Subject: Fw: RE: END OF BARAK OBAMA
BANKRUPTCYIRS TICKET (LTK11157015048919X)
IRS APPROVES BANKRUPTCY
OF OBAMA, AND SF SUP CT JULY 16 2007
IR
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From: Alvin Hansen
Sent: 08/16/13 02:06 PM
To: IRS Help Desk
Subject: RE: END OF BARAK OBAMA BANKRUPTCY
(LTK11157015048919X)
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RE: END OF BARAK OBAMA BANKRUPTCY (LTK11157015048919X)
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SUBJECT: END OF BARAK
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---------------Original
Message---------------
From:
Vernon
Joseph Hansen < pennibanctrust@hotmail.com >
Subject:
END
OF BARAK OBAMA BANKRUPTCY
The End of Barack
Obama?
A
wealthy Maryland journalist (who's neither a Democrat or Republican)
has exposed a scandal
brewing within the current Administration.
He says it could ruin Obama's entire Presidency... and would also
result in some of the most dramatic changes to ordinary American life
in more than 50 years.
Dear Fellow American,
Hello. My name is Porter Stansberry.
Fourteen years ago, I founded Stansberry & Associates Investment
Research. It has since become the largest firm of its kind in the world.
We specialize in financial research, and serve hundreds of thousands of
paid subscribers in more than 120 countries.
You may know of our firm because of the work we did over the last several
years – helping investors avoid the big disasters associated with Wall
Street's collapse.
We warned people to avoid Fannie Mae and Freddie Mac, Lehman Brothers,
General Motors and dozens of other companies that have since collapsed.
We even helped our subscribers find opportunities to profit from these
moves by shorting stocks and buying put options. To my knowledge, no
other research firm in the world can match our record of correctly
predicting the catastrophe that occurred in 2008, and the rebound that
has occurred since then.
The video presentation we created three years ago, to explain the
financial crisis, and our thoughts on what would happen next, has become
the most-watched on-line financial video in history, as far as we can
tell.
But that's not why I created this follow-up presentation.
I reference our success and experience with Wall Street's latest crisis
because we believe there is an even bigger crisis lurking –something that
will shake the very foundation of America.
I know that to most people, the situation seems to be getting better.
Stocks have recovered nearly all their losses. Real estate has rebounded.
Unemployment and bankruptcies have dropped. But here's the thing:
The
unfortunate reality is that we are actually in a much more dangerous and
precarious place today than we were five years ago.
And that
is why I've spent a significant amount of time and money in the past few
months preparing this presentation.
In short, I want to talk about a specific event that will take place in
America's very near future... which could actually bring our country and
our way of life to a grinding halt.
This looming crisis is related to the financial crisis of 2008... but it
is infinitely more dangerous, as I'll explain in this letter.
As this problem comes to a head, I expect there will be a near-complete
shut-down of the American economy. Life as we have known it for more than
40 years will essentially cease to exist. Our governments on both the
Federal and State level will shut down. Banks will not open. Businesses
will at least temporarily shutter their doors. I expect we'll see martial
law, enforced by the U.S. military.
Believe me, I don't make this prediction lightly and I have no interest
in trying to scare you.
I'm
simply following my research to its logical conclusion.
I did the same when I tracked
Fannie Mae and Freddie Mac's accounting. Also with General Motors, Lehman
Brothers and the rest. And when I began giving this warning in 2006 no
one took me very seriously... not at first. Back then, most mainstream
commentators just ignored me.
And when I presented my case and exposed the facts at economic
conferences, they got angry. They couldn't refute my research... but they
weren't ready to accept the enormity of its conclusions either.
That's why, before I go any further, I have to warn you...
What I am going to say is controversial. It will offend many people...
Democrats, Republicans, and Tea Partiers, alike. In fact, I've already
received dozens of pieces of hate mail.
And... the ideas and solutions I'm going to present might seem somewhat
radical to you at first... perhaps even "un-American."
My guess is that, as you read this letter... you'll say: "There's no
way this could really happen... not here."
