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Archive for September 3, 2012

Is Spain Running Out Of Cash?

“Some hours ago Spain finally bit the bullet, and after months of waffling had no choice but to hand over €4.5 billion (the first of many such cash rescues) in the form of a bridge loan to insolvent Bankia, which last week reported staggering losses (translation: huge deposit outflows which have made the fudging of its balance sheet impossible). As a reminder, in June Spain formally announced it would request up to €100 billion in bailout cash for its insolvent banking system, which subsequently was determined would come from the bank rescue fund, the Frob, which in turn would be funded with ESM debt which subordinates regular Spanish bonds, promises to the contrary by all politicians (whose job is to lie when it becomes serious) notwithstanding. And while Rajoy has promised that the whole €100 billion will not be used, the truth is that considering the soaring level of nonperforming loans in Spain – the biggest drain of both bank capital and liquidity – it is guaranteed that the final funding need for Spain’s banks will be far greater. As a further reminder, Deutsche Bank calculated that when (not if) the recap amount hits €120 billion, Spanish total debt/GDP would soar to 97% in 2014 from an official number of 68.5% in 2011 (luckily the endspiel will come far sooner than that). But all of that is well-known, and what we wanted to focus on instead was the fact that bank bailout notwithstanding, Spain will have no choice but to demand a full blown rescue within a few short month for one simple reason: its cash will run out.”

Via Zero Hedge

How Long Will the Dollar Remain the World’s Reserve Currency?

“We frequently hear the financial press refer to the U.S. dollar as the “world’s reserve currency,” implying that our dollar will always retain its value in an ever shifting world economy. But this is a dangerous and mistaken assumption.

Since August 15, 1971, when President Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold, the U.S. dollar has operated as a pure fiat currency. This means the dollar became an article of faith in the continued stability and might of the U.S. government.

In essence, we declared our insolvency in 1971. Everyone recognized some other monetary system had to be devised in order to bring stability to the markets.”

We frequently hear the financial press refer to the U.S. dollar as the “world’s reserve currency,” implying that our dollar will always retain its value in an ever shifting world economy. But this is a dangerous and mistaken assumption.

Since August 15, 1971, when President Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold, the U.S. dollar has operated as a pure fiat currency. This means the dollar became an article of faith in the continued stability and might of the U.S. government.

In essence, we declared our insolvency in 1971. Everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Via Activist Post

From City Slickers to Homesteading

“Many call it faith, some call it conviction, others call it chutzpah, but you need it in bucket loads to make this work. You have to believe that you are doing the right thing. Everything is in place for us to be consumers and part of this all-consuming society. Maybe our ancestors lived a certain way that we want to emulate, but that’s not how people live now, and it’s not how society even wants you to live. If you are looking for a sign, so to speak, it may not come in the form you are hoping it will. Signs all around us speak to us daily, you just have to be looking in the right places and ready to interpret them.

Many still believe the market will correct itself and things will go back to normal. We know this is not going to happen. But knowing it and acting on it takes a whole lot of guts. You’ll be called everything from crazy to stupid, but you must believe in yourself and move forward. I have come to believe that when people have called us crazy for doing this, inside they are actually fearful that we’re right; that in fact we do know something they don’t and they wonder why they can’t see it. But you will do what we did. You call on your faith, strengthen the bond with your family, and move forward. As with everything in life, the first to go against the grain is considered a rebel and set aside or even written off. Don’t let anyone tear you down, and keep your plan in place.

It is really important that your spouse is on board. It isn’t necessary for your siblings and parents to agree with your plans, but it really does help if your spouse shares your vision for the future. This isn’t a choice between which washing machine or shotgun to buy; to execute this takes both of you to agree that the future is bleak. It might sound silly, but if one of you believes that things will return to the days of yesteryear and the other knows that “ain’t gonna happen,” you will have problems.”

Via Off the Grid News

Student Debt Malinvestment

“That means that more unemployed former students will end up being hounded for debts that they cannot afford to repay, yet cannot discharge through bankruptcy. If those debts had been accrued at the roulette wheel, though, they could.

It wasn’t always this way. Until 1976, all student loans could be discharged in bankruptcy. Until 1998, student loans could be discharged after a waiting period of five years. In 1998, Congress made federal student loans nondischargeable in bankruptcy, and, in 2005, it similarly extended nodischargeability to private student loans. Since 2000, student loan debt has exploded, and private student loans have grown even faster.”

Via Zero Hedge

Categories: Debt

Moody’s Downgrades European Union To Outlook Negative

“Not entirely surprising following the outlook changes for Germany, France, UK, and Holland but still an intriguing move right before Draghi’s big unveiling: Moodys maintains AAA rating but shifts to outlook negative.”

Moody’s believes that it is reasonable to assume that the EU’s creditworthiness should move in line with the creditworthiness of its strongest key member states considering the significant linkages between member states and the EU, and the likelihood that the large Aaa-rated member states would likely not prioritize their commitment to backstop the EU debt obligations over servicing their own debt obligations.

