HALF-FULL REPORT 07/15/11

The current crisis du jour over the debt ceiling makes me think of Errol Flynn (1909-1959). 

Flynn’s best friend was David Niven, with whom he starred in a number of movies.  Flynn was the handsomest and most charming man in Hollywood.  It was impossible not to like him – or as many a Hollywood actress attested, not to love him.

Yet Flynn had a fatal character flaw – his unreliability.  As Niven once commented:  "You can depend on Errol to always let you down." 

Just like Republicans.  We can hope against hope, but in the end, you know they’re going to cave.  Trump’s assessment looks accurate:  they are doing "another el foldo."

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Aside from begging LtCol Allen West to smack Boehner and Cantor upside their heads and ordering them to take the debt ceiling hill, what can we do?

We can talk about the rating agencies.  There are three main ones, Moody’s, Standard & Poor, and Fitch.  All three are under shoot-the-messenger attack by EU mandarins for exposing the insolvency of the euro.  Watch now for the Zero Administration to follow suit.

Yesterday (7/14), S&P announced there is at least a 50% chance that it will downgrade the US’ gold-plated AAA credit rating within the next 90 days unless a "credible solution to the rising U.S. government debt burden" is achieved.

The Demagogues are using this to shriekingly pressure the Pubs into caving on the debt ceiling – but no one seems to be reporting what is actually going on.  Yes, S&P along with the other two, are warning the US not to default, i.e., pay debt service, but everyone knows now that there’s plenty of tax revenue to do that with no ceiling raise at all.

The real story has nothing to do with the phony threat of default, but S&P’s demand that the US’ "debt trajectory" be radically slowed down by spending cuts of at least $4 trillion over the next 10 years.  Read this carefully:

"If Congress and the Administration reach an agreement of about $4 trillion, and if we conclude that such an agreement would be enacted and maintained throughout the decade, we could, other things unchanged, affirm the ‘AAA’ long-term rating and A-1+ short-term ratings on the U.S."

The threat is plain – don’t do this, and the AAA rating goes down the tubes.  This is wonderful news.  Zero’s game has been to force Fed rates to less than 1%.  This lets him borrow trillions at virtually no interest, and the banks to make money all day long by borrowing money at that no interest from the Fed and flip it into Treasuries yielding 3%.  (Note this also means the banks never have to loan any money to businesses.)

Once there’s a rating downgrade, this game is over.  The Fed will have to raise rates, which will explode debt service costs and disenable Zero from digging us into a ever-deeper deficit hole.

Now look at that S&P 90-day deadline:  mid-October, just in time for Congress to conclude its FY2012 budget.  That’s where the next battle lies.  The debt ceiling is a skirmish, very important but not conclusive.  The war is far from over. 

The FY2012 budget has to approve any deficit spending – including that permitted by any debt ceiling increase.  Raising the ceiling is a permission to borrow, not the authorization to.  The House can stop the latter in the FY2012 tracks.  A luta continua, as the Renamo guerrillas of Mozambique would say, the struggle continues.

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We also need to take a global view on this.  We are rightly freaking out over the unconscionable debt of our government.  But such debt is swamping governments all over the world. 

We all know about Greece, which as of today (7/15) is paying 29.89% on its two-years, and Portugal’s at 16.8%.  But now Italy, the world’s 7^th largest economy, is paying 5.5% on its ten-years, while Spain’s are at 5.86%.  The only option for the ECB at this point is to print euros in the trillions and devalue their way-overvalued currency to kingdom come.  The euros is doomed more than the dollar.

But do you know about the debt hole China is stuck in?  Princeton’s Minxin Pei provides a jaw-dropping analysis, China’s Ticking Debt Bomb, disclosing how and why the Chicoms are afflicted with the same spending and borrowing disease as the US and the EU.

China’s claim that it has a debt to GDP ratio of under 20% is a typical Chicom lie.  Pei explains:

"Once local government debts, costs of re-capitalizing state-owned banks, bonds issued by state-owned banks, and railway bonds are included, China’s total debt amounts to 70 to 80 percent of GDP, roughly the level of public debt in the United States and the United Kingdom. Since most of China’s debt has been borrowed in the last decade, China is on an unsustainable trajectory at the current rate of debt accumulation."

At some time in the near future, the Chicoms will be forced to service their debt by eating up their foreign reserves – meaning they’ll have to cash in their US Treasurys.  And meaning they’ll have a lot less dough to invest in growing their economy. 

Now try this on.  A recent study – Why Prices in China Are Higher Than the US – discloses that prices for things people buy are 50% higher in China than the US – while per capita income is 34 times lower in China than the US.  Inflation is rocketing up for the Chinese. They are in beaucoup deep kimchee worse than we are.

The common denominator in all of this global conflagration of debt is monopoly money pretending to be real, governments printing up endless oodles of fiat currencies that have no actual value.

