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

Because the Press is not Headlining this, Does this Falling Tree Make any Sound?

Speculation over the state of relations between Washington and Riyadh were stirred again this week when the former Saudi ambassador to Washington, Prince Turki al-Faisal, wrote a blistering New York Times opinion piece.

He warned that if Washington carried out its threat to use its veto to halt the Palestinian drive for statehood recognition in the UN Security Council, it would put at risk Saudi-US cooperation in numerous areas.

"The 'special relationship' between Saudi Arabia and the United States would increasingly be seen as toxic by the vast majority of Arabs and Muslims, who demand justice for the Palestinian people," Prince Turki wrote.

In the commentary headlined "Veto a State, Lose an Ally," he warned that Saudi cooperation with the United States in Iraq, Afghanistan, Yemen and the Gulf could also be at risk.

See also this. 

Did You Agree to "Pump" US Dollars into Europe?

Worried that Europe’s debt impasse posed a growing threat to the global financial system, the world’s major central banks moved Thursday to assure that European banks would not run short of cash as troubled nations like Greece and Italy sought to stabilize their economies.

Enlarge This Image

Michael Reynolds/European Pressphoto Agency

Christine Lagarde, head of the International Monetary Fund, welcomed the move by the central banks, saying, "They are getting together and acting together."

It's Pot-Kettle Party Dressed to the Nines . . .

Two years after being laughed out by a bunch of Chinese students, Tim Geithner realized that his hypocrisy may pass muster in the Beltway, but the crowd is tougher across the Atlantic. As Reuters reports, the much anticipated meeting between Geithner and the euro FinMins in Wroclaw, Poland, lasted all of thirty minutes and if nothing else managed to unite the Europeans... in their ridicule and derision of the man that has become a global muppet caricature. The litany of quotes needs no explanation: "I found it peculiar that even though the Americans have significantly worse fundamental data than the euro zone that they tell us what we should do and when we make a suggestion ... that they say no straight away," Maria Fekter, [Austria's Finance Minister] told reporters afterwards, recalling a difference of opinion between Geithner and German Finance Minister Wolfgang Schaeuble on how to reinvigorate the euro zone and tax financial deals." And the kicker came from Belgian Finance Minister Didier Reynders, who responded 'tartly' that "We can always discuss with our American colleagues. I'd like to hear how the United States will reduce its deficits ... and its debts."

Poverty In America: A Special Report

America is getting poorer.  The U.S. government has just released a bunch of new statistics about poverty in America, and once again this year the news is not good.  According to a special report from the U.S. Census Bureau, 46.2 million Americans are now living in poverty.  The number of those living in poverty in America has grown by 2.6 million in just the last 12 months, and that is the largest increase that we have ever seen since the U.S. government began calculating poverty figures back in 1959.  Not only that, median household income has also fallen once again.  In case you are keeping track, that makes three years in a row.  According to the U.S. Census Bureau, median household income in the United States dropped 2.3% in 2010 after accounting for inflation.  Overall, median household income in the United States has declined by a total of 6.8% once you account for inflation since December 2007.  So should we be excited that our incomes are going down and that a record number of Americans slipped into poverty last year?  Should we be thrilled that the economic pie is shrinking and that our debt levels are exploding?  All of those that claimed that the U.S. economy was recovering and that everything was going to be just fine have some explaining to do.

Back in the year 2000, 11.3% of all Americans were living in poverty.  Today,15.1% of all Americans are living in poverty.  The last time the poverty level was this high was back in 1993.

However, it is important to keep in mind that the government definition of poverty rises based on the rate of inflation.  If inflation was still calculated the way that it was 30 or 40 years ago, the poverty line would be much, much higher and millions more Americans would be considered to be living in poverty.

So why is poverty in America exploding?  Who is getting hurt the most?  How is America being changed by this?  What is the future going to look like if we remain on the current path?

Let's take a closer look at poverty in America....

$19 Billion In Erroneously Paid Unemployment Claims

Nearly $19 billion in state unemployment benefits were paid in error during the three years that ended in June, new Labor Department data show.

Source: Labor Department

Click image for a full-size interactive map

The amount represents more than 10% of the $180 billion in jobless benefits paid nationwide during the period. (See a sortable chart of each states’ overpayments) The tally covers state programs, which offer benefits for up to 26 weeks, from July 2008 to June 2011. Layers of federal programs that help provide benefits for up to 99 weeks weren’t included.

