On Wednesday, the temporary suspension of the debt ceiling ended, and so now the federal government is not going to be able to go into any more debt until the debt ceiling is raised. For the moment, the Trump administration can implement “emergency measures” to stay under the debt limit, but it won’t be too long before we get to a major crisis point because the federal government is quickly running out of cash. Already, the U.S. Treasury has less cash on hand than Apple or Google, and that cash balance is going to keep on dropping until the debt ceiling is finally lifted.
You may remember that the debt ceiling became a major issue a couple of times during the Obama years. Last time around, Barack Obama and the Republicans in Congress agreed to a horrendous deal which suspended the debt ceiling until several months after the 2016 election…
Since President Barack Obama signed the “Bipartisan Budget Act” on Nov. 2, 2015 there had been no legal limit on the amount of money the federal government could borrow until now. That law included a section entitled “Temporary Extension of Public Debt Limit.” It said that the law imposing a limit on the federal debt “shall not apply for the period beginning on the date of the enactment of this Act and ending on March 15, 2017.”
During the 16 and a half months between the signing of that deal and today, the U.S. national debt rose by a whopping $1,414,397,000,000.
But now the U.S. national debt will not be allowed to rise by another penny until the debt ceiling is raised or suspended once again.
The Trump administration is pushing hard to get the debt ceiling raised, and this is a complete reversal from how Donald Trump felt about the debt ceiling back in 2013. The following comes from the L.A. Times…
Trump sided with hard-liners in 2013, publicly opposing an increase. “I cannot believe the Republicans are extending the debt ceiling — I am a Republican & I am embarrassed!” he tweeted then.
Trump was actually right about the debt ceiling in 2013, and he is wrong now.
We simply cannot afford to keep adding trillions of dollars to the national debt. What we are doing to future generations of Americans is beyond criminal, because we are literally destroying their future just so that we can enjoy an inflated standard of living that we do not deserve today.
“Today,” Mnuchin wrote, “Treasury is announcing that it will suspend the sale of State and Local Government Series (SLGS) securities. SLGS are special-purpose Treasury securities issued to states and municipalities to assist them in conforming to certain tax rules. These securities count against the debt limit. The suspension of SLGS sales will commence on March 15, 2017, and continue until the debt limit is either raised or suspended. As in the past, it is likely Treasury will utilize additional extraordinary measures.”
The federal government will be able to keep going for a little while by implementing such “extraordinary measures”, but the Treasury cash balance is going to continue to dwindle and at some point a major squeeze is going to happen.
As things get tighter and tighter, the Trump administration will become increasingly desperate to get the debt ceiling raised. As I wrote about yesterday, the key for Trump is going to be finding 218 votes in the House of Representatives that will be willing to go along with him.
You would think that since Republicans control the House that this should be easy, but the truth is that there are a lot of conservative Republicans that are not inclined to agree to a debt ceiling increase without substantial accompanying budget cuts.
The proposed budget that Trump released this week is getting a lot of criticism from the left for cuts to social programs, but the truth is that it actually doesn’t reduce the deficit at all…
President Trump’s “skinny” budget blueprint for 2018 features a proposed $54 billion increase in defense spending and an equal number of spending cuts from the smallest part of the federal budget.
That means his changes won’t add to next year’s projected $487 billion deficit. But they won’t reduce it, either.
And remember, that “$487 billion” figure is just for show. During the Obama years the U.S. national debt increased by an average of well over a trillion dollars a year, and that is almost certainly going to continue for years to come as long as the debt ceiling is raised.
Republicans are supposed to be the party of fiscal responsibility.
So now is their big test.
If they raise the debt ceiling and continue adding more than a trillion dollars a year to the national debt, they will lose all credibility with conservative voters on fiscal issues.
But if they try to force the federal government to start living within its means that is going to severely harm the economy in the short-term.
Donald Trump is going to have to try to figure out a way to navigate this crisis. He has already promised that he will not touch Social Security and Medicare, and those are the two biggest drivers of our budget deficits. In fact, it is being projected that entitlement spending and interest on the debt will eat up every single penny that the federal government takes in within 20 years.
So if Trump won’t touch the big entitlement programs, where will he possibly find enough cuts to satisfy the fiscal conservatives in Congress?
Without them, Trump does not have enough votes to raise the debt ceiling.
In addition, many of the conservatives in Congress absolutely hate the new Republican health care plan, and they hope to use this debt ceiling crisis as leverage to change the bill.
If Trump can’t work out something with conservatives, perhaps he could turn to the Democrats. But most Democrats are extremely resistant to work with him on anything after all that has been said and done, and so for Trump to get a deal with them he would have to make extreme concessions.
This represents the biggest political test for the Trump presidency so far, and if we get down the road a couple of months and nothing gets done, this debt ceiling crisis could spark the kind of financial crisis that I describe in my novel entitled “The Beginning Of The End“.
Barack Obama pushed things right to the brink a couple of times, but he was savvy enough politically to never let things go over the edge.
Now it is Trump’s turn, and somehow he has got to find a way to get the debt ceiling raised without making extremely deep compromises that would gut the rest of his agenda.
And he had better get to work on this quickly, because time is running out and the clock is ticking…
Their agenda may be on the rocks in the United States at the moment, but that doesn’t mean that the globalists are giving up. In fact, a major push toward a cashless society is being made in the European Union right now. Last May we learned that the 500 euro note is being completely eliminated, and just a few weeks ago the European Commission released a new “Action Plan” which instructs member states to explore “potential upper limits to cash payments”. In the name of “fighting terrorism”, this “Action Plan” discusses the benefits of “prohibitions for cash payments above a specific threshold” and it says that those prohibitions should include “virtual currencies (such as BitCoin) and prepaid instruments (such as pre-paid credit cards) when they are used anonymously.”
This new document does not mention what an appropriate threshold would be for member states, but we do know that Spain already bans certain cash transactions above 2,500 euros, and Italy and France already ban cash transactions above 1,000 euros.
This is a perfect way to transition to a cashless society without creating too much of an uproar. By setting a maximum legal level for cash transactions and slowly lowering it, in effect you can slowly but surely phase cash out without people understanding what is happening.
And there are many places in Europe where it is very difficult to even use cash at this point. In Sweden, many banks no longer take or give out cash, and approximately 95 percent of all retail transactions are entirely cashless. So even though Sweden has not officially banned cash, using cash is no longer practical in most situations. In fact, many tourists are shocked to find out that they cannot even pay bus fare with cash.
