Posts Tagged ‘Statsfinanser’

Protesterna mot de statsfinansiella åtstramningarna når Storbritannien

Protesterna mot de tyvärr helt oundvikliga nedskärningarna efter åratal av finansiell misskötsel har nu nått Storbritannien. Uppemot 500.000 britter (enligt organisatörerna) tågade idag genom London för att visa sitt missnöje i vad som uppges vara den största demonstrationen sedan Irak-kriget 2003.

Detta är fortfarande bara en uppvärmning för vad som komma skall. När nollställningen väl sker kommer de nu föreslagna nedskärningarna i välfärden att framstå som obetydliga. Vi bevittnar en finansiell krasch i slow-motion.

Här är ett par bilder via SkyNews:

A mass march in protest at government cuts sets off from Embankment on March 26

Paint splattered police officers look on during clashes outside Top Shop on Oxford Street

SkyNews: Police said paint bombs and ammonia-filled lightbulbs were thrown


Der Spiegel: Tyskland och Frankrike sätter press på Portugal att acceptera ett räddningspaket snarast möjligt

Tyska Der Spiegel rapporterar på lördagen att Tyskland och Frankrike vill att Portugal skall acceptera ett räddningspaket snarast möjligt för att förhindra att skuldkrisen sprider sig till andra länder.

Detta kommer dock knappast som något direkt överraskning utan är ytterligare en bekräftelse på att den statsfinansiella krisen inte har försvunnit efter Irlands ‘räddning’. Som vi tagit upp tidigare så kommer allt detta så småningom tyvärr att sluta i en världsomfattande statsfinansiell kris med en kollapsande obligationsmarknad och en påföljande valutakris (hyperinflation) utan dess like. Detta kan kännas svårt att ta till sig och acceptera, men betänk hur mycket som har hänt de senaste 2 åren och hur snabbt det gått sedan Greklands, i praktiken, statsfinansiella ‘konkurs’. Vi befinner oss i vad man kan kalla en krasch slow-motion.

Från Reuters:

Germany and France want Portugal to accept an international bailout as soon as possible in order to prevent its debt crisis spreading to other countries, German magazine Der Spiegel reported on Saturday.

Without citing its sources, the magazine said government experts from both European heavyweights were concerned Lisbon will soon not be able to finance its debt at reasonable rates, after its borrowing costs rose at the end of last year.

Berlin and Paris also want euro zone countries to publicly commit to do whatever it takes to protect the bloc’s single currency, including topping up a 750 billion euro ($968 billion) rescue fund if necessary.

Portugal is viewed by many economists as the peripheral euro zone country that is most likely to follow Ireland and Greece to seek an international bailout as it grapples to cut its debts and borrowing costs. It holds its first bond auction of the year next week.

The American Dream

The AMERICAN DREAM is a 30 minute animated film that shows you how you’ve been scammed by the most basic elements of our government system. All of us Americans strive for the American Dream, and this film shows you why your dream is getting farther and farther away. Do you know how your money is created? Or how banking works? Why did housing prices skyrocket and then plunge? Do you really know what the Federal Reserve System is and how it affects you every single day? THE AMERICAN DREAM takes an entertaining but hard hitting look at how the problems we have today are nothing new, and why leaders throughout our history have warned us and fought against the current type of financial system we have in America today. You will be challenged to investigate some very entrenched and powerful institutions in this nation, and hopefully encouraged to help get our nation back on track.

Kategorier:Statsfinanser Taggar:,

Ökande budgetunderskott och stigande räntor – tidvattnet vänder

FinanceAndEconomics.Org har nyligen publicerat ännu ett intressant inlägg där man tar upp hur Federal Reserves oändliga kvantitativa lättnader kommer att leda till ett dollarras de kommande månaderna och ett definitivt slut för obligationsbubblan, med stigande räntor som följd.

Noterade också att man räknar med en fortsatt förstärkning av yuanen, som faktiskt redan har börjat stiga de senaste veckorna, och att detta kommer att pressa upp råvarupriserna ytterligre.

Regelbundna läsare kommer troligtvis känna igen mycket av det som tas upp, men är ändå mycket läsvärt då det är så välskrivet.

Widening deficits and rising Treasury yields – the tide turns

US Treasury bond prices topped out at the end of September, and since then they have fallen sharply. The yield on the 10-year bond has risen from 2.4% to 3.4%, which is the break in the trend that those who believe bonds are in a bubble were looking for. Much of this rise in yields was after Congress agreed to extend the Bush tax cuts, prompting rumours that US sovereign debt might be downgraded by the rating agencies, given upward revisions to the budget deficit.

The extension of the Bush tax cuts could easily keep the budget deficit above $1.5 trillion for the next two years. To put this in context, Federal spending is to remain at about $3.7 trillion and tax revenue at about $2 trillion.  This is not a reasonable credit proposition for buyers of Treasuries and goes much of the way to explaining the rise in yields. Because Treasury yields are the principal determinant for all dollar borrowing, everyone needing dollar-denominated credit in 2011 should be very concerned that these rates are rising.

