State Budgets Have No Where to Run

17 States Still Project Budget Deficits (It Will Get Much Worse); Moving Targets and the Slowing Global Economy

State economies have partially recovered from the depths of 2009 and early 2010, but 17 states still project deficits. Moreover, there are no rainy day funds or untapped revenue sources, and some "temporary" tax hikes are set to expire. California is $13 billion in the hole but that is a huge improvement compared to the $40 billion hole previously.

Print Yourself a Merry Little Recovery

If some debt and money printing are good, why don't we scrap all taxes and borrow and print our way to endless prosperity.  This seems to be the worldwide mass delusion that is in full swing.  


See these two stories:

The Nightmare After Christmas

The pathetic state of the global financial system was again on display this week. Stocks around the world go up when a major central bank pumps money into the financial system. They go down when the flow of money slows and when the intoxicating influence of the latest money injection wears off. Can anybody really take this seriously?


There are, of course those who are still under the illusion that this can go on forever. Or even that what we need is some shock-and-awe Über-money injection that will finally put an end to all that unhelpful worrying about excessive debt levels and overstretched balance sheets. Let’s print ourselves a merry little recovery.


And, 

Japan Will Raise More Cash From Debt Issuance Than Taxes For Fourth Year In A Row

As we reported earlier this year, Japan's marketable public debt, already the largest in the world at $11.2 trillion compared to America's $10 trillion (of course this assumes the whole SSN sleight of hand is funded, which it isn't), is due to surpass ¥1 quadrillion any month now (aka the exponential phase). And that's just the beginning. As Bloomberg reports, "Bond sales to the market will climb to a record 149.7 trillion yen ($1.9 trillion), while the national budget’s reliance on debt for funding will rise to an unprecedented 49 percent in the year starting April 1, Japan’s government said Dec. 24. The government said it plans to sell 44.2 trillion yen of new bonds to fund 90.3 trillion yen of spending in next fiscal year’s budget. It estimates that tax revenue will total 42.3 trillion yen in fiscal 2012, meaning that new bond sales will exceed tax revenue for a fourth year." In other words, in a world increasingly disconnected form any sort of reality, very soon no taxes at all will be needed: after all each and every government (or uber-union in teh EU's case, once the imploding Eurozone turns to the final Deus Ex - a fiscal protectorate issuing joining Eurobonds) will simply fund all its cash needs by printing its own money. 

It's No Longer about Politics, It's About Simple Math!

It's no longer a matter of politics, it's simply a matter of math!

I don't agree with this whole article from the Burning Platform but recommend a careful read of the whole thing.

Destruction of the "Antiquated Notion of Sovereignty" . . . ??

What has been referred to for years in progressive, collectivists circles as the "antiquated notion of sovereignty" is squarely under attack worldwide, including the dual sovereignty in the unprecedented compound republic system of the U.S.

The sad and unfortunate fact is that we are doing this to ourselves:

"The borrower is servant to the lender." (Proverbs 22:7).

And, "Think what you do when you run in debt, you give another power over your liberty."  (Benjamin Franklin).

While this article refers to the EU, the implications are spot on for the United States on an even grader scale.

From Zero Hedge:

From the "just delivered speech by ECB executive board member José Manuel González-Páramo is the following: "We cannot completely delegate governance to financial markets. The euro area is the world’s second largest monetary area. It cannot depend solely on the opinions of ratings agencies and markets. It needs economic governance arrangements that are preventive and linear. This underscores my central point that a much more comprehensive approach to economic governance is now the priority for the euro area. And this means more economic and financial integration for the euro area, with a significant transfer of sovereignty to the EMU level over fiscal, structural and financial policies." In other words, in order to protect people from the "stupidity" of rating agencies which after years of lying have finally started telling the truth, and the market which does what it always does, and punishes those who fail, Europe must be prepared to give up "significant sovereignty" (sounds better than Anschluss) to Europe's "betters" which is another way of saying 'he who pays the piper calls the tune."

