"The Americans continue to play silly buggers over their budget. It's fantastic stuff to watch. Especially if you're a 'Deal or No Deal?' fan, unlike us. Last night's episode ended with 'No Deal!'
Stocks dropped, gold plopped and bonds face planted. One bank after another is dumping bonds that pay interest or mature over the coming months. Last night it was Citigroup.
One interesting tid-bit of news on this topic is that commentator Marc Faber reckons, if push comes to shove, rather than balancing their budget by cutting spending, the politicians will ask the Federal Reserve to buy bonds directly from the government. That's called 'monetisation' Weimar Republic style. It would break the 1913 law that created the Federal Reserve in the first place, but heck, when you make the laws, breaking laws isn't a problem.
Sick of the American shutdown story? On to something new then. Fair warning though, the rest of this Daily Reckoning is going to be mighty unpopular. Even more so than yesterday's housing bubble analysis. It's all about the hidden opportunity in this image:
'via Blog this'
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