So most of Europe is already moving in this direction, and now this new Action Plan is intended to accelerate the transition toward a cashless society. The public is being told that these measures are being taken to fight money laundering and terrorism, but of course that is only a small part of the truth. The following comes from the Anti-Media…
The European Action Plan doesn’t mention a specific dollar amount for restrictions, but as expected, their reasoning for the move is to thwart money laundering and the financing of terrorism. Border checks between countries have already been bolstered to help implement these new standards on hard assets. Although these end goals are plausible, there are other clear motivations for governments to target paper money that aren’t as noble.
In a truly cashless society, governments would be able to track where everybody is and what everybody is doing all the time. And in order to have access to the cashless system, people would have to comply with whatever requirements governments wanted to impose on their helpless populations. The potential for tyranny that this would create would be off the charts, but very few people seem greatly alarmed by the move toward a cashless system all over the globe.
“There is little debate among law-enforcement agencies that paper currency, especially large notes such as the U.S. $100 bill, facilitates crime: racketeering, extortion, money laundering, drug and human trafficking, the corruption of public officials, not to mention terrorism. There are substitutes for cash—cryptocurrencies, uncut diamonds, gold coins, prepaid cards—but for many kinds of criminal transactions, cash is still king. It delivers absolute anonymity, portability, liquidity and near-universal acceptance.”
Over in Asia restrictions are being put on cash as well. Legendary investor Jim Rogers commented on what is currently happening in India during one recent podcast…
The time will come when you won’t be able to buy a cup of coffee without being traced, warns investment guru Jim Rogers. To control people, governments will increasingly seek to hunt down cash spending, he adds.
“Governments are always looking out for themselves first, and it’s the same old thing that has been going on for hundreds of years. The Indians recently did the same thing. They withdrew 86 percent of the currency in circulation, and they have now made it illegal to spend more than, I think it’s about $4,000 in any cash transaction. In France you cannot use more than, I think it’s a €1,000,” said Rogers in an interview with MacroVoices Podcast.
The reason why this is taking place all over the planet is because this is a global agenda.
The globalists ultimately plan to completely eliminate cash, and this will give them an unprecedented level of control over humanity.
One thing that many fear may someday be implemented is some form of microchip identification system. In order to access the cashless grid, you would need your “ID chip” so that the system could positively identify you, but of course there are millions of people around the world that do not intend to get chipped under any circumstances.
In the old days, you would be labeled a “conspiracy theorist” just for suggesting that they may try to chip all of us one day, but in 2017 things have completely changed.
Senate Bill 109 would make it a Class C felony to require someone to be implanted with a radio frequency identifier, such as microchips placed in pets.
The idea for the bill came from a constituent, the Las Vegas Republican said.
If that sounds very strange to you, then you may not know that companies all around the globe are already starting to explore this type of technology. For instance, a company in Belgium called NewFusion has actually begun to microchip their employees…
In a move that could be lifted straight from science fiction, workers at a Belgian marketing firm are being offered the chance to have microchips implanted in their bodies.
The chips contain personal information and provide access to the company’s IT systems and headquarters, replacing existing ID cards.
The controversial devices raise questions about personal security and safety, including whether they may allow the movements of people with implants to be tracked.
Technology like this often starts off being “voluntary”, but then after enough people willingly accept it the transition to “mandatory” is not too difficult.
We live at one of the most critical moments in all of human history, and the globalists are certainly not going to lay down and die just because Donald Trump won the election.
The U.S. represents less than five percent of the population of the planet, and in most of the world the agenda of the globalists is on track and is rapidly advancing.
The globalists want a unified one world economy, a unified one world religion and a unified one world government. The election of Donald Trump was a blow to the globalists, but it has also made them more dangerous, more ruthless and more determined than ever before.
And in case you think that using the term “globalists” is a bit strange, the truth is that even the New York Times is using it to describe the global elite and their global agenda.
We are in a life or death battle for the future of our society, and the globalists are never going to give up until they get what they want. So now is not a time for complacency, because the very future of our country is at stake.
Did you know that almost 70 percent of the U.S. population is essentially living paycheck to paycheck? As you will see below, a brand new survey has found that 69 percent of all Americans have less than $1,000 in savings. Of course one of the primary reasons for this is that most of us are absolutely drowning in debt. In fact, the total amount of household debt in the United States now exceeds 12 trillion dollars. So many Americans are so busy just trying to pay off their existing debts that they can’t even think about saving anything for the future. If economic conditions remain relatively stable, the fact that so many of us are living on the edge probably won’t kill us. But the moment the economy plunges into another 2008-style crisis (or worse), we could be facing a situation where two-thirds of the country is in imminent danger of running out of cash.
If you are living paycheck to paycheck, you live under the constant threat of your life being totally turned upside down if that paycheck ever goes away. During the last crisis, millions of Americans lost their jobs very rapidly, and because so many of them were living paycheck to paycheck all of a sudden large numbers of people couldn’t pay their mortgages. As a result, multitudes of American families went through the extremely painful process of foreclosure.
Unfortunately, it appears that we have not learned anything from the last go around. According to the brand new survey that I mentioned above, 69 percent of all Americans have less than $1,000 in savings…
Last year, GoBankingRates surveyed more than 5,000 Americans only to uncover that 62% of them had less than $1,000 in savings. Last month GoBankingRates again posed the question to Americans of how much they had in their savings account, only this time it asked 7,052 people. The result? Nearly seven in 10 Americans (69%) had less than $1,000 in their savings account.
Breaking the survey data down a bit further, we find that 34% of Americans don’t have a dime in their savings account, while another 35% have less than $1,000. Of the remaining survey-takers, 11% have between $1,000 and $4,999, 4% have between $5,000 and $9,999, and 15% have more than $10,000.
Perhaps the most alarming fact from this survey is that 62 percent of all Americans had less than $1,000 in savings last year. So that means that this number has gotten 7 percent worse over the last 12 months.
How did that happen? I thought the mainstream media was telling us that the economy was getting better…
Look, if you don’t have an emergency fund you are in danger of losing everything. This is a point that I have been making over and over again for years, and in an article about this new survey USA Today made this point very strongly as well…
This data is particularly worrisome since the recommendation is for Americans to have six months in expenses saved in case of an emergency, such as a large medical expense, car repair bill, or losing your job. Without this emergency fund to fall back on, millions of Americans could be risking financial disaster.
As the publisher of The Economic Collapse Blog, people are constantly asking me what they should do to get prepared for what is coming.
