• Monetary Metals
    05/02/2016 - 01:28
    The price of gold shot up this week, and silver moved proportionally. Headlines are screaming for gold to hit $10,000 or $50,000. Does this alleged new bull market have legs?

CBO on "Ultimate Can Kicking"

Bruce Krasting's picture



The Congressional Budget Office is out with a very well timed report on what the hell should be done with debt, deficits, taxes and the economy.



There is a lot of information in the reports. (link), (link) I doubt that too many of the folks in Congress will bother to read it. I looked through it; I think the following chart is the one the deciders in D.C. will focus on:





Lots of policy options are measured in the chart. Think like a politician, and go to the bottom line. What set of proposals has the biggest bang? My summary from the CBO chart:


-Totally junk the scheduled spending cuts for the military.


-Do away with all of the mandatory non-defense cuts (sequestration).


-Don’t do anything with taxes. Roll over everything for a couple of more years.


-Extend the 2% payroll tax break for two years.


If we kick the can down the road for a few more years, what do we get? The deep thinkers have come up with numbers that look pretty attractive. The CBO thinks that significant benefits could be realized as soon as September 30, 2013.


In terms of jobs, the CBO reckons that as many as 3.4m jobs could be created/saved if everything on the cliff is pushed off to the future.


The economy would be much stronger if the can is kicked. The difference between falling off the cliff and extending everything is 2.9% of GDP. That’s a very big number; it comes to $500Bn of top-line growth.


Well, that sounds good. What would this cost? The CBO puts the tab at an incremental $503Bn in 2013 and another dollop of red ink in 2014 of $682Bn. (The base line debt is ~$850Bn for 2012/13. The can-kick would be on top of the base line numbers)



Who would go for a plan like this? Very Important People like Paul Krugman and Larry Summers, would probably say that the stimulus was too small, but they would come down in favor of it.


The Administration would like this idea. It would give them two years of breathing room.


The Fed would love this plan. This is what Bernanke has been advocating. The IMF and the rest of the G-20 would hail it.


The Republicans would hate it, but what can they do but complain? After all, the Reds did get clobbered in the election. Republicans want to keep the tax rate on those making more than $250k and they definitely want to avoid cutbacks in military spending. If Republicans play hardball, they will lose big. They know that they are cornered. To save face, and to have a say in the outcome, they might go along, provided they got the "big" prize. A chance to change the tax code.


The grand compromise that could make this happen is a legislative commitment to rewrite the tax code. There would have to be a “promise” to achieve the necessary tax-code changes within twelve months. If there were no agreement on the changes in tax laws by 12/31/13, then the country would revert to falling off the cliff.


I think there is going to be a can-kick. I think it will include all the existing tax issues (Bush cuts and AMT). The sequestered cut backs in spending will be pushed out for a year. But, importantly, the 2% payroll tax break will not be extended. As part of the deal, there will be a promise to write the tax code.


We’ll see what Obama has to say in a few hours. Obama is no dope. He knows that the market cap of all US stocks is down by $600Bn the last few days. He knows that the market wants a can-kick. He knows that a tax re-write is necessary. He knows that the economy needs a boost. He knows that there is next to nobody left who gives a damn about the debt picture. He knows that Bernake will buy up all the extra debt. So he will push to kick-the-can.


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Fri, 11/09/2012 - 21:10 | 2966793 dexter_morgan
dexter_morgan's picture

Kind if interesting. like usual the MC get the BOHCFMDJA.


Fri, 11/09/2012 - 20:42 | 2966733 Big Ben
Big Ben's picture

The Budget Control Act of 2011 will go the way of all the other laws that have been passed to supposedly fix the government deficit: it will be revised and gutted before it can trigger any really significant spending cuts or tax increases. Congress feels that its main job is spending money and it will spend every cent that it can beg, borrow, steal, or print.

If a drug addict came to you and said "Just loan me enough money for one last fix and then I promise I will give up drugs, get a job, and pay you back." would you believe him? Well there is a much better chance of the addict giving up drugs than there is of Congress ever balancing the budget.

Fri, 11/09/2012 - 18:38 | 2966402 Catullus
Catullus's picture

So the CBO concluded that $500bn in government spending represent $500bn in GDP.  Brilliant.

GDP = C + I + G + Mx.


