Study: America’s Real Fiscal Gap is $211 trillion, 35% Chance of Default Within 30 Years

By James Pethokoukis

This new fiscal study—from Richard W. Evans and Kerk Phillips of Brigham Young University and Laurence Kotlikoff of Boston University—is worrisome, to say the least:

Most developed countries appear to be running unsustainable social policies. In the U.S., federal liabilities (official debt plus the present value of projected non-interest expenditures) exceed federal assets (the present value of projected taxes) by $211 trillion or 14 times GDP. Closing this fiscal gap requires an immediate and permanent 64 percent hike in all federal taxes. … Our simulations, calibrated to the U.S. economy, produce an average duration to game over of about one century, with a 35 percent chance of reaching the fi scal limit in about 30 years. … When our economy reaches game over, the government is forced to default on its promised payment to the contemporaneous elderly.

Read the rest here.

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If demographics are destiny, then this might be the best decade for global economic growth in 70 years. Take that, Great Recession.

The following chart from Goldman Sachs breaks down global growth over the past 30 years and projects forward for the next 40. The good (or maybe bad) news is that despite the whole “global financial crisis” thing you might have read about, the 2010s are the big winner. (A note on the chart: The dark blue shows Brazil, Russia, India and China’s share of global growth, the lighter blue the next 11 biggest emerging markets, the lightest blue all other emerging markets, and the grey the world’s rich economies.)

To read the rest and see the chart, go here.

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One wonders how this was all missed by the media during his presidential campaign…

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By Murray Weiss

 

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DOW DOWN 78

S&P DOWN 10

NASDAQ DOWN 12

[youtube://http://www.youtube.com/watch?v=VzctzKFKM8o 450 300]

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Indicative value….

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Can you say $6….

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This may be a serious debt bubble brewing; if not it will certainly prevent future consumers from supporting our consumption based economy.

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Source

High-frequency traders have caused U.S. commodity futures prices to disconnect from market fundamentals of supply and demand since the 2008 financial crisis. An extensive and detailed analysis by the United Nations Conference on Trade and Development just confirms what we have shown again and again (most recently here in Silver) that HFT’s impact on the world is not all unicorn-tears and liquidity-providing. Markets are more exposed to ‘sudden and sharp’ corrections, and as Reuters notes “The strategy of those involved in high-frequency trading tends to reinforce the correlation between equities and commodities“. In a somewhat stunning conclusion from an academic treatise, the authors find “We are not saying that it’s all about speculators and (that) fundamentals don’t matter. But we are saying that they tend to matter less, except in extreme cases,”. Unlike other studies on the linkages, the UNCTAD study uses tick-data and finds correlations rising and trade size dropping as frequency increased dramatically since the crisis in 2008. Critically, one final consequence is that investors seeking to diversify or hedge against other investments in their portfolio are often disappointed as the increased HFT creates a destabilizing effect on commodities (increasing volatility) and can often create bubbles.

The number of Ticks (trades) has risen exponentially faster than the volume – as the black (ratio) line indicates – for WTI in this case.

And on a rolling 5-minute correlation basis – it is abundantly clear that there has been a regime shift in the relationship between US equities and WTI (in this example)…

 

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Andy offered this great article explaining the TVIX move…

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Disgusting…..

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Shouldn’t the taxpayer not also benefit from the great game of musical chairs ?

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Source

“The Senate on Thursday passed legislation barring lawmakers from using insider information for personal profit, sending the bill to the White House.

The Stop Trading on Congressional Knowledge (STOCK) Act already approved by the House passed the upper chamber easily by a vote of 96 to 3.”

Read more

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Source

“All the evidence points to the fact that the Federal Reserve’s loose monetary policy did not cause the housing bubble, Ben Bernanke told students at the George Washington University School of Business today.

While he acknowledged that this issue is still very much up for debate—and added that increased demand for housing based on low interest rates could have contributed to the wave that caused the bubble—he gave three reasons for why the Fed should not be held completely responsible:

• “The boom and bust in the us was not unique.” Indeed, he specifically points to the U.K. as an example of a housing bubble even during tight monetary policy.
• “The increase in housing prices was way too large to be associated with the small changes in monetary policy.”
• “The timing of bubble, he argued, did not coincide with the Fed’s policy decisions. He asserted that 1998 was the start of a major uptick in housing prices—not when the Fed was aggressively lowering rates in the 2000s. That “was right in the middle of the tech boom,” Bernanke said, adding that it’s possible “the same mentality that was feeding stock prices may have been feeding house prices as well.”

Read more

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No need to explain the obvious with thin floats; these three trades take the cake.

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The VIX is up $0.95 or 6%.

The VXX is up $0.85 or 4.5% , but TVIX, (twice the VIX move,) is down $1.27 or nearly 9%…..fucktarded indeud.

[youtube://http://www.youtube.com/watch?v=xTsvwBkVdKw 450 300]

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WTI is down $2.17 @ $1.0510….briefly breaking $104.88 which was support and a 50% retracement of the recent rally.

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Deleveraging  seems to be a thing of the past….

A chart to put things into perspective…

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A slump in every category….

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Surprisingly it took this long for a ban of pink slime….

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In light of the president’s speech it behooves us all to get to the bottom of two whistlblower claims over safety issue on the XL Pipeline.

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