The number one thing that I always suggest is to build up an emergency fund.
In a chaotic situation it is always hard to anticipate accurately what is going to happen, but without a doubt we are all going to need to continue to pay our bills and to buy things for our families during the next crisis.
Yes, someday the U.S. dollar will become rather worthless, but until that happens you are going to need to continue to put a roof over the heads of your family and to put food on the table.
And you are going to need money to do those things.
Some time ago, the Federal Reserve also found that a large percentage of Americans are living on the edge of financial disaster. They discovered that 47 percent of all Americans could not even come up with $400 to pay for an unexpected emergency room visit without borrowing the money or selling something that they own.
If you can’t even come up with $400 you are really hurting, but that is the status of about half the country these days.
We are continually being told that the economy is strong, but that is simply not the truth.
In fact, it turns out that the period from 2005 to 2015 was the worst period for per capita real GDP growth in modern American history. The following comes from Zero Hedge…
Growth was unusually strong in the 1960s and early 1970s. In every year from 1966 through 1973, per-capita income was up between 30 percent and 40 percent from a decade earlier. Thus, it’s not surprising that many Americans recall this as a great period for the nation’s economy.
In every year from 1984 to 2007 — a period that economists call the Great Moderation, because of the way both growth and interest rates stabilized — per-person income was up between 20 percent and 30 percent from a decade earlier. That’s ample reason for Americans to view this as a good period for the economy.
Cumulative per-person growth from 2005 to 2015 was lower than in any prior decade in the sample. That certainly helps explain why many Americans are unhappy with the nation’s recent economic performance.
Why doesn’t Donald Trump ever bring up that amazing fact? I would think that he could get a lot of mileage out of that number.
At this point, nobody can deny that the middle class is shrinking. 61 percent of all Americans lived in middle class households in 1971, but now the middle class makes up a minority of the population for the very first time in our history.
Back in 1970, the middle class brought home approximately 62 percent of all income, but today that figure has plummeted to just 43 percent.
Those that are still doing well often dismiss those that are struggling by barking out such phrases as “get a job”, but the truth is that getting a good job is not so easy these days.
The most recent statistics show that there are 7.9 million Americans that are considered to be officially unemployed. When you add that number to the 94.1 million working age Americans that are considered to be “not in the labor force”, you get a grand total of 102 million working age Americans that do not have a job right now.
And just because you do have a job does not mean that everything is okay. As I have discussed previously, 51 percent of all U.S. workers make less than $30,000 a year according to the Social Security Administration.
Everywhere you look things seem to be getting worse and not better. Not too long ago I documented the explosion of tent cities all over the country as poverty continues to rise, and I discussed how one study found that some young women in our impoverished inner cities are so desperate that they are actually trading sex for food.
Sadly, it isn’t just a few hard cases that we are talking about. Even in areas of the country that are supposed to be “doing well” we are seeing record-setting poverty numbers. For example, it was recently reported that the number of New Yorkers sleeping in homeless shelters just set a brand new all-time high, and the number of New York families permanently living in homeless shelters is up 60 percent over the past five years.
If things are this bad during an “economic recovery”, what are they going to look like once the economy really starts imploding?
And considering the fact that almost 70 percent of the population has virtually no savings, could our nation handle an extended economic downturn that may be even worse than what we experienced in 2008 and 2009?
As a nation we truly are living on the edge, and it isn’t going to take very much at all to push us into oblivion.
Not all jobs are created equal. There is a world of difference between a $100,000 a year energy industry job and a $10 an hour job running a cash register at Wal-Mart. You can comfortably support a middle class family on $100,000 a year, but there is no way in the world that you can run a middle class household on a part-time job that pays just $10 an hour. The quality of our jobs matters, and if current long-term trends continue unabated, eventually we are not going to have much of a middle class left. At this point the middle class has already become a minority in America, and according to the Social Security Administration 51 percent of all American workers make less than $30,000 a year right now. We have a desperate need for more higher paying jobs, and that is why what is happening in the energy industry is so deeply alarming.
Just today we got some more disturbing news. According to Challenger, Gray & Christmas, the U.S. has lost 195,000 good paying energy jobs since the middle of 2014…
Cheap oil has fueled a massive wave of job cuts that may not be over yet.
Since oil prices began to fall in mid-2014, cheap crude has been blamed for 195,000 job cuts in the U.S., according to a report published on Thursday by outplacement firm Challenger, Gray & Christmas.
It’s an enormous toll that is especially painful because these tend to be well-paying jobs. The average pay in the oil and gas industry is 84% higher than the national average, according to Goldman Sachs.
Those are good paying jobs that are not easy to replace, and unfortunately the jobs losses appear to be accelerating. In their new report, Challenger, Gray & Christmas went on to say that 95,000 of those job cuts have come in 2016, and 17,725 of them were in July alone.
We also got some other bad news for the U.S. economy on Thursday.
Factory orders are down again, and at this point U.S. factory orders have now been down on a year over year basis for 20 months in a row. That is the longest streak in all of U.S. history.
Needless to say, we have never seen such a thing happen outside of a recession.
Once again, this is something that has never happened outside of a recession.
On top of all that, tax receipts continue to plummet. This is a very bad sign for the economy, because falling tax receipts are usually a sign that we are headed into a recession. The following comes from Zero Hedge…
July “Withheld” receipts – those tax and withholding payments that come straight from wage earner pay stubs – are down 1.0% year over year.
This data series can be choppy, and looking at the three month trailing average yields a 3.1%. That’s a touch slower than the 2016 YTD comp of 3.3%, and tells us to not expect too much from Friday’s number.
Also worth noting: YTD non-withheld tax receipts (such as those that come from “Gig economy” workers) are down 6.5%, and July’s comp is 15% lower than a year ago.
Last, corporate tax receipts are down 11% YTD, and if the current pace of these payments holds it will be the first negative comp since 2011. Bottom line: if the tax man isn’t as busy, can the U.S. economy really be expanding?
Are you starting to see a pattern here?
And let’s review what else we have learned over the past couple of weeks…
-U.S. GDP growth came in at an extremely disappointing 1.2 percent for the second quarter of 2016, and the first quarter was revised down to 0.8 percent.
Meanwhile, things continue to get worse around the rest of the planet as well. For example, the economic depression in Brazil continues to deepen and it is being reported that the Brazilian economy has now been shrinking for five quarters in a row…
Brazil’s economy, the world’s ninth largest, contracted by 0.3 percent in the first quarter, marking the fifth straight quarter it shrank. Last year, Brazil’s gross domestic product fell to its lowest level since 2009.
