President Barack Obama is due back in Washington early Thursday for a so called final effort to negotiate a deal with Congress to postpone the “fiscal cliff” of tax increases and government spending cuts set to begin next week. No specific bill dealing with this fiscal cliff was on the schedule in either the U.S. Senate or House of Representatives.
Speaking directly to sources on the Hill, things are not looking very good. Speaker of the House John Boehner (Office Phone Number: 202-225-0600) and the Republican establishment quietly retaliated against everyone who were on crucial House committees of strong fiscal conservatives, especially anyone who supported Ron Paul. Boehner is within 17 seats of losing the position of the Speaker of the House (legally, anyone can run for the Speaker of the House it need not be a member!). Boehner had a deal with Obama last year, but backed off when he thought it would personally cost him the position of the Speaker of the House. When he went back to Obama to try to cut a deal this time saying look we were so close last year, Obama said you should have taken the deal then.
Obama insists upon raising taxes on the rich following France. He does not get it that almost 70% of the national debt is interest! He is raising taxes of the productive portion of society not to help the poor, but the keep the debt rolling. That will reduce employment as has been the case in Europe. That 2 year old with a simple pocket calculator can figure out that eventually 100% will be consumed by interest. Spending programs will be cut to make sure interest payments keep flowing.
This not going to be HYPERINFLATION for that presumes spending keeps going and they just print to pay expenses. Instead, we are causing capital to withdraw from investment and this is producing STAGFLATION where costs are rising but economic growth is imploding.
Boehner purged fiscal conservatives from committees because he is trying to force the Republicans to play ball and keep it business as usual. January is coming up as a volatile month in so many markets, and this is the critical issue we have to come to grips with to survive. By 2016, we will have the FIRST opportunity for a THIRD PARTY to emerge in the USA and Boehner is doing his best to purge the fiscal conservatives from the Republicans. The “establishment” Republicans appear hopeless. The Democrats just want to go full force at the “rich” and have no clue what they are doing long-term. This is indeed a Fiscal Cliff we are facing. The end is certainly near and 2013 looks to be the year from hell ahead.
There is no indication that government will even listen in the USA in a respectful manner. Boehner has abandoned the mantle of Reagan and is only interested in placating the religious right while keeping the taxes low and spending flowing. There is just no long-term strategy at all.
Due to requests for a conference for the average person, as a public service this will be held in Philadelphia shortly. Many traders have requested a two-day training workshop in the USA rather than Shanghai. And still others want a World Economic Conference here on the East Coast. We will try to satisfy these demands. 2013 is going to be the Year from Hell! Perhaps the Maya were right that this would be the beginning of a seachange politically. It certainly could not get any worse.
Reserve Your Seat for the One Day Sovereign Debt Crisis Seminar & how to survive what is really coming our way: Seat prices will be $200 each as a public service. SovereignDebtCrisis@gmail.com
We look like we are still here – or at least I am and back in the USA. In the Maya report I provided the the real story. To the Maya, this was a BEGINNING, not an end. There is a high correlation to political changes with the Maya Baktuns – 394.26 years. This may in fact be pointing to the Sovereign Debt Crisis and indeed we will see countries embarrassed and fall into dust. The charts of the Maya cycle seem to correlate to the major changes we see coming next year for 2013.
So you still have to file your taxes. You will still have white knuckles especially come next summer. The Maya cycle is the beginning of a new era. That is trial by fire and we certainly seem to be headed into the eye of the storm for 2013. So the black hole didn’t get us. The poles did not flip, but are moving 40 miles a year. And the debts keep going.
There has been a long-term trend in major inflations and deflations. The numbers are 23 and 26 years. There is sufficient data that has survived even from the Temple of Apollo on the Island of Delos which was essentially the ancient world’s central bank. Just as we know there was a major default of some 13 cities, we also know there was a major real estate bubble between 314-290BC. The Temple rented land owned by Apollo. Land prices soared in part due to a rise in commodity prices caused by weather. The rally lasted 23 years as the commodity bubble burst in 290BC.
