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- Shortfall in California’s Budget Swells to $16 Billion (New York Times, May 12, 2012):

LOS ANGELES — The state budget shortfall in California has increased dramatically in the last six months, forcing state officials to assemble a series of new spending cuts that are likely to mean further reductions to schools, health care and other social programs already battered by nearly five years of budget retrenchment, state officials announced on Saturday.

Gov. Jerry Brown, disclosing the development in a video posted on YouTube, said that California’s shortfall was now projected to be $16 billion, up from $9.2 billion in January. Mr. Brown said that he would propose a revised budget on Monday to deal with it.

“We are now facing a $16 billion hole, not the $9 billion we thought in January,” Mr. Brown said. “This means we will have to go much further and make cuts far greater than I asked for at the beginning of the year.”

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Tags: Collapse, Debt, Economy, Global News, Government, Politics, U.S.

- How Long Before Massive Government Debt Buildup Triggers Another Financial Shock? (ZeroHedge, May 11, 2012):

From Madeline Schnapp, Director of Macroeconomic Research at TrimTabs

Stimulus Tactic of Increasing Government Debt to Increase GDP Broken and Unsustainable. How Long before Massive Government Debt Buildup Triggers Another Financial Shock?

Sometimes a picture is worth a thousand words.  A recent post on the popular ZeroHedge financial blog compared the annualized growth in federal debt to the annualized growth in GDP in Q1 2012.  ZeroHedge reported that while U.S. government debt rose by $359.1 billion in Q1 2012, the U.S. GDP grew only $142.4 billion.  Durden noted that, “It now takes $2.52 in new federal debt to buy $1 worth of economic growth.”

http://www.zerohedge.com/news/chart-day-change-q1-american-debt-and-gdp

The surprising observation prompted us to examine the relationship between growth in debt and growth in GDP from 1975 through 2012.  What we found is both astonishing and frightening.

In Q1 2012, GDP rose $142 billion, while debt rose $359 billion.  In other words, it took nearly $2.50 in debt to generate $1.00 in GDP.  We wanted to understand how this relationship compared to those that prevailed in previous decades.  The graph below shows our findings.

Source: Bureau of Economic Analysis – www.bea.gov and Treasury Department – www.treas.gov.
Note:  The negative value in 2008 was due to negative GDP growth.

From 1975 to 1980, each $1 increase in GDP was accompanied by an increase in debt of between 20 and 47 cents.  In other words, the increase in GDP was two to five times the increase in debt.

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Tags: Debt, Economy, GDP, Government, Politics, U.S.

- S&P Opens The Pandora’s Box: The Wall Of Refi Worry Is $46,000,000,000,000 Tall (ZeroHedge, May 10, 2012):

In what S&P calls a ‘Perfect Storm’, the next four years will see a minimum of $30 trillion in companies’ refinancing needs related to maturing bonds and loans and further they expect $13-$16 trillion more debt will be required to finance growth. With bond portfolios over-stuffed with corporate debt (since angst over sovereign risk has skewed asset allocation away from that cohort) the rating agency is concerned that ongoing bank deleveraging, these huge debt re-funding requirements, and the diminishment of central banks and governments to do anything about it leave serious problems with a credit overhang so large. Critically, especially as we hear calls for ‘growth’ plans from Europe, is the increasing likelihood that, as Reuters reports, this will potentially influence corporate credit quality and “alter the fragile equilibrium that currently exists in the global corporate credit landscape”. While S&P expect the refinancing needs may well be met “This global wall of nonfinancial corporate debt will potentially compound the credit rationing that may occur as banks seek to restructure their balance sheets, and bond and equity investors reassess their risk-return thresholds” which “raises the downside risk in global markets” as an inability to finance growth may well be the catalyst for another risk flare. “Governments and central banks have less fiscal and monetary flexibility to prevent serious problems emanating from future market disturbances. A perfect storm scenario would likely cause financing disruptions even for borrowers that are not highly leveraged.”