Inflation has also shot higher recently, rising 9 percent in 2015, from 6.3 percent in 2014, according to data from the World Bank. Energy as a percentage of exports, meanwhile, fell to 7 percent in 2015, from 9 percent in the previous year.
And of course Brazil is hosting the Olympics this summer, and that is turning out to be a major debacle. Many of the international athletes will actually be rowing, sailing and swimming in open waters that are highly contaminated by raw sewage, and Brazilian police have been welcoming tourists to Rio with a big sign that says “Welcome To Hell“. And let us not forget that right next door in Venezuela the economic collapse has gotten so bad that people are killing and eating zoo animals.
As the global economy continues to deteriorate, what should we do?
“Negative returns and principal losses in many asset categories are increasingly possible unless nominal growth rates reach acceptable levels,” Gross said in his latest Investment Outlook note published Wednesday.
“I don’t like bonds; I don’t like most stocks; I don’t like private equity. Real assets such as land, gold, and tangible plant and equipment at a discount are favored asset categories.”
I tend to agree with Gross. Bonds are in a tremendous bubble right now, and the stock market bubble has grown to ridiculous proportions. In the end, the only wealth that you are going to be able to fully rely on is wealth that you can physically have in your possession.
As you have seen in this article, signs of economic decline are all around us.
And yet, many people out there are still convinced that good times are right around the corner.
What is it going to take to convince them that they are wrong?
What would America look like with absolutely no electricity? Could you survive in a world with no lights, no cell phones, no computers, no televisions, no ATMs, no cash registers and no refrigerators? Such a world is not as far away as you might think. A very powerful nuclear blast directly over the center of the continental United States could potentially fry electronic equipment from coast to coast, and it would take months or even years to fully restore power. During that time, the entire country would be plunged into chaos and experts tell us that tens of millions of Americans would die. But even if we are never attacked by a nuclear weapon in that manner, scientists assure us that it is inevitable that a massive electromagnetic blast from the sun will produce a similar result someday anyway. In fact, back in 1859 a giant solar storm that came to be known as “the Carrington Event” fried telegraph machines all across North America and Europe. If a similar event happened today, life as we know it would be brought to an abrupt halt, and chaos would ensue from coast to coast.
In two days, a bold new movie will be released in theaters that portrays what the aftermath of such an event would look like in this country. It is entitled “AMERIGEDDON”, and it was directed by Mike Norris, the son of Chuck Norris. You can view the official trailer for the film right here…
I wish that more movies like this would come out, because most of what Hollywood produces these days is absolute garbage. Our entertainment-addicted society needs films like this that educate and inform, and I hope that as many Americans as possible get a chance to see it because this threat is very real.
In 2001, Congress established a commission to study the EMP threat, and those on the commission examined this problem quite extensively for a number of years. In 2008, members of the commission reported to Congress that they had come to the conclusion that the consequences of such an event would be absolutely catastrophic for this nation…
In 2008, the commission warned that “a high altitude nuclear explosion is one of a small number of threats that can hold our society at risk of catastrophic consequences.” If such an attack were to cause a nationwide blackout lasting as long as a year, up to 90 percent of the American people could die due to starvation, disease and societal collapse.
Personally, I think that the 90 percent figure is too high.
But what if it was just 50 percent of all Americans that died? We are still talking about the most horrific disaster in U.S. history by a very wide margin, and it would essentially mean the end of the Republic.
So what has Congress done about this threat?
Next to nothing, and this has many of the experts quite upset.
Ours is an electronic civilization. Electricity runs everything, including the economy. Electricity sustains the lives of 320 million Americans.
Terrorists could inflict “The greatest injury on the greatest number” by attacking the national electric grid and blacking-out all the life sustaining critical infrastructures.
A nationwide blackout would, in effect, turn the “off switch” for the United States. A terror blackout that lasts one year could kill so many people and cause such chaos that the lights might never come back on.
No less than two congressional commissions, the EMP Commission (2008) and the Strategic Posture Commission (2009) and numerous independent studies, including the recent books Lights Out and Blackout Wars, warn that an attack on the grid is an existential threat. A terror blackout could have such catastrophic consequences as to challenge the continued existence of our civilization.
And remember, no attack is even necessary in order for the power grid to be brought down. In fact, most Americans have absolutely no idea that our planet barely missed being fried by a massive EMP burst from the sun in both 2012 and 2013. Those two “near misses” were both extremely close, and if either of them had hit us directly you would not be reading this article today.
AMERIGEDDON, coming to theaters nationwide May 13, 2016, has been described as “the movie the establishment doesn’t want you to see.” Showing what happens when a not-so-future U.S. government conspires with the United Nations to stage an attack on the energy grid, AMERIGEDDON depicts a country ruled by martial law in which citizens are stripped of their constitutional rights and their guns. A group of patriots fight back and rescue the country from slipping into irreversible chaos.
AMERIGEDDON’s release in an election year is not coincidental. The film illustrates a dystopian future all patriots must guard against and is a call to action to preserve the Second Amendment and stop executive rule by fiat. Director Mike Norris, son of Chuck Norris, asks for like-minded Americans to support the film.
“The fact that a recent poll showed a majority of Americans are enraged with the federal government points to a frenzy of unrest with the dictatorial way in which our country has been run,” said Norris. “My family has long been involved in protecting the rights of Americans. We are concerned about the future and and see this film as a call to action. We urge people to join us in theaters and show Hollywood and politicians that true patriots will fight for their rights and want to see their values represented on-screen.”
A collaboration between Norris and entrepreneur and writer Gary Heavin, AMERIGEDDON seizes on fact-based threats and asks the ultimate question, “What happens when government turns on the people it’s supposed to protect?”
The sad thing is that the experts tell us that we could go a long way toward protecting our power grid from an EMP event for just a few billion dollars.
But there is absolutely no urgency among our leaders to get this done. They would rather waste our tax dollars in thousands of other ways.
And unfortunately, there is not much urgency to address this threat among ordinary Americans either. There are a variety of reasons for this, but I would like to touch on one. There seems to be a belief among many Americans that God would never allow something this bad to happen to us since we are so special. Of course this is complete nonsense, and anyone that doubts this should check out my new article in which I point out the parallels between modern America and Nazi Germany.
