else.
Today, debt service absorbs half of Nevada's budget, and 40% of Michigan's. In Arizona, California, Connecticut, Ohio and Illinois, the share now exceeds 20%.


The third and biggest problem, pension costs, both increases current cash expenses and artificially understates what the states should be spending today. Even by putting the minimum into their pension funds, they're still crowding out spending for everything else because the costs are rising so fast. Hence, it ensures that future tax increases and spending cuts will be far greater than advertised. The states are systematically underfunding their pensions. Today, they cover 77% of their future liabilities versus 103% in 2000. If they fully paid their annual pension costs, the states would need to increase spending by over $700 billion a year, or over 40% of their current outlays.


And those figures don't include future spending on health care costs, falling into a little-known category called OPEB or Other Post Employment Benefits. Most states simply pay these OPEB costs directly from revenues. No actual income-generating funds, accumulated for the future, back them in most states. New Jersey, New York, Connecticut and Illinois are all pay-as-you go states with totally unfunded OPEB liabilities. As those costs inevitably swell, they will apply even more pressure to state budgets.

Giant shadow of debt


Whitney also presents a startlingly bleak picture of state debt. States have two types of liabilities that are fully backed by tax revenues. One is on-balance sheet, and the other is excluded from the states' books. The first type is the General Obligation bonds that fund salaries and current expenses. Those are fully visible to investors. But the bigger problem is the giant shadow cast by the pension and OPEB liabilities that are absent from balance sheets. In fact, states weren't even required to report the OPEB number at all until 2008, and the pension figure is consistently understated because states generally far overestimate future returns on their retirement funds.


As Whitney shows, these off-balance sheet numbers are an incredible three times the size of all on-balance sheet debt, totaling $2 trillion. The load is rising quickly; the unfunded pension burden has jumped 50% in the past year.


Naturally, some states are far healthier than others. Indiana, says Whitney, is a "model citizen," while California and New Jersey already face such high tax rates that they have little room, or political will, to raise more revenue. The danger is a continuation of what's already happening, what Whitney calls "state arbitrage," in which the low-tax, business friendly venues such as Texas and North Carolina keep drawing companies and workers from the fiscally-challenged states. That could cause a vicious cycle where the weak get even weaker as their tax bases erode, and the strong reap the rewards from fiscal prudence.


The damage from state arbitrage could increase the scale of defaults in the second type of municipal securities: Revenue Bonds. Once again, Whitney sees little threat to General Obligation bonds because states simply won't default. What the fiscal calamity calls in doubt is Revenue Bonds that back specific projects such as subsidized housing, toll roads, land acquisitions, and nursing homes. Those bonds are supported by the cash flows from the projects themselves, and they aren't guaranteed by the state governments. So if the cash flows fall short of the interest payments, they need to be restructured -- at a big cost to the investors who own them. And the revenue bonds now dwarf general bonds in total dollar amount outstanding, totaling $2.7 trillion, versus $1.4 trillion for the GOs.


Whitney points out that Florida has issued 90% of its municipal offerings in revenue bonds, many tied to real estate. Those real estate-related securities are the most vulnerable. Only time will tell if the "hundreds of billions" figure Whitney ventured on 60 Minutes will materialize. But her report shows that of all the problems investor and politicians are worried about, the mess in state finances is one of the most dangerous, and certainly the most overlooked.




Meredith Whitney: State finances are worse than estimated - The Term Sheet: Fortune's deals blog Term Sheet

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World Debt is Unpayable, The Only Solution is Monetary Collapse
by Bob Chapman



As far as we can discern the US Treasury thus far has spent and borrowed about $100 billion from the federal pension accounts. Unless there is a vote on the cash debt extension prior to August 2nd, government will probably have borrowed some $250 billion to $300 billion. The Treasury is paying virtually no interest on this debt. Three-month Treasury bills are currently yielding zero percent. Our question is how will the funds be generated to fulfill the Treasury’s obligation to the pension fund? What happens if on August 2nd if legislation is not passed? Does this go on forever? We will keep you apprised on new developments.

The current situation regarding the state of recovery in the US has turned from precarious to dismal and as we predicted a year ago May we will have to be treated to QE3 something no one really wants, but as we said before it is inevitable. The Fed and their controllers, the member bank owners of the Fed, know the present approach doesn’t work and it is only a matter of time, as a result of their policies, when more stimulus will be needed, which in turn leads to more inflation.

Due to the current state of affairs Fed Chairman Bernanke has been making one appearance on TV after another. He gets grilled over and over again and he doesn’t like the public reception at all. He shouldn’t, as more and more observers see that two quantitative easings haven’t worked. They cost at least $3.6 trillion in funds created out of thin air, and all they have done is prolong the agony. The flip side is the policy has caused higher inflation. What else can one expect when deficits astound and the Fed has to buy $1.6 trillion in Treasury bonds. A large percentage of this debt is used to wage perpetual war for perpetual peace. During this process the President has bypassed the Constitution and is deliberately repressing the freedoms of American citizens. There no longer is a separation of powers, but virtual dictatorship bought and paid for by Wall Street and banking.

It should be firmly implanted in your mind that your masters in government and those controlling government brazenly and arrogantly believe that they know better what is good for you, than you do. That is why when they speak to you their answers are dripping with condescension - as if to say, how dare you question what we tell you. Fed Chairman, Mr. Bernanke, is a perfect example of this. He, others and his predecessors have created a false economy based upon perpetual debt and upon money and credit being created out of thin air. Today that is accompanied with zero interest rates, a combination that in time can only bring a falling dollar, inflation and a collapsing economy. Mr. Bernanke appears to believe that an increased supply of money has little or no effect on the comparison between money and the prices of goods. He has to be living in a fairy tale land. Thinking such as this can only end up making a bad economic situation worse.

For more than a month the US has been faced with the task of extending the short-term debt limit. The game that is being played is that one side wants to cut the deficit and the other side does not. In reality both sides do not want to cut anything, or should we say the elitists who control these supposed representatives of the people do not want anything cut. They want the game to continue, so they can continue to loot the economy, an interesting take on this sideshow is if Treasury debt is not increased the situation grinds to a standstill.