Federal Fraternity of Fraud

"When all government, domestic and foreign, in little as in great things, shall be drawn to Washington as the center of all power, it will render powerless the checks provided of one government on another, and will become as venal and oppressive as the government from which we separated." -- Thomas Jefferson

Prof. William Black at Occupy LA.  Bill Black led thousands of fraud prosecutions during the S&L Crisis.  Since then, the federal government has centralized all power to Washington and, at best, looked the other way while massive fraud has been perpetrated.  The purpose of government is to protect life, liberty and property, including from fraud.  However, the benefit to fund national campaigns is too great to bite the hand that is feeding the DC excess and centralization.  

However, the answer is not anarchy or socialism as many of the Occupy Crowd seek.  It is decentralization to our original unprecedented system of government.  This is precisely why "it must be the states themselves, erecting such barriers at the constitutional line as cannot be surmounted."  Thomas Jefferson

Isn't it naive to believe/hope that Washington will solve "The Washington Problem"?

Federal Fraternity of Fraud

"When all government, domestic and foreign, in little as in great things, shall be drawn to Washington as the center of all power, it will render powerless the checks provided of one government on another, and will become as venal and oppressive as the government from which we separated." -- Thomas Jefferson

Prof. William Black at Occupy LA.  Bill Black led thousand of fraud prosecutions during the S&L Crisis.  Since then, the federal government has centralized all power to Washington and, at best, looked the other way while massive fraud has been perpetrated.  The purpose of government is to protect life, liberty and property, including from fraud.  However, the benefit to fund national campaigns is too great to bite the hand that is feeding the DC excess and centralization.  

However, the answer is not anarchy or socialism as many of the Occupy Crowd seeks.  It is decentralization to our original unprecedented system of government.  This is precisely why "it must be the states themselves, erecting such barriers at the constitutional line as cannot be surmounted."  Thomas Jefferson

Isn't it naive to believe/hope that Washington will solve "The Washington Problem"?

"Super" Committee Insanity

Suppose you have . . .

Credit Card Debt of $150,000 and still growing because . . .

You are still OVERSPENDING at the rate of nearly $15,000 PER YEAR and . . .

You don’t have the $750,000-$2,110,000 you need to care for your parents and grandparents in their old age as you promised (which they are counting on now that they are retiring), and, given that there are 6 of them and only one of you, you likely never will.

So, you decide these problems are too tough to handle on your own so you convene a SUPER COMMITTEE to help you with your predicament.

This SUPER COMMITTEE initially recommends that you . . .

Cut the amount you are OVERSPENDING by $12,000 over 10 years, or $1,200 per year on average, and that you get seriously started on these drastic cuts in 4 or 5 years from now, but . . .

Because this proposal is just way too hard the SUPER COMMITEE is considering that you only . . .

Cut your OVERSPENDING by $5-6,000 over 10 years, or $5-600 per year, and still take a break for 4 or 5 years before you really get serious about cutting your OVERSPENDING by the paltry $5-600 per year.

And, let’s not worry about the promises we’ve made to mom and dad, grandmas and grandpas because . . .

Surely, something magically amazing will happen between now and the time things get really serious . . .

Add 8 zeroes to these numbers and that is the condition of our nation’s finances and the recommendations of the SUPER COMMITTEE.

Approaching Fiscal "D" Day . . .

Via Lew Spellman of the Spellman Report as posted on Zero Hedge:

How Monetization Happens: Being at the Helm When the Ship Goes Down

The consequences of excess debt are now facing the leaders of Europe head on, and a monumental decision must be made whether explicitly or implicitly. Excess debt leads to a long chain of D words: Deleveraging in an attempt to retire debt results in a depressed economy and declining asset prices. The depressed economy breeds private debt defaultsthat in turn produce distressed banks. The chain then runs through depositor flight from the banks, producing a financial crisis and in turn a devaluation of the currency as capital flees. When foreign goods become more expensive there is a declining standard of living as import prices rise faster than wages. Then in an effort to stop the governmentdebt trap, there is a default on promised entitlements under an austerity program leading to the swift defeat of the political leaders. But ultimately there is a sovereign restructuring or a default of the government debt. Most, if not all, the D words are visiting Europe at the moment and its leaders are falling by the wayside.

There is not a precise science that tells us when the debt trap begins the downward spiral that takes the ship down, but there are some rough guidelines. Reinhart and Rogoff (This Time is Different) have found to the extent one can generalize when a country’s debt-to-income ratio reaches the 90 percent level the ship of state begins to list and currently the OECD aggregate of 30-country gross debt-to-income ratio is 105 percent.