Over the years, I have repeatedly written about this EMP threat. There is a chapter in “Get Prepared Now” about it, and I extensively warn that a day of reckoning is coming for America in my new book.
Sadly, most people are not listening.
Most people just seem to believe that everything is going to be okay somehow.
But as far as this EMP threat is concerned, the experts assure us that it is absolutely certain that a massive burst from the sun will inevitably fry our electronics someday even if we are never attacked with a nuclear device. In addition, sources in the intelligence community are telling us that foreign hackers are becoming increasingly sophisticated and that someday they could bring down our power grid with just the push of a button. This is something that Ted Koppel is so alarmed about that he wrote an entire book about it.
So I don’t know why Barack Obama doesn’t want to do anything about this.
And I certainly can’t figure out why Congress doesn’t want to do anything about this.
It is almost as if a cloud of insanity has descended upon the land and nobody can think straight.
Let us hope that our leaders wake up and start addressing this threat, because someday we will most certainly have to deal with an event of this nature.
Did you know that 95 percent of all retail sales in Sweden are cashless? And did you know that the government of Denmark has a stated goal of “eradicating cash” by the year 2030? All over the world, we are seeing a relentless march toward a cashless society, and nowhere is this more true than in northern Europe. In Sweden, hundreds of bank branches no longer accept or dispense cash, and thousands of ATM machines have been permanently removed. At this point, bills and coins only account for just 2 percent of the Swedish economy, and many stores no longer take cash at all. The notion of a truly “cashless society” was once considered to be science fiction, but now we are being told that it is “inevitable”, and authorities insist that it will enable them to thwart criminals, terrorists, drug runners, money launderers and tax evaders. But what will we give up in the process?
In Sweden, the transition to a cashless society is being enthusiastically embraced. The following is an excerpt from a New York Times article that was published on Saturday…
Parishioners text tithes to their churches. Homeless street vendors carry mobile credit-card readers. Even the Abba Museum, despite being a shrine to the 1970s pop group that wrote “Money, Money, Money,” considers cash so last-century that it does not accept bills and coins.
Few places are tilting toward a cashless future as quickly as Sweden, which has become hooked on the convenience of paying by app and plastic.
During a recent Sunday service, the church’s bank account number was projected onto a large screen. Worshipers pulled out cellphones and tithed through an app called Swish, a payment system set up by Sweden’s biggest banks that is fast becoming a rival to cards.
Other congregants lined up at a special “Kollektomat” card machine, where they could transfer funds to various church operations. Last year, out of 20 million kronor in tithes collected, more than 85 percent came in by card or digital payment.
And of course it isn’t just Sweden that is rapidly transitioning to a cashless society. Over in Denmark, government officials have a goal “to completely do away with paper money” by the year 2030…
Sweden is not the only country interested in eradicating cash. Its neighbor, Denmark, is also making great strides to lessen the circulation of banknotes in the country.
Two decades ago, roughly 80 percent of Danish citizens relied on hard cash while shopping. Fast forward to today, that figure has dropped dramatically to 25 percent.
“We’re interested in getting rid of cash,” said Matas IT Director Thomas Grane. “The handling, security and everything else is expensive; so, definitely we want to push digital payments, and that’s of course why we introduced mobile payments to help this process.”
Eventually, establishments may soon have the right to reject cash- a practice that is common in Sweden. Government officials have set a 2030 deadline to completely do away with paper money.
Could you imagine a world where you couldn’t use cash for anything?
This is the direction things are going – especially in Europe.
As I have written about previously, cash transactions of more than 2,500 euros have already been banned in Spain, and France and Italy have both banned all cash transactions of more than 1,000 euros.
Little by little, cash is being eradicated, and what we have seen so far is just the beginning. 417 billion cashless transactions were conducted in 2014, and the final number for 2015 is projected to be much higher.
Banks like this change, because it enables them to make more money due to the fees that they collect from credit cards and debit cards. And governments like this change because electronic payments enable them to watch, track and monitor what we are all doing much more easily.
These days, very rarely does anyone object to what is happening. Instead, most of us just seem to accept that this change is “inevitable”, and we are being assured that it will be for the better. And no matter where in the world you go, the propaganda seems to be the same. For example, the following comes from an Australian news source…
AND so we prepare to turn the page to fresh year — 2016, a watershed year in which Australia will accelerate towards becoming a genuine cashless society.
The cashless society will be a new world free of $1 and $2 coins, or $5 or $10 bank notes. A new world in which all commercial transactions, from buying an i-pad or a hamburger to playing the poker machines, purchasing a newspaper, paying household bills or picking up the dry-cleaning, will be paid for electronically.
And in that same article the readers are told that Australia will likely be “a fully cashless society” by 2022…
Research by Westpac Bank predicts Australia will be a fully cashless society by 2022 — just six years away. Already half of all commercial payments are now made electronically.
Even in some of the poorest areas on the entire globe we are seeing a move toward a cashless society. In 2015, banks in India made major progress on this front, and income tax rebates are being considered by the government as an incentive “to encourage people to move away from cash transactions“.
Would a truly cashless society reduce crime and make all of our lives much more efficient?
But what would we have to give up?
To me, America is supposed to be a place where we can go where we want and do what we want without the government constantly monitoring us. If people choose to use cashless forms of payment that is one thing, but if we are all required to go to such a system I fear that it could result in the loss of tremendous amounts of freedom and liberty.
And it is all too easy to imagine a world where a government-sponsored form of “identification” would be required to use any form of electronic payment. This would give the government complete control over who could use “the system” and who could not. The potential for various forms of coercion and tyranny in such a scenario is obvious.
What would you do if you could not buy, sell, get a job or open a bank account without proper “identification” someday? What you simply give in to whatever the government was demanding of you at the time even if it went against your fundamental beliefs?
That is certainly something to think about.
Many will cheer as the world makes a rapid transition to a cashless society, but I will not. I believe that a truly cashless system would open the door for great evil, and I don’t want any part of it.
What about you?
Would you welcome a cashless society?
Please feel free to share what you think by posting a comment below…
What would you do if the power grid went down and never came back up? One of these days, and it could be a lot sooner than most people think, we will all wake up in a country without electricity. And considering how utterly dependent we have become on technology, that is a very frightening scenario to consider. How would Americans react if nothing worked? Just imagine a world where everything electronic is dead. I am talking about lights, cell phones, computers, televisions, ATMs, heating and cooling systems, credit card readers, gas pumps, cash registers, refrigerators, hospital equipment etc. When the power goes out for a few hours, that can be a major inconvenience, but what if it went out all over the nation and it didn’t come back on for months or even years? This is one of the greatest potential threats that the United States is facing, and yet very few people are even talking about it.
