Wednesday, February 26, 2020

Financial Storm Clouds Gather Over Italy


by Don Quijones, Wolf Street:

Wishful thinking may not be enough.

The financial markets have been exceedingly calm in Italy of late. At the end of October the government was able to sell €2.5 billion of 10-year debt at auction at a yield of 1.86{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, the lowest since last December — an incredible feat for a country that four months ago witnessed a major bank bailout and two bank resolutions, and that has so much public debt that it spends €70 billion a year to service it, the world’s third-highest.

And there’s the ECB’s recent decision to slash its bond buying from roughly €60 billion a month to €30 billion as of Jan 1, 2018. Then there’s the over €432 billion of Target 2 debt the government owes the ECB, the growing likelihood of political instability as elections approach in 2018, the recent referendums for greater fiscal and political autonomy in Lombardy and Veneto and serious unresolved issues in the banking sector.

Monte dei Paschi di Siena may still be alive as a bank, but it’s not out of the woods. Last week its stock resumed trading after ten months of being suspended from Italy’s benchmark index, the FTSE MBE. Shares opened on Wednesday at €4.10, then rose 28{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to €5.26. But it didn’t stick. On Friday, shares closed at €4.58.

It’s a far cry from the €6.49 a share the Italian government paid in August when it injected €3.85 billion into the bank to keep it alive. It spent another €1.5 billion shielding some of the bank’s junior bondholders, whose debt was converted into equity. As part of the rescue, the Tuscan bank was forced to present a plan to cut 5,500 jobs and close 600 branches until 2021, in addition to transferring 28,600 million euros in unproductive loans and divesting non-strategic assets. Investors clearly have their doubts.

In Veneto the situation is, if anything, even bleaker as over 40,000 businesses have been left starved of credit following the impromptu resolution of the region’s two biggest banks, Popolare di Vicenza and Veneto Banca. Bloomberg:

While Intesa Sanpaolo SpA, Italy’s second-largest bank, paid a symbolic sum to acquire the healthiest parts of the two Veneto lenders, the state entity that’s absorbing the 18 billion euros ($21.3 billion) of troubled debt the banks amassed, called SGA, isn’t fully operational yet. That has left small and midsized companies in the lurch—in many cases unable to do business.

“Many of these borrowers are profitable companies, but they’re stuck in limbo,” said Mauro Rocchesso, head of Fidi Impresa e Turismo Veneto, a financial firm that provides collateral to companies seeking lines of credit. “They don’t have a counterparty anymore and can’t find fresh capital from a new lender because of their exposure to the two Veneto banks.”

It’s not just businesses and investors that are losing faith in Italy’s financial sector; so too is the public. Just 16{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Italians still have confidence in the country’s lenders, according to a poll by the SWG research group of Trieste on Friday.

Trust in the Bank of Italy is also in decline, having plunged from 36{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in June to 24{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in October. Such widespread public mistrust didn’t stop the national central bank from awarding the bank’s governor, Ignazio Visco, another six-year term after presiding over the worst banking crisis of a generation.

The Bank of Italy’s reputation was further dented this month after documents presented in a Milan court case revealed that Italy’s central bank knew that MPS’ management had papered over a loss of almost $500 million in 2010 and failed to report it. At the time the governor of the Bank of Italy was Mario Draghi.

Now, as chairman of the ECB, Draghi is in charge of withdrawing the QE monetary punch bowl upon which many peripheral EU economies have grown dependent to keep servicing their debts.

Saddled with one of the biggest public debt mountains on the planet, Italy is particularly vulnerable to this change in policy. Even after three years of QE, Italy’s economy is growing at a rate of 1.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} a year — good for Italy, but still the worst in Europe. Once the the ECB stops snapping up Italian debt over the coming years, the southern European nation will almost certainly struggle to find buyers for its government bonds.

The ECB has purchased €300 billion ($353 billion) of Italian bonds under its QE program, which is more than three times the net bond issuance for the country during that period, according to Christian Schulz, European economist at Citigroup. That means the ECB has not only bought pretty much all new bonds issued in Italy since 2015, but also existing bonds from other investors.