PIIGS Will Be PIIGS . . .

Imagine that Portugal, Italy, Ireland and Spain might all want the same debt forgiveness 
"haircut" that Greece just got . . . 

I You Don't Understand "Derivatives" You Should . . .

The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System

Courtesy of Michael Snyder of Economic Collapse

Most people have no idea that Wall Street has become a gigantic financial casino. The big Wall Street banks are making tens of billions of dollars a year in the derivatives market, and nobody in the financial community wants the party to end. 

The word "derivatives" sounds complicated and technical, but understanding them is really not that hard.  A derivative is essentially a fancy way of saying that a bet has been made.  Originally, these bets were designed to hedge risk, but today the derivatives market has mushroomed into a mountain of speculation unlike anything the world has ever seen before.  Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.5 quadrillion. 

Keep in mind that the GDP of the entire world is only somewhere in the neighborhood of $65 trillion.  The danger to the global financial system posed by derivatives is so great that Warren Buffet once called them "financial weapons of mass destruction".  For now, the financial powers that be are trying to keep the casino rolling, but it is inevitable that at some point this entire mess is going to come crashing down.  When it does, we are going to be facing a derivatives crisis that really could destroy the entire global financial system.

Bank of America to Charge Their Trillion$$ in Fraud to Your Account?

Bank of America is preparing to offload it's trillions in derivative liabilities off on to the taxpayers thru the FDIC.

Where are the investigations? Where are the government regulators who reject such fraudulent conduct? Where are the prosecutions for the trillions that have been stolen from are earnings and savings to bail out those who created the global meltdown?

Largest 6-Week Dump of US Treasuries in History

From ZeroHedge:
Over the weekend, we observed the perplexing sell off of $56 billion in US Treasurys courtesy of weekly disclosure in the Fed's custodial account (source: H.4.1) and speculated if this may be due to an asset rotation, under duress or otherwise, out of bonds and into stocks, to prevent the collapse of the global ponzi (because when the BRICs tell the IMF to boost its bailout capacity you know it is global). We also proposed a far simpler theory: "the dreaded D-day in which foreign official and private investors finally start offloading their $2.7 trillion in Treasurys with impunity (although not with the element of surprise - China has made it abundantly clear it will sell its Treasury holdings, the only question is when), has finally arrived."  (. . . more)

U.S. Senate Launches Trade/Currency War with China (our largest creditor)

Now if this doesn't get your attention, nothing will. (Click here for the full story of our Senate, led by that genius Harry Reid who just provoked a DefCon 2 trade and currency war with China who just happens to be our largest creditor.  Nice job, Harry!)

A Recession by any other Name Still Smells . . .

From the New York Times:


WASHINGTON — In a grim sign of the enduring nature of the economic slump, household income declined more in the two years after the recession ended than it did during the recession itself, new research has found.


Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.  (. . . more)

10 Yrs of Pres. Obama's "Millionaire Tax" would only Plug 4 Months of Fed Overspending.

From Zero Hedge:


In order to keep the ongoing class warfare waged by the administration in perspective, today the CBO was kind enough to score the revenue impact of the proposed and much debated Buffett Tax, now appearing in non-populist literature as "Surtax on Millionaires." According to the Budget Office, said tax which is the source of substantial consternation among the population, would generate, over the next decade, a grand total of... drum roll... $453 billion. Why the drum roll? Because as we pointed out a few days ago, the US closed the 2011 fiscal year having added $1.23 trillion in debt (a number which would have been $1.4 trillion absent some year end settlement gimmickry). In other words, last year the US government had on average a $100+ billion deficit each month. In yet more other words, the great populist gimmick that is the Buffett Tax will have the great benefit of generating, between 2011 and 2021 enough money to plug a debt hole, at the rate America currently spends money, of 4 months.


(. . . more)

Most Serious Financial Crisis in History?

Sir Mervyn King was speaking after the decision by the Bank’s Monetary Policy Committee to put £75billion of newly created money into the economy in a desperate effort to stave off a new credit crisis and a UK recession.

Economists said the Bank’s decision to resume its quantitative easing [QE], or asset purchase programme, showed it was increasingly fearful for the economy, and predicted more such moves ahead.

Sir Mervyn said the Bank had been driven by growing signs of a global economic disaster.

