Tag Archives: David Stockman

Stockman: “Trump Will Create A Debt Crisis Like Never Before” by Tyler Durden

There may be some fireworks around the legislative battles over the next debt ceiling increase. From Tyler Durden at zerohedge.com:

Having warned that “everything will grind to a halt on March 5th” due to the under-appreciated debt-ceiling debacle that looms over Washington, and exclaiming that “what is going on today is complete insanity,” former Reagan Budget Director David Stockman is rapidly losing faith that anything can be done…

“I’ve thrown in the towel because he’s not paying attention and he’s not learning anything and he’s making ridiculous statements.”

Reflecting on Trump’s address to Congress, and what we know of The White House agenda, Stockman told Fox Business’ Neil Cavuto:

“We don’t need a $54 billion increase in defense when the budget already is ten times bigger than that of Russia. We don’t need $6 trillion of defense spending over the next decade because China is going nowhere except trying to keep their Ponzi scheme together.”

Stockman rejected Trump’s dynamic scoring hope…

“Trump is so deep in fiscal la-la-land, he won’t even find the wrong envelope… he is saying crazy things.”

And wasn’t sold on Speaker Ryan’s Obamacare plan.

“If you look at the Ryan draft that came out over the weekend, it’s basically Obamacare-like. It’s not really repealing anything,” he said.

“It’s basically reneging and turning the Medicaid expansion into a block grant, turning the exchanges into tax credits [and] it’s still going to cost trillions of dollars.”

Last week, Trump’s Treasury Secretary Steven Mnuchin, told FOX Business the administration is “focused on an aggressive timeline” to produce a tax reform plan by August Opens a New Window. , but in Stockman’s opinion, tax reform won’t happen this year.

To continue reading: Stockman: “Trump Will Create A Debt Crisis Like Never Before


The Draghi Derangement: $2 Trillion Euro Government Bonds Trading At Negative Yield, by David Stockman

From David Stockman, at davidstockmanscontracorner.com:

That investors anywhere in this age of fiscal profligacy would pay to own the notes and bonds of sovereign states is a testament to the financial deformations of modern central banking. But the fact that nearly $2 trillion of debt issued by European governments is currently trading at negative yields——now that’s a flat-out derangement. After all, the aging, sclerotic economies of the EU have been making a bee line toward fiscal insolvency for most of the last decade.

So it goes without saying that this giant agglomeration of pay-to-own government debt is not reflective of an outbreak of fiscal rectitude or any other rational economic development. It’s purely an artificial trading result stemming from central bank destruction of every semblance of honest price discovery. In this case, the impending ECB purchase of $70 billion of government debt and other securities per month for the next two years has transformed the financial casinos of Europe and elsewhere into a front runner’s paradise.

As today’s Bloomberg piece tracking Europe’s $2 trillion of exuberant irrationality makes clear, sovereign bond prices are soaring because traders are accumulating, not selling, in anticipation of the ECB’s big fat bid hitting the market in the weeks ahead:

“It is something that many would not have pictured a year ago,” said Jan von Gerich, chief strategist at Nordea Bank AB in Helsinki. “It sounds very awkward in a sense, but if you look at it more, the central bank has a deposit rate in negative territory, and there’s a huge bond-buying program coming. People are holding on to these bonds and so you don’t have many willing sellers.”

Needless to say, this is the opposite of at-risk price discovery; it amounts to shooting fish in a barrel. Never before have speculators been gifted with such stupendous, easily harvested windfalls. And these adjectives are not excessive. The hedge fund buyers who came to the game early after Draghi’s “anything it takes”ukase have enjoyed massive price appreciation, but have needed to post only tiny slivers of their own capital, financing the balance at essentially zero cost in the repo and other wholesale funding venues.

Indeed, the more risk, the bigger the windfall. German yields have now been driven below the zero bound on all maturities through seven years, emboldening speculators to move out on the risk curve. So doing, they have gorged on peripheral nation debt and have been generously rewarded. In the case of the 10-year bond of Ireland—-a state which was on the edge of bankruptcy only a few years ago—-leveraged speculator gains are now deep into three figures.


To continue reading: The Draghi Derangement

Stockman Likes SLL Review of Stockman’s The Great Deformation

David Stockman featured Straight Line Logic’s review of his book The Great Deformation, The Corruption of Capitalism in America on his website davidstockmanscontracorner.com and on his “Best of the Week” feature.

Link to the original review on Straight Line Logic

Link to Stockman’s Best of the Week

Entomology 101, A Review of David Stockman’s The Great Deformation by Robert Gore

by Robert Gore

David Stockman tells the truth and knows what he is talking about. Either virtue disqualifies him for Washington or the major media, so he blogs (davidstockmanscontracorner.com) and writes books. An insider as President Reagan’s budget director and then a partner in private equity powerhouse Blackstone Group, Stockman now loses friends and influences malcontents from his chosen perch on the outside. Ignore his book, The Great Deformation, The Corruption of Capitalism in America, at your peril. It chronicles the deterioration of the welfare-warfare state and reveals the economic, financial, social, and political horror show America has become. This polemic perforates the media’s stock-market fueled happy talk, war propaganda, and endless trivia that divert attention from our dysfunctional economy and corrupt, bankrupt government. Continue reading