Furthermore, there are the other bits of bad news coming out of the US: a number of states are demonstrably bankrupt, as are individual towns, cities and counties.  The whole public sector is one insolvent mess. Would you really lend ten-year money to the government that presides over all this for only 3.4%? The private sector is in a fix as well. The banks have leant money with increasing carelessness since the early 1990s and have now lost more than their capital – though this has been concealed from us as a matter of expediency. Private individuals are unemployed, homeless or signed up for food stamps, and those that are not – well, many of them soon will be. It seems remarkable that any credible economist or investment strategist has the gall to forecast economic recovery in the foreseeable future.

It is against this background that the Bush tax cuts have been extended.  Tax cuts are a good thing, but more importantly than that there is still no attempt to deal with excessive public sector spending. Politically, spending cuts get more and more difficult the deeper America sinks into its insolvent mire.  The politicians have had no option but to say that government deficits will reduce when the economy recovers, giving them the excuse for not cutting spending. That is why they extended the Bush tax cuts. Together with the $600bn QE2, the politicians see it as a one trillion-plus boost to the economy. If only it were so simple.

Actually, QE2 is about the Fed printing money to buy new Treasuries, because there are no other buyers at these yield levels without the underwritten guarantee of the Fed.  It saves the politicians from addressing reality because this new money can be found for Medicare, social security, welfare handouts and defence, all of which might otherwise be cut.

While finding it virtually impossible to restrict these vital spending commitments, the politicians are also unable to increase tax revenues.  The political imperative, to clobber the rich, will actually reduce tax receipts below expectations, as the experience of history has proved.  And rescinding the Bush tax cuts would have been counterproductive, by draining money away from the productive private sector for the benefit of the unproductive public sector. This must be obvious to all but those blinded with Keynesian myopia, since even the politicians seem to understand this point.  But they dare not take this chain of thought any further and address actual spending. Rather, they leave it to those clever guys at the Fed and their financial magic.

The truth is that economic energy lost in public sector bureaucracy and economic misdirection can only be made up by borrowing from abroad or by printing money. If overseas lenders are unwilling to lend, that leaves monetary inflation, which will only work for so long as the public does not understand what is happening to money’s value. It is an attempt at economic sustainability through monetary debasement.

Therein is the problem. In the coming months the wider American public will become increasingly aware that all this printing of money is just pushing up prices.  QE1 was sold as a one-off emergency measure not to be repeated, a response to the financial crisis and to stop it becoming an economic one.  Bond investors must now suspect that QE2 is more about funding the deficit than anything else.  Indeed, the only reason Treasury yields have been so conveniently low is the Fed has rigged the market by buying Treasuries and mortgage bonds to keep them there.  Imagine the cost, and therefore the increase in the budget deficit if long-dated Treasuries were priced more correctly, perhaps at six to eight per cent.  It would become obvious to all that the US is firmly snared in a debt trap, where higher interest rates increase the deficit, requiring yet higher bond rates to justify the extra default risk, and so on. Hence the fear of the rating agencies’ credit revisions, and that is what the market is beginning to understand.

Bernanke is an economist, not a market man, so there is a possibility he is unaware the tide in the market has actually turned.  He may temporarily take comfort from the increasing steepness of the yield curve, which makes it profitable for banks to buy Treasuries financed by short-term funds, bolstering their capital.  But as the money flows out of the dollar he will soon find the Fed is alone as a long-term buyer of Treasuries.  That would cause serious damage to inflationary expectations. Bernanke, the economist, will strongly resist raising interest rates, perhaps denying the presence of inflationary pressures much as he is today, or perhaps blaming rising commodity prices on demand from the BRICS rather than debasement of the dollar.  The cost of such obduracy will be a sharply lower dollar, adding further to price inflation expectations and eventually forcing interest rate rises on the Fed, who will always reluctantly raise them too little too late.

The timing and extent of this dollar weakness depends partly on the Chinese.  China’s own difficulty is also price inflation, and the prime contributor is the yuan currency peg.  China will have no alternative, if she is to control inflation, to raising her exchange rate.  Since China is now the principal source of demand for a most commodities, a rising yuan will lead to yet higher commodity prices in dollar terms.

It is now becoming a case of when, rather than if, the revaluation of the yuan happens. We can expect this to be a major currency event, triggering yet more selling by other foreign dollar holders.  And to judge the degree of dollar weakness, we must look at those raw material and commodity prices, and not other paper currencies, which have their own economic baggage to contend with.

So when the dollar plummets in the coming months, in commodity terms at least, the inflationary pressures will rack up, exposing the folly of Bernanke’s theoretical economics of zero interest rates, QE1 and QE2.  The end of the Treasury bubble signals the end of one interest rate era and the beginning of the next.  The highly indebted and those relying on further dollar borrowing will be unfortunately crushed.  The tide has indeed turned.

Dagens bild: USAs statsskuld, skatteintäkter och utgifter

Diagrammet nedan är hämtat från James Turks senaste inlägg på med titeln ‘Numbers Don’t Lie’, där han beskriver varför vi kan förvänta oss hyperinflation i USA. Diagrammet gör det tämligen uppenbart.