Fri, 11/09/2012 - 17:04 | 2966076 crzyhun
crzyhun's picture

Dearest leader is not dope! Right! What he is an idealogue of the collectivist mindset like his mentors... you know WHO!

Fri, 11/09/2012 - 16:41 | 2965973 Burticus
Burticus's picture

History is often a good predictor of the future.  The elephant/jackass sock-puppets-in-charge have can-kicked without exception in the past, so it's a logical deduction that they will continue their usual central-bank enabled can-kicking.

Besides, they need at least enough porkulus/scamulus/spendulus to pay back their loyal crony campaign contributors ten fold on their "investment".

The only question is when they run out of road and the can goes off the cliff, taking the Untied State economy with it.

Fri, 11/09/2012 - 20:42 | 2966732 one-in-nine
one-in-nine's picture

Kicking the can has worked so well for the Greeks it makes sense that we should kick the can too, our economies and financial systems being so similar :rolleyes:

Besides, in order for the system to really crash hard, the train needs to be going much faster before it hits that point where there are no tracks...full speed ahead...a Chevy Volt in every driveway...

Seriously, before you rebuild something it's usually best to start with a solid foundation.  For that we need the Pauls of the world to realize that the loot taken from Peter isn't free.  Everything has a price and pain is part of the deal. 

Emperor Turhan: How will this end?
Kosh: In fire.
Fri, 11/09/2012 - 16:33 | 2965934 franzpick
franzpick's picture

Last I noticed the 12 year old graphical law of gold following the debt ceiling upward had not been repealed: CanKick Reid's proposed $2.4T increase raises the limit 14.6% from $16.4T to $18.8T, and the extension of TD's best-graph-ever will show AU at $2000 in just 24 months. I'll play this game.


Fri, 11/09/2012 - 16:46 | 2966003 new game
new game's picture

it is that simple; the best hedge avail...

at some point the phys will be in short supply as long as buyers and sov gubs take physical delivery.

silver to spike first as the system dries up and the naked shorts prove to be what they are.

like max says when they start buying with printed money it is over.

another thought; so if the fed is buying mbs to the tune of 40b/month, then who owns your home when the econ tanks?

homes for printed fiat or free to the fed/bankster cartel. at that point in time, i would burn the fucker and laugh and walk the fuck away.

Fri, 11/09/2012 - 16:20 | 2965841 newworldorder
newworldorder's picture

Excellent observations Bruce on what the politicos will do rather than what they should do.

For those that think that the Republicans did not lose, please consider the dynamic shift in voter preferences as well as voter racial makeup. Race baiting is unfortunatly doing very well in this country. Check out the racial makeup of voters that is all the current rage on many news stories. Tell me that reasoned, well thought out political considerations are reflective in those numbers. America has indeed changed much since the immigration laws of the mid sixties. Whether the change has been for the better, will reveal itself by where the country ends up in the next 6 to 10 years.

Fri, 11/09/2012 - 16:13 | 2965795 laughnow
laughnow's picture

I dont think Repubs got clobbered. They didnt win the WH. They lost by 3 million Paul voters who stayed home and 1 million Liberatarian votes. The clobbering will come if that wus Boner caves. If he does we can hope that the majority in Congress will hold strong and tell him to stick it. Success can also be measured by causing the President to fail. 

Problem comes if they are successful in kicking the can, gold will take off. Then the emperor really has no clothes. At least to the rest of the world. When the inflation that comes with

can kicking arrives in earnest with higher gas and food prices, Repos can pin all of that on Obama. They can say we tried to stop him. It will get really bad as raw materials

priced in dollars go through the roof.

Fri, 11/09/2012 - 16:05 | 2965747 NoTTD
NoTTD's picture

He knows that a tax re-write is necessary.


I question your premise.

Fri, 11/09/2012 - 16:04 | 2965744 NoTTD
NoTTD's picture

He knows that the market cap of all US stocks is down by $600Bn the last few days. 


I question your premise.

Fri, 11/09/2012 - 16:02 | 2965735 NoTTD
NoTTD's picture

Obama is no dope. 


I question your premise.

