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Any good ideas what to invest in to protect against further currency devaluations and economic drops? What are you doing or thinking of doing?

Since I will be spending the Thanksgiving holiday with a group of relatives, I thought I would take the time to develop a Fact Sheet covering the things they will be dealing with by next Thanksgiving. Unfortunately, most of them are liberals and one I think is a closet DU reader. Hopefully, at least a little education can be accomplished …and… some might even change their minds and call their Congresscritter or Senator. Clearly there may be a big chunk out of their wallet and some really painful health care insurance issues to deal with next year. If nothing else,...

Before the economy went bust, California voters authorized multibillion-dollar charges on the state's infrastructure credit card. They approved generational investments in roads, schools and levees, as well as hospitals and stem-cell research. At the time, fiscal experts projected that California at most would have to spend roughly 6 percent of its annual budget on payments. But after an economic collapse, estimates now show that debt service could consume as much as 10 percent of the annual general fund budget by 2014-15 – an "unprecedented" ratio, according to the Legislative Analyst's Office. The latest debt warning comes weeks after lawmakers and...

''Wave of Debt Payments Facing U.S. Government The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true. But that happy situation, aided by ultralow interest rates, may not last much longer. Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed. Even as Treasury officials are racing to lock in...

Shocking, but true! The ultra-liberal New York Times is concerned about the national debt and deficit spending? I can't believe my eyes! This ranks right up there with Socialist France, formerly Communist Russia, and Communist China warning our government that they're spending too much money. Has the "Old Gray Lady" awakened to the realization that money doesn't grow on trees?

The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true. But that happy situation, aided by ultralow interest rates, may not last much longer. Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed. Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings...

Obama might have to 'eat his words' on health reform...

Greece Tests The Limit Of Sovereign Debt As It Grinds Towards SlumpGreece is disturbingly close to a debt compound spiral. It is the first developed country on either side of the Atlantic to push unfunded welfare largesse to the limits of market tolerance. By Ambrose Evans-Pritchard Published: 5:58PM GMT 22 Nov 2009 Euro membership blocks every plausible way out of the crisis, other than EU beggary. This is what happens when a facile political elite signs up to a currency union for reasons of prestige or to snatch windfall gains without understanding the terms of its Faustian contract. When the...

Former director of the Congressional Budget Office (CBO) Douglas Holtz-Eakin, testified before the Senate Committee on the Budget on Nov. 10, giving a sharp rebuke of the Obama administration's out-of-control spending...

The Debt Economy...

Okay, don’t listen to me… I admit that I don’t know spit about sunshine. But when it comes to universal economic implosion, I’ve ranted about David Walker, Glen Beck, and Lou Dobbs forever. I’m pretty sure I’ve put up at least eight rants on this issue. Fine… Don’t listen to me or any of us for that matter. But at least consider what France’s Société Générale bank had to say...

Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction. In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems. Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years....

Recently I was in public discussion on the question of poverty in Britain and how to overcome it. The poverty is relative, of course, not real destitution; but there is nonetheless no doubt as to its squalor. Among the panel on which I appeared was a very pleasant member of the Fabian Society, that is to say the society whose goal was to achieve socialism in Britain gradually and by reformist means (it was named after the Roman general, Quintus Fabius Maximus, who wore Hannibal down by attrition rather than by pitched battle). One of the definitions of poverty most...

NEW YORK (CNNMoney.com) -- Here's a new way to think about the U.S. government's epic borrowing: More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest. More than half. In fact, $4.8 trillion. If that's hard to grasp, here's another way to look at why that's a problem. In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a...

The Great Credit Crunch Is Deepening Minyanville Staff Nov 19, 2009 9:20 am Consumers will feel the effects in the form of tighter credit standards. Editor's Note: This article was written by Richard Suttmeier, chief market strategist at ValuEngine.com, which is a fundamentally-based quant research firm in Princeton, New Jersey, that covers more than 5,000 stocks every day. Within the proposed banking reform bill, the House Financial Services Committee wants banks and funds to make payments in advance for companies deemed “too-big-to-fail”. This fund will be capped at $200 billion, insuring that taxpayers won't wind up paying for a bailout...

