Bruce Krasting's Contributions

The Congressional Budget Office is out with a very well timed report on what the hell should be done with debt, deficits, taxes and the economy.

Democrats want to go back to the good old days when Fannie and Freddie were tools of both the Congress and the Administration. The Dems want the D.C. mortgage agencies to write off all underwater loans. The goal is to socialize the losses that borrowers are faced with.

Total global debt is around $200Tn. World GDP is less than $70Tn (300% global debt to global GDP). Advanced economies have a higher percent of total Debt/GDP then developing countries. So the crux of the problem lies with Japan, most of the EU and the USA.

Beppe Grillo is a well know TV personality/comedian in Italy. At age 64 he ran for political office in Parma, and won. He has been doing a lot of talking since, and his philosophies have become very popular.

Absent some earth shaking event between now and November, Obama is going to win, the House will remain in the hands of the Republicans and the Senate will continue to be equally divided. The war between Reds and Blues will be just as bad as it was a year ago. The day after the election, the fight over the fiscal cliff will commence. I expect it will be ugly.

The Congressional Budget Office (CBO) did a good job of shredding the electric car industry and the government’s role in its evolution with a recent report.

Mario was able to maintain “Radio-Silence” on the key elements of the plan he unfolded. As a result, he achieved tactical advantage when he unveiled his bold proposals. The global capital markets were both shocked and awed, and responded with unbridled enthusiasm.

The Congressional Budget Office came out with its Update to the Budget and Economic Outlook 2012 – 2022 yesterday (Link). The press jumped on the report’s conclusion that the consequences of not dealing with the fiscal cliff will cause a recession in 2013. The CBO thought it might result in 0.5% YoY drop in GDP.

The only winners in this story are the rail-roads. Everyone else will pay a bit more. In some cases there might be shortages (rock salt/chemicals up north). Global grain, corn and bean supplies may get disrupted. Add another few percent to the already skyrocketing price of raw food stocks.

Bernanke will speak at the all-important Jackson Hole meeting on August 31. This means that Ben is writing his speech this week. He will be speaking on the phone with his cohorts about what to he will say. In the process, he will get a consensus from the Fed’s voting members for policy actions that will be taken (if any) on September 13.

I’m going to give Biden an award for his words. I call it the “Postpony”. I’m tired of the phrase, “kick the can down the road”. When Biden spoke about SS he was kicking the can. He was pushing a strategy of postponing a debate/resolution of something that is important for the country’s medium and longer-term future.

So Mr. D spoke and said nothing at all. Those that expected a “big stick” from the boss at the ECB are very disappointed. The initial market reaction to this dud is a down move in equities and the Euro while Italian and Spanish yields soar.

Way back in 2007 a fellow by the name of Herve Falciani was working as a computer guy for HSBC in Geneva, Switzerland. He stole the bank records of 24,000 customers who were stashing money.

London has always been the center for the Euro dollar deposit market, but most banks had NY operations that also made markets in Euro depos. For a time, I sat on one of those desks. This was way before the Internet and live-streaming prices.

The EUR rate against the major crosses this morning does not reflect the views of my friend. The current EURUSD 1.2570 rate reflects the market thinking that there is no immediate crisis. It certainly is not a price that contemplates a Euro without Germany. Should “Athens” thinking on the outcome gain some traction, then the Euro is headed much lower.

The Swiss National Bank (SNB) intervened in support of its 1.2000 currency peg against the Euro to the tune of CHF 60 billion ($66B) in the month of May. The vast majority of this intervention occurred during European trading hours.

I talked with a Swiss banker from Geneva today. The conversation went like this: BK – Are you guys still seeing boatloads of money coming in from outside the country?

The other day the IRS announced new rules for settling tax liabilities for individuals. It’s a sweet deal. I thought that was interesting. Then yesterday we get an announcement from Altria (MO) that they too have cut a deal with the boys at the IRS. Coincidence? Leading indicator?

If you read me on a regular basis you know that I speak with a fellow in Athens who is connected to the shipping industry and the government. I provide links below to some of those articles to establish this person’s credibility.

The Social Security Trust Fund (SSTF) 2012 report to Congress is now out (link). It’s 242 pages and contains a great deal of information. I have reviewed a number of sections in the report that I consider to be key measures of SS’s health.