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What a US Debt Default Could Bring

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A US debt default could trigger a nightmare scenario that many economists have been warning about. Eventually this shit pile of debt will have to be dealt with but is this the moment ? One thing is for sure, this can easily be avoided but as usual politicians like to play Russian roulette.

The following are 12 very ominous warnings about what a U.S. debt default would mean for the global economy…

#1Gerald Epstein, a professor of economics at the University of Massachusetts Amherst: “If the US does default, that will make the Lehman Brothers bankruptcy look like a cakewalk”

#2Tim Bitsberger, a former Treasury official under President George W. Bush: “If we miss an interest payment, that would blow Lehman out of the water”

#3Peter Tchir, founder of New York-based TF Market Advisors: “Once the system starts to break down related to settlement and payments, then liquidity disappears, as we saw after Lehman”

#4Bill Isaac, chairman of Cincinnati-based Fifth Third Bancorp: “We can’t even imagine all the things that might happen, just like Henry Paulson couldn’t imagine all the bad things that might happen if he let Lehman go down”

#5Jim Grant, founder of Grant’s Interest Rate Observer: “Financial markets are all confidence-based. If that confidence is shaken, you have disaster.”

#6Richard Bove, VP of research at Rafferty Capital Markets: “If they seriously default on the debt, what we’re really talking about is a depression”

#7Chinese vice finance minister Zhu Guangyao: “The U.S. is clearly aware of China’s concerns about the financial stalemate [in Washington] and China’s request for the US to ensure the safety of Chinese investments.”

#8The U.S. Treasury Department: “A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse”

#9Goldman Sachs: “We estimate that the fiscal pull-back would amount to 9pc of GDP. If this were allowed to occur, it could lead to a rapid downturn in economic activity if not reversed quickly”

#10Simon Johnson, former chief economist for the IMF: “It would be insane to default, but it’s no longer a zero-percent probability”

#11Warren Buffett about the potential of a debt default: “It should be like nuclear bombs, basically too horrible to use”

#12Bloomberg: “Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.”

Source: theeconomiccollapseblog.com

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Peter Schiff: Its Going To Hit The Fan In Obamas 2nd Term

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Peter Schiff’s interview with Varney on Fox.

  • Gold is consolidating in preparation for another big move up.
  • People are getting complacent and think things are getting better, but that’s only because governments are printing money. People will soon start to see the inflation.
  • Japan will start to see high rises in inflation.
  • Inflation is the new monetary policy for CBs.
  • Markets are currently blindsided and won’t see inflation until it gets much worse.
  • CPI numbers are phoney and designed to hide inflation.
  • Bond bubble will eventually burst and that money will chase real goods.
  • Would be shocked if there wasn’t an explosive move up in gold in next 2-3 years.
  • It will hit the fan in Obamas 2nd term  – Currency crisis & Sovereign debt crisis.

What The Presidents Said About US National Debt

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Talk is cheap.

US: Obama Pushing For Carbon Tax

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Fresh from his presidential victory, Obama is making noises about introducing a carbon tax in the US as reported in Bloomberg. Despite the fact that only 3% of all CO2 is man made, governments globally have used this biased science as an excuse to introduce new taxes for a misinformed public. Now its Obama’s turn since he no longer has to care about getting re-elected but will be hard to introduce as the Republicans control the House.

Barack Obama may consider introducing a tax on carbon emissions to help cut the U.S. budget deficit after winning a second term as president, according to HSBC Holdings Plc.

A tax starting at $20 a metric ton of carbon dioxide equivalent and rising at about 6 percent a year could raise $154 billion by 2021, Nick Robins, an analyst at the bank in London, said today in an e-mailed research note, citing Congressional Research Service estimates. “Applied to the Congressional Budget Office’s 2012 baseline, this would halve the fiscal deficit by 2022,” Robins said.

Hurricane Sandy sparked discussion on climate protection in the election after presidential candidates focused on other debates, HSBC said. A continued Republican majority in the U.S. House of Representatives means Obama’s scope for action will be limited, Robins said. Cap-and-trade legislation stalled in the U.S. Senate after narrowly passing the house in 2009.

North American discharges fell 1.3 percent last year amid slowing economic growth. In China, the world’s biggest emitter, greenhouse gases from fuel use rose more than 9 percent in 2011, according to BP Plc (BP/) statistics published on June 13.

“Cap-and-trade has been demonized” and Obama probably won’t seek to install such a program in his second term, Richard Sandor, founder of the world’s biggest carbon trading exchange in Europe, said today at the presentation in London of his book titled Good Derivatives.

New carbon trading programs in California, China and Brazil may encourage U.S. lawmakers to introduce greenhouse gas trading by about 2020, Sandor said.

“We’ve lost our moral authority in the U.S.,” he said. “You haven’t here in Europe.”

Prices in the European Union carbon market, the world’s biggest by traded volume, dropped to a four-year low in April on surging supply and flagging demand.

Obama and the U.S. Congress should consider a carbon tax to help meet the government’s looming need for revenue, according to the Center for Climate and Energy Solutions in Arlington, Virginia.

The tax would not necessarily add to the economy’s total tax burden, according to Elliot Diringer, executive vice president of the research group. Such a tax may free up space for reductions in company taxes that dissuade employment, for example, Diringer said in an interview from Arlington.

“We have lots of need for new revenue to address our challenges,” which include priorities for conservatives such as extending tax cuts, avoiding deep defense cuts, reducing the corporate tax rate, reforming tax territoriality, and deficit reduction, the group said today in an e-mailed statement.

“While Sandy’s lessons are still fresh, the president should be clear about the urgency of cutting carbon emissions and strengthening critical infrastructure to protect Americans against the rising costs of climate change,” the group said yesterday in a separate statement.

Source: Bloomberg

Gas Prices

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Enough said 😉

Legends Who Left Their Mark

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