But just remember:
No one believed me four years ago when I said the world's largest
mortgage bankers - Fannie Mae and Freddie Mac - would soon go bankrupt.
And no one believed me when I said GM would soon be bankrupt as well...
or that the same would happen to General Growth Properties (the biggest
owner of mall property in America).
But again, that's exactly what happened.
No one believed me in 2011 when I said the crisis would cause "riots
in the streets." Then came the protests in Wisconsin, and the Occupy
Wall Street movement all over the country.
And that brings us
to today...
The same financial problems
I've been tracking from bank to bank and from company to company for the
last six years have now found their way into the U.S. Treasury. I'll
explain how this came to be. What it means is critically important to you
and every American...
The next phase in this crisis will threaten our very way of life.
The savings of millions will be wiped out. This disaster will change your
business and your work. It will dramatically affect your savings
accounts, investments, and retirement.
It will change everything about your normal way of life: where you
vacation... where you send your kids or grandkids to school... how and
where you shop... the way you protect your family and home.
I'll explain how I know these events are about to happen. You can decide
for yourself if I'm full of hot air.
As
for me, I'm more certain about this looming crisis than I've been about
anything else in my life.
I am literally afraid for my
family's future, and I have taken drastic steps to prepare for what I
know must inevitably happen next.
I know that debts don't just disappear. I know that bailouts have big
consequences. And, unlike most of the pundits on TV, I know a lot about
finance and accounting.
And this is all coming to a head much, much sooner than most Americans
think.
Of course, the most important part of this situation is not what is
happening... but rather what you can do about it.
In other words... Will you be prepared when the biggest financial crisis
in America in more than 50 years, hits?
Don't worry, I'm not organizing a rally or demonstration. And I've turned
down every request to run for political office.
Instead, I want to show you exactly what I'm doing personally, to protect
my family, and to protect and perhaps even grow my money, and how you can
prepare as well.
You see, I can tell you with near 100% certainty that most Americans will
not know what to do when commodity prices – things like milk, bread and
gasoline – soar. They won't know what to do when banks close... and their
credit cards stop working. Or when they're not allowed to buy gold or
foreign currencies. Or when food stamps fail... or their Social Security
checks come to a halt.
In short, our way of life in America is about to change – I promise you.
In this letter I'll show you exactly what is happening, and why it is
inevitable.
Again, you can challenge every single one of my facts and you'll find
that I'm right about each allegation I make.
Then, I hope you'll take action for yourself.
Will you act now to protect yourself and your family from the catastrophe
that's brewing right now in Washington D.C.?
I hope so. And that's why I wrote this letter.
I'm going to walk you through exactly what I am doing personally, and
what you can do as well. I can't promise you'll emerge from this crisis
completely unharmed – but I guarantee you'll be a lot better off than
people who don't follow these simple steps.
But I'm getting ahead of myself just a bit.
Let me back up and show you in the simplest terms possible what is going
on, why I am so concerned, and what I believe will happen in the next 12
months...
The Greatest
Danger
America Has Ever
Faced?
I believe that we as
Americans are about to see a major, major collapse in our national
monetary system, and our normal way of life.
Basically, for many years now, our government has been borrowing so much
money (very often using short-term loans), that very soon, we will no
longer be able to afford even the interest on these loans.
Again... I say these things as an expert in accounting and financial
research.
You may not think things are THAT BAD in the U.S. economy, but consider
this simple fact from the University of New Mexico Bureau of Business and
Economic Research...
Even if ALL U.S. citizens were taxed 100% of their income for an
entire year... that's every penny, earned by every citizen in the
entire country... it would still not be enough to pay off our
debts. Not even close. We'd still be trillions of dollars
short.
That's absolutely incredible, isn't it?
Yet, I've never seen this fact reported anywhere else. And right now,
today, the federal government has to borrow 46 cents of every dollar they
spend...spending that stands at a staggering average of $435.8 million per hour. How is that
possibly sustainable?