An electromagnetic pulse attack could potentially send our nation back to the 1800s in a single moment, but very few of us are equipped to handle life without technology. Tech guru John McAfee recently wrote an article in which he expressed his belief that 90 percent of the population would be dead within 2 years of such an attack…
You may think that is an unreasonably high estimate, but it turns out that it is the exact same number that the EMP Commission used in their report to Congress back in 2008…
What would a successful EMP attack look like? The EMP Commission, in 2008, estimated that within 12 months of a nationwide blackout, up to 90% of the U.S. population could possibly perish from starvation, disease and societal breakdown.
In 2009 the congressional Commission on the Strategic Posture of the United States, whose co-chairmen were former Secretaries of Defense William Perry and James Schlesinger, concurred with the findings of the EMP Commission and urged immediate action to protect the electric grid. Studies by the National Academy of Sciences, the Department of Energy, the Federal Energy Regulatory Commission and the National Intelligence Council reached similar conclusions.
So what has Barack Obama done to protect us from such an attack?
But there are others in the government that are very, very concerned about this threat. For example, NORAD recently moved back into Cheyenne Mountain, and the potential for an EMP attack was given as the primary reason for the move…
The Pentagon is moving the headquarters for the North American Aerospace Defense Command (Norad) back into Cheyenne Mountain near Colorado Springs, Colo., a decade after having largely vacated the site.
Why the return? Because the enormous bunker in the hollowed-out mountain, built to survive a Cold War-era nuclear conflict, can also resist an electromagnetic-pulse attack, or EMP. America’s military planners recognize the growing threat from an EMP attack by bad actors around the world, in particular North Korea and Iran.
An EMP strike, most likely from the detonation of a nuclear weapon in space, would destroy unprotected military and civilian electronics nationwide, blacking out the electric grid and other critical infrastructure for months or years. The staggering human cost of such a catastrophic attack is not difficult to imagine.
For years, most experts have assumed that an EMP attack would be conducted by exploding at least one nuclear weapon high up in our atmosphere. And that could definitely happen someday. But now governments all over the world are working on other ways to deliver an EMP strike, and many of them do not involve nuclear weapons at all.
The U.S. government is among those that have been doing this kind of research. The U.S. Air Force now reportedly has the capability to conduct an EMP assault against individual buildings or power stations. The following comes from the Daily Mail…
For years, scientists have been attempting to create such a weapon as part of Champ, or the Counter-electronics High-powered microwave Advanced Missile Project.
Now, the US Air Force claims it has advanced the technology, and says it can deploy it using the stealthy Joint Air-to-Surface Standoff Missile-Extended Range (JASSM).
There are fears a well targeted attack could knock out multiple power stations.
‘This technology marks a new era in modern-day warfare,’ said Keith Coleman, CHAMP program manager for Boeing Phantom Works.
And we also know that Russia, China, Iran and North Korea have also been developing EMP weapons. This next excerpt comes from DefenseNews…
The possibility of man-made EMP events has grown in tandem with the technological sophistication of America’s adversaries. It is widely known that both Russia and China already have this capability, and both countries have carried out serious work relating to the generation of EMP in recent years as part of their respective military modernization programs.
Now, rogue states Iran and North Korea may not be that far behind. Iran, for example, is known to have simulated a nuclear EMP attack several years ago using short-range missiles launched from a freighter. North Korea, meanwhile, has acquired the blueprints to build an EMP warhead, and in July of 2013, a North Korean freighter made it all the way to the Gulf of Mexico with two nuclear capable missiles in its hold.
Why are these other nations developing these technologies?
Iranian military documents describe such a scenario–including a recently translated Iranian military textbook that endorses nuclear EMP attack against the United States.
Thus, Iran with a small number of nuclear missiles can by EMP attack threaten the existence of modernity and be the death knell for Western principles of international law, humanism and freedom. For the first time in history, a failed state like Iran could destroy the most successful societies on Earth and convert an evolving benign world order into world chaos.
And it wouldn’t take much to completely disrupt electricity generation in America. In a previous article, I discussed a Federal Energy Regulatory Commission report which made the following jaw dropping statement…
“Destroy nine interconnection substations and a transformer manufacturer and the entire United States grid would be down for at least 18 months, probably longer.”
Are you starting to get the picture?
We are far more vulnerable than most people realize.
And even if we are never attacked by an EMP weapon, scientists tell us that it is inevitable that a massive solar storm will produce a similar result someday anyway. Back in 1859, a massive solar storm that came to be known as “the Carrington Event” fried telegraph machines all over Europe and North America.
NASA says that there is a 12 percent chance that a similar solar storm will hit us within the next ten years, and if that happens the consequences will be absolutely catastrophic…
NASA is warning that there’s a 12 percent chance an extreme solar storm will hit Earth in the next decade, sending out massive shock waves that would knock out grids across the world.
The economic impact of this doomsday scenario could exceed $2 trillion — or 20 times the cost of Hurricane Katrina, according to the National Academy of Sciences.
I don’t know why more people aren’t concerned about this. There are things that the federal government could do to harden our electrical grid, but they aren’t doing them.
This is a foreseeable danger, but our “leaders” are not taking it seriously.
And even if nobody ever purposely attacks us, scientists insist that it is only a matter of time before the sun unleashes an electromagnetic pulse that fries our electronics. In fact, we have had some very close calls in recent years. The following is an excerpt from a book that I co-authored with Barbara Fix entitled “Get Prepared Now“…
Most people have absolutely no idea that the Earth barely missed being fried by a massive EMP burst from the sun in 2012 and in 2013. And earlier in 2014 there was another huge solar storm which would have caused tremendous damage if it had been directed at our planet. If any of those storms would have directly hit us, the result would have been catastrophic. Electrical transformers would have burst into flames, power grids would have gone down and much of our technology would have been fried. In essence, life as we know it would have ceased to exist – at least for a time. These kinds of solar storms have hit the Earth many times before, and experts tell us that it is inevitable that it will happen again.
It amazes me that such a small percentage of the population is taking this threat seriously.
An electromagnetic pulse could bring down our entire society in a single moment at any time, and all of the experts assure us that it will happen someday.
But our politicians are just sitting on their hands and most Americans mock the idea that we need to be concerned about this.