Fri, 11/09/2012 - 16:34 | 2965941 new game
new game's picture

To whom it may concern:

I have thought every which way a half witted pin head loser can think and come to one conclusion: WE ARE FUCKED. Ok,

that was half witted, but seriously if you can think of any scenario that could change the course we on (given the leadership for the past 40 years); please comment.  These fuck heads have painted all of us into a corner with land mines every which way they move.  The course RP (his platform)proposed would get us there, but not without much pain and agony.  Cutting the budget 500b, raising taxes dramatically on corp. profits outside of usa and TIME would be a start...

i digress and fly the white flag and give the fuck up on any hope of these paid and bot whore fuck losers will come close to doing the right things to turn ship away from high seas ahead.

goldyglocks econ ahead...

Fri, 11/09/2012 - 16:32 | 2965931 new game
new game's picture

To whom it may concern:

I have thought every which way a half witted pin head loser can think and come to one conclusion: WE ARE FUCKED. Ok,

that was half witted, but seriously if you can think of any scenario that could change the course we on (given the leadership for the past 40 years); please comment.  These fuck heads have painted all of us into a corner with land mines every which way they move.  The course RP (his platform)proposed would get us there, but not without much pain and agony.  Cutting the budget 500b, raising taxes dramatically on corp. profits outside of usa and TIME would be a start...

i digress and fly the white flag and give the fuck up on any hope of these paid and bot whore fuck losers will come close to doing the right things to turn ship away from high seas ahead.

goldyglocks econ ahead...

Fri, 11/09/2012 - 15:28 | 2965580 hooligan2009
hooligan2009's picture

thank god my name is not "can", I would be black and blue (but not red).

the CBO and both parties are missing the point. the voters don't need tinkering with a fucked up system. 

the voters need a bottom up total overhaul so that they get an unfucked up system, you know, one that says "we dont want to print money to buy food stamps and health" and "we want to employ our armed forces in a productive way at home, rather than paying them to kill strangers in far away places that we can't even spell".

is it too much to ask to argue a case for a new start and ackowledge that the present system is NOT WORKING!

Fri, 11/09/2012 - 18:00 | 2966265 unnamed enemy
unnamed enemy's picture

it works very well for the 1%

Fri, 11/09/2012 - 18:34 | 2966340 hooligan2009
hooligan2009's picture

i am pretty sure some of the wealth created by the 1.5 million of the good guys and girls in the military would find its way into the 1% earning more than 250,000. actually, only 1.25 million people earn more than 250,000. you probably know who they are. only 460,000 people earn more than 1 million.

toy tool here for percentile income ranking using 2010 data


i am not saying that 250,000 is not a lot of money, but do we think that every one of the 1.25 million earning more than 250,000 or 460,000 earning more than a million are part of some conspiracy with barriers to entry that make sure the other 210 million in of working age dont make them even more money?

oh, and to get to the (coincidental) number of people on foodstamps, the income level is around the 22nd percentile of 11,200 a year.

Fri, 11/09/2012 - 15:20 | 2965539 Flakmeister
Flakmeister's picture

The is no growth to stimulate by interest rates, printing, supply side nonsense, you name it, it will not work

Figure out how to get oil back to $20 a barrel and the old magic will work again, problem is that $20 oil is the same as $300 gold, it ain't ever happening again...

And do not insult anyone intelligence by saying "Drill baby drill", the best tight oil plays going now correspond to ~$65-70 per barrel of marginal production... And those are the *BEST* plays....

As for NG, the US is still importing the stuff on a net basis....

Fri, 11/09/2012 - 15:38 | 2965625 Orly
Orly's picture

How about strengthening the US dollar to every other currency in the world?  It is already happening right now.  We may not see $20/bbl but we will see $50 in the not-too-distant future.

And $100/oz gold, too.


Fri, 11/09/2012 - 16:38 | 2965961 JohnG
JohnG's picture

I don't see how that can happen.

If by some miracle there is a real recovery and banks begin lending the enormous excess reserves again, interest rates will rise.  Moey supply outstrips production and inflation (high or perhaps hyper) results.

If the Fed tries to take the reserves out of the system by selling bonds, interest rates will rise, killing any chance of a real recovery.  Bondholders will be destroyed, liquidity is drained from the markets and we get a severe depression.

The Fed's purchase of bonds to drive down interest rates has created quite possibly the largest bubble yet, maybe bigger than derivatives.  It is nonsensical for a bond to carry a negative real interest rate, especially when the government issuing the bond is running large budget deficits that it seems unable to reduce and when the central bank is monetizing the debt.

