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Permadeficit on the Potomac

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  • Mon, Feb 01, 2010 - 02:07pm

    #1

    machinehead

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    Permadeficit on the Potomac

From an NYT article about Pretzeldent Barack Dubya O’Bummer’s $3.83 trillion budget:

Annual deficits through fiscal year 2020 would not drop below 3.9 percent of gross domestic product under the administration’s projections. And by the end of the decade, projections show the annual deficit ticking upwards again, to 4.2 percent of G.D.P. in 2020, as growing health costs and an increasingly older population force up spending for Medicare and Medicaid benefits.

http://www.nytimes.com/2010/02/02/us/politics/02budget.html?hp

Punchline: we’re in permadeficit. And that’s just on a cash basis; never mind the multitrillion deficits under proper GAAP accounting. This year, the cold steel jaws of the leghold entitlement traps set by Franklin Deficit Roosevelt and Lyndon Barack Johnson have snapped shut on Uncle Sam’s bony ankle. Now he must choose between gnawing his leg off to escape, or slowly starving.

It’s made plain in the article why the budget can’t and won’t be balanced:

Medicare, Medicaid and Social Security — the so-called entitlement programs that are the largest and fastest-growing part of the budget — would be exempted, along with defense and veterans programs.

‘Defense’ alone amounts to over 5% of GDP. Most countries with peaceful neighbors can defend their borders with military expenditures of 1% of GDP; that’s probably what the U.S. actually spends on this function. The rest goes to running an unaffordable global empire.

Sadly, all Democratic and Republican presidential candidates are vetted by the Council on Foreign Relations for their fealty to the crushingly costly U.S.-led global empire. Fiat currency is a system of war finance. Now that the U.S. empire has developed a megalomaniacal jones for power, its Achilles-heel economic Ponzi scheme is entering the terminal phase of exponential runaway.

Mark my words: sovereign downgrades and defaults are going to be the major theme of this decade. It ain’t just Greece. Dreams come due, comrades. Don’t expect real-vaue repayment from insolvent debtors who can print their own scrip. Treasurys are certificates of guaranteed confiscation. Whereas gold, guns and grub don’t depend on ‘honor among thieves’ for their value.

 

 

  • Mon, Feb 01, 2010 - 07:43pm

    #2
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Permadeficit on the Potomac

Whereas gold, guns and grub don’t depend on ‘honor among thieves’ for their value.

+1

I lost all respect for Soros last week when he said gold is in a bubble. I think someones head is in a bubble.

 

  • Mon, Feb 01, 2010 - 07:50pm

    #3
    Peak Prosperity Admin

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    Re: Permadeficit on the Potomac

What’s amazing to me is that he’s already included the “Cap and Trade” #’s to his intake of funds.  Didn’t know that had been approved in CONgress.  What do they know that we don’t????  Hmmmmm….us CT believers seem to be more on the money on a daily basis.  

  • Mon, Feb 01, 2010 - 09:54pm

    #4
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Permadeficit on the Potomac

I lost all respect for Soros last week when he said gold is in a bubble. I think someones head is in a bubble.

Davos I agree….Like Jim Rogers said in that one meeting he was in….asked how many owned Gold & very few ever had. I don’t see how it can be a bubble unless it is owned & sought after by many.

Gold maybe on a high but the market is on a sugar high IMHO.

Mark my words: sovereign downgrades and defaults are going to be the major theme of this decade. It ain’t just Greece.

Imagine a lot of the world going down piece by piece. China has it’s own real estate bubble that goes POP! They all start looking back at the USA as stability for the world…and we know for a fact we are BROKE… Scary!

  • Mon, Feb 01, 2010 - 11:32pm

    #5
    Peak Prosperity Admin

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    Re: Permadeficit on the Potomac

[quote=Davos]

Whereas gold, guns and grub don’t depend on ‘honor among thieves’ for their value.

+1

I lost all respect for Soros last week when he said gold is in a bubble. I think someones head is in a bubble.

[/quote]

Here’s what Soros is quoted as saying at Davos:

“When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment,” he told the World Economic Forum in Switzerland, according to the Telegraph. “The ultimate asset bubble is gold.”

http://weblogs.baltimoresun.com/business/hancock/blog/2010/01/soros_gold_is_the_ultimate_bub.html

These words are subject to ambiguous interpretation. ‘Ultimate’ means ‘final’ or ‘last.’ If bubble conditions ‘are developing at the moment,’ then his next sentence could possibly be restated as, ‘The final asset bubble will be gold.’

In any case, from a contrarian point of view, you want ‘experts’ to be trashing gold. Amid the hail of contemptuous brickbats, gold launched more than twenty dollars today.

