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Global Bond Issuance To Top A Staggering $8 Trillion In 2012

Tyler Durden's picture




 

As households are supposedly deleveraging and European nations face austerity, one might suspect that global debt levels were stabilizing or even dropping. Think again. It will likely come as no surprise when we point out that the G-7 nations alone face a massive $7.3 Trillion (with a T) of sovereign-only maturities (and a further $566 Billion in interest payments) in 2012 alone. This incomprehensible number is worsened only in historical comparison as it's current level is 125% higher than was 'expected' at the end of 2010 (and 238% higher than was expected for 2012 at the end of 2009). As Bloomberg points out, Japan tops the list with $3.05tn (equivalent) followed the US at $2.76tn for 2012 as the former peaks in March 2012 (with $678bn due in that month alone) and the latter peaks in this month with January 2012 seeing over $480bn due to mature (and be rolled). But it gets worse for supply - global corporations (dominated by Financials relative to non-Financials), as noted by S&P today, have used the low interest rate environment to modestly relever and face almost $1 Trillion (again with a T) of maturing debt that will need to be rolled in 2012 (with January and March also topping the list) and over $3.1Tn in the next four years. So in the next four years, amid a slowing demand picture thanks to European worries, global corporate debt combined with G-7 sovereign debt maturing is an incredible $18.48 Trillion that will need to be rolled, rehypothecated, and have capital allocated to it (or not).

Debt loads are piling up in shorter and shorter maturities for the G-7.

...and from the end of 2009, expectations for 2012's debt load (maturing and needing to be rolled) has increased dramatically...

 

Breaking down the $7.3 trillion equivalent debt maturities for the G-7 across the year, we see January and March as critical...

Obviously Sovereign issuance dominates Corporate issuance but European New Bond Issuance for 2011 was dwindling as we ended the year...

which worries S&P greatly:

European Corporate Issuance Volume Remains Thin, Reflecting Continued Investor Worry

New corporate bond issuance in Europe continues to be very thin, reflecting the economic uncertainty that has characterized the region for the past few months. New deals through the first half of December totaled $20 billion. Of this, 85% were investment grade and 15% were not rated; there were no speculative-grade deals. In addition, the number of European companies issuing debt outside of Europe has increased, demonstrating difficulty in securing capital from within the region.

 

In November, the total new bond issuance in Europe was $43 billion. About 10% of this total is attributable to the European Financial Stability Facility (EFSF), an entity created to safeguard financial stability in Europe by providing financial assistance to member states.

As they see huge amounts of financial and non-financial debt needed to be rolled over the next few years...

 

All-in-all, the debt loads are becoming awesome and face what Bloomberg describes as a bad combination:

The buyer base for peripheral Europe has obviously shrunk at the same time that the supply coming to the market is increasing, which is not a good combination,” said Michael Riddell, a London-based fund manager at M&G Investments.

 

but we agree with the following that it will be mid-year (March onwards) that the real problems of excess supply hit (and pre-judging when this gets (or how much of this is) priced into forwards is anyone's guess):

Investors should be most worried about the period after the ECB’s second three-year longer-term refinancing operation scheduled in February, according to Ignis’s Thomson.

“The amount of liquidity that has been supplied by central banks, with more to come from the ECB in February, suggests the first couple of months will be a sort of phony war as far as the supply is concerned,” Thomson said.

 

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Tue, 01/03/2012 - 16:45 | 2030177 BaBaBouy
BaBaBouy's picture

Print AWAY ... Bitchez ...

It's GOLD'en To Me.

 

And If we're Lucky, Ron Paul... 

Tue, 01/03/2012 - 16:49 | 2030260 tallen
tallen's picture

Don't forget silver! 

Peak silver reached in US, demand for Electronics, Jewelry and solar uses continues to rise. Ore grades globally continue to decline, the perfect storm for much higher silver prices.

Buying loads of phys through  Bullionvault(Anything below $30 is a steal) and some OTM SLV calls for some fun!

Tue, 01/03/2012 - 17:39 | 2030472 trav7777
trav7777's picture

we're like 5% of global production now?  big whoopie, US silver peak

Tue, 01/03/2012 - 17:45 | 2030497 tmosley
tmosley's picture

dat cognitive dissonance.

Batting 1.000 on being wrong on every issue.  Keep it up, dumbass.

Tue, 01/03/2012 - 19:40 | 2030814 kito
kito's picture

silver blew its load with expectations of inflation that did and will not come to pass. its done. deflation has already done its damage to silver.

Tue, 01/03/2012 - 19:54 | 2030849 WonderDawg
WonderDawg's picture

Deflation is not finished with the damage just yet. More to come, bigger and badder.

Tue, 01/03/2012 - 20:56 | 2031000 baby_BLYTHE
baby_BLYTHE's picture

how come nothing I buy is getting cheaper? I pray for DEFLATION! They never have nor will ever allow deflation. The phony growth, leverage, exhausted energy inputs and demographic time bomb must be prolonged as long as possible! Must protect banker bonuses, the world-wide military empire and the domestic police state. No reset into a more free and favorable Republic allowed!

Tue, 01/03/2012 - 21:05 | 2031047 Greenhead
Greenhead's picture

Seems that if supply is up and demand isn't enough and we are in a manufactured low interest rate environment, the only buyers are the buyers of last resort.  Central banks will have to monetize if they really want to keep interest rates low.  Sounds like a recipe for printing.

 

Tue, 01/03/2012 - 21:10 | 2031071 unununium
unununium's picture

b_B +8T

kito has learned nothing

Tue, 01/03/2012 - 21:44 | 2031194 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The reset is coming Blythe. It will be fast and furious!

Tue, 01/03/2012 - 22:00 | 2031225 Eatabanker
Eatabanker's picture

 

"Mother nature provides birds for the worms, but she doesn't drop them in their nest". 

As for your strategy of praying for deflation, I fear your prayers will be answered in spades.