So what do you think? Please feel free to add to the discussion by posting a comment below…
Did you notice that Greece’s creditors are not rushing to offer the Greeks a new deal in the wake of the stunning referendum result on Sunday? In fact, it is being reported that the initial reaction to the “no” vote from top European politicians was “a thunderous silence“. Needless to say, the European elite were not pleased by how the Greek people voted, but they still have all of the leverage. In particular, it is the Germans that are holding all of the cards. If the Germans want to cave in and give the Greeks the kind of deal that they desire, everyone else would follow suit. And if the Germans want to maintain a hard line with Greece, they can block any deal from happening all by themselves. So in the final analysis, this is really an economic test of wills between Germany and Greece, and time is on Germany’s side. Germany doesn’t have to offer anything new. The Germans can just sit back and wait for the Greek government to default on their debts, for Greek banks to totally run out of cash and for civil unrest to erupt in Greek cities as the economy grinds to a standstill.
In ancient times, if a conquering army came up against a walled city that was quite formidable, often a decision would be made to conduct a siege. Instead of attacking a heavily defended city directly and taking heavy casualties, it was often much more cost effective to simply surround the city from a safe distance and starve the inhabitants into submission.
In a sense, that is exactly what the Germans appear to want to do to the Greeks. Without more cash, the Greek government cannot pay their bills. Without more cash, Greek banks are going to start collapsing left and right. Without more cash, the Greek economy is going to completely and utterly collapse.
So yes, the Greeks voted for change, but the Germans still hold the purse strings.
And right now the Germans do not sound like they are in any mood to compromise. The following comes from a Reuters report that was published on Monday…
German Chancellor Angela Merkel’s deputy said Athens had wrecked any hope of compromise with its euro zone partners by overwhelmingly rejecting further austerity.
Merkel and French President Francois Hollande conferred by telephone and will meet in Paris on Monday afternoon to seek a joint response. Responding to their call, European Council President Donald Tusk announced that euro zone leaders would meet in Brussels on Tuesday evening (1600 GMT).
German Vice-Chancellor Sigmar Gabriel, leader of Merkel’s centre-left Social Democratic junior coalition partner, said it was hard to conceive of fresh negotiations on lending more billions to Athens after Greeks voted against more austerity.
Leftist Prime Minister Alexis Tsipras had “torn down the last bridges on which Greece and Europe could have moved towards a compromise,” Gabriel told the Tagesspiegel daily.
In addition, Angela Merkel’s office released a statement on Monday that placed the onus on making a new proposal to end this crisis on the Greek government…
“It is up to Greece to make something of this. We are waiting to see which proposals the Greek government makes to its European partners,” the office of German Chancellor Angela Merkel, Europe’s leading austerity advocate, said in a statement.
Just because the Greek people want the Germans to give them a very favorable deal does not mean that the Germans will be inclined to do so. The Germans know that whatever they do with the Greeks will set a precedent for the rest of the financially-troubled nations all across Europe. If Greece gets a free lunch, then Italy, Spain, Portugal, Ireland and France will expect the same kind of treatment…
Angelos Chryssogelos, an expert on Greek politics at the London-based think tank Chatham House, said the strength of Sunday’s mandate handed to Tsipras means it will be almost impossible for the prime minister’s leftist Syriza party to make a deal with European creditors.
“The Europeans made it pretty clear where they stand, and they have been consistent,” Chryssogelos said, adding that the creditors also are unlikely to back down. “Right now, voters across the eurozone largely support the tough stance taken by the eurozone.”
Chryssogelos said Greek voters may have underestimated the resolve of the creditors to reach an accord on their terms. “If someone is seen getting preferential treatment, then someone else will want that treatment,” he said, referring to other eurozone debtors such as Ireland and Portugal.
And remember, there is a very important Spanish election coming up in December.
If Syriza comes out as the big winner in this crisis, it will empower similar movements in Spain and all over the rest of the continent.
In a move sure to increase pressure on Greece’s flailing banks, the European Central Bank on Monday decided not to expand an emergency assistance program, raising fears that Greece could soon go completely bankrupt.
The move put a swift crimp on Greek leaders’ jubilation after winning a landslide endorsement from their citizens to reject Europe’s austerity demands and seek a new bailout bargain. Now they must seek a bargain before the money runs out within days, which would likely force them off the euro.
Basically we are watching a very high stakes game of chicken play out. And as the cash dwindles, economic activity in Greece is slowly grinding to a halt. The following comes from the Washington Post…
The dwindling cash is sucking the life out of everything from coffee shops to taxis, as anxious Greeks economize amid fears for the future. Greek leaders also banned transfers of money abroad, meaning that very little can now be imported into the country.
Printing plants are warning that they may run out of paper to print newspapers by the end of the week. Butchers say that stocks of imported meat are dwindling.
Some are even projecting that we could see civil unrest erupt in Greece in about “48 hours” once the ATM machines run out of cash…
Greek Prime Minister Alexis Tsipras probably has 48 hours to resolve a standoff with creditors before civil unrest breaks out and ATMs run out of cash, hedge fund Balyasny Asset Management said.
Yes, the Greek people exhibited great resolve in voting against the demands of the creditors on Sunday.
But how long can they endure this economic siege?
It is inevitable that a breaking point will come. Either the Greek government will give in, or the Greeks will leave the euro and start to transition back to the drachma.
If we do see a “Grexit”, and many analysts believe that one is coming, it could set off a chain of events that could cause immense financial pain all over the planet. There are tens of trillions of dollars of derivatives that are tied to European bond yields, European interest rates, etc. The following is an excerpt from a piece authored by Phoenix Capital Research that explains what kind of jeopardy we could potentially be facing…
The global derivatives market is roughly $700 trillion in size. That’s over TEN TIMES the world’s GDP. And sovereign bonds… including even bonds from bankrupt countries such as Greece… are one of, if not the primary collateral underlying all of these trades.
Greece is not the real issue for Europe. The entire Greek debt market is about €345 billion in size. So we’re not talking about a massive amount of collateral… though the turmoil this country has caused in the last three years gives a sense of the importance of the issue.
Spain, by comparison has over €1.0 trillion in debt outstanding… and Italy has €2.6 trillion. These bonds are backstopping tens of trillions of Euros’ worth of derivatives trades. A haircut on them would trigger systemic failure in Europe.
If Greece gets a “haircut” on their debt, other European nations would want the same and that would cause massive chaos in the derivatives markets.
But if Greece does not get a deal and ends up leaving the eurozone, that will cause bond yields to go crazy all over Europe and that would also cause tremendous chaos in the derivatives markets.
