The Next Crisis is at Our Doorstep

For weeks now, I’ve been warning about a market collapse. Among the numerous items I pointed out were:

1) The US economy rolled over in a big way in Q1
2) The Euro Debt Crisis was spreading to Italy and Spain
3) China was showing signs of economic contraction
4) Mutual funds were overly invested in stocks
5) Historical patterns forecasting a collapse
6) Signs that the Fed had lost control of the markets

And on and on.

Meanwhile the mainstream financial media’s consensus was that everything was just fine and that at worse the “recovery” was slowing just a bit. The Euro issues were contained. The US debt issues weren’t a problem. And the Fed would be able to get the economy roaring in no time.

Well here we are and the markets are an absolute bloodbath. Other than hopes for QE 3 there really isn’t much to be bullish on. Indeed, we are very likely heading into the REAL Crisis in short order.

That Crisis will be a Crisis of Faith in the US Fed’s ability to contain and/or solve the problems of the financial system.

For 80+ years, the US financial system has operated under the belief that the Federal Reserve could handle any problem. This belief was put to the ultimate test in 2008 when the Fed faced off against the biggest Financial Crisis of the last 80 years. And the ONLY thing that kept us from the brink was the belief the Fed could fix things.

Read More at Zero Hedge By Phoenix Capital Research

DID GOP BREAK ‘PLEDGE TO AMERICA’ DURING DEBT VOTE?

Penny Starr at CNSNews.com pointed out this morning that House Republicans may have broken one of their most vocal promises from their 2010 campaign Pledge to America pitch when voting for Budget Control Act yesterday. The debt-limit bill, which is expected to save the U.S. from default for the first time in it’s history, was passed in the House yesterday with GOP support despite not being posted with the text online “for at least three days” before the vote.

“Explaining the Republicans’ vision in a response to President Obama’s radio address on Oct. 30, 2010—just before the election—Rep. John Boehner explained that ‘Americans should have three days to read all bills before Congress votes on them.

‘The American people are in charge of this country, and they deserve a Congress that acts like it,’ said Boehner. ‘Americans should have three days to read all bills before Congress votes on them–something they didn‘t get when the ’stimulus’ was rushed into law. We should put an end to so-called ‘comprehensive’ bills that make it easy to hide wasteful spending projects and job-killing policies. Bills should be written by legislators in committee in plain public view–not written in the Speaker’s office, behind closed doors.’”

Starr finds that the summary of how the Republican Congress has fulfilled the Pledge on the House Republican Conference’s Web site, reads on the section regarding the three-day rule: “A Three Day Waiting Period on all Non-Emergency Legislation.” The words “non-emergency” or “emergency” do not appear anywhere in the text of the original Pledge for America as published by the House Republicans.

Read More at the Blaze By Christopher Santarelli, the Blaze

Boehner Should be a Goner

Boehner and McCain vied for “Pansy of the Week,” and Boehner won. Despite the polls that revealed overwhelmingly that America wanted no increase in the debt ceiling, Boehner caved like a Hollywood stage chair. As the saying goes, “His ass is grass.”

America deserves a budget that is tighter than a camel’s butt in a sandstorm; however Boehner’s bill essentially doubles the national debt in a decade, thus the Democrats lust for spending is not hampered in the least. The payout to the lien holders, the American taxpayers is over ten years, a deal I dare you to try to cut with the IRS if you owe back taxes.

Any ten year plan for spending by government is a fool’s folly, because America’s back will be broken from the weight of debt long before then. We are clicking off $5B a day in debt service alone, and not even addressing the principal. Why didn’t Boehner just approve America for a reverse mortgage, because that’s what old people do when they don’t plan on leaving the kids and grandkids the house in the will.

Boehner’s deal does not shrink government at all. He had a chance to finally force government to rein in spending, and he dropped the ball. He negotiated with Obama, a guy who is too lazy to scratch his own butt, a guy who hasn’t presented a budget in over eight months. Obama relies on white people to do his work for him, because Obama is incompetent and indolent.