Experience has taught me whining is not a very useful strategy. Perhaps you should consider investing your fleeting time

and diminishing energy watching and learning the rules from more successful individuals whose values you share. 

 

 

 

Tue, 01/03/2012 - 17:18 | 2030396 Meremortal
Meremortal's picture

America is not going to elect a man to the Presidency who would turn 80 during his first term, IF he lives that long.

Tue, 01/03/2012 - 18:10 | 2030603 Sudden Debt
Sudden Debt's picture

do you know why they never elect a pope younger than 65?

Tue, 01/03/2012 - 19:24 | 2030769 Eally Ucked
Eally Ucked's picture

John Paul II was 58 when elected

Tue, 01/03/2012 - 18:08 | 2030592 Sudden Debt
Sudden Debt's picture

Oké, oké... let me just take my checkbook and write you a.....

OR BETTER YET!! CAN I PAY WITH SILVER DOLLARS!

http://i.ebayimg.com/00/$(KGrHqEOKicE3F0)wT0dBN2vYzkGiw~~_12.JPG

they can cash them in with every US citizen.

 

Tue, 01/03/2012 - 16:41 | 2030185 Cognitive Dissonance
Cognitive Dissonance's picture

A $Trillion here, a $Trillon there. Before you know it you're talking "real" money.

LOL

http://en.wikiquote.org/wiki/Everett_Dirksen

Tue, 01/03/2012 - 16:52 | 2030281 smlbizman
smlbizman's picture

heres the check for 2012....just dont cash it till monday...

Tue, 01/03/2012 - 17:17 | 2030390 NotApplicable
NotApplicable's picture

*Monday Morning, phone rings...*

Hey buddy, can I borrow some more money to cover the check I gave you. No, dude, it's totally cool, solvent as a motherfucker. It's just with this whole lack of liquidity in the market, things are gettin' tight. Why I even had to sign over my kids as collateral at the Fed window last week!

Tue, 01/03/2012 - 17:43 | 2030492 trav7777
trav7777's picture

start diggin in the couch cushions

Tue, 01/03/2012 - 17:15 | 2030379 chubbar
chubbar's picture

OT but things are heating up over in the "birther" camp! Looks like a judge finally found the balls to rule that yes, someone in the U.S. does actually have a right to verify the qualifications of a person running for president as outlined in the constitution.

It appears that Obama is going to be deposed on why he has a Connecticut SS # as well as why he submitted a forged long form Birth Certificate. This ought to get interesting, assuming the judge isn't hit by a bus or drowns in a hot tub.

http://www.orlytaitzesq.com/?p=29976

http://www.orlytaitzesq.com/wp-content/uploads/2012/01/Farrar-Motion-to-dismiss-by-Obama-is-denied.pdf

 

Tue, 01/03/2012 - 17:23 | 2030416 NotApplicable
NotApplicable's picture

Likely this is more "Poor Obama" theater designed to make him look human. While the SSN may be suspect, there's plenty of reasons why it could be legit (plausible deniability, ftw!) due to how it was implemented. If nothing else, it should make for cheap entertainment.

Tue, 01/03/2012 - 16:36 | 2030187 ACP
ACP's picture

I can't believe I can still buy food at the supermarket with worthless linen bitchez!

Tue, 01/03/2012 - 16:40 | 2030218 Cognitive Dissonance
Cognitive Dissonance's picture

I can't believe I can still buy Precious Metals with worthless linen bitchez!

Fixed it for ya. :>)

Tue, 01/03/2012 - 16:41 | 2030225 ACP
ACP's picture

Excellent Smithers...yessss......eeeeeeexcellent!

Tue, 01/03/2012 - 16:56 | 2030300 DoChenRollingBearing
DoChenRollingBearing's picture

Buy both!  Diversification!

Tue, 01/03/2012 - 16:49 | 2030267 LawsofPhysics
LawsofPhysics's picture

Sure you can, just be sure to bring more and more of that paper.  It will continue to work until the holder of the food won't sell it, or there simply isn't any available.   Amazing how that ounce of silver that filled a gas tank in the 1950's, still fills a tank (and look up 6% in one day), how's that paper of yours again?

Possession has always been 9/10 of the law, soon it will be all that matters.

Tue, 01/03/2012 - 17:01 | 2030318 HungrySeagull
HungrySeagull's picture

By damn!

 

So Silver does fill a tank 60 years later.

HAH!

 

The writer has one thing wrong. We are not deleverging, we are actually flying away from the rotten feeder and learning to catch fish ourselves again.,...

 

If only those damn fish stop glowing at night.. We need our sleep.

 

Today I quit paying 5.00 for a bag of Pretzels and bought Crackers, salted for a buck 24. Where does that leave the maker of the Prezels?

 

And that Cotton that supports the dollar bills at the Mint needs to keep growing. Despite the flooding, we expect to Choke the world in dollars and corn.

Ponder that!

Tue, 01/03/2012 - 17:40 | 2030478 LawsofPhysics
LawsofPhysics's picture

I grow cotton, been two good years.  If only you needed cotton to simply "add zeros".  Too bad you don't, so you mint comment is bullshit. Remember, the bernanke said they were not printing.

No worries, I like fishing and have the land and resources to do so, all that will matter in the future.

Tue, 01/03/2012 - 17:47 | 2030504 tmosley
tmosley's picture

Make your own pretzels.  Delicious AND much cheaper.

Though perhaps not for long.  My source of flour (25 pound bags) just went up by 14%.

Tue, 01/03/2012 - 16:57 | 2030302 economics1996
economics1996's picture

I went from shoping at Publix to Albertsons to Aldi.  Anyone notice the nice 70% markup on eggs?  99 cents to $1.69 a dozen at aldi?

Tue, 01/03/2012 - 17:02 | 2030326 HungrySeagull
HungrySeagull's picture

Still a damn sight cheaper than the Mcdonald's eggs I gotta tell ya.

