Monday, September 30, 2013

Government Is Shutting Down in Budget Impasse

BREAKING NEWSTuesday, October 1, 2013 12:09 AM EDT
Government Is Shutting Down in Budget Impasse
A series of rapid-fire back and forth legislative maneuvers by the House, Senate and White House late Monday failed to break a bitter budget standoff over President Obama’s health care law, setting in motion the first government shutdown in nearly two decades.
Harry Reid, the Senate majority leader, dismissed as game-playing a late-hour House proposal to begin conference committee negotiations.
The impasse meant that 800,000 federal workers were to be furloughed and more than a million others would be asked to work without pay. The Office of Management and Budget issued orders that “agencies should now execute plans for an orderly shutdown due to the absence of appropriations” because Congress had failed to act.

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http://www.nytimes.com/2013/10/01/us/politics/congress-shutdown-debate.html?emc=edit_na_20131001

Government Shutdown Approaches What a Way to Run a Country

http://www.informationclearinghouse.info/article36394.htm

Americans get the best democracy money can buy. The best, brightest and most honorable are excluded. Rare exceptions prove the rule.

Shutdown of the Federal Government: 

Causes, Processes, and Effects
http://www.fas.org/sgp/crs/misc/RL34680.pdf

Jacob G. Hornberger: SHUTDOWN ANXIETY

http://fff.org/2013/09/30/shutdown-antics/?utm_source=rss&utm_medium=rss&utm_campaign=shutdown-antics

Isn’t it great seeing all those statists pacing the floor and wringing their hands over the possible “shutdown” of the federal government? Given that their entire world revolves around the federal government — which is their parent or their god — the possible shutdown of the federal government is one of the most frightening events in the life of a statist. It’s like the world coming to an end.
Of course, there really isn’t any possibility of a genuine shutdown. What are described as the “essential functions” of the federal government will continue. Of course, what U.S. officials call essential and what libertarians call essential are two completely different things. Under the shutdown, the major programs of the welfare-warfare state will continue.
What will supposedly cease are what the feds consider “non-essential” functions, with employees in those sectors being sent home.
The statists say that the government shut-down will mean economic catastrophe for America. What they mean by that is that all those laid-off federal non-essential employees won’t have their extremely generous federal salaries to spend at the mall.
Actually, however, the government shut-down would be one of the best things that could ever happen to America. In fact, if we’re lucky, the government shut-down will be permanent and all those non-essential personnel will be permanently laid off.
No longer would American taxpayers be burdened by the taxes needed to fund those non-essential people and their non-essential functions. Equally good, all these non-essential people would find jobs in the private sector, making them productive citizens rather than parasitic citizens living off the taxes that the private sector pays.
Thus, a government shutdown would be doubly positive. It would leave more savings in private hands and increase the number of productive people in the private sector. Increases in savings and productive capital are the key to rising standards of living for people in a society.
Will it happen? Unfortunately, no. Republicans are as committed to statism as Democrats are. The last thing they want to do is shut down the welfare-warfare state, including its non-essential functions. After all, if Republicans had wanted to terminate the federal government’s non-essential functions, they would have done it long ago.
Consider the excuse that Republicans are using to threaten a shutdown — Obamacare. Standard Republican claptrap. They’ll complain about this welfare reform or that welfare reform, but they’ll never challenge or question the fundamental causes of the problem — Medicare and Medicaid, medical licensure, and healthcare and insurance regulation.
That’s because Republicans believe in healthcare socialism. Their only beef is with President Obama’s reform plan. What if Obamacare was repealed? What difference would it make? We’d still have a healthcare crisis produced by healthcare socialism. What then? Are Republicans going to then call for the repeal of Medicare and Medicaid, medical licensure, and healthcare and insurance regulations? Not on your life. Like I say, they love healthcare socialism, just as they love other aspects of the welfare state. They’ll simply come up with their own statist reform plan, which will produce the same types of horrific distortions that Obamacare will produce. The problem is not Obamacare. The problem is healthcare socialism, something that all statists, both Republican and Democrat, ardently believe in.
But it is fun to watch it play out, if for no other reason than to see the deep anxiety the possible shutdown produces within statists. We all know how it ends though: The shutdown won’t last long and the welfare-warfare state will, unfortunately, soon be back in full force.