As the ECB cuts its purchases by roughly half in two months’ time, those investors, including foreigners, Italian households and Italian retail investors, will have to come back into the market in a big way; otherwise the yields on Italian bonds will begin soaring, driving up the costs of funding for the government.

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OPERATION FREEDOM – Sunday, November 5, 2017 – Bill Holter

by Dave Janda, Operation Freedom:

Topics Discussed: Vaccination-Industrial Complex, Undocumented Allocations, Manipulation of financial markets, New World Order Syndicate, Obama Care, Free Market Health Reform, Putin, The Ukraine, ISIS, Syria, The Constitution, Natural resources, Reserve currency, Corruption, gold, silver, Global Elite, International Banking Cabal, debt, Federal Reserve, Too Big To Fail Banks, Crony Capitalism, Debt Ceiling, Financial implosion, Recession, Economic Depression, Freedom, Liberty

Click HERE to listen to Bill Holter

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Trump to Asia: A Potential Historic Breakthrough


by Harley Schlanger, LaRouche PAC:

With President Donald Trump set to leave for his Asia tour within days, the stakes couldn’t be higher. Following the inspiring developments of the 19th Congress of the Chinese Communist Party, Trump called President Xi Jinping to congratulate him on the results, and to confirm that he is looking forward to their meeting on November 8. Trump will be traveling with a number of American businessmen and manufacturers, who are hoping to expand trade opportunities with China, and to become participants in the global projects of the Belt and Road Initiative (BRI).

Helga Zepp LaRouche has emphasized that the success of this tour by Trump would consolidate a cooperative alliance between the U.S., Russia and China, which would spell the end of the imperial, unipolar geopolitical order run by neocons and neo-liberals, which has put the world on the edge of global economic collapse and World War III.

Sadly, few people in the West are aware of this potential historic breakthrough. The only “news” available to those in the Trans-Atlantic region is the latest unconstitutional provocations of the legal assassin, Robert Mueller, who is the point person for a desperate effort by the London-centered oligarchs intent on stopping the momentum of the BRI, and prevent Trump from succeeding in bringing in the U.S. as a partner.

Join us on Thursday, as Mrs. Zepp LaRouche, the chairwoman of the Schiller Institute, will provide a necessary strategic corrective to the Fake News, based on spreading the Spirit of the New Silk Road.


HARLEY SCHLANGER:  Hello, I’m Harley Schlanger from the Schiller Institute and I’d like to welcome you to this week’s webcast with Helga Zepp-LaRouche.  Helga, this has been an extraordinary week of crucial strategic developments, which, as is often the case, these have been hidden from most of the people in the West.  We can start with the fact that President Trump will be going to Asia in a couple of days, and he has a pivotal Nov. 8th meeting with President Xi Jinping.  President Xi gave a very significant message yesterday, where he said he’s looking forward to the opportunity to cooperate with the United States on a “win-win” basis.

There’s all sorts of Chinese activity, including Russian Prime Minister Medvedev coming to China, developments on the Silk Road in Ukraine, Portugal and elsewhere.  But also, as you had forecast in one of the earlier webcasts, there’s an effort to stop this from taking place, and we saw that with the Mueller intervention, the special counsel — the legal assassin Robert Mueller — with a really fraudulent set of indictments on Monday of this week, Paul Manafort and his aide Gates; and then this classic British FBI sting operation with George Papadapoulos. And right on cue, David Gergen went on CNN and said President Trump should not go to Asia in the middle of this.

So where do things stand, as we’re sitting here, today?

HELGA ZEPP-LAROUCHE:  It is very dramatic and very hopeful.  First of all, I think both Presidents, President Trump and President Xi, have signalled ahead of the summit their best intention to make this a breakthrough.  President Trump gave an extremely interesting interview to Fox TV’s Lou Dobbs, where he said that he expects the relationship between the United States and China to be absolutely great; that China is a great country, that he has an excellent relationship with President Xi Jinping. And then President Xi Jinping, on his side, had a meeting addressing a meeting of the Tsinghua University, which is a very prestigious university in Beijing, where he said that he is looking “far ahead and aiming high” in the relationship with the United States.  And this is actually, I think it’s a very interesting conception.  You can also say it’s a “vision” — looking “far ahead and aiming high,” and I couldn’t help but compare that to the policy of approach of Chancellor Merkel [in Germany] who always has a policy of “little steps.”  And she once said even that one can only steer ahead as far as one can see.