“This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances, but to act calmly to this and to do the right thing.”

(. . . more)

When Politicians Realize they Can Bribe the People with Their Own Money

Families were more dependent on government programs than ever last year.

Nearly half, 48.5%, of the population lived in a household that received some type of government benefit in the first quarter of 2010, according to Census data. Those numbers have risen since the middle of the recession when 44.4% lived households receiving benefits in the third quarter of 2008.

Click for full-size image

The share of people relying on government benefits has reached a historic high, in large part from the deep recession and meager recovery, but also because of the expansion of government programs over the years. (See a timeline on the history of government benefits programs here.)

(. . . more)

We're Just Now Learning that the Fiscal Cancer of 2008 wasn't Cured by Monetary Lortab . . .

From Zero Hedge:


In an interview with IMF advisor Robert Shapiro, the bailout expert has pretty much said what, once again, is on everyone's mind: "If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected. All those banks are counterparties to every significant bank in the United States, and in Britain, and in Japan, and around the world. This would be a crisis that would be in my view more serrious than the crisis in 2008.... What we don't know the state of credit default swaps held by banks against sovereign debt and against European banks, nor do we know the state of CDS held by British banks, nor are we certain of how certain the exposure of British banks is to the Ireland sovereign debt problems."  (. . . more)

100% Debt to GDP DEAD Ahead . . .

From Zero Hedge:

Little to say here: total debt is now at, obviously, a new record high of $14,856,859,498,405.73, which is a $20 billion increase overnight, $67 billion in the past two days, and $162 billion in the last three days. We will repeat the last part:total US debt has increased by $162 billion in three days. Said otherwise, total US Debt/GDP is now 98.9%. Please carry on.

It's All Greek to US as BK Countdown Begins

By ELENA BECATOROS and MENELAOS HADJICOSTIS Associated Press

ATHENS, Greece (AP) - Greece has enough money to pay pensions, salaries and bondholders through mid-November, the finance minister said Tuesday, as global markets sank on worries that a messy default could bring down European banks and trigger another global recession. . . .

"We're at the worst moment under the worst conditions. We're dependent on the help and lending of our institutional partners," Venizelos said.

"We have to make a super-human effort to win this wager of our times. There was this false sense of a standard of living that we, ourselves created," the minister stressed. "What's important now is to protect the country and to make clear and final decisions."

Regulating Rates Higher in the Midst of Recession . . . Really?

From Alaska to Georgia and Wyoming to Florida, utilities are seeking permission to pass on hundreds of millions of dollars in new charges to customers to help upgrade aging infrastructure and build new or retrofitted power plants that comply with tougher environmental regulations, a Daily Beast review of regulatory filings has found.


The influx of requests, many still pending before state regulators, has left energy experts convinced that electricity prices will be on the rise for the foreseeable future as the industry struggles to modernize its aging infrastructure.  (. . . more)

Derivative Liability Dwarfs Debt

From USAWatchdog.com

. . . the Fed doled out $16 trillion in the wake of the credit crisis of 2008.  This is an enormous sum that is greater than the all goods and services produced in the U.S. in a single year.  Domestic banks and companies got the money, right along with foreign banks and companies.  In effect, the Federal Reserve bailed out the world financial system. Now, we are right back to square one facing another financial meltdown with European banks and sovereign debt.  If the Fed spent $16 trillion, why in the heck is this problem not fixed and why isn’t the world economy taking off like a rocket?”  The simple answer is it wasn’t enough money.  

The Bank of International Settlements pegs the total world over-the-counter (OTC) derivative exposure at around $600 trillion, but many experts say the real figure is more than twice that amount.  No matter which figure you use, it is a gargantuan sum.  OTC derivatives are an unregulated dark pool of money with no public market.  These are basically debt bets between two entities on things such as credit risk, currencies, interest rates and commodities.  According to the latest report from the Comptroller of the Currency, just four U.S. banks have an eye popping $235 trillion of OTC derivative leverage. (Click here for the complete Comptroller of the Currency report.)  As a nation, U.S. banks have a total OTC derivative exposure of $250 trillion. So, the fact that just four U.S. banks have this much leverage and risk is astounding!  