*Truck stop meals excluded. Those are high calorie 1000 miles to go food when you dont know when or where you will eat again.

Tue, 01/03/2012 - 16:37 | 2030193 gabeh73
gabeh73's picture

Goto Drudge Report Caucus and vote to end the racist wars. Vote Ron Paul

Tue, 01/03/2012 - 16:39 | 2030214 GeneMarchbanks
GeneMarchbanks's picture

What about the non-racist ones?

Tue, 01/03/2012 - 16:42 | 2030235 hugovanderbubble
hugovanderbubble's picture

US has the enemy inside...its called the Fed.

Tue, 01/03/2012 - 16:45 | 2030252 GeneMarchbanks
GeneMarchbanks's picture

Even a Spaniard knows that ;)

Tue, 01/03/2012 - 16:43 | 2030241 Schmuck Raker
Schmuck Raker's picture

Evolution?

Tue, 01/03/2012 - 17:16 | 2030388 Meremortal
Meremortal's picture

What about the anti-semitic ones?

Tue, 01/03/2012 - 17:41 | 2030484 trav7777
trav7777's picture

I'm going to vote to have people who keep claiming everything they don't like is RAYCISS put in a cage.

the US is DIVERSE. We have massive diversity all up and down government and in society.  And the MSM says RP is a rayciss too.

Tue, 01/03/2012 - 16:37 | 2030194 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Nothing Keynesiansim can't handle!

Tue, 01/03/2012 - 16:40 | 2030215 i love cholas
i love cholas's picture

I wonder if I will surive to see a Zillon

Tue, 01/03/2012 - 16:59 | 2030317 Caviar Emptor
Caviar Emptor's picture

Cintillion

Tue, 01/03/2012 - 17:04 | 2030330 HungrySeagull
HungrySeagull's picture

I guess if my ass keeps growing wider, I might have a pocket big enough to hold one of those monster bills someday.

 

Somebody pass the JELLY! (A cookie if you remember this one)

Tue, 01/03/2012 - 16:40 | 2030217 hugovanderbubble
hugovanderbubble's picture

long Lexmark

 

Tue, 01/03/2012 - 17:18 | 2030393 HungrySeagull
HungrySeagull's picture

No no no.

Lexmark is crap.

 

Come here inside my draft room, let me show you the new remade Dot Matrix Printer that is featuring a 30mm Gatling Gun to keep up with today's high speed dot matrix printing needs!

No laser or ink needed.

Tue, 01/03/2012 - 16:41 | 2030220 AC_Doctor
AC_Doctor's picture

Pray for buyers, Kleptocrats and bank slime or die trying...

Tue, 01/03/2012 - 16:41 | 2030223 youngman
youngman's picture

8 trillion for the sovereigns....but there is Bank debt that is coming due...and other debt.....now who will buy it....especially if it is still rated AAA....or rated DDDDDDDDD.....to me this is the question....Greece has 14 billion coming due in March.....who who who let the dogs out....and who will buy that???? No one with skin in the game...but if you give me the money for free...I will do it for you for a FEE.......a fast payout fee....

Tue, 01/03/2012 - 16:59 | 2030315 economics1996
economics1996's picture

Ben will print.  He thinks he is smarter than the markets.  His plan is to print just enough to offset the defaults.  History shows no one is smarter than the markets.

Tue, 01/03/2012 - 17:39 | 2030471 tekhneek
tekhneek's picture

He.

Hasn't.

Fucking.

Stopped.

Printing.

He's.

Just.

Not.

Talking.

About.

It.

 

Tue, 01/03/2012 - 17:42 | 2030486 DoChenRollingBearing
DoChenRollingBearing's picture

+.  1.

Wed, 01/04/2012 - 09:46 | 2032396 Hephasteus
Hephasteus's picture

Opening his trap about it was making the gold market manipulation too difficult.

Tue, 01/03/2012 - 16:41 | 2030230 Everybodys All ...
Everybodys All American's picture

Wait until they have to roll this again next year and then the next year and then... Well you know how this ends.

Tue, 01/03/2012 - 16:42 | 2030234 mn2
mn2's picture

it could be 16trillion the market will still go up.  Dont be fooled by negaive headlines

Tue, 01/03/2012 - 16:42 | 2030236 YesWeKahn
YesWeKahn's picture

And the folks who are holding these debts are at 50X leverage, pretty scary no?

Tue, 01/03/2012 - 16:43 | 2030238 mayhem_korner
mayhem_korner's picture

 

 

Ummm...what happens to those interest payments when yields go Greek?

Tue, 01/03/2012 - 16:45 | 2030248 Irish66
Irish66's picture

credit card

Tue, 01/03/2012 - 17:05 | 2030334 HungrySeagull
HungrySeagull's picture

Force Majure I think.

 

Either the weight of the debt literal will tilt the earth past Solisce or melt the wires that carry the binary.

Can you imagine a market that needs a month to close instead of just a few hours?

Tue, 01/03/2012 - 16:47 | 2030261 Cognitive Dissonance
Cognitive Dissonance's picture

The term "Go Greek" tickles the mind with all the different 'usages' that could be applied when interests rates go........well.......as you said, when interest rates go Greek.

I really must pull my head out of the gutter......as opposed to my ass...ets. :>)

Tue, 01/03/2012 - 17:31 | 2030442 youngman
youngman's picture

They should be there now...we think in the old normal....the old school way..econ 101...but today...ben Prints to cover what we are not buying...there is a third team on the field.....and he does not play by our old rules...he makes his own up...they will and can never let rates go up...its over if they do...they know that...so its print print print..and hopefully not everyone will sell at the same time so its looks "normal" to the rest of us...but if ther is a black swan event and people dump....well...that will be the new Normal NORMAL.....and no one knows what that will be like...

