“By All Relevant Debt Indicators, the US Fiscal Scenario Will Soon Approximate [that of] Countries on the Verge of a Sovereign Debt Default” → Washingtons Blog
“By All Relevant Debt Indicators, the US Fiscal Scenario Will Soon Approximate [that of] Countries on the Verge of a Sovereign Debt Default” - Washingtons Blog

Thursday, November 5, 2009

“By All Relevant Debt Indicators, the US Fiscal Scenario Will Soon Approximate [that of] Countries on the Verge of a Sovereign Debt Default”

Josh Lipton points out:

The American Enterprise Institute for Public Policy Research (AEI) published a paper indicating that “by all relevant debt indicators, the US fiscal scenario will soon approximate the economic scenario for countries on the verge of a sovereign debt default.”

Well, the U.S. is acting like a banana republic.

Lipton also quotes Einhorn and Rosenberg to argue that America's overheated printing presses and huge debts are helping to drive gold higher:

David Einhorn of Greenlight Capital, recently speaking of why he’s become a fan of gold, had this to say:

I have seen many people debate whether gold is a bet on inflation or deflation. As I see it, it is neither. Gold does well when monetary and fiscal policies are poor and does poorly when they appear sensible. Gold did very well during the Great Depression when FDR debased the currency. It did well again in the money printing 1970s, but collapsed in response to Paul Volcker’s austerity. It ultimately made a bottom around 2001 when the excitement about our future budget surpluses peaked.

Einhorn added, “Prospectively, gold should do fine unless our leaders implement much greater fiscal and monetary restraint than appears likely. Of course, gold should do very well if there is a sovereign debt default or currency crisis.”

David Rosenberg, chief economist and strategist at Gluskin Sheff, also continues to favor gold. The fact that the yellow metal continues to surge higher -- even with ongoing deflationary developments -- suggests that other factors are driving bullion to new bullish heights, he says.

“It’s called scarcity of supply relative to fiat currency,” Rosenberg argues.


  1. This -for today's Libertarian muddleheads led astray by the gold bugs- is the Sixty-Four-Million Dollar Question.

    When will the people of the world get tired and suspicious of the growing pile of dollar bills under their mattresses?

    The answer is sometime after the sky falls, and even more likely -never when gold trades again at under $250.00

    There is no shortage of gold.

    There is a steadily growing and seemingly insatiable demand for dollars.

    You can send all your worthless dollars to me, if you're sure YOU've got it right, -otherwise.

  2. Oh, really? Bill Mitchell: Zimbabwe for hyperventilators 101

    I'm not denying that the Fed is generating a big liquidity bubble. That's its objective in order to reflate asset values and rescue toxic debt. I'm not defending this either. I think it is the wrong policy.

    Still, the major problem the world is facing a spiraling deflation and in my view, deflation is winning. The government needs to spend more, e.g., a jobs guarantee program, as Randy Wray recommends here. But that's regarded as way to radical even to consider. Trillions for Wall Street, handouts for Main Street.

  3. Tom Hickey is right of course. Spiraling deflation IS winning the tug-o-war, -massively so, -even laughably so -in the face of all the efforts to rig the game.

    But deflation is not a problem. Deflation is not a problem -at this juncture in history.

    The problem is that -were the credit economy somehow impossibly re-inflated, its negative effect on most everyone's standard of living would be unbearable -when everyone compares -their standard of living- to the politically connected Wall Street thieves that have plundered every bailout.

    Those who are calling for guillotines and rebellion are gaining the upper hand, and a third world reality could break out at any time -worldwide. It has in fact broken out, in Mexico, in China -and all around the world.

    The American people long ago soured on this bailout business, -not so much because of their own financial condition, as for the excesses that were predicted and have since been brought to light.

    A depression is a wonderful time to be filthy rich and getting richer off the woes of all the shmoes in the bread lines -and- the picket lines. One would think an auto worker had a right to earn a living wage. -LOL-

    Even the inane health care and silly climate initiatives, if passed, will become a negative focus as their true bailout-nature gets more honest play.

    Scandal is all too common.

    But in this administration -scandal is being trumped by fiscal debauchery.

    If anyone really has some moral spine about their weakling personhood, they should laugh at the way Warren Buffett is being again trumpeted as some sort of financial geru on Geritol.

    And Bill Gates has gone absolutely brain dead -endorsing Monsanto genetically engineered products.

    Warren Buffett bought $5 billion worth of Bank of America common stock at $39.85 on the way down a year and a half ago.

    Now he's bought the Burlington Northern train set the feeble-minded old geezer always wanted as a knickered youth. That makes Buffett and Burlington Northern an awfully large target for anyone who is looking to target him.

    If jumping in bed with Warren Buffett is anyone's idea of a good time, -save us all!

    Buffett is immoral, a pathetic, clownish, and giggling cretin who could think of nothing better to do with his money -than to give it to Bill Gates. -LOL-



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