If there were ever a president who needed the credit card cut, as Sheila Jackson implied, “It’s this [black] president.” Obama runs America finances like a hood rat; spending all the money before he even gets his check. Hood rats spend like there’s no tomorrow, because they don’t think about tomorrow.

Read More at The Black Sphere By Kevin Jackson, The Black Sphere

Tax Warning: Will Barack Obama Do to America What Leftists Already Have Done to Illinois…and England…and…?

Now that the debt-limit fight is basically over (the Senate will join the House in approving it later today), we need to immediately prepare for the next stage in the fight to stop big government and restore economic liberty.

President Obama and other leftists clearly have signaled that they want the new “super committee” – which will recommend $1.5 trillion of deficit reduction before Thanksgiving – to be a vehicle for “balance” and “shared sacrifice.” But if you look in a Statism-to-English dictionary, you learn that “balance” is a code word for higher taxes and “shared sacrifice” means class-warfare taxation.

I’ve already explained that a truly balanced approach requires nothing but spending restraint. And I’ve explained why Obama’s class-warfare taxation is misguided.

Today, let’s look at three real-world examples. We’ll start with the President’s home state. Early this year, using sneaky maneuvering, Illinois politicians raised the state’s income tax rate. I warned that this would drive jobs and businesses out of the state. That was an easy prediction, of course, and we’re already seeing results.Here’s a blurb from a Chicago Sun-Times story.

It’s becoming a habit around here — another day, another stalwart of financial services in Chicago threatening to leave town. On Thursday, it was the Chicago Board Options Exchange suggesting that higher corporate taxes in Illinois could cause it to take jobs out of state. The CBOE’s warning came a day after CME Group Inc. said the same thing. CME owns the Chicago Mercantile Exchange and the Chicago Board of Trade. The options market, with its headquarters and trading floor at 400 S. La Salle, employs about 580 people, not including traders who use its facilities. A CBOE spokesman said in a statement that “economic realities” could force a move.

Because the CME and CBOE are so high profile, I suspect Illinois politicians will provide some sort of one-off tax holiday or back-door subsidy to prevent this from happening. That won’t solve the problem, of course, which is that high tax rates inexorably will undermine the state’s competitiveness and that ordinary people will pay the highest price.

Read More by Dan Mitchell

Why I Opposed the Debt Limit Increase

This act increases the debt limit by between $2.1 and $2.4 trillion, the biggest explosion of debt in American history. It allows the government to avoid spending reductions for the next two years while squandering our last best hope of averting a sovereign debt crisis.

I am opposed to this measure for the following reasons:

The purported cuts, even if realized, are far below the $4 trillion deficit reduction that credit rating agencies have warned is necessary to preserve the Triple-A credit rating of the United States government.

It blows the lid off the House budget passed in April by more than a half-trillion dollars over ten years.

It makes no significant spending reductions for at least the next two years, essentially freezing spending at an unsustainable level. While the debt increase occurs this year, deficit reductions are to be spread over many years and could be reversed by future acts of Congress.

The spending caps are easily circumvented by declaring appropriations to be an emergency, a response to a “major disaster,” or necessary for the “Global War on Terror.”

 Read More at Floyd Reports By Rep. Tom McClintock, Floyd Reports

Limbaugh: Don’t Be Fooled — Debt Deal Means More Taxes

Whether the deal to reduce the government deficit passes or not, says radio talk-show host Rush Limbaugh, the American people are still going to get a tax increase.

“Any way you slice it you are going to get tax increases. That’s how screwed we are,” he said.

Limbaugh blames the complex accounting done by the Congressional Budget Office, he said on his radio show on Monday.

President George W. Bush’s tax cuts that are due to expire at the end of next year, he says. If Obama extends the cuts, the CBO will consider that a $ 5 trillion reduction in government income which will have to be made up elsewhere. If they expire, that’s a direct tax hike on Americans, Limbaugh said.

“Anyone wanting to tell you there are no tax increases in this technically may be right, this piece of legislation does not have a specific tax increases in it. But what’s slated to happen over the next few months results in one,” Limbaugh said.

