Daily Digest

Daily Digest 11/24 - Fed Downgrades Projections, High Soup Kitchen Demand, Home Sales Fall

Wednesday, November 24, 2010, 11:00 AM
  • Fed Downgrades US Economic Projections
  • Ireland Said to Require 85 Billion Euros for Rescue
  • Spain Forced to Double Rates at Bond Sale
  • Michigan to Curb Road Projects as Gas Tax Revenue Shrinks
  • Cleveland Schools Face $58 Million Budget Deficit in 2012
  • Spain and Portugal Under Fire as Bond Spreads Hit Record
  • NC Governor Perdue Contemplating Massive State Budget Cuts
  • IMF's Lipsky Says Portugal Hasn't Sought Financial Aid, Facilities Exist
  • Euro at Stake, German Finance Chief Warns
  • S&P Downgrades Additional $8.05 Billion Of CDOs On Subprime Woes
  • Euro in `Exceptionally Serious' Situation Amid Irish Bailout, Merkel Says
  • Bailout for Spain Would Empty European Coffers, Analysts Warn
  • Report: City's Food Pantries, Soup Kitchens Cope With Higher Demands
  • San Diego County Expanding Food Aid But Still Covers Less Than Half Of Those Eligible
  • Time-Lapse Video Shows Food Stamp Usage (News video)
  • Putin: More Trade with China in Local Currencies
  • Home Sales Fell 2.2% in October

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Economy

Fed Downgrades US Economic Projections - FOMC November Minutes

U.S. gross domestic product, the broadest measure of economic activity, is projected to rise at an annual rate of between 3.0% and 3.6% in 2011 after growing by around 2.5% this year. That compares with a previous June forecast that GDP would increase between 3.5% and 4.2% next year. The economy grew at an annualized rate of just 2.5% in the third quarter, government data showed Tuesday, after rising by 1.7% in April to June. Since the recession ended in June 2009, the economy has been expanding at an average quarterly rate of less than 3.0%. That's too low to make a dent on unemployment and compares with a growth rate of nearly 8.0% that followed the previous deep U.S. recession in the early 1980s. In fact, several Fed officials believed unemployment was more likely to rise than fall if the economy continues to grow so softly. "Participants agreed that progress in reducing unemployment was disappointing," the minutes showed.

Ireland Said to Require 85 Billion Euros for Rescue

European Union officials estimate that a rescue package for Ireland may amount to about 85 billion euros ($114 billion), according to two officials familiar with the talks. The European Commission cited the figure as a preliminary estimate on a conference call of euro-region finance ministers on Nov. 21, said the people, who spoke on condition of anonymity because the talks were private. Of the total, 35 billion euros would be earmarked for banks and 50 billion euros to help finance the Irish government.

Spain Forced to Double Rates at Bond Sale

But the rates offered were sharply higher than at the last similar auction on October 26, at 1.743 per cent for the three-month bonds, up from 0.951 per cent previously.
The yield on the six-month paper jumped to 2.111 per cent from 1.285 per cent.
Rates or yields on bonds issued by Ireland, now the subject of an EU orchestrated rescue, and by Portugal, Greece, and Spain and to a lesser extent Italy, have risen as their public finances come under increasing strain.
The difference, or spread, between the rate that Spain must pay to attract funds for 10 years, and the rate paid by Germany which represents the benchmark rate in the eurozone, also rose on Tuesday to a new historic high of 236.1 basis points or 2.361 percentage points.
It is now at a wider level than at the peak of the Greek debt crisis.


Michigan to Curb Road Projects as Gas Tax Revenue Shrinks

Michigan could see half of its road construction budget disappear by 2012, taking with it scores of repair projects and thousands of jobs in a state that relies heavily on its freeways. A freefall in gas tax revenue over the last decade has the Michigan Department of Transportation projecting its repair budget for 2012 to be $626 million, a slice of the $1.4 billion spent in 2010. And Michigan barely escaped the same fate for 2011, said Bill Shreck, MDOT director of communications, when it faced an $84 million shortfall in its effort to qualify for federal matching funds. 


Cleveland Schools Face $58 Million Budget Deficit in 2012

The impending shortfall is due to state funding cuts, declining tax dollars, and rising costs for staff salaries and benefits. By law, the district is required to balance its budget every year, and Sanders said he and his staff are brainstorming long term solutions to the shortfall. 


