Mish's Global Economic Trend Analysis

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• Dollar Plunges as Obama, Boehner Speak on Deficit; Finger-Pointing Text
• Fiat Money Produces Endless Sea of Wars, Debt, Social Inequality, Economic Bubbles, Rampant Consumerism, Environmental Rape; Why Gold is the Answer
• Spanish Government Bonds Hit 6% Again; Yields Climb in Italy
• Boehner, Cantor Attack Obama's $2.4 Trillion "Blank Check" Plan; Both Sides Digging In; It's a Four Player Scenario, Pelosi is Irrelevant
• Sea of Red in Asia, China Down Nearly 3 Percent; New Record High for Gold; "Super Committee" is Super Idiocy

Dollar Plunges as Obama, Boehner Speak on Deficit; Finger-Pointing Text Posted: 25 Jul 2011 09:06 PM PDT Tonight president Obama and speaker Boehner gave back-to-back speeches pointing the finger at each other as to who is to blame for the debt crisis. I did not think much of either speech, neither did the Forex markets. MarketWatch reports Dollar plunges after Obama, Boehner speak on debt Speaking from the White House Monday evening, Obama urged congressional leaders to give him a "fair compromise" about cutting the deficit and raising the U.S. debt ceiling in "the next few days." The dollar initially fell against the yen as Obama spoke, to ¥77.96 from ¥78.24 before the speech, but it pared losses as he finished his remarks. The greenback resumed against the yen its fall as U.S. House Speaker John Boehner spoke, supporting a Republican plan to end the debt stand-off. Text of Finger-Pointing Speeches Barack Obama's speech as delivered Speaker Boehner's remarks, as prepared for delivery US Dollar Index click on chart for sharper image Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Fiat Money Produces Endless Sea of Wars, Debt, Social Inequality, Economic Bubbles, Rampant Consumerism, Environmental Rape; Why Gold is the Answer Posted: 25 Jul 2011 12:07 PM PDT My friend Dominic Frisby put together an interesting video on the rationale for a gold standard. link if above video does not play: Gold: Independent Money A gold standard will not cure every social ill in the world, nor will it stop all senseless wars. Nothing will. However, by now it should be clear to everyone that the current fiat system is good only for bankers, brokers, politicians, war mongers, and the already wealthy. Everyone else loses as inflation eventually eats away at what's left of the rapidly shrinking "middle class". All fiat currencies including the US dollar are doomed. The only debate is the path it takes to get there. For further discussion please consider Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold's Honest Discipline Revisited Michael Pettis Warns of "Virulent Political Turn Against Euro", Adds Clarification to "Gold's Honest Discipline" Jim Grant on going forward with a gold standard, "This is not a threat, this is not a promise, it's going to happen" Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Spanish Government Bonds Hit 6% Again; Yields Climb in Italy Posted: 25 Jul 2011 09:54 AM PDT With most eyes focused on the smoke and mirrors debt ceiling fiasco in the US, inquiring minds note that sovereign debt yields in Europe are once again climbing with 10-Year Spanish government bonds touching 6% once again. Spain 10-Year Government Bonds Bloomberg Quote: Spain Italy 10-Year Government Bonds Bloomberg Quote: Italy Note that Bloomberg's charts do not match the quotes, so go by the quotes, not the charts. Lower yields on Greece, Portugal, and Ireland are meaningless if they head higher on Spain and Italy. That Spain is back above 6% already and Italy headed there is significant. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Boehner, Cantor Attack Obama's $2.4 Trillion "Blank Check" Plan; Both Sides Digging In; It's a Four Player Scenario, Pelosi is Irrelevant Posted: 25 Jul 2011 08:43 AM PDT Four players must agree to do a debt ceiling resolution or nothing gets done. Those players are House Speaker John Boehner, Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, and President Obama. Many have House Minority Leader Nancy Pelosi in that group. However, Pelosi is irrelevant. The house passed the "Cut, Cap, & Balance" without Pelosi so the House can pass something without her support again. The problem is the Senate and President Obama. Debate Getting More Rancorous, Both Sides Digging In Both sides are digging in, and if anything the verbal attacks are getting more rancorous. Boehner and House Majority Leader Cantor both laid into Obama's proposal as noted in Boehner's Blog Common-Sense GOP Effort Will Prevent Job-Crushing Default & Deny President Obama a $2.4 Trillion Blank Check. Highlights from Boehner's Blog Today, House Republican leaders will discuss with lawmakers a new framework designed to prevent a national default while ensuring any debt limit increase granted to President Obama includes spending reforms and cuts that exceed the debt limit hike. This common-sense plan is aimed at stopping President Obama's indefensible quest for a debt limit increase that would run past the next election without a process in place to ensure spending is being cut as the debt ceiling is being raised. I know the president's worried about his next election. But my God, shouldn't we be worried about the country? President Obama desperately wants a large debt limit increase that will take him past the next presidential election. Granting the president's request would amount to giving the president a $2.4 trillion blank check he can use to continue the spending binge that has driven our nation to the brink of a job-destroying downgrade and default. The president has made it pretty clear he sees this debate as inconvenient compared to his desire to create more 