Congress, the President and the so-called negotiators want an increase in this short-term debt of $2.4 trillion. That would be a short-term debt limit of $16.7 trillion to carry the debt limit past the next election. The offset of reduced spending is to come over the next ten years. How ridiculous and ludicrous. Do they really expect us to buy this charade?
The most recent strategy by the elitists is to keep Japan’s problems under wraps. Just do not let it into the media, even though some Japanese officials say the island could become uninhabitable. This is also why President Obama went to see Chancellor Merkel in Berlin. He urged her to make a deal to settle the Greek problem. He doesn’t understand that such a deal would make her and her party, the CDU, unelectable for a long time. The German citizens want Greece cut loose. They’ll take the losses and the result is many banks will go under. The President is as well trying to bolster his approval ratings.

The propaganda is flowing to keep Americans from panicking in the face of not recovering, no short-term debt extension, municipal and state failures and Europe starting to collapse. The elitists are in serious trouble due to these problems. The icing on the cake for them is the disaster that the Bilderberg meeting turned into in Switzerland.

US consumer confidence is lower now than it was at the beginning of the credit crisis. That isn’t unexpected when unemployment is rising, retail is falling and the manufacturing numbers out of Chicago and New York are falling steeply.

What professionals for the most part do not seem to understand is that the events of 2006/07 have never been solved. On February 2009 the inflationary depression began. There has now been a double dip since then. What we have witnessed is slight revivals caused by the injection of money and credit. Unemployment is close to the same level it was 2-1/2 to 3 years ago. That phenomenon has been the same in the UK and Europe. In the UK the Bank of England and in Europe the ECB are doing the same thing the Fed is doing and that is buying government debt by creating money and credit out of thin air. The City of London, Wall Street and Frankfurt would have you believe these injections into the systems were working, when in fact all they have done is temporarily bail out Wall Street and the City of London and the European financial centers as well as the governments involved. Nothing has been done to structurally assist the system and put people back to work. What readers have to understand is that what has been done to these economies does not work and the participants know it doesn’t work. Professionals, who are not connected with the elitists, have panicked, because they do not understand what is going on - what is being done to them. The market was ripe to fall, but there is another important factor, Wall Street wants a short-term debt extension with little or no spending cutbacks. The new conservatives say no, we are not going to do that. The market will be taken lower until these representatives see the light. How far are they willing to take the market down, probably to between 8,500 to 10,000 on the Dow, or until Congress gives them what they want. In the meantime they will attack commodities, gold and silver, so no one can profit. Unfortunately for them, that isn’t working this time. They are lower, but come back every time they are artificially pushed down. We believe that is what this market correction is all about. Wall Street will take the market down as far as they have to in order to get what they want. In the meantime the Middle East and Europe are in turmoil and wars abound in a number of Middle Eastern countries. Those on the inside understand that the market is fueled by major deficit spending and the injection of money and credit, as government inflates debt away. The economy and the market for the last two years have not justified stock prices at the level they have maintained during that period. The same is true for the UK and Europe.

Most of the professionals do not understand what is really going on and what is being done to them and their clients. Data is weak and getting weaker as economic statistics continue to fall and point to more problems ahead. This is ample justification for a falling market to aid the deliberate reduction in prices. We must remember that the only bastion of gains for the public left is the market. If it comes down Congress will hear from constituents loud and clear. That is what is supposed to force the issue on passing the short-term debt extension.

As a reaction to this free spending foreign governments have slowed or stopped their purchase of Treasury and Agency bonds leaving the job to the Fed. This problem is going to worsen as we go forward. Now it is not only foreign governments that are slowing purchases, but also American households as well. They are selling more than $1 trillion annually and sales are increasing, as mom, pop and hedge funds dump government paper.

As QE2 nears an end investors are getting emotional. It is called panic. They can expect little from the FOMC next week, Europe can expect the same from the EU meeting the following week. Greece is in a state of revolution and there is no agreement in sight. In fact, the banks, governments, the EU and the IMF cannot agree on anything. The Greeks want a break in terms. If they do not get one it is default.

We predicted Greece would pursue these ends and we told them to do so several times on radio, TV and in the press. A Greek default will not only bring the euro down, it will take down the European banking system and that was our intention from the beginning.

Greece and the other countries in financial and economic trouble should have never been included in the euro zone. They simply were not qualified and the solvent countries not only knew that, but also stood by as these countries cooked the books with the help of JPMorgan, Goldman Sachs and Citigroup. We wrote about it 11 years ago, but no one was listening.


The Greeks after a year of austerity have had enough of it, and are in no mood to give away their country to the bankers. An interest in the telecom company was recently sold to the Germans for $0.30 on the dollar. The Greeks are not going to stand still for anymore such sweetheart deals. When Greece entered the euro zone on January 1, 2001, they were happy to have an austerity program for entry in as much as they had the highest inflation rate in Europe. Their deficits were higher than any other EU country at that time, but the bank and sovereign loans kept coming, because it was political. The EU and the euro zone were to be the template for the new world currency and the new world government. That is why Greece and others were rushed into the euro zone. Then there was the novel and stupid concept of one interest for all, which we said at the time guaranteed disaster, and that is what we have ten years later.

We have recommended the purchase of gold and silver coins, bullion and shares since June 2000, after we got subscribers and others out of the stock market in the second week of April 2000, two weeks after the top. We did the same thing at Dow 14,000 and predicted a bottom at 6,600. The fall was to 6,550. We got subscribers out of the real estate market starting in June of 2005. As you can see we have been on top of things all those years. The call on the destruction of the euro we hope will be our best call yet. The perceived risk from our point of view is that Greece will default and leave the euro to be followed by Ireland and Portugal and later Belgium, Spain and Italy. It will probably take two to three years for this to become reality. Germans do not want the euro and never have wanted it. We believe within three years every country will be back with their own currencies and the dream of one world government for now in Europe will be a dead issue.