What Are The Unintended Consequences Of A Government Shutdown?

http://www.zerohedge.com/news/2013-09-30/what-are-unintended-consequences-government-shutdown

BofA's breakdown: "The shutdown will likely add to the budget deficit. It is costly to stop and start programs. The 1995-96 shutdown directly added $1.4 bn to the deficit (about $2.5 bn in today’s dollars) Moreover, the shock to growth will undercut tax revenues. In addition, ironically it does not impact the implementation of Obamacare since it is an entitlement similar to Medicare. However, there is some chance it could delay US economic data releases: in 1996, the December employment report was delayed two weeks as a result of the shutdown then.The Federal Reserve and the Post Office, both of which do not depend on Congressional appropriations, will not see any cutbacks due to a shutdown."

President Obama To Explain Whose Fault Is It Anyway - Live Webcast

http://www.zerohedge.com/news/2013-09-30/president-obama-explain-whose-fault-it-anyway-live-webcast

We've heard from Boehner, Reid has chipped in, and even Schumer had a cameo but now the big man steps up to point fingers, clarify where the blame should lie, and demand his way or the highway. We are sure soon after we will get the same speech from Boehner wit ha word replace "Republicans" for "Democrats" but the farce continues...
 LIVE VIDEO
CLICK ON THE LINK ABOVE

MARTIN ARMSTRONG'S LATEST BLOG POSTS

Understanding Contagion – Something Politicians Remain Clueless About

Bratusek Alenka
The crisis in Long-term Capital Management that began with Russian debt spread and hit every market with lightening speed. Even the dollar/yen fell from 147 to 103 in just days. Why? It is called contagion. Major investment is spread-out internationally. As a crisis unfolds for one region, it spreads by forcing liquidation of other markets to raise cash because of an unrelated market implosion.
This is what we are seeing in Slovenia where the government is discussing the impact of a possible bailout of its banks because Austrian banks in need of capital at home are forced to liquidate investments in Slovenia.
The Slovenian Prime Minister, Alenka Bratusek is confronted with the crisis in the national banking sector that is emerging as a very major problem in yet another Eurozone country. The Slovenian economy is in crisis because of Austria and the withdrawal of Austrian banks from the country is exposing what some say if about 20% of the GDP is in the category of bad loans.

DEBT – PENSION CRISIS – Fuel Behind A Stock Rally

DebtDevouer
I cannot emphasize how serious a situation we are in on two fronts (1) Sovereign Debt Crisis and (2) Pension Crisis. These are really global problems that are going to explode in our faces. In Europe we have the Sovereign Debt Crisis has spilled over into the banking system since banks were required to have sovereign debt as their reserves. Create unsound government debt and you simultaneously undermine the banking system That is killing two birds with one stone.
Then there is the Pension Crisis. This is widespread throughout Europe and America. Pensions have needed 8% on average to meet obligations. But governments need low interest rates to reduce deficits. This is a battle that will end very badly because they will be unable to keep rates down artificially and as pension funds are forced to invest privately, rates will rise.
Japanese savers are expected now to begin pumping in almost $700 billion into the stock market under tax free incentives.The Japanese government is now trying to deal with the Pension Crisis facing the nation with the world’s oldest population and lowest interest rates. The Japanese the Pension Crisis is reaching critical mass. The Nippon Individual Savings Account program, will now begin allowing individuals to buy 1 million yen ($10,145) a year of risk assets that are EXEMPT from taxes on dividends and capital gains for five years. The plan is expected to draw in as much as 68 trillion yen through 2018, with 65 percent of users pulling money out of bank deposits to purchase securities. Here too, we should expect to see this pressure push interest rates higher.
Expect this trend to also filter over and feed into the US share market. There will be equity funds and US shares that pay good dividends unlike those in Japan. This is part of the potential Phase Transition on the horizon for the US share Market into 2015.75.

Senate Rejects House Budget Offer With Shutdown Near

BREAKING NEWSMonday, September 30, 2013 2:32 PM EDT
Senate Rejects House Budget Offer With Shutdown Near
The Senate on Monday quickly rejected a House proposal to fund the government only if Democrats agreed to delay or undo parts of the 2010 health law as House Republicans gathered in the Capitol to plot their response in the escalating budget fight.
Within minutes of convening just after 2 p.m., the Senate on a 54 to 46 vote followed through on Democratic threats to strip the health care provisions from a measure passed by the House early Sunday morning and send it back to the House.
But House Republicans showed no sign of backing down, signaling a readiness to shut down the federal government over the health law.