This prompted my old friend Ambrose Evans-Pritchard in the London Telegraph today (7/15) to explain that the only solution is a global return to a gold standard.  Ambrose thinks this will be a basket of commodities, rather than gold solo.

I agree with Ambrose that the Era of Fiat Currencies is coming to an end.  Zero and the Demagogues, the EU central bankers, the Chicoms and other financial scammers are headed off the cliff.  The debt game is over.

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Let’s take a fun break.  Moslems all over the globe are in a tizzy over a professor of Islamic Theology at Münster University in Germany claiming his studies show Mohammed may never have existed. 

Then again, TTPers have known this for years.  The Myth of Mecca, written two weeks after the Moslem Atrocity of 9/11, explained how the biography of Islam’s alleged founder is fiction, that "Mohammed" is not a name but a title (Arabic for "The Praised One"), and that Islam was an invention for the purpose of providing a religious justification for Arab imperialism in the 7^th-8^th centuries.

The Myth of Mecca might be worth re-reading now.

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Speaking of Moslems, time to celebrate Ahmad Wali Karzai’s getting bumped off in Afghanistan on Tuesday (7/12)  This was an evil horrible man, as revealed in How Corrupt Is The Afghan Government Our Soldiers Are Dying For? (July 2010), and again in Why God Is Punishing Pakistan (August 2010 – note especially the info on Watan Risk Management, AWK’s company).  Good riddance.

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Speaking of Moslem countries, Syria is about to finally break free of the monstrous Assad dictatorship.  The more the regime sends its soldiers to kill protestors, the larger the protests become.

Today (7/15), over a million Syrians were in the streets of cities and towns across the country, demanding Assad resign and his government be swept away.  With the protests finally moving into Damascus itself, Israeli intel folks are saying Assad will soon be toast.

Also toast is Libya’s Gaddafi.  The French have informed him he either leaves the country (South Africa has offered him the best asylum) or they will kill him – period, no other choices.  Talk to anyone at NATO and they’ll tell you the French have had it with Gaddafi and are 100% committed to killing him if he doesn’t get out of Libyan Dodge. 

Forget "cheese-eating surrender monkeys" when it comes to Gaddafi – the French are serious.

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Speaking of another Moslem country… well, ok, Britain isn’t completely Moslem yet but it’s getting there.  One of my favorite Brit writers is a guy named James Delingpole, a colleague of Ambrose Evans-Pritchard at the London Telegraph.

You probably have been subjected to the enemedia frenzy over Rupert Murdoch and the phone hacking by one of his tabloid papers.  The enemedia thinks it can hype this up to get rid of Fox News – and use it as a distraction away from the monumental Fast and Furious scandal engulfing Eric Holder and Zero’s Justice Dept.

So here’s Delingpole in high form:  The BBC Is A Thousand Times More Evil and Dangerous Than Rupert Murdoch.  Enjoy.

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Here’s something else to enjoy:  a video of Thad McCotter (R-MI) on Fox News in a very impressive discussion of why he is running for president. 

As you’ll see, this is a very bright, savvy, knowledgeable, and articulate guy.  A little-known Congressista (unlike Michele Bachmann who has a national following) running for POTUS may seem quixotic – yet it will seem less so once you watch him.

The only place he falls on his face is making a goofy case for supporting the auto industry bailout because Detroit provides "the arsenal of democracy."  Huh?  I thought they made cars in Detroit, not aircraft carriers.

McCotter’s defending Zero’s illegal auto bailout that criminally cheated GM bondholders for the purpose of bailing out UAW union workers, not democracy arsenals, is indefensible.  He’s got to walk this back with an admission he’s pandering to his folks in Michigan and swear on a Bible to never do it again.

If he gets that behind him, his candidacy may start to really go places.

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I know there are too many links to too much stuff to read already in this HFR, but nonetheless, The Chosen One by Angelo Codevilla is the classic "must read" of the week.

Who knew about Zero’s grandparents having connections with the CIA?  What got my attention especially was Angelo’s discussion of Cord Myer.  I talked about Cord in Hanoi John and Slick Willie (October 2004), and his telling me he recruited Bill Clinton for the CIA when Slick was at Oxford. 

The dots Angelo connects between Cord’s CIA covert ops and Zero’s grandparents are fascinating.  The whole article is. 

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Finally, two important announcements. 

First:  Miko, who really runs TTP and all of you who have been to a Rendezvous know well, is getting married tomorrow!  All TTPers, I’m sure, will want to wish him a very enjoyable honeymoon.  You can do so at [email protected].  Congratulations, Miko & Meg!  Live long and prosper!

Second, due to popular request, we have a new date for Rendezvous XI.  Rendezvous XI is now Friday October 7 to Sunday October 9. 

The question is:  should it be international, at Niagara Falls in Canada – or in the nation’s capital, Washington DC?  Please let us know on the Forum!

One last note:  Due to popular TTPer demand, The Speech I’d Give If I Were Running For President is a Free article – you can sent it to absolutely anyone you want in the entire solar system and beyond.