Playing with Debt Nukes

By Greg Hunter’s USAWatchdog.com

The situation in Greece is bleak.   Sure, the Prime Minister, George Papandreou survived a confidence vote yesterday, but he is a long way from solving the debt crisis in his tiny country.  The public debt totals $500 billion.  The plan is to add another $150 billion or so in debt.  It will be a second bailout package to keep the country afloat. In order to get the money, Greece will have to sell off state owned assets.  It must also give the people more financial pain in the form of even deeper cuts to government programs and entitlements.  That plan will surely spark more protests and civil unrest.  It comes down to a fight between the bankers that made reckless loans or the people who will suffer deep austerity for years.  In the end, one way or another, Greece will default.  The bankers are willing to pile on debt in hopes everything will get back to normal and they will get paid.  That is a pipe dream.

Even if the banks voluntarily let some of the debt rollover, it could lead to something equal to a default.  Reuters reported yesterday, “Fractious euro zone finance ministers are trying to patch together a second aid package for Greece, with more official loans and, for the first time, some sort of contribution by private investors who hold Greek government bonds.  ‘Fitch would regard such a debt exchange or voluntary debt rollover as a default event and would lead to the assignment of a default rating to Greece,’ Andrew Colquhoun, head of Asia-Pacific sovereign ratings with Fitch, said at a conference in Singapore.”  (Click here for the complete Reuters story.)

Last week, Jean-Claude Junker, President of the Euro Group and head of the 17 Eurozone finance ministers, warned of the dire consequences of a Greek default.  The Associated Press reported Saturday, Junker said a Greek bankruptcy, “could prove contagious for Portugal and Ireland, and then also for Belgium and Italy because of their high debt burden, even before Spain.  . . . We are playing with the fire. . . ” (Click her to read the complete AP story.) If Greece is forgiven debt or outright defaults, how long do you think it will take all those other countries to do the same thing?  My prediction is it would cause a daisy chain of defaulting debt that would reach critical mass in days.  “Playing with fire” is an understatement.  It is more like playing with debt nukes.

But, have no fear in the short run, according to economist John Williams of Shadowstats.com.  In a report last week, Williams said, “To the extent that Greece’s solvency crisis threatens systemic collapse, short-term funding solutions almost certainly will be found by the interested sovereign states and central banks, including particularly the U.S. Government and the Federal Reserve.  As seen in 2008, systemic failure will be avoided so long as it is possible to do so with the spending of whatever money needs to be created, or with the extension of whatever financial guarantees are needed.  Due to domestic political concerns, U.S. activity here likely will be covert—worked through a third party—or otherwise downplayed as much as possible.”

The real problem the world faces is not Greek debt because it is merely the dead canary in the world’s financial coal mine.  It is America that has terminal debt disease.  $12 trillion in liquid assets (things like dollars and Treasuries) are held outside of the U.S.  According to Williams, “. . . the U.S. dollar, which remains vulnerable to a massive sell-off with little or no further warning. . . .The crises facing the United States and the U.S. dollar dwarf those in the euro system. . .”

This is precisely why the guy who sits at the head of the world’s biggest bond fund, Bill Gross, says the U.S. is in “worse shape than Greece” and other heavily indebted European countries. Mr. Gross says the full extent of U.S. debt and liabilities are nearly “$100 trillion.” Now that’s a megaton debt nuke!  Mr. Gross also says that people investing in Treasuries will “get cooked.” Gross has sold off his U.S. Treasury holdings along with countries such as China.  Russia is the latest powerhouse to dump U.S. government debt.  TheStreet.com reported last week, “A top Russian economic official says his country is likely to continue decreasing the share of its portfolio that consists of U.S. debt, according to a published media report.  ‘The share of our portfolio in U.S. instruments has gone down and probably will go down further,’ said Arkady Dvorkovich, chief economic aide to Russian President Dmitry Medvedev, according to a report on The Wall Street Journal’s Web site.” (Click here to read the complete TheStreet.com report.)