So far, the bubble has been protested by the euro "crisis" casing investors to seek refuge in dollars.  This is what is holdg the dollar up right now even while the FED continues to print money to support trillion dollar plus annual deficits.

The dollar's echange vailue itself is a bubble.  Note the sharp rise in the price of gold and silver since 2000.

The bond market bubble will pop if the dollar bubble pops. The Federal Reserve can sustain the bond market bubble by purchasing bonds, and there are no limits on the Federal Reserve’s ability to purchase bonds. However, the endless monetization of debt, even if the new money is stuck in the banks and does not find its way into the economy, can spook foreign holders of dollar-denominated assets.

Foreign central banks can decide that they want to hold fewer dollars and more precious metals as their reserves. Other countries, sensing the US dollar’s demise.

BRIC's plus South Africa are already trading in thier own cross currencies to stay away from the dollar.

These agreements substantially reduce the use of the US dollar in international trade and, thus, the demand for dollars. When demand falls, so does price, unless the supply shrinks. But the Federal Reserve has announced, essentially, unlimited supply of US dollars. So we are faced with a paradox. The US dollar is supposed to remain valuable despite its enormous increase in supply?  How??

In addition, China hold about two trillion dollars of dollar denominated assets, primarly in bonds.  Look how we are treating them.....naval bases everywhere, suits in the WTO, etc.

What happens when (not if) China decides to dump 2T in bonds on the market?  Washington will try to buy dollars with swaps, drives the dollar down and interest rates skyrocket.

Sooner or later, the dollar loses reserve currency status, dollar loses safe haven status, high inflation in the US, US loses worldwide hegemonic power.  China wins, we lose big time.


Now, Orly, you are a much more expericned FX trader than me obviously.  How much are you willing to bet on the dollar rising?  Me...I wuouldn't touch that wil an eleven foot pole.

Fri, 11/09/2012 - 17:18 | 2966123 Orly
Orly's picture

If we showed the world that we are trying to get our fiscal house in order, people would run out of the Euro and the Pound so fast, it wouldn't even be funny.

The reason for the massive run-up in gold has been because of uncertainty.  Eliminate that uncertainty and gold comes back to reasonable levels.  The massive "printing" done by the Federal Reserve has caused people to flee the USD as a safe-haven.  People would fly out of the JPY and the AUD it wouldn't be funny.

There is no way the Chinese are going to dump their UST assets (yes, assets, not "paper"...).  They would be foolish to do that, especially with their economy on the brink of a meltdown.  It's the only thing they have that's stable.  The rest is lies.

I am saying that if people had ore confidence in the US economy, the USD would come down to normalised levels and commodities would be a much more reasonable price.  Get oil cheap again, the economy booms, and so on and so on...

Fri, 11/09/2012 - 17:39 | 2966182 JohnG
JohnG's picture

One more thing:  It is my firm belief that the Chinese have A LOT more gold than they "say"they do, as you said it's all lies from them.  Plus er are treating them like shit, and they do want the renminbi as the reserve currency.

Fri, 11/09/2012 - 17:37 | 2966172 JohnG
JohnG's picture

OK, so you think that we will (or even can) get our "fiscal house" in order.  OK, so we have to show this to the world.

Bernanke has been saying this exact thing to Congress in Humphrey-Hawkins testimony for THREE YEARS, is't a fiscal problem.  It hasn't happenned so far.  He also stated that he would not monetize the debt.  That was a plain lie.  So far he's been the one to keep deficit spending alive with money printing.  Obama will reappoint him, things will continue to get worse.

To get "the world" to believe that we are on the track to a fiscally sound policy, we would HAVE to primarily reduce the deficit, and that means cut spending dramatically.  Something like 50%.  This won't happen.  Unless you believe REAL entitlement reform, killing most or all transfer payments, reducing the military by half, halting all foreign aid, I mean taking an axe to the budget.  That might do it, but again, I just don't think it will. 

Something as simple as cutting food stamps would cause severe rioting.  The insane CPI that is killing senoirs and savers now.....  These are the people that  voted him in.  I', not saying that he's a "good guy" and would honor any promises made, but do you think this can be ramrodded through a divided Congress?

Impossible I say. 

I do respect your opinion though.  Things could change.  Hell, there could be a miracle.  Who knows what the future will bring.  I still won;t bet on the dollar, and 'm not even especially a PM "bug."


edit: sorry for tthe misspellings, I get this tiny little font that I can barely see....

