Gold closed at a new ALL-Time high in US Dollars today, and rose even higher in reaction to the release of FOMC minutes from the fed’s last meeting. – “A few members noted that, depending on how economic conditions evolve, the committee might have to consider providing additional monetary stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run.”
Euro gold jumped to a new record high at almost €1116 with the growing realization that the European debt crisis is turning into an avalanche as Italy and Ireland join Portugal on the hot-rails to sovereign debt hell. Gold is also surging to all-time highs in British Pounds today.
GOP leader says give Obama new debt limit powers- AP
With compromise talks at a vituperative standstill, Senate Republicans unexpectedly offered Tuesday to hand President Barack Obama new powers to avert a first-ever government default threatened for Aug. 2.
No tax hikes, and no spending cuts. Agreeing to disagree. And adding $2.5 TRILLION to the nation's already out of control debt to "save the economy". All at the expense of the US Dollar. Is it any wonder that Gold is launching today?
Senate Republican Leader McConnell Folds On The Debt Ceiling
By Zero Hedge
Something troubling happened in D.C. today, where it seems that the Senate Republican leader basically just folded like a cheap suit in the ongoing farscial standoff on the debt ceiling (which luckily should bring the whole comedy to an end and the nation can progress with its previously scheduled ponzi collapse). In essence, as Bloomberg says, according to McConnell's proposed 3-Stage plan, "The debt-ceiling increase could occur without the companion spending cuts, McConnell said." Ironically, when we observing comparable posturing by Boehner from two days ago we said "in two weeks we get news of no tax hikes, and no deficit reduction, which will be spun by the great diversionary media machine as the great compromise, and, of course, leading to a $2.5 trillion debt ceiling hike. Win, win for everyone." It seems precisely this is on the agenda. Details on McConnell's plan to basically let the President do whatever he chooses: "Senate Republican Leader Mitch McConnell proposed a “last choice option” for increasing the U.S. debt limit in three stages in case President Barack Obama and Congress can’t agree on a deficit-reduction plan. McConnell’s plan would let the president raise the limit, while accompanying it with offsetting spending cuts, unless Congress struck down his plan with a two-thirds majority. Don Stewart, a spokesman for McConnell, said the plan would allow Obama to raise the debt limit while putting the onus on him and congressional Democrats for any failure to cut spending." Surely the president would be shaking in his boots knowing that if he were to cut spending the "onus" would be on him. Here is how the Republican justifies this betrayal: "The proposal is “not my first choice,” McConnell said, adding that he wanted to show the financial markets that the U.S. will not default on its debts. He said he continues to seek a broader deal to raise the $14.3 trillion debt limit with congressional Democrats and the White House." Funny: this is the same logic that Jean-Claude Juncker used when validating outright lying to the media, and general public. It appears there are little if any differences between politicians in Europe and the US when it comes to lies.
Gold may have surged on the "news" that the Fed Heads are prepared to initiate QE3 should economic conditions warrant, but this news of a possible rise in the debt ceiling with no commensurate spending cuts or revenue increases is definitely not going to instill a lot of confidence in US Debt holders. This is akin to prescribing poison for the US Dollar. Gold Bulls should be penning Sen. McConnell thank you notes at this hour, and moving him up their Christmas card lists.
Maybe this little statistic has put the fear of catastrophe into our politically motivated US Congress and Senate forcing them to raise the debt ceiling immediately without tax hikes OR spending cuts:
U.S. Must Borrow Another $5,240 Per Household Just to Fund Gov't at Current Level Through Sept. 30
(CNSNews.com) - President Barack Obama and congressional leaders seeking to negotiate a deal to increase the legal limit on the federal government’s debt, would need to agree to increase that debt by $615.865 billion between now and Sept. 30, just to keep the government going at current spending levels, according to the CBO’s latest estimate of the fiscal 2011 deficit and the Treasury Department’s latest accounting of the federal debt.
Given that the Census Bureau estimates there are now 117,538,000 households in the United States that means the federal government must borrow an additional $5,239.71 per American household just to maintain the current federal spending level through Sept. 30.
The $615.865 billion in new debt needed between now and Sept. 30 (the last day of fiscal 2011) will decrease only to the degree that Obama and Boehner and the other congressional leaders agree to cut near-term federal spending that is scheduled to take place between now and Sept. 30.