(. . . more)

14 Daunting Financial Facts

A collection of data points that shed light on our daunting financial circumstances:

On both sides of the Atlantic, the big banks are highly leveraged, they have taken on a ton of risk and they are very deeply exposed to derivatives.  It is as if virtually nobody learned any lessons during the financial crisis of 2008.  Once again we are facing a situation where if a couple of financial dominoes fall it could send dozens of others tumbling to the ground.

Some very significant things happened on Monday.  But the media has gotten so used to reporting on tremendous financial instability that Monday's events mostly got brushed to the side.  Instead, Amanda Knox captured most of the headlines.

But the reality is that some really, really monumental stuff has been going down.

The following are 14 facts that just might scare the living daylights out of you....

#1 On Monday, the Dow was down 258 points.  Lately it seems as though the Dow has been going up or down by several hundred points almost every single day, and that much volatility is not a good sign for the health of the financial system.

#2 Shares of Wall Street banking giant Morgan Stanley fell by another 8 percent on Monday.  Overall, shares of Morgan Stanley have declined by more than 50 percent since February.

What Happens when a Desperate Debtor Picks a Fight with its Number 1 Creditor?

From Zero Hedge on the madness of the Senate picking a fight with our Number 1 Creditor:


The Senate finally did it and fired the first round in the great US-China currency war, after they took aim at one of China's core economic policies, voting to move forward with a bill designed to press Beijing to let its currency rise in value in the hope of creating U.S. jobs. As Reuters reports, "Senators voted 79-19 to open a week of Senate debate on the Currency Exchange Rate Oversight Reform Act of 2011, which would allow the U.S. government to slap countervailing duties on products from countries found to be subsidizing their exports by undervaluing their currencies. Monday's strong green light for debate on the bill bolsters prospects it will clear the Democrat-run Senate later this week, but prospects for action in the Republican-controlled House of Representatives are murky. If the bill did clear both chambers, it would present President Barack Obama with a tough decision on whether to sign the popular legislation into law and risk a trade war with Beijing, or veto it to pursue a more diplomatic approach." The response has been quick and severe: "China's foreign ministry said it "adamantly opposes" a bill pushed by the U.S. Senate that will allow the United States to impose duties on countries that undervalue their currencies." And just because China is now certain that the US will continue with its provocative posture, most recently demonstrated by the vocal response in the latest US-Taiwan military escalation, we would not be surprised at all to find China Daily report that China has accidentally sold a few billions in US government bonds... just because.

Why Muddle Through and Kick the Can Isn't Working . . .

From Boston Consulting Group by way of ZeroHedge.  A stark look at the painful truths DC refuses to face.


Denial. Denial is safe. Comforting. Religiously and relentlessly abused by politicians who don't want nor can face reality. A word synonymous with "muddle through." Ah yes, that "muddle through" which so many C-grade economists and pundits believe is the long-term status quo for the US and the world just because it worked for Japan for the past three decades, or, said otherwise, "just because." Well, too bad. As the following absolutely must readreport, which comes not from some trader of dubious credibility interviewed by BBC, nor even from an impassioned executive from a doomed Italian bank, but from consultancy powerhouse Boston Consulting Group confirms, the "muddle through" is dead. And now it is time to face the facts. What facts? The facts which state that between household, corporate and government debt, the developed world has $20 trillion in debt over and above the  sustainable threshold by the definition of "stable" debt to GDP of 180%. The facts according to which all attempts to eliminate the excess debt have failed, and for now even the Fed's relentless pursuit of inflating our way out this insurmountable debt load have been for nothing. The facts which state that the only way to resolve the massive debt load is through a global coordinated debt restructuring (which would, among other things, push all global banks into bankruptcy) which, when all is said and done, will have to be funded by the world's financial asset holders: the middle-and upper-class, which, if BCS is right, have a ~30% one-time tax on all their assets to look forward to as the great mean reversion finally arrives and the world is set back on a viable path. But not before the biggest episode of "transitory" pain, misery and suffering in the history of mankind. Good luck, politicians and holders of financial assets, you will need it because after Denial comes Anger, and only long after does Acceptance finally arrive.

The Economy is on the Ropes and Going Down

Submitted by Chris Martenson

The Economy Is on The Ropes And Going Down

The risk faced by those who are analyzing macro trends is sounding like a broken record. For those younger readers who have no idea what that means, imagine an MP3 song that will stick on and endlessly repeat a random segment of the song you are listening to until you give your device a sharp knock on the side. That's what a broken record sounded like.