Tue, 01/03/2012 - 16:44 | 2030244 vote_libertaria...
vote_libertarian_party's picture

So how much is NEW selling.  The US alone needs to find $1.5T in NEW money every year.  Japan about the same?  Europe about the same?

Even if the central banks QE what still needs to go to market?  Half?  A third?

 

You can't find enough buyers now and yet additional supply is still flooding the market.

Tue, 01/03/2012 - 16:59 | 2030314 Spacemoose
Spacemoose's picture

please, correct me if i'm wrong but the bigger problem will be re-rolling the existing debt.  if i were an investor with 2 or 3 billion coming in from the maturity of a 3% instrument and one of my alternatives was to roll that back into 1% paper, i would seriously consider rebalancing my portfolio with more "real" assets and less gov. paper.  if everyone has the same thought, would this not cause a huge run up in equities, farm property, pm's and commodities? where is my reasoning flawed?

 

 

Tue, 01/03/2012 - 17:19 | 2030401 HungrySeagull
HungrySeagull's picture

Not flawed. Its the same as handing your oldest daughter over to the land lord to postpone your past due rent another month.

Tue, 01/03/2012 - 17:46 | 2030500 LawsofPhysics
LawsofPhysics's picture

You missed the run up in farmland my friend.  I know of several areas that have seen up to a 500% increase in the price per acre over the last three years for farmland.  All fine and good if you can make the land productive.  Local governments in Kansas and Nebraska are drooling over the "predicted" tax revenue.  Seems these idiots just can not learn their lesson.  Big difference between predictions and reality.  There is also a big difference between paper investments and physical assets (of all kinds) that you can actually touch or that contribute directly to your survival.  Parity the world over is coming faster and faster.  If your country has a high standard of living, then there is only one direction for it to go (unless you actually know how to do things yourself).

Tue, 01/03/2012 - 17:54 | 2030532 DoChenRollingBearing
DoChenRollingBearing's picture

I've read that Midwest farmland is in a huge bubble.

Tue, 01/03/2012 - 18:19 | 2030624 MachoMan
MachoMan's picture

Second the farm land runup...  probably a decade late to the party (maybe 5 years to be nice).  It has been creeping up for a long time, but the boom has happened in more recent years.

The neat part?  The 8 and 9 figure transactions I see aren't done on any leverage...

Tue, 01/03/2012 - 18:36 | 2030658 LawsofPhysics
LawsofPhysics's picture

"The 8 and 9 figure transactions I see aren't done on any leverage..."

Another reason local governments are droolling, they assume the owners have money and will bring that to town, but if that is "paper" money and the land is still not productive, then it doesn't mean shit.

Tue, 01/03/2012 - 19:38 | 2030809 MachoMan
MachoMan's picture

Except for the ability to confiscate the land for taxes owed...

Tue, 01/03/2012 - 18:36 | 2030655 HungrySeagull
HungrySeagull's picture

I found out about it on a show called AG. It broadcasts early in the morning, very early and the last show was a eye opener.

 

There is so much going on in Farm and I don't know nothing. Except that around here Hay loads are going out while the live stock and horse owners weep.

Tue, 01/03/2012 - 16:49 | 2030268 cranky-old-geezer
cranky-old-geezer's picture

 

 

That's $8 trillion of wealth borrowed from people without their consent.

$8 trillion of wealth STOLEN actually, since it will never be paid back.

Anyone still wonder why the middle class is disappearing?

Tue, 01/03/2012 - 17:08 | 2030319 economics1996
economics1996's picture

No, but explain to others why this is happening.

Tue, 01/03/2012 - 17:06 | 2030340 HungrySeagull
HungrySeagull's picture

Gavel in Congress, voice vote aye, gavel out and go home.

 

Easy enough.

Tue, 01/03/2012 - 17:22 | 2030412 earleflorida
earleflorida's picture

7billion people and growing ~100ml annually - gotta have US $$$'s to survive

Tue, 01/03/2012 - 17:24 | 2030418 earleflorida
earleflorida's picture

c-o-g

ask the Japanese -

the answer is there in broad daylight?

Tue, 01/03/2012 - 16:49 | 2030270 Dick Darlington
Dick Darlington's picture

But but but, debt=growth. Ask Krugman.

Tue, 01/03/2012 - 17:00 | 2030316 Zero Govt
Zero Govt's picture

I do hope Krugman gets to the front line in Iran to test his economic theory of how War stimulates the economy (2 illegal wars and $Trillions of Govt bailouts still hasn't worked on the dead as a Dodo US economy)

tape him to the nose of a US warship Titanic-like as 40 kamazkazi Iranian powerboats approach at attack speed ...let's see how this pansies theories work out at the sharp end of his theoretical junk

 

Tue, 01/03/2012 - 16:50 | 2030273 JustObserving
JustObserving's picture

$8 trillion is enough to buy all the gold mined in human history - about 5 billion ounces.

That is why we cannot go back to the gold standard - too much paper currency, too little real money.

Tue, 01/03/2012 - 16:57 | 2030301 Dr. Engali
Dr. Engali's picture

That all depends on how gold is denominated.

Tue, 01/03/2012 - 16:59 | 2030312 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1  Absolutely right.

 

Gold could go VERY HIGH.  There is plenty of gold.  Before long, it will be harder to buy it though.

Tue, 01/03/2012 - 17:06 | 2030344 economics1996
economics1996's picture

You figure $950 trillion bogus cash floating around and a $63 trillion economy?  Do the math.  Gold, if the money comes out to play, will be at $4,000 or $5,000 an ounce depending on the hysteria.

Tue, 01/03/2012 - 17:23 | 2030415 HungrySeagull
HungrySeagull's picture

Let's pretend the USA cashed out 8000 tons of gold from Fort Knox at 4thousand dollars.

 

It should come out to about 768 with 15 zeros. Would that be enough? I need a drink, head hurts.

