(CNSNews.com) – The U.S. Treasury quietly warned at the end of a statement issued last Wednesday that it expects the federal government to hit its legal debt limit before the end of this year–which means before the new Congress is seated–and that “extraordinary measures” will be needed before then to keep the government fully funded into the early part of 2013.
What does “extraordinary measures” mean?
“It might be good for Mr. Obama’s friends, but it’s not good for the world,” widely followed investor Jim Rogers complained on CNBC in reference to the cheap-money policies of the past four years.
His strategy: “Today I’m going to short more bonds, more U.S. government bonds. I’m going to buy more commodities, both base metals and precious metals. It looks to me like money printing is going to run amok now, spending is going to run amok.”
What do you know about the Weimar Republic?
Stocks took a sharp nosedive across the board Wednesday in the wake of President Barack Obama’s re-election, triggered by worries over the looming “fiscal cliff” and as fears over Europe’s economy reemerged.
The Dow fell below 13,000, while the S&P 500 traded under 1,400 for the first time since early September.
“I don’t think there’s a long-term market reaction to the presidential election itself—it’s now how quickly we can focus on the ‘fiscal cliff’ and coming up with a resolution,” said Art Hogan, managing director of Lazard Capital Markets.
What in his actions over the past 4 years gives you any reason to believe Obama knows how and – if he does – is actually willing to address our spending problem? Remember, he is only in power because he has promised to take from the rich and give to the poor, but the rich do not possess enough wealth to feed all the poor to whom Obama is now indebted, and the only way he can keep those poor from turning on and eating him is to keep spending.
It’s definitely too early to read into any of the data, but it wouldn’t hurt to pay attention to where U.S. futures move as the election results continue to pour in:
You should read this story in light of Hogan’s comments in the story before it.
Traders say one of the most pressing issues facing the U.S. is the looming “fiscal cliff,” a combination of higher taxes and government spending cuts that automatically takes effect unless Congress acts by Jan. 1. The total impact next year could be as high as $800 billion.
So, how will Obama deal with the spending problems? Well, we are about to face the largest tax increase in the history of mankind come January 1st, but then there are also many other stories that suggest what is coming in reaction to our debt crisis:
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 carbon tax starting at $20 a 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.
Since I am on a John Adams kick today, I’ll just leave you to ponder over all of this against these words:
All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit, and circulation.
Stocks around the world are getting hammered today.
“U.S. stocks opened lower and kept falling throughout the morning in New York. The Dow Jones industrial average was down 2.5 percent at 12,918.23 and the broader S&P 500 index off the same rate at 1,392.99,” the Associated Press report.
Meanwhile, European stocks are faring just as poorly if not worse.
“In Europe, the FTSE 100 index of leading British shares dropped 1.6 percent to close at 5,791.63 while Germany’s DAX fell 2 percent to 7,232.83. The CAC-40 in France dropped 2 percent to 3,409.59,” the AP notes.