Now, that’s quite a difference in the approach.  And this comes naturally, immediately after the 19th National Congress of the CPC, where Xi Jinping managed to unite the whole party behind his vision of the Belt and Road Initiative, of the idea of a community of a shared future of mankind, and he said that that is going to be discussed in the meeting with President Trump.  So I think that the signs that the relationship between the two most important countries in the world will turn out to be positive, I’m very, very hopeful.

And I think the Western media are just ridiculous.  I was watching especially the German coverage of what’s going on in the United States, and it’s as if the FBI were running the German media!  Because they only report the one side, the Obama intelligence community side and they don’t report at all what Trump is actually saying.  And they naturally don’t report anything about this upcoming visit.

So I think people will be in for a surprise, because I think the developments cannot be hidden, and my expectations are very high that they will be very positive.

SCHLANGER:  We also have, as I mentioned at the outset, a very active Chinese engagement in the world.  There are developments in Portugal with the Maritime Silk Road, with Ukraine as a possible transit point into Europe.  And also, by the way, important discussion between India and China:  What can you tell us about that?

ZEPP-LAROUCHE:  I think President Xi Jinping has a grand design of overcoming all tensions. You know, the “win-win” concept applies to every single country, and you can see that, for example, in the fact that Japan, whose Prime Minister Abe is moving closer to the work with China and the Belt and Road Initiative.  And the same goes for India which until very recently had this border conflict in Doklam, where they had actually a stand-off between the militaries of both sides, and that has apparently been quite successfully calmed down and the relations between China and India are now much improved.

And then, naturally Prime Minister Medvedev of Russia was just in Beijing and he met with President Xi Jinping and Prime Minister Li Keqiang and others, and they talked about integrating the New Silk Road, the Belt and Road Initiative with the Eurasian Economic Union; and they even talked about creating a “Silk Road on Ice” by joining efforts for the development of the Arctic. Then you have all kinds of efforts to overcome tensions among all kinds of conflicts, and I think there is a grand design behind all of this, which is the idea to move the entire world community up to a new level of relations among nations, overcoming geopolitics.

And I think this is something most people have not yet even started to think about.  I think this is such a revolutionary new concept, of overcoming geopolitics by finding a collaboration in the interest of the other, uniting actually all of mankind.  And I don’t know if it will succeed, because you know, there are important forces who are opposing it, but I think the intention, by China, by President Xi Jinping, to establish such a new model of relationships is without any question.

And I think people who are sort of brainwashed by the Western media, and what we find many times in the streets, at our information tables, where people say “Oh, but I don’t trust the Chinese,” well I would ask these people to just investigate for a little bit of time, and make yourself more familiar with what is the Chinese grand design, and not go by the media reports against China.  Why should people believe the media on China, when they obviously are lying on so many other issues?  So I would want the audience — you —  to open your minds and to open your hearts and find out for yourself.  Because I think, what we are witnessing right now, is one of the most exceptional changes in human history:  Because if this model of the Chinese succeeds, then the danger of war and the danger of the extinction of the human race through the use of thermonuclear weapons, for example, would be overcome forever.  And that is definitely something which I think is worth trying to accomplish.

SCHLANGER:  Last week, you mentioned that the CEO of Caterpillar, which is a company that manufactures heavy machinery used for agriculture and construction, said that he’s very optimistic about a U.S. role in the New Silk Road.  We also have a leading establishment figure now, Joseph Nye, a professor at Harvard, someone who’s inside the institutions; he came out and he said he favors U.S. cooperation with China.  What is it that the neo-cons and neo-liberals in the establishment fear so much about a U.S.-China cooperation?