Spain and Portugal Under Fire as Bond Spreads Hit Record

Yields on 10-year Portuguese bonds jumped to 6.9pc, replicating the pattern seen in Greece and Ireland just before they capitulated and turned to the EU and the International Monetary Fund. Spreads on 10-year Spanish bonds rose to a post-EMU record of 233 basis points over Bunds, pushing the yield to 4.87pc. Spain's central bank governor, Miguel Angel Fenrandez Ordonez, said the contagion had spread rapidly to the eurozone periphery and "made itself felt" in the Spanish debt markets. He called on Madrid to accelerate fiscal reforms to persuade the markets the country really means to put its house in order. "Spain is a bit too big to be bailed out," said Antonia Garcia Pascual, of Barclays Capital. "The size of rescue required would use up all the funds available and then you have Italy with contagion as well."

NC Governor Perdue Contemplating Massive State Budget Cuts

Gov. Bev Perdue's administration is weighing sharp and painful budget cuts next year that would include state park closures, tuition hikes at community colleges and major state layoffs. Faced with a projected $3.5 billion budget shortfall next year, Perdue asked the heads of state departments, agencies and colleges to develop plans for cuts ranging from 5 percent to 15 percent.

IMF's Lipsky Says Portugal Hasn't Sought Financial Aid, Facilities Exist

John Lipsky, the second-ranking official at the International Monetary Fund, said facilities exist to help Portugal in case it seeks aid. “Portugal has not requested any such support but the facilities exist if it were to be needed,” Lipsky said today in an interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene. He said the IMF is in regular contact with Portugal as with other members.

Euro at Stake, German Finance Chief Warns

German Finance Minister Wolfgang Schaeuble has warned that the euro itself is at stake in the currency bloc's sovereign debt crisis, knocking about a third of a cent off its value. 
"We're surrounded by a difficult environment in Europe," Schaeuble said yesterday, referring to a debt crisis that has now engulfed Ireland as well as Greece and threatens to spread further. "I'd like to make clear that our joint currency is at stake. If we can't lastingly defend it jointly as a stable currency, the economic and social consequences would be incalculable," he said.

S&P Downgrades Additional $8.05 Billion Of CDOs On Subprime Woes

Standard & Poor's Ratings Services downgraded $8.05 billion of collateralized debt obligations, citing credit deterioration and recent downgrades in underlying U.S. subprime residential mortgage-backed securities. The ratings agency has lowered ratings on hundreds of billions of dollars worth of RMBS and CDOs in the past year as estimates for the amount of losses in them continue to rise.


Euro in `Exceptionally Serious' Situation Amid Irish Bailout, Merkel Says

“I don’t want to paint a dramatic picture, but I just want to say that a year ago we couldn’t imagine the debate we had in the spring and the measures we had to take” over Greece, Merkel said in a speech to Germany’s BDA employers’ group in Berlin today. “We are facing an exceptionally serious situation as far as the euro’s situation is concerned.”

Bailout for Spain Would Empty European Coffers, Analysts Warn

Bailout for Spain would require 'whopping €420bn', say analysts, amid fears that as yet undeclared debts could bring the country to its knees The cost of providing an Irish-style bailout for Spain would almost empty the emergency fund that was set up by the European Union and the International Monetary Fund to deal with the crisis affecting weak members of monetary union, a leading team of analysts warned tonight


Report: City's Food Pantries, Soup Kitchens Cope With Higher Demands

According to a new study by the New York City Coalition Against Hunger, demand at New York City's more than 1,000 food pantries and soup kitchens increased about 7 percent this year, on top of the 20-percent increase in 2009. "There's been no recovery for hungry New Yorkers," said New York City Coalition Against Hunger Director Joel Berg.

San Diego County Expanding Food Aid But Still Covers Less Than Half Of Those Eligible

It’s not easy to estimate the number of people who are eligible, but more than 480,000 San Diegans are living at or below the federal poverty level. That means the number of people enrolled in “CalFresh” has increased from below 30 percent to about 40 percent of people who are eligible. Fleming says 10,000 San Diegans are now applying for food stamps every month, up from 4,000 a month before the economic downturn. 


