Sell-off in US Treasuries raises sovereign debt fears
CIGA Eric

Just like in the 70s when gold began its historic climb, the final Pillar of Gold (a bear market in US Treasuries) must be in to attain $1650 and above.
US Treasuries breaking down, as they are with the 25 years plus up trend to be decimated must happen.
Then you can make living selling US Treasuries rallies short for many years to come.
In the 70s rates on ten year bonds went from under 4% to 14 7/8%.
In the 70s overnight money went above 21%
It will happen again as gold climb to and through $1650.
The formula of 2006 clearly points out that this MUST happen.
It was simply common sense as gold is now at $1650 and better.
There is another salient point that not only is the Health Bill the biggest grab of centralized power since Roosevelt, it was desired by only 37% of the population while 48% did not want it in that form or at all.
Confidence is what makes currency value and that is sundering fast.
The US dollar is no safe haven.

Jim

"The yield on 10-year Treasuries – the benchmark price of global capital – surged 30 basis points in just two days last week to over 3.9pc, the highest level since the Lehman crisis. Alan Greenspan, ex-head of the US Federal Reserve, said the abrupt move may be "the canary in the coal mine", a warning to Washington that it can no longer borrow with impunity. He said there is a "huge overhang of federal debt, which we have never seen before".

Frankly, the canary in the coal mine died a long time ago. What we are seeing now is recognition of the problem. Recognition has the potential to produce acceleration within the existing trends.

Long-Term U.S. Government Bonds Total Return Index (LTGBTRI) to Gold Ratio:
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Long-Term U.S. Government Bonds Total Return Index (LTGBTRI):
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Source: telegraph.co.uk ^[3]

More… ^[4]

US Long Bonds
CIGA Eric

The neckline has been defended again. As US long bonds have bounced, the inflows have receded.

US TBd (20 Years +) and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:
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Within a week, price driven by (insert the appropriate headline) – passage of healthcare, weak bond auctions, the end of the Shamrock Shake sales at McDonald’s, sits on the neckline again.

US Long Bonds 20-Year+ ETF (TLT)
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The US long bond market reminds me of the moment when two hockey players, squaring for a fight, throw the gloves to the ice. As I said before, this neckline will be defended at all costs. The immovable objects meets the unstoppable force ^[7] – the US long bond market.

More… ^[8]

State Debt Woes Grow Too Big to Camouflage
CIGA Eric

The markets will force the weak hands. It always does. After that, it will be the printing press to the rescue.

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.

California’s stated debt — the value of all its bonds outstanding — looks manageable, at just 8 percent of its total economy. But California has big unstated debts, too. If the fair value of the shortfall in California’s big pension fund is counted, for instance, the state’s debt burden more than quadruples, to 37 percent of its economic output, according to one calculation.

Source: cnbc.com ^[9]

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KUHNER: Will America break up?
CIGA Eric

According to a leading Russian economist 8 years ago, the answer is yes. We certainly got change.

"President Obama is splintering America. The passage of Obamacare was a historic victory for liberal governance. Yet, its true cost may be that it triggers the eventual breakup of the country. "

Money’s focus remains on how this will political "change" affects American capitalism. If increased socialism retards creative capitalism, it will ultimately be reflected in the shares of USA, Inc – the US dollar.  A labor force destined to scrap for service and entertainment rather than high-skilled jobs will find raising a family increasingly difficult without centralized handouts. The American vision was forged on hard work and independence – a person’s ability to realize their destiny.  If this vision has become impeded, then no amount of socialism will return American capitalism to envy of the world.

More… ^[11]

Hi Jim,

It’s about time someone other than yourself has seen the handwriting on the wall.

This New York Times article begins with the following paragraph:

"California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay."

The latter part of the article mentions widespread use of interest rate swaps by various States which "gave the illusion that their house was in order" but in reality concealed hidden debt.

The article concludes by stating "These are the things that can precipitate a crisis."

Hope you’re enjoying your trip!
Best wishes,
CIGA Black Swan

State Debt Woes Grow Too Big to Camouflage
By MARY WILLIAMS WALSH
Published: March 29, 2010

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.

And states are responding in sometimes desperate ways, raising concerns that they, too, could face a debt crisis.

New Hampshire was recently ordered by its State Supreme Court to put back $110 million that it took from a medical malpractice insurance pool to balance its budget. Colorado tried, so far unsuccessfully, to grab a $500 million surplus from Pinnacol Assurance, a state workers’ compensation insurer that was privatized in 2002. It wanted the money for its university system and seems likely to get a lesser amount, perhaps $200 million.

Connecticut has tried to issue its own accounting rules. Hawaii has inaugurated a four-day school week. California accelerated its corporate income tax this year, making companies pay 70 percent of their 2010 taxes by June 15. And many states have balanced their budgets with federal health care dollars that Congress has not yet appropriated.

More… ^[12]

Dear Mr. Sinclair,

Another sign of the shift that is taking place:

StanChart files for Rs 3,375-cr IDR issue

Eighteen months after starting talks with regulatory agencies, Standard Chartered Bank today filed a draft prospectus to raise up to $750 million (around Rs 3,375 crore) through Indian Depository Receipts.

This is the first time a foreign company is planning to list shares in India by issuing IDRs. The UK-based Standard Chartered Plc moved the market regulator, the Securities and Exchange Board of India, for approval to float 220 million IDRs…

…Since rules for IDR listing were first notified more than five years ago, StanChart has been the first to come forward. “There will be others who will come forward in the future,” said Swaroop, adding the bank planned to list in India by the end of June…

More… ^[13]