The Greek fallout will take down a number of too big to fail European banks, and could cause serious harm to lender countries. These mistakes will not be anything they will do again, anytime soon. We do not believe the Fed will be able to bail out European banks this time. The American public won’t stand for it after having to go to federal appellate court and traverse two years to find out the Fed lied and overstepped its charter by being banker to the world. The problems in the US are similar to those of Europe and it is only a matter of time before the US financially blows up. If Greek yields can go to 17-1/2%, so can yields in all countries in trouble, and there are plenty of them. The taxpayers in the US, UK and Europe are fed up with paying the bill for all of this speculation and mad political escapades. That will soon come to an end. It has too, as bankruptcy seems to be the only option. Three-month Treasury bills yield zero percent, and 2-year bills yield 0.40%, as the 10’s yield 2.91%. There now is only one way for yields to go and that is up. There is a limit to credit creation, but we are not at the juncture as yet. It is probably two years off, perhaps three years.

One of the aspects of the debt disease we haven’t really discussed is the fallout from Greece if and when it goes under. Thirty-three European banks hold large amounts of bonds in the PIIG countries, and they could all go under if the 5 or 6 weak countries go bankrupt. In addition, there are the countries and others who are loaded with these bonds. Like the Fed the ECB has been bailing out banks and it is against the rules, so that could put the officers in legal jeopardy. The very fact that these bankers broke the rules is onerous. The big question is are they headed for jail? If they have made mistakes the taxpayer has to pay the bills. We believe they should be in jail. The bill for exposure to the debt of the 5 financially weak nations could be $625 billion. The ECB has done the same thing the Fed has done and that is bankroll insolvent banks by buying the toxic waste they own and putting it on their balance sheets, which the public get to pay for. It is the socialization of corporate debt, fascist style. Most of the garbage has no value or little value. We always wonder what prices the Fed and the ECB pay for the soiled merchandise. Both refuse to tell us.

It is said the ECB is using 24 to 1 leverage with only $116 billion in capital and reserves. If assets fall 4.25% its entire capital base would be wiped out. That could easily happen if Greece and the other four PIIGS default. We call that ominous because none of the problem countries want to repay the debt to a gaggle of bankers who are nothing but criminals. Our take is the 5 will eventually default and perhaps Belgium as well. That means the ECB is insolvent and the major banks throughout the euro zone are as well, including many central banks. Professionals do not have a clue about how serious this is to the entire world financial system. Perhaps we are wrong. The ECB only has $268 billion in Greek bonds. That is simply a trifle for such big socialist hitters. Yet, it is double their capital base.

A Greek default would put 94% of the direct losses on European creditors and 5% would be shared by US creditors. The other side of the equation is US companies making some 90% of all losses being owed by US writers of default insurance. These US banks have sold $120 billion of credit default swaps to European banks. These are the banks that are too big to fail, which American taxpayers will have to pick up the losses for. Have those US banks hedged their exposure? We do not know, but we do know what they have done is irrational and incompetent. That is unless the US or the Fed had to for some reason guarantee losses. Something similar to what we suspected in the US banks’ sale of toxic waste to these same European banks. If the Fed, the Treasury and the Exchange Stabilization Fund are audited we will find out. These numbers are staggering, but their exposure to $100 billion in Irish debt is equally as onerous.

Such speculation and secret deals have to come to an end if we are going to survive financially. We definitely need to re-pass the Glass-Steagall Act that we fought hard to protect 13 years ago.

We can promise you that if Greece defaults eventually the ECB will be insolvent. We have dreamed of that day for 12 years. The destruction of the ECB and the euro zone, which would in part destroy the Illuminist drive into world government.

We think in order to avoid such a catastrophe the ECB would simply print more money as the Fed has, prolonging the agony. The real bailout mechanism would be France and Germany to put up their gold to save the euro zone and the euro. That is if the US allows Germany to have their gold. We can promise you that if the politicians of these two countries attempted to use their countries gold as collateral or propose its sale they would be lynched.

Like the Fed, the ECB has no credibility left. It is obvious that these two central banks only mission is to save the financial system that owns them. When are people going to smarten up? The ECB and the bankers thought Greece and the Greek people would be a pushover. The bankers thought they would just move in and loot the country. Once the Greeks were educated on the issues they made the proper choices. That is why we spent so much time on radio, TV and in the press there. Now they know the truth and the bankers, the euro and the EU are screwed. The ECB, as a result, is dead meat whether they realize it or not.

World debt is unpayable, especially that of the US, UK and the euro zone. The only solution is collapse. There can be no saving the system. It is only a matter of time and what the catalyst is. It could be Greece.



World Debt is Unpayable, The Only Solution is Monetary Collapse

Bob Chapman is a frequent contributor to Global Research. Global Research Articles by Bob Chapman

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If the U.S. Dollar Collapses, What Happens to Your Portfolio?

Currencies / US Dollar Jun 21, 2011 - 02:40 PM By: Jeff_Clark





Jeff Clark, BIG GOLD writes: Have you considered what will happen to your portfolio - and all the other areas of your life - if the dollar fails? The ramifications will be widespread, painful, and inescapable if you're not properly diversified.
Last month, I attended the Global Currency Expo sponsored by EverBank. The overarching theme, as you might expect, was that diversification out of one's home currency is paramount. While there were plenty of traders on hand, it was the big-picture talks that had the most pressing messages.
I came away feeling that I needed to reexamine my exposure to the dollar. Have you considered what will happen to your portfolio - and all the other areas of your life - if the dollar fails? The ramifications will be widespread, painful, and inescapable if you're not properly diversified.
With that in mind, I want to pass on some highlights from a few speakers, along with their investment recommendations... many of which were framed as the "trade of the decade."
Frank Trotter of EverBank Direct stated that the U.S. dollar "will see a significant decline in the next 5-10 years." His five favorite currencies for the next decade are the Swedish krona (which he thinks is better than the Swiss franc), the Norwegian krone, the Australian and Canadian dollars, and a surprise, the Brazilian real.