Time-Lapse Video Shows Food Stamp Usage (News video)

A new time-lapse video illustrates the depressing rise of food stamp usage throughout the United States since 2007. The video's creator, an online blogger, points to the alarming levels. Food stamps now feed a record 43 million. According to a recent Wall Street Journal report, food stamp usage has increased almost 60 percent since 2007.


Putin: More Trade with China in Local Currencies

China has just allowed the yuan to start trading against the Russian ruble in its interbank market. Until now, the two nations have mostly traded in U.S. dollars. China has encouraged the yuan's use for cross-border trade to reduce its reliance on the dollar.

Home Sales Fell 2.2% in October

Sales of previously owned homes fell in October amid weak demand and concerns about the foreclosure process, putting sales for 2010 on pace to close at their lowest level in 13 years.



 

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

16 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4236
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...

"Spain has frozen the start of its 13.5 billion-euro ($18 billion) program to sell state-guaranteed power revenue bonds until government debt-market volatility abates, people with direct knowledge of the transaction said.

Bankers who were authorized yesterday to begin gauging investor interest in the first tranche of bonds will wait until the yield stabilizes on Spanish debt, roiled by Ireland’s bailout request, said two people who asked not to be named because the process is confidential. The sale may proceed after the yield settles, one of the people said.

“Going ahead with these bonds would have been almost crazy,” said Ivan Comerma, who manages about 3 billion euros as head of capital markets at Banc International Banca Mora in Andorra. “It would be better to wait till the waters calm down.""

"Russia may cancel sales of domestic bonds for the second time this month and delay its first-ever offering of ruble-denominated debt abroad as concerns over the weakening currency and Ireland’s bailout curtail demand.

The Finance Ministry’s auctions of 2015 and 2012 federal bonds, known as OFZs, may fail to garner enough bids to take place today as appetite for assets in local currency sours, according to VTB Capital and Trust Investment Bank in Moscow. A planned debut sale of ruble Eurobonds may be postponed because of “weak” market conditions, OAO Gazprombank said yesterday. "

  • Other news, headlines and opinion:

Ireland, the Euro, & the Future: An Interview with Ambrose Evans-Pritchard (McAlvany audio...A must listen. Don't miss this one)

Spain, Portuguese CDS spreads hit record levels

Germany sells 4.8 bln euros of Bunds, to poor demand

Ireland's credit rating slashed as it prepares to unveil four-year austerity plan

Muni Issuers May Face Default 'Crunch,' Lehmann Says

Portuguese general strike seeks to bring country to standstill

Greek Unions Prepare for Strike Against New Austerity Measures

Police march on City Hall to protest possible layoffs (Aurora)

Baby Boom to Bust: Time to Raise Retirement Age? (CBS News)

Moody's: Home prices to fall until mid-2011

Mayor sees $57 million budget deficit in coming year (New Haven)

Poland May Issue Pension Bonds to Compensate Private Funds

New-Home Sales Fall 8.1% in October

SingleSpeak's picture
SingleSpeak
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Posts: 507
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...

San Diego County Expanding Food Aid But Still Covers Less Than Half Of Those Eligible

Is it just me, or would it be better to try to get less people on food stamps (CalFresh) instead of more? When you are bankrupt, maybe you would benefit more by teaching people to fish, rather than giving them a fish.

junkyard71's picture
junkyard71
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Posts: 22
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...

hey don't impose logic and reason into this collapse.  we can't have none of that!

DRHolden's picture
DRHolden
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Posts: 131
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...

People don't want to learn to fish when they can have fish given to them.  Besides, many of these people can't afford a fishing pole because they spent all there money on a state-of-the-art HDTV, iPod, iPhone, or maybe a Blackberry...  They can't afford to feed their kids, but they can't miss Dancing with the Stars either.  I mean ain't that America something to see?

flavian's picture
flavian
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Posts: 29
Must see video

Today in european parliament:

Poet's picture
Poet
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Joined: Jan 21 2009
Posts: 1892
Fish Versus Fishing

If by "fish" you mean "get a job" or "learn new skills" may I remind you that:

1. This economy is still down 7 million jobs since 2007. There really aren't a lot of jobs out there. Even for people with college degrees, things are hard. I feel very sorry for the crop of college students about to graduate. Even doctors are discouraging others from becoming doctors these days.
2. Working full time at a law-abiding, respectable, honest minimum wage job STILL qualifies one for food stamps. Y'know, those hard-working people who work at the McDonald'ses and Walmarts where millions of flippant, solidly middle class Americans like to shop.