More, please, kind sirs! Please don’t throw us into that golden briar patch, where poor King Midas starved to death. Ain’t nothin’ to eat there. Please, please, don’t crucify us on that lonely cross of gold! Don’t take away our hard-earned FRNs and replace them with that useless shiny metal, oh no no no! Not after I’ve accepted Benny Bubbles as my personal savior. His FRNs endureth forever; Fed without end, Amen.

  • Mon, Feb 01, 2010 - 11:37pm

    #6
    Peak Prosperity Admin

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    Re: Permadeficit on the Potomac

[quote=machinehead]

[quote=Davos]

Whereas gold, guns and grub don’t depend on ‘honor among thieves’ for their value.

+1

I lost all respect for Soros last week when he said gold is in a bubble. I think someones head is in a bubble.

[/quote]

Here’s what Soros is quoted as saying at Davos:

“When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment,” he told the World Economic Forum in Switzerland, according to the Telegraph. “The ultimate asset bubble is gold.”

http://weblogs.baltimoresun.com/business/hancock/blog/2010/01/soros_gold_is_the_ultimate_bub.html

These words are subject to ambiguous interpretation. ‘Ultimate’ means ‘final’ or ‘last.’ If bubble conditions ‘are developing at the moment,’ then his next sentence could possibly be restated as, ‘The final asset bubble will be gold.’

In any case, from a contrarian point of view, you want ‘experts’ to be trashing gold. Amid the hail of contemptuous brickbats, gold launched more than twenty dollars today.

More, please, kind sirs! Please don’t throw us into that golden briar patch, where poor King Midas starved to death. Ain’t nothin’ to eat there. Please, please, don’t crucify us on that lonely cross of gold! Don’t take away our hard-earned FRNs and replace them with that useless shiny metal, oh no no no! Not after I’ve accepted Benny Bubbles as my personal savior. His FRNs endureth forever; Fed without end, Amen.

[/quote]+1 !!!!!! I’m so glad I took the 401k/IRA hit.

  • Tue, Feb 02, 2010 - 12:01am

    #7
    Peak Prosperity Admin

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    Re: Permadeficit on the Potomac

if the endgame be gold, guns, beans and bullets (and a lot of making do with less knowhow) and worthless trashuries

how’s it play out?

i’m expecting fits of reflation/inflation/stagflation/bullshitation

interspersed with absolute despair of deflation/debts/writeoff/revolts/revolutions

i’ve been 100% gold/silver/shares/bullion coins since early 2001 with bouts of index puts and shorts

but now i’m only 20% bullion coins, 20% gold/silver stocks and lots of cash……waiting

  • Tue, Feb 02, 2010 - 12:21am

    #8
    Peak Prosperity Admin

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    Re: Permadeficit on the Potomac

Davos,

Excuse me for jumping in way over my head…I try to keep up with you guys…..not easy for a housewife with a marketing background!

I’m always looking for clues on what you brainiacs are really doing with your money….I understood the “took the hit with 401/IRA, we are in the process of doing that now even though my CPA is screaming that we are too young and paranoid…but I’m concerned about this BIG Annuity that I invested in with 125k 6 months BEFORE seeing CC for the first time….can I cash that in?  I’ve tried to find answers on the web but can’t.  Reluctant to ask our CPA who is buddies with my Dad and both are swallowing blue pills, golf and scotch every day.

They both suspect our insanity already. If you can help, advice from stangers (here) at this point seem to make most sense…

  • Tue, Feb 02, 2010 - 12:43am

    #9
    Peak Prosperity Admin

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    Re: Permadeficit on the Potomac

@romans 12-2 I can’t and would not give financial advice. I could be 100% wrong a lot can happen. But ALL my money went to paying down as much debt as we could and a huge chunk went into PMs and we stocked up on food and the rest. I was able to close all our 401ks and IRAs and we sold real estate that I subdivided just at peak. Thank God it went to closing.

I have faith in G*d, Gold, Guns and as MachineHead says GRUB. Add gardens to the g’s.

Call your CPA would be my only advice. Find out what you can do or what you are stuck with. ZeroHedge had a piece on the 2 trillion dollar heist that I imagine will be going down to help Bernake ease the QE.

PS Thanks MachineHead. I look up to you like I look up to CM. You’r smart!!

  • Tue, Feb 02, 2010 - 12:58am

    #10
    Peak Prosperity Admin

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    Re: Permadeficit on the Potomac

All good advice and makes me feel betterSmileanyway.  Already pretty set on guns,gold,grub….guess if we are not really planning on anything that used to look like retirement – then who cares about stupid annuity anyhow. 

But where you got me is paying down our debt….still have a 250 mortgage.  Why should we pay this down/off?

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