Warning

I have been resisting making this warning, but I must because there is a real possibility. I have been warning since October of a Treasury bond market collapse getting under way by the end of March. It actually started on February 12 and picked up speed last week in earnest. Suddenly experts are coming out of the woodwork saying it's a possibility. On March 31st the Fed is supposed to stop its agency debt program and quantitative easing program. What those are is not so important as this: No one on the earth thinks it will happen. But the Fed says they will do it.

If they do, it could start a real panic in the bond market, which would ripple through the whole world, and could end up collapsing the whole world economy. Starting on Thursday, if you even think you heard someone say "bond market panic" or bond market collapse" or "sovereign debt collapse" drop everything. Run and get food and water and gas, alternative means of cooking, heating, lighting, as much as you can. It will be the most important thing you've ever done. You will have about two and a half days to get it done, but have no guarantee that you'll get ahead of the other people. I will post more on this.

More on the debt

David Ross from Radiant Asset Management indicates in his research that the total obligations of the U.S. government exceed $90 trillion referring to the estimate of the Financial Management Services of the U.S. Treasury. They include hospital insurance, supplementary medical insurance, and social security. “[T]he collected money (which Treasury has borrowed and Congress spent) falls far short of what is required to fulfill the long-term obligations of those programs, even if it had not already been spent. Almost all of the $90 trillion are promised obligations with no established method of payment.”

I have never seen this $90 trillion number. I come up with $107 trillion.

Ross points out further: “Including unfunded obligations, the U.S. moves to 1st, well above Taiwan and Zimbabwe, for the highest debt to GDP ratio. . . U.S. total debt plus unfunded obligations total 625% of GDP.”

The Peterson-Pew Commission on Budget Reform stated that “the United States would almost certainly experience a debt driven crisis,” that “could unfold gradually or it could happen suddenly, but with great costs either way.” “The excessive debt would. . . affect citizens in their everyday lives by harming the American standard of living through slower economic growth and dampening wages, and shrinking the government’s ability to reduce taxes, invest, or provide a safety net.”

Many experts believe that at some point such system of borrowing is going to collapse. Peter Schiff, the President of Euro Pacific Capital, argues that the way the U.S. government functions is that “we borrow money and then when the interest payments are due we borrow money to pay the interest. . . It is one gigantic Ponzi scheme.”

Peter Schiff is brilliant, but his video blog is of silly quality.

By the way, the deficit for this year so far is $651,000,000,000.

Treasury auction hairball

Here's a story about what I have called "the big show" this year. This is the 900 pound gorilla that will wreck the economy. Everyone poo pooed the idea and the evidence keeps rolling in. This article talks about the bad government debt auctions, which I have been forecasting would happen by March for the last six months. It does say something misleading by saying "earlier auctions this year have been strong." Some have, but the trend has been bad, and we have had several failed auctions, which people said would never happen. They got so bad that apparently the Fed did something else behind the scenes because suddenly for several weeks after that the results were freakishly good...then bad again.

Everyone with a brain and a pencil can do the math and see that the drunken sailer spending spree is literally impossible to pay for. There is literally not enough savings on earth to lend what our administration wants to borrow in our names. There is literally no combination of tax increases and spending cuts that makes these deficits work. I'm sure they will raise taxes to the moon anyway, but it's still impossible. These nitwits in Washington have given up pretending to try to be competent. They are on a tear to make all of their own dreams come true. Why should they care about us?

Regarding the tax increases, reading the list of new taxes for the health monstrosity makes your eyes glaze over before you can even read the whole list of new taxes you'll have to pay. God forbid you're a business owner (the devil, in liberal-speak). It's ok though. The official estimate is that the cost per family of four will only be $15,200! What the?!