"Insanity is doing the same thing over and over and expecting different results." - Ben Franklin, Albert Einstein, et al...The debt spending by the Government - and even worse, the acceptance of it by Taxpaying Americans - is completely insane - by any definition of the word. But first I wanted to comment that yesterday I had speculated that the cost of Bernanke's housing market support proposals sent to Congress a week ago would cost Taxpayers in the range of $500 billion to one trillion dollars. Barclays is out today saying that Bernanke's Fed alone is likely to spend $500 - $750 billion buying mortgages. But Bernanke is also asking for Obama to chip in Taxpayer money. It remains to be seen just how much QE + deficit spending will total on this next round of economic "stimulus," aka big bank bailout confetti. Here's the report from Bloomberg this morning: LINK
I don't know about anyone else, but the situation surrounding the latest request by Obama to raise the debt ceiling had me a bit confused. I had thought that the deal reached in August ultimately raised the ceiling to $16.4 trillion. So I researched it a bit because the media is making it sound like what Obama is asking for is in addition to what was done in August. So here's how it works: In Feb 2010 the debt ceiling was set at $14.294 trillion. On August 2 it was raised to $14.694 trillion so that the Government didn't have to shut down until a new ceiling was reached. Then in September, a deal was reached that put the ceiling at $15.2 trillion but would ultimately take the debt ceiling up to $16.4 trillion, contingent on budget cuts. So right now the Treasury is at the $15.2 trillion limit and Obama has to get Congressional approval in order to utilize the final $1.2 trillion of capacity.
What's getting lost in all of this is that since August 2, the Government has borrowed $200 billion per month ($15.2 - $14.2 divided by 5 months). This is insane. The debt limit agreement in September was intended to take the Treasury thru 2013. Theoretically by then the Government was supposed to agree on massive budget cuts. I would bet my last silver eagle the budget cuts will never happen. In the meantime, the Government is borrowing at a record rate, spending at a record rate and tax revenues - the ultimate indicator of economic health - are coming in lower than was forecast when the fiscal 2012 budget was proposed.
Just think about this number for a minute: the Federal Government is borrowing at a rate of $200 billion per month right now. That's $278 million per hour in a 30 day calendar month. That is insanity. Based on that, the math from the original debt limit deal is tragically wrong and Obama and his happy Government spenders will run out of borrowing capacity by the end of June 2012. That's insane. California is a great microcosm and reflection of the fiscal insanity at the Federal level. Yesterday an hour and a half after the stock market closed, California announced that its current fiscal budget deficit is $2.5 billion wider than was forecast 6 months ago. I honestly don't know how California's Government stays open. Here's the LINK
The situation in California can easily be extrapolated to the national level. Despite the smoke and mirrors being used by the Government number crunchers and readily reported by the mainstream media, this country will not stop borrowing to spend until the rest of the world no longer accepts the dollar. You are insane if you don't think that can happen - just ask anyone who is familiar with the collapse of the German mark in 1923...
Ron Paul had a very impressive showing in New Hampshire. He finished 2nd with 23% of the votes. In 2008 I think he had something like 2% of the votes. Romney was expected to runaway with the NH primary anyway. Despite the "Live Free or Die" slogan on the NH license plate, it seems that voters in NH love insanely corrupt free-spending liberals masquerading as Massachusetts Republicans. That's insane too.
Gold and silver are putting on an impressive recovery from their post-MH Global manipulated collapse in December. Yesterday I mentioned that Jim Sinclair stated in an interview that "something is going on behind the scenes that is not yet evident" and that it was being reflected by quiet buying in the gold and silver markets. I would concur with this analysis and right now every sell-off intra-day in gold and silver is being bought.
If you don't think that the Government and the Fed are going to have to print a lot more money in order to feed the $278 million per hour borrowing - and to prop up the de facto insolvent banking system - you are crazy. If you don't start moving as much as can into gold and silver (and the extraordinarily undervalued mining stocks), you are insane.