Normally, I study these kinds of numbers when I'm looking at a business
to invest in or to recommend to my readers. But lately I've spent most of
my time looking into our national balance sheet, because as the banking
system collapsed in 2008... all of the bad debts were absorbed by the
world's governments. And it continues to this day.
We began the year 2013 with a net public debt that has more than doubled
since the year BEFORE Barack Obama took office. These overwhelming public
financial obligations are completely unprecedented in the history of our
country, outside of the two major global wars we fought in the 20th
century.
But even these incredible figures don't tell the real story. Or even half
of it.
Various other government agencies and private companies taken over by the
government also have obligations of nearly another $5 trillion. We've
already booked complete losses on $140 billion worth of these
obligations. Yet they remain completely off the federal balance sheet.
When you add these other, genuine, federal obligations that exist right
now, today, you come up with a total debt figure that's much more than
$20 trillion. Far more than half of these debts were assumed under
President Obama.
We don't know what the full burden of these new and existing debts will
be in total, over time.
That's because the Federal Reserves power to manipulate interest rates is
unlimited—at least for now that's the case.
We don't know how much of Fannie's and Freddie's bad debts will
eventually be covered by the U.S. Treasury. (We do know they have an
unlimited line of credit... so it's a safe bet that we haven't seen the
last of these charges.) Finally, we have no idea what the eventual costs
of the Federal Reserve's ongoing expansion of the monetary base will be
over the long term.
There is one thing that's certain, however: these debts will not be free.
They will carry a burden.
Today, we have more government debt than any country in the history of
the world. We have more debt than every country in the European Union...
combined.
With each additional commitment we sink further and further into debt...
closing in upon the moment that we can simply no longer afford even the
interest payments on our obligations.
And here is the part that really matters... the costs of maintaining our
debts are about to skyrocket.
Right now the Federal Reserve is manipulating interest rates down to
almost zero. As a result, the interest rate at which our government
can borrow money is at a record low level. In fact, the Federal
Reserve has lowered its benchmark interest rate ten times since August
2007, from 5.25% to a zone between zero and 0.25%. Obviously, the current
rate won't last forever.
But what will happen if the average real interest rate ends up being just
4% annually, and we pay it off over 30 years like a mortgage?
Incredibly, we'll spend $34.3
trillion to simply repay what we owe right now. If the rate ends up being
6%, we'll spend $43.1 trillion.
Now, of course, our politicians believe that through policy and currency
manipulation, they can simply avoid paying any of these costs. They can
order the Federal Reserve to prevent interest rates from ever rising to a
level that would cost the American people anything. They believe they can
manage the economy, so the debts of Fannie and Freddie won't go bad. They
believe (without any proof whatsoever) that they can stimulate the
economy by even more deficit spending, so that it grows faster, allowing
tax revenues to produce a surplus. Repaying these debts, they say, will
be easy and painless.
But you know better, my friend. You must know better. The wages of sin
must be paid. And they will be paid.
Just consider the plans of those who argue otherwise...
Paul Krugman, one of the most widely read and respected
"economists" in the country wrote about this incredibly naïve
and ridiculous solution in a January 7th, 2013 New York Times column.
He said:
"There's
a legal loophole allowing the Treasury to mint platinum coins in any
denomination the secretary chooses. Yes, it was intended to allow
commemorative collector's items – but that's not what the letter of the
law says. And by minting a $1 trillion coin, then depositing it at the
Fed, the Treasury could acquire enough cash to sidestep the debt
ceiling – while doing no economic harm at all."
Very few people, even our
most influential economists, seem to remember that the utility of money
and credit are based upon their soundness.
Money allows people to exchange goods and services widely, greatly
increasing the specialization of labor and facilitating the economic
magic of competitive advantage. Money also plays the critical function of
facilitating communications between and among many disparate actors.
Price changes guide producers and consumers.
But... when the money can't be trusted... this entire system breaks down.
The price signals can't be relied upon. And it becomes harder and harder
for people to exchange labor and capital.