Eric Roseman of Commodity Trend Alert warned that we'll see a food crisis within three to five years. He's convinced China will become a net importer of agriculture, which will have major ramifications around the globe. His trade of the decade is the exchange-traded note for grains, JJG.
Sean Hyman of World Currency Watch said his trade of the decade is the Singapore dollar (SGD). "Buy it and forget it."


Doug Casey also spoke; he laid out five "sure things" for the next ten years:

1. Short bonds/bet on rising interest rates
2. Short the yen/go long on Japanese small- and mid-cap stocks
3. Borrowed money: "It's an excellent way to short the dollar, and you get a tax deduction."
4. Gold: "It's not cheap, but it's going higher. Buy it and store it abroad."
5. Small-cap mining stocks

Rodney Johnson, president of HS Dent, got some audible groans from the audience when he claimed the trade of the decade was the U.S. dollar versus the euro. He's convinced that deflation is coming and that inflation hedges will get hurt. He predicted that the dollar will rebound and that interest rates and prices will fall. While it's always healthy to check one's assumptions, I heard no reason to change my mind about the dollar's long-term woes. Interestingly, most of the speakers do expect the dollar to temporarily strengthen this summer, though they have no doubt the currency is ultimately headed to the graveyard.


But the most thorough and convincing presentation by far came from Chuck Butler, president of EverBank World Markets and a 35-year currency analyst. If anyone knows currencies, it's him. It's been said that he's advanced awareness of the currency markets more than almost any other banker working today.


Chuck outlined the case against the U.S. dollar with damaging conviction. He pointed out that the pound sterling was the world's reserve currency until WWII, and "we became the reserve currency by financing England because they couldn't pay their debts and had diluted their currency...

They needed assistance from other countries to service their debt and had overextended their military." Sound familiar?


He noted that China, with little fanfare, started signing swap agreements in 2009. To date, they've signed agreements with much of Asia, the European Union, Canada, Russia, Brazil, Belarus, Argentina, and will soon with Japan and Korea. There are even rumors of them working on currency swaps with the Arab nations. He reminded us that China's president recently stated publicly that the U.S. dollar is a "product of the past."


The scary ramifications of this were couched in a stark warning: "The U.S. dollar will lose its reserve currency status sometime between 2014 and 2020. There will be no trumpet; it will just happen."


He said SDRs (Special Drawing Rights) from the IMF may be used first, but that it won't matter since the dollar losing its reserve status is "inevitable." He, too, felt there will likely be some strength in the greenback this summer, but that this will change nothing in the long-term picture.
When it comes to preparing one's investments for this eventuality, Chuck stated that "94% of investment return is based on the asset-class selection, and a low covariance with other assets." On a practical basis, this means owning an investment that is not correlated with U.S. stocks, and one that is not denominated in U.S. dollars. He said the key to diversification is applying the same logic you would to stocks: "You wouldn't buy just one stock, so why would you own just one currency?"
He likes the renminbi, which can be played via CYB or CNY. He also likes the Singapore dollar, the Norwegian krone, and the Swedish krona.


The point of the weekend was to examine one's portfolio from the point of view of a failing currency. It won't matter too much how diversified your stocks are if they're all exposed to the same currency. If this outlook turns out to be correct - and I see no way around it - then the U.S. dollar will undergo a sea change that will erode and ultimately destroy any investment backed by it.


So, how much exposure do you have to the U.S. dollar? And what happens to your portfolio when the greenback reaches its ultimate resting place? Even if you think it avoids becoming fancy green toilet paper, prudence suggests that you at least consider preparing your investments for a prolonged erosion. By the time you carry your investment "bucket" to retirement, the persistent leak from dollar devaluation could buy half of what it did ten years earlier. Will this be acceptable to you and your family?


Gold and silver are one of the easiest and simplest ways to diversify out of the dollar, regardless of one's portfolio size. They are a confidential, personal, and immediate purchasing-power protector. Pretend your financial life depends on it, because the abuse continually heaped upon the dollar doesn't come free of consequences.
FREE Special Report : Learn all about how, when and where to buy silver… which forms of silver are the best to own… and why we could soon be running out of silver altogether… in Casey Research's 2011 Silver Investing Guide . Read and download it for free here.
© 2011 Copyright Casey Research - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

http://www.marketoracle.co.uk/Article28817.html

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Be Your Own Central Bank; Own Gold, Silver: Marc Faber

Published: Monday, 18 Apr 2011 | 12:16 AM ET

By: CNBC.com

Famed investor Marc Faber, Editor and Publisher of The Gloom, Boom & Doom Report said investors "should be their own central banks and gradually accumulate gold reserves as a currency", rather than speculating in gold.

Axel Griesch | ASFM | Getty Images

Dr. Marc Faber

According to Faber once the Federal Reserve's quantitative easing ends in June, the central bank will come under pressure to announce another round of easing, or QE3. While he acknowledged the greenback may see a temporary rally, he said long-term the dollar would to continue to decline. Click here for more.

"The value of the U.S. dollar will be precisely its intrinsic value — namely zero, precisely zero," said Faber. That in turn would boost demand for gold and silver.

Spot gold hit a record high of $1,4880.50 on Monday, while silver rose to a 31-year high of $43.34 as concerns about rising inflation and the euro zone's debt problems boosted safe haven demand.

Another factor that would boost gold prices were negative real interest rates in emerging economies. He said interest rate hikes in countries such as India and China would not keep up with the rising cost of living and that would make assets such as gold and property attractive.


Faber recommended holding physical bullion over other gold assets such as ETFs or gold mining companies. However, he advised against holding gold assets in the U.S. because of the risk of "expropriation" of gold assets by U.S. authorities. Click here for full interview.


Dollar Direction & Precious Metals - CNBC

Faber also said he expects property prices in places such as Singapore to continue rising given negative real interest rates in that country. And he said the most important thing investors needed to do at a time like this was to diversify.


"(Investors) need to own some real estate, they need to own some farmland, they need to own some equities, some cash and some precious metals," Faber added.