China Says World Must Cut Debt

Chinese Premier Wen Jiabao, facing calls to widen support for indebted European countries, signaled that developed nations should cut deficits and open markets rather than rely on China to bail out the world economy.

“Countries must first put their own houses in order,” Wen said today at the World Economic Forum in the Chinese city of Dalian. “Developed countries must take responsible fiscal and monetary policies. What is most important now is to prevent the further spread of the sovereign debt crisis in Europe.”

China can best contribute to the global economic recovery by ensuring steady growth at home, Wen said, calling on the European Union and U.S. to allow more Chinese investment in return.

Can Less Than 2 Workers per Retiree Sustain Social Security?

The Social Security model was based on a model of nearly 16 retirees per worker.  Today, there are less than 2 workers per retiree and Congress over the years has raided the Social Security "Trust Fund" to build "bridges to nowhere" leaving behind government I.O.U.s.  Where's the Line that we realize a great injustice has been perpetrated on this nation?

(CNSNews.com) - There were only 1.75 full-time private-sector workers in the United States last year for each person receiving benefits from Social Security, according to data from the Bureau of Labor Statisticsand the Social Security board of trustees. 

That means that for each husband and wife who worked full-time in the private sector last year there was a Social Security recipient somewhere in the country taking benefits from the federal government.

Commodities Look Set to Rocket Higher

Chris Martenson on the likelihood of continued pressure to the upside in commodities.

I've been asked to comment on the work of a few noted deflationists who are calling for a top in commodity prices here. Their argument is pretty clear cut: Because inflation is a function of available money plus credit (their definition), and because credit has fallen, deflation is what comes next. When looking about for things to deflate in price, commodities are an obvious candidate for attention because they have risen so much over the past decade.

In this view, three things have to be true:

1. Demand for commodities has to fall below supply. After all, as long as demand exceeds supply, prices will typically rise.
2. Money, including credit that would normally be used to buy commodities, has to shrink. That's the definition of deflation that we're analyzing here.
3. People's preference for money has to be greater than their preference for 'things,' with commodities being very obvious 'things.' That is, faith in money has to be there or people will prefer to store their wealth elsewhere.

These are all just versions of the old supply/demand argument for commodity prices, except that our consideration also includes the important element of the Austrian economic view of demand for money.

There are several reasons why I think there are serious holes in each of these conditions. Enough to warrant a healthy degree of caution in one's certainty about what 'must' happen next to commodity prices. Full disclosure: I continue to have 75% of my total net worth locked up in gold and silver, so I am decidedly in the camp that does not believe the commodity surge has yet run its course.

How to Rob a Nation of Half a Trillion Dollars - Solyndra Solar Stimulus $$

The plan put forward is a four-week sale of the company. The logic behind this very rapid schedule is that Solyndra is still burning cash at the rate of $1mm a week. How long will the $4mm DIP financing last? Four weeks. The terms of the DIP makes it a sure thing that Solyndra is going to be sold ASAP. That sounds good. But not for the DOE.

The one-month period is a very short time frame. The likely result will be that no serious alternative buyer will appear. Should that happen, the senior creditor will get all of the assets of the company at the end of 30 days. That would be Argonaut. It's possible that Argonaut will end up owning a company that lists $850mm in assets for less than $100mm.

In the next week the Court will rule on the proposal for a four week sale and the $4mm Argonaut DIP. If that plan is approved, what is left of Solyndra will go to Argonaut and the US DOE will suffer a loss of 100% of its $528mm loan.


See this also.

"Jobs Bill" for One, Please!

This latest from Mish Sheldlock on President Obama's "Jobs Bill."  

Rebates on social security taxes will not create any jobs, let alone the 1.5 million to 2 million that is projected. To create jobs in private business we need structural reforms that will permanently make businesses more competitive such as health care reform and scrapping numerous union work rules.

GDP Perversion

Government spending adds to GDP regardless of what is produced or how much, so fixing 1 bridge or 3 adds the same GDP. If you waste enough money you can have a positive GDP, whether anything is really produced or not.

Most of the first stimulus was squandered and should Obama win approval for his $447 billion plan, most of that will be squandered as well. Tax cuts will help corporate profits but do little for permanent hiring, and prevailing wage laws and union work rules ensure we will massively overpay for infrastructure projects.

Unless and until we fix structural issues, we can expect no job creation, no matter how much money Keynesian clowns want to throw around.

Devil at my Doorstep

Obama's proposals are 180 degrees wrong. Obama wants to drive up labor costs, not because it makes economic sense, but because it is the only way he can possibly be reelected.