Likewise, credit enables an economy to grow by facilitating the growth of
savings and capital investment through real interest rates. But very few
people are willing to delay consumption and trust their savings in an
economy that refuses to pay savers any
return above inflation for their savings.
And that's exactly where we are today.
Although to most Americans everything seems calm... and that we are
enjoying an economic recovery, I can promise you this:
We are trapped.
There is no way out.
And nobody in Washington – not Republicans, not Democrats, and not even
Tea Partiers – want you to realize how precarious our government's
finances really are. They can't afford for you to understand this
dilemma... or what it means.
Because here's the thing...
And this is the big secret the government hopes you never understand...
According to even my most conservative calculations (again, using numbers
provided by the Congressional Budget Office) a debt default by the U.S.
government would be inevitable – were it not for one simple anomaly...the
one thing that has saved the United States so far.
I'm talking about our country's unique ability to simply print more
money.
You see, the U.S. government has one very important weapon to use in this
crisis so far: We are the only debtor in the world who can legally print
U.S. dollars. And the U.S. dollar is what's known as "the world's
reserve currency."
The dollar forms the basis of the world's financial system. It is what
banks around the world hold in reserve against their loans.
Again, that's a secret most politicians don't understand:
As things stand now, the U.S. government can't go broke in any ordinary
sense of the word because it can simply print dollars to pay for its bad
debts. (It's been doing so since March of 2009.)
That might sound pretty good at first. Since we can always just print
more money, what is there to worry about...?
Well, let me show you...
Why Our Biggest
Advantage
is About to Disappear
You see, as things stand
today, America is the only country in the world that doesn't have to pay
for its imports in a foreign currency.
Here's what I mean...
Let's say you're a German and you want to buy oil from Saudi Arabia. You
can't just pay for your oil in German marks (or the new euro currency),
because the oil is priced in dollars.
So you have to buy dollars first, then buy your oil.
And that means the value of the German currency is of great importance to
the German government. To maintain the value of its currency, Germans
must produce at least as much as they consume from around the
world...otherwise the value of its currency will begin to fall, causing
prices to rise and its standard of living to decline.
But in America...?
We've been able to consume as much as we want without worrying about
acquiring the money to pay for it, because our dollars are accepted
everywhere around the world. In short, for decades now, we haven't had to
produce anything or export anything to get all the dollars we needed to
buy all the oil (and other goods) our country required.
All we had to do was borrow and print more money.
And boy did we. Take a look at this chart...
Even as late as the 1970s,
America was the world's largest creditor. But by the mid-1980s we'd
become a debtor to the world. And since the late 1990s we've been the
world's LARGEST debtor.
Today, our government owes more money to more people than anyone else in
the world.
With all of these bad debts piling up, we've had to begin repaying our
debts by printing trillions of new dollars.
With QE3, the latest round of "quantitative easing," the Fed is
now promising to print $85 billion a month. That's over a trillion
dollars a year.
And now, finally, the impact of this is being felt in a big way.
As our creditors figure out what's happening, we are beginning to have
very, very big problems.
I believe our creditors (which include foreign countries and other
investors here and abroad) will either completely stop accepting dollars
in repayment... or greatly discount the value of these new dollars. I'm
sure you think that sounds crazy, but as I'll show you, it is already happening.
In fact, Zha Xiaogang, a researcher at the Shanghai Institutes for
International Studies, recently said:
The
shortcomings of the current international monetary system pose a big
threat to China's economy."
That's why China is now
actively taking steps to phase out the U.S. dollar because of its
frustration with the U.S. government's mismanagement of our currency. And
how does our government respond? We have the audacity to label China a
"currency manipulator!"
Do you see the irony here?
As a result of what our government is doing today, I'm confident we will
soon see an end of the U.S. dollar standard.
In fact, I'm 100% sure of it. It's not a matter of "if," but
"when." And I think it's going to happen much, much sooner than
most people think.
Of course, I'm not the only one saying this. Even some mainstream
publications like the New
York Post are recognizing the inevitability of this event.