Be Your Own Central Bank; Own Gold, Silver: Marc Faber - CNBC

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China warns U.S. debt-default idea is "playing with fire"


An employee of an money exchange counts U.S. dollar bills in Tokyo November 27, 2009.
Credit: Reuters/Yuriko Nakao/Files


By Emily Kaiser


SINGAPORE | Wed Jun 8, 2011 5:24pm IST


SINGAPORE (Reuters) - U.S. Republican lawmakers are "playing with fire" by contemplating even a brief debt default as a means to force deeper government spending cuts, an adviser to China's central bank said on Wednesday.


The idea of a technical default -- essentially delaying interest payments for a few days -- has gained backing from a growing number of mainstream Republicans who see it as a price worth paying if it forces the White House to slash spending, Reuters reported on Tuesday.


But any form of default could destabilize the global economy and sour already tense relations with big U.S. creditors such as China, government officials and investors warn.


Li Daokui, an adviser to the People's Bank of China, said a default could undermine the U.S. dollar, and Beijing needed to dissuade Washington from pursuing this course of action.


"I think there is a risk that the U.S. debt default may happen," Li told reporters on the sidelines of a forum in Beijing. "The result will be very serious and I really hope that they would stop playing with fire."
China is the largest foreign creditor to the United States, holding more than $1 trillion in Treasury debt as of March, U.S. data shows, so its concerns carry considerable weight in Washington.


"I really worry about the risks of a U.S. debt default, which I think may lead to a decline in the dollar's value," Li said.


The U.S. Congress has balked at increasing a statutory limit on government spending as lawmakers argue over how to curb a deficit which is projected to reach $1.4 trillion this fiscal year. The U.S. Treasury Department has said it will run out of borrowing room by Aug. 2.


If the United States cannot make interest payments on its debt, the Obama administration has warned of "catastrophic" consequences that could push the still-fragile economy back into recession.


"It has dire implications for the economy at a time when the macro data is softening," said Ben Westmore, a commodities economist at National Australia Bank.
"It's just a horrible idea," he said.


Financial markets are following the U.S. debate but see little risk of a default.


U.S. Treasury prices were firm in Europe on Wednesday, supported by a flight to their perceived safety on the back of the Greek debt crisis and worries about a slowdown in U.S. economic growth.


Marc Ostwald, a strategist with Monument Securities in London, said markets were working on the assumption that the U.S. debt story "will go away". But nervousness would grow if a resolution was not reached in the next five to six weeks.


'WOULDN'T HAPPEN'


The Republicans' theory is that bondholders would accept a brief delay in interest payments if it meant Washington finally addressed its long-term fiscal problems, putting the country in a stronger position to meet its debt obligations later on.


But interviews with government officials and investors show they consider a default such a grim -- and remote -- possibility that it was nearly impossible to imagine.
"How can the U.S. be allowed to default?" said an official at India's central bank. "We don't think this is a possibility because this could then create huge panic globally."


Indian officials say they have little choice but to buy U.S. Treasury debt because it is still among the world's safest and most liquid investments. It held $39.8 billion in U.S. Treasuries as of March, U.S. data shows.


The officials declined to be identified because they are not authorised to speak to the media.


Oman is concerned about the impact of a default on the currency reserves of the sultanate and its Gulf neighbours.


"Our economies are substantially tied up with the U.S. financial developments," said a senior central bank official, who spoke on condition of anonymity.


"It just wouldn't happen," said Barry Evans, who oversees $83 billion in fixed income assets at Manulife Asset Management. "They would pay their Treasury bills first instead of other bills. It's as simple as that."
Monument's Ostwald called the default scenario "frightening" and said bondholders' patience would wear thin if lawmakers persisted in pitching this strategy in the coming weeks.


"This isn't a debate, this is like a Mexican standoff and that is where the problem lies," he said.
Yuan Gangming, a researcher with the Chinese Academy of Social Sciences, a government think tank, smelled some political wrangling behind the U.S. debt debate as the 2012 presidential election draws nearer and said Republicans "want to make things difficult for Obama."
But with time running short before the U.S. Treasury exhausts its borrowing room, Yuan said default was a real risk.


"The possibility is quite high to see a default of the U.S. debt, which would harm many countries in the world, and China in particular," he said.


(Reporting by Kevin Lim and Jong Woo Cheon in Singapore, Suvashree Dey Choudhury in Mumbai, Aileen Wang and Kevin Yao in Beijing, Abhijit Neogy in Delhi, Marius Zaharia in London and Umesh Desai in Hong Kong; Editing by Dean Yates and Neil Fullick)

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The Fed Rearranges the Deck Chairs on the Titanic Economy: Bob Chapman

World markets and especially US markets are in a state of uneasiness and it is only a matter of time before they degenerate further. The real question is will everything break loose between now and the end of the year? The answer in part is yes, and it is currently in process.


“The President’s Working Group on Financial Markets,” along with elitist insiders normally have the ability to make the stock and bond markets do what they want them to. That is, at least on a short-term basis. We believe the market is being deliberately taken down by them in order to impress upon politicians that if they do not extend the short-term cash debt limit that the market will fall even further and that in turn will reduce their ability to get reelected. If you do not think that is possible then you have no idea what is going on. At the present time with about a month to the August 2nd deadline the two political parties are nowhere near an agreement. As we draw closer to the deadline investors will become more and more concerned and the market will trend lower.


These problems that we predicted for the second half of the year are all coming together like a bad dream. This could very well be a reply of 2008, but for a different set of reasons. Obviously Wall Street knows something others do not know as they resort to large layoffs.


For months oil prices have tended higher. The official CPI is 3.6% when in reality it is well over 10%. Unemployment officially under U3 is 9.1%, when in reality it is 22.6%.


No solution has been found for Greece’s problems, even though an agreement has been made with lenders, and as an extension of that, we see euro, euro zone and European Union problems that probably are unsolvable.


