Belief in the inviolability of entitlements is directly proportional to age.

The entire debt mess is just a mafia style bust-out.

This whole HP debacle got me thinking about the old fashioned mafia bust out again, it applies to these corrupt govts and govt agencies as well.

Maybe time to max out the credit on guns, ammo and food.

People are idiots. A person who earns an average of $50,000 a year for 50 years has contributed $72,000 at today's rates. You can go thru that in a week at the hospital. When you hear people say they paid for Medicare I want to tell them they paid for one hospital stay - the rest is just welfare.

"And now the IMF has a problem because its bylaws prohibit lending to nations with "unsustainable" debts, which it defines as 120% of GDP."

Is it possible to either change the bylaws (if yes, you can be sure it is a done deal)or act as if it is not being violated is what I expect IMF would do..

IMHO, it is only Jens Weidmann who is standing between Greece and Money (via ECB). Till now he has been steadfast. Let us see whether he can hold out when things break apart or we get a Hank Paulson moment of "Or else".

So I guess the "forward" mortgage and car payments shouldn't be counted as debt either. Yup, our country is in good shape.

I recall that about 50 yrs. ago a gov. threw out the mobsters/capitalists from their country. Ever since they have had a pretty hard time living within their means. That country is still in the gulf. Even hurricanes can't wipe it off the map.

It might be time to take off the blinkers and find a modified social/economic model that could work.

Of course the Germans have to make the Greek really sweat this out. The German financial guys needs to make the appearance to the German public they actual give a **** their money.

Reminds me of communist Russia, the government pretends to pay us and we pretend to work.

Of course more spending will fix the problem.

Govt spending is added to GDP. Borrowing enough for stimulus projects will add the borrowed amount to both numerator and denomerator. This lowers the debt/GDP ratio.

Example: California is now building a high speed train from Fresno to Merced.
/sarc

I think the mistake virtually ALL of us have made over the last 5 years is to expect TPTB will follow the law - they don't, they change the rules when backed into a corner. I was warned that they would do this in '08 by a veteran bond trader, I ignored his advice, he was right, and I blew up a more than one trading acct. as a result.

My point is, when things get serious - they will lie, cheat, and change the rules - it would not surprise me in the least to find out that Bernake has been filling in the hole in Europe when the ECB could not act.

I am 100% positive he has Gates. Just read your first to sentences again and you are too.

I'm afraid this will be an example of:
"A little knowledge is a dangerous thing"

--but every now and then there is a mention of the Fed helping out the ECB with "liquidity swaps" which somehow involves getting their money for our money, at a better rate? The wiki definition is not very useful. I searched for what this is on the Market Ticker and found some nice things to read but I still don't get it. It somehow puts the US on the hook for their bad debt.

Karl??

Quote:

........ It somehow puts the US American Taxpaying Minority on the hook for their bad debt.

FIFY....

TMD wrote..

People are idiots. A person who earns an average of $50,000 a year for 50 years has contributed $72,000 at today's rates. You can go thru that in a week at the hospital. When you hear people say they paid for Medicare I want to tell them they paid for one hospital stay - the rest is just welfare.

That is only half the story on medicare TMD. There is a deductible. It pays 80%. There is a monthly premium that comes out of the Social Security payment. There is the high percentage that just fall over dead and never draw a dime. About 25% of men are dead at 65 and they also happen to fall over dead quite often and never make it to the hospital to create a large bill. We are just now reaching the point where the people retiring now paid medicare their entire working careers. $72,000 is still a lot of money and coupled with the premiums at retirement should pay for one bad illness. The $50K a year guy paid plenty into Medicare. It is the people that made half that much that are subsidized.

Nope.

Not damned likely, and in any event it's disclosed if it starts happening (unless you believe they're keeping two sets of books.)