IMF Emergency Action Signals Imminent Threat to International Monetary System

According to Dow Jones the "International Monetary Fund will likely re-activate a $580 billion resource pool in coming weeks to ensure it has funds to help cover Europe's worsening sovereign-debt crisis, according to several people close to the matter." Why is this a big flashing red light? "According to the IMF, the pool of supplementaryresources are only to be activated when "needed to forestall or cope with a threat to the international monetary system." 

Debt Ceiling Increased Another $500 Billion Without Discussion of Cuts as Promised

This is how the DC Budget/Debt Ceiling/Deficit Reduction Game Works!

The U.S. Senate, in an unusual procedure, cleared the way Thursday for the U.S. to lift its borrowing authority by $500 billion to $15.19 trillion, enough to keep the support federal government borrowing through late January or early February.

The action came under an unusual legislative procedure spelled out under the August agreement to raise the U.S. debt ceiling and avoid a U.S. credit default. In a 52-45 vote, the Senate blocked an attempt by Republicans to slow down the process that will result in the $500 billion debt-ceiling increase.

The complicated procedure, designed by Senate Minority Leader Mitch McConnell (R., Ky.), would allow an increase of the borrowing limit while allowing most Republicans to vote against such an increase.

US Military Plane Forced Down By North Korean Electronic Attack

SEOUL - A US military reconnaissance plane came under electronic attack from North Korea and had to make an emergency landing during a major military exercise in March, a political aide said Friday.

The aide said the plane suffered disturbance to its GPS system due to jamming signals from the North's southwestern cities of Haeju and Kaesong as it was taking part in the annual US-South Korea drill, Key Resolve.

More "Obama Money": Ever Wonder Where the Value of "Free Money" Comes From?

WASHINGTON (AP) — The economy weak and the public seething, President Barack Obama is expected to propose $300 billion in tax cuts and federal spending Thursday night to get Americans working again. Republicans offered Tuesday to compromise with him on jobs — but also assailed his plans in advance of his prime-time speech.

In effect, Obama will be hitting cleanup on a shortened holiday week, with Republican White House contender Mitt Romney releasing his jobs proposals on Tuesday and front-running Texas Gov. Rick Perry hoping to join his presidential rivals Wednesday evening on a nationally televised debate stage for the first time.

Lawmakers began returning to the Capitol to tackle legislation on jobs and federal deficits in an unforgiving political season spiced by the 2012 presidential campaign.

Adding to the mix: A bipartisan congressional committee is slated to hold its first public meeting on Thursday as it embarks on a quest for deficit cuts of $1.2 trillion or more over a decade. If there is no agreement, automatic spending cuts will take effect, a prospect that lawmakers in both parties have said they would like to avoid.

It's easier to borrow and print than to get your financial house in order.

"We're on the way to a worldwide financial dictatorship governed by bankers," said Peter Gauweiler, German Bundestags Representative (CSU), in an interview published Monday in the Welt Online. "We don't support Greece," he said. "We support 25 or 30 worldwide investment banks and their insane activities."

Successful lawyer, he fought back in the German Supreme Court, claiming that the money-printing and bailout operations by the European Central Bank (ECB), and Germany's role in them, violate the constitution. The court's decision is expected on Wednesday. The foundation of the euro was the Stability Pact, he said—a contract that now has been broken. And he wonders if "the euro can still function as a value-retaining currency."

Iceland Tries Ex-Premier Over Financial Collapse

Iceland’s former premier, Geir Haarde, yesterday became the first political leader to be tried over the global financial crisis as judges began to decide whether he can be held responsible for the collapse of the country’s banking sector.

Haarde, who has dismissed the case as a farce, was one of four politicians blamed in a report last year for contributing to the country’s stunning economic collapse, when all its major banks failed in a matter of weeks in October 2008.

Goldman Sachs Advising Private Clients of Impending Collapse

Goldman Sachs is telling the public that everything is going to be just fine, but meanwhile they are advising their top clients to bet on a huge financial collapse. On August 16th, a 54 page report authored by Goldman strategist Alan Brazil was distributed to institutional clients. The general public was not intended to see this report. Fortunately, some folks over at the Wall Street Journal got their hands on a copy and they have filled us in on some of the details. It turns out that Goldman Sachs secretly believes that an economic collapse is coming, and they have some very interesting ideas about how to make money in the turbulent financial environment that we will soon be entering. In the report, Brazil says that the U.S. debt problem cannot be solved with more debt, that the European sovereign debt crisis is going to get even worse and that there are large numbers of financial institutions in Europe that are on the verge of collapse. If this is what people at the highest levels of the financial world are talking about, perhaps we should all start paying attention.