Tue, 01/03/2012 - 17:48 | 2030508 DoChenRollingBearing
DoChenRollingBearing's picture

 

Thought experiment:

 

The US Treasury announces that they will buy ANY and ALL gold for an arbitrary high price (say $5000 or $10,000 per oz).

Then not only are our debts much easier to cover, but the price of gold would likely be liberated...  That devalues the dollar, but what's a dollar worth in a world full of rehypothecation?

Winners:  Holders of gold.  .gov could pay down the debt.

Losers:  Anyone NOT holding gold.

Tue, 01/03/2012 - 18:39 | 2030665 HungrySeagull
HungrySeagull's picture

Well thinking on your experiment. If that day happens, things will move extrememly fast.

A mountain of gold will flow towards Uncle Sam within hours and hopefully the buyers are agile and fast enough to scoop up silver and other PM's because within hours or minutes Kitco's charts are going vertical.

Hopefully the seller of gold ounce to uncle sam and use the money to make it back on the back of other metals.

The following morning the Nation will see pricing across the board as to cause trouble. Paper will burn, Gold would be king.

 

And still the bill collectors call those who have none.

Tue, 01/03/2012 - 17:14 | 2030376 Dr. Engali
Dr. Engali's picture

I never could understand the argument that there is not enough gold. To me that shows a limited thinking capability.

Tue, 01/03/2012 - 18:41 | 2030668 HungrySeagull
HungrySeagull's picture

If you went around my area scooping up metal objects aka junk. You could send several railcar loads towards a foundry. What results from that will probably yeild a goodly amount of metal good for ship, ammunition or munitions.

Tue, 01/03/2012 - 17:04 | 2030332 economics1996
economics1996's picture

Wrong.  In the past producers created profits by expanding production and lowering cost creating deflation, which is good for consumers.

Get the Keynesian BS out of your vocabulary and head.

I prefer free banking with both gold and silver used as the reserve.  Plenty of silver available.

Tue, 01/03/2012 - 17:07 | 2030345 NotApplicable
NotApplicable's picture

This is without a doubt the most asinine argument against the gold standard, ever. All you're saying is that the relative valuations of gold vs. everything else is out of whack. Way out of whack. To state that they are so far out as to be incapable of reverting to the mean, is to not understand what the money supply is.

Tue, 01/03/2012 - 16:55 | 2030274 Dr. Engali
Dr. Engali's picture

Look at the pole on Drudge. Ron Paul is blowing everybody away in Iowa votes.

 

http://www.drudgereport.com/

Tue, 01/03/2012 - 17:01 | 2030323 DoChenRollingBearing
DoChenRollingBearing's picture

I added my vote for Ron Paul!  30.52%...

Tue, 01/03/2012 - 17:07 | 2030348 HungrySeagull
HungrySeagull's picture

I am not sure if I want Ron Paul.

I am holding my nose at all of them so far....

 

Ron Paul reminds me of "Fail Safe" or Dr. Strangelove

Tue, 01/03/2012 - 17:28 | 2030430 DoChenRollingBearing
DoChenRollingBearing's picture

Fair enough

At least Ron Paul COULD and maybe WOULD do the following:

 

1)  Bring the troops home, shut down bases overseas, etc.

2)  Veto, veto, veto!  

3)  RP would likely shrink the government.

4)  Fewer bailouts, including sleazy "green enerrgy" companies.

Tue, 01/03/2012 - 18:47 | 2030681 HungrySeagull
HungrySeagull's picture

I wont mind bring in the troops from developed nations like German, England etc. There are Nations that can be allowed now that WW2 is over 60 years to handle thier own defense.

 

I dont mind a few detachments vital to our interests globally.

 

Veto against a hard headed Congress is going to cause the Media to go crazy, and the People to feel sick because no one can do anything in a Fiscal year until the final Veto, Veto override votes are in. Congress will fight. Even at night while we sleep.

I dont mind a little government shrinkage. The VA for example has seen a large increase in employee parking (More workers) to handle a large case load in longer time lines.

 

I swear, the private county hospital runs a full radiology department on demand JIT 24/7 with just a few people compared to a fully staffed VA nuclear clinic with dozens.

 

What is a bailout? Oh when the Solar companies go belly up?

Maybe the government best stay out of private enterprise unless vital for defense and so forth. What was that Nancy the speaker wanted? Oh yes, replace a few Light bulbs to save energy in that cold sink of a Capital Building.

 

I welcome further thoughts.

 

My biggest fear is Ron Paul will lose his temper like a old man would and ferociously sodomize the young suit carrying the Football and smash the button.

I hope that we dont have a nut on that button. A old line of thought from one who has lived the cold war years.

Tue, 01/03/2012 - 16:53 | 2030287 LawsofPhysics
LawsofPhysics's picture

Just like the old schoolhouse rock segment "My Hero Zero".  They (paper-pushing financial fucknuts) will just keep adding zeros to thier own accounts, not yours.

Possession will be all that matters soon enough as infinite growth on a finite planet is impossible, sorry Krugman.

Tue, 01/03/2012 - 17:09 | 2030354 HungrySeagull
HungrySeagull's picture

And the tears will flow while sackcloth rent and ashes fall while everything goes negative into interger or fractional.

 

A little for you, some for you, a portion for you and .... some for all.

Where does that leave us? Less than zero.

 

Jubilee is the only way out. American style "Fuck it." hit the erase key and start over.

Tue, 01/03/2012 - 17:29 | 2030432 DoChenRollingBearing
DoChenRollingBearing's picture

"Jubilee"

I keep hearing that word.  It could happen.

