Some perspective on the US debt ceiling and how it impacts our trading…

You guys panicked about the US debt impasse yet? Sigh.

Let’s break down some relative numbers and see just how worried we should be about what the papers and TV are sure is the Most Important Economic Story of the Year.

Remember the original TARP bill?  It was for less than $700 billion or so.  The outcry from the public who rightly saw that the Republican/Democrat Regime and the Federal Reserve it allows to monopolize all currency and monetary actions were about to upwardly transfer unprecedented wealth to a bunch of insolvent and crooked bankers.

At the time, I was on TV, interviewing Republican and Democrat Senators and Congressman, all of who confirmed that the public was against the TARP bill by about 9 to 1.  Several congressman told me that they’d never seen such a strong consensus from their constituents.

So the bill failed.

And Wall Street tanked for a day by a couple, few percent.

So the Republican/Democrat Regime added another $150 billion or so of pure pork to the TARP bailout.  I’m still talking about summer 2008, when it was a Republican Administration (you know those guys who say they are “conservative” and “capitalists”) and a Democrat Congress (you know those guys who say they are “liberal” and for “level playing fields”).   These same people, including Obama, McConnel, Boehner, and Reid, somehow were able to find the budget for $150 billion in pork in one day.  That’s about 1/6 of a trillion dollars of bribes pork that these guys somehow were able to find in the midst of the “worst financial crisis” in history so that the bankers who backed them and who needed the $700 billion outright welfare infusion to keep from having their own businesses liquidated and purchased by a smarter, more conservative businessmen and bankers.

Guess what happened when these same guys who say we are facing a budge crisis now revoted on that expanded $800 billion TARP bill that included an extra $150 billion or so of outright pork — remember the special break on Medicaid for Nebraska citizens that they included as part of the great TARP bailout package that no other state’s citizens deserved apparently?

And don’t believe any of that propaganda about TARP having been paid back.  The banks and the Federal Reserve have created upwards of ten trillion dollars of other welfare and bailout programs since the original TARP passed.  I mean, do you guys even remember that the entire US government debt was only $8 trillion when we started the bailouts in 2008?

With all those stealth bailouts and the tanked economy it helped create, the Republican/Democrat Regime under both Bush and Obama, added six trillion dollars to the on-balance sheet debt that your children and grandkids will pay back.

Six trillion dollars in three years was added to the recognized US debt since the bailouts started, in large part to fund the trillions of dollars that the Republican/Demcorat Regime has hoisted onto the banking system which then donates that money back to them for elections and propaganda to get more welfare money even as they sit up in Washington right now pretending that they’ve got to cut a two or three trillion dollars from the budget in the next ten years.

$6 trillion in recognized debt that’s been added to the US debt in the last three years.  $3 trillion that they say they need to cut from social services and health care for the poor and elderly over the next ten years.

Let’s wrap up this up with what all this means to our trading.

This entire debate about the US debt ceiling is a calculated distraction and political maneuvering by the two parties who are clearly working on the same side except when they want to pretend there’s a debate over a pretend crisis.  That doesn’t mean it won’t hit stocks on occasion.  And if we do get into mid August with these idiot politicians continuing to debate over this debt ceiling, the markets will likely get hit for 5% or so.   More likely after a few more days of posturing, these guys will suddenly figure out some timing/pricing/social services cutting compromises (don’t worry the welfare for the banks will continue unabated) and we’ll forget about this “US debt ceiling crisis” just like we did the last twenty US debt ceiling crises.

Ultimately, $14TT of debt is no joke.  But we are paying record low interest rates to borrow unprecedented amounts of money to pump into our system and enable the banks to continue looting the taxpayer with 0% loans and 3% Treasuries.   We are allowing the banks to ignore their crippled second lein balance sheets and continue to create trillions in on- and off-balance sheet money supplies.

Most analysts and pundits are looking at this US budget impasse as the likely driver of the next big phase of the stock markets and economy.  Those analysts and pundits are wrongly listening to the politicians who want them to believe that agreeing to figure out how to cut a few hundred billion dollars of cuts to social services over the next ten years will somehow have a bigger impact that the ten trillion plus of bailouts and welfare for the banks and giant corporations that they’ve pumped into the system over the last three years.

Size matters when it comes to the economy.  Let’s stay focused as usual, on what matters.

Back in a minute with some trading details.