You've probably noticed the "Defcon" style lights on the right sidebar of the Ticker if you've been on today, and the similar light bar on the forum this evening.

The current configuration is:

That's "3" that's lit.

Why did I put this up?  Because I fully expect our government to be dumb enough to fail to deal with the deficit for the simple reason that doing so is going to force recognition of the hidden damage that they've been covering up for the last three years with all the deficit spending!

As such I fully expect the condition of our fiscal and financial house to deteriorate, until "2" and then finally "1" is lit.  There is also one level worse than "1" that is already present in the table.  History says that when governments refuse to deal with these matters on an honest and forward basis, eventually the "worse than 1" happens.  We "practiced" the "worse than one" scenario when I was a school child, albeit for only a year or two.

I still remember it and it sucked.

Should I see meaningful progress toward dealing with our budget, tax and banking systems, I will move the indicator to "4".  Should we actually address these issues the indicator would move to "5".

I don't expect to see either "4" or "5" lit, but I'd like to be pleasantly surprised.

"4" is not "$100 billion" in cuts, nor is it Rep. Ryan's BS game that he is trying to run and which the CBO says would produce more debt rather than less.

To get "4" to light up I need to see a credible plan with immediate execution that takes no less than 1/3rd of the deficit off this year, another third next year, and whatever is left the final year, plus no less than $300 billion in surplus to start paying down the debt. No games, no gimmicks, no BS or there's no light movement.

Doing the right thing will result in recognition of the rot in our economy that we've been trying to hide, and for this reason I expect the trajectory on the TickerCon indicator to be southbound.  Somewhere around "2" or "1", the markets will "break" in an unmistakable fashion, and this time the Fed will not be able to stop it with their QE games.

Unfortunately.

Here are the time limits (such as they are) and the readiness standards that apply to Tickercon.  Please note that Tickercon is US-centric although it may be of use to others.

• 5: No special conditions.  Low state of readiness.  Specifically, this means that markets are normal in FX, equity and debt.  Interference, if any, by government is low.  No special programs being overtly operated by the US Federal Reserve or Congress.  The economy is stable, although this does not mean "booming" - just stable.  Interest rates are positive against GDP growth throughout the curve.  May be maintained for an unlimited amount of time.
  
  
• 4: Awareness Raised.  Intelligent people are "awake."  The first stage of "alertness", implying some evidence of tampering with markets but no evidence of distress.  Interest rates remain positive throughout the curve, but may approach zero at one or more specific points.  No immediate risk of financial distress has been identified.  May be maintained for an unlimited amount of time.
  
  
• 3: Caution Advised.  Intelligent people are actively preparing for economic, geopolitical or social trouble that may be ahead by a short to moderate length of time (up to one year in advance.)  FX, debt or equity markets are showing signs of distress and distortion through intentional acts.  Interest rates are negative in real terms through some material part of the curve and/or there is evidence of intentional tampering with both FX and credit markets.  Equity positions are subject to large and unforeseen swings that are not individual-event linked.  This status may be maintained for an extended period of time before either being upgraded or downgraded.
  
  
• 2: Prepare. Intelligent people have or are in the final process of completing preparations or have completed them.  Credit, FX and equity position exposures should be hedged.  There is evidence of overt manipulation and stress which has at least a one-in-three chance of leading to a severe dislocation event within the next six to twelve months.  This status may be maintained for six to twelve months before being upgraded or downgraded.
  
  
• 1: Locked-and-cocked.  Preparations should be complete.  Evidence exists suggesting that a financial, geopolitical or similar event is likely within the next several weeks.  Wide-spread economic, geopolitical or social distress has a reasonable probability (better than one in five) of occurring during the above time period.  This status will not be maintained for more than thirty days as extraordinary vigilance is required to do so.
  
  
• Boom: Execute on your plans.  Nothing further needs to be said.  This status is not necessarily '"fatal" but it indicates that a severe dislocation event is occurring.  This is similar to a Tornado warning - the funnel has been spotted.  It may not hit you, but if you're in the way of it you're going to get run over.  This status will be maintained for however long the actual condition lasts at which time it will be downgraded to the appropriate level.