Fri, 11/09/2012 - 15:47 | 2965662 akak
akak's picture

The fact that other ships may be sinking faster than your own does not mean that your sinking ship is thereby somehow rising out of the water.

Fri, 11/09/2012 - 16:20 | 2965835 Orly
Orly's picture

Sure it does.  The world still prices its oil and commodities in US dollars.  If our dollar were to strengthen, the cost of oil (to us...) would drop dramatically, as it already has.  Then, we could really stick it to the Chinese.  The problem with that is, though, that we would also be sticking to the Japanese and really whacking the Australians, who, frankly, could use a real whooping right about now.

As the dollar strengthens, we'll see fifty dollar oil in the US by the end of next summer.  If not, I'll eat my hat.  (Thankfully, I don't have a hat...)


Fri, 11/09/2012 - 19:35 | 2966546 sherryw
sherryw's picture

Care to elaborate on why you are so down on Australia?

Fri, 11/09/2012 - 20:50 | 2966709 Orly
Orly's picture

I am not down on Australia, I am down with Australia.

Bert, there comes a time when you have to realise that the US is giant compared to Australia and New Zealand and no matter the fine job Mr. Stephens has done with the RBA (and he really has...), the economic might of the US dwarfs that of your continent.

To say that the Aussie is worth a dollar-five in real terms, on an even playing field, does not even really make sense.  The Aussie has been driven up by speculators, people wishing to leave the European currencies in droves and the ramp in commodity prices brought about by unprecedented easing by the Federal Reserve Bank in the US.  Next time the AUSUSD ramps to where you think would be an unsustainable level, you should trade your A$ for US$.

Look about.  What are homes selling for there?  Is that real?  I don't think so.


Por claro: To be "down with" something in America means that I am on your side.  A conversation might be, for instance:

"Yo, y'all wanna toke dis spleef?"

"Yeah, I'm dowm wif dat."

As an example, of course.


Fri, 11/09/2012 - 16:39 | 2965969 Orly
Orly's picture

Sorry to reply to myself but here's a plan:

  1. Accelerate the losses on the books of the banks and modify or even eliminate many of the MBS/CDS trash that the Fed currently holds in lieu of real credit.  Sorry, lots of guys are going to have to take a haircut.  Not our problem.  They shouldn't have been playing with M-80s if they didn't want one to blow their eyeball out.
  2. Continue with what has become known as QE3, except mandate to the banks that the money does not go into the stock or commodities markets; it goes to loans for small to medium sized businesses and individuals.  The Fed can then modify or eliminate all of that trash.
  3. Eliminate all taxes on capital gains and dividends for everyone.
  4. Revise the tax code such that corporations pay no tax but small businesses aren't taxed as indiduals.  Institute a VAT or a flat tax for every person across the board.  Eliminate most deductions.
  5. Revise the laws so that this garbage cannot happen again, meaning repeal Glass-Stegall and separate banks from investment houses once and for all with a special provision in the code that says this law cannot be repealed without a super-majority nationwide referendum.

The people taking it on the chin in these proposals are the member banks of the Federal Reserve Board and their cronies.  The $6 Trillion plan was pulled off okay but the unintended consequences of what they did is getting out of hand.  Sign the law, or face pitchforks.  Your choice.

Where am I wrong?

Fri, 11/09/2012 - 17:47 | 2966213 cranky-old-geezer
cranky-old-geezer's picture



Where am I wrong?

You overlooked the ground rule, it's a looting spree, gotta keep it going.  Any excuse, alabi, cover story, banner they can come up with to transfer more wealth to the government and Wall Street.

You folks can't make sense of what they're doing because you won't admit what they're doing, looting the damn nation dry.

I saw it in '08 with TARP.   Beginning of the looting spree, and they'll keep going till they've looted everything.

You folks need to realize this is it for America, the end game.

Fri, 11/09/2012 - 17:18 | 2966125 riphowardkatz
riphowardkatz's picture

read Einhorns book on the Small business administration and how corrupt and poor their lending process is.

2.Continue with what has become known as QE3, except mandate to the banks that the money does not go into the stock or commodities markets; it goes to loans for small to medium sized businesses and individuals.  The Fed can then modify or eliminate all of that trash.

