I think we need to get used to the fact that we don't have a government of "wise leaders" (unfortunately for Ron, the electing public would not know what a "wise leader" was if such a candidate were to land in their lap... ). What we have is a group of Congressmen all of whom, have to also get re-elected every 2 years - BY AMERICAN CITIZENS! If they try to cut one nickel out entitlements (50% or our federal spending), 50 million senior citizens will run them over a cliff!

When it comes to cost cutting, our political system guarantees failure because our "decision makers" in congress - like "John Boehner of Ohio" have to literally walk around on egg-shells otherwise the good people of Ohio will end his career in 10 seconds. Imagine if your boss handed you a pay cut, then allowed you to "vote" on whether or not he should be able to keep his job?

The framers of the constitution did not have this problem because they were never elected!

Because this is a STRUCTURAL flaw, there is no reason to think that Congress will become an effective group of cost cutters and reformers (the summer debt ceiling debate and the ridiculous outcome, $2.4T in 10 year solution - proved that point). Because of this reality, Congress (who is elected by us) is effectively forcing the Central Bank to deal with problem alone, through quantitative easing measures to devaluate the currency. Remember it may not be all that bad - if there is any hope to get manufacturing going again, its a weak dollar... .

The dollar goes down by another 50% in 3yrs - Get used to it.

I just went back and reread the Paul Krugman article:

Click to view link

I had not finished it last night and now I'm glad that I didn't.

I vascilated between delight that the deal made Obama look bad to Krugman--and hopefully other libs as well--and sheer horror at some of the other things he said.

I am vastly troubled at the viciousness of the attacks on the "resistance" forces, i.e., Tea Party Patriots. Not just in the Krugman article, but among some "conservatives" as well.

I just realized that I don't even know if they eventually agreed to vote for the current bill--did they? It doesn't call for a balanced budget and I thought that was their own "tipping point".

Well. Thanks injun1 and Zen$$$. I'm hoping that I undersand the remark better now.

injun1, it is shaping up to be a very interesting week.

Thanks all for your posts. I guess we'll all be moving on to the topic of the day for today. See ya' there!

Good morning and thanks!

Now I see. I thought he meant future interest costs on the national debt--in a cumulative sense, i.e., how much interest we pay annually on the debt.

Actually, he was speaking in the traditional terms of the government absorbing all the excess capital and thereby increasing interest rates for those other than the GOV.

Maybe now I should go back and reread the article.

Thanks, my fiend!

I thought a lot about this last night and I believe, rightly or wrongly, that this is the final nail in the coffin of the American Republic. Unless the Congress unite to defeat this bill by voting YES and making clear to the President that they will not countenance such chicanery I am afraid they will have emasculated themselves completely and transferred all power to the Executive Branch. From now on you will be living in a totalitarian dictatorship with even the last vestiges of a Republican government removed.

I have always thought that Obama was in some symbolic way going to parallel the presidency of FDR and I have mentioned this before relating to his second swearing in ceremony that was done in FDR's map room under the gaze of the Architect of the US Capitol Benjamin Latrobe:

"Let us recall that the second oath was performed in secret: "...the two men convened in the White House Map Room at 7:35 p.m. for a brief proceeding that was not announced until it was completed..."

In Freemasonry the god of the secret societies is covertly substituted for the One True God. This false god is identified in the masonic lodges as "the Great Architect."

The mysterious man in the portrait who silently presides over the authentic inauguration of Barack Obama as Commander and Chief, is Benjamin Latrobe, the great architect of the U.S. Capitol." (Michael A. Hoffmann)

President Obama has used the debate over the debt ceiling as a cover and has run it down to the very last minute to increase the tension and to hide his true objective, the creation of a new voting procedure that will give the Executive Branch total power over legislation. He will now be able to create legislation to authorise unlimited Executive orders that will be impossible for Congress to challenge. This is exactly like FDR who issued more Executive Orders than any President either before or after his four terms of office and did many other such things to undermine the Republic. Click to view link

In His commentary on the Law the Lord Jesus said "Simply let your 'Yes' be 'Yes', and your 'No', 'No'; anything beyond this comes from the evil one." President Obama said "Let your Yes be No and your No be Yes." So, where does that come from?

@injun1
Thank you for the kind words and the information about other shocking US government programs. I am not surprised. I was surprised by the details of that crop loss insurance but once I knew about it I suspected it was not the only federal giveaway program that would shock me.

A majority of the politicians of both parties would just love to get rid of Social Security and Medicare and get their hands on that money to give it out to their cronies and benefactors.

"Am I just too tired to "get" this?"

No, it just means what Krugman says: Interest rates are currently very low so future spending won't do much to reduce future interest costs.

His point is that the US is already so far in debt that if interest costs were to return to normal levels they'd swamp any future spending. This is to say "the cat is out of the bag", or "the horse has left the barn". There's no help coming. In very real terms, it no longer matters how much the US government spends, if interest rates can't be controlled the game is over.

The world is at zero interest rates, there is nothing that can reduce the rates even more.

Cheer up my friend, the other crowd runs nothing but there mouths/ha! There is only so much we can do, and the first is to inspire others to join our conversation. An exchange of information is the beginning. Each of us who participates knows something the other does not. We all learn from each other.

As for your question, it is my sense that you can't have HSBC sell off U.S. assets and layoff 25,000 worldwide without it have not U.S.impact. especially in the currency markets. My experience with them tells me they are batting down the hatches and preparing for storage.

Employment will probably stagger big time again and when the markets take time to digest the debt ceiling bill they are going to find it is nothing but B.S.

As an investor I am right in the middle of it. But as a lackluster contributor at DB I have to sit back and smile at every post and think there is plenty of hope within us all.