Debt ratings for sovereign nations are falling like ten-pins, which we look at very skeptically. Why were not these ratings reduced by rating agencies some time ago? We see the rating agencies, as controlled by Wall Street, and we see no coincidence that these ratings are all being lowered almost simultaneously. We think these events are being timed to force debtor European nations to heel to European bankers’ demands. By example, it is obviously the intention of Europe’s Black Nobility, which controls such banking, to rape Greece financially and enter it into financial bondage for years to come and they intend as well to render the other five hopeless EU members into the same position.


Little has been done to repair the damage done by the credit crisis, which began in 2008. The financial sector and government has temporarily been kept from failure, but little else has been done. The situations in Europe and the UK are no better. Failure of a debt extension and or default by Greece could lead to a collapse of the world financial system, as we know it. The long-term looting by the Fed, the Bank of England, and many others, day-by-day is being exposed to the public by talk radio and the Internet and the elitists are powerless to stop it. We’d say it won’t be long before the whole world knows what they have been up too for a long time. The exposure of these facts is affecting public confidence and many are saying, are we next? The entire financial sectors in the US, UK and Europe are now more vulnerable than ever and by the looks of recent economic reports things are looking worse. That is why Greece or debt extension is so important. Their failure could trigger panic. The Democrats in the US House are playing chicken and if a deal is not reached there will be no extension. Further to this China is slowing down and has major inflation problems and a real estate bubble and Japan has been devastated.


As we predicted the Feds will spend $900 billion in their QE2 program. It has injected $2.3 trillion into the financial system September of 2008. The federal government has added $1.7 trillion for a total of $4 trillion and no recovery has appeared. Over the next year $112 billion of the Fed’s government bond holdings will mature and they will use those funds to roll Treasury paper.
The Fed as well holds $914 billion in mortgage backed debt known as toxic waste, and $118 billion of debentures from Fannie Mae and Freddie Mac. They will maintain these levels until September. In July and August plans will be put in place to again increase money and credit in order to assist in the Treasury and agency markets and replace funds, some $850 billion that will not be forthcoming from Congress.


Real unemployment is 22.6%. That should move up to 22.8% to 23% by the end of the year.


The two political parties have been meeting for two months and have accomplished very little regarding the cash debt extension. If no compromise is reached the US credit rating will probably be lowered and interest rates will rise. Zero interest rates are still currently in place. It is not a pretty picture. As we predicted in May 2010, the second half of 2011 is going to fraught with problems.


Wall Street sees what we see, but they are not going to tell you what we will tell you. Their direction and thought process is what you have to watch. Why would the securities and banking business be planning big layoffs and payroll cutbacks? They obviously believe markets are headed lower and they see plenty of problems ahead. Wall Street is pessimistic and they should be because they see what we see. Except for gold and silver shares get out of the market as fast as you possibly can.


Food prices will probably double again over the year and OPEC says they will not raise oil production. That means over the next year oil should trade between $85 and $120 a barrel, barring any unusual events. This means based on QE2 inflation should reach 25% to 30% next year.


In spite of financial problems in the UK and Europe the dollar is still unable to gain against other currencies in any meaningful way. That is understandable, considering a possible downgrade of US debt and a recent statement by Moody’s to downgrade the debt of Wells Fargo, Citigroup and Bank of America.



As of late bank stocks have been hit hard and that is not a good omen. Bank stocks led the downside in 2008.
The residential real estate market is off 5% year-on-year, as new home sales soften and existing sales go nowhere. We see another 10% to 20% price drop this and next year. Even when prices bottom, how long will it be before there is a recovery, perhaps ten or twenty years? If you didn’t notice consumer confidence is lower now than it was in late 2008.


Even though Greece made a deal their second bailout would probably only last another year. The case for this kind of rescue is very weak. In the final analysis Greece has to go bankrupt along with the other five problem nations. That in turn will kill the euro and the European, UK and US banking systems. Very few people realize how serious this is even professionals.


Complicating matters Moody’s just lowered the outlook for 13 Italian banks, and said 16 others could have downgrades as well. The German banking association said last week they would no longer accept the ratings of Moody’s, S&P and Fitch because their ratings are bogus and are used politically by Wall Street and US banking. Sometime ago China said the same thing. As a result of pressures in Spain and Italy, the ECB is flashing a red alert signal. More trouble is on the way. Needless to say, yields on bonds in problem countries are climbing, as are the costs for credit default swaps. Contagion is spreading and sooner or later it will affect the lender countries as well. These conditions will also lead to a tightening of liquidity.


Greece’s public debt as a percentage of GDP is 143% and Italy isn’t far behind with 119%. As contagion moves forward from Greece higher borrowing costs will prevail as countries like Italy, Spain, Ireland and Portugal have to rollover their debt, along with contagion comes a change in sentiment, which causes contraction, which could spread worldwide, as liquidity finds its way into gold, silver and commodities.


All nations have to have sustainable growth to produce rising tax revenues to service existing and new debt. That hasn’t and is not happening and with the policies being implemented it won’t happen in the future. Governments and central banks are only interested in funding and saving corrupt and bankrupt governments, financial sectors and select transnational conglomerates.



These selective rescues are accompanied by the drums and dark clouds of war, which are deliberately created to distract the world populace. Who worries about debt solvency when you may be dead tomorrow? Without such a distraction economic and financial problems move to the forefront and that is the last thing the elitists want to happen. The public has to be kept dumb and stupid, otherwise they cannot be bilked out of everything they have worked for in their lifetime. That era is coming to an end, because people are being told the truth about who is doing what to them and why via talk radio, that now spans the globe and via the Internet as well.



We are seeing the results of that in Greece today and many more countries will follow, including the US. The people of the world will eventually end this reign of banker tyranny, because they will have been educated and will have discovered the truth. Too big to fail will be cast into the dustbin of history.


The antithesis of central banks and fiat currencies are gold and silver, which have acted in the capacity as the only real money for 6,000 years. This has become even more apparent over the past 11 years. After having exited the stock market in the second week of April 2000, we told subscribers in June 2000 to begin accumulating gold and silver coins, bullion and shares. Since then, vs. nine major currencies, every year gold and silver have appreciated more than 20% annually. During that period the stock market has fallen on average 20% annually. The concentrated central bank selling of gold since 1988 has been staggering, but there were many willing buyers and during that period gold rose from $260 to $1,550 and silver from $3.50 to $50.00.



