Wednesday, November 5, 2008

The Grapes Of Wrath

Change? You want change? Be careful what you wish for.

The sheep of a nation have spoken. They have chosen a leader bereft of leadership. They have chosen a manufactured "politician" as their next President because he isn't George Bush. How pathetic.

Change? Can you say "lower standard of living"? Can you say "substantially higher taxes" for EVERYONE, not just the "rich". There are no more rich. The rich are dropping like flies. The rich, the top 20% of society pay 80% of the nations taxes already. This country faces a ONE TRILLION DOLLAR deficit JUST next year. I'm sorry, I don't care how you do the math, these people can not pay for that by themselves.

A "windfall profits tax" on Oil companies? LOL, you thought the price of gasoline was expensive this summer? You ain't seen nothing yet. Tax the Oil companies and watch the supply of gasoline disappear. Has history taught these fools anything?

Higher corporate taxes? LOL. Corporate profits are falling like stones in the ocean. You think unemployment is bad now? Raising corporate taxes is NOT going to create jobs, it is going to eliminate them.

Higher energy costs will do little to increase corporate profits. Higher unemployment will only make tax revenues fall. Change? O yeah, there is gonna be change alright, but the sheep are not gonna like it. Take that to the bank. The Obama presidency is doomed from the start. America will never be the same. God bless the children, for they will bear the brunt of the fallout from the events of today.

Obama to inherit feeble economy awash in red ink
WASHINGTON (AP) -- To the victor goes the mess. Barack Obama's presidential election victory comes with an albatross of a prize -- an economy beset by a stubborn housing slump and the worst financial crisis in 70 years.

Consumers and businesses are sharply reducing their spending and the government is awash in red ink.

The current administration on Wednesday will detail its plans to borrow a record $550 billion in the final three months of the year as a down payment for the various financial rescue packages put into effect in response to the global crisis.

A Treasury Department official on Monday projected the government would need to borrow an additional $368 billion in the first quarter of 2009. Treasury is expected to bring back its three-year notes to help cover the increased borrowing needs.

Will world swallow another half-trillion in U.S. Treasuries this quarter?
WASHINGTON -- The U.S. Treasury predicted it would borrow this quarter more than three times the amount initially forecast as weaker economic growth and the costs of a new bank rescue package swell the budget deficit.

Borrowing needs will rise to $550 billion in the three months to Dec. 31, compared with the $142 billion predicted in July, the Treasury said in a statement in Washington. That would be more than double the largest ever -- a record $244 billion in new marketable debt in the first three months of this year.

"The U.S. Treasury faces an unprecedented financing need," said Goldman Sachs analyst Ed McKelvey, echoing a similar comment last week by Anthony Ryan, the Treasury's acting undersecretary for domestic finance.

McKelvey predicts the Treasury's total 2009 borrowing needs at about $2 trillion.
The Treasury predicted three months ago it would borrow $171 billion in marketable debt in the July-to-September quarter and have a cash balance Sept. 30 of $45 billion. Today, the department said the actual amount it borrowed $530 billion in the third quarter and the cash balance at the end of the period was $372 billion, including a supplementary financing program at the Federal Reserve.

Do you really think that the world is going to continue to purchase the debt of this nation. Would you buy the debt of a bankrupt company? Of course not, you'd never get your money back. Why should the world continue to foot this country's flatulence? They shouldn't, and most likely won't. Can you say rising interest rates?

Yeah, "rising interest rates."

Rising interest rates will not help corporate profits grow. Lower corporate profits equals lower tax revenues...even if you raise their taxes. Oh, by the way, corporations can take their businesses out of the country to avoid higher taxes. Ever think of that Mr. Taxman? Government regulation, medical benefits, and taxes are what destroyed this nations manufacturing wasn't George Bush. Go ahead and raise corporate taxes. Things will change in a hurry...from bad to worse.

Please don't misunderstand. A McCain victory would have been as feeble as this one. Neither one of these clowns, and their inner circle, is up to the task at hand. Neither were willing to face the truth about this country's financial debacle throughout their entire campaign. What comes out of Obama's mouth is the same drivel we have heard from Democrats for the past 25 years. None of what he says or proposes addresses this nations #1 problem. The country is BROKE! As in bankrupt. As in unable to repay it's debts. Obama isn't going to fix a damn thing with his "plans for change" because quite simply, he doesn't have the money to do any of it.

This country faces some hard choices. The choices all center around "spending". This country has got to CUT SPENDING dramatically because it has no more money to spend. You could take every single dollar from every single American today, and it would not come close to paying off this nations debt. How sad is that? Very sad. But more than sad, it's pretty damn scary. Sadly, the "Hope for Change" so many carry today, will soon turn to despair. Obama is NOT the answer. He is certainly not this nations savior. Expect more of the same from Washington for the next four years.

When the chickens come home to roost
Merrill Lynch did a study recently, showing that the 30 biggest US equity holdings amongst US hedge funds were amongst the poorest performers in the S&P500. In other words, it is likely that much of the recent sell-off in equity markets around the world can be traced back to hedge fund liquidations.

There is no question that hedge funds are downsizing at present. The problem is to obtain precise data on the phenomenon. If we estimate that the global hedge fund industry controls about $2 trillion of capital, and we assume that 15-20% is going to be pulled out between now and year-end (which is not far from the truth according to our sources), $3-400 billion must be returned to investors between now and 31st December.

Deleveraging continues

That is not the whole story though. The average hedge fund uses leverage, to the tune of about 1.4 times (see chart 2). This is down significantly from a year ago, but it still means that hedge funds need to liquidate investments of at least $500-550 billion in order to meet current redemption requests. And the real number is probably higher because some of the worst performing strategies this year are the ones using the most leverage. The real number is therefore more likely $6-800 billion, and that is a big enough sum of money to put downward pressure on the markets.

More Signs Of A Silver Shortage
By: Theodore Butler and Israel Friedman
The evidence of a wholesale silver shortage continues to build. This is in addition to the current retail shortage. The continuing tightening in the price differentials between the trading months in COMEX futures has continued and become more dramatic.

One of the clearest indicators of a shortage in a physical commodity occurs when the nearby futures months trade at a premium to more deferred trading months. That means buyers are willing to pay more for a commodity because it is not immediately available. Remember, the definition of a commodity shortage revolves around delays and premiums. While the nearby months in COMEX silver futures haven’t yet grown to a premium over the more deferred months (called backwardation or an inverted market), they have moved noticeably in that direction.

A second sign was the unusual and persistent buying of the recently concluded October COMEX silver futures contract, which recorded almost 1300 contracts delivered (6.5 million ounces) for the month. The bulk of these contracts resulted in a removal of silver from COMEX silver warehouses.

Finally, the big silver ETF, SLV, reported a decline of around 4.5 million ounces over a two day period recently. It is impossible to tell whether declines in the metal holdings in the ETFs are due to investor share liquidation or if shareholders are removing metal for other purposes, such as industrial consumption. Looking at the share trading volume and price action for the period corresponding to this drop, I’m inclined to think it was due to removal, rather than liquidation. Recent reports of big inflows by air transport of silver from London to India seem to explain the declines in SLV more than investor liquidation. If I am correct, wholesale silver is a lot tighter than most assume.

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