This is pasted from Wikipedia:
History
On December 12, 2007, the Federal Open Market Committee (FOMC) announced that it had authorized temporary reciprocal currency arrangements (central bank liquidity swap lines) with the European Central Bank and the Swiss National Bank to help provide liquidity in U.S. dollars to overseas markets.[3] Subsequently, the FOMC authorized liquidity swap lines with additional central banks. The swap lines are designed to improve liquidity conditions in U.S. and foreign financial markets by providing foreign central banks with the capacity to deliver U.S. dollar funding to institutions in their jurisdictions during times of market stress.[4]
As of April 2009, swap lines were authorized with the following institutions: the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Japan, the Bank of Korea, the Banco de Mexico, the Reserve Bank of New Zealand, Norges Bank, the Monetary Authority of Singapore, Sveriges Riksbank, and the Swiss National Bank. The FOMC authorized these liquidity swap lines through October 30, 2009.

By November 2011, swap agreements were extended until February 2013, at lower interest rates.[5]

Those swaps put the default risk (and FX exchange risk!) on the FOREIGN central bank, not ours.

The whole damn thing is a joke. The fiscal cliff is a joke. We went over the cliff when Obama pushed through spending that couldn't be paid. Social Security and Medicare shouldn't even be part of the general budget, but they are. They should be required to run on what they are paid and they should order Congress to do what is necessary to keep the program solvent or raise their premiums. And, there should be a private alternative to Medicare, if this mess persists.

The joke is that the drachma would fix Greece. Fix them alright. I would put my drachmas into stores of toilet paper, because if the political class persisted in funding their plans, toilet paper would hold up better than the drachma. At some point, you can't spend what isn't earned. Ben Bernanke doesn't understand this and it seems that Congress and most other governments don't understand as well

In the meantime, Greece is a pimple compared to what is about to happen in Japan. The link below is Kyle Bass' most recent release, posted on scribd by zerohedge. Japan is no longer Japan. I am opening an account and shorting the yen and I am going to short this rally when it passes 1400. As things stand over there right now, it might be the trade of the decade. The new government is going to step on the central bank and print and what has held true of Japan in the past no longer holds true. The fallacy that those that have a domestic currency won't default is a joke. When the markets realize what Japan is doing, interest rates on JGB's will skyrocket and wipe out the entire tax revenue of the country. The US can still apply the brakes. It would take a 100% tax increase to balance the budget in Japan and the young end of their population is disappearing rapidly. Immigrants don't go to Japan, as the population is zenophobic. Bass covers both Europe and Japan.

http://www.scribd.com/doc/113621307/Kyle....

Speaking of debt bombs? Take a look at France. We are about to move from PIGS to PFIGS and maybe Belgium as well, speaking of PF. The banks in Europe are too big to bail. This is the prime problem that prevents a solution to any of the debt problem in Europe. There are elections as well. Bass presents charts showing the liabilities of the various bailout funds in Europe. The whole thing is a joke.

Mann: YEP.

I just dont see how the hangover can be right around the corner... not in the next couple months anyway. I'm reading 8 strong bullish readings in a row right now on my indicator. This is beyond Dec 2011 levels now, and if it keeps up its going beyond March 2009 as well. I'm looking for a 2nd half 2006 type performance right now. (Not just new highs but 100 more handles piled on top of those new highs) I'm trying to figure out what can possibly happen politically that would drive a move like that...

Karl, the debt crisis is one of the greatest stage shows of all time. A really good book and maybe a volume of books could be written and and for us that try to be students of such fiascos, would be great reads. I have Rogoff and Reinhardt's book, "This Time It's Different", but I haven't waded too far into it. They have put together 600 years of these kind of fiascos. I am going to get busy and study that volume, as it not only goes into the various situations, but it puts a time for recovery on the crisis. The joke is the crisis is behind us, a tale told by an idiot.

