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genglandoh
02-14-2011, 06:53 AM
The US Budget Deficit estimate for 2011 has been adjusted from -1,266 Billion to -1,654 Billion. This is a 377 Billion increase or a 30% increase, making 2011 the largest budget deficit in history.

http://www.reuters.com/article/2011/02/14/usa-budget-obama-idUSN1321917920110214

Some background
******Deficit
2007****-160
2008****-458
2009***-1,412
2010***-1,555
2011***-1,645

Tylerdurden
02-14-2011, 07:04 AM
Doesn't mean much overall, the real threat on the horizon is what is happening in food items and fuel costs as the Quanitive Easing,1,2,3,4......... continues.
It cannot stop now or ever as it is a death slide like a patient on life support. Costs of staple items will do the Wiemar republic dance on the poor and middle classes heads until they rise up or just whimper away and die.

Maybe this will open you eyes to the truth of these things...

Preparing Accordingly II

A frequent topic here has been the ongoing and still-building food inflation crisis. The MSM is just now awakening and beginning to discuss the implications. By the time the great unwashed become fully aware of the magnitude of this problem, it will be too late. You, my dear reader, still have time to prepare.

As you know by now, the endless money printing by our inept and foolish "leaders" is causing prices to rise in all things dollar-denominated. Economics 101 teaches us that more dollars chasing a static supply of goods leads to an increase in price. Eventually, these rising input costs are passed along to the consumer in the form of cost-push inflation. This insidious monster is the most painful of economic afflictions as rising costs are not met with commensurate rises in wages. The pain to the consumer is great and often brings about social unrest and upheaval. We will surely discuss this phenomenon in greater detail in the days ahead. For now, I wanted to give you charts on some items that we don't normally follow here, just so you can grasp the dimension and scale of that which lies ahead.

First up is the primary commodity index, the C.R.B. Here is the current makeup of the index:

EnergyCrude Oil, Heating Oil,
Natural Gas17.6% GrainsWheat, Corn, Soybeans17.6% IndustrialsCopper, Cotton11.8% MeatsLive Cattle, Lean Hogs11.8% SoftsCoffee, Cocoa, Sugar
Orange Juice23.5% Precious
MetalsGold, Silver, Platinum17.6%









And here is a weekly chart:

http://2.bp.blogspot.com/-4FP-hIoeiT8/TVgTc26P2vI/AAAAAAAAAWQ/kHVmOcGFDMs/s320/CRB.jpg (http://2.bp.blogspot.com/-4FP-hIoeiT8/TVgTc26P2vI/AAAAAAAAAWQ/kHVmOcGFDMs/s1600/CRB.jpg)
When did the index really take off? Last July. Why then? That's when the realization was made that QE2 was coming. Will it continue rising? As long as QE continues? Will QE ever end? No. It can't.

First up, coffee. Coffee is a great cost-push example. For now, companies like Starbucks are trying to absorb some of this rise in price by slashing margins and other internal "controls". They can't can't keep this up forever, though, so soon your latte is going up in price. A lot. Interestingly, SBUX has risen about 30% since July. Does that add up for you? Me, neither.

http://4.bp.blogspot.com/-d6BZJal4ADc/TVgUurfGnDI/AAAAAAAAAWU/y5ydXdon5rQ/s320/Coffee.jpg (http://4.bp.blogspot.com/-d6BZJal4ADc/TVgUurfGnDI/AAAAAAAAAWU/y5ydXdon5rQ/s1600/Coffee.jpg)

OK, now, here's where the real problem is: Corn and the other grains. The disp**** shills, LIESman, Krugman et al , can wax prophetic all they want about the minimal impact these higher prices will have on the consumer. You can draw three conclusions from this:
1) They are all profoundly stupid, almost to the point of partial retardation.
2) They are criminally negligent in their lack of basic economic education.
3) They are deliberately misleading people in the hopes of maintaining the ponzi as long as possible.
I'll let you decide which is true. I know which one I believe.
Back to corn. Look at this chart:

