So Congress says we won’t hear about the debt ceiling again until Feb. 7. Don’t count on that.

Washington is playing a shell game. Move the money here and there fast enough and nobody will be able to figure out how much cash — and, more important, debt — the US really has.

In the first place, putting the Feb. 7 date on the debt-ceiling extension instead of placing an amount on the new borrowing limits is preposterous. The numbers, I’m sure, will come out after the agreement is fully signed, sealed and — Washington hopes — forgotten.

The old debt limit was $16.7 trillion. You are probably thinking that since this was the limit, that’s where the US debt level now stands. You would be wrong.

…..read more HERE

When President Obama nominated Janet Yellen to be the next Chair of the Federal Reserve Board the praise he offered was similar to what had already poured in from around the country. In their assessments of Ms. Yellen’s long career, Congressman, editors, and academics have underscored how her prescience and caution distinguish her from the reckless overconfidence that have plagued her male colleagues at the Federal Reserve. As proof of her wisdom supporters have pointed to speeches she delivered in 2005 and 2006 in which she supposedly issued clear warnings about the dangers then building in the frothy real estate markets. Without any attempt at reasonable fact checking, these claims have been parroted by the media.

However, a brief review of the speeches in question reveals that she issued no such warnings at that time. In a new video, Peter Schiff, the CEO of Euro Pacific Capital and a well-known author and economist, goes over the speeches in question and comes to the easy conclusion that the new leader at the Federal Reserve is just as incapable as her predecessors of recognizing a dangerous asset bubble. Worse yet, as a diehard believer in the power of expansive monetary policy, Ms. Yellen would be much less likely to attack an asset bubble even if she were ever to recognize one before it burst.

Great News! The Fiscal Crisis is Over!

The D.C. press corps was giddy last night, declaring that the fiscal crisis had ended. Senators praised “honorable friends” from “great states,” congressmembers gave standing O’s to their stalwart leaders, and the president saluted bipartisanship while ridiculing Republicans, bloggers, activists and pretty much anyone else who dared oppose him.

If the whole thing seemed a bit surreal, it’s because the whole thing was a bit surreal. America’s fiscal crisis is not that our debt ceiling isn’t quite high enough — it’s that we have too much debt.

It’s as if I had $250K in credit card debt and I told my wife, “Great news, honey — our fiscal crisis is over! I just got a new Visa!” If she didn’t hit me over the head with a rolling pin, she would most assuredly tell me where I should place it.

To help visualize how up the creek we find ourselves, I created an infographic –

It’s an imperfect analogy, but imagine the green is your salary, the yellow is the amount you’re spending over your salary, and the red is your MasterCard statement. Before sharing this info with your spouse, I recommend you hide the rolling pin.

When a conservative hesitates before raising the debt ceiling, he’s portrayed as a madman. When Paul Ryan offers a thoughtful plan to pay down debt over decades, he’s pushing grannies into the Grand Canyon and pantsing park rangers on the way out.

Forget sustainable — how is this sane? 

Irrational situations provoke irrational responses. Ted Cruz may not have mapped out a winning strategy to end Obamacare, but he energized millions of Howard Beales yelling, “I’m mad as hell and I’m not going to take it anymore.”

It seems the only way to make the press notice the real fiscal crisis is to elect another Republican president.

About Ricochet

The path to tyranny is almost always paved with good intentions. 

And so, enter stage left, the innocuously named Consumer Financial Protection Bureau (CFPB). 

These government agencies with the catchy, high-sounding names are always the most dangerous. After all, it was the ‘Committee for Public Safety’ that was responsible for wanton genocide during the post revolution Reign of Terror in France. 

Recently, the CFPB  ‘encouraged’ retail banks in the Land of the Free to ‘help’ their customers regarding international wire transfers. And by ‘help’, they mean prohibit. 

Of course it’s all for ‘consumer protection’.. So under the guise of safety and security, several banks will curtail retail customers’ abilities to send international wire transfers. 

Chase, for example, will start to limit cash withdrawals and ban business customers from sending international wire transfers from November 17 onward. 

And starting October 20th, HSBC USA’s Premier clients will have to wait a minimum of five days before transferring funds to their OWN international accounts! 

This is the very nature of capital controls– restricting the free flow of capital across borders until it is trapped inside the country and forcibly denominated in a rapidly devaluing currency. 