As zenbillionarire says, be very, very quiet, we are hunting for wabits!

I just read Paul Krugman at JSMineset. I found one very confusing statement. Maybe someone can enlighten me--make it simple, if you will. It's too late in the evening for much critical thinking!

"On one side, interest rates on federal borrowing are currently very low, so spending cuts now will do little to reduce future interest costs."

Am I just too tired to "get" this?

The dollar just jumped 35 pts since we posted and came down 20 all in about 5 seconds. They are trying to build support, maybe for fear of the employment numbers.I got in earlier and in good shape but I pity the poor guy who didn't take a position earlier and is just entering a position, he is on a roller coaster ride that will give him a heart attack or be busted, which ever comes first.

Re: How are you?

I'm tired by this time of the evening.

I'm frustrated that it seems that the same old gang is running things. The MSM seems to still be able to manipulate the mainstream momandpop.

I keep feeling like the sky is falling...but "normal folks" think that now that we have avoided default, everything is fine. No problemo.

I surely do enjoy your posts--particularly on this topic. Seems like lots of us are doing therapeutic chats here. Seems good for all of us.

Were you surprised at the short duration--30 seconds--of the dollar's jump?

What bad economic news are you referring to for this week? Worse than the ISM?

"Upon the news the dollar jumped over 50 points in perhaps 3 seconds. Then came back to reality within the following 30 seconds"

There were a few articles today and yesterday that predicted exactly that, but they suggested it might last longer than thirty seconds. It had to do with leveraged positions unwinding rapidly, and the analysts who dared go there pretty much agreed it would happen with or without an "agreement", though those with a longer view surmised the dollar bounce would be very short IF the debt ceiling was raised, longer if it was not. So maybe they win the prize.

Ha! I would be very, very quiet! The Natives would be eye balling Yosemite also!

" the Indians interpreted that the treaty of 1868 entitled them to take possession of surplus federal land"

Well, I'd keep a weather eye on Yellowstone then...

Dottie, the knee jerk reaction happened in the currency market. Upon the news the dollar jumped over 50 points in perhaps 3 seconds. Then came back to reality within the following 30 seconds. There is tremendous downside pressure on the dollar. Hence metals during the reading simply held their own. And there's more bad economic news that's coming out this week.

How are you?

I find great humor in the position of liquidating real estate holdings of the federal government. For example:

In 1969 the occupation of Alcatraz was on the front page news. The infamous prison island was targeted by the Native American and not without some thought. The United States government had in essence vacated the island. It was considered surplus.

Unknown to the general public and most of the federal government, the Indians interpreted that the treaty of 1868 entitled them to take possession of surplus federal land. It never reach the courts because of the deals that were cut by the Nixon administration. Nobody dared wanted that to be heard before the United States Supreme Court.

There have been other examples of reverted lands back to the tribes, even in the recent past. Some returned because it was right, but I suspect some was returned because nobody wants to hear the answer to all the potential lawsuits that would hit the federal court system.

Whether one wants to determine whether it is a right or wrong issue is neither here no there. The fact remains congress would be very careful about the wording on the disposition of federal surplus lands.

just thinking out loud....

BTW, all. I was pretty surprised that gold didn't take a bigger hit on the news of a deal.

All here realize that it was all "Shock and Awe", but I expected a knee jerk reaction to be a gold selloff to below $1600. I didn't expect it to last, but think it's a good sign that it didn't happen at all.

I want to add my comments to the others who say this is one of the best of your articles. it is a timely topic well covered in the article.

Thanks for your comment. People seem to have forgotten who the true owners of the gold are.

I was surprised (disappointed) about a month ago when Ron Paul was reported to have said that we should use the gold to pay off part of the national debt. I wondered if he did it because he thought it might expose the truth: that all the gold in Ft. Knox is kaput.

Was it the IMF who sold gold a few years ago "to help the underdeveloped nations of the world."

How special.

Don, you've had some particularly insightful posts on this topic. Thanks.

I do want to add to the debate about the ignorance of the American people. Let's be honest here. People who watch the MSM are DISinformed. They could be called gullible, but the people running this game are very slick. One "well-informed" CNN-educated liberal told me that he would be happy to pay more taxes--implying that I should be as well. It's a good intention--he has more money than he knows what to do with, but he is willing to be generous. Unfortunately, there will never be enough money. That's the whole point.

Well. I started that para to defend the disinformed. Somehow I didn't get thre. Just too tired tonight to pull the thoughts together. Should have tackled it earlier in the day! LOL

Anyway, Don, thanks for your posts.

@dotti

Any gold in Ft Knox rightfully belongs to the American people. Let's divvy up the people's gold and give an equal quantity of it to each and every American citizen. Besides stimulating people with a golden new new deal we can tax gross interest income from federal debt at 100%.

Reply from The Daily Bell

We seriously doubt there is any gold left at Fort Knox.

Tazio, thanks. Read the full press release. All seems to make sense to me.

However, I would not necessarily say that they support the idea of selling some of the US gold reserves and govt owned property.

"Assuming that all of our gold is still there [Ft. Knox], this gold is worth $426.5 billion at the present time, enough to cover our U.S. government's deficit spending for almost four whole months. The U.S. government also owns valuable land, buildings, monuments, and other types of Real Estate, that could also be worth hundreds of billions of dollars. Although we don't support selling all of our gold and Real Estate, if the U.S. government isn't going to implement real spending cuts that will lead to a balanced budget, we rather sell our assets than see the dollar-denominated savings and incomes of all Americans lose its purchasing power."

My reading says that EVEN THIS would be better than the continued spending (printing) that is debasing our currency and wiping out the people's savings.

Thanks for the link. It is a really good read and full of good, factual information. I recommend it!