Whatever cuts the president and congressional leaders agree to make two or three years from now—when many of them may no longer be in elective office—will have no impact on the amount of money the Treasury will be forced to borrow in the remaining 82 days of this fiscal year.
To add insult to injury for the US Dollar, the May trade deficit surged. This should have a major negative impact on second quater GDP.
Trade deficit surges to $50.2 billion in May
WASHINGTON (Reuters) - The U.S. trade gap widened much more than expected in May as a jump in oil prices helped push imports to the second highest level on record and exports fell slightly from April's record high, a U.S. government report showed on Tuesday.
The trade deficit totaled $50.2 billion, the highest since October 2008, and well above the consensus estimate of $44.0 billion from Wall Street analysts surveyed before the report.
Imports rose 2.6 percent to $225.1 billion, the highest since the record of $231.6 billion set in July 2008 just before the global financial crisis took a huge toll on global trade.
The increase reflected record imports of capital goods and food, feeds and beverages in a sign of resurgent U.S. demand, but a jump in oil prices to $108.70 per barrel -- the highest since August 2008 -- also accounted for a large part of the gain.
The oil price jump helped push the U.S. petroleum trade deficit to the highest since October 2008. Imports from the Organization of the Petroleum Exporting Countries were also the highest since October 2008.
The wider-than-expected trade gap will likely prompt analysts to scale back their estimates of second-quarter economic growth, as imports captured more of stronger U.S. demand.
Ranting Andy Supplemental: Debt Ceiling Debacle, The Death Blow to America
By Andy Hoffman
The debt ceiling is the biggest joke in the history of America, which is saying a lot. To display it as such, I have dug up several enlightening websites, starting with the first one, directly below, listing the FISCAL 2010 deficit at $1.65 trillion, NOT INCLUDING all of the “off-balance sheet items” such as WARS (Iraq/Afghanistan), the ongoing BAILOUTS of privatized entities such as Fannie Mae and Freddie Mac (remember them?), and numerous other items we are not even told about.
...no matter who was President, or who controlled Congress (Democrat or Republican), the numbers continued to soar. I am an Independent, so I have no particular bias either way, but must note that the longest ongoing myth in this nation is that Republicans are any more “conservative” than Democrats.
since 1940, the U.S. debt limit has been raised an incredible 75 TIMES, or more than once each year, from $49 billion to $14.292 (so precise) trillion. And if you really want to laugh (or cry), nearly all of the debt ceiling increases were labeled as “temporary” by the administering Congresses.
Anyhow, the debt ceiling was just $400 billion when the U.S. abandoned the gold standard in 1971, and first reached $1 trillion in 1981, just 30 years ago.
Reagan’s administration then doubled it to above $2 trillion.
Next, Bush I’s team doubled it again to $4 trillion, in just four years during a relatively mild recession. And despite raising taxes, to boot!
Next, Clinton’s administration, during the so-called best economic times in American History (all fraudulent, as it turned out) raised the debt ceiling by another 50%, to $6 trillion.
Next, the “Neo-Cons” under Bush II, under cover of the “War on Terror” and popping of the stock and real estate bubbles (inherited from years of easy monetary policy, care of Alan Greenspan, and the “Strong Dollar Policy”, care of Robert Rubin), added yet another 50% to the debt limit, to $9 trillion.
Next, with the U.S. economy past the point of no return, the commencement of the global financial meltdown, and a President hell-bent on bypassing socialism on the way to pure communism, “Hope and Change” Obama has added another roughly 50%, to $14.292 trillion, in just 2½ years!
And finally, the coup to gras of the U.S. dollar as “world reserve currency” will be this month’s inevitable increases to an estimated $16.5 trillion, equating to a roughly 85% increase for Obama in just four years, which by the way will only grow faster under the next President, whom will make Obama look as “conservative” as Obama is making Bush look.
And on last note: Don't overlook the rising Japanese Yen's contribution to Gold's liftoff today.
Our CRIMEX banking cartel is no doubt highly distressed this evening by today's news and events. Expect these criminals to look for anything and everything that isn't nailed down to throw at the Gold market tomorrow to thwart this surge in Gold prices. The shit is very close to the fan now.