So much depends on keeping this system of legalized gambling that we call “derivatives trading” stable. We have allowed the global derivatives bubble to become many times larger than the GDP of the entire planet, and in the end we will pay a great price for this foolishness.
Every pyramid scheme eventually collapses, and this one will too.
But the difference with this pyramid scheme is that it is going to take the entire global financial system down with it.
The debt crisis in Puerto Rico could potentially cost financial institutions in the United States tens of billions of dollars in losses. This week, Puerto Rico Governor Alejandro Garcia Padilla publicly announced that Puerto Rico’s 73 billion dollar debt is “not payable,” and a special adviser that was recently appointed to help straighten out the island’s finances said that it is “insolvent” and will totally run out of cash very shortly. At this point, Puerto Rico’s debt is approximately 15 times larger than the per capita median debt of the 50 U.S. states. Yes, the Greek debt crisis is larger, as Greece currently owes about $350 billion to the rest of the planet. But only about $14 billion of that total is owed to U.S. financial institutions. But with Puerto Rico, things are very different. Just about the entire 73 billion dollar debt is owed to U.S. financial institutions, and this could potentially cause massive problems for some extremely leveraged Wall Street firms.
There is a reason why Puerto Rico is called “America’s Greece”. In Puerto Rico today, more than 40 percent of the population is living in poverty, the unemployment rate is over 12 percent, and the economy of the small island nation has continually been in recession since 2006.
Yet all this time Puerto Rico has continued to pile up even more debt. Finally, it has gotten to the point where all of this debt is simply unpayable…
Steven Rhodes, the retired U.S. bankruptcy judge who oversaw Detroit’s historic bankruptcy and has now been retained by Puerto Rico to help solve its problems, gave a blunt assessment on Monday.
Puerto Rico “urgently needs our help,” Rhodes said. “It can no longer pay its debts, it will soon run out of cash to operate, its residents and businesses will suffer,” he added.
This is why I hammer on the danger of U.S. government debt so often. As we see with the examples of Greece and Puerto Rico, eventually a day of reckoning always arrives. And when the day of reckoning arrives, power shifts into the hands of those that you owe the money too.
It would be hard to understate just how severe the debt crisis in Puerto Rico has become. Former IMF economist Anne Krueger has gone so far as to say that it is “really dire”…
“The situation is dire, and I mean really dire,” said former IMF economist Anne Krueger, co-author of the report commissioned by the U.S. territory, which recommended debt restructuring, tax hikes and spending cuts. “The needed measures may face political resistance but failure to address the issues would affect even more the people of Puerto Rico.”
So who is going to get left holding the bag?
As I mentioned at the top of this article, major U.S. financial institutions are very heavily exposed. Income from Puerto Rican bonds is exempt from state and federal taxation, and so that made them very attractive to many U.S. investors. According to USA Today, there are 180 mutual funds that have “at least 5% of their portfolios in Puerto Rican bonds”…
The inability of the U.S. territory to repay its debt, combined with the financial crisis in Greece, would have far-reaching implications for financial markets and unsuspecting American investors. Morningstar, an investment research firm based in Chicago, estimated in 2013 that 180 mutual funds in the United States and elsewhere have at least 5% of their portfolios in Puerto Rican bonds.
It is important to keep in mind that many of these financial institutions are very highly leveraged. So just a “couple of percentage points” could mean the different between life and death for some of these firms.
And unlike what is happening with Greece, the private financial institutions that hold Puerto Rican bonds are not likely to be very eager to “negotiate”. In fact, the largest holder of Puerto Rican debt has already stated that it is very much against any kind of restructuring…
U.S. fund manager OppenheimerFunds, the largest holder of Puerto Rico debt among U.S. municipal bond funds, warned the island it stands ready to defend the terms of bonds it holds, a day after the governor said he wanted to restructure debt and postpone bond payments.
What Oppenheimer is essentially saying is that it does not plan to give Puerto Rico any slack at all. Here is more from the article that I just quoted above…
OppenheimerFunds, with about $4.5 billion exposure to Puerto Rico according to Morningstar, said it believed the island could repay bondholders while providing essential services to citizens and growing the economy. It said it stood ready “to defend the previously agreed to terms in each and every bond indenture.”
“We are disheartened that Governor Padilla, in a public forum, has called for negotiations with other creditors, representing and including the millions of individual Americans that hold Puerto Rico municipal bonds,” a spokesman for Oppenheimer said in a statement.
But Puerto Rico simply does not have the money to meet all of their debt obligations.
So somebody is not going to get paid at some point.
When that happens, those that insure Puerto Rican bonds are also going to take tremendous losses. The following comes from a recent piece by Stephen Flood…
Now, bondholders are at risk as are the funds which hold Puerto Rican bonds and, more importantly, those who insure them in the derivatives market.
Dave Kranzler, from Investment Research Dynamics has warned that there are signs that the Puerto Rico situation may not remain a local crisis for much longer.
He points out that share prices of MBIA, the bond insurers, have been plummeting. MBIA are valued at $3.9 billion whereas their exposure to Puerto Rican debt is around $4.5 billion. Kranzler reckons their exposure could even be multiples of that figure. A default could wipe them out.
He also points out that the firm’s largest shareholders are Warburg Pincus, the firm to which Timothy Geithner went after his stint as Treasury Secretary, when he helped paper over the chasms opening up in the financial system.
Did you notice the word “derivatives” in that quote?
Hmmm – who has been writing endless articles warning about the danger of derivatives for years?
When Puerto Rico defaults, bond insurers are going to be expected to step up and make huge debt service payments to investors.
But this just might bankrupt some of these big bond insurers. In fact, we have already started to see the stock prices of some of these bond insurers begin to plummet. The following comes from the Wall Street Journal…
Bond insurers MBIA Inc. and Ambac Financial Group Inc. are down again Tuesday as concerns over Puerto Rico’s ability to repay its debt multiply.
Investors fear that both firms face the potential for steep losses on their promises to backstop billions of Puerto Rico’s $72 billion of debt.
MBIA’s stock closed down 23% Monday, and fell more than 10% before rebounding Tuesday. By late afternoon, the stock was down 6%. Ambac’s stock fell 12% Monday and was off 14% Tuesday.
Of course Puerto Rico is just the tip of the iceberg of the coming debt crisis in the western hemisphere, just like Greece is just the tip of the iceberg of the coming debt crisis in Europe.