Treasuries are really just an extension of the U.S. dollar.  After all, these bonds take your money today and pay you back dollars in the future.  The interest rate has to be high enough to compensate for inflation and turn a profit.  With the U.S. on a dollar printing orgy that is bailing out foreign and domestic banks, Treasury investors will be eaten up by inflation.  So, selling Treasuries is the same as dumping the buck.  If dollars are sold off rapidly, then the buying power of the once mighty dollar could evaporate like a puddle of water in the desert.

 

Comments
  1. Sarkis

    No QE3 -gold will be on sale! QE3 shows up then gold is dirt cheap! Your move Bernanke……I’m waiting.

    • Greg

      Sarkis,
      I think your side will win this fight!
      Greg

  2. Davis

    This is not exactly a “follow the money piece but could be the out growth of the contaign of debt spreading across the Altantic.

    A Government in Search of its Moment.

    The reaction across the blogosphere to the establishment of this new “White House Rural Council” has been almost universally negative. In first reaction it would be easy to recall President Reagan’s warning about the nine most frightening words; “I’m from the government, and I’m here to help.” The range of adjectives that could and have been applied to this initiative range from “presumptuous” and “arrogant” on the low end and ratchet up on the scale of paranoia to “insidious” and “pernicious” on the high end.

    It’s pretty hard not to see the opening salvo in the creation of yet another vast, mindless bureaucratic boondoggle as frightening in and of itself. After all one needn’t look to hard to see all the great benefits that liberal democracy and government assistance have provided to the upper mid-west. Detroit comes to mind as a most shining example.

    The question that first comes to mind is just who is it that hatched this hair brained scheme in the first place? And why would anyone think that peaceful if struggling rural communities (full of “bitter clingers”) would want anything to do with the systems and methods that turned such once great places as Detroit into festering slums of poverty violence, corruption and decay?

    Is this the liberal mindset simply gone delusional? Or perhaps an administration seeing itself on the road to political ruin and grasping at creating yet one more dependent class that can be psychologically bound to government assistance? Or is there perhaps something else going on here? While the public hand is being played with this nonsense is the other hand setting us up for something even more dangerous behind the scenes?

    Well, for me at least, it’s a bit hard not to become a little paranoid by what I see potentially going on here, so let me lay a few things out point by point.

    On the first level there are no doubt a great many of naïve liberals out there who can be sold on the notion that this is nothing more than a necessary “outreach” program to the rural “poor” in desperate need of government help. What better way to employ these vast legions of new college graduates with their worthless sociology degrees than to disperse them among the ignorant masses to spread the word of the great beneficent federal government?

    On the level just below that are the equally naïve political operatives who will see and us this as a opportunity to use a new bureaucracy to try and convince the “rural bumpkins” that with out President Obama and his party bringing these new benefits to them they would be either lost, forgotten or somehow suffering in even worse conditions. “So just pull that straight Democrat Party lever the next time you step into the voting booth why don’t you?”

    Below these two layers of camouflage we will find the real danger however. Once this little army of well meaning operatives is dispersed they, like good bureaucrats everywhere, will start generating reports about what is going on in their individual locations. Where are they being well received, where are they meeting resistance and to what degree. Once some community or communities have been identified as particularly resistant to and even resentful of yet more government interference in their lives comes the time to send in the “agent provocateur” who in the name of enforcing some new useless, meaningless and unwanted bureaucratic regulation will commit some egregious act intended to create a violent reaction. Be it a demonstration turned violent, the firebombing of some local office or better yet, from their perspective the killing of some “innocent and well intentioned” federal employee, they will then have what they have truly been after; the “hard evidence of domestic terrorism” coming from the conservative “flyover country.” They will have their Horst Wessel, their martyr for the cause, their “burning of the Reichstag” moment. I can here it now; “Civil order must be maintained, these acts of lawlessness must not be tolerated.”