ZEPP-LAROUCHE:  It is so clear that the Chinese model, which is also reflected in the new banking institutions, such as the Asian Infrastructure Investment Bank (AIIB), the New Development Bank of the BRICS countries, the Silk Road Fund, and many similar institutions, they are explicitly oriented towards investment in the real economy.  And rather than looking at this emerging system of alternative credit institutions as a savior, as something which may eventually even be the lifeboat when the next financial crash hits — which is about to happen at any moment — they look at this as a threat.  Because as you can see, the entire Western system, especially as it emerged  after the collapse of the Soviet Union, was based on the idea of a unipolar world, based on the “special relationship” of the Anglo-Americans, running the world through financial control of the dollar-denominated system.

And this system obviously worked for some people very well, because they became richer and richer — I mean, just shamelessly rich billionaires, two-digit billionaires, while the majority of the people, or a larger part of the people became poorer, the middle class was afraid to be out in the corner; so these people defend that system, because that is what their privilege is based on, that is what their money is attached to. And they look at the idea that China is promoting a model which is truly devoted to the common good — not only the common good of the Chinese people, but very explicitly is investing in people and in countries that were left behind by the trans-Atlantic financial system.  And they’re providing credits for infrastructure, for industrial parks, for agriculture, and naturally, this is a more attractive model.  So rather than saying, “OK, let’s recognize the fact that the Western model did not function, it led to all kinds of rebellions, it led to the Brexit, it led to Hillary Clinton losing the election; it led to the rise of popular parties in Europe; and it’s actually contributing to the dissolution of the EU at a rather amazing speed, if you look at Spain, if you look at the situation in other areas such as Eastern Europe, for example, which is clearly turning away from the EU. So it had all of these side-effects, but rather than reflecting upon it and changing, and maybe adjusting to the new offers, they are determined to oppose it by the old tricks, lies, set-ups and coups if they can; and that is why they are not giving up.

I think it’s a small elite, but in many countries like the people who are going after Trump in the United States, are definitely determined not to let that new system emerge, and we have in Europe, unfortunately, similar-minded people.  But they are in trouble, in my view.

SCHLANGER:  Let’s turn our attention for a moment to the latest developments in the United States on this:  In particular, I want to focus on this plea agreement with this character Papadopoulos, which was based on the fact that they say he lied to the FBI.  What did he lie about?  Supposedly he was told that the Russians had hacked emails; supposedly he met with a Russian professors — who turns out to be from Malta —  and the Russian professor introduced him to Putin’s niece — who turned out not to be Putin’s niece — and the whole story just wreaks of a classic FBI-British sting operation.

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Gold Speculators Refuse To Give Up; Another Drop Likely

by John Rubino, Dollar Collapse:

Normally winter is a good time for gold, with men buying their significant others jewelry for Christmas and lots of New Years Day marriage proposals. Here’s an overview of the dynamic from Adam Hamilton of Zeal Intelligence:

Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.

Gold stocks exhibit strong seasonality because their price action mirrors that of their dominant primary driver, gold. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities experience, as its mined supply remains fairly steady all year long. Instead gold’s major seasonality is demand-driven, with global investment demand varying dramatically depending on the time within the calendar year.

This gold seasonality is fueled by well-known income-cycle and cultural drivers of outsized gold demand from around the world. And the biggest seasonal surge of all is just now getting underway heading into winter. As the Indian-wedding-season gold-jewelry buying that drives this metal’s big autumn rally winds down, the Western holiday season is ramping up. The holiday spirit puts everyone in the mood to spend money.

Men splurge on vast amounts of gold jewelry for Christmas gifts for their wives, girlfriends, daughters, and mothers. The holidays are also a big engagement season, with Christmas Eve and New Year’s Eve being two of the biggest proposal nights of the year. Between a quarter to a third of the entire annual sales of jewelry stores come in November and December! And jewelry historically dominates overall gold demand.

According to the World Gold Council, between 2010 to 2016 jewelry accounted for 49{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, 44{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, 45{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, 60{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, 58{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, 57{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, and 47{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of total annual global gold demand. That averages out to just over half, which is much larger than investment demand. During those same past 7 years, that ran 39{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, 37{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, 34{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, 18{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, 20{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, 22{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, and 36{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} for a 29{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} average. Jewelry demand remains the single-largest global gold demand category.

