CRISIS: Government Revenues, Expenditures and Debt Headed For Abyss, & More

Here's the Next Crisis "Nobody Saw Coming"

When borrowing become prohibitive (or impossible) and raising taxes no longer generates more revenues, state and local governments will have to cut expenditures.

"Strangely enough, every easily foreseeable financial crisis is presented in the mainstream media as one that "nobody saw coming."

 No doubt the crisis visible in these three charts will also fall into the "nobody saw it coming" category.

Take a look at this chart of state and local government debt. As we noted yesterday, nominal GDP rose about 77% since 2000. So state and local debt rose at double the rate of GDP. That is the definition of an unsustainable trend

Coming Out - As a Bear! 

Earlier this year, as the market kept marching upward, I decided that buying put options on equities wouldn’t give me the kind of protection I was looking for. So I liquidated most of my equity holdings. We also shut down our equity strategy for the firm.

Of late, I’ve taken it a step further, starting to build an outright short position on the market. In the long-run, this may be losing proposition, but right now, I am rather concerned about traditional asset allocation.

James Turk: Money Bubble About to Pop

This money bubble is going to pop. It has to because there is just too much debt in the world. That debt has to be reconciled and, ultimately, when you are reconciling debt, it gets back to the point about collateral on the balance sheets. There is just not enough good collateral to support all of this paper money circulating out there

The Economist: The TPP is Dead 

The coverage of the TPP in the media was schizophrenic, on the one hand describing it as part of Obama’s “pivot to Asia” (as in an effort to contain China’s growing hegemony), meaning it was clearly a political enterprise, an “everybody but China” deal, and on the other hand, saying that the reason Americans should support it was those miniscule trade benefits. And of course, there was nary a mention of the cost in terms of national sovereignity.

The Tale of an Anxious Economic Recovery, Told by a Revived Textile Mill 

“More people are finding jobs, but nobody feels optimistic about their income prospects,” he added. “That’s likely why it doesn’t feel like the economy has really recovered even though the statistics say it has.”

John Kerry on the Risk of Congress ‘Screwing’ the Ayatollah 

On a related matter—whether or not the nuclear agreement represents a bad deal for the people of Syria, who suffer under the Iran-supported Assad regime, which will presumably benefit financially from the lifting of sanctions on its primary sponsor—Kerry was somewhat dismissive. In response to my question, “Does it bother you that money will be going to Assad and Hezbollah?,” 

Kerry responded, “Yes, but it’s not dispositive. It’s not money that’s going to make a difference ultimately in what is happening.”

Canada Is On The Brink

 Of A‘Very Unusual

 Recession’

Canada is teetering on the edge of a recession.

The country's GDP has fallen for five straight months, the latest numbers coming in at a 0.2 percent contraction in May. And economists say Canada is about to hit its second-straight quarter of declining GDP, the technical definition of a recession.

Contributing to Canada's problems include plunging commodities prices, slowing exports and a falling Canadian dollar. The tumble in crude oil, which has fallen more than 15 percent year to date, has hit Canada hard as a commodities-heavy economy.

According to TD Bank's deputy chief economist, Derek Burleton, investor concerns about the Canadian economy date back to last year, when oil prices first began to fall.

"They're worried about Canada; they're still short Canada," Burleton said. "There's not a lot of upside to growth."

Learning Success: 

APPLY Tips From The Best

Warren Buffett, Berkshire Hathaway – He is a deeply conservative trader during the times that everyone around him is moving from one extreme to the other to the tune of huge losses and gains. Warren Buffett is a perfect example of patience, proving that slow and steady generally wins the business race. (Although I continue to press my own desire to spur Fishbowl’s inventory software business to race!)

Top Weekly Ideas and Insights

An Inconvenient Truth:

What Happens When Top Economists Realize Physical Growth Constraints?

 EXISTENTIAL REALITY 

"Humanity's Coming of Age"

 - The Last Days of Economic Growth -

Ontario Debt Downgraded For Excessive Spending & More

Investors' Insights Comments 

The BIG Market Warning

There is little doubt we are in the midst of a perfect financial storm, that history will perhaps one day record as "The Mother of All Global Market Crashes". Interest rates were too low, for too long, that created unsustainable bubbles in financial  and real estate markets around the world.This time it is different was again the usual mantra.

It never is. It Never Will Be. It couldn't last! 

Mathematically, everyone denied that a mean reversion of interest rates would ever occur and thereby collapse global asset bubble values everywhere by 50% or more. Guess what? Somebody bought that last tulip, and we are now experiencing the reversion with the full brunt of its present value mathematical consequences.  

Moreover, many economies are facing debt woes and physical economic and climate change issues causing either water,capital or food shortages. You cannot run economies without food, water and energy; somehow Nobel Prize nor Ivy League economists can never  figure this out. 

The FED charts tell us the financial market weather is very bad. Wall St is getting very worried and today's  world headlines tell the story of a free fall in values in Japan, China, Australia and elsewhere, that mirrors all the great stock, bond  and economic meltdowns of past and recent history. Plunging prices for  days and weeks on end - because we just run out of bigger fools. The real laws of supply and demand.

If you have that sinking feeling that things are about to get much worse. One thing you need not worry about, you are not alone.

And remember that old adage  -  when its over, its over!