Yes, there is "abuse", but there's also a great need.

Poet

 

rjs's picture
rjs
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Joined: Aug 8 2009
Posts: 445
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...
SingleSpeak wrote:

San Diego County Expanding Food Aid But Still Covers Less Than Half Of Those Eligible

Is it just me, or would it be better to try to get less people on food stamps (CalFresh) instead of more? When you are bankrupt, maybe you would benefit more by teaching people to fish, rather than giving them a fish.

there really aint enough good fishing holes in sandiego county for 3 million poeple to catch enough to eat well...to be eligible for food stamps, one must be near the poverty level for a given state, or have enough children to qualify otherwise...i dont know about you, but i dont want to see any kids growing up malnourished...

http://www.epi.org/economic_snapshots/entry/state_of_working_america_preview_poor_children/

http://www.ehow.com/how-does_4674050_food-stamps-work.html

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...
SingleSpeak wrote:

San Diego County Expanding Food Aid But Still Covers Less Than Half Of Those Eligible

Is it just me, or would it be better to try to get less people on food stamps (CalFresh) instead of more? When you are bankrupt, maybe you would benefit more by teaching people to fish, rather than giving them a fish.

there really aint enough good fishing holes in sandiego county for 3 million poeple to catch enough to eat well...to be eligible for food stamps, one must be near the poverty level for a given state, or have enough children to qualify otherwise...i dont know about you, but i dont want to see any kids growing up malnourished...

http://www.epi.org/economic_snapshots/entry/state_of_working_america_preview_poor_children/

http://www.ehow.com/how-does_4674050_food-stamps-work.html

jumblies's picture
jumblies
Status: Silver Member (Offline)
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Posts: 244
Re: Must see video

Today in european parliament:

...

Wow! That was a roasting. Too late to stop the contagion, I think, but he's right on the money.

 

dps's picture
dps
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Posts: 442
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...

I happen to be working as a dispatcher for a cable company making significantly less than $20/hour (none of your business).  I'm grateful to have a job at all.

I have a BS in computer science and a MS in computer information systems.

I have 20 years experience as a programmer, a manager & a project manager.

With all the information available on this site explaining why things are so bad, I'm shocked at comments suggesting people should just get to work.  What are you thinking?

junkyard71's picture
junkyard71
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Posts: 22
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...

welcome to the new normal.  we shipped most of our good middle class jobs overseas in the last decade or so.   they will not return...  more are being off-shored daily.  we'll ship them all out given time.  america's a service economy now.  you need to somehow figure out a way to support that service economy on your sub $20 an hour pay check.  credit cards are a good way to do this, just check the terms and look for the card with the lowest minimum payment plan.  that will help extend the time leading to the collapse.  also buy stuff on store credit often they have no interest and no payments for a year.  i've recently seen ads offering 2 years!   i think i'll wait to buy a new car until the rebate is 100% and the ad says no payments ever!   that'll be a good deal!

gm will "give" you a truck for 50 days if you don't like it - return it - no guestions asked!   i won't ask what gm will do with those trucks that are returned....  asking would just open a nasty can of worms.

what can't be fixed won't be fixed.  our "system" is fixable but our population will never tolerate it. 

get ready to get down sized again.  cable subs are in trouble.  not mentioning that there is nothing on the 300 channels i receive for my 139 a month.  i don't know why i kept it so long....  it was easier to just keep it i guess...  too busy to cancel?  -  no more it's gone.  i kept internet and local channels but cut my bill more then half. 

i keep the internet because of blogs like this one.  and i do enjoy (in a morbid dark sorta way) watching the collapse happen live and in color.

anyway i think a lot, lot, lot of folks are dropping cable  do you have any insight into the numbers at your company?  

good luck and consider going into biz for yourself as a one or two man operation.  in depressions opportunity abounds.  offer high quality and a fair price (fair does not mean low,  it is relative to the quality of your offerings)  when people are on a tight budget quality comes before price.  we all know that walmart stuff lasts a few uses and then falls apart....  it's designed to do just that...  i expect a lot less of that junk will be sold in the new normal.

it just all takes time to develop.  people are slow to change but once they do change it can be radically.  

best job for the next 20 years?   small scale local farmer.