That frenzied Western jewelry buying heading into winter shifts to pure investment demand after year-end. That’s when Western investors figure out how much surplus income they earned during the prior year after bonuses and taxes. Some of this is plowed into gold in January, driving it higher. Finally the big winter gold rally climaxes in late February on major Chinese New Year gold buying flaring up in Asia.

So during its bull-market years, gold has always tended to enjoy major winter rallies driven by these sequential episodes of outsized demand. Naturally the gold stocks follow gold higher, amplifying its gains due to their great profits leverage to the gold price. Today gold stocks are once again now heading into their strongest seasonal rally of the year driven by this robust winter gold demand. That’s super-bullish!

Since it’s gold’s own demand-driven seasonality that fuels the gold stocks’ seasonality, that’s logically the best place to start to understand what’s likely coming. Price action is very different between bull and bear years, and gold is absolutely in a young bull market. After being crushed to a 6.1-year secular low in mid-December 2015 on the Fed’s first rate hike of this cycle, gold powered 29.9{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} higher over the next 6.7 months.

This is pleasant reading for anyone long gold or gold mining shares. But the futures markets continue to tell a different and less encouraging story. See Strange Things Happening In The Paper Gold Market, which noted that last month speculators were overly long and were as a result losing their shirts in the ongoing price correction — but were for some reason refusing to throw in the towel. The conclusion was that they’d need more convincing via another big price decline.

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Let’s Clear Up One Confusion About Bitcoin


by Charles Hugh Smith, Of Two Minds:

If bitcoin can be converted into fiat currencies at a lower transaction cost than the fiat-to-fiat conversions made by banks and credit card companies, it’s a superior means of exchange.

One of the most common comments I hear from bitcoin skeptics goes something like this: Bitcoin isn’t real money until I can buy a cup of coffee with it.

In other words, bitcoin fails the first of the two core tests of “money”: that it is a means of exchange and a store of value. If we can’t buy a cup of coffee with bitcoin, it obviously doesn’t qualify as a means of exchange.

The confusion here is the same one that plagues the conventional understanding of the foreign exchange markets: people confuse exchange and convertibility, which are both flows, i.e. transactions.

Here’s an illustration of the difference.

Let’s say Hipster Coffee Bar accepts payment in bitcoin (BTC) for a cup of coffee. In the U.S., the coffee bar accepts the BTC as payment, which is then converted into the local currency, the U.S. dollar, to pay rent, employees’ wages and so on.

The Hipster Coffee Bar branch in Mexico converts the BTC into pesos, the branch in Thailand converts the BTC into baht, and so on around the world.

Another coffee shop, Most Excellent Coffee, doesn’t accept bitcoin in exchange for a cup of coffee. So when I enter Most Excellent Coffee, I convert a sum of BTC into U.S. dollars if I’m in the US, to pesos if I’m in Mexico or into baht if I’m in Thailand, and proceed to buy the cup of coffee.

You see the point: what matters isn’t whether the coffee shop accepts bitcoin directly; what matters is whether bitcoin is easily convertible to the local fiat currency. Put another way: convertibility rests on the recognition that the “money” is a reliable store of value that can be converted into a variety of other currencies.

As long as the cost of converting one form of “money” into another form of “money” is fast and low-cost (i.e. nearly frictionless), then it no longer matters whether the “money” in question can be used directly in an exchange or not.

Consider a credit card. Part of the service offered by the issuer isn’t just a line of credit to fund purchases; it’s convertibility from one’s domestic currency into whatever currency is used in the place where you’re making the purchase.

This convertibility is certainly fast in the credit card realm, but it’s not frictionless; rather, it’s costly, as a hefty fee is skimmed for every transaction paid in one currency and converted to the cardholder’s domestic currency.

If bitcoin can be converted into fiat currencies at a lower transaction cost than the fiat-to-fiat conversions made by banks and credit card companies, it’s a superior means of exchange.

In other words, it doesn’t matter what currency the coffee shop accepts; what matters is the friction involved in converting the currency you hold with the one the shop accepts.