The world economy is on the ropes and it won't ever recover. At least not to anything resembling its recent past. Neither the gleeful housing bubble nor the free-flowing credit that enabled that side bubble to emerge will return. The resources simply do not exist to repeat that final orgy of consumption. A new reality is upon us and - while fortunately more and more people are choosing to face our predicament rather than pretend the current risks and challenges do not really exist - the absolute numbers are still small and for the most part don't inlcude any of our political leaders.

The macro trends of worsening public and private debt loads, a looming and unaddressed Peak Oil threat, exponentially increasing global population, resource depletion, and an all-too-human tendency to use the money printing machine to deal with tough economic problems all remain pointed firmly towards an uncomfortable conclusion: There's a future of less in store for most people.

Our best hope is for a negotiated decline to lower levels of economic activity that allow us to gracefully adjust our expectations to a new and lower level consumption that offers an even more enjoyable and purpose filled existence. Our worst fear is that a stubborn insistence on business as usual by our leadership leads to a future shaped by disaster rather than design.

The Fundamental Issue is this: you can't solve a problem rooted in too much debt with more debt. It just doesn't pencil out.

Solyndra: Another Lesson in How to Punish the Prudent and Reward the Reckless (or Criminal)

How convenient.  Solyndra executives will plead the 5th to Congress.

Sept 20 (Reuters) - Solyndra LLC's chief executive and chief financial officer will invoke their Fifth Amendment rights and decline to answer any questions put to them at a Congressional hearing on Friday, according to letters from their attorneys obtained by Reuters.

In the letters sent to the House Energy and Commerce Committee's Subcommittee on Oversight and Investigations, attorneys for Solyndra CEO Brian Harrison and CFO W. G. Stover said they advised their clients not to provide testimony during the hearings.

The bankrupt company's $535 million federal loan guarantee is being investigated by the House Energy and Commerce Committee.

Harrison is represented by Orrick, Herrington & Sutcliffe and Stover is represented by Keker & Van Nest.

Solyndra's offices were raided by the FBI two days after the company filed for bankruptcy, although the FBI did not say what prompted the raid. (Reporting by Nichola Groom in Los Angeles, editing by Gerald E. 

30 Signs the Monetary Lortab is not Curing the Fiscal Cancer . . .

If you think the U.S. economy is bad now, just wait for a few months.  Things are about to become absolutely nightmarish.  None of the long-term economic trends that are hollowing out our economy have been addressed and more bad economic news seems to come out virtually every single day.  Now there is constant talk of the "next recession" in the mainstream media.  But did the last recession ever truly end?  The number of good jobs continues to decline, more stores are closing, incomes continue to go down, credit card debt and student loan debt are soaring, the housing market resembles a corpse, the number of Americans living in poverty continues to rise and government debt is at unprecedented levels.  We are losing blood fast, and almost all of our leaders are either too corrupt or too incompetent to be able to do anything about it.  The U.S. economy really and truly is about to go into the toilet, and if something is not done very quickly we are going to experience a complete and total economic disaster in this nation.

Americans have been promised over and over that this economic downturn is just "temporary" and that things will return to normal soon.  During this upcoming election cycle, the Democrats will swear that they have all the answers and that if we just elect them everything will be okay.  The Republicans will also swear that they have all the answers and that if we just elect them everything will be okay.

Well, both sides are lying.  The economic plans of both major political parties are a joke.  Neither of them can restore economic prosperity to this nation.

Our politicians could delay the coming economic collapse by borrowing gigantic piles of money and pumping all of that cash into the economy.  But stealing from our children and our grandchildren is not exactly sound economic policy.

Yes, the U.S. economy is in bad shape right now, but things are about to get even worse.  The long-term problems that are destroying our economy have not been fixed, and the leaks in our ship are going to continue to grow.

The following are 30 signs that the U.S. economy is about to go into the toilet....

US Debt Situation Makes Greece Look Outright Prudent . . .

From Professor Laurence Kotlikoff:

Our government is utterly broke. There are signs everywhere one looks. Social Security can no longer afford to send us our annual benefit statements. The House can no longer afford its congressional pages. The Pentagon can no longer afford the pension and health care benefits of retired service members. NASA is no longer planning a manned mission to Mars.