 

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3200
Re: Fish Versus Fishing
Poet wrote:

If by "fish" you mean "get a job" or "learn new skills" may I remind you that:

1. This economy is still down 7 million jobs since 2007. There really aren't a lot of jobs out there. Even for people with college degrees, things are hard. I feel very sorry for the crop of college students about to graduate. Even doctors are discouraging others from becoming doctors these days.
2. Working full time at a law-abiding, respectable, honest minimum wage job STILL qualifies one for food stamps. Y'know, those hard-working people who work at the McDonald'ses and Walmarts where millions of flippant, solidly middle class Americans like to shop.

Yes, there is "abuse", but there's also a great need.

Poet

 

+++++++1

Living in an area that barely noticed the recent recession because we have been in a depression for the past couple generations, there are plenty of people on food stamps and other gov't programs because there are no jobs.  In addition, because of circumstances that aren't necessary to go into here, there is a large population of developmentally challenged people who are able to live in the community as reasonably normal citizens because of these same programs.  The food pantries here have always been busy, now they are running out of food.  There are also a lot of people that by any measure are poor, but still are able to scrape by without gov't assistance and raise families including paying for their own health insurance.  They have big gardens, hunt and know how to shop.  There is also an active barter economy.

In some places poverty is everywhere, it isn't just those people you see going in and out of the welfare office.  Have a little compassion people.

Doug

Johnny Oxygen's picture
Johnny Oxygen
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Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...
dps wrote:

I happen to be working as a dispatcher for a cable company making significantly less than $20/hour (none of your business).  I'm grateful to have a job at all.

I have a BS in computer science and a MS in computer information systems.

I have 20 years experience as a programmer, a manager & a project manager.

With all the information available on this site explaining why things are so bad, I'm shocked at comments suggesting people should just get to work.  What are you thinking?

Couldn't agree more. I'm in the same boat. Sure am glad I spent all that time and money on degrees. Now I can have educated conversations with the rest of my colleagues who also have degrees. Mostly we talk about how we are going to make rent.

If I had any gumption I'd try and go get a better paying job, god knows there are a ton of them out there.

I too am just glad I have a job...any job.

idoctor's picture
idoctor
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Posts: 1731
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...

jim rogers on gold

Happy ThanksgivingSmile

phecksel's picture
phecksel
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Posts: 204
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...
Quote:

get ready to get down sized again.  cable subs are in trouble.  not mentioning that there is nothing on the 300 channels i receive for my 139 a month.  i don't know why i kept it so long....  it was easier to just keep it i guess...  too busy to cancel?  -  no more it's gone.  i kept internet and local channels but cut my bill more then half.

Drop the cable and put up an antenna with a Tivo to record.  We did it three years ago, and haven't looked back.  About the only thing I miss are some of the local college football games.  Most cable shows can be found as a download available on the internet.  Best part, the OTA signal is superior to cable or satellite.

Damnthematrix's picture
Damnthematrix
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Posts: 3998
Re: Daily Digest 11/24 - Fed Downgrades Projections, High ...

The Tipping Point has Arrived

I believe we have finally breached the tipping point in the socio-political landscape of the United States of America.  There will be no going back from here.  Everyone on all levels of society including the elites must make a choice.  Will you stand for real reform and an end of the feudalistic rule of the oligarchs and their paid-off puppets that line the streets of Washington D.C., or will you keep your mouth shut and play the old and dying game in the context of a completely different cultural environment? 

While many will disagree with what I am about to say, I believe the oligarchs and the Federal Reserve have already lost. 

This will not be clear to the vast majority at this time because the powerful institutions that dominate and rob us will continue to fight for survival but the wind is already blowing in a different direction and cannot be reversed.  The smart elites are starting to see this and are hedging their bets.  The dumb or stubborn ones may want to start looking at countries with non-extradition treaties or start blowing the whistle on someone above them and fast.  The window of opportunity to make the choice is closely quickly.  “I was just following orders” will not cut it when the dollar collapses and Disneyland shuts down.  There have not been any major arrests and people have seemingly gotten away with all their frauds and crimes.  This too will change and 2011 will represent a change in trend in this regard.  We have entered the terminal phase of this ponzi scheme economy and those responsible for its creation and its continued support at the expense of the vast majority of the populace will see their foul deeds rise to the surface. 

