The bond issue

News,

Reuters:
California to miss budget deadline, "meltdown" nears

The state of California is broke as a joke and not half as funny. Commissar Schwarzenegger went to the Federal government for a bailout. Though it was rejected...Reason? If the Treasury bails out California, it will have to bailout other states. 41 States are facing "budget shortfalls" aka no money.

Obama To California: Drop Dead

So our government will bail-out banks, but not states...How neat.

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Bonds, lots of Bonds.

Bloomberg:
Suitcase With $134 Billion Puts Dollar on Edge

This is the most fascinating scandal yet. Two Japanese nationals were caught going from Italy to Switzerland, with 134 Billion Dollars in US bonds...If the bonds are real and not counterfeit, then that makes these two, the US's 4th Largest creditor after China, Russia, and Japan. They were trying to get into the freeport of Chiassco. The Freeports in Switzerland are legal no-man's land. They are places filled with exotic art, gold, ancient artifact, weapon, and drug traders. All transactions occur via a third party, they are veritable treasure troves.

Sooo. If the Bonds are real, then it looks like Japan was trying to dump its bond holdings privately. If the Bonds are fake, then some one has got some nuts. Both cases are bad for the dollar. 1. Huge amounts of counterfeit notes floating around could prove disastrous. 2. Anyone dumping that amount in US bonds, would shake the bond market to its core.

Either way this is an interesting development.

Market Watch:
Traders prep for $104 billion in auctions next week

Remember, we have to sell around 200billion bucks in bonds every month to finance our 2 trillion buckeroo deficit.. The Fed has continued to buy treasuries, because they have to. If these auctions don't go off well we will be in trouble fast. Since March the Fed has bought around 170billion in bonds from the treasury. That means, that the FED created around 170billion to buy US debt. The collateral on these bonds is you, me and any children we may or may not have.

The Fed has bought nearly $170 billion Treasurys since it kicked off the buying program in late March

Lets be realistic, how long can they keep this up? They can keep printing the money....right? Right into oblivion. Weird eh? The implications are fearful to contemplate.

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Interesting side notes:

Wall Street Journal:
Google Invests $2.6 Million in Genetics Company

USA Today:
Drugs found in drinking water

Icelandic Demolition man. They were going to take his home, sooo he decided he'd have the last laugh. That and Icelandic sounds neat, its really close to old norse. An interesting side-note, modern Norwegians can't read and understand their ancient chronicles without a dictionary, (like us trying to read middle english) but Icelanders have no problem. They were isolated linguistically that long ago. Fascinating eh?


Prov.
14:10
The heart knoweth his own bitterness; and a stranger doth not intermeddle with his joy.

With Love,

Joshua F.