Of course the size of this massive refinancing wall dwarfs the recent discussion of how much of Europe’s financial system’s equity market cap is nothing but vaporware – since we note that 30% of this $30 trillion is for European financials and corporations.

Tags: Banking, Bonds, Corporations, Debt, Economy, Global News, Standard & Poor's

- As China Buys, Sellers Push Gold Down To 4 Month Lows (ZeroHedge, May 8, 2012):

Gold just lost the $1600 handle for the first time since January 5th and is suffering its biggest one-day loss in over two months as Europe’s meltdown is driving broad liquidations. Are hungry Chinese central bankers more than happy to soak up the precious metal at a discount from levered longs liquidating into the European fiasco?

Chart: Bloomberg

- “Uncivilized” China Quietly Building Gold Reserves As Gold Imports From HK Soar By 587% In First Quarter (ZeroHedge, May 8, 2012):

A month ago we ended up with the hilarious situation where the US was actively considering releasing petroleum from the Strategic Petroleum Reserve even as China was demonstratively and concurrently adding to its strategic inventory. Now, as the developed world is seeing day after day of gold hammering on amusing flights of fancy that central banks won’t be forced to engage in more and ever bigger rounds of monetary dilution, and where the seller apparently has no regard for getting a “good” price, but merely seeks to crash the bid stack slams various PM prices, we see the same inversion with gold. Because as Bloomberg reports, “Mainland China’s gold imports from Hong Kong surged more than sixfold in the first quarter, to 156 metric tons, adding to signs that the country may displace India as the world’s largest consumer of the precious metal on an annual basis.” And the punchline: “The purchases through Hong Kong may signal that the mainland is accumulating reserves, London-based brokerage Sharps Pixley Ltd. said in February. The nation last made its reserves known more than two years ago, stating them at 1,054 tons.” Yep ladies and gents: the PBOC is very grateful that it can add hundreds of tons of gold to its reserve holdings in a stealthy operation which it will announce only after its conclusion, at which point, like true 13F chasing lemmings, retail will send gold soaring. But in the meantime, dear hedge funds worried about your margin calls and 1 month performance reports, please proceed calmly along with the lemming herd, and keep pushing gold lower and cheaper for our new Chinese overlords, and for everyone else who, without P&L timing constraints, takes delight in such brief arbitrage opportunities.

From Bloomberg:

Imports from Hong Kong were 135,529 kilograms (135.53 metric tons) between January and March, from 19,729 kilograms in the year-earlier period, according to data from the Census and Statistics Department of the Hong Kong government. Shipments in March rose 59 percent from February, yesterday’s data showed.

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Tags: Australia, Bonds, China, Debt, Dollar, Economy, EU, Europe, Fed, Federal Reserve, GDP, Global News, Gold, Hong Kong, India, New Zealand, Politics, U.S., World Bank

Source: Unemployment Rate Drops To 8.2% For One Simple Reason: The Number Of People Not In The Labor Force Is Back To All Time Highs: 87,897,000

- Why There Are No Jobs (Intel Hub, May 4, 2012):

What a week. On Tuesday the DOW finished the day at 13,279, its highest close since December 2007.  In terms of the stock market, we’ve crossed the great divide…December 2007, remember, was pre-financial crisis.

In fact, it was nearly a year before Lehman Brothers vanished from the face of the earth and black swans relentlessly descended upon the LIBOR like common ravens upon fresh Southern California road kill.  If you recall, when the sky was falling in late 2008, spread movements that were statistically not possible in a million years, somehow, happened every day.

Money market shares of the Reserve Primary Fund did the impossible…they broke the buck – falling to $0.97 cents a share.  Still, while the stock market may be back to where it was over four years ago, the world is dramatically different…

For one thing, back in December of 2007 you could buy a 10-year Treasury Note yielding 4.23 percent.  Today the 10-year Note Yields less than half that.  Of course, December 2007 was before TARP, CPFF, MMIFF, TAF, ZIRP, QE, QE2, Operation Twist, and all sorts of other harebrained schemes were put into practice to “reflate” financial markets.