The elitists impeded the upward movement in these metals to keep them from reaching their true value, but they still performed admirably. Over that time period many sovereign nations have been accumulating gold and continue to do so. Inflation began its current rise 11 years ago as the Fed and other central banks were forced to offset the deflationary effects in the fall in the stock market and then the collapse in the real estate markets, bubbles that the fed deliberately created to keep the economy from collapsing. Money and credit creation are the antithesis of deflation. This is how we arrived at where we are today. The surge of QE1 and QE2 and stimulus 1 and 2 have been the latest manifestation of wild liquidity creation, which will soon turn into high gear as quantitative easing 3. The money war is well underway and fiat currencies are losing to gold and silver and that will continue. All the attempts to discredit gold and silver have not deterred some investors from buying these precious metals.



The result is that official above ground inventories have been reduced to the extent that very little is left to impede the upward movement of these metals, especially silver. At the same time demand continues unabated and new supplies of these metals from the earth falters, as large ore bodies become harder and harder to locate and more expensive to mine due to persistent inflation caused by central banks. All the increases in margin requirements in the long run will not deter the upward path of these metals, nor will the use of paper derivatives block the long-term assent of these metals.



The recently discovered rules in the Dodd-Frank Bill to reduce leverage on margined transactions will do little to discourage speculators. They will just move from Forex to another exchange and contrary to dumb sensationalist notices that this may lead to the end of the physical gold and silver trade and the purchase of shares are totally without foundation. We question the reasons why persons would concoct such extravagant fairy tales? Supplies of physical gold and silver are disappearing and the elitists are trying to chase speculators out of the market depressing prices and stopping a desire for delivery.



They are going to discover that their efforts will be unsuccessful, as will their concentrated short positions that the CFTC and our government refuses to do anything about, because they have engineered the suppressions, which they are finding are not working. Obviously, today there are big hitters in these markets and they are undeterred by the manipulation and use of excessive margin requirements. That means in the future the effect of market manipulation will end and free markets will return.


It will be another four months before Federal Reserve Chairman Ben Bernanke meets the press again to tell America what has transpired in the ensuing time frame. The Fed can do as it pleases and the public will know little about its operations to save its bogus balance sheet. Events are increasing in velocity. There are reportings by states and municipalities concerning their financial positions, whether there will be a QE3 after September, after the Fed’s $900 billion has been exhausted and will Congress supply a short-term debt extension on August 2nd.



These are major events and should be watched closely. At least for the next year the Greek problem has been neutralized, but not solved. That is if Greece does not have a revolution, as a result of that vote. Due to talk radio and the Internet exposure the Greek people know that the banks are financial terrorists and that it is the banker’s intent to steal as much of Greece as they can.



At least for the moment there will not be a Greek default. The grievous losses by European, UK and US banks have been kicked down the road probably for the next year, but it will be interesting to see what will be attempted, if anything, to augment a slowing world economy. Europe now is the media’s focus of attention even though enabling legislation has been past. The sovereign debt problems have not and will not go away. It is not only the sovereigns, but the banks as well, which are in far worse shape. These bankers sidestepped participation in the bailout, because they own all of the European politicians. That does not make the problem go away. It could be 50 years before debt is written off or offset, so it is not surprising that the media will be forced at least in part to focus on Europe. As this transpires America’s problems will slowly become front-page concerns, especially when America and Wall Street finds out that the US government had to loot federal pensions of $275 billion to keep the government afloat until August 2nd with no ability to repay those funds. Then what happens if congress does not approve the short-term debt extension? Will government keep looting the pensions plan or get legislation passed to commandeer private pensions, 401Ks and IRA’s? $6 trillion is a tasty morsel for a bankrupt country. Passage will be simple if a bill goes forward, because our masters on Wall Street and in banking own 95% of our Congressmen. The average American has no say in government any more.


There you have it. A long hot summer. Nothing has changed except the deck chairs have been temporarily rearranged. The ship is still sinking.

In the first ruling by a federal appeals court on President Obama’s health care overhaul, a panel in Cincinnati handed the administration a victory yesterday by agreeing that the government can require a minimum amount of insurance for Americans.


A Republican-appointed judge joined with a Democratic appointee for the 2-1 majority in another milestone for Obama’s hotly debated signature domestic initiative — the first time a Republican federal court appointee has affirmed the merits of the law.


The White House and Justice Department hailed the panel’s affirmation of an earlier ruling by a federal court in Michigan; opponents of the law said challenges will continue to the US Supreme Court.


At issue is a conservative law center’s lawsuit arguing on behalf of plaintiffs that potentially requiring them to buy insurance or face penalties could subject them to financial hardship. The suit warns that the law is too broad and could lead to more federal mandates.


The Thomas More Law Center, in Ann Arbor, Mich., argued before the panel that the law was unconstitutional and that Congress overstepped its powers.


The government countered the measure was needed for the overall goal of reducing health care costs and reforms such as protecting people with preexisting conditions. It said the coverage mandate will help keep the costs of changes from being shifted to households and providers.
White House adviser Stephanie Cutter called the ruling another victory for millions of Americans and small businesses benefiting from the overhaul.


“At the end of the day, we are confident the constitutionality of these landmark reforms will be upheld,’’ she said in a statement.


The law center predicted its case would have a good shot on appeal.


“Clearly, our case won’t resolve all the issues, because we don’t raise the state rights issue, but we are the only one that is currently ripe for Supreme Court review that raises the challenge on behalf of an individual,’’ said David Yerushalmi, an attorney for the law center.


The three-judge panel of the US Court of Appeals for the Sixth Circuit delivered a lengthy opinion with disagreement on some issues, moving unusually quickly in delivering its decision, less than a month after hearing oral arguments.


“Congress had a rational basis for concluding that the minimum coverage provision is essential to the Affordable Care Act’s larger reforms to the national markets in health care delivery and health insurance,’’ Judge Boyce F. Martin, appointed by President Carter, wrote for the majority.