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http://www.nytimes.com/2013/10/01/us/politics/congress-shutdown-debate.html?emc=edit_na_20130930

Sunday, September 29, 2013

MARTIN ARMSTRONG'S LATEST BLOG POSTS


They Are Officially Eyeing up Pensions

Bureacrats
I have been warning that my sources on Capital Hill have been pointing to the next great take-over that is coming – the $19.4 trillion in pension funds. This is now starting to hit the mainstream press. This will be the way to regain national security by buying back foreign holders of US debt. Additionally, keeping interest rates so low, at 2% pension funds cannot survive with US Treasuries anymore. The typical allocation has been 40% in US Treasuries. That has no choice but to decline. Therefore, we have the sudden interest now of the U.S. Consumer Financial Protection Bureaueyeing up the $19.4 trillion in retirement savings as a measure of course to protect consumer investments with decisions of people with absolutely no investment experience.

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Update on Computer Modeling

We are getting closer to bringing on-line the full model where clients will actually be able to ask the computer questions. This is theREAL model that taught me how the world really functioned. Many have asked if I personally can really be replaced. That is my goal and new modeling has been underway for the past year as I try to code those subtleties. True, it is not easy. But it is clear that eventually the only way to really help society is to create a knowledge base that accumulates over the course of generations.
There are those who are personally greedy and other who will do anything to stop this project. Perhaps it is the battle between the evil Karma and the good. What is clear, however, is that with each crisis, society simply tries the same thing over and over. It would be nice just once to have a computer you asked what are the options and has anyone tried this before? What was the outcome? We are simply the definition of insanity – we keep doing the same thing over and over again while expecting a different result.

US – Italy – China

Cyber-World
Of course, the USA stock futures and the dollar came under some pressure as the shutdown of the government appears more likely. Everyone knows this is just drama and posturing as if the USA would actually default. But hey, it is good for moving markets as the talking head talk to themselves so much, they will confuse the issue, The euro is also feeling political troubles as it is becoming increasingly clear that there is a movement toward federalism in Europe and Brussels will be taking over most of Europe. But then there is the Italian government that has teetered on the edge of collapse. Italy is too big to bail-out. Then there is China that surprised everyone with a downward revision to its activity in its factory sector.
We are still headed into a turning point this week/next in most markets.

Gold Lending Could Stop in London

Gold 400 oz Bars
Many of the Goldbugs will be happy to hear that the London Bullion Market Association (LBMA) says it might start charging member banks more or even dissolving the Gold Forward Offered Rates (GOFO) – the rate at which dealers will lend gold against US dollars – due to new financial market regulations. The push for regulation stems from the Libor (London Interbank Offered Rate) manipulation scandal in 2012. The International Organisation of Securities Commissions (IOSCO) has been looking at how to supervise market benchmark setters.
The truth behind gold lending was also the expansion of the market and added liquidity. During the 1970s, the way OPEC members could legally earn interest under Islamic law was to “buy” gold and “sell” it forward collecting the difference that was not formally called interest. The OPEC nations ran their money in gold in this manner and that helped create the liquidity to launch gold as a viable futures contract before 30-year bonds hit in 1977 and even the S&P500 futures that did not appear until 1985. It was gold that was the leader in creating an international marketplace. If gold can mo longer be used in this manner, there will be liquidation of gold holdings by those who still use it to park money and earn unofficial interest for religious reasons.
The Chairman of LBMA told Reuters reporters on Sunday that the new principles require the body to “look at how data is collected, how it’s recorded, who is administrating it.” If members decide that they “don’t need to spend more money on regulatory affairs [...] then the GOFO might not exist.”
This could be bearish for gold and actually reduce its liquidity. Money has parked in gold for religious reasons. If there no possibility of income, there is no reason to park cash in gold for religious institutions. Some will immediately disagree and claim money is there because it’s bullish on gold. That is like saying everyone in New York is a banker. In any market, people buy for a variety of reasons. It is NEVER a single act that causes all people to buy or sell. You cannot reduce it to a single cause and effect.