We're broke for a reason. We've spent six decades accumulating a huge official debt (U.S. Treasury bills and bonds) and vastly larger unofficial debts to pay for Social Security, Medicare, and Medicaid benefits to today's and tomorrow's 100 million-plus retirees.

China To 'Liquidate' US Treasuries

This from Ambrose Evans-Pritchard:

The debt markets have been warned.

A key rate setter-for China's central bank let slip – or was it a slip? – that Beijing aims to run down its portfolio of US debt as soon as safely possible.

"The incremental parts of our of our foreign reserve holdings should be invested in physical assets," said Li Daokui at the World Economic Forum in the very rainy city of Dalian – former Port Arthur from Russian colonial days.

"We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way."

"Once the US Treasury market stabilizes we can liquidate more of our holdings of Treasuries," he said.

To my knowledge, this is the first time that a top adviser to China's central bank has uttered the word "liquidate". Until now the policy has been to diversify slowly by investing the fresh $200bn accumulated each quarter into other currencies and assets – chiefly AAA euro debt from Germany, France and the hard core.

We don't know how much US debt is held by SAFE (State Administration of Foreign Exchange), the bank's FX arm. The figure is thought to be over $2.2 trillion.

The Chinese are clearly vexed with Washington, viewing the Fed's QE as a stealth default on US debt. Mr Li came close to calling America a basket case

We May Soon Learn that Massive Doses of Lortab Can't Cure the Financial Cancer Diagnosis of 2008

From the Global Economic Analysis Bulletin (GEAB) 2020 September edition:

The politico-financial "perfect storm" of November 2011

So, in November 2011 the United States will brace itself for a politico-financial "perfect storm" that will make the summer problems look like a slight sea breeze. The six elements of the future crisis have already come together:

. the "super committee" responsible for deciding budget cuts on which there was no agreement this summer will prove incapable of resolving the tensions between the two parties

. the automatic budget cuts required to be made in the absence of agreement will result in a major political crisis in Washington and increasing tensions, especially with the military and the recipients of social benefits. At the same time, this "automatic function" (a real abdication of decision-making authority by Congress and the United States Presidency) will generate major disturbances in the functioning of the state system.

. the other major rating agencies will join S&P in downgrading the US credit rating and diversification out of US Treasury Bonds will accelerate, in the knowledge that the United States now depends primarily on short-term financing.

. the inability of the Fed to do anything but talk and manipulate stock markets or gasoline prices in the United States, now makes any last-minute "rescue" impossible.

. over the next three months the US public deficit will increase dramatically as tax revenues are now already in the process of collapsing under the impact of the relapse into recession. In other words the increased debt ceiling voted in a few weeks ago will be reached well before the November 2012 elections... and this is information that will spread like wildfire in the fourth quarter of 2011 ... reinforcing all investors’ fears to see the United States follow Euroland’s example over Greece and force its creditors to take heavy losses.

. Barack Obama’s new plan in the fight against unemployment will have no significant effect. On the one hand, it’s not up to the challenge and, for this reason, can’t rally the country’s energies; and on the other, it will be cut to pieces by the Republicans who will only keep the tax cuts... The only result of which will be to increase the country’s debt even more.

European Central Bank Leaders Appear to Reject Money Printing to Deal with the Insolvency of Greece, et al.

From Zero Hedge:

European Central Bank Governing Council member Jens Weidmann told Germany's Spiegel magazine in an interview he considered it wrong to "throw out all established principles of monetary policy by citing a general emergency."

In a preview of an interview to be published in the new edition of Spiegel, Weidmann, head of the Bundesbank, said: "Once people start to use monetary policy there will always appear to be reasons suggesting it should continue to be used."

See also this from Mish Shedlock:

Germany Rejects Geithner's Leveraged Rescue Fund Proposal; First Time Ever, Majority of Germans No Longer See Benefits to Eurozone Membership

It's good to see someone thinking clearly, and that someone is certainly not Treasury Secretary Tim Geithner who wants to dump more Euro risk on the backs of European taxpayers, especially German taxpayers.

Bloomberg reports Germany Rejects Using ECB Leverage to Increase European Rescue Fund’s Size