Dramatisk dag i Irland med proteststorm mot parlamentet och uppmaningar om nyval

Dagen efter ‘räddningen’ av Irland var allt annat än lugn, med en hårt utsatt regering som anklagades för förräderi, proteststorm mot parlamentet och uppmaningar om omedelbart upplösande av parlamentet och nyval. Inte nog med det, EU sa samtidigt att Irland kan tänka sig att mjuka upp sin position gällande de låga bolagsskatterna. Google, HP och andra globala giganter har satt hård press på Irland och meddelat att man kan tänka sig att lämna landet om skattesystemet ändras.

En smått dramatiskt dag med andra ord men till skillnad från regeringen så lär inte det irländska folket vika sig i första taget. Kan ni tänka er vilka protester som kommer att bryta ut i Europa, inte minst i Tyskland och Frankrike, när det går upp för folket att de kommer att betala för all bankkorruption och misskötsel av statsfinanser. Håll i hatten, det kommer att blåsa kraftigt de kommande månaderna.

Här är en kommentar från Karl Denninger (The Market Ticker):

The government is under siege, with protesters attempting to storm Parliament. More-ominously, however, is that The Green Party appears to have pulled out from their government coalition, which would mean that any budgetary reforms that are as a condition of the bailout could fail.
That, in turn, would trash the entire process.

The EU in turn has said that Ireland is willing to consider ”softening” their position on the corporate tax rate. This has trouble written all over it, as much of the ”Irish Miracle” has been due to the very low corporate tax rate that dragged a number of corporate headquarters there – including some from the United States. Should changes in tax rates promote corporate flight further serious pressure would be placed on government budgets due to the loss of jobs and thus tax revenue.

The ultimate problem with bailouts is that everyone seems to think there’s a free lunch. There isn’t. You can rob someone to pay someone else, but you can’t conjure up money from nowhere. But bailouts inherently wind up taxing the people who got robbed in the first place to pay off the people who made the bad bets and lost money. When it comes to bailing out banks it gets even worse due to the leverage involved – the banksters keep the money, including their salary and bonuses, while the people get robbed not only in the form of losses on their so-called ”safe” investments but then again when they are taxed to fund the bailout!

There’s nothing like getting stuck up at gunpoint and not only losing the hold-up money but then being taxed a second time to pay for the robbery in which you were victimized!

This nonsense has to stop and the banks involved must be taken into receivership, reorganized, and the executives involved removed from their positions, tried and jailed.

Gris-sjukan har kommit till USA

Har ni precis som jag observerat genomklappningen på den amerikanska marknaden för municipal bonds den senaste tiden? Bara denna vecka har flera fonder som investerar i dessa instrument sett mycket kraftiga fall som påminner oss om att problemen i Europa inte går att jämföra med de jätteproblem som finns i USA. Kom ihåg, Kalifornien är världens åttonde största ekonomi och har minst lika stora problem med finanserna som lilla Grekland.

Det stora fokuset på Europa är bara ett sätt att blickarna riktas mot USA och de gigantiska ekonomiska problem som även finns på delstats- och stadsnivå. Ett bevis på dessa problem är att Moodys häromdagen sänkte kreditbetyget för både Philadelphia och San Francisco. Inte nog med det, staden Hamtramck bredvid Detroit har blivit den första stad att ansöka om konkurs. Och fler lär det bli.

Grafen nedan är hämtad från The Golden Truth som bl a skriver följande:

It was only a matter of time. The PIIG disease has come to this country, infecting the States and municipalities with huge budget defiicts and impossible public employee benefit and pension plans. Check this out – this is Pimpco’s general Municipal Income Fund, with the top 5 State positions noted.

This thing has lost 15.3% since its peak in early September – less than 2 months. I’d say that fund has trichinosis. If you happen to have a decent portion of your wealth tied up in muni paper, lose sleep assurred that many individual munical issues have lost a lot more, given that the above atrocity is a highly diversified fund, which ”shelters” the fund from the ravages of any one individual municipal issuer’s disaster.

Mer från The Golden Truth:

Please be advised that this is a catastrophe developing that you want to avoid. At least when a sovereign entity loses its ability to make payments from revenues (i.e. the U.S. Government or an EU satellite country), the sovereign entity can print money to make sure bond payments can be fulfilled. Not the same with municipal bond issuers. At this stage in the game, many States are borrowing the money from other sources for now to make payments. But, as the chart above shows, the perceived risk of default is starting to soar. As States and municipalities face much higher yields in order to attract yield-hog investors, your existing muni bond portfolio will get crushed.

We all know – that is, ”we” who are willingly looking at the reality of the situation – the variables which are strangling the cash flow and budgets of States and municipalities are only going to get worse – a lot worse – as the underlying factors which are squeezing States deteriorate. And muni paper is typically secured only by the ability of the issuer to fund repayment out of revenues derived from some form of taxation. As that source of revenue dissipates, so does the value of your muni bond.

If you truly believe that the economy is getting better, then have fun riding your muni bonds into the ground. But just like the PIIGS, this situation is going to exacerbate.

Fortunately, there is a solution. Got gold?

Kategorier:Statsfinanser Taggar:,