Posted on 08/25/2010 8:45:22 AM PDT by Bigtigermike
Investors will face defaults on government bonds given the burden of aging populations and the difficulty of securing more tax revenue, according to Morgan Stanley.
“Governments will impose a loss on some of their stakeholders,” Arnaud Mares, an executive director at Morgan Stanley in London, wrote in a research report today. “The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.” The sovereign-debt crisis is global “and it is not over,” the report said.
(Excerpt) Read more at sfgate.com ...
This is going to be so ugly.
Once those Gov issued debit cards stop working be far, far away from Blue colored urban areas.
This is the kind of thing that makes me buy a couple of thousand rounds of ammo.
Cloward and Piven........
Why would you default when you can print more money to cover your obligations? - tom
“Once those Gov issued debit cards stop working...”
That’s right. At least during the last depression, people still have some moral character and a work ethic. I am not looking forward to NOLA across the country.
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I guess this is a job for Wall Street Rahm (/snix). Prof Ohaha knows nothing about high finance.
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COMING TO A TOWN NEAR YOU----WALL STREET FALLOUT The death grip Lehman Brothers had on just one state.
THE LEHMAN BROTHERS BANKRUPTCY UP CLOSE Lehman Brothers managed Florida's public assets, sold securities, underwrote bond deals and handled residential and commercial mortgages. Local Fla governments are stuck with about $556 million in tainted securities that they can't redeem.
FLA GOVT AGENCIES FACE HUGE LOSSES Fla's counties, cities and school districts face a loss of more than $300 million for roads, sewers and schools. The state has $290 million less to pay for everything from hurricane claims to health care, community colleges and care for infants with disabilities.
The biggest casualty is Florida's giant public pension fund. Fla took a $230 million hit on Lehman stocks and bonds. More than $440 million disappeared from the pension fund that pays benefits for some 1 million retirees and public employees.
The pension fund holds another $53 million in Lehman bonds that have lost most of their value and has $323 million tied up in tarnished mortgage-related securities purchased from Lehman. If the state sold those securities today, the pension fund would lose about $188 million more.
Further north, 75% of then-NJ Gov Jon Corzine's appointments to the State Investment Council (invests pension billions) had ties to the bankrupt Lehman Bros. The New Jersey Economic Development Authority gave Lehman Bros $123 Million tax dollars FOR DOING NOTHING. That's right---FOR DOING NOTHING. The EDA brainiacs unloaded $123 million tax dollars on Lehman Brothers (AND Morgan Stanley) .... simply to cancel an earlier deal. Can you say buddy bailout? Kickbacks? Wire-transfers offshore? NOTE: Corzine once headed Goldman Sachs.
Yet these losses are trivial compared to the collateral damage on the economy that followed the collapse of Lehman Bros.
Obama's trillion dollar bailouts are a direct result of that instability.
Are ammo prices EVER going to come back down? It seems the supply of ammo has picked up but prices are down only a buck or two a box from the peak. Prices trippled and haven’t come down. I used to pay $10-12 for Winchester white box .45 and it is still at $26. How long is this insanity going to last? Or is going to be like gasoline? Now that shooters have seen these high prices for 3 years, the ammo manufacturers act like we should be used to them and are leaving them in place. I’ve been waiting for a price drop to stock up but it isn’t happening. How long do I wait???
Supply, demand.... IF PEOPLE WILL PAY $26 A BOX, WHY SELL FOR LESS?
“Are ammo prices EVER going to come back down?”
I know nothing about ammo, but a little about economics. If the price isn’t dropping, that means demand is outstripping supply. Thus, even if supply triples in response to higher demand, prices won’t fall if demand quadruples during the same period.
You can draw whatever conclusions you like about the factoid that apparently demand for ammo has exceeded supply for at least 3 years. I cannot think of a single possible explanation for this that would be complimentary to the POTUS and his anemic performance in office.
I thought you couldn’t say renege anymore.
Once that happens, another nuclear option by Federal Reserve. Print federal reserve notes (dollars) and keep buying worthless US treasuries that Uncle Sam doesn’t pay back and then the govt. will simply take that “new money” from federal reserve and sprinkly it in the economy as they see fit. Federal Reserve takes loss and well what do they care - they can simply print more and pay their loss off.
In the US anyway, there wasn’t a mechanism, government to relive the moral and hardworking from their fruits. Now you/we are just chumps, serfs, suckers. Fed/state and local government are just wealth stripping, thieving, transfer mechanism.
Continental dollar, Lincoln and greenbacks, FDR and the confiscation of private gold, and Nixon. All have trashed previous money principals when they had too. I don’t see any problem, for them, doing in the future.
The last thing government wants is to lose power and to reduce themselves or spending IMO.
Governments that have their own central banks and can print money to buy their own debt will not default, but investors will pay a price through incrementally higher inflation.
But the governments that don’t have their own central banks and don’t have much influence on the Fed and ECB, such as Greece & Ireland and states like California, are in real danger of defaulting on debt in the next several years. California is moving steadily towards de facto bankruptcy when it will run out of cash to pay all its bills and will be unable to sell more bonds at reasonable interest rates. As the risk of taking a haircut on interest payments or principle repayment grows, California bonds are starting to turn into a Ponzi scheme, and if the legislature doesn’t make meaningful structural budget cuts then investors will stop buying those bonds at investment-grade rates within a few years. I think CA bonds are already junk and the ratings agencies are late on downgrading them because they don’t want to be blamed for the fallout in the financial markets that will result from downgrades, which are inevitable without structural budget reform.
“Are ammo prices EVER going to come back down? It seems the supply of ammo has picked up but prices are down only a buck or two a box from the peak. Prices trippled and haven’t come down. I used to pay $10-12 for Winchester white box .45 and it is still at $26. How long is this insanity going to last? Or is going to be like gasoline? Now that shooters have seen these high prices for 3 years, the ammo manufacturers act like we should be used to them and are leaving them in place. I’ve been waiting for a price drop to stock up but it isn’t happening. How long do I wait???”
You can thank overall commodity prices for that. Lead, Brass, Copper, etc.
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