The Post
recently reported that, "The US dollar is getting perilously close
to losing its status as the world's reserve currency. Should it cross the
line, the 2008 financial crisis could look like a summer storm."
And billionaire Ray Dalio of Bridgewater Associates, the largest and
best-performing hedge fund in the world, told CNBC that it is
"inevitable that the dollar's role as the world's currency will
diminish from the dominant world currency to one of a few."
"It
will fade probably fairly quickly, so the United States, which accounts
for almost two-thirds of the reserves will probably go down to 50
percent of the world's reserves."
Keep in mind, the U.S. dollar
has been the world's reserve currency for decades now... so most
Americans don't have a clue about what the repercussions are of losing
this status.
And maybe you think it could never happen... but the truth is, this is
exactly what happens when countries get too far in debt or when they
consume too much or produce too little.
In fact, the same thing happened to Great Britain in the 1970s.
First Britain… Now
America
Most people don't know this,
but Britain's sterling was the reserve currency for most of the world for
nearly 200 years... for most of the 18th and 19th centuries.
It continued to play this role until after World War II, when America was
forced to prop up Britain's economy with foreign aid –remember the famous
Marshall Plan, when we gave billions to help European countries rebuild?
Unfortunately though, Britain pursued a socialist national agenda. The
government took over all of the major industries. Like Barack Obama,
Britain's leaders wanted to "spread the wealth around." Pretty
soon the country was flat broke.
The final straw for Britain came in 1967, when things got so bad the
Labour Party (the socialists) decided to "devalue" the British
currency by 14%, overnight. They believed this would make it easier for
people to afford their debts.
In reality, what it did was make anyone holding British sterling 14%
poorer, overnight, and it made everything in Britain, much, much more
expensive in the coming years.
And for the country as a whole, it ushered in one of the worst decades in
modern British history.
Most Americans don't know about Britain's "Winter of
Discontent" in the late 1970s, when the government put a freeze on
wages. There were continuous strikes in nearly every sector... grave
diggers, trash collectors... even hospital workers. Things got so bad at
one point that many hospitals were reduced to accepting emergency
patients. And mothers giving birth had to bring their own linens.
In 1975, inflation in Britain skyrocketed 26.9%... in a single year!
The government also imposed what was known as the "Three Day
Week" in 1974. In short, businesses were limited to using
electricity for only three specified consecutive days' each week and they
were prohibited from working longer hours on those days.
Television companies were required to cease broadcasting at 10:30pm... to
save electricity.
Just how bad were things, exactly?
Well, here's a photo of the garbage that piled up because they didn't
have enough money to pay trash collectors a fair wage...
Imagine... Britain was a
global superpower for 150 years. But when they started intentionally
devaluing their currency, things went straight downhill.
It's now obviously clear that the same thing that happened to Britain's
sterling when it was the world's reserve currency, is now happening to
the U.S. dollar. In fact, the exchange value of the U.S. dollar has
fallen nearly 10% since June 2010. And its rate of decline is
accelerating.
As the U.S. dollar continues to lose its position as the world's currency,
gas, oil, and other commodities will continue to skyrocket. Almost
EVERYTHING we consume will get dramatically more expensive. All the
clothing, furniture, and household goods we import from China.
All the food we get from Central and South America... all the
electronics, televisions, computers, and cars we get from Asia and
Europe. And when you look back over the past few years, the numbers are
startling...
The chart below shows how much a few key commodities have skyrocketed in
price, just since the beginning of 2009...
And the point here is
simple... As we print more money, the price of the world's most essential
commodities have soared. This is NOT a coincidence.
Around the world, as we print, prices soar... citizens protest...
governments get overthrown. And it's only going to get worse...
Because here's the important fact you simply must understand about the
United States right now:
Our government can NOT stop printing money because there is no possible
way for us to actually afford our existing debts. No one wants you to
know this. No one.
That's why, despite the obvious inflation going on all around the world,
the Fed continues to say there's no inflation at all.
And that's the scary part, to me.