'stimulus' programs. "I'd rather be talking about stuff that everybody welcomes – like new programs," he said at a recent press conference. He is trying to set up a no-win situation for taxpayers: either he gets his $2.4 trillion blank check, or America defaults. Congress can deny President Obama a blank check and protect the American people by passing legislation to prevent a default that is consistent with the principles of the Cut, Cap, & Balance plan that passed the House with bipartisan support. The American people are still asking the question: 'where are the jobs?' And they know Washington's spending binge is part of the problem. For the sake of our economy and our future, we need to stop spending money we don't have and start creating a better environment for long-term job growth. Smoke and Mirrors Over the weekend several people asked what was in the various plans and how much would really be cut. Unfortunately details are scant and the plans keep changing. However, anything short of the "grand bargain" has no real substance. It is debatable if the "grand bargain" has substance. There will be an agreement. The question is what that agreement will look like. No one knows exactly but the short answer is "smoke and mirrors". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Sea of Red in Asia, China Down Nearly 3 Percent; New Record High for Gold; "Super Committee" is Super Idiocy Posted: 25 Jul 2011 01:19 AM PDT In the wake of a budget ceiling impasse, markets in Asia are down sharply with China leading the way, down nearly 3 percent. Seriously, does anyone think Congress will not pass something? The US is not going to default and everyone knows it. Of course there are plenty of reasons for the global markets to sink, so it's remotely possible the markets picked this time to worry about the slowing global economy. New Record High for Gold One thing does make sense this evening and that is a new high for gold in spite a firm US dollar. The US is not going to do much about the deficit, nor is the crisis in Europe over. Add in an overheating Chinese economy and a potential downgrade of US debt and gold ought to be headed higher and it is. Super Committee Nonsense I thought it was Tim Geithner who came up with the "Super Committee" idea but he was merely silly enough to latch on to it. The latest hare-brained scheme comes from Senate Minority Leader Mitch McConnell and Majority Leader Harry Reid. Please consider 'Super Congress': Debt Ceiling Negotiators Aim To Create New Legislative Body Debt ceiling negotiators think they've hit on a solution to address the debt ceiling impasse and the public's unwillingness to let go of benefits such as Medicare and Social Security that have been earned over a lifetime of work: Create a new Congress. This "Super Congress," composed of members of both chambers and both parties, isn't mentioned anywhere in the Constitution, but would be granted extraordinary new powers. Under a plan put forth by Senate Minority Leader Mitch McConnell (R-Ky.) and his counterpart Majority Leader Harry Reid (D-Nev.), legislation to lift the debt ceiling would be accompanied by the creation of a 12-member panel made up of 12 lawmakers -- six from each chamber and six from each party. Legislation approved by the Super Congress -- which some on Capitol Hill are calling the "super committee" -- would then be fast-tracked through both chambers, where it couldn't be amended by simple, regular lawmakers, who'd have the ability only to cast an up or down vote. With the weight of both leaderships behind it, a product originated by the Super Congress would have a strong chance of moving through the little Congress and quickly becoming law. A Super Congress would be less accountable than the system that exists today, and would find it easier to strip the public of popular benefits. Negotiators are currently considering cutting the mortgage deduction and tax credits for retirement savings, for instance, extremely popular policies that would be difficult to slice up using the traditional legislative process. House Speaker John Boehner (R-Ohio) has made a Super Congress a central part of his last-minute proposal, multiple news reports and people familiar with his plan say. A picture of Boehner's proposal began to come into focus Saturday evening: The debt ceiling would be raised for a short-term period and coupled with an equal dollar figure of cuts, somewhere in the vicinity of a trillion dollars over ten years. A second increase in the debt ceiling would be tied to the creation of a Super Congress that would be required to find a minimum amount of spending cuts. Because the elevated panel would need at least one Democratic vote, its plan would presumably include at least some revenue, though if it's anything like the deals on the table today, it would likely be heavily slanted toward spending cuts. Or, as Obama said of the deal he was offering Republicans before Boehner walked out, "If it was unbalanced, it was unbalanced in the direction of not enough revenue." Constitutional concerns aside, abdicating legislative responsibility to a super committee with super powers is idiotic. Besides didn't the Gang-of-Six just attempt to do something similar? And where did that plan go after a year of wrangling? Is a 12 man committee more likely to agree to something than a 6 man committee? Anyone who thinks so has mush for brains. Of course the whole idea might be to save face for both parties so that no one has to do anything but point fingers and blame the other side for lack of sensible action. Each passing day delivers more reasons to be disgusted with leaders of both parties. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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