    Hummmm now just what will they do with all those battle hardened troops that are being brought back from Afghanistan and Iraq? Why would they deploy them to the southern border to stem a real invasion when they can be dispatched back to their local National Guard units and then called out to suppress this “new threat?”

    Yeah, yeah I know I’m just ranting like a paranoid loon here. Do I really think this bunch of stumble bums could actually pull such a stunt off? Frankly, no. That does not mean however that such machinations are beyond the mindset of the Fabian socialist, crypto-fascist, very real paranoids, inhabiting the halls of the present administration. This is after all the man who said we need a domestic security force, just as powerful and just as well funded as the military. We just had the President of the Postal Workers Union suggest that the letter carriers be made part of the Homeland Security Department. What better way to create a vast network of government spies than the recruit the very people who visit your doorstep six days a week?

    The creation of this “White House Rural Council” may be just the first step. One can only hope that by shining enough disinfecting light on this disease infested cockroach of bureaucracy we can at least send it scurrying back under its rock if not kill it outright.

    That said, I think that the deterioration of the domestic and indeed global economy will politically overwhelm this administration long before any such effective network could be put in place. The danger then becomes violent crowds in the streets tired of being out of work, or having the safety net of social wefare pulled out from under them or just plain sick and tired of ineffective government telling them how to run their lives or that all the chaos is their fault. That will bring us back to the very same very real threat of violent government suppression of an angry populace. It’s working out so well in Greece and the Middle East, why not here?

    Never mind, just relax, bread and circuses, “So you think you can dance” is on tonight. What more could we need or ask for.

    • Greg

      Thank you Davis for adding to the content of this site!
      Greg

  3. Vess

    The USA is not in a worse shape than Greece – but it is about as bad as Greece by almost any reasonable statistic (debt-to-GDP, debt-to-revenue, unemployment…). There is one important difference, though – unlike Greece, the USA can print the currency its debt is denominated in and devalue it. This puts it in a much better position in the short run.

    In the long run, however, the result is exactly the same. The USA will hyperinflate, the US dollar will collapse and this will cause tremendous pain all over the world, because of the US dollar’s reserve currency status.

    Greece has two options. First, it can default (Argentina-style) and leave the eurozone (i.e., drop the euro). Just leaving the euro is not enough, because its debts are mostly in euros (at least the external ones), so switching to a local currency and devaluating it won’t help by itself. This will result in a few years (3-5) of intense economic pain for Greece. After that it has a chance to recover. However, if this path is taken, a lot of very big banks (mostly French, German and British) will become insolvent. In order to save them, the ECB will have to print euros like there is no tomorrow (like the Fed?), which will collapse the euro, resulting in tremendous pain for the EU.

    Second, the bailouts can continue for quite a while (3-5 years). This will not solve the problem, of course – but it will postpone it, while making it worse. In the end, due to all the money printing for the bailouts, the euro will collapse, resulting in, etc.

    Of course, as goes Greece, so do Ireland, Portugal, Belgium and eventually Spain and Italy.

    Sadly, all three paths end in the same way – collapse of the US dollar, and collapse of the euro. The whole process can be prolonged significantly (up to 5 years is my best guess) but I don’t see a way for reaching a different result.

    Germany could save itself economically, if it leaves the euro immediately. However, such a decision is politically unacceptable and the probability for it is nil.

    • Greg

      Thank you Vess and Sam for adding your perspectives to this post!
      Greg

  4. Sam

    Dear Greg,

    Gee, you’re always so cheerful! :-D

    Yes, Greece has pretty much had it. Its socialism, and its “free” stuff for all are now coming down on the country. The bankers are robbing, but the people have to do without the programs they should not have had in the first place.

    The same will happen here, although there WAS a strong prediction on Alex Jones’ program yesterday (with guest Gerald Celente), that in order to partly pay off the bankers, BHO would seize private holdings of GOLD. Do you really think that people will give up what now represents their savings? Can you say “civil war?”