A President George W. Bush appointee concurred; a President Reagan appointee who is a US district judge in Columbus, Ohio, sitting on the panel disagreed. Judges are selected for panels through random draw.




The Fed Rearranges the Deck Chairs on the Titanic Economy | International Forecaster Weekly Bob Chapman The International Forcaster | Economy News | Investing | US Market Information | Gold | Silver | Wall Street Bailouts | Investment Trends | Money

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Gerald Celente informed King World News today that he expects a bank holiday to happen. Here is a portion of the KWN exclusive detailed sneak peak at the upcoming Summer Trends Journal, “What will another major terror strike mean should an attack hit one of the major NATO nations? The effects this time will go global.

Bank holidays will be called, the US and other fragile economies will crumble, gold and silver will soar and already troubled currencies will crash. Economic martial law will be declared, promised as a temporary measure, once in place it will remain in place.”

Celente continues:



“Civil rights will be suspended and particularly in America, Homeland Security, already intrusive, will achieve an Orwellian omnipresence. With banks closed and economic martial law in place, restrictions will be set on the amounts, times and frequencies of withdrawals (of cash). It will be essential to have a stash of cash on hand.”

When asked to comment on the above portion of his upcoming Summer Trends Journal Celente stated, “Let’s listen to what Moammar Gaddafi said recently, he said they are planning revenge attacks against Nato countries that are trying to kill him...And you’ve heard me say this before, if his major export in Libya was broccoli you think anybody would be there?

It couldn’t be because of the sweet crude oil that the Europeans buy from him...So when they start retaliating, when terror strikes, the people will again rally around the government, they will get more of their rights taken away from them, and as they get their rights taken away from them they’ll get their money taken away from them too.

They’ve done it before, they’ll do it again. Go back to 1933, the emergency banking act under FDR, what did they do? They called a bank holiday. You can’t get your money out and oh by the way turn in all of your gold. Sell us your gold at $20.65 an ounce and after we get it all we are going to repeg the price of gold to $35 an ounce, which means back in those days when the dollar was pegged to gold you just lost 40% of your purchasing power.

We believe the same thing is going to happen now because they are going to devalue the currencies as a means of paying off all of this worthless debt.”

To hear the Gerald Celente interview giving the King World News audience a KWN exclusive detailed preview into his brand new soon to be released “Summer Trends Journal” CLICK HERE.

© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.



Eric King

KingWorldNews.com

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The People Fiddle as the Country Burns

6 July 2011 74 Comments
By Greg Hunter’s



USAWatchdog.com


Thank goodness the Casey Anthony case is over! The jury thinks she is not guilty of murder. I don’t know if they got right or wrong, but I do know many dollars and much air time was devoted to a story that will have zero effect on the lives of 99.999% of Americans. I think the discovery of a walking, talking Martian would have gotten about the same attention. I guess this stuff sells newspapers and gets TV ratings but is sure not what U.S. citizens should be focused on. Maybe that’s the point. Are stories like Casey Anthony just our version of a Roman Circus? Are the masses being kept preoccupied with events that have no bearing on their lives while the country burns in a cloud of debt?



I think so.


Most people have no idea of the perilous position the U.S. is in. One wrong move by our government or even a government the size of Greece, Portugal, Spain or Italy, and there could be a daisy chain of debt explosions around the globe. The people are in the dark, and I blame the mainstream media (MSM.) A story that should have people really terrified is the battle going on in Washington D.C. over raising the debt ceiling some $2.4 trillion dollars. If the issue is not settled by early August, the U.S. could have the mother of all debt defaults.





The Democrats and Republicans cannot agree on a package that contains both tax increases and budget cuts. President Obama has called for a “balanced approach.” Bloomberg reported yesterday, “The Obama administration and congressional leaders are working to complete a deal on a long-term budget reduction package by July 22 as part of a plan to raise the $14.3 trillion debt limit. The Treasury Department has said that its borrowing authority expires Aug. 2 and could result in a first-ever U.S. default on its obligations.


Obama’s comments came as Democrats were intensifying a showdown with Republicans over whether tax increases should be part of a deficit-cutting deal before the Aug. 2 deadline.” (Click here for the complete Bloomberg report.)


Everyone should be watching this debt ceiling negotiation because, no matter the outcome, it will affect the lives of 99.999% of Americans and many people around the globe. If a deal is not reached, catastrophic consequences would follow.



In his latest report, economist John Williams from Shadowstats.com said, “Such a default would be a serious mistake, and it most likely will be avoided as political games push the limits of brinksmanship. An outright default likely would trigger massive dumping of the U.S. dollar, and it would accelerate movement to much higher U.S. inflation and, ultimately, to hyperinflation.”



According to Williams, there are $12 trillion in liquid dollar assets held outside the U.S. That is where the hyperinflation would come from.


Paul Farrell from MarketWatch.com takes the opposite end of the argument and says the U.S. should not raise the debt ceiling because it will make matters worse in the future. In a post he wrote yesterday, he said, “No, do not raise the debt-ceiling. You heard me: Block the debt ceiling vote. Don’t raise it. America’s out-of-control. A debt addict. Time to detox. Deal with the collateral damage before it’s too late.”



Farrell gives 7 reasons why he thinks we should force a depression right now and not wait for an even bigger one to happen later. (Click here to read the complete MarketWatch.com report.)


Either way, America is heading for a real disaster, and most people are clueless of how fast the economy could fall off a cliff. And when I say disaster, I mean riots, crime, violence, hunger, hyperinflation and a complete loss of wealth that will vanish seemingly overnight. This is a fall that will forever change the country. This is big, very big. Meanwhile, the mainstream media (MSM) is obsessed with wall-to-wall coverage of stories like Casey Anthony. I guess the John Edwards saga will be the next distraction as we head for the abyss. When we crash, and I guarantee it will happen, the MSM will sit around and say the exact same thing it said after the 2008 meltdown: “Nobody saw that coming.” Let the games continue.


Debt Ceiling News vs Casey Anthony News | Greg Hunter?s USAWatchdog