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Ontario Cut by S&P as Big Spending 

Makes It Global Laggard

While the deficit has been dropping, the province’s total debt outstanding has been rising and now stands at about C$315 billion, according to the Ontario Financing Authority. Ontario’s C$250 billion of long-term bonds rated by Moody’s Investors Service is the most of any province, state or local government in the world, the New York-based company said last year.

Someone stole $1 billion from Moldova. That's an eighth of its GDP 

Investigators, including the US auditing firm Kroll, are looking into the matter but have released few details. The speaker of Moldova's parliament finally released a report by Kroll late Monday night that implicated a Moldovan businessman in the scheme, but recommended further investigation.

Many Moldovans are mad about all this.

Greece – What You Are Not Being Told by the Media 

If you are a fan of mafia movies, you know how the mafia would take over a popular restaurant. First, they would do something to disrupt the business – stage a murder at the restaurant or start a fire. When the business starts to suffer, the Godfather would generously offer some money as a token of friendship. In return, Greasy Thumb takes over the restaurant’s accounting, Big Joey is put in charge of procurement, and so on. Needless to say, it’s a journey down a spiral of misery for the owner who will soon be broke and, if lucky, alive.

Is the American Economy Really Recovering? 

I went back through historical records, back before the global financial crisis revealed just how poorly managed America really is, and I pulled Bureau of Labor Statistics (BLS) employment data from two periods: the peak just before the global financial crisis in 2007 to 2008, and as of May 2015. I cross-referenced the data with other numbers the BLS publishes on average weekly earnings.

Gold Gets Ignored in Greek Meltdown With Fewest Bulls Since 2006

While money managers ignored the precious metal’s allure as a haven, demand from Greek customers for Sovereign gold coins was double the five-month average in June, the U.K. Royal Mint said June 29.

China Targets Short Sellers in Stock-Index Futures Contracts

The measure, which comes after the exchange made it more expensive to speculate on stock-index contracts, is intended to curb short selling and won’t work, according to Xinhu Futures Co. China’s state-run media has blamed rumor-spreading short sellers and foreign investors for a stock-market rout that erased more than $3.2 trillion of value in less than a month.

Life insurance industry a risk to U.S. stability, IMF says

In a report released Tuesday, the IMF said that prolonged low interest rates "pose a slow burning solvency risk" for life insurers. If low rate stay until 2018, 11 out of 18 life insurance groups would report negative shareholder equity, the IMF said.

More Leading Global Headlines

Ranking The States By Fiscal Condition 

Greek Banks Prepare Plan To Raid Deposits 

 U.K. Welfare Spending Increases $43 Billion Under Cameron


Chinese Trading Suspensions Freeze $1.4 Trillion of Shares Amid Rout


Central Banks Across the World Pressured to Fight Against Euro Depreciation


European Central Bank’s Nowotny: If Greece Misses Payment, Funds Will Be Cut Off

Top Weekly 

Ideas and 

Insights

LESSON ONE:

How It All Began?

IS EXISTENTIAL REALITY 

Science or Archaic Fabrications?

Ukraine Crisis Grows - NO FUEL!

 

 

Impendent fuel crisis in Ukraine will crash country's economy

The Voice of Russia

 

According to a recent statement made by the energy minister Yuri Prodan, Ukraine will run out of gasoline in the next 29 days. Given Ukranie's dire economic situation, a fuel crisis will surely crash the country's economy.
 

Most oil refineries in Ukraine are owned by Russian companies or are operating on Russian crude oil. Since the beginning of political crisis, refineries have almost stopped producing gasoline and the imports of crude oil have ceased.

"If we talk about fuel, we have a stable situation. We estimate that we have enough fuel for 28-29 days", Prodan told RBK Ukraine. Of course, a situation in which a country receives no crude oil imports and has insignificant stocks of fuel can't be described as "stable", but the current Ukrainian "government" is known for its unjustified optimism.

The situation with the natural gas supplies is just as bad. According to Prodan, Ukraine can access 2 bn cubic meters of natural gas from its underground storage facilities. This quantity should be enough for covering between 2.5 and 3 months of consumption. However, after April 1st all of the existing discounts on Russian gas price will be canceled. In the past, Ukraine was unable to pay for natural gas deliveries even at discounted prices so, there is doubt that a crisis-stricken illegitimate government is alble to pay for gas deliveries at full price.

After Ukraine's debt to Gazprom reached 2 billion dollars, the Russian gas giant warned that the next deliveries will only be made after advance payments. It is highly unlikely that the self-appointed authorities in Kiev will find the funds necessary for the payments. Yuri Prodan's hopes that "reverse supplies" from the EU can help were dashed by a recent statement made by Slovakian government which stressed that Bratislava will not increase supplies to Ukraine to a level that can be "detrimental" to the Slovakian economy. Robert Fico, the prime minister of Slovakia, told the press that his priority is "to ensure the flow of Russian gas through Ukraine" and pointed out that although supplies from Slovakia can help Ukraine, his government is not in a position to fund such help.

Overall, the situation in Ukraine has not yet become a full-fledged fuel crisis but it is likely to evolve into one.

Regardless of the source, imports of crude oil and natural gas will require advance payments in hard currency while the country's budget is empty. Self-appointed Ukrainian authorities expect help from the US and the EU, but so far no one in the West has ...

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