    BHO will go on television tonight, announcing the withdrawal of 10,000 troops from Afghanistan. Hooray! But, don’t cheer too early. For, in defiance of Congress and the American people, BHO wants to send troops to LIBYA in October this year. And, to ensure a BHO victory in 2012, BHO wants to legalize the illegals in this country by executive order. Yup, we’re getting into more debt by way of a war we don’t need with a foe who has done nothing since 9/11, and with legalized illegals dipping into the “free” social goodies pool.

    We will have “change” whether we like it or not. “Hope” died a long time ago.

  5. Tom H

    Tick-tock, tick-tock, tick-tock……..All countries should default on the criminal banking cartel, reset, and give sovereignty back to their citizens. The only thing stopping this is the banksters own all of the politicians, so we can not depend on the politicians to do what’s best for the people. Since the politicians always do what is best for the criminal banking cartel, we can count on the explosion and a world-wide depression. Tick-tock……Got physical?

    • Greg

      Good Idea Tom H!!
      Greg

  6. Richard

    You are correct Greg, the ultimate financial problem is right here at home. The US $$$ is nothing more than a house of cards right at the tipping point!

    • Greg

      Thank you Richard, Peter and Ron P for the comments ands support.
      Greg

  7. peter

    Those responsible for the US debt, and those who currently are choosing to do nothing about it, belong to a new species that I have discovered and named. (Eee latest blog on my site.)
    Homo insania – human folly

  8. Ron P

    Greg, what do you see as the problem our elected leaders have in understanding that the USA is heading into the same disaster that the European countries now find themselves.

    I see the American public electing a new group of representatives and senators that have ideas to correct alot of our problems, but the core group that has been there for years keeps getting reelected and they continue to make the same bad decisions year end and year out. The new group does not have enough clout to make much of a change, so the electorite gets frustrated and elects someone else to take their place, again leaving that same core group in power.

    Guess we will just have to wait for the disaster to occur. The smart ones will make personal decisions that will protect themselves in the event that this happens.

  9. Regulation Q

    Greg –

    Be wary of what Bill Gross speaks. His words and actions do not happen on a remote island of (1). They are carefully crafted and timed to: a.) Benefit Bill Gross/Pimco and: b.) To aid & abet movements in liquidity flows according to what is either dictated to him, or agreed upon at a roundtable in secrecy.

    Like I said, you don’t own the world’s largest house of bonds and make decisions or statements on your own that can/will have wide ranging impact on global markets…

    • Greg

      Reg Q,
      Very good point, well said and well taken! Thank you for making it hear.
      Greg

  10. Stan H

    Most of us have experienced owning an old car that has served us well.Occasionally, a part breaks and the repair runs into many hundreds of dollars and we go ahead and fix it. When the transmission starts to go, then we have to make some serious reckoning: You can’t get a good used car for $2,500 so it may be worth taking the hit and doing an overhaul. Regardless of the decision, the problem is close to the red line. If the engine blows then the car has passed its abort point and is replaced. The economic policymakers have a similar but much more complex predicament. How far do they support a system that is untenable before they acknowledge it is untenable? The Greek economy is not viable because their main source of income is tourism. Having the Euro as its currency reduces its appeal to tourists. The United States also has a system that is not workable in that most manufacturing is outsourced. Unless something radical is done to correct this problem, US economic policy makers will be taking increasingly more expensive repairs to a system that is unsustainable.

  11. brian

    I just wish they would just sieze the wealth from us directly and up front to bail out their buddies in europe and the banking world, it would probably be cheaper for us in the long run since the solution they have opted for now will more than likely lead to a mushy collapse into an indefinate economic gray goo of chaos.

  12. mara evans

    Great article, Greg. So clear and to the point. We sure are in big trouble!

    I also want to add that I love how respectful you are to the people who post, even when they are rude and inflammatory. It says a lot about you.

