CNBC.com morning comment:
Sovereign debt ratings are in the news this morning on several fronts: Fitch affirmed the AAA rating of the U.S. after Monday’s closing bell, though it did drop the outlook to negative.
Why should we expect improvement before November 2012?
Other than wine tasting a pretending it matters, here is the agenda:
G20 crisis talks schedule
- During the morning Mr Sarkozy is due to hold separate talks with US President Barack Obama and India’s Prime Minister Manmohan Singh
- Herman Van Rompuy, President of the European Council, and Jose Manuel Barroso, President of the Commission, hold a press conference
- G20 leaders have a working lunch
- Early evening, Mr Sarkozy to hold a press conference
- Series of working sessions during the morning on tax evasion, globalisation, and financial regulation
- Concluding press conference by Mr Sarkozy in the early afternoon.
This info is from www.g20.com
Monty Guild posts an excellent global market commentary with recommendations for the Commodity Market, Currencies, Equity Markets and Bond Markets. It is always a good read and very useful. This report discusses Fannie Mae and Freddie Mac plus growing discontent in the USA.
Guild Investment Management
The credit contraction is a declining credit cycle that leads to a declining business activity. To put it another way, as our friend Larry Jeddeloh of the Institutional Strategist likes to say, we are in a credit cycle not a business cycle, and that is why the traditional stimulus measures are not having much of an effect.
A source of discontent in America is undoubtedly the fact that household incomes in America have been in a state of decline while the prices of basic needs has been rising. This standard-of-living impairing cocktail is what the American electorate has consumed for more than a decade.
The following came to me and I think the world should get this message:
Senior citizens are constantly being criticized for every conceivable deficiency of the modern world, real or imaginary.. We know we take responsibility for all we have done and do not blame others.
HOWEVER, upon reflection, we would like to point out that it was NOT the senior citizens who took:
- The melody out of music,
- The pride out of appearance,
- The courtesy out of driving,
- The romance out of love,
- The commitment out of marriage,
- The responsibility out of parenthood,
- The togetherness out of the family,
- The learning out of education,
- The service out of patriotism,
- The Golden Rule from rulers,
- The nativity scene out of cities,
- The civility out of behavior,
- The refinement out of language,
- The dedication out of employment,
- The prudence! out of spending,
- The ambition out of achievement or
- God out of government and school.
And we certainly are NOT the ones who eliminated patience and tolerance from personal relationships and interactions with others!!
And, we do understand the meaning of patriotism, and remember those who have fought and died for our country. Just look at the Seniors with tears in their eyes and pride in their hearts as they stand at attention with their hand over their hearts!
YES, I’M A SENIOR CITIZEN!
Legal tender (those good old Federal Reserve Notes pretending to be “US dollars”) can be made illegal for doing business? I would suggest that this – together with all the rest of the policies that the government is enacting that effectively crush the rights, freedoms and incomes of the average American is very bullish for non-mainstream forms of money.
The key thing to keep in mind during this credit crisis is that businesses and citizens don’t need any “money” to do business. You’ve got steel, I’ve got oil, who needs the FRN paper anyway?
The bigger story here is default on the US debt.
In the news article below, cash is literally being declared “illegal” (wow!) for doing business in a State of the USA. How fast could the US just tell China and others that their Federal Reserve Notes are not the problem of the government? That their Federal Reserve Notes are the problem of the “full faith and trust” of the Federal Reserve Bank of the USA?
The Raw Story
In a new law that could put every trading post, Goodwill, flea market, garage sale and Craigslist merchant in the state of Louisiana out of business, a bipartisan group of elected representatives has opted to ban all cash payments for the buying and selling of used goods.
It was signed into law on July 1, but flew so far under the radar that practically nobody in the media noticed until this week, when Louisiana’s KLFY Eyewitness News 10 put a spotlight on the new rules and their likely impacts on local business.
The law also requires second-hand sellers to obtain personal information about each buyer — information like names, addresses, driver’s license number and even, if applicable, their license plate number — and turn it over to state officials.
The prohibition on cash sales is confusing on its face, and appears to contradict the very text on each Federal Reserve note in circulation. “This note is legal tender for all debts, public and private,” U.S. dollars plainly state.
This is an excerpt from a great analysis. It’s worth reading complete article.
“The truth is, the U.S. may never again be the lowest-cost maker of sneakers, clothing, kitchen utensils, the innards of iPhones and thousands of other goods for which inexpensive labor is key.
It’s also a stretch to conclude that a weak yuan is the sole source of the yawning U.S. trade deficit with China. In the past five years — under pressure from the U.S. — China has allowed its currency to appreciate 20 percent against the dollar. And the U.S.’s trade deficit with China? It hit a monthly record of $29 billion in August.
What’s more, at least half the final price of products labeled as “Made in China” goes to Americans, from retail clerks, to shippers and handlers, advertisers, engineers and designers, according to a study by the San Francisco Federal Reserve.“
Here’s how to get your mind around the USA debt problem: Remove 8 zeros from each line and pretend it’s a household budget. I love it when complex things are simplified so that we can all understand.
Sort of brings the issue “home” doesn’t it?
|United States Tax revenue||$ 2,170,000,000,000||Annual family income||$ 21,700|
|Fed budget||$ 3,820,000,000,000||Money the family actually spent||$ 38,200|
|New debt||$ 1,650,000,000,000||New debt added to their credit card||$ 16,500|
|National debt||$ 14,271,000,000,000||Outstanding balance on their credit card||$ 142,710|
|Recent budget cut||$ 38,500,000,000||Total budget cuts for coming year||$ 385|
There are several trends developing the the USA which are typically symptoms of upcoming extreme political change.
It is not protest movements like “Occupy Wall Street”. These high-profile movementes typically generate a new generation of leaders which can easily be co-opted, manipulated, absorbed and strategically managed to act in the interests of the established power blocks. Key uses of these social protests for power brokers is to generate fear; produce media friendly footage that can be misrepresented; and other compromise deals that erode the credibility of social protest action in general and their leaders in particular. The goal is create apathy and docility in the face of much needed political and social restructuring.
The real roots of social change come when communities opt out of the central “money and taxes” nanny state completely. A few examples are :
- Barter taking transactions out of the statistics and range of the tax collector
- Communities inventing their own local currencies for local trade (and again – the taxman loseth)
- Community volunteer work making central, tax-paid support for parks and other community resources unnecessary and unwanted
- Communities able to provide food and other basics locally
All of the above changes in the USA “way of doing business” reduce the attack vectors that big business and financial interests can use to control local populations.
All of the above changes are also fully coherent with how Americans perceive themselves.
And they are all in full swing right now…
Hoping to keep their money close to home, three Bay Area communities have begun operating their own currencies.
In June, a group of businesses in San Francisco’s Bernal Heights neighborhood started signing up residents for a debit card that offers 5% of purchases back in a local currency called Bernal Bucks when residents shop in the community. The move follows that of two nonprofits in Marin County—Coastal Marin Fund and FairBucks—which began minting their own $3 coins last year.
The idea is to raise resident awareness about supporting small businesses in an era of big-box national chains, and to find a new way to raise funds for local causes.
“Neighborhoods are taking their economic destiny into their own hands by looking at the money that is circulating in them,” said Arno Hesse, one of the creators of Bernal Bucks.