Liberty Newswire – 2/2/2012

[The Liberty Insight Newswire is an aggregation of what we consider to be important financial and political news and commentary from across the web.]

This week’s newswire includes California running out of cash, Europe rearranging furniture, a dose of reality for the housing market, and our latest $1T deficit. The real gem, however, is the final article which discusses a potential deal between Iran and India (and maybe China) to trade oil for gold- the implications of which are hard to fathom.

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Controller: State to run out of cash in March without action
Sacramento Bee, January 31, 2012

California will run out of cash in March unless it can find $3.3 billion dollars in accounting gimmicks. Surprise; they overestimated revenues and underestimated expenses in their budget.

“But Chiang said additional cash management solutions are needed because state tax revenues are $2.6 billion less than what Gov. Jerry Brown and state lawmakers assumed in their optimistic budget last year. Meanwhile, Chiang said, the state is spending $2.6 billion more than state leaders planned on.”

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Europe May Be Planning 1.5 Trillion Euro Backstop Fund
Spiegel Online, January 31, 2012

As I read this article, the phrase “rearranging the deck chairs on the Titanic” kept popping into my mind. The financial rulers of the world are now talking about combining the EFSF, ESM, and IMF funds to create a super European bailout fund totaling nearly $2T. (Don’t worry if you don’t know the acronyms, it’s all just BS.) But the real kicker comes in the last sentence of the article:

“But Lagarde is hoping that the super-fund will never need to be used once it is in place, especially as the European Central Bank should be waiting in the wings to provide more liquidity into the financial sector.”

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The European Super Highway of Debt
Demon-ocracy Info

Speaking of European debt, here is a really cool info-graphic demonstrates how much banks borrowed from the PIIGS

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Homeownership rates fall to 66% as downturn nears a bottom
USA TODAY, January 31, 2012

Realtors and the media have been repeatedly calling the bottom in housing for a while now. The latest data from the S&P Case-Shiller Report shows November home prices were down 3.7% from a year ago. When will the real (inflation adjusted) housing bottom occur? When unemployment is back to normal levels, when the tens of millions of foreclosures, delinquencies and underwater mortgages work their way through the system, and when interest rates have climbed well above the historical average. In other words, not for a long time.

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Congressional Budget Office reports another $1 trillion deficit
Politico.com, January 31, 2012

I guess a budget deficit over $1 trillion isn’t exactly news these days, but the CBO now estimates the 2012 budget deficit to be $1.079T up from the $953B it had projected in August. Anyone want to bet the final tally ends up below the new projection?

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India to pay gold instead of dollars for Iranian oil. Oil and gold markets stunned.
DEBKAfile.com, January 23, 2012

“India is the first buyer of Iranian oil to agree to pay for its purchases in gold instead of the US dollar, DEBKAfile’s intelligence and Iranian sources report exclusively.  Those sources expect China to follow suit. India and China take about one million barrels per day, or 40 percent of Iran’s total exports of 2.5 million bpd.”

If this reporting is true, it could have major implications for the dollar and world trade in general, as I discussed here. It appears India, China, Russia and others are not playing along with the U.S. and E.U. in their attempts to sanction Iran.

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One Response to Liberty Newswire – 2/2/2012

  1. Doug Bond says:

    Unbelievably good stuff!!!!!….Love the European Super Highway of Debt….pictures are worth a thousand words!!

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