Read More at NewsMax  By Martin Gould, Newsmax.com

Moody’s: Neither debt plan protects the nation’s AAA rating

The “limited magnitude” of both debt plans put forward by congressional leaders would not put the nation’s AAA credit rating back on solid footing, Moody’s Investors Service announced Friday.

“Reductions of the magnitude now being proposed, if adopted, would likely lead Moody’s to adopt a negative outlook on the AAA rating,” the credit rating agency said in a new report. “The chances of a significant improvement in the long-term credit profile of the government coming from deficit reductions of the magnitude proposed in either plan are not high.”

It added that “prolonged debt ceiling deliberations” have increased the odds of a downgrade, but that the firm is still confident policymakers will avoid a default.

“It remains our expectation that the government will continue with timely debt service,” the firm said.

It also clarified that as far as it is concerned, the nation will only default if it misses an interest or principal payment on U.S. debt, not if it misses payments on other obligations like federal employee salaries or Social Security benefits.

 Read  More at The Hill  By Peter Schroeder, The Hill

Boehner, McConnell Agree to Let Obama Borrow Another $2.4 Trillion

House Speaker John Boehner (R.-Ohio) and Senate Minority Leader Mitch McConnell (R.-Ky.) have reportedly agreed to give President Barack Obama the authority to borrow as much as an additional $2.4 trillion—thus allowing him to get past the November 2012 election without having to seek another increase in the legal limit on the federal debt.

A pleased President Obama announced the deal in a briefing at the White House press room at 8:40 p.m. on Sunday.

“Most importantly,” Obama said of the deal, “it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months. And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.”

Neither Obama, nor Boehner, nor McConnell released the details of the deal on Sunday evening.

The New York Times reported that the money to increase the debt limit would come in an initial installment of $900 billion followed by a second installment of $1.2 to $1.5 trillion. The first $900 billion would include an immediate $400 billion to allow the government to pay its immediate bills. Both the initial and second installment, according to the Times would be subject of disapproval votes by Congress which would cancel the debt limit increases, but that these disapproval votes would be subject to a veto by President Obama—meaning that both houses of Congress would have to vote by two-thirds majorities to prevent the debt limit increases from happening.

Read More at CNSNews By Terence P. Jeffrey, CNSNews.com

Deconstructing the Revenue Side of the Debt-Ceiling Deal: Yes, There’s a Real Threat of Higher Taxes

Politicians last night announced the framework of a deal to increase the debt limit. In addition to authorizing about $900 billion more red ink right away, it would require immediate budget cuts of more than $900 billion, though “immediate” means over 10 years and “budget cuts” means spending still goes up (but not as fast as previously planned).

But that’s the relatively uncontroversial part. The fighting we’re seeing today revolves around a “super-committee” that’s been created to find $1.5 trillion of additional “deficit reduction” over the next 10 years (based on Washington math, of course).

And much of the squabbling is about whether the super-committee is a vehicle for higher taxes. As with all kiss-your-sister budget deals, both sides can point to something they like.

Here’s what Republicans like:

The super-committee must use the “current law” baseline, which assumes that the 2001 and 2003 tax cuts expire at the end of 2012. But why are GOPers happy about this, considering they want those tax cuts extended? For the simple reason that Democrats on the super-committee therefore can’t use repeal of the “Bush tax cuts for the rich” as a revenue raiser.

Here’s what Democrats like:

There appears to be nothing in the agreement to preclude the super-committee from meeting its $1.5 trillion target with tax revenue. The 2001 and 2003 tax legislation is not an option, but everything else is on the table (notwithstanding GOP claims that it is “impossible for Joint Committee to increase taxes”).

Read More By Dan Mitchell

We’ve Been Played for Saps, Folks: Boehner Bill Will Become Reid Bill

RUSH: I think we’ve been played for a bunch of saps, I mean not us exclusively, I just mean the whole country, the Republican Party, ruling class. I’ll explain as uncomfortable as it is and as grading as it is, I’ll explain as the program unfolds it’s great to have you here as always telephone number if you want to be on the program. 800-282-2882. The e-mail address ElRushbo@eibnet.com.

