What's Dead (Short Answer: All Of It)

The Market Ticker ^ | 03/05/09 | Karl Denninger

[Oberon]

Just so you have a short list of what's at stake if Washington DC doesn't change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can't believe, and they're showing it as an imminent event - like perhaps today imminent.)

• All pension funds, private and public, are done. If you are receiving one, you won't be. If you think you will in the future, you won't be. PBGC will fail as well. Pension funds will be forced to start eating their "seed corn" within the next 12 months and once that begins there is no way to recover.
• All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can't earn anything off investments, and if you have a claim in process at the time it happens, it won't get paid. The probability of you getting "boned" on any transaction with an insurance company is extremely high - I rate this risk in excess of 90%.
• The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they're doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare.
• Government debt costs will ramp. This warning has already been issued and is being ignored by President Obama. When (not if) it happens debt-based Federal Funding will disappear. This leads to....
• Tax receipts are cratering and will continue to. I expect total tax receipts to fall to under $1 trillion within the next 12 months. Combined with the impossibility of continued debt issue (rollover will only remain possible at the short duration Treasury has committed to over the last ten years if they cease new issue) a 66% cut in the Federal Budget will become necessary. This will require a complete repudiation of Social Security, Medicare and Medicaid, a 50% cut in the military budget and a 50% across-the-board cut in all other federal programs. That will likely get close.
• Tax-deferred accounts will be seized to fund rollovers of Treasury debt at essentially zero coupon (interest). If you have a 401k, or what's left of it, or an IRA, consider it locked up in Treasuries; it's not yours any more. Count on this happening - it is essentially a certainty.
• Any firm with debt outstanding is currently presumed dead as the street presumption is that they have lied in some way. Expect at least 20% of the S&P 500 to fail within 12 months as a consequence of the complete and total lockup of all credit markets which The Fed will be unable to unlock or backstop. This will in turn lead to....
• The unemployed will have 5-10 million in direct layoffs added within the next 12 months. Collateral damage (suppliers, customers, etc) will add at least another 5-10 million workers to that, perhaps double that many. U-3 (official unemployment rate) will go beyond 15%, U-6 (broad form) will reach 30%.
• Civil unrest will break out before the end of the year. The Military and Guard will be called up to try to stop it. They won't be able to. Big cities are at risk of becoming a free-fire death zone. If you live in one, figure out how you can get out and live somewhere else if you detect signs that yours is starting to go "feral"; witness New Orleans after Katrina for how fast, and how bad, it can get.

The good news is that this process will clear The Bezzle out of the system.

The bad news is that you won't have a job, pension, annuity, Social Security, Medicare, Medicaid and, quite possibly, your life.

It really is that bleak folks, and it all goes back to Washington DC being unwilling to lock up the crooks, putting the market in the role it has always played - that of truth-finder, no matter how destructive that process is.

Only immediate action from Washington DC, taking the market's place, can stop this, and as I get ready to hit "send" I see the market rolling over again, now down more than 3% and flashing "crash imminent" warnings. You may be reading this too late for it to matter.

[Sgt_Schultze]

I heard Karl will be appearing on WBAL Radio's Ron Smith Show at around 4:10.

[PGalt]

Absolutely.

[Oberon]

I heard Karl will be appearing on WBAL Radio's Ron Smith Show at around 4:10.

...tuning in now...

[woollyone]

self ping
for later reading

and a clackity-clack-round gets racked, bump to the top

[Oberon]

Denninger’s going to be on in just a minute... gotta get through the ads.

[Oberon]

Is it okay to bump your own thread? Or is it a sign of self-absorption?

[FromLori]

Remember last night there was an article about Jim Rogers saying there would be blood and riots!

[Lurker]

For later.

[Chode]

unfriggin believable...

Blair Holt Firearm Licensing
& Record of Sale Act
2-16-9
Very Important for you to be aware of a new bill HR 45 introduced into the House.
This is the Blair Holt Firearm Licensing & Record of Sale Act of 2009.
We just learned yesterday about this on the Peter Boyles radio program.
Even gun shop owners didn’t know about this because it is flying under the radar.
To fin d out about this - go to any government website and type in HR 45 or Google HR 45 Blair Holt Firearm Licensing & Record of Sales Act of 2009. You will get all the information.
Basically this would make it illegal to own a firearm - any rifle with a clip or ANY pistol unless:
·It is registered
·You are fingerprinted
·You supply a current Driver’s License
·You supply your Social Security #
·You will submit to a physical & mental evaluation at any time of their choosing
·Each update - change or ownership through private or public sale must be reported and costs $25 - Failure to do so you automatically lose the right to own a firearm and are subject up to a ye ar in jail.
·There is a child provision clause on page 16 section 305 stating a child-access provision. Gun must be locked and inaccessible to any child under 18.
They would have the right to come and inspect that you are storing your gun safely away from accessibility to children and fine is punishable for up to 5 yrs. in prison.
If you think this is a joke - go to the website and take your pick of many options to read this. It is long and lengthy. But, more and more people are becoming aware of this. Pass the word along. Any hunters in your family - pass this along.
Peter Boyles is on this and having guests. Listen to him on K.H.O.W. 6:30 a.m. in the morning. He suggests the best way to fight this is to tell all your friends about it and “spring into action”. Also he suggests we all join a pro-gun group like the Colorado Rifle Association, hunting associations, gun clubs and especially the NRA.
This is just a “termite” approach to complete confiscation of guns and disarming of our society to the point we have no defense - chip away a little here and there until the goal is accomplished before anyone realizes it.
This is one to act on whether you own a gun or not.
If you take my gun, only the criminal will have one to use against me. HR 45 only makes me/us less safe. After working with convicts for 26 years I know this bill, if passed, would make them happy and in less danger from their victims.
http://www.google.com/search?q=HR+45+Blair+Holt+Firearm+Licensing+%26+Record+of+Sales+Act+of+2009&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a
http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.45:
http://www.opencongress.org/bill/111-h45/show
http://www.govtrack.us/congress/bill.xpd?bill=h111-45

[Travis McGee]

HR 45 won’t see the light of day, but they will use it as an example of a “too far” gun control bill, to make RINOs grateful to sign a bill “only” half as bad.

[Chode]

i will pray for the first and hope against the second...

[meadsjn]

It’s never as bad as the worst predictions nor as good as the best. It’s always somewhere in the middle. This post can be classified as a “worst”

This time the "worst" is the optimistic view.

The train has already gone over the cliff, and it's now just a matter of determining the distance to the bottom of the gorge.

[Travis McGee]

“I will pray for the first and hope against the second...”

AMen. And prep for the worst.

[Chode]

roger that...

[Lurker]

Springfield Armory XD series in .45 ACP.

L

[Squantos]

Nothing like a little positive news before the weekend !!

Damn !

[Jet Jaguar]

BTTT

[hiredhand]

Denninger DID end on a positive note! :-)

[blam]

"Denninger DID end on a positive note! :-)"

This is good news?

"... you won't have a job, pension, annuity, Social Security, Medicare, Medicaid and, quite possibly, your life."