Just like in a Third World country, the government is radically devaluing
the dollar and simply lying to everyone about what is really happening.
Whether you realize it or not, there is already a "run" on the
dollar. Many of our creditors, like the Chinese, are getting out of the
dollar as fast as they can via strategic commodities, like copper, gold,
and oil. That's partly why commodity prices are soaring.
Unfortunately, skyrocketing commodity prices are just the beginning.
There are other disastrous consequences to the U.S. dollar losing status
as the world's currency...
For example, as demand for U.S. dollars around the globe decreases,
interest rates will skyrocket. Instead of getting a mortgage at today's
incredibly low rates of around 3%, it might cost you 8%... or even 10%...
or 15%.
Imagine what that would do to housing prices!
Stock prices will likely plummet by at least 40% in a matter of weeks as
a result of this event in the currency markets. We had a small taste of
this in 2011.
But believe me, it's going to get much, much worse from here.
As investment banker and best-selling author James Rickards writes in his
new book Currency Wars:
"If the currency collapses, everything else goes with it... stocks,
bonds, commodities, derivatives and other investments are all priced in a
nation's currency. If you destroy the currency, you destroy all markets
and the nation."
That's the harsh reality we are facing. And it's what no politician will
ever tell you.
What's happened over the past few years is that investors are finally
wising up to the mess that we are in.
This is why countries like Germany are taking nearly all their gold
stored around the world, and bringing it back home. They are worried. And
they have every right to be.
In the financial world, they refer to this as "capital flight."
And what it means is, when people figure out that their savings in U.S.
dollars are in jeopardy, they look for better and safer alternatives.
This is why gold prices have gone up for 12 straight years. As far as we
are aware, no other asset has ever gone up for 12 straight years, in the
history of our nation.
But remember, we are not the first to go through this...
When Germans realized their currency was being destroyed in the 1920s,
they got their money into Swiss Francs and gold as quickly as possible.
When Argentineans realized their currency was being destroyed in recent
years, they did the same—by moving money as quickly and as quietly as
possible into a safer currency and into "hard assets" like land
and precious metals.
And it's the same with the U.S. dollar right now. As it continues to lose
its position as the world's reserve currency, it will cause a brutal
downturn in our economy, which will be about 10-times worse than the
mortgage crisis of 2008. Remember, we bailed ourselves out of the last
crisis by simply printing trillions and trillions of new dollars.
In a currency crisis, that's not possible. Printing money only makes the
situation worse.
Again, I'm not the only one saying this...
As Barron's reported...
"The
demand for dollars from the rest of the world has been of inestimable
benefit to the U.S. economy. It quite simply allows Americans to
consume more than they produce and save less than they invest; in other
words, to live beyond our means."
And listen to what Sam Zell,
the 60th richest man in America according to Forbes Magazine, said on a rare interview
with CNBC.
Zell said:
"My
single biggest financial concern is the loss of the dollar as the
reserve currency. I can't imagine anything more disastrous to our
country. I'm hoping against hope that ain't gonna happen, but you're
already seeing things in the markets that are suggesting that
confidence in the dollar is waning. I think you could see a 25%
reduction in the standard of living in this country if the U.S. dollar
was no longer the world's reserve currency. That's how valuable it
is."
You see, what will also
happen as a result of this looming currency crisis, and the end of the
U.S. dollar as the world's reserve currency, is a massive inflation in
America, the likes of which we have never seen before.
When everyone is trying to get rid of their U.S. dollars and our federal
government just continues printing more, this crisis will reach epic
proportions.
Remember, we as Americans are not immune to the basic laws of
economics and finance.
Over the past 100 years, many other governments have tried to do what our
government is doing today... that is, printing money to pay for
insurmountable debts. And in the past 100 years, this type of inflation
and debt crisis has reared its ugly head in Germany, Russia, Austria,
Argentina, Brazil, Chile, Poland, the Ukraine, Japan, and China, just to
name a few. Greece is falling apart. Italy, Ireland, Portugal and Spain
are all in trouble.
And now the same process is well underway in the United States.