"The Illusion of Prosperity": U.S. Destined to Lag Rest of the World, Peter Boockvar Says Posted Nov 19, 2009 09:00am EST by Aaron Task in Investing "It's dangerous to be short this market," says Peter Boockvar, equity strategist at Miller Tabak. Despite a penchant for bearishness, Boockvar says the rally can continue as long as the Fed keeps rates at zero. "When you cut rates to nothing you're encouraging people to take risk," Boockvar says. "As long as asset inflation is [the Fed's] goal, the market could go higher but there are obvious consequences," including inflation. The Fed is trying...

The national debt is now at 12,031,299,186,290.07. That is not chump change. We are in hock big time and even if we were to pawn off all our national parks and pimp out every member of congress, it would be a long, long time for us to pay it off. Suffice to say, we will never live to see a huge chunk out of the debt paid off, nor will our children or their children or their children's children or their children's children's children. In fact, we would have to open a big book of biblical begats before the debt...

After weeks of waiting as a handful of Senate Democrats crafted legislation behind closed doors, the Democrats' health care plan has at last been unveiled. The bill was drafted in secret over seven weeks and then sent for scoring to the Congressional Budget Office, a process which went on for three and a half weeks and only produced a brief - but costly - estimate (which may be a testament to the size and convoluted nature of the final legislation). Now the question is, how long will the American people have to review the bill before it is voted on...

File this one under, "Who cares?" Mark Knoller at CBS's Political Hotsheet: It's another record-high for the U.S. National Debt which today topped the $12-trillion mark. Divided evenly among the U.S. population, it amounts to $38,974.34 for every man, woman and child. Technically, the debt hit the new high yesterday, but it was posted on the Treasury Department website just after 3:00 p.m. ET today. The exact calculation of the debt is a 16-digit tongue-twister and red-ink tsunami: $12,031,299,186,290.07 This latest milestone in the ever-rising journey of the National Debt comes less than eight months after it hit $11 trillion...

BEIJING, Nov 18 (Reuters) – President Barack Obama gave his sternest warning yet about the need to contain rising U.S. deficits, saying on Wednesday that if government debt were to pile up too much, it could lead to a double-dip recession.

Heading to Oslo in Weeks, President Obama Faces Tough Days on the Diplomatic Front November 17, 2009 7:27 AM MoreBEIJING, CHINA -- In less than a month, President Obama will step onto a stage in Oslo, Norway, to accept the Nobel Peace Prize. If Mr. Obama hoped that his week-long four-country visit to Asia, his first as president, would yield concrete accomplishments that might silence critics skeptical that he deserves that prize, he might be disappointed. Though White House aides insist the president's trip was mainly to reassert a US presence in Asian diplomacy, and that his itinerary set no...

It was brought to my attention today that the cost of the current Healthcare bill is equal to our Total current debt to China (1.3 Trillion dollars).

The total combined national debt has just officially hit $12. In the 300+ days that Obama has been our president, Obama and Pelosi have accumulated more than $1.4 trillion dollars of debt, an astounding rate of increase of nearly $4.7 billion a day. Congratulations federal government, you're the best! Our children and grandchildren will really appreciate it.

Anyone trying to figure out what in the world is going on in today’s economy might remember Agatha Christie’s classic, Murder on the Orient Express. When master sleuth Hercule Poirot boarded that train, he’d no idea that before the night ended he’d face the most perplexing murder case ever. A carful of passengers, all of whom had motive and opportunity, maneuvered around so skillfully that even Christie’s brilliant Belgian couldn’t figure out whodunit. The best he could do was point a perfectly manicured finger at the most likely culprits — in the end, everybody walked away, except the luckless victim....

