100% have one or more entitlements that they won’t give up this side of government default.

Yes, this remains a nation of great resources, but it will take a decade or more to get back any semblance of normalcy. The people need shick therapy and it is coming.

Foreigners are not buying US debt, the Fed is.

Aggregate trade deficits with the rest of the world are $500 billion a YEAR. Debt sale requirements are getting to be $250 billion to $350 billion a MONTH, including roll-0ver (US debt has a 30 month average maturity thanks to Clinton)

Analysis of Fed data shows that the catch all category of “Households” increased their purchases 32 FOLD in the last year. Bear in mind these are the same “households” assailed by 17% U6 unemployment. Inquiry found that “households” was a “plug” category.

Analysis of what drove the 40% bear market rally shows heavy after hours trading of options did it and that there are unidentified major buyers who have $10′s of billions (nearly unlimited) in funds.

Gee, wonder who has unlimited funds that can be created with one-legged accounting to the tune of $trillions.

The Fed severely needs auditing.

That said, look for a dollar rally now, since there’s currently a 90% inverse correlation between the dollar and the stock market and the market is at the beginning of a correction to its recent 40% gain.

Bottom is 2 years or less away
I expect bottom is still about 4-6 years away.

I’m sorry to say it, but it depends on what happens in Washington AND the other major world capitols. We owe so much debt to overseas creditors that their ability to continue to finance our revolving (and increasing) debt is as much of a factor as the actions of our own lawmakers.

Our welfare may depend upon the ability of the economies of China, Japan and Russia and their ability to continue to lens us money.

“Hi my name is Uncle Sam.”

“Hi, Sam!”

“I’m a debt junkie.”

When I started querying bank managers about securitization in 2006 and discovered what they had done, I was horrified for this very reason.

Nearly 2 years after this mess started, they are still doing securitizations, AIG et al are still writing credit default swaps, the Too-big-to-fail banks are even bigger and $10′s of trillions in liabilities have been trundled off on you and I.

The US Congress has been hijacked by a criminal gang of oligarchs. Now even the poor black folks who supported Obama know this.

Blowback is going to be brutal. The more of the corrupt pols still in office when it collapses, the better.

I would not want to be in their shoes.

I do not disagree we have some issues, but I just think after some tough medicine it will work out. And the longer we do nothing the bigger the pill.

Entitlements will yield, but it will take a collapse to get the political will.

Manufacturing will come back and the globalists aspirations will die.

Keynesian economics will be discredited for at least a century.

Georgia’s 2 senators will be lampooned for even longer when political economists realize that their progression of votes were deliriously wrong.

I do not think all economists are wrong, but being a contrarian against popular thought is not easy. I can show many well respected economist I read, who like I did not understand how you can live on debt and have declining production.

My mentor in business gave me great advise if does not make sense do not do it. And if someone cannot explain the concept on the back of a bar napkin how we make money off the deal run!

Bonds could be scary especially municipal with the debt loads, tax revenue down and future benefits due.

With all that said I am not as down on the economy as my friend Indy. I just think it will be hard 3 to 5 years and people will eventually have to give on entitlements ie Medicare, SS……..

The key is the country keeps going and does not need retirement money like an individual. But I do think that unless we bring back manufacturing the spread between rich and poor will widen.

I think that is being done…even for your favorite politician, RL:

Karen Handel & the SEB

All that is left now is to find out how much damage they will inflict trying to overwhelm a crisis none of them saw with more of the toxins that poisoned the system in an effort to prove they weren’t insane, after all.

Every hiccup, every recession, since the 1930′s has been met with ever-increasing government and concomitant debt. These fools think they can borrow and spend without limit like Bernanke intimated in his helicopter speech.

Now they have reached their Minsky Moment. It is their Little Big Horn. Custer lost his scalp. They have lost their relevance and credibility.

The econ blogosphere is ripping them to shreds with superior data analysis.

The reconfirmation vote of Chambliss and Isakson will be like an ugly tattoo on an already ugly record.

Before this is done the entire profession of economics will be utterly exposed as the fools that they are.

There are major hurtles in 2010.

The inflation/deflation debate going on is silly. The $trillions being thrown into the fray don’t precisely mesh with where the damage is being inflicted.

Mine was the good fortune in 2002 and 2003 to go into gold significantly and stay put. I sold my gold holdings in October and am in cash. The current pull-back will be a reentry point.

The sovereign debt of ROW is going to scare the entire world back into the $US. At that time markets will crash below the lows of last March.

We never have stopped falling. The data is totally manipulated to paint a rosier picture and an “unknown player of UNLIMITED resources” is propping up the markets.

Can they print to infinity like Bernanke pledges to do? Yes. And eventually he will ignite the fires of inflation.

To continue to allow securitizations is sheer madness. Securitizations are fractional ownership on steroids. To keep churning them out when there is NO existing market other than the Fed is insane. All of the economic value is extracted in fees and what is left becomes a welded together mess of good and bad that costs $$$$$$ to untangle and rectify.

I agree that you should be mostly in cash or some bonds right now… or temporarily shorting the stock market, which appears to be on the next downleg now. Values will continue to fall in this environment.

You’ll know we’ve hit bottom when people throw in the towel. They haven’t yet. I expect bottom is still about 4-6 years away.

And even if interest rates go up, which I think will happen, than values go down ie housing, cars….. via affordability of payment.

That is why I am holding on to cash because I do think values have hit the bottom. And that is another reason why investments and lending is tough because nobody knows if we hit bottom yet.

What will eventually break the cycle is major money is on the sidelines and eventually they will put it back to work. The next question is how we start producing things on a macro instead of just consuming. And if that is not dealt with it will be have and have not type recovery.

Gold is more expensive now than before for exactly the same reason our exports are higher now than before. The dollar is worth less, compared to certain other currencies. It’s something that needed to happen to bring our current account into balance.

As for Isakson, anyone else notice he voted AGAINST adopting pay-as-you-go rules for new expenditures? What a liberal. Who else voted against it? Oh, right, every single Republican in the Senate. Good thing they’re not in charge any more.