As Bill Gross, founder, managing director and co-CIO of PIMCO wrote
recently:
"The future price tag of printing six trillion dollars worth of
checks comes in the form of inflation and devaluation of
currencies..."
And George Melloan of the Wall
Street Journal echoed these sentiments when he said:
"Indeed,
it is unlikely that Americans themselves will escape the inflationary
consequences of current Fed policy.... The Fed is financing a vast and
rising federal deficit, following a practice that has been a surefire
prescription for domestic inflation from time immemorial."
It's painfully clear that we
have a major, major problem on our hands.
Perhaps we could right the ship if we could drastically reduce costs and
cut spending.
But that's the EXACT OPPOSITE of what our politicians are doing today.
But our political leaders are now on a runaway, suicide course. They've
come to believe that narrowing the tax base and printing billions and
billions of dollars is the formula for prosperity.
It has never worked, EVER, in human history, and it will never work now.
Like I said, these theories have all been tried in many other places
around the world – Zimbabwe, Argentina, Germany after World War I... and
they never work. No nation in history ever became wealthier by going
deeply into debt and then printing the money required to repay the loans.
And despite what nearly all politicians seem to think... and what many
pop-culture "economists" appear to believe, I 100% GUARANTEE it
will not work here, either.
Unfortunately, the success the Fed has enjoyed (so far) in expanding the
monetary base and manipulating the Treasury bond market has greatly
emboldened our politicians.
But when you take a closer look, you realize that everything on the
Federal and State level is a complete and absolute mess, because our
government has been living way beyond its means for so long...
Is Your State as
Broke as these Places?
Did you know that according
to the Center on Budget and Policy Priorities, a Washington, D.C.-based
think-tank, some 31 states are working to close $55 billion in shortfalls
for the 2013 fiscal year?
As the Center recently reported:
"These
gaps are all the more daunting because states' options for addressing
them are fewer and more difficult than in recent years."
And the Federal Reserve Bank
of New York recently found that municipal bond defaults are in fact much
greater than rating agencies have reported. Standard & Poor's
reported 47 defaults between 1986 and 2011, but according to the New York
Fed, there were in fact 2,366 -- FIFTY times more.
Remember, unlike the federal government, states can't typically run a
deficit, so they are taking drastic steps to cut back. For instance...
** A
town in Ohio turned off 766 of the town's 5,200 streetlights – which
will remain turned off for two years. They hope to save $185,000.
** Philadelphia announced it is closing 37 schools, because the
district is "out of time and out of options," according to
Superintendent William Hite.
** Budget crises have prompted states to explore early release options
for prisoners. California is scrambling to comply with a Supreme Court
order to reduce its inmate population by 30,000 people by
mid-2013.
New Jersey Governor Chris
Christie, confirmed that this problem is going on all over the country...
He told 60 Minutes...
"It's
not like you can avoid it forever, 'cause it's here now. And we all
know it's here. And the federal government doesn't have the money to
paper over it anymore, either, for the states. The day of reckoning has
arrived. That's it. And it's gonna arrive everywhere. Timing will vary
a little bit, depending upon which state you're in, but it's comin'.
"We spent too much
on everything. We spent too much. We spent money we didn't have. We
borrowed money just crazily. The credit cards maxed out, and it's over.
It's over."
That's why Christie and other
governors around the country are now introducing bills to slash pension
benefits to government employees. As laughable as these steps are, at
least they are taking steps in the right direction—making drastic and
dramatic changes to save money.
And although it's gone almost completely unreported in the mainstream
press, six U.S. communities were actually forced to declare bankruptcy in
2010... and there were a slew of new municipal bankruptcies in 2011 as
well, including Jefferson County, Alabama, which at the time was the
largest municipal bankruptcy in U.S. history.
Of course, that was topped in 2012, when three California municipalities
declared bankruptcy in a matter of weeks, including the new "largest
municipal bankruptcy in U.S. history"... Stockton, a city of 290,000
people east of San Francisco.
