Saturday, February 20, 2010

"Crisis of Confidence": Yes, Risks of U.S. Default Are Very Real, Charles Ortel Says

With America facing $1 trillion annual deficits and debt-to-GDP ratios on par with those of Europe's so-called PIGS, some are asking what was once unthinkable:Is the U.S. at risk of defaulting on its debt?

Earlier this week, Nobel-prize winning economist Joseph Stiglitz told Tech Ticker the U.S. "has absolutely no real problem servicing the debt at the current level"; meanwhile, Treasury Secretary Tim Geithner recently said America will "never" lose its vaunted triple-A credit rating after Moody's suggested it was a possibility if we don't get our fiscal house in order.

Take a hard look at America's balance sheet and "you have to be concerned," says Charles Ortel, managing director of Newport Value Partners.

Total gross U.S. debt is now $50 trillion or 12 times the nation's total gross income, according to Ortel, whose debt calculation excludes unfunded mandates such as Social Security and Medicaid but does include corporate debt which he says are "potentially eligible for bailouts." (more)

World Financial Report, Feb 19, 2010

Click here for audio

U.S. Mortgage Foreclosures Rose in Fourth Quarter

A record number of Americans were in danger of losing their homes in the fourth quarter, even as new delinquencies declined, the Mortgage Bankers Association said.

Loans in foreclosure rose to 4.58 percent of all mortgages, while those more than 90 days overdue -- the point at which lenders usually begin the process of seizing a property -- climbed to 5.09 percent, the Washington-based trade group said in a report today.

“We have a hard-core block of unemployed who have been out of jobs for a long time, and that’s keeping the long-term delinquencies high,” Jay Brinkmann, the association’s chief economist, said in an interview. “New entrants to the ranks of the unemployed have been falling, and that’s why we see the early delinquencies dropping.” (more)

British military insider: World War III is being staged; starting with Israel and Iran

US “leadership” and their corporate media minions are pushing juvenile-level propaganda for war with Iran; lies that anyone can verify with a few moments’ attention. If you haven’t already confirmed the Orwellian-level disinformation, stop and read the above two links now.
Many people hypothesize the confirmed lies for wars with Iraq and Afghanistan, and a final war with Iran, is to control oil. Connected is the theory that US political and economic “masters” are so confident in their propaganda, and so correct in their conclusion that the critical mass of humanity is too feeble to stop them, that they brazenly move forward for global hegemony.

This article provides a different explanation of the facts; with heightened urgency to prevent war with Iran, as it is a planned step to begin a Third World War. (more)

Credit markets flash hottest warning signal since crisis

Jitters over Chinese credit tightening and default risks in Greece and Dubai are causing bond vigilantes to batten down the hatches across the world, bringing the most dramatic credit rally for a century to a shuddering halt.

The Markit iTraxx Crossover index measuring yields on lower-grade debt has jumped by almost 130 basis points since mid-January to 514, while the main index of investment grade bonds has jumped by a third to 93. "This is the biggest move since the financial crisis in early 2009, said Gavan Nolan, Markit's credit analyst. (more)

Wall Street's Bailout Hustle

On January 21st, Lloyd Blankfein left a peculiar voicemail message on the work phones of his employees at Goldman Sachs. Fast becoming America's pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles. In his message, Blankfein addressed his plan to pay out gigantic year-end bonuses amid widespread controversy over Goldman's role in precipitating the global financial crisis.

The bank had already set aside a tidy $16.2 billion for salaries and bonuses — meaning that Goldman employees were each set to take home an average of $498,246, a number roughly commensurate with what they received during the bubble years. Still, the troops were worried: There were rumors that Dr. Ballsachs, bowing to political pressure, might be forced to scale the number back. After all, the country was broke, 14.8 million Americans were stranded on the unemployment line, and Barack Obama and the Democrats were trying to recover the populist high ground after their bitch-whipping in Massachusetts by calling for a "bailout tax" on banks. Maybe this wasn't the right time for Goldman to be throwing its annual Roman bonus orgy. (more)

Fed Raises Discount Rate - Peter Schiff - 02-18-2010

Economic Charts

Marc Faber - Gold Seek Radio Nugget - 02-17-10 - Part 1