    Thanks, ME

    • Greg

      You are very kind Mara. Thank you for supporting the site!
      Greg

  13. Jerry A.

    Greg, I truly enjoy U.S.A. Watchdog. It is refreshing, and it keeps the hope and promise alive, that we can restore our Republic as the forefathers of this nation envisioned and created. I personally have educated many a fiend and neighbor on the roots of our history. I must say that forwarding your emails to them has made my points much easier for them to understand. Many of them now realize that there is a “mainstream Media” that is owned and controlled by the global Banker, corporate, government criminal cartel. It was hard enough just getting them to understand that the Federal Reserve Bank is a privately owned “for profit” company that has printed and controlled our Keynesian economic policy of fiat money, and has slowly been ruining us in less than a 100 years. In my opinion, people like Dr. Ron Paul, Judge Andrew Napalitano, Peter Schiff, Lew Rockwell, Greg Hunter etc. are true modern day patriots that can turn it around for our nation, and they may be our last hope for a relatively peaceful reversal leading to the reinstatement of the Constitution, Bill of Rights, Liberty, and human rights. We must also establish a sound monetary policy by abolishing the FED, and look to the Austrian economic model as “The Mises Institute” has taught us. The people must be educated and understand what has and is happening, and take back there rights as guaranteed by the Constitution and Bill of Rights. Only then will the voice of “We The People” be heard again, and be the law of the land.

    • Greg

      Jerry,
      The rebirth of the nation will be quite painful but well worth it. Thank you for your comment and kind words!
      Greg

  14. mitchbupp

    ‘Brutally honest, Bernanke admitted that he had no clue what was actually causing the current fragility in the U.S. economic recovery.

    Bernanke spoke today afetr the FED meeting today and the stock market tanked again … Hi remarks make it clear he is a failure because he doesn’t understand that for an economy to prosper and expand the workers must have somekind of disposable income and today with the erosin of wages through inflation and corporate wage supression a families disposable income is gone……

    Bernanke should remember what Henry Ford said to other industrialists about the superior wages he paid his workers. Do you know what Henry said?

    • Greg

      Mitch,
      Thank you for the reporting and comment. No, I do not know what Mr. Ford said about superior wages. Please tell us.
      Greg

      • mitchbupp

        Ford was confronted by other industrialists who chastised Ford for paying his workers more than standard daily wage of $2.34 for a 9 hour shift. He told others that the $5 for an 8 hour day would make it possible Ford employees to buy the products they make.

        “We are now working out the wage schedules,” answered Mr. Ford. ” We have stopped thinking in terms of a minimum wage. That belongs to yesterday, before we quite knew what paying high wages meant. Now so few people get the minimum wage that we do not bother about it at all.”

        from; http://www.worklessparty.org/timework/ford.htm

        “The industry of this country could not long exist if factories generally went back to the ten hour day, because the people would not have the time to consume the goods produced. For instance, a workman would have little use for an automobile if he had to be in the shops from dawn until dusk. And that would react in countless directions, for the automobile, by enabling people to get about quickly and easily, gives them a chance to find out what is going on in the world-which leads them to a larger life that requires more food, more and better goods, more books, more music — more of everything. The benefits of travel are not confined to those who can take an expensive foreign trip. There is more to learn in this country than there is abroad.

        “Just as the eight hour day opened our way to prosperity, so the five day week will open our way to a still greater prosperity.

        http://en.wikipedia.org/wiki/Henry_Ford#The_five-dollar_workday

        from Wikipedia; “Ford’s policy proved, however, that paying people more would enable Ford workers to afford the cars they were producing and be good for the economy. Ford explained the policy as profit-sharing rather than wages”

        • Greg

          Mitchbupp,
          Thank you for putting this on the site. Very interesting and informative!!
          Greg

  15. Monnie

    Another good piece, Greg!

    I don’t think the bankers actually expect the Greeks to repay these loans, at least not in euros.

    The globalists aren’t quite ready for the final economic collapse, which a Greek default would trigger (note that Fitch just warned that it would consider even a debt rollover as a default and so would lower Greece to junk bond status). No, they want to keep Greece “alive” for a while yet with another bailout, which keeps the big Euro banks afloat for a while.

