My Dear Friends,
You are all my extended family in Tanzanian tradition.
To all the Fathers out there, Happy Fathers Day. To the Mothers, a nation stands on the integrity of its Mothers. If Mothers are degraded the nation will certainly fall.
Respectfully,
Jim
Jim Sinclair’s Commentary
Greece is nothing compared to the 33 states of the USA charging at 200mph towards a stone wall of bankruptcy.
Nearly Bankrupt Illinois Forced To Pay Through The Nose To Borrow Money
Joe Weisenthal | Jun. 18, 2010, 9:02 AM
The market has lost confidence in Illinois, a state which has now adopted its own IOU system.
Illinois sold $300 million of Build America Bonds at a yield premium over Treasuries about 40 percent higher than two months ago after lawmakers failed to close a $13 billion budget deficit for the year starting July 1.
The fifth most-populous U.S. state sold the taxable debt maturing in 2035 priced to yield 7.1 percent yesterday, or 297 basis points over the 2040 Treasury to which it was benchmarked, according to data compiled by Bloomberg. Illinois offered Build Americas of similar maturity at spreads of 205 basis points and 210 basis points in two April issues, Bloomberg data show. A basis point is 0.01 percentage point.
Jim Sinclair’s Commentary
And exactly how do you get out of that danger?
In truth you do not. No one is going bailout the US except QE to infinity.
Greenspan: We’re In Danger Of Being The Next Greece!
Joe Weisenthal | Jun. 18, 2010, 5:51 AM
Former Fed Chair Alan Greenspan has an op-ed in the WSJ arguing that the runaway Federal Deficit threatens to turn the US into the next Greece.
He doesn’t actually think that the US debt bears any credit risk, due to our ability to print at will, but that there is a substantial risk that borrowing costs will soar.
Of course, market participants are aware of our towering deficit, and yet yields continue their long march lower, so that’s kind of problematic to his world view.
Says Greenspan: "This is regrettable, because it is fostering a sense of complacency that can have dire consequences."
Yet, he argues, not all market signals are so benign:
In the wake of recent massive budget deficits, the difference between the 10-year swap rate and 10-year Treasury note yield (the swap spread) declined to an unprecedented negative 13 basis points this March from a positive 77 basis points in September 2008. This indicated that investors were requiring the U.S. Treasury to pay an interest rate higher than rates that prevailed on comparable maturity private swaps.