http://4.bp.blogspot.com/-jJbepiSj3a8/TVgVv_NH_bI/AAAAAAAAAWY/eDkoYbw7rjk/s320/Corn.jpg (http://4.bp.blogspot.com/-jJbepiSj3a8/TVgVv_NH_bI/AAAAAAAAAWY/eDkoYbw7rjk/s1600/Corn.jpg)
This near 100% move has occurred in the offseason. What happens if we get a little drought in the American midwest this summer?
What the shills fail to recognize is the interaction between agricultural commodities. In this case, its the relationship between corn, cattle and hogs. You see, if you're a rancher or a pig farmer, your primary input cost is feed. (Ever heard of the term "midwest corn-fed beef"?) When feed costs double, your first move as you attempt to control costs is to sell some of your stock. As those cows and pigs come to market, their presence has the same impact as any other increase in supply...a temporary suppression of price. Yet, even in this environment, look at a cattle chart:

http://1.bp.blogspot.com/-ya20ZU3K690/TVgYD55JKQI/AAAAAAAAAWc/VoLIdlc4gQc/s320/Cows.jpg (http://1.bp.blogspot.com/-ya20ZU3K690/TVgYD55JKQI/AAAAAAAAAWc/VoLIdlc4gQc/s1600/Cows.jpg)
And look at hogs:

http://3.bp.blogspot.com/-NZ22TwtS7Kw/TVgYLgux60I/AAAAAAAAAWg/51ANRKXoJio/s320/Pigs.jpg (http://3.bp.blogspot.com/-NZ22TwtS7Kw/TVgYLgux60I/AAAAAAAAAWg/51ANRKXoJio/s1600/Pigs.jpg)
The only thing that has kept cow and pig prices from rising at the same rate as the grains is this temporary increase in supply. Replacement rate of a herd or barn is usually not much more than 1:1 so it follows that all of the excess supply currently in the market will lead to a commensurate drop in supply later this year. Add less supply to increased demand (due to QE) and you get explosive price increases. So, not only are the grains significantly more expensive, protein is, too. Not good. Not good at all.

Thus the phrase: Prepare Accordingly. The time is now. We're already seeing, in other parts of the globe, what hungry, desperate people are willing to do. This will continue and get worse.
Prepare yourselves.
Prepare your families.
Prepare your friends.
Consider things through to their logical conclusions.
Be ready for any and all eventualities.

http://www.zerohedge.com/article/guest-post-preparing-accordingly-ii

genglandoh
02-14-2011, 07:26 AM
Don't you think the Deficit Problem is the cause of inflation.

Tylerdurden
02-14-2011, 07:34 AM
Don't you think the Deficit Problem is the cause of inflation.

No, money printing out of thin air by the privately owned central banks (The FED) with no oversight. There is a reason they stopped reporting M3.

Tylerdurden
02-14-2011, 08:20 AM
Here's some more trickling in. Food prices are going through the roof. With that comes a loss of any form of stability. The biggest issue causing the riots in the middle east is food costs as the poor buy in bulk rather than the way we do prepackaged here. Its easy to cover up rising costs short term by altering sizes like we have seen the past year or so but now it comes out into the light of day.
Major Food Distributor Sysco: “Immediate Volatile Prices, Expected Limited Availability, and Mediocre Quality at Best” (http://www.activistpost.com/2011/02/major-food-distributor-sysco-immediate.html)

genglandoh
02-14-2011, 08:29 AM
No, money printing out of thin air by the privately owned central banks (The FED) with no oversight. There is a reason they stopped reporting M3.

Agreed printing money is why inflation happens.
But the reason the central banks around the world are printing money is because their Governments have large budget deficits.

Tylerdurden
02-14-2011, 08:39 AM
Agreed printing money is why inflation happens.
But the reason the central banks around the world are printing money is because their Governments have large budget deficits.

One controls governments with debt. That's the central bank scam. If you really want to change things support auditing the Fed. Once we understand what has been done things will change quickly.

RonW
02-14-2011, 09:53 AM
[QUOTE][Some background
******Deficit
2007****-160
2008****-458
2009***-1,412
2010***-1,555
2011***-1,645 /QUOTE]

The deficit spending is one of the most important problems..The more the government spends in red ink, the more capital they consume which takes away the capital from the private sector. And the private sector is where the real job creation is done.This is one reason why banks don't have money to loan to the private sector which is what will really stimulate the economy.
And as the government grows they need more capital to run it, which means more taxes and less capital once again in the private sector.
But you will never hear paul krugman and keynesian economists say this..

mikefrommontana
02-14-2011, 10:23 AM
OK, what I'm stumped at, and I know I should go rummaging through budget numbers to figure this out but: What all the sudden required a TRILLION dollars between 2008 and 2009. Is all of this the costs of the Iraq and Afghanistan wars coming "on the books"? I don't think that such shifts can be laid entirely on entitlements. TARP? Where's the money going?