Fri, 11/09/2012 - 18:47 | 2966427 Common_Cents22
Common_Cents22's picture

The only lending small/med businesses can get is receivables financing/factoring at 2-4% a MONTH.   That's it.   No LOC, no loans, nothing.

Fri, 11/09/2012 - 17:44 | 2966208 Orly
Orly's picture

There is no doubt that things are bad and corrupt but if we have to do it, we have to do it and that starts with hard choices and everyone tightening their belts.

It can happen.  Do we have the will as a peope to do it?  We'll see.

If everyone in power and management would just do the right thing, I say all of this will go by the wayside sooner than most people would believe possible.

Sat, 11/10/2012 - 04:13 | 2967374 StychoKiller
StychoKiller's picture

[quote] If everyone in power and management would just do the right thing,...[/quote]

Bwahahaha!  You're downright delusional there...


Fri, 11/09/2012 - 16:58 | 2966054 new game
new game's picture

one more; tax profits on corporation profits out side of usa dramatically higher.

send a message to china-peg fuckers, peg this up your ass...

Fri, 11/09/2012 - 17:03 | 2966072 Orly
Orly's picture

Yeah.  No corporate tax inside the US but the money on what you make outside the US is taxed at 21%.

Note the distinction, not the money you make outside the US as that can still be considered domestic (as long as it was made here and shipped there...) the money on what you make outside the US...

Fri, 11/09/2012 - 18:11 | 2966311 Parrotile
Parrotile's picture

Seems a protectionist policy.

How many times have such policies backfired in the past?

If you are implying that "Corporate earnings on things made outside the USA" includes earnings of local subsidiary Companies, isn't this a case of "we've made heaps of $$s out of your slave labour in the past, but since we now feel the need to bolster economy, so long suckers!"

You REALLY think Nuclear-armed (and crazy) countries like India (favourite location for most US Callcentres / Software support houses) and Pakistan (so-called "US Allies" but who've had a gutful of US assassinations of their people) will take this without any protest?

You REALLY think China is going to give up her aspirations to be World No 1 Economy "just to suit the USA"? You know, the China that's turning out some pretty good combat aircraft, and is now engaged in a carrier-building programme??

With the emergence of non-US $ denominated trading blocs (BRICS etc), even Blind Freddy can see that the days of the US $ as Revserve Currency must be, and so are, surely coming to an end. And, once this happens there's a whole flock of Black Swans coming home to roost.




Fri, 11/09/2012 - 18:43 | 2966334 Orly
Orly's picture

Let them eat static.

This is about North America.  This isn't some protectionist trade policy whereby we're going to get back at the Chinese for making cheaper tires and trying to undercut our markets.  This is about: we have a problem and we need to fix it. Think of it as America in rehab.  (Hopefully more successful than Lindsey Lohan...)

We need to fix our wagon before we can pull the rest of the world along with us any more.  So India and Pakistan can moan all they want to.  The Chinese and Australians can complain about getting pulled away from the teat.  The Japanese would find the whole thing funny and highly entertaining; holding their hands cross-ways in front of their mouths while they giggle at the Chinese and Koreans stamping their feet.

We need to think of ourselves now.  No more of this, "What happened to the half-trillion dollars, Mr. Chairman?"  Those days are long gone.


Addo: Besides, all the tax policy would do in regards to manufacture outside of the US is to encourage manufacture in North America (so, US, Mexico and Canada would be exempt...).  If you can make products there with greater than a 20% mark-up, plus local tax incentives, then be my guest.  You'll see how long that lasts.  Just asks the Chinese.  Their labour costs are soaring and are comparable to some parts of Mexico even now.

Fri, 11/09/2012 - 19:32 | 2966531 sherryw
sherryw's picture

Oi! Australians, the teat? Come on, America's protectionist policies in agriculture have done Australia no favours! Australia is one of the most deregulated countries in the world. And our mining is very competitive on its merits and despite high labour costs.

Fri, 11/09/2012 - 20:26 | 2966689 Orly
Orly's picture

Bert... (as my mother-in-law would say...)

The rapid rise in commodity prices that has lent itself to your Goldilocks economy has been sponsored by the Fed releasing real credit into the system, which has not created loans across America but has gone to ramp equities and commodities.