Where are we on the debt deal? I suspect that most of the people, and this is what a lot of people are relying on, “Just finish it!” A lot of people are sick and tired of hearing about it, let’s move on to something else. “I’m tired of talking about it. Can’t we do something that’s fun? What the hell is going on?” I understand the sentiment. Yesterday or last night the Republican leadership succeeded in getting Allen West to flip and vote for the Boehner plan or to commit to it. The same thing with Paul Ryan, and I’ve had a lot of e-mails: “What’s Allen West doing? I can’t believe Allen West, of all people.” These Democrats, folks, you have to understand who we’re dealing with here. This whole thing with Debbie “Blabbermouth” Schultz going on the House floor and accusing West of wanting to cut Medicare and Social Security and all that in the south Florida district, and you remember the contretemps that begin with West responding to it and so forth. They have put his re-election into play and, of course, they’ve got the media on their side down here in south Florida.

So all over the media is the allegation that Allen West wants to do all this damage to senior citizens and so forth so that’s how his vote gets — I’m guessing. I haven’t spoken to him. But I think that’s a large part of it. Now, as we all know the Boehner bill is not ideal. It’s another one of these eight hundred, nine hundred, I don’t even think it gets to a trillion, but let’s say it does, a trillion dollars in cuts over 10 years, the debt limit raised immediately so the spending occurs immediately, but it re-invites the debt limit debate all over again in a few short few months and in fact there is from the Daily Caller today a story that says the GOP is stealing Christmas. The Democrats are going back to the Gingrich that stole Christmas theme from the Clinton days. And here’s the story from the Daily Caller: “GOP Aims to Gut Christmas, White House Alleges — House Speaker and national grinch John Boehner is planning to spoil Christmas, White House officials are claiming, as they try to head off passage of Boehner’s two-stage debt ceiling bill.”

They don’t want to head off passage of the Boehner bill. They want the Boehner bill to pass in the house. There’s a trap essentially that’s being set, and I noticed that there’s an AP story, and way down at the AP story: “In fact, Boehner’s plan has enough in common with Reid’s — including the establishment of a special congressional panel to recommend additional spending cuts this fall — that Reid hinted a compromise could be easy to snap together,” between his nonexistent bill and the Boehner bill. What does that mean? What it means is that over in the Senate Reid really doesn’t have a bill. He’s got an idea, but he doesn’t have a bill. And what he’s put forth as an idea hasn’t gotten all that much support. But here comes, let’s say the House, and Boehner doesn’t have the votes in the House yet according to Politico. And this is key. That was as of 9:30 this morning and they’re going to be working the Republican caucus all day long before the vote tonight. But, as of now, Boehner doesn’t have the votes for his bill. But let’s assume he gets the votes. The Boehner bill then goes to the Senate where it’s dead on arrival. There are 58 senators that are going to vote against it, by design. However, they’ve got a bill over there now.

So Dingy Harry can take the Boehner bill and tweak it and rewrite it, make additions to it, take some things out of it, play with it however he wants, and get enough votes from Democrats since it becomes the Reid bill, and then it gets sent back to Boehner in the House looking nothing like his bill, but the rationale for passing the Boehner bill in the House is we’ve got to do this, the time is up, we’re not going to get blamed. So if Reid monkeys around with the bill that he gets from Boehner, and it passes in the Senate, with whatever changes that are not favorable to us, of course, they throw it back in Boehner’s lap, and then the pressure is going to be back on Boehner. Okay, do you sign the Reid bill? Do you pass it? Do you get your guys to vote for it and send it to Obama, basically a Democrat bill. That is what a lot of people — and I sign on to the theory, too — this is one of the traps that’s being set. The Boehner bill is essentially being used to be a foundation for a nonexistent as of yet Reid bill. And thereby the Boehner bill becomes the Reid bill, therefore Democrat bill all in the absence of an Obama plan. No Obama plan at all in this.

Read More at RushLimbaugh.com