    I can see the banksters offering Greece a choice between a VERY severe austerity program and giving up some of its beautiful islands.

    I do wonder if the globalist elites (monsters in my view) fear that they may be losing control of their plans to march toward the NWO, which includes keeping the Eurozone together and moving North America toward the NAU.

    BTW, it seems the elites have selected Rick Perry as the next POTUS, or at least the GOP candidate. Maybe he’ll be just a back-up for Obama, as McCain was in ’08. At any rate, as a Texan, I’m hear to tell you Perry is a good enough talker to have managed to convince many that he’s a Tea Party guy, but he’s just another corrupt politician.

  16. Oldguy

    There’s an old story that applies to the average US citizen that voted for the liberal clowns such as good old Harry Reid. It seems a grey old farmer was showing off his new fine mule to his neighbor. While his neighbor watched, he tied his mule to a four gang plow, whereafter he picked up a length of 2×4 and wopped the mule on the head. He then kissed the mule and started plowing away. The neighbor was impressed, but dared ask the farmer: “That mule did wonderful, but why did you hit him with the 2×4 ?” The farmer said, “I had to get his attention first.” I’m afraid that the average Joe, sitting in front of his TV will have to take the coming 2×4 hit before he looks at what HE HAS LET HAPPEN. Very good article Greg. Danged if you don’t do a good job!! Oldguy

  17. clamboslice

    Does Bill Gross make a distinction between debt and promises by the US government? The actual debt obligation is a lot less than $100 trillion, it’s $14+ trillion. That’s still a lot of dough. Promises are things that can be broken, like a promise to pay you social security benefits on your 66th birthday. So, my view is slightly more optimistic about the USA maybe than Mr. Gross.
    But, I haven’t changed my opinion from 2008, when talking about the situation with others, I predicted trouble for at least 4 years, so far I have not been wrong.

    • Greg

      Clamboslice,
      I am happy you are optimistic. I am not because we have not fixed anything. Thank you for weighing in.
      Greg

  18. Jmac

    The great crisis continues to expand beyond the capacity of band aids to cover it up.

  19. Ross

    Four points.

    First, While we do have $100T-$140T in future costs (assuming Medicare and Social Security rules remain the same), it’s disingenuous to claim that that number has anything to do with the US debt. I’m not in a panic right now because all future water and electricity bills on my home are greater than my annual salary. And the rules for Medicare/Medicaid will change dramatically, which will eliminate the biggest part of the $100T-$140T estimate.

    Second, While China sold off short term treasuries, they still hold more long term US bonds than ever.

    Third, Mr. Williams from Shadowstats is not the most credible source on financial issues and quoting him is tantamount to quoting a Patent Medicine Expert (cures Boils and Gout!). While I fully agree that the core CPI number is nonsense, his alternative inflation numbers make even less sense and don’t come close to passing the sniff test given what my dollars can still buy today vs. 10 and 20 years ago.

    Finally, yes there will be inflation. Even if M3 took a beating in 2007-2009 and there’s significant deflationary pressure from those events, the various actions of the fed are pumping liquidity back into the system in different pockets from where it was lost, and that misplaced liquidity will still cause issues. Unfortunately for you and me, it spells stagflation. Fortunately for the country and it’s debtors (including fixed-rate mortgage holders), it also spells a way for debtors to service that debt. And fortunately for all of us, the inflation rate will not qualify as hyper-inflation. We may see 18% interest rate loans again, but that should return a lot of durable assets to affordability in the long term. Gonna be a sucky short-medium term, though.