And this is exactly how it starts… making it more difficult to move money abroad. 

We’ve been writing for years that this would happen. This isn’t some tin-foil hat conspiracy. This is reality. 

Throughout history, bankrupt governments have almost always resorted to these same desperate tactics. 

As the US government is hours away from crossing the fiscal Rubicon, it only seems appropriate. They are bankrupt, and they are desperate. 

I’ve written so many times before that the US government fails to collect enough tax revenue to pay for mandatory entitlements gross interest on the debt. 

In other words, they could eliminate practically everything we think of as government (like the military) and still be in the hole by tens of billions of dollars. 

This is not a mark of a wealthy nation. And nearly every other government throughout history that reached this position resorted to plunder, confiscation, and destruction of liberty. 

Every bit of objective data points to the same conclusion. And with this new information, it appears that the consequences of inaction are coming soon. 

One day, perhaps just months from now, all of this will seem obvious… to everyone. People will look back and think ‘duh, how did I not see that coming?’ 

But rest assured, when the masses figure it out, every window of opportunity to protect yourself from the negative consequences will be slammed shut. 

Your instincts are probably telling you that something is wrong. It’s time to trust them. And to take action.

But it’s critical to have the right information to do that. 

My team and I have spent months putting together a low cost quickstart action kit— a crash course of sorts to help you get started right away. 

This kit contains the bare essentials of what you need to know, and do, right now… to protect your savings, safeguard your family, and preserve what you have worked to build for your entire life. 

Right now, there is still time to take some of these basic steps. And I really want to encourage you to take advantage of this time while the window is still open. The tiniest effort and investment right now can make an enormous difference down the road as this trend continues to unfold. 

Unless, of course, you trust your government. In which case I encourage you to do nothing and enjoy the ride.

Until tomorrow, 
 
Simon Black 
Senior Editor, SovereignMan.com

 

 

Neither this email communication nor content posted to the website SovereignMan.com is intended to provide personal financial advice. Before undertaking any action described in this letter, financial or otherwise, you should discuss your options with a qualified advisor– accountant, financial planner, attorney, priest, IRS auditor, Tim Geithner… Also, nothing published in this letter constitutes encouragement to avoid or evade tax obligations in your home country. Furthermore, you should understand that SovereignMan.com may in some instances receive financial compensation for products and/or services which are mentioned in the letter, and in other cases, SovereignMan.com receives no compensation. The needs of the community come first, and the presence or lack of financial compensation in no way affects the recommendations made in this letter.

also:

A Shutdown climax?

Congress climbed the highest bridge in town, called 911 and threatened to jump. 

First responders recognized the voice on the other end of the line, of course. They’ve called before. Each time, the negotiator has talked these misguided fools off the ledge. 

Sure, this is probably another cry for attention. But we still have to get the police on the scene. Have the firefighters hold out the big net. It might be a waste of time and resources. But we can’t just ignore the problem, right?

So here we are. The spectacle will (supposedly) reach its climax today. The media breathlessly reports on every word as traders jockey for position in the markets. As much as I’d like to ignore it all, it’s nearly impossible to miss all the flashing lights and sirens…

Luckily, we’re reminded that it could be worse. A lot worse, in fact. 

“As a result of the stalemate in Washington, the S&P 500’s average daily percentage move has increased since mid-September,” reports Bespoke Investment Group. “Looking at the chart below, even after the recent uptick in the average daily move of the S&P 500, it is still less than a third of the day to day volatility that we saw back during the 2011 debt ceiling debate. In fact, it is actually much closer to its lows of the last three years than it is to its highs. It may be raining now, but it is far from pouring.”

Judging by the market’s reactions so far this week, it feels like a debt ceiling resolution failure is not baked into the pie. The default stance is the belief that a last-minute deal will emerge. That might be true. But again, that’s no guarantee that the market will snap back to new highs.

The news doesn’t matter. Investors’ reaction to the news is what counts. Now’s not the time to go nuts guessing “deal or no deal” with a wild trade. You could get burned either way… 

If you’re looking for a longer-term trade, however, there are a few interesting setups appearing under the market’s surface. Financial stocks have quietly pulled themselves out of the gutter over the past week or so. I’ve even found a regional bank stock I like right now. Stop by the PRO for details…