Tylerdurden
02-14-2011, 10:26 AM
OK, what I'm stumped at, and I know I should go rummaging through budget numbers to figure this out but: What all the sudden required a TRILLION dollars between 2008 and 2009. Is all of this the costs of the Iraq and Afghanistan wars coming "on the books"? I don't think that such shifts can be laid entirely on entitlements. TARP? Where's the money going?

Support Ron Pauls campaign to audit the Fed and find out. The Fed has repeatedly refused to provide details to congress so no one really knows.

RonW
02-14-2011, 11:11 AM
Let's not forget the expansion of the government itself. Back in the 90's for a brief period we actually came to a balanced budget,,,that budget was aprrox. 2 trillion..
It gradually inflated to a budget of 2.5 trillion, but for the last ten years especially they have borrowed over and above the budget which now puts us at 14 trill. in the red (national debt)and they are wanting a budget closer to 4 trillion a year then the 2.5 trillion they generate in revenues.
Homeland security was created out of thin air after 9-11 and is now up to about 70 billion a year.
They keep increasing the funds to the programs they have and generating new programs..till we end up where we are ...the bloated goat that has consumed everything it can..such as our economy..

S.V. Airlie
02-14-2011, 11:18 AM
I find it interesting that so many talk about the fed deficit..Now I know there is a relationship between the fed deficit and those deficits that are carried over to the states but our current state deficits are do not seem to be any worse..We have two deficits to deal with one is state and one if federal.May be I am wrong but no one has addressed that aspect.

RonW
02-14-2011, 11:47 AM
You are on the money there S.V. besides the money we got to cough up for the feds red ink, almost if not all of the states have a bunch of red ink as well..more money we got to cough up. And that leads to the question what about the counties, cities, schools, public employees pension funds..
We are looking at bond defualts, and states filing bankruptcy, mainly to get rid of unfunded mandates and public employees pension funds that never where realistic to begin with but a lot of promises by politicians of yesterday with the promise of tomorrows tax payer picking up the tab in the future.
Unfortunately the future is here and we owe all this money for wastefull spending and promises of the past..
So where does it end and when will reality set in.?

wardd
02-14-2011, 11:55 AM
http://andrewsullivan.theatlantic.com/.a/6a00d83451c45669e20120a5dc5c99970c-popup

http://http://en.wikipedia.org/wiki/File:PublicDeb

http://yellowroad.wallstreetexaminer.com/blogs/files/2008/06/img0009_2097970562.PNGtTriade.PNG[/URL]

S.V. Airlie
02-14-2011, 12:09 PM
Wardd..I thinkI'm readibng this right..It should vary by state as some are more in the red than others but you, again, if I read this correctly have given a graph for households with no indication of federal deficit..I think the two deficits for each state and the feds should be combined..
ps..it may not make a difference overall but it should be taken into account

peb
02-14-2011, 12:10 PM
OK, what I'm stumped at, and I know I should go rummaging through budget numbers to figure this out but: What all the sudden required a TRILLION dollars between 2008 and 2009. Is all of this the costs of the Iraq and Afghanistan wars coming "on the books"? I don't think that such shifts can be laid entirely on entitlements. TARP? Where's the money going?

Believe it or not, TARP was not one of the main causes. It had very little to do with the increase of the deficits. It did cause an increase in government debt at the time, but not the deficit. The reason why is because of the way TARP was implemented. The government effectively bought assets with most of TARP money, it did not "spend" anything (a few exceptions). When any entity buys an asset, it causes a loss of cash (in this case, more debt), but it does not hit the expense ledgers, instead the increase debt was offset by new assets on the balance sheet. This is perfectly valid accounting, as long as the assets are properly valued. At the time, people had legitimate questions about that, but it appears to have been done properly from the federal governments' perspective.

Also, since much of TARP has been paid back, the increase in debt levels between then and now are due mostly to the deficit we have run since then.

The Freddie and Fannie situation are different, the ongoing support and increase in their balance sheets is rather suspect. It is likely that the negative equity on those two companies balance sheet should really be treated as part of the US debt.

The Federal Reserve's situation is different also. It definitely has taken on assets to its balance sheet which may be inaccurately valued.

peb
02-14-2011, 12:12 PM
I find it interesting that so many talk about the fed deficit..Now I know there is a relationship between the fed deficit and those deficits that are carried over to the states but our current state deficits are do not seem to be any worse..We have two deficits to deal with one is state and one if federal.May be I am wrong but no one has addressed that aspect.