    • Greg

      Ross,
      Cutting Medicare and Medicaid and telling people they will just have to get sick and die is going to be a lot harder than you think for politicians. (And if we are going to cut that then let’s also cut all the phony accounting for the big banks ans all the forgiveness of toxic debt through Fannie and Freddie. I like the pain to be distributed equally.) If you lost your job and were chronically unemployed then you would be worried about your future bills. The U.S. will someday lose it’s World Reserve Currency Status that will equal the same thing as chronic unemployment because the U.S. will no longer be able to print money to buy oil. The world is not going to allow America to forever pay its bills with printed money. When the dollar loses World Reserve Currency status, all hell will break lose for Americans.

      China does not hold “more long term paper than ever” according to many recent news reports. Here’s one from CNSNews.com: http://www.cnsnews.com/news/article/china-has-divested-97-percent-its-holdin Russia also announced it has cut its Treasury holdings by 30% and says it will continue to do so. Consider this selling the buck and more signs along the road to the U.S. losing it’s reserve currency status.

      What do you base your appraisal of economist John Williams on? He is an Ivy League trained economist and sells his news letter to hundreds of fortune 500 companies and hedge funds around the Globe. He has been quoted by nearly every news organization around. Williams is a credible source and has a well documented track record to prove it. He figures inflation exactly the same BLS did it in 1980 and before–with no accounting gimmicks to make things look better than they are. You are computing inflation by a “sniff test?” I think what you say about Williams borders on liable, and is completely without merit.

      I guess we will have to wait and see how “sucky” it will be both short and long term. I will be betting Williams’ economic projections will be a lot closer to predicting what will happen in the future than yours, but who knows you might be right. Thank you for your comment.
      Greg

      • Sean S

        Greg,

        I believe Ross was just pointing out that a comment in your article implied unintentionally that China had sold off most or much of it’s holdings of US Government debt, ie.

        “Gross has sold off his U.S. Treasury holdings along with countries such as China.”

        This caught my attention also. Whilst it is true that China has sold some Treasury bonds it’s holdings of US debt are massive. Sales have represented a relatively small percentage of China’s total US holdings which remain well above one trillion USD. (Any major sell off of US debt would have major negative implications for the bond market and a very negative impact on the value of the USD).

        Here is just one very recent press report out of China on the matter. This was fairly widely reported around the middle of this month.

        “NEW YORK / BEIJING – China, the largest foreign holder of United States Treasuries, bought more federal bonds in April (2011) for the first time since October despite concerns over the US debt level.

        China’s purchases of US debt rose $7.6 billion to $1.15 trillion – the first month-on-month increase since its holdings reached $1.18 trillion in October, according to the Treasury International Capital report, known as TIC. China boosted its holdings after selling most of its bonds for five straight months.

        Overall, foreign nations were net buyers of US long-term securities, with purchases rising by $30.6 billion in April.”

        Just how accurate these reports are I could not say.

        As a matter of interest in one of Bill Gross’s recent articles he indicated that PIMCO may be a buyer of future US treasury debt issues. I found this an extraordinary comment given PIMCO’s activities, past statements and various other considerations.

        All the best.

        • Greg

          Sean S,
          Fair enough, thank you.
          Greg

  20. BLT

    You know Greg, I only listen to the MSM 1 month after reading your articles. It takes them EXACTLY 30, to 31 days to regurgitate “almost exactly” what you said 1 month before. Except of course, they have a way to still sound completely disconnected with the real world when they say it. No lie. Its quite comical to sit there and go “and I knew about that 4 paychecks ago!!” You are on the front lines on this site and you give us the chance to stand with you. Thanks!

    • Greg

      Thank you BLT for your reporting and support!
      Greg

  21. Bob

    Oil control is what this country has going for it’s self. Once the troops come home game over. This was what 9/11 was done for, the long range plan to control oil and back the dollar with oil control. Also we plan on using up the worlds oil before we drain are country of what little oil we have. It’s the smart thing to do because a Army needs oil and the first thing in war is to take control of your enemies oil. Bloody big boys game’s. GROW FOOD a pound of gold for a pound of potatoes

  22. Samantha in Tucson

    Hope my commentary is not too off topic; I think it is in keeping with the spirit of your post:

    Don’t you just love what Timmy Geithner says Obama is recommended for this country – more taxes on small businesses?! According to Tiny Tim, “The Obama administration believes taxes on small business must increase so the administration does not have to shrink the overall size of government programs.”

    http://www.cnsnews.com/news/article/geithner-taxes-small-business-must-rise

    I’m certain this will be good for our economy and jobs (NOT!). What about taxes for the big blood-sucking corporate greed-mongers and their off-shore tax havens?! Have we gone TOTALLY mad? I truly think we have.