Did the Nation Overdose on Debt? Thu, Nov 5 2009, 18:36 GMT by John Silvia Wells Fargo Investments, LLC Long-term Repercussions of Swelling Government Indebtedness “You cannot escape the responsibility of tomorrow by evading it today.” – Abraham Lincoln Fiscal year 2009 for the United States government drew to a close on Sept. 30, when the closing bell sounded to the sour tune of a $1.417 trillion deficit (Figure 1). Some perspective: 1.4 trillion is equal to 13 times the number of people who have ever lived, or $4,500 for each and every person living in the United States. The...

The credibility and economic future of the the United States, as viewed by the international financial community, has never been at such a low point as it is today.  The rest of the world has awakened to the end result of the economic policies being pursued by the current government in Washington D.C.  Yet the vast majority of our fellow citizens are oblivious to what may well happen not only to their children and grandchildren but increasingly to nearly all that are alive today.  What many dismiss as happening far into the future, thus other people's problems, is now looming...

California debt binge shakes up muni bond market November 10, 2009 | 8:48 pm The municipal bond market’s message to California: Enough with the borrowing already! Over the last seven weeks the state has sold more than $21 billion of short- and long-term debt for budget-related reasons and to finance voter-approved infrastructure projects. That flood -- in a period when muni bond yields nationwide already were rebounding after diving in summer -- has helped to boost yields more than they might otherwise have risen, some analysts assert. "Yields are higher because California has so much paper in the market," said...

New York State’s Dedicated Highway and Bridge Trust Fund hasn’t been all that dedicated. Since 1991, only 34.9 percent of the money in the fund went directly toward the repair and improvement of the state’s deteriorating roads and bridges. And over the next four years, that will shrink to about one fifth. It’s supposed to be a “locked box,” but apparently the lock wasn’t very strong. If only one-third of the money in the Highway and Bridge Trust Fund has actually been used to pay for highways and bridges, the question, is, where did the money go? The answer is...

President Obama is on his first state visit to Asia. And, whether it's at home or abroad, it seems the economy remains job number one. With visits on the travel agenda to China and Japan, the two largest foreign holders of U.S. government debt, "the heavy emphasis of this trip is on trade and financial issues," says Politico.com White House editor Craig Gordon. A potential highlight of the trip comes Wednesday when the President meets with Chinese Premier Wen Jiabao, who recently raised eyebrows saying, "we hope the United States will keep an appropriate size to its deficit." It's a...

Thursday saw the US Treasury report a record October deficit, the 13th monthly shortfall in a row. The Federal Reserve last week vowed to hold its key interest at next-to-zero for an "extended period". The Bank of England here in London has now created £200 billion of new money since March, using it primarily to buy government bonds as Whitehall's deficit hits a peace-time record equal above 14% of GDP. China's central bank reported record gold reserves this spring of 1054 tonnes. The Reserve Bank of India bought 200 tonnes of gold from the International Monetary Fund at the start...

The State Of The American Economy In One Chart Economics / US Debt Nov 12, 2009 - 01:31 PM By: Ceri_Shepherd They say a picture paints a thousand words. Well this picture paints very clearly the American Economy for the last 30 years. Ever decreasing Bond Yields which = EVER EXPANDING DEBT. The chart below shows that interest rates have been decreasing by approximately 0.5% every 2 years. Put simply, As the price of debt becomes cheaper more is created and then spent, and that effectively is the economy. In 1981 the 30 year bond which is a good approximation...

WASHINGTON (Reuters) – Not sure what to give Uncle Sam this Christmas? How about a nice, fat check to help whittle away at the $7.6 trillion national debt? The U.S. Treasury Department accepts gifts, payable to the Bureau of the Public Debt. Just mail them to the attention of Department G, Post Office Box 2188, Parkersburg, West Virginia, 26106-2188. Make a note in the memo section that it is a gift to reduce the debt held by the public. Yes, really. It's all on the Treasury's website, at the end of the list of frequently asked questions. Which raises a...