Via Zero Hedge

Categories: Economy

Austerity Sledgehammer: At Least Half a Million College Students On Waiting Lists as Loans Dry Up; Colleges Face Mass Layoffs

“Austerity measures, though unpopular and not discussed by government officials and media pundits, are in full effect across a broad spectrum of services and industries.

In many parts of the country local governments are being forced to layoff or cut the salaries of thousands of emergency personnel. Education spending cuts across debt behemoths like California, Illionois and Michigan are forcing elementary and high school classrooms to capacities exceeding thirty or forty students at a time and removing subjects like art, music and physical education from school schedules. Towns and cities all over America are declaring bankruptcy on an almost weekly basis. Government sponsored health care systems are feeling the pressure with major cuts in access to key prescription medications quickly becoming the norm.

Just two years ago the idea that austerity cuts would hit America like an 8-pound sledgehammer was inconceivable.

Today it’s become quite apparent, especially for those just entering college or returning to higher education in an effort to learn new skills for a dying or dead jobs market.

In addition to nearly $1 billion in state funding cuts for college students, the progressive State of California and others are now facing massive jobs cuts and salary reductions across the board.”

Via SHTF Plan

Categories: Uncategorized

Global Manufacturing Update Indicates 80% Of The World Is Now In Contraction

“With the US closed today, the rest of the world is enjoying a moderate rise in risk for the same old irrational reason we have all grown to loathe in the New Normal: expectations of more easing, or “bad news if great news”, this time from China, which over the weekend reported the first official sub-50 PMI print declining from the magical 50.1 to 49.2, as now even the official RAND() Chinese data has joined the HSBC PMI indicator in the contraction space for the first time since November. Sadly, following today’s manufacturing PMI update, we find that the rest of the world is not doing any better, and in fact of the 22 countries we track, 80% are now in contraction territory. True, Europe did experience a modest bounce from multi-month lows of 44 in July to 45.1 in August (below expectations of 45.3), but this is merely a dead cat bounce, not the first, and certainly not the last, just like the US housing, and now that China is officially in the red, expect the next shoe to drop in Europe. Also expect global GDP to eventually succumb to the manufacturing challenges faced by virtually every country in the world, and to post a negative print in the coming months.”

Via Zero Hedge

EU’s Poorest Member Country Smacks Down Euro As Bulgaria Refuses To Join Eurozone

‘If one needs a shining example of why the days of Europe’s artificial currency are numbered, look no further than the EU’s poorest country which moments ago said “Ne Mersi” to the Eurozone and the European currency. From the WSJ: “Bulgaria, the European Union’s poorest member state and a rare fiscal bright spot for the bloc, has indefinitely frozen long-held plans to adopt the single currency, marking the latest fiscally prudent country to cool its enthusiasm for the embattled currency. Speaking in interviews in Sofia, Prime Minister Boyko Borisov and Finance Minister Simeon Djankov said that the decision to shelve plans to join the currency area, a longtime strategic aim of successive governments in the former communist state, came in response to deteriorating economic conditions and rising uncertainty over the prospects of the bloc, alongside a decisive shift of public opinion in Bulgaria, which is entering its third year of an austerity program. “The momentum has shifted in our thinking and among the public…Right now, I don’t see any benefits of entering the euro zone, only costs,” Mr. Djankov said. “The public rightly wants to know who would we have to bailout when we join? It’s too risky for us and it’s also not certain what the rules are and what are they likely to be in one year or two.” “

Via Zero Hedge

Farm tenant arrested after burglars shot was ‘plagued by break-ins’

” “They have not been injured but property has been stolen.”

Local farmers said the area has been increasingly targeted by car thieves.

One said: “We had three Land Rovers stolen. We had fitted one with a tracker and it was recovered in Birmingham.”

A second man was later treated for gunshot injuries after arriving at Leicester Royal Infirmary, 10 miles from the scene of the shooting. Neither of the men is said to be seriously injured.

Yesterday the businessman and his wife were arrested on suspicion of causing grievous bodily harm. Four men, understood to be the suspected burglars, were also arrested.

The case will reignite the debate over a householder’s right to defend his property, which began in the late 1990s after the farmer Tony Martin shot two burglars at his remote Norfolk home. In 1999, Martin fired at Brendan Fearon, 29, and Fred Barras, 16, after they broke into the house in Emneth Hungate. “

Via Telegraph

Categories: Uncategorized

With landmark lawsuit, Barack Obama pushed banks to give subprime loans to Chicago’s African-Americans

“President Barack Obama was a pioneering contributor to the national subprime real estate bubble, and roughly half of the 186 African-American clients in his landmark 1995 mortgage discrimination lawsuit against Citibank have since gone bankrupt or received foreclosure notices.

As few as 19 of those 186 clients still own homes with clean credit ratings, following a decade in which Obama and other progressives pushed banks to provide mortgages to poor African Americans.

The startling failure rate among Obama’s private sector clients was discovered during The Daily Caller’s review of previously unpublished court information from the lawsuit that a young Obama helmed as the lead plaintiff’s attorney. “

Via The Daily Caller

Categories: Uncategorized
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