Tue, 01/03/2012 - 16:58 | 2030308 apberusdisvet
apberusdisvet's picture

a one quadrillion FRN would have to be double in size to hold all the zeroes and would be good for the economy:

New Wallets and purses for all

All men's pants would have to be changed

easier to start bonfires

Complete redo of all vending machines and cash registers

 

THE BROKEN WINDOW THEORY WORKS!!!!!

h/t Pual Krugman                         /sarc

 

Tue, 01/03/2012 - 16:58 | 2030310 Caviar Emptor
Caviar Emptor's picture

It's like a global obesity epidemic, only for central banks. Each one is too embarrassed to admit their problem, but they wear "fat pants" wherever they go. And they keep blaming metabolism, the food, big bone structure, genetics, advertising, and everything but the problem itself

Tue, 01/03/2012 - 17:08 | 2030351 NotApplicable
NotApplicable's picture

Well, thanks to ZIRP, it isn't like there are any consequences.

Say... are you gonna eat that?

Tue, 01/03/2012 - 17:10 | 2030357 HungrySeagull
HungrySeagull's picture

And add all the income these Obese people have managed to create a porn like industry based on people paying to watch you eat online.

Tue, 01/03/2012 - 16:59 | 2030311 ucsbcanuck
ucsbcanuck's picture

Does anyone know a way to go long printers? Cos they are going to be busy this year...

Tue, 01/03/2012 - 17:03 | 2030327 DoChenRollingBearing
DoChenRollingBearing's picture

Big printers use lots of bearings.  Go long bearings!

Tue, 01/03/2012 - 17:12 | 2030363 HungrySeagull
HungrySeagull's picture

You betcha.

Timkin for me. With great amounts of Grease because it's bitching heavy. Lube aint gonna cut it because we are not at high speed.

Races will need to be made from American Steel, none of that tin crap that comes in.

 

Instead of disposing the Dollars, throw them along with expended brass into the tumblers to make good clean bearings.

Tue, 01/03/2012 - 17:34 | 2030452 DoChenRollingBearing
DoChenRollingBearing's picture

+ HM518445/10 (for Fruehauf trailer axles)

Timken, however, has done us NO FAVORS re us buying their bearings for Peru.  They will not sell to us!  We are buying LOTS of Korean for the ever-expanding HYUNDAI fleet there.  And as more Hyundai trucks enter the country, the more we will buy their heavy-duty pieces.

Tue, 01/03/2012 - 18:51 | 2030688 HungrySeagull
HungrySeagull's picture

Also the German Ball Bearing industry during the War years. Did they not have to go underground to keep production?

 

I have burned out a few trailer bearings. Those are stories that will have to be told over a fireplace and smokes someday. Nature's mountains and heavy loads have a way of making sure that good engineering does not fail.

 

Let's hope that South Korea managed to maintain peace or even reunify with north korea for pernament peace. That would be good for business.

 

Don't put them Hyundai trucks on our crumbling roads. We are still using freeways built in the early 60's that will make sure your product is good or not. (Not yours personally... there are many factors in a vehicle)

Tue, 01/03/2012 - 17:01 | 2030321 WTF_247
WTF_247's picture

What I want to know is who is buying all this debt - someone has to be the net purchaser.  It would seem that there is not enough free assets in the world to support the level of bond issuance continuing.  Even if you take leverage into account, most of it cannot be backed by anything (which is known).  What I want to know is where is the money coming from to pay for these bonds?  The govts around the world are not only rolling over existing debt, they continue to issue more and more.  At some point there should be no buyers at any price because there is no more ability to pay for the bonds.  Well, unless you count the electronic funny money that exists with a keystroke of the Bernank and Timmay. 

It would seem to be a giant round robin.  All of the major countries of the world are deficit financing.  By nature this means you should have NO MONEY TO SPEND buying bonds of other countries.  The only answer to me is massive round robin printing all around the world.  US sells to UK, UK sells to France, France sells to Germany etc.  Plus they probably pledge the other bonds they have to purchase more

Tue, 01/03/2012 - 17:10 | 2030360 NotApplicable
NotApplicable's picture

Not only do they pledge those old bonds, they do it with leverage!

Tue, 01/03/2012 - 17:04 | 2030333 TooBearish
TooBearish's picture

TY- IN OTHER NEWS-MBIA Wins Summary Judgment Decision Against Countrywide

Tue, 01/03/2012 - 17:05 | 2030335 Smiddywesson
Smiddywesson's picture

Oliver Blanchard, chief economist at the IMF, says government debt is a grave threat, but in the same speech, he says we can grow our way out of it....get this...in 20 years!!!!!!!  LMFAO!

You have to read this to believe it.  He basically admit it's all over.  Too funny.

2011 In Review: Four Hard Truths Posted on by iMFdirect

By Olivier Blanchard

(Versions in  ??????, EspañolFrançais???????, ???)

What a difference a year makes …

We started 2011 in recovery mode, admittedly weak and unbalanced, but nevertheless there was hope. The issues appeared more tractable: how to deal with excessive housing debt in the United States, how to deal with adjustment in countries at the periphery of the Euro area, how to handle volatile capital inflows to emerging economies, and how to improve financial sector regulation.

It was a long agenda, but one that appeared within reach.

Yet, as the year draws to a close, the recovery in many advanced economies is at a standstill, with some investors even exploring the implications of a potential breakup of the euro zone, and the real possibility that conditions may be worse than we saw in 2008.

I draw four main lessons from what has happened.

•        First, post the 2008-09 crisis, the world economy is pregnant with multiple equilibria—self-fulfilling outcomes of pessimism or optimism, with major macroeconomic implications.

Multiple equilibria are not new. We have known for a long time about self-fulfilling bank runs; this is why deposit insurance was created. Self-fulfilling attacks against pegged exchange rates are the stuff of textbooks. And we learned early on in the crisis that wholesale funding could have the same effects, and that runs could affect banks and non-banks alike. This is what led central banks to provide liquidity to a much larger set of financial institutions.

