Economic Crisis News 2015-08-10
Starting off in cryptocurrency news, bitcoin prices have retracted back a bit from the rally. Currently around $265, down about 7% from a week ago. Exchange service Kraken announced they are discontinuing service to New York residents. Their blog post calls the recent BitLicense regulations an abominable foul creature. Since Benjamin Lawsky's resignation a few months ago, any new criticism of the laws must be directed to the new New York Department of Financial Services Superintendent Anthony Albanese. This news comes after their recent lowering of trading fees as of August 1st.
Former boxer Mike Tyson has apparently joined up with a bitcoin company with plans to release name branded ATM's in Las Vegas August 30th.
US Government Insolvency
Lately we've been discussing a lot the insolvency of Social Security, specifically Disability which is out of money by next year. The One Social Security Act, a temporary patch to the problem, introduced in the House july 22nd has done nothing so far. To recap, the supposed 2015 budget had a 564 Billion dollar deficit which projected 18.69 trillion in total debt.
We may need to issue a correction on past reports. There is a 2016 budget passed by the House & Senate in early May, but this however is only a blueprint and all appropriations or continuing resolutions must be passed to fund government before the new fiscal year starting October 1st. Each year funds need to be allocated for 12 different sections of discretionary spending. This is the first time in six years Congress has passed a budget.
The blueprint passed for 2016 is only $29 billion less than 2015. This country simply can't survive in this current debt & spend paradigm where we must print money like Zimbabwe to pay for new bills. Printing more money without any generation of wealth will lead to inflation and the loss of value for the currency.
If you believe, like many financial experts including Martin Armstrong, Jeff Berwick, David Morgan and more, that something big is likely to happen by this September in world finances, a failure to pass key funding bills may be a real game changer. We could see a shift in America's stability and hegemony in the world; perhaps the start of the introduction of a replacement currency for the very much dying Dollar. US debt is near 18.4 Trillion despite official treasury department statements showing 18.1 Trillion frozen for over 20 weeks.
Puerto Rico has already defaulted...we know that for sure because, well, CNN has reported it now right? Puerto Rico is the largest US Territory. This is their first default in their history since before, it's cession from Spain in 1898.
Officials in the country have until the end of August to finalize economic and fiscal reform proposals that are crucial if the island indeed doesn't pay its debt. Following Detroit, Stockton and other US city defaults, this could test the resiliency of the US municipal bond market. With $72 Billion in debt, their debt per person is only about $20,000 compared to at least 57,000 per each US citizen, and this is just official federal debt.
We should be the country in default! Perhaps they can default because most of the debt is owned by ordinary Puerto Ricans; just like bail-ins, the little guy gets the shaft when the country's treasure chest runs dry.
Speaking of citizens getting the shaft, Greece is treated less honestly in mainstream news which does not readily admit that it has defaulted. Headlines Sunday say Greece is closed to a deal with creditors for it's 3rd bailout; perhaps we'll see this week what happens. The next date to look for is August 20 when they owe 3.4 Billion Euros to the European Central Bank. This is already 4% of the rescue offer of 86 billion.
Oil & Silver
In commodities, oil price is again down, another $3 to a 7 month low. This is with just slight gains in the US Dollar Index. The Euro is down significantly vs the Dollar since a year ago; though the major crash happened in late 2014 to March this year.
Despite price dips, oil drillers in America have posted production gains for 2015's second quarter. Part of the reason is the fact that projects have been in the pipeline for quite a while, coming to fruition only recently. That adds more capacity to company portfolios.
Gold is roughly flat for the week at 1,092 and silver is up a few cents, still under $15 per ounce though. SRS Rocco is reporting that the largest silver prodcuers are seeing production declines as well as global exchanges are losing silver rapidly including JP Morgan, HSBC bank and CNT withdrawing from the COMEX. Australia's production quarter to quarter of silver is down a whopping 31%.