So, yes, the teat of the American taxpayer is paying for gold at $1750/oz., as well as copper and iron ore (though that market appears to have crashed...).  That's why the Australia dollar can do no wrong nowadays and if you tried to move anywhere else in the world, you would be taking a giant haircut on your way out the door.  I would be very suspicious of an Australian dollar that is worth more than a US dollar, if I were you.


Fri, 11/09/2012 - 15:06 | 2965467 goodrich4bk
goodrich4bk's picture

Bruce writes:

"The economy would be much stronger if the can is kicked. The difference between falling off the cliff and extending everything is 2.9% of GDP. That’s a very big number; it comes to $500Bn of top-line growth.

Well, that sounds good. What would this cost? The CBO puts the tab at an incremental $503Bn in 2013 and another dollop of red ink in 2014 of $682Bn. (The base line debt is ~$850Bn for 2012/13. The can-kick would be on top of the base line numbers)"

In other words, Bruce is suggesting we borrow $1.285 trillion over two years so we can get "top line growth" of $500B.  How the fuck does that math make any sense?

I say Obama goes off the cliff just so it become absolutely clear who is screaming the loudest for more deficits --- it is Wall Street and every large corporate squid that "earns" its money skimming off ever dollar of new consumer debt.  It is not Main Street and it is certainly not those, like me, who pay 15% payroll taxes and little in income taxes to begin with.


Fri, 11/09/2012 - 20:21 | 2966673 max2205
max2205's picture

The Bernake put is only good in pre election year. Put off

Ben where are you. Feels like he called the TBTF and said , ok now we bring rates down hard so buy bonds and sell stocks.

Ben is unashamed because .....

Fri, 11/09/2012 - 15:02 | 2965448 kaiserhoff
kaiserhoff's picture

Why sweat the small stuff, Bruce?  All of your bonds are toast.  You're beginning to sound like Leo.

Fri, 11/09/2012 - 15:09 | 2965484 Bruce Krasting
Bruce Krasting's picture

I don't own bonds. What makes you think I do? Nothing in any of my writing would lead you to that conclusion. Bonds are a negative investment. I've said so for years.

Do you bring up Leo out of nostalgia? That dates you to these pages.

The guy went off the cliff buying Chineses solars. Shit happens.

Fri, 11/09/2012 - 15:30 | 2965591 kaiserhoff
kaiserhoff's picture

Jeez, must have hit a nerve.  It wasn't that long ago that you were bitching about having lost a hundred grand a year in "interest income".  What was that?  Money markets or hush, hush, Swissies?

None of my business what you invest in Bruce, but for over two years, you've done a good job analyzing bonds.  The point was, and is, this cliff thingy is BULL SHIT!  The debt is much larger than any public figure has yet acknowledged, so the lefty toads in the CBO will do what they always do, but let's not pretend that pretending matters.

Take a meat ax to the budget, or surrender to hyperinflation.  Those are the options.

Sat, 11/10/2012 - 04:08 | 2967368 StychoKiller
StychoKiller's picture

Let's wait and see WHO gets the sceptre in China...

Fri, 11/09/2012 - 15:23 | 2965515 akak
akak's picture

Ah, Leo "I never met a government spending and/or bailout plan I didn't like" Kovilakis!  The same guy who kneejerkedly applauded every corrupt move by Bernanke and the rest of the financial oligarchy, and who continually admonished all of us to supinely submit to every egregiously rapacious move by the sociopaths who masquerade as our leaders and betters.

I hope that clown is losing his shirt in the market right now.  It couldn't happen to a better narcissistic Keynesian bastard and spineless apologist for evil.

Fri, 11/09/2012 - 15:36 | 2965614 Orly
Orly's picture

I think he was ill for a while.  I wondered why we haven't seen him for like a year.  Any ideas?  He dropped off the map before the whole solar thing blew up, so I don't think that was it.

And we all miss RoboTrader and the infamous Harry Wanger...


Fri, 11/09/2012 - 19:20 | 2966517 sherryw
sherryw's picture

But on the other hand, we also miss Cheeky!

Fri, 11/09/2012 - 20:15 | 2966651 kaiserhoff
kaiserhoff's picture

Hard to admit, but I really do.  That fool gave new meaning to spastic, making a chain of FX predictions, oblivious to the fact that the odds were a billion to one against that being even close. 

I shall always treasure the day a newbie addressed him as Mr. Bastard.  Thought I would split a gut.

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