If bitcoin can be converted into U.S. dollars at a lower transaction cost that the USD can be converted into (say) Swiss francs, it’s superior to fiat currencies as a means of exchange.

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Nothing Really Matters, Anyone Can See

by Turd Ferguson, TF Metals:

The US labor force is rapidly shrinking. Wage growth is non-existent. The vast majority of the American people have no savings and little hope for economic improvement. But none of that matters with the G-3 central banks in charge!

So today saw the latest installment of the BLSBS. If you check your “mainstream” sources, you;ll be led to believe that everything is great and getting even better!

But look under the hood and you see that this is all bullshit. The unemployment rate that Drudge blares on behalf of Trump is only at its “lowest since 2000” because October saw an astonishing 968,000 people leave the labor force. This leaves the total number of people NOT in the labor force at a record 95,385,000. Then, as ZH notes, “this took place as the number of employed Americans declined by 484,000, however since the unemployment rate denominator dropped more, it translated into an actual decline in the unemployment rate!”  Read all about it here:

Secondly, about this notion of “hiring bouncing back” and the “economy rebounds”. Do you recall this very prescient chart from Morgan Stanley? Well, the two hurricanes messed up the math BUT, since this BLSBS is all about “catch up”, let’s take another look:

If this chart had continued to be accurate (no hurricanes), the combined total of “new jobs” for September and October would have been 345,000. And what was the actual total? September was revised today to +18,000 and this latest report had October at 261,000. That’s a total of 279,000. Hmmmm. How about that for your “rebounding” economy and job market?!?

And the wage growth component was terrible, too, with wages FLAT month-over-month and coming in at a growth of just 2.4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} year-over-year. This includes all of the high-end, top-salary types so can you imagine what the actual wage growth is for the vast majority of Americans who actually do all the living, working and dying? Try close to ZERO!

But, of course, here’s the thing. When the G-3 central banks attempt to control everything, none of this matters at all. In typical G-3 fashion, the all-important USDJPY sank on the news, it immediately double-bottomed and then moved higher at 45 degrees until it was right back to where it was at 8:29 EDT.

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US Gross National Debt Spikes by $640 billion in 8 Weeks

by Wolf Richter, Wolf Street:

But the debt-ceiling charade is back.

The debt ceiling charade being played out every few years in Congress makes the entire world shake its collective head and pray that Congress will for the umpteenth time raise the dang thing or at least “suspend” it. The other option is a US default, the global consequences of which are too ugly to imagine, even for Congress.

In its infinite wisdom, Congress didn’t raise the debt ceiling in September; it only suspended it through December 8, after which the horse-trading will start all over again. But Congress is busy listening to lobbyists about the tax cuts – who gets them and who pays for them – and the debt ceiling isn’t even on the back burner. So here we go again.

But this charade has some peculiar effects, beyond its entertainment value: For months on end, it covers up the true extent of US government debt, and its continued surge. Then suddenly, the floodgates open.

Over just these six years, the debt has ballooned by $5.7 trillion, or 39{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, from $14.8 trillion to $20.5 trillion. In the chart below, note the last three debt-ceiling fights, the long flat lines in 2013, 2015, and 2017, followed each time by an enormous spike when the debt ceiling was lifted or suspended, and when the “extraordinary measures” with which the Treasury keeps the government afloat were reversed.

The current post-debt-ceiling spike has reached $640 billion and continues to surge:

The last three debt ceiling spikes:

  • On October 17, 2013, the day after the debt ceiling was raised, gross national debt jumped $328 billion and then continued to surge. By November 25, it had jumped by $464 billion to $17.2 billion
  • On November 2, 2015, the day after the debt ceiling was raised, gross national debt jumped $340 billion and then continued to surge. By the end of November, it had spiked by $650 billion to $18.8 billion.
  • On September 8, 2017, the day after the debt ceiling was “suspended,” gross national debt jumped by $329 billion, and by now has spiked by $640 billion to $20.5 trillion. This spike is somewhat lower than my estimate on August 21 of an $800-billion spike, but it’s not through spiking yet either.

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