Wednesday, August 01, 2007

Going With The Flow? / Contrary Investor

Always a pleasure to read the brilliant stuff from Contrary Investor. This is only a small summary. Make sure you click on the headline to read the entire piece. Not a pretty picture.....

Immer wieder ein Genuß die treffenden Analysen von Contrary Investor zu lesen. Die nachfolfenden Charts sind nur ein kleiner Auszug. Kann jedem empfehlen den kompletten Report lesen (Überschrift klicken). Nicht sehr rosig.......

The first in this series is the very simple relationship between household cash and household liabilities. You may remember that our definition of household cash is as broad as can be. We include all household "banking products", per se, but also include all household holdings of bonds, inclusive of Treasuries, Agencies, corporates, muni's and mortgage backed paper. Implicitly, we are assuming bond holdings could be converted to cash at a moments notice. So what follows is simply total household cash less total household liabilities over the last six decades.

Next in the hit parade is this same household liability number now set against disposable personal income. In one sense, it's a measure of how much debt households have been able to support relative to their income at any point in time. And quite understandably, as interest rates in general have fallen since the early 1980's, households have been able to support ever larger total debt relative to their ongoing and growing income streams.

> Too bad that the US consumer can´t raise the debt limit like the government......

> Zu blöd das der Konsument nicht wie die US Regierung beliebig die Verschuldungsgrenze weiter nach oben schrauben kann...


Paulson: US should boost debt limit
Treasury Secretary Henry Paulson on Monday said the United States may be unable to pay its bills this fall unless Congress raises the government's borrowing authority, now capped at $8.965 trillion.

Congress has already boosted the statutory debt limit several times during President Bush's tenure. The last time Congress upped the government's borrowing authority was in March 2006 when it agreed to raise the debt ceiling by $781 billion.

In the past, Treasury has resorted to numerous accounting maneuvers to pay its bills while the government waited for Congress to expand its borrowing authority. Paulson argued against being forced to use such measures, saying they "would create unnecessary uncertainty for the financial markets and result in costs to the government." Such actions, he said. "should be reserved only for extraordinary circumstances, and should be avoided."

> And all this at times when Bush & co wants to make the public believe the deficit is improving......

WARNING: make sure you have no coffee in your mouth when you click on the link to see the chart for "Forecast US Budget Balance" :-)

> Und all das passiert zu Zeiten wo von Seiten der Regierung immer wieder zu hören ist das sich die Kassenlage entspannt......

WARNUNG: Ihr solltet besser keinen Kaffee im Mund haben wenn Ihr den nachfolgenden Chart "Forecast US Budget Balance" sehen werdet :-)

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