The opportunity for 2013 to be a watershed year is profound. We may see the 23 year low in Japan and that means the JGBs would collapse and interest rates will start to rise. A slight uptick in interest rates in Japan will devastate the Japanese banks. We may at last see people withdraw their cash and buy real assets including shares in the top Nikkei 225 companies.
We may also see a reversal in trend for Greece and France may turn into a good short. Watch out for gold. A year-end close below 1570 will warn we can still retest key support at 1435.
One question I get a lot is how long has Sovereign Debt Defaults been going on. Just for the record, kings use to borrow from the temples. In Greece, the first recorded default in history took place during in the fourth century B.C., when 13 Greek city states borrowed funds from the Temple of Delos, which was probably the largest bank in the Ancient World. It was highly trusted and was at the top of donations to pave the way to good fortune. Delos was the birthplace of Apollo, which made it special. The league of Greek city states never made good on the loans and the temple took a 80% loss on its principal. The modern Greek defaults have been 1826, 1843, 1860, 1894, and 1932.
The good news, Greece looks like it will be a buy in 2013. We will be providing the Berlin materials shortly. Effectively, what politicians were not understanding when we warned that UNLESS the debts of member states were consolidated into one European debt, the system would be torn apart.
In all fairness to Greece, the Euro fell to 80 cents US at first, then rallied to nearly $1.60. This meant that the PREVIOUS debt of southern European states APPRECIATED doubling in real costs. It was not just a spending-spree. It was the DOUBLING of the real nominal value of the debt that they had to pay. Sorry, but they got screwed with the Euro all because politicians thought they could not sell a nationalization of debt for Europe and just started with the currency.
Europe needs a single phone system more than a single currency. Your phone costs on roaming are outrageous. They need serious tax reform to be competitive. Then countries like Germany and Switzerland tax you based on what you made the year before and if it was less, well you have to wait for a refund next year. This is devastating to those who lose their job. They still have to pay taxes as if they were earning an income. Governments are borrowing from the poor and do not have the decency to give them any interest.
There are a lot of inefficiencies that have to be cleaned up. Next year 2013 will be very interesting indeed.
YES – those who attended seminars will receive the year-end Reversals in major markets next week.
So many people only look at the US debt and yell and scream while jumping up and down in their yellow rain coats preaching the end is near. True, the US has the largest public debt, but it is far from the worst for it has the largest economy. That distinction being the worst debtor belongs to Japan and if Japan had to pay its debt back, it would be an economic Tsunami of untold proportions. Here are the facts just from the CIA and it is 2 years old. It is far worse and we may see the final capitulation of Japan in 2013.
|Public Debt Top 20, 2010 estimate (CIA World Factbook 2011)
||Public Debt (in billion USD)
|| % of GDP
||per capita (USD)
||Note (2008 estimate)
||($ 5,415, 38%)
||($ 7,469, 172%)
||($ 1,931, 66%)
||($ 1,933, 106%)
||($ 1,863, 56%)
||($ 1,247, 16%)
||($ 1,453, 68%)
||($ 1,158, 52%)
||($ 775, 39%)
||($ 831, 64%)
||($ 571, 41%)
||($ 561, 36%)
||($ 335, 97%)
Only the USA and ERITREA Tax citizens based upon birth.
Virtually every other country (exceptions below) tax ONLY if you are a resident. If you are not there, you do not pay. Now France is talking about adopting the US system of economic slavery based upon birth.
the following countries have no income taxes:
| British Virgin Islands
| Cayman Islands
| Norfolk Island
| Pitcairn Islands
| Saint Barthelemy
| Saint Kitts and Nevis
| Turks and Caicos Islands
| United Arab Emirates
| Vatican City
| Wallis and Futuna
| Western Sahara