Days after lawmakers agreed to ask voters for $11.1 billion in debt for water projects, the state had to pay more than expected to sell its most recent bond issue. Brokers underwriting the sale of $1.9 billion in state general obligation bonds originally thought investors would demand a 3 percent yield. Instead, as the Los Angeles Times reported Wednesday, "the state was forced to offer a 4 percent annualized tax-free yield to lure investors." That pushed the state's cost of borrowing at least a third higher than originally projected. That means the state, in order to borrow $1.9 billion, will...

Now there’s a real decoupling. Friday’s unemployment figures came out in America. They showed that 8.2 million Americans have lost their job since the GFC began in 2007. The official unemployment rate (the one that under-measures actual unemployment) is at 10.2% and growing. Stocks rallied on this news. Employment is said to be a lagging indicator. Economists tell you it’s the last thing to recover from a recession. Businesses don’t begin hiring until after they are sure the worm has turned in the economy. But right now, there is a pretty big decoupling between the stock market’s verdict on the...

The U.S. Lunatic Asylum (i.e., Economy) Is Facing Approximately $15 Trillion In Roll Risk By 2012 Submitted by Tyler Durden on 11/10/2009 15:06 -0500 Zero Hedge recently highlighted the developing risk in the government's outstanding Treasury portfolio, where nearly 40% of all issues mature within the year. As such the roll risk for the US government is massive, and even the smallest unexpected macro blip would make the rolling/refinancing of roughly $5 trillion in debt very problematic. Yet the US government is not alone in this quandary of how to keep T-Bill interest rates at record lows: an earlier report...

When the Borrowers Stop Borrowing By Bill Bonner 11/09/09 Beunos Aires, Argentina – The Dow moved up 17 points on Friday, leaving it above the 10,000 mark. Gold rose too – it is at a new record high, only $5 below $1,100.(The DJIA closed today up 203 points) According to the news reports, the US economy is ‘growing’ again. Yes, that’s the official storyline. But wait, what kind of growth is this? David Rosenberg: “All we can say is that if the overwhelming consensus is correct that the recession is behind us, then what we have on our hands is...

The Problems With “Printing Your Way Out Of Debt” By Bill Bonner 11/07/09 Beunos Aires, Argentina – Governments are running breathtaking deficits…and accumulating alarming debts. Japan has a national debt of nearly 200% of its GDP. Where did that debt come from? It came from 20 years of trying to buy its way out of a slump with borrowed money. Of course, it didn’t work. But now, Britain and America are following the Japanese lead…and the Japanese are still at it! At the present rate, Japan’s government debt will grow to 300% of GDP in 10 years. America’s debt could...

The following is from the 'About' link on the Debt Clock Page) The purpose of the US Debt clock is to inform the public of the financial condition of the United States of America. We are dedicated to bringing the public the most accurate, up-to-date debt information possible. The numbers are laid out in such a way to give a complete real-time snapshot of the country’s balance sheet. Although the numbers involved are enormous, it is still easy to see the relative balance between wealth generated and wealth consumed. All the debt clocks on the site are updated continuously to...

There were, once upon a time, usury laws that generally held any interest rate greater than 10% was illegal. The Federal Reserve under Paul Volcker believed that interest rates needed to be raised to insane levels to stop the runaway inflation, which was the first stone that hit the water sending the shock waves that we are having to pay for today. Once the usury laws were altered so the Fed could fight inflation, it set in motion the doubling of household debt, not to mention the national debt. At 8%, the principle is doubled through interest in less than...

The August Congressional Budget Office budget forecast for the fiscal year that began last month says that Uncle Sam will take in $2.264 trillion from October 2009 through September 2010. That’s an increase of 7.6% over fiscal 2009’s intake of $2.105 trillion. Though it won’t be official until Tim Geithner’s crew releases its Monthly Treasury Statement next week, it’s virtually certain that the government’s collections will open the year in a deep hole compared to last year, and probably well behind what CBO expects. Take a look at this compilation of key items from October’s final Daily Treasury Statement, compared...

