The stock markets had a good month in November. But Glenn warns, "enjoy it while it lasts." Glenn reviews how the Federal Reserve's actions — especially its quick pivot from allowing debt to pile up to slamming on the breaks — could likely lead to a massive crash. "We are running out of options," he says, as the yearly interest on our national debt skyrockets toward $1 trillion. So, Glenn gives you the real stats while the Fed says it has everything under control ...
Below is a rush transcript that may contain errors
GLENN: Here's a -- here's an interesting story. Remember from investors.com. Can we just remember who got us here? Okay.
Listen to this.
The ten-year Treasury yield set off roaring alarms about the US budget. When it surged to 5 percent last month.
Now those warnings look like a fire drill. Federal Reserve rate hikes seem to be over for now.
Giving the bond market a reprieve, and allowing powerful S&P rallying to resume. But enjoy it while it lasts.
The next debt scare may be the real thing, and it could rock the US economy and stock market.
Here's why: The fed's historic turnabout from enabling massive budget deficits to directing the sharpest rate hikes in 40 years. Has seemingly broken the budget.
The Treasury market stress is almost certain to return.
And the era of fed quantitative easing and near zero interest rates, promoted care-free fiscal policies, that led to the US racking up $20 trillion in federal debt since 2008.
Exhibit A in the case of the broken federal budget. It's the deficit surge in fiscal 2023. Which ended September 30th.
Unemployment was near a record low. And GDP growth was strong.
Under those conditions, the budget deficit usually shrinks.
But this year, it doubled. To $2 trillion. And that's only if you ignore accounting for Biden student loan forgiveness that was struck down.
The Federal Reserve's fingerprints are all over the red ink. Fed spent more than 100 billion in interest on its bond portfolio to the Treasury in fiscal 2022.
It had to halt those payments last year as bond prices fell. Having let inflation out of the bag at an 8.7 cost of living adjustment stoked a 130 billion-dollar increase.
In Social Security checks. Another $100 billion, went to FDIC bailouts for the Silicon bank.
To top it off, the Fed hiking is the key rate, past 5 percent. Forced Uncle Sam to pony up an extra 177 billion in interest, on the debt.
Here's the thing: Interest on the debt was 711 billion dollars.
Went up in 2023. 711 billion dollars. Up from 534 billion, in 2022. 413 billion in 2021.
We're now running at a rate for this month, which will total 825 billion.
So we have doubled the interest payments. Now, we're probably 12 months. Twenty months away from a trillion dollars, in debt interest only.
Remember, the entire budget that we can pay for, cover our bills. If we are living within our means, is $2 trillion. The rest of it, we borrow.
What are you willing to cut, by a trillion dollars. Just to pay the interest?
We are running out of options.
The fed says they have it all under control.
Nobody is buying our bonds.
The fed is buying our bonds. So when you hear, oh, S&P 500.
Deutsche Bank just said it will go up. We will have a surge. Enjoy it while it lasts.
The problem is: Only the ones who have tons of money in the stock market. And those are the ones who usually get all the bailouts.
And they get all the government contracts, and everything else.
They're the ones in the stock market. They're the ones making all of the money.
If you have money in investment, good for you.
Good for you. But it is eventually going to go away.
And guess who will win?
All of those who are connected.
All of those who are connected. You know, I like it in -- I like the old days, when companies did something. And you could go, oh, that's really good.
I want to invest. And their stock would go up. Oh. And that's really bad. And their stock would go down.
Oh, the economy is really bad. Stock would go down. Now it doesn't work that way anymore.
The only one I've seen Walt Disney. Walt Disney marked its 100th anniversary with Wish.
Cost them $200 million to produce. It brought in over the five-day weekend, $19.5 million.
Wow. Now, by contrast, Frozen brought in 125. Frozen 2. Not even Frozen 1. Frozen 2, brought in $125 million over the same period.
Indiana Jones, the dial of destiny, gone. The Little Mermaid, nothing. The Marvels, worse than The Hulk. How is that possible?
And the only thing worse than that is Haunted Mansion. The only thing worse than that is Wish! It couldn't happen to a nicer group of people.
These are the kinds of things that we used to see in America. You disconnect from reality, you lose.
I don't know when we're going to see the first government bailout of Disney.
But I'm waiting for it.