The truth is they have created a bigger crisis, attempting to fix the last one. Obama should be impeached for claiming he fixed this mess and chances are good he will be. The big question is, if this is actually debt, who is going to pay and who is going to take the losses. There aren't any other possibilities. Even if the CB's swallow the stuff, someone is paying for other people's mistakes. In short, we are getting ****ed by the bankers once more. They should claw back some of the compensation paid on creating this debt with a coal shovel.

The contagion? I don't believe Greece is the contagion, as Greece has a history. The contagion is going to be one of the countries we don't expect to default. Spain might be because of the size of its debt or Italy, but I think it is going to be a country that has a different reputation. Maybe Britain, which is up to its neck in debt. Such an event would change the view of all sovereign debt around the world, including the USA. It was pointed out in something I read that 1% on the US debt is $150 billion and climbing. 5% on the 10 year bond implodes the government finances, the housing market and the stock market.

I am going to add another idea about what Bernanke is up to and the rest of the Fed. The one thing that happened in Japan was they had a huge housing/real estate bubble and stock bubble at the same time. Both deflated and though there were plenty of rallies in stock during the 1990's, they never got it back up to mirror the debt. Japanese real estate hit ridiculous prices that made anything we saw in the US look tame. Maybe it was the failure to bail out the banks early and instead move to ZIRP that turned the country upside down, but the debt/equity at market ratio turned the country upside down. People could no longer sell their assets and pay their debts and being a debtor in a lot of countries doesn't come with the benefits it does in the US.

If this supposition is true, a significant fall in the US stock market will implode the entire bubble and likely resume the collapse in housing. This is merely a guess and would be hard to prove, kind of like the chicken and egg. But, why else would a country not be able to resume its foreward walk, when it enjoyed such a trade advantage for so many years. The entire rest of the world had market booms in the 1990's and for that matter 2000's in a lot of places, while Japan was stuck on the bottom of what is now a 30 year trading range. There has been a concerted effort in the US to keep the stock market up, maybe to the point that the bid/asks are rigged and the futures market is always pumped overnight. I'm up pretty late most nights and I always take a look at the market. 12 AM NY time, regardless of what else is happening, there is a spike in the ES futures. There isn't a lot of volume at that time generally and a few thousand longs at the market can do wonders. If you lost 3 points on 3000 contracts, we are only talking $450,000, a check for about 2 days for a guy like Blankfein. And, they are on the bottom of the move that works and 3000 contracts can walk out the back door once sunrise comes.

Here is another gem from Mauldin. I found the Bass link in this one.
http://mauldin_images.s3.amazonaws.com/i....

We aren't talking politics here jb350. I am and I think Karl is talking math. The world economy is a methhead that has been up a month and takes another shot. It don't get him high any more, but merely keeps him from falling over.

QE is swapping bank assets from interest bearing to cash. The liability of the bank is still the same, but the asset has changed from an income asset to a non-income asset. Banks could at least lend their spare cash to other banks in the past, but they are all full of cash. They could lend it to customers, but which customers. They could and probably are lending it to Greece, ala John Corzine. In any event, it either goes back into someone's mattress or ends up back in the bank as a new liability. Bernanke and other Central Bankers could actually drown the banking systems with too much cash.

Mann,

Hugh Hendry brought up the point that before you go short Japanese debt the Yen might actually strengthen as they will be selling US/foreign assets to finance their debt payments for some time. So you might get slayed going short even though the investment thesis ultimately is correct. I think this is the link with a video.

http://www.zerohedge.com/news/2012-10-25....

Something that caught my eye was the Olympus scandal in Japan. They got caught paying an investment banking firm an insane amount of money on a transaction. The money was really to pay off a bad loan from the 1990's disguised as a advisement fee. Something tells me there is a **** ton of bad debt still floating around and this is the norm not an exception. In this case it looked like an off balance sheet handshake deal of some type. I wouldn't want to be long Sony, Panasonic or Sharp as this type of debt financing is probably like Herpes.

The short and long of this is that at some point this bad debt has to be written off.

This **** is gettin' old. **** the EU.

Musical chairs.