White House Budget Director Peter Orszag warned Tuesday that large federal deficits will eventually imperil the U.S. economy because they will lead to higher interest rates and more borrowing from overseas. Orszag, in a speech in New York, said that deficits, expected to add $9 trillion to the current national debt of $12 trillion over the next decade, are "serious and ultimately unsustainable." Orszag said that deficit spending was necessary to help boost the economy when unemployment is hovering around 10 percent. But he said that red ink must be stopped as the economy recovers. During a recovery, private investment...

I don't follow the monetary and fiscal problems of other countries very closely. We've got enough of a crisis here to worry about anywhere else. But during the stim bill debate, you may recall liberals pointing to Japan's "stimulus spending" in the decade of the 1990's as an example of how to get out of a deep recession. Maybe they should have read the fine print as Ambrose Evans-Pritchard of the Telegraph explains: The IMF expects Japan's gross public debt to reach 218pc of gross domestic product (GDP) this year, 227pc next year, and 246pc by 2014. This has been...

As I have repeatedly noted, China has been blowing a bubble with easy credit. MarketWatch's Craig Stephen warns investors to be wary of a potential correction, at least in some sectors: Policy tightening could soon become the dominant market theme, meaning it's time for a rethink. After recent rate hikes in Australia and Norway, tightening is back on the agenda in many countries, including China. And with the U.S. just clocking up 3.5% annualized GDP growth for the third quarter, dollar bears will have something to think about. Nomura says its time to get a little more defensive in the...

<p>The Treasury has been announcing record debt auctions, and yet we see little in the form of increasing interest rates to attract buyers to these securities that are still somehow gobbled up. The Fed's balance sheet, of late, doesn't seem to account for it, as any buying they are doing seems to be sterilized. Are the Chinese so insane that they are buying up anything the Treasury throws up in the air? It appears not.</p>

It is becoming more and more evident, to the astute observer of realistic economics, that the second dip in the "W" global recession is coming up quickly. This is of course, identical to what took place between the 1929 collapse and the 1931 final landing. The world economy fell hard, bounced high and than fell into a deep black hole, that it took it thirty years to climb out of. This time will be worse, at least for the Anglos and more specifically the Americans. ...Now for the Yanks. The Americans, more so than any others are about to find...

It Is Japan We Should Be Worrying About, Not AmericaJapan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending – and allowing it to push public debt beyond the point of no return. By Ambrose Evans-Pritchard Published: 5:33PM GMT 01 Nov 2009 The rocketing cost of insuring against the bankruptcy of the Japanese state is telling us that the model has smashed into the buffers. Credit default swaps (CDS) on five-year Japanese debt have risen from...

Reporting from Los Angeles and Sacramento - Starting Sunday, cash-strapped California will dig deeper into the pocketbooks of wage earners -- holding back 10% more than it already does in state income taxes just as the biggest shopping season of the year kicks into gear. Technically, it's not a tax increase, even though it may feel like one when your next paycheck arrives. As part of a bundle of budget patches adopted in the summer, the state is taking more money now in withholding, even though workers' annual tax bills won't change. Think of it as a forced, interest-free loan:...

FRANKFURT (Dow Jones)-Greek and Portuguese government bonds came under pressure Thursday after rating agency Moody's Investors Service issued fresh warnings on the countries' sovereign credit ratings. Moody's placed Greece's A1 currency ratings on review for possible downgrade, and it also changed the outlook on Portugal's Aa2 rating to negative, citing serious fiscal deterioration in Greece and structural economic challenges and a lack of will to challenge them in Portugal.

Selling U.S. debt was a bit harder than expected today. Today's treasury auction came in a bit below expectations, with the 7-year yield hitting 3.14% after initial expectations of 3.11%. The bid to ask, which is the total value tendered over the total accepted, as shown below, came to 2.65. This was lower than the average of the last four auctions.

A major shortcoming in an otherwise thoughtful post on deficit spending is a traditional mistake in which analysts seek to analogize the expenditures of government with that of a private household or business. The government is sovereign. This fact gives to government authority that households and firms do not have. In particular, government has the power to tax and to issue money. The power to tax means that government does not need to sell products, and the power to issue currency means that it can make purchases by emitting IOUs. No private firm can require that markets buy its products...