No, it is being addressed. The bond market is seeing to that. The bond market is about to take control of various state's budgets. Also, if you add up the deficits for all of the states, I still think they are dwarfed by the federal deficit. At least that is what my memory is telling me.

S.V. Airlie
02-14-2011, 12:17 PM
I mentioned that in a post above; that state deficits in comparison don't probably make a difference in the fed deficit overall. .Don't know what the bond market is doing yet..Waiting to figure that out

peb
02-14-2011, 12:18 PM
OK, what I'm stumped at, and I know I should go rummaging through budget numbers to figure this out but: What all the sudden required a TRILLION dollars between 2008 and 2009. Is all of this the costs of the Iraq and Afghanistan wars coming "on the books"? I don't think that such shifts can be laid entirely on entitlements. TARP? Where's the money going?

The idea that the Iraq and Afghanistan wars were not "on the books" was a fabrication that was implied by the Obama administratino. All costs of those wars have been accurately accounted for in the federal deficits the last 10 years. The only thing that was different, was that the Bush administration did not include the projected costs in any of their proposed budgets. But as the money was spent, it was accounted for properly.

I will add, that it was entirely proper that the Bush administration relied on specific appropriation bills to fund those wars. It was one of the most honest things that could have been done, as it forced ongoing debate in congress as to the continuation of those wars. The appropriations were not included in a lump budget that was passed in its entirety. It made things diffucult politically, because the finding battles were always going on. Notice how the wars are now carried on with little congressional approval or disapproval. The Obama administration did two things wrong, place the funding in the yearly budget, and then used the term "off-budget" to imply that it was not accounted for honestly during the Bush years. Of course, the average liberal on the street bought into this garbage completely. It is still not well understood.

wardd
02-14-2011, 12:19 PM
someone explain why we have unemployed and idle productive capacity

what would happen if those workers were employed and that capacity producing?

peb
02-14-2011, 12:21 PM
OK, what I'm stumped at, and I know I should go rummaging through budget numbers to figure this out but: What all the sudden required a TRILLION dollars between 2008 and 2009. Is all of this the costs of the Iraq and Afghanistan wars coming "on the books"? I don't think that such shifts can be laid entirely on entitlements. TARP? Where's the money going?

Finally, you are right about entitlements also, assuming you are defining entitlements only as SS and medicare. Those deficits have yet to make that significant an impact on the deficit.

THe big jump was due to the (non-TARP) stimulas programs passed in 2008 during the final year of the Bush administration and in 2009 at the very beginning of the Obama administration. Those spending levels have now become the norm.

RonW
02-14-2011, 12:28 PM
THe big jump was due to the (non-TARP) stimulas programs passed in 2008 during the final year of the Bush administration and in 2009 at the very beginning of the Obama administration. Those spending levels have now become the norm.

Absolutely, they want the one time stimulus to now be in the budget every year, more govee..

But the tarp, program may be a whole lot more then meet the eyes or what they tell us about.
We where told 8 or 900 billion.when behind the scenes talk about trillions of dollars from the federal reserve sent all over and abroad.
They have been mention of 9.3 trillion and 12.3 trill. and then the doods & Frank financial reform bill is suppose to have a mention of 20 trillion in it ..
So let's audit the fed..

S.V. Airlie
02-14-2011, 12:31 PM
A guess a fox in the henhouse is the best we can get anyway with an audit

Dutch
02-14-2011, 12:34 PM
been saying it since Ive been back - forget gold- invest in long term food storage - of course that idea was poo pooed by all the wb forum glitteratzy. ;)

RonW
02-14-2011, 12:43 PM
been saying it since Ive been back - forget gold- invest in long term food storage

Lead may end up being the future commodity .......who would have ever thunk..

peb
02-14-2011, 12:44 PM
Absolutely, they want the one time stimulus to now be in the budget every year, more govee..

But the tarp, program may be a whole lot more then meet the eyes or what they tell us about.
We where told 8 or 900 billion.when behind the scenes talk about trillions of dollars from the federal reserve sent all over and abroad.
They have been mention of 9.3 trillion and 12.3 trill. and then the doods & Frank financial reform bill is suppose to have a mention of 20 trillion in it ..
So let's audit the fed..

