Translation for the perplexed analysts: The Federal Reserve will be virtually the only entity buying long-term (20 and 30-year) debt from the U.S. Government through mid-2012. This is most likely because even though the government would like to extend its debt for two or three decades, not many investors are willing to trust the government with their money for three decades.
I had the pleasure of speaking with Pimco's Bill Gross, one of America’s most famed investors, on CNBC’s Kudlow Report. Mr. Gross has generated big buzz over his admission that betting against U.S. debt was a mistake.
We remain long term bullish on gold and long term bearish on the dollar. Money printing/quantitative easing could prop up stocks, but we could also be in for a period of stagflation.
Today I am going to do something different, openly praise blatant incompetence. I will list my reasons later but first let me sing the praises of sheer incompetence.
The big news last week was what didn't happen. The United States of America didn't default on its national debt.
Corporate profits will continue to rise while business balance sheets are pristine and chock full of cash. Consider the combination of solid productivity, moderate wage rates, and falling commodity prices. These are all plusses for the economy and stocks.
One week after Democrats drove us to the brink of default because they wouldn’t cut the U.S. budget deficit, White House officials tried to blame everyone from ratings agencies to the Tea Party for the economic woes they created. By my math, that makes the Tea Party 100 percent OK with me.
A new clash is ahead that seems fated to split the right into fiscal hawks versus security hawks. It was scheduled for early 2012 by the debt-ceiling deal forced on Barack Obama by Tea Party Republicans.
I’m sure, since it’s in Chicago AND Obama's there-big fish, bad smell- one way or another the night will be tax-deductible for the royalty who can afford to shell out that kind of coin. That way the Dukes and Duchesses of boardrooms from L.A. and NYC can stop worrying about denying jobs to regular Americans in order that their solar farm investments can finally pay off.
This is a pathetic deal. It's no wonder futures are rallying. My dead grandmother could find more cuts than this. The S&P, Moody's, and Fitch should all downgrade US debt on this deal.
One Wall Street source has told me that he believes that in the event of a debt ceiling deal not being agreed to by the president and Congress that the Federal Reserve will stand in as the buyer of record on maturing Treasuries, therefore taking care of principal payments. The Treasury Department would then presumably only have to pay interest on the debt.
CEOs are hoarding cash for their companies. The economy is barely growing. And folks are leaving the dollar for gold and foreign currencies. And with less than a week until the August 2 debt-limit deadline, Congress still dithers.
President Obama and the Democrats are issuing dire warnings that the U.S. may default on its debts if the debt ceiling is not increased. This is a false threat.
In the latest remodeling of Obama’s economic strategy in front of the 2012 elections, a number of media outlets are reporting that Treasury Secretary Tim Geithner is getting ready to depart after Obama concludes debt ceiling and budget negotiations with the GOP.
The world’s government projections for deficit financing in 2011 is $8-10 trillion. We are bumping into the ceiling of the world’s ability to fund ongoing sovereign deficits and debt on an annual basis.