What has become clearer this year is that liquidity problems, and associated runs, can also affect governments. Like banks, government liabilities are much more liquid than their assets—largely future tax receipts. If investors believe they are solvent, they can borrow at a riskless rate; if investors start having doubts, and require a higher rate, the high rate may well lead to default. The higher the level of debt, the smaller the distance between solvency and default, and the smaller the distance between the interest rate associated with solvency and the interest rate associated with default.  Italy is the current poster child, but we should be under no illusion: in the post-crisis environment of high government debt and worried investors, many governments are exposed. Without adequate liquidity provision to ensure that interest rates remain reasonable, the danger is there.

•       Second, incomplete or partial policy measures can make things worse.

We saw how perceptions often got worse after high-level meetings promised a solution, but delivered only half of one. Or when plans announced with fanfare turned out to be insufficient or hit practical obstacles.

The reason, I believe, is that these meetings and plans revealed the limits of policy, typically because of disagreements across countries. Before the fact, investors could not be certain, but put some probability on the ability of players to deliver. The high-profile attempts made it clear that delivery simply could not be fully achieved, at least not then.  Clearly, the proverb, “Better to have tried and failed, than not to have tried at all,” does not always apply.

•        Third, financial investors are schizophrenic about fiscal consolidation and growth.

They react positively to news of fiscal consolidation, but then react negatively later, when consolidation leads to lower growth—which it often does. Some preliminary estimates that the IMF is working on suggest that it does not take large multipliers for the joint effects of fiscal consolidation and the implied lower growth to lead in the end to an increase, not a decrease, in risk spreads on government bonds.  To the extent that governments feel they have to respond to markets, they may be induced to consolidate too fast, even from the narrow point of view of debt sustainability.

I should be clear here. Substantial fiscal consolidation is needed, and debt levels must decrease. But it should be, in the words of Angela Merkel, a marathon rather than a sprint. It will take more than two decades to return to prudent levels of debt.  There is a proverb that actually applies here too: “slow and steady wins the race.”

•         Fourth, perception molds reality.

Right or wrong, conceptual frames change with events. And once they have changed, there is no going back. For example, nothing much happened in Italy over the summer. But, once Italy was perceived as at risk, this perception did not go away. And perceptions matter: once the “real money’’ investors have left a market, they do not come back overnight.

A further example: not much happened to change the economic situation in the Euro zone in the second half of the year. But once markets and commentators started to mention the possible breakup of Euro, the perception remained and it also will not easily go away.  Many financial investors are busy constructing strategies in case it happens.

Put these four factors together, and you can explain why the year ends much worse than it started.

Is all hope lost? No, but putting the recovery back on track will be harder than it was a year ago. It will take credible but realistic fiscal consolidation plans. It will take liquidity provision to avoid multiple equilibria. It will take plans that are not only announced, but implemented. And it will take much more effective collaboration among all involved.

I am hopeful it will happen. The alternative is just too unattractive.

Published on iMFdirect blog.

Olivier Blanchard is Economic Counsellor and Chief Economist at the International Monetary Fund

Tue, 01/03/2012 - 17:06 | 2030338 Smiddywesson
Smiddywesson's picture

Here's my comments on the IMF site.  Think the have a snowflakes chance in Hell of getting past the moderation period?

 

COMMENTS:

OK, Oliver, let's see if I have this right:

1.  If government debt gets too big, the difference between the rates you have to give and the rates that will break you gets smaller and smaller until you collapse.

2.  Unfortunately,  the bond vigilantes are a bunch of scardy cats, and once they know you are in trouble, the perception makes the reality.  Worse, any fiscal discipline is bound to lead to lower growth, makes things scarier.

3.  If we don't substantially lower our spending and debt, we will implode.

4. To avoid imploding we have to print through our liquidity provision.

5.  Don't worry, even though debt, the very central problem I have identified in this speech is INCREASING, we promise we won't devalue, we'l just grow our way out of this over the next 20 years.  LOL!!!!

 

The end is priceless, so I'll quote it:

"It will take plans that are not only announced, but implemented.  (regardless of silly things like laws) And it will take much more effective collaboration among all involved." (i.e., everything has to go perfectly)

I am hopeful it will happen. The alternative is just too unattractive. (i.e., Even I don't believe it.)

HERE YOU HAVE IT FOLKS, THE CHIEF ECONOMIST OF THE IMF DENIES DEVALUATION IS IN THE CARDS, AND WE ALL KNOW WHAT HAPPENS WHEN BANKERS AND THEIR MINIONS START DENYING THINGS.

Prediction for 2012:  Before May all central banks that count ped to the SDR, and the SDR is in turn pegged to gold.  Then we all devalue together, and ramp gold prices to the sky as we print like there is no tomorrow announcing price targets to return us to pre deflationary levels ala Bernanke's 11/21/2002 and 10/31/2003 speeches.

 

Tue, 01/03/2012 - 17:27 | 2030428 mayhem_korner
mayhem_korner's picture

If government debt gets too big, the difference between the rates you have to give and the rates that will break you gets smaller and smaller until you collapse.

 

Bingo.  And in desperation to keep the gap from closing, the i-rate is artificially held well below inflation, making hyperinflation the other front to the war. 

There are going to be a LOT of UST bagholders at some point. 

Tue, 01/03/2012 - 17:38 | 2030465 DoChenRollingBearing
DoChenRollingBearing's picture

@ smiddy

FOFOA's new piece is about "2012, The Year of the Surprise" and is great reading.

Tue, 01/03/2012 - 17:56 | 2030543 Smiddywesson
Smiddywesson's picture

DCRB,

Thanks, I've neglected his site during the holiday travel and will get up to speed.

 

Tue, 01/03/2012 - 17:08 | 2030350 Timmay
Timmay's picture

Don't buy our debt? Terrorist.

Default on your debts? Terrorist.

NDAA baby....

$7T covered.

Tue, 01/03/2012 - 17:13 | 2030370 HungrySeagull
HungrySeagull's picture

If you dont have debt and dont have income and have a skill from the old arts and trades of centries past to make your own living, that makes you a terrorist too.