You have your facts confused and mixed up (and I am on your side politically about a lot of this stuff). The federal reserve was NOT involved in TARP directly (with QE I, you can make the case they enabled the treasury purchases), it was all done by the US treasury. The federal reserve explicitly took the position they could not do what TARP called for.

AS for the TARP money being sent all over and abroad, that is simply what it was about from word one. All of the cry and screaming about AIG money going to Goldman Sachs and forign banks was a bunch of bs. AIG was taken over by the government. AIG had the bad side of a lot of bets on mortgage securities (most of the bad side of the CDS bets). So if AIG was to be bailed out, by definition when they paid off their debts, the money was going to go to GS, JPM, forign banks, hedge funds, etc who were on the right side of those bets.

I have no idea what you mean about the Dodds and Frank bill having 20trillion in it. For what? I hate the bill, horrible legislating IMO, but I know nothing about that. Maybe some references?

As to the comment "They have been mention of 9.3 trillion and 12.3 trill", I have no idea what you are talking about here either. References on that?

I have spend a lot of time reading and understanding the financial events since 2008 (well, way before then, its really what I do for a living), I try to keep up fairly closely with all of this stuff, but I just don't know what you are talking about.

RonW
02-14-2011, 01:13 PM
I have spend a lot of time reading and understanding the financial events since 2008 (well, way before then, its really what I do for a living), I try to keep up fairly closely with all of this stuff, but I just don't know what you are talking about.

So have I, since I am self employed, I knew in the spring of 08 the sh*t was going to hit the fan and last for years if we where lucky.
We , the u.s. are not in financial trouble, it is actually a world crisis that is much deeper then anyone would guess in their wildest guesses.
This is what the global economy has led to, literally a financial meltdown. worldwide.
Contrary to popular belief china is also ready to collapse.
I didn't read your paper on bis or see it, are you referring to the bank of basil, which years ago tried to put a halt on the financial leveraging, which in a home or commercial realestate should be about 1 to 10, instead they pumped it all the way up to 1 to 70. not a common known fact.
The banksters world wide leveraged to above and beyond, then they created the derivative markets which are suppose to now exceed 65 trillion.
or the world's gdp output.
At the same time they turned the stock and exchanges into a casino and contrary to what norm thinks that the dow should be about 12,000.. I suggest that in the early 90's it was only 3,000 so how did it skyrocket 4 folds in less then 15 years.
We are living in a ponzzi scheme that is about to bust worldwide.
The u.s. federal reserve pretty much controls things world wide, over a year ago I read that the actual cost of the bailout, was closer to 12 trillion, only a week or 2 ago on the dylan ratigan show, and he is one of the few that is really unraveling the economy as to facts stated it was 9.3 trillion..
Just the other day gerald celente said it was actually 20 trillion and the only way we know this is it was mentioned in the latest scam the dodd and frank financial reform bill..this money or credit was shipped world wide..

peb
02-14-2011, 01:45 PM
BIS - Bank of international settlements. http://www.bis.org/ , the paper is http://www.bis.org/publ/work300.pdf

RonW, your financial reading is obviouslyl different than mine. FYI derivative markets have been around forever, the term is too broad to have any real meaning. There were new deriviative types that came available in the last 10 or so years, which ones are the problems would require them to be identified by type (there are hundres of types, some of them hundres of years old).

The dow was 3000 or so in 1990 because it was still recovering from a secular bear market that lasted 16 years and ended in 1982. With an annual increase of 6-7%/year )which is what inflation + gdp ) would "typical" for the dow in that time frame you would expect it to double in price approximately every 12 years. It did so, almost twice, in less than 10 years since 1990 because of the after effects of the long-term secular bear market and the fact that it ended the 18 year bull market beginning in 1982. In that period of the cycle, the increase was not greatly out of line, considering the market cycle and the strong economy (not the nasdaq, it is a different story).

Editied to fix with respect to dividends.

peb
02-14-2011, 02:15 PM
RonW, I will add that the DJIA 5 fold between 1950 and 1965, so your 1990s example is not out of line historically with other bull markets.

Tylerdurden
02-14-2011, 06:31 PM
Well before this gets lost in a see of nonsensical minutia lets look at who we owe.

http://silverminers.com/commentary/wallace/index.php?&content_id=1290

Seems our Biggest creditor the Privately owned Federal Reserve has us for a whopping 5.351 Trillion.