Monday, May 18, 2009

Another Sign of P3 (But Maybe Sooner Than We Thought)

Most of you are aware of my seemingly endless quest for P3 catalysts. They are everywhere. While only a few of my posts have had P3 in the title, most seem to point towards the fact (IMO) we're headed for some really troubled waters. I expect the P3 in the title to begin to pick up steam soon.

This weeks edition of the P3 watch comes from Tyler at Zero Hedge. In a "Guest Post: Tax Revenues Tanking" David Galland, Managing Editor, The Casey Report presents a great case on just how bad our government's income stream really is.

"We continue to stand by our December forecast that the 2009 budget deficit is more likely to widen to levels between $2.5 and $3 trillion rather than the CBO’s $1.8 trillion forecast. We also believe that inflation could start setting in as early as Q3 of 2009 and will accelerate sharply by 2010. Treasury Rates will start climbing and the era of cheap money will end, making it harder for overleveraged consumers, businesses, and governments to service their debt." is just one example from a well written study of just how bad things are getting.

This is the earliest predition on impending inflation I have seen. It may be a bit aggressive, but I get it and can agree. When we are struggling to get our "well capitalized" banks to lend at the lowest rates in history, what's going to happen when rates begin to skyrocket. HA! You think our credit defaults and foreclosures are bad now wait till you get a load of what's gonna happen then.

Oh, remember there are trillions on the sidelines right now waiting to be invested. When savings interest rates begin to climb, what do you think is going to happen to the appetite for risk? That's right, mass exodus to the land of low risk and high rates and the market gets pummelled. Maybe this is another reason for the (what I believe is) artificially inflated market. They know this is coming and are trying to keep the market on life support as long as possible.

We can't fund it, we can print our way out of it and we cant buy our way out of it. It is only a matter of time that the failed auctions get worse and the Fed can only buy so much stuff. Taxes revenues are down and this trend may continue. In my last post I mentioned California and the Governments plan to tax their way out of that mess. Right now, that appears the only way. Obinhood is already working on the life insurance side for some additional billions. What's next?


  1. Obama and the Congress do not care about the deficit or the national debt. None of them are acting responsibly - it's an orgy of spending and it will continue like it always has.

    Even laws they pass are ignored and no one goes to jail from the government.

    The FED is equally crooked.

    P3 may never come.

  2. For me, I always come back to earnings plain and simple. And the reality is people have less spending power in the US than in a long time which means less demand for products and services. I also look at the new theme which is being sold by dems and repubs which is "people want more government", so taxes will contine to rise and government will get bigger and bigger which will spell less and less growth of GDP. Obama just yesterday came out wanting more "estate taxes". I suspect eventually when you die all your possesions and money will be the property of the US government.

  3. S135 - you are WRONG

    CRS - we're on the same page.


Keep it civil and respectful to others.