Tue, 01/03/2012 - 17:39 | 2030475 DoChenRollingBearing
DoChenRollingBearing's picture

If you have gold or a gun, you are a terrorist as well.  It's all George Bush's fault!

Tue, 01/03/2012 - 17:13 | 2030364 gaoptimize
gaoptimize's picture

I'm affraid the bar charts might give viewers the impression that things will improve after 2012, which would be incorrect.  This is a classic bow wave and the ship (barrowing) will continuing to pick up speed.  I predict the 2013 bar on the chart will be well above $10T come Jan 2013.

Tue, 01/03/2012 - 17:15 | 2030378 HungrySeagull
HungrySeagull's picture

It aint that Bow Wave swabbie. It's going to be the first long heave of the Ocean wide roller that will seperate the seamen from landlubbers.

Let the vomiting and whining begin! All sick to the lee rail please.

Tue, 01/03/2012 - 17:21 | 2030409 ebworthen
ebworthen's picture

This must mean I need to max out the credit cards for 2012.

Tue, 01/03/2012 - 17:31 | 2030443 NotApplicable
NotApplicable's picture

Something tells me that all of this unsecured CC debt is actually secured by political donations.

Tue, 01/03/2012 - 18:53 | 2030695 HungrySeagull
HungrySeagull's picture

Or better yet close em.

 

I dont know if that is the right thing to do or not, but no credit cards is the way we are going. (It makes life interesting with banking.. but oh well..)

Tue, 01/03/2012 - 17:21 | 2030410 pitz
pitz's picture

Who's gonna buy all this garbage? 

Tue, 01/03/2012 - 17:25 | 2030421 HungrySeagull
HungrySeagull's picture

A Recycler of course! Dontcha know? They had that angle covered before we were born to learn about going green.

 

If not? Probably sent to a incinderator for power or methane gas.

Tue, 01/03/2012 - 17:32 | 2030445 NotApplicable
NotApplicable's picture

You are! (via proxy)

Tue, 01/03/2012 - 17:42 | 2030490 ebworthen
Tue, 01/03/2012 - 17:33 | 2030435 BlackholeDivestment
BlackholeDivestment's picture

Looks like trouble has increased to ...deadly. 

http://www.youtube.com/watch?v=Ci3fQiGCPcs

Striiiiiiiiiiiiiiiiiike BOOM! http://www.youtube.com/watch?v=GY2AnNRQgmI

Tue, 01/03/2012 - 17:43 | 2030491 youngman
youngman's picture

Today there was a leak that the Greek Bondholders might be close to a VOLUNTARY agreement on the bond haircut.....the VOLUNTARY was a very important word there....so as not to cause a default ruling.....to me this is cheating 101....CDS crapshoot.....they are not going to let you win on that table ever....so while I am a gold owner....quit a bit ....I have this bad feeling that when we think we are finally going to get paid off big....they...TPTB will pass laws or taxes or something that will not allow us our spoils for our hard work and patience....

Tue, 01/03/2012 - 17:51 | 2030517 f16hoser
f16hoser's picture

Dr Ron Paul numbers are surging pre-caucus! Romney caught crying in fetal position. News at 11!

Tue, 01/03/2012 - 17:58 | 2030551 TheSilverJournal
TheSilverJournal's picture

It looks like bonds are going to be a great investment. I hear that the more of something there is, the more they're worth.

TheSilverJournal.com

Tue, 01/03/2012 - 18:15 | 2030617 Ned Zeppelin
Ned Zeppelin's picture

Ben: "We're gonna need a bigger Epson."

Tue, 01/03/2012 - 18:16 | 2030619 PartysOver
PartysOver's picture

Happy Hour math say that we can expect another 100 Trillion in CDS's be written on these new bonds.   Thereby creating substantial institutional trading profits for the big banks leading to "Dig deep anal exctracted fictional" profits for the quarter.  

Fly, stocks, fly.

Reality?  We don't need no stinking reality!

Tue, 01/03/2012 - 18:35 | 2030654 AndrewJackson
AndrewJackson's picture

Tyler, do these numbers include financing necessary for global deficits? Thanks.

Tue, 01/03/2012 - 21:25 | 2031138 Real Estate Geek
Real Estate Geek's picture

It seems as if the data must understate the problem of what must be rolled within the next few years.  Considering the penchant for short-term debt, what's rolled in 2012 will almost certainly show up again as debt which must be rolled again in the very near term.

Wed, 01/04/2012 - 03:18 | 2032054 EZYJET PILOT
EZYJET PILOT's picture

So they will keep rolling over debt and the banks will continue to play the middle man, recyling the debt for vast fee's, doing the scummy dirty work, whilst the taxpayers pay the interest the banks keep the cancer alive which is killing the patient. I can see this playing out for a lot longer than I envisaged. 

Wed, 01/04/2012 - 08:46 | 2032304 theyenguy
theyenguy's picture

Nature economist and historian Elaine Meinel Supkis writes The Outer Darkness is a very odd place. This is where infinity and zero happen at the same time. And where wishes, when they come true, lead to disaster. If we wish for something and get it, it is really a curse. This odd situation is a paradox that humans refuse to understand. We hate this sort of paradox and want absolutes that always makes us happy. Only, when we get what we want, we are then profoundly unhappy. Why this is so is absolute yet hard to grasp: the challenges of living in difficulties is what makes life ‘living’ rather than an endless moral and mental death! It is boring. It drives us insane.

Outer Darkness has been achieved in the world’s sovereign debt marketplace. Infinity and Zero finally met as the coordinated central provision of Dollar FX Swaps and the ECB’s provision of the LTRO facility has coupled with the US Federal Reserve ZIRP policy and disaster is the result, as the world government treasuries, BWX, is about to enter an Elliott Wave 3 of 3 down: the Global Government Finance Bubble is about to burst big time. Warren Buffet has said that “you only find out who is swimming naked when the tide goes out.”

  
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