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Tags: Bailout, Barack Obama, Ben Bernanke, Bonds, Collapse, Debt, Economy, Fed, Federal Reserve, Global News, Government, Politics, Stock Market, U.S., Unemployment, Wall Street

- Hugh Hendry On Europe “You Can’t Make Up How Bad It Is” (ZeroHedge, May 2, 2012):

At The Milken Institute conference yesterday, Hugh Hendry delivered his usual eloquent and critical insights on the state of Europe. Beginning with the statement that “All of Europe has defaulted”, the canny-wee-fella (translation: shrewd and cautious young chap) explained that “The political economy in Europe is such that the politicians chose to default on their spending obligations to their citizens in order to honor the pact with their financial creditors and so as time goes on, the politicians are being rejected.” Between France’s election of Mr. Hollande and Luxembourg’s ‘when times get tough you have to lie’ Juncker, Hendry says the only inspiration for Europe is fiction as “you just can’t make up how bad it is” as he goes on to discuss the precedent for a way forward, the grotesque distortions of fixed exchange rate regimes, why Weimar happened, why the transfer union will never happen, Ayn Rand’s reality, and fear politicians are feeling.

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Tags: Bonds, Debt, Dollar, Economy, EU, Europe, France, Germany, Global News, Government, Hugh Hendry, Inflation, Politics, Weimar Republic

- Biderman Makes Friends: “Bankers Are As Dumb As Politicians” (ZeroHedge, May 2, 2012):

In his usual quiet manner, TrimTabs CEO Charles Biderman unloads his emotional baggage along with USAWatchdog’s Greg Hunter in this 15-minute interview. The sad truth is that, just like his alter-ego Lewis Black, Biderman is right – again and again. Whether it is reflecting on the kick-the-can mentality of polticians or US investor’s apparent willingness to accept the  pulling-the-printing-press-over-our-eyes-behavior, or the fact that Europe can only get worse and how that will spread contagiously to the rest of the world (directly via trade or indirectly via risk-aversion), his focus on the facts (especially with regard to the real state of the US economy as he describes it) makes it hard to disagree for even the most vehement long-only manager (is it any wonder we don’t see him on CNBC that much anymore?). Biderman and Hunter discuss the signs of growing inflation, the need to get rid of the deadwood bankers, Europe’s imminent demise, central banks’ ‘funny money’ creation, and the need for Gold and TIPs in any portfolio, Charles is at his best as he makes friends (except with the bankers and politicians that he scoffs at) and hopefully influences people.

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Tags: Barack Obama, Bonds, Charles Biderman, Debt, Dollar, ECB, Economy, EU, Europe, Fed, Federal Reserve, Global News, Gold, Government, Inflation, Obama administration, Politics, Society, TrimTabs, U.S.

YouTube Added: 24.02.2012

Tags: Banking, Barack Obama, Bonds, China, Debt, Dollar, Economy, Fed, Federal Reserve, Global News, Government, Obama administration, Politics, Ron Paul, Society, U.S.

- “We Are Number One!”, Or Why At Least Broke Greece Is Not America (ZeroHedge, April 28, 2012)

Tags: Debt, Economy, EU, Europe, GDP, Global News, Government, Greece, Morgan Stanley, Politics, U.S.

YouTube Added: 26.04.2012

In case the YouTube video ‘disappears’:

Books from Jim Marrs @Amazon.com:

- The Trillion-Dollar Conspiracy: How the New World Order, Man-Made Diseases, and Zombie Banks Are Destroying America

- The Terror Conspiracy Revisited: What Really Happened On 9/11, And Why We’re Still Paying The Price

- The Rise of the Fourth Reich: The Secret Societies That Threaten to Take Over America

- Rule by Secrecy: The Hidden History That Connects the Trilateral Commission, the Freemasons, and the Great Pyramids

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