    Also, we are being sold down the river…literally. How about the state of Idaho strongly contemplating selling a large parcel of land to the Chinese for a supposed economic trade zone with, perhaps, thousands of Chinese working in these types of trade zones. The governor of Idaho says (in essence) “he needs the money” for his state. Okay…so sell OUR LAND to Chinese companies…that’s really smart!

    http://voices.idahostatesman.com/2010/09/02/rockybarker/chinese_company_officials_meet_leaders_idaho_energy_firms

    I fear for our dear country! We are losing her to corporate corruption, greed, and back-room deals that no one but the elite are privy to.

    Our country is crumbling from within, education is in shambles, and the spirit of our country is changing in many ways that are NOT for the better.

    What can we do? How do we band together and DEMAND from our politicians that they STOP the destruction from within.

    We may not have a ground war in the U.S. with visible foreign invaders on our shores, but we certainly DO have a war going on with an enemy who may be far worse and in front of our noses — the big banks, political cartels, and destruction of the middle class.

  23. Ambrose

    Greg,

    Thanks for another great article – true, but scary.

    I noticed that 19 people out of 617 responded to the poll “When do you think the next financial crisis will happen?” by “There will not be another financial crisis because everything is fixed.” I am glad that a few of us are still optimistic while most people watch the Economy heading to a meltdown.

    Debt nuke may be a great relief to me – a quick and painless death. But I think the current economy is more like slow alcohol poisoning. A lot of people will be suffered after the Happy Hours. Whom should we blame for? Ben Bernanke, the guilty bartender who served too many free drinks to Big Banks and Big Corporations.

    Thanks for staying sober.

    Ambrose

    • Greg

      Ambrose,
      Thank you for your support.
      Greg

  24. Geo

    Greg,

    From what I’ve seen, there is no single source for attacks on the U.S. This article certainly points to the attack of big banks that started long before 1913 but certainly became a victory for them when the FED came to being and took control of our money in 1913. If we had stayed with controlling our own money and using gold and silver coins, the U.S. wouldn’t be in this situation. Being able to print endless stacks of fake money is the financial ruin of this country. When the dollar goes down … and it will soon, life as we know it will be drastically changed.

    As you know, the same thing is happening all over the world. As the FED prints more money other countries follow suit to intentionally devalue their money to maintain balance of trade. There are going to be swings in the dollar value as this all unfolds but it will end up in disaster. Not for the bankers who will have basically enslaved the world, but for the average Joe who losses everything not based in tangible assets.

    There is no way out without extreme pain at this point. Our best move would be to dump the FED, return to a hard currency, eliminate most of the government, and bring our troops home to defend this land. That is of course a pipe dream but it would be IMHO the best plan to get us back on track.

    In addition, we would have to combat the other big front that is attacking us. That is the left thinking that has ruined our public schools, destroyed any morality this country had, and is driving us to ruin with socialism.

    What about solutions? I fear we are lost and only by personally preparing for disaster can anyone hope to survive. I can only envision a time when the basics of life will be scarce. Individually we need to restore morality (get God in your life), stock up on food, water and other supplies to help … and that’s all they will do – help you through the troubled times to come.

    Good article, thanks.

    Geo

  25. Tyson Jae

    It’s actually pretty far off.
    Even London pretty much flogs Paris in population statistics.
    The central region in Paris has only 2 million people. Although all of the regions combined make a population of 11 million, still pretty far of the list.

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