Earlier this year I wrote two piece that I think are worth re-reading and I have attached links to them.  The first was “A Time to Speak Out” http://www.zerohedge.com/article/time-speak-out and the second was the “The Elites Have Lost the Right to Rule” http://www.zerohedge.com/article/elites-have-lost-right-rule.  When I wrote these articles many of the themes addressed were completely out of the mainstream, yet in an amazingly brief period of time many of the frustrations I voiced are now popping up everywhere I look.  It’s strange and rewarding to see the topics I and countless others have been discussing on the “fringe” break into the light of day.  Now that these concepts are out there is no stopping the avalanche that is about to hit the oligarchs smack in the face.  As Gandhi said “An error does not become truth by reason of multiplied propagation, nor does truth become error because nobody sees it.”

This brings me to discuss what I think is one of the most important letters from an elite I have seen in 2010.  I am referring to Bill Gross’ most recent piece.  Now when I say he is an “elite” I am not saying he is part of some vast conspiracy to turn us further into serfs.  What I mean is he is one of the most fabulously wealthy people in America.  He also happens to have made his fortune in the financial services industry and runs the country’s largest bond fund.  This is a person that has every reason and incentive to play nice with the other elites and their corrupt institutions at the top of which lies the Federal Reserve banking cartel.  What he did in his latest letter was far from “playing ball.”  Here are some of the notable quotes and the entire letter can be found here http://www.pimco.com/Pages/RunTurkeyRun.aspx.

“Was it relevant in 2004 that John Kerry was or was not an admirable “swift boat” commander? Will the absence of a mosque within several hundred yards of Ground Zero solve our deficit crisis? Is Christine O’Donnell really a witch? Did Meg Whitman employ an illegal maid? Who cares! We are being conned, folks; Democrats and Republicans alike.”

“Perhaps, as a vocal contingent suggests, our paper-based foundation of wealth deserves to be buried, making a fresh start from admittedly lower levels. The Fed, on Wednesday, however, will decide that it is better to keep the patient on life support with an adrenaline injection and a following morphine drip than to risk its demise and ultimate rebirth in another form.”

“Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public debt, actually, has always had a Ponzi-like characteristic.”

“The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not.”

Ok, so what is Bill Gross up to you ask?  I will give you my two cents.  This guy is not as fabulously wealthy as he is for being a dope (although this cannot be said for a lot of people in this industry that are merely financial engineers that would become extinct overnight without 0% interest rates but that’s another story).  Bill Gross sees the writing on the wall.  He see the winds of change and is hedging his bets.  He is throwing out a carrot to those that criticize the completely corrupt and ponzi scheme economy and financial system we have today which benefits only those that speculate on the taxpayers dime.  We could end this fake and destructive economy by ending the Fed in its current form (at the very least everything they do must be transparent) and restoring the rule of law.  He attacks the false left/right paradigm and rightly points out that both the Democrat and Republican establishment have sold out the people to line their own pockets.  In the second quote he actually explores the notion that “our paper-based foundation of wealth deserves to be buried.”  Then finally he points out what many others have but almost no one is the mainstream ever admits.  The U.S. government is running a giant ponzi scheme with regard to its debt.  Hmmm do you want to own gold or treasuries?

Truth be told, what Bill Gross did in this letter is to create the ultimate hedge for himself.  He didn’t say these things earlier when they were just as true as they are today and certainly must have been clear to someone of his intelligence.  He said it now.  He said it now because he can see the writing on the wall.  The important thing is not that he ultimately defends what the Fed is doing (which he unfortunately does) but that he felt the need to hedge himself and distance himself from the system.  As he writes in the final paragraph, “We haven’t been around for 35+ years and not figured out a way to avoid the November axe. We are a survivor and our clients are not going to be Turkeys on a platter.”  Indeed, the axe is going to fall on the oligarchs and if you don’t want to be a turkey on a platter you had better choose sides and fast.   As the great Ralph Waldo Emerson wrote in his 1836 essay Nature, “There are new lands, new men, new thoughts.  Let us demand out own works and laws and worship.”  Well said sir, well said.   

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