And keep this in mind: Only about half the states in the country (27 in
all) allow municipalities to declare bankruptcy. If it were allowed
everywhere, I'm sure we'd see twice as many bankruptcies as we're seeing
today.
But for most places where bankruptcy is not allowed... they just keep
kicking the can down the road, rather than address the real problems.
In Baltimore, for example, where my firm's offices are headquartered, the
city can't legally declare bankruptcy. But that doesn't mean they aren't
essentially bankrupt.
An independent audit solicited by the mayor recently shows the city will
be $2 billion short of the money they need over the next decade. In other
words, as one of local news station reported: the "City of Baltimore
is on a path to financial ruin."
And the truly amazing thing is that the U.S. Federal government is in
even worse shape than the local governments!
The only reason we haven't seen the full brunt of this crisis yet on the
federal level is because we've just continued to pile on more and more
debt.
The states can't print money... but the Federal government can (at least
for now). And for the moment, this is all that is preventing a currency
collapse of unprecedented proportions.
**
And this is the important point to remember: What most people don't realize is
that the U.S. government can only continue printing dollars... as long as
the U.S. dollar remains the world's reserve currency.
I can't
stress this enough: You need to act now in order to protect your assets,
and grow your savings in the next few years. In the next few minutes, I'm
going to show you exactly how I'm protecting my own money, and what I
recommend you do.
But first, let me show you what exactly is going on right now...
Americans Don't
Realize
What is Already
Happening
Like I said, most Americans
not only don't believe the U.S. dollar could ever lose its spot as the
world's reserve currency, they don't even really understand what that
means either.
But I am here to tell you... this is the biggest problem our country now
faces, and it is clearly underway.
With the rising level of U.S. debt, many countries around the world are
questioning the position of the U.S. dollar as the reserve currency. They
want to diversify out of the U.S. dollar, as quickly as possible.
The latest sign of a move away from the dollar as a reserve currency is
that China and South Korea recently came to an agreement that allows
firms to settle deals in either the Chinese yuan or the South Korea won
instead of the U.S. dollar. "The agreement is part of a push among
emerging countries to internationalize local currencies after the global
financial crisis," reports Bloomberg.
Alan Wheatley, a global economics correspondent for Reuters recently wrote:
"Fed up
with what it sees as Washington's malign neglect of the dollar, China
is busily promoting the cross-border use of its own currency, the yuan.
"Displacing the
dollar, Beijing says, will reduce volatility in oil and commodity
prices and belatedly erode the ‘exorbitant privilege' the United States
enjoys as the issuer of the reserve currency at the heart of a post-war
international financial architecture it now sees as hopelessly outmoded."In
fact, in the past couple years, China has signed international currency
agreements with Germany, Brazil, Russia, Australia, Japan, Chile, the
United Arab Emirates, India and South Africa.
Japan and India also recently
signed a currency deal linking their currencies closer together, and
lessening their dependency on U.S. dollars.
These agreements are part of a trend that started a few years ago, when a
group of the world's most powerful countries, including China, Japan,
Russia, and France, got together for a secret meeting – WITHOUT the
United States being present or even knowing about the meeting.
Veteran Middle East reporter Robert Fisk reported on this event in
Britain's newspaper, The
Independent. Here's what he wrote:
"In the
most profound financial change in recent Middle East history, Gulf
Arabs are planning – along with China, Russia, Japan and France – to
end dollar dealing for oil, moving instead to a basket of currencies
including the Japanese Yen, Chinese yuan, the euro, gold and a new,
unified currency planned for nations in the Gulf Co-operation Council,
including Saudi Arabia, Abu Dhabi, Kuwait and Qatar."
Fisk also interviewed a
Chinese banker who said:
"These
plans will change the face of international financial transactions.
America... must be very worried. You will know how worried by the
thunder of denials this news will generate."
And sure enough, after Fisk
published the details of this secret meeting, U.S. officials and central
bankers from around the globe denied these plans.
But as the old central banking adage goes... how do you know exactly when
a currency will be devalued?
The