$15 Trillion is the Official Debt. Do You Know How Much the Total Fiscal Gap Is?

In an interview with NPR, former Reagan economic adviser Laurence Kotlikoff said the U.S.'s "true indebtedness" amounts to $211 trillion.

That's more than 15 times the $14 trillion official figure.

"We're focused just on the official debt, so we're trying to balance the wrong books," Kotlikoff said, naming Social Security, Medicare, and Medicaid for the skyrocketing unofficial figure.
If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That's the fiscal gap...

Goldman Sachs Advising Private Clients of Impending Collapse

Goldman Sachs is doing it again. Goldman is telling the public that everything is going to be just fine, but meanwhile they are advising their top clients to bet on a huge financial collapse. On August 16th, a 54 page report authored by Goldman strategist Alan Brazil was distributed to institutional clients.

The general public was not intended to see this report. Fortunately, some folks over at the Wall Street Journal got their hands on a copy and they have filled us in on some of the details. It turns out that Goldman Sachs secretly believes that an economic collapse is coming, and they have some very interesting ideas about how to make money in the turbulent financial environment that we will soon be entering.

In the report, Brazil says that the U.S. debt problem cannot be solved with more debt, that the European sovereign debt crisis is going to get even worse and that there are large numbers of financial institutions in Europe that are on the verge of collapse. If this is what people at the highest levels of the financial world are talking about, perhaps we should all start paying attention.

"We Got Robbed!"

A dose of financial reality from the Young Turks. "We got robbed."

PIMCO: "Condition of U.S. Economy is Grim and Scary."

Following Friday’s report that zero jobs were generated in the month of August, Pimco investment firm CEO Mohamed El-Erian called the condition of the U.S. economy “grim and scary.”

Speaking to Bloomberg Television’s Betty Liu, El-Erian estimated the chance of another recession as at least one-in-three, and possibly as high as one-in-two.

“The downside risk is increasing,” El-Erian, whose company manages a portfolio of over $1 trillion, told Bloomberg.

Is This Federal Govt Brilliant, or What?

Abuse taxpayers for $700 Billion +++ to bailout the reckless banks and then sue them for $200 Billion for having deceived the government with bogus commercial paper. Such a deal.

Roubini: "We are in a Worse Situation than 2008"

The world’s developed economies are trapped at the “stall speed” of low growth and need to have greater fiscal stimulus and less austerity to kick-start growth, leading economist Nouriel Roubini told CNBC Friday.


Speaking at the Ambrosetti Forum on the shores of Lake Como, near Milan, Roubini said in an interview: “We are in a worse situation than we were in 2008. This time around we have fiscal austerity and banks that are being cautious.”

The US is the Ultimate Subprime Debtor . . .

Insatiable demand for safe haven U.S. government bonds is helping mask a potentially huge financial problem — the need to extend the maturity of debt issued by the United States.

The United States has the least balanced maturity schedule of any major nation. Over 70% of its bonds mature within five years, compared with an average 49% for the 34 member countries in the OECD.

Hit the Interim Debt Ceiling Already Adding $400 Billion in New Debt in One Month

Remember when one month ago the US, to much pomp and circumstance, not to mention one downgrade,  announced a grand bargain raising the debt ceiling from $14.294 trillion to something much higher, with a stop gap intermediate ceiling of $14.694 trillion, or $400 billion more. Well, as of today, or less than a month since the expansion, total US debt is at $14.697 trillion. Yep - the total debt is again over the ceiling, which means the US debt increased by $400 billion in one month. Score one for fiscal prudence. And while the total debt subject to the limit is still slightly less, at $14.652, one week of Treasury auctions and will be time for Moody's to justify again why the US is a quadruple A credit.

Your "Federal Family," Loving You to Insolvency

“Under the direction of President Obama and Secretary Janet Napolitano, the entire federal family is leaning forward to support our state, tribal and territorial partners along the East Coast,” a FEMA news release declared Friday as Irene churned toward landfall.

The G-word — “government” — has been nearly banished, with FEMA instead referring to federal, state and local “partners” as well as “offices” and “personnel.”

“'Government’ is such a dirty word right now,” says Florida State University communication professor Davis Houck. “Part of what the federal government does and any elected official does is change the terms of the language game into terms that are favorable to them.”

“Family” can evoke favorable thoughts of motherhood and security. But it can also conjure images of Big Brother and organized crime.