Monday, April 4, 2011

US Government Borrowing Nominally Breaches Debt Ceiling as Congress “Argues Over a Bar Tab on the Titanic”, One step closer to an International conflict in Libya

4/4/2011 Portland, Oregon – Pop in your mints…
The Western Governments and their respective Central Banks, (save Germany and Ireland), are in denial.  They are bankrupt.  You can only hide bankruptcy so long before economic law begins to reign.  Not even the world's most powerful monetary authority nor its most powerful military can stop it.  The laws of economics are as immutable as the God who put them in place.  
Our current speculation at The Mint is that the Western Governments are about to play what they believe to be their trump card, a large scale conflict otherwise known as a world war.  Why else would the US be "reluctantly" tangled up in a military operation in North Africa?  Now there is talk of an Obama Doctrine which, like the Monroe Doctrine, will give credence to further military intervention in far off lands.  This is a sad state of affairs, but as our wife gently reminds us if we begin to fret, "es lo que nos toca vivir (it is what we have been chosen to experience)."
Meanwhile, back at home, the US Congress continues to neglect its duties.  Former U.S. Comptroller General David Walker equated the current budget debate on Capitol Hill to "…arguing about the bar tab on the Titanic."  We love the analogy but shudder at what it implies.
As the bickering continues at the Federal level, the problems with US State and Local government finances are beginning to come home to roost.  Jamie Dimon, Chairman and CEO of JPMorgan Chase, thinks that 100 municipalities will not make it.
And out of nowhere, the latest US Treasury auctions sent the total outstanding US Debt over the debt ceiling.  OOOOOOOOPPPSSS!  According to
"the most recently disclosed total debt was 14,211,567,662,931.23 as of March 28. This excludes the settlement of all of this week's auctions which amount to $35 + $35 + $29 billion (including today) or $99 billion. Adding the two amounts to $14,310,567,662,931.23. As a reminder the debt ceiling is $14,294,000,000,000.00. In other words, the total US debt just passed the debt limit - break out the Champagne! Granted there is a buffer of $52.2 billion between the total debt and the debt actually subject to the ceiling, meaning that America is not in default, yet."
As we have speculated here at The Mint, Armageddon is upon the bond markets.  Perhaps not coincidentally, on Friday the EU gave approval to undertake military operations on the ground in Libya to support the humanitarian mission, which up until now has involved dropping bombs from jets. 
The world is about to undergo what historians will call a "fundamental" shift.  At least they will have the benefit of know what happened.
For those of us who are here now, "es lo que nos toca vivir."  We will sit glued to our seats watching the end of the world as we know it!

And I feel fine!  If you trust Jesus, you probably do as well.
Stay Fresh!
P.S.  Check out our new 72 hour call at!
Key Indicators for Monday, April 4th, 2011

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.