Daily Digest

Daily Digest 7/13 - More Debt Ceiling Drama, Italy and Spain Under Fire In Debt Crisis, MN Shutdown Debate Over Payroll

Wednesday, July 13, 2011, 9:43 AM
  • Obama: No Social Security Guarantee In August If GOP Doesn’t Back Down
  • Markets May Turn Turbulent Waiting for Debt Deal
  • White House: Debt deal needed in "matter of days"
  • McConnell, Boehner increase criticism of Obama
  • Give Obama New Debt Limit Power, GOP Leader Says
  • Italy, Spain under fire as debt crisis spreads
  • EU Hunts for Debt-Cut Tools in Overhaul to Tame Spreading Crisis
  • Fed Officials Divided on Further Stimulus
  • Greece needs more aid by September 15 - Minister
  • Pa. Budget Cuts Economic Development By 35 Percent
  • Union: prison cuts will result in riots, violence
  • Oregon agency to close 3 sex offender units
  • Budget cuts hit Louisiana state parks, museums
  • 26 Percent Property Tax Hike Approved for DeKalb County
  • Ethiopian Inflation Rate Climbs to 38.1% as Food Prices Soar
  • Ireland cut to 'junk' status on bailout fears
  • Cal State Hikes Tuition 12 Percent
  • Census: Share of children in US hits record low
  • Minnesota shutdown stirs debate over who gets paid
  • Spanish bank IPOs threatened by worsening crisis
  • Euro states should hand over debt powers-Bini Smaghi
  • Seattle May Fix Battered Streets With Big Increase In Car Tab Fees
  • Kane tacks $10 onto traffic fines to fund child center

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Economy

Obama: No Social Security Guarantee In August If GOP Doesn’t Back Down (VIDEO)

For the first time in public, President Obama has warned that crucial benefits for retirees, veterans, and disabled people might not go out early next month if Republicans don't relent in the debt limit fight.

"This is not just a matter of Social Security checks," Obama told CBS News in an interview that will air Tuesday night. "These are veteran's checks, these are folks on disability and their checks. There are about 70 million checks that go out each month. I can not guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it."

Markets May Turn Turbulent Waiting for Debt Deal

The concern, say analysts at Barclays, is the deep spending cuts that will accompany any agreement to raise the U.S. debt limit. Federal spending accounts for 8 percent of gross domestic product, a broad measure of the economy.

A debt limit agreement that includes cutting $2 trillion in spending is sure to weigh on the recovery. Goldman Sachs economists say it could shave 0.8 percentage points off economic growth next year.

White House: Debt deal needed in "matter of days"

The White House said on Tuesday a debt deal needs to be reached in a "matter of days" because of the looming Aug. 2 deadline for raising the national debt ceiling to avoid default.

White House spokesman Jay Carney also rejected as "unfortunate" a comment by Senate Republican leader Mitch McConnell that a real solution to the U.S. debt problem is probably not possible as long as President Barack Obama remains in office.

McConnell, Boehner increase criticism of Obama

The top two Republicans in Congress sought Tuesday to put the onus on President Barack Obama for failure to resolve a fight over how to increase the government's borrowing authority. Senate Minority Leader Mitch McConnell said a deal with Obama is "probably unattainable" and House Speaker John Boehner said the specter of default is "his problem." The unusually blunt and combative language came just hours ahead of another White House meeting aimed at finding an accommodation on a package of spending cuts to accompany an increase the debt limit. It further complicated an already convulsive bargaining environment, with the Aug. 2 debt limit extension deadline fast approaching.

Give Obama New Debt Limit Power, GOP Leader Says

With compromise talks at a vituperative standstill, Senate Republicans unexpectedly offered Tuesday to hand President Barack Obama new powers to avert the first-ever government default threatened for Aug. 2.

Under a proposal outlined by Sen. Mitch McConnell of Kentucky, Obama could request increases of up to $2.4 trillion in the government's borrowing authority in three separate installments over the next year, as long as he simultaneously proposed spending cuts of greater size.

In essence, McConnell's proposal would greatly enhance Obama's authority to avoid a default, while also virtually absolving Republicans of responsibility if one occurred.

Italy, Spain under fire as debt crisis spreads

Key Italian and Spanish government bond yields hit their highest levels in 14 years on Tuesday on worries euro zone policymakers were stalling over efforts to resolve the debt crisis and avert a disorderly Greek default.

Italian 10-year yields jumped more than 30 basis points on the day to break above 6 percent for the first time since 1997, approaching the 7 percent level analysts see as an unsustainable cost for Italy's borrowing needs. They later slipped back below 6 percent on market talk the European Central Bank was buying Italian and Spanish bonds even though bond traders who normally see the trades said there was no sign of such purchases.

EU Hunts for Debt-Cut Tools in Overhaul to Tame Spreading Crisis

European finance chiefs hunted for ways to cut Greece's debt burden, floating ideas from bond buybacks to a temporary default in an overhaul of a strategy that has failed to contain the debt panic.

As a surge in bond yields in Italy and Spain brought the crisis closer to the heart of the euro area, Europe dusted off previously discarded plans under the glare of markets that have lost confidence in governments' ability to still the turmoil. "They are taking it one step a time and you never get ahead of the snowball," said Matt King, Citigroup Inc.'s global credit strategy head in London.

Fed Officials Divided on Further Stimulus

Federal Reserve policy makers disagreed on whether additional monetary stimulus will be needed even if the outlook for economic growth remains weak, minutes of their meeting last month showed.

“A few members noted that, depending on how economic conditions evolve, the committee might have to consider providing additional monetary stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run,” the Federal Open Market committee said in the minutes of its June 21-22 meeting, released today in Washington.

“On the other hand, a few members viewed the increase in inflation risks as suggesting that economic conditions might well evolve in a way that would warrant” the FOMC “taking steps to begin removing policy accommodation sooner than currently anticipated.”

Greece needs more aid by Sept. 15 - minister

Greece needs a fresh tranche of international aid by Sept. 15 and is prepared to push new austerity measures and privatisations to secure the lifeline to deal with its debt crisis, its finance minister said on Tuesday.

Evangelos Venizelos said world financial markets were using Greece as an excuse for an attack on the euro and that whatever Athens did, markets would never be satisfied.

Pa. Budget Cuts Economic Development By 35 Percent

Attracting out-of-state businesses and helping revitalize communities is getting a bit tougher for state officials under a new Pennsylvania budget that cuts more than $114 million from the Department of Community and Economic Development.

Union: prison cuts will result in riots, violence (Connecticut)

Unionized prison guards are warning of inmate riots and other violence inside Connecticut's lockups if the government goes ahead with planned budget cuts.

Gov. Dannel P. Malloy has asked the Department of Correction to cut the equivalent of 1,019 positions and trim $62.9 million from its budget in the current fiscal year and $78 million in the next. The state plans to close the Bergin in Mansfield this summer and the Enfield Correctional Institution by October.

Oregon agency to close 3 sex offender units

As a result of budget cuts, Oregon officials plan to close three cottages that house sex offenders at MacLaren Youth Correctional Facility in Woodburn.

The Oregonian newspaper reports that plans call for transferring about 75 convicted sex offenders to other "close custody" units or possibly to less secure halfway houses run by private nonprofit agencies. Three other youth corrections units are slated to close, two in Salem and one in Albany.

Budget cuts hit Louisiana state parks, museums

In the heart of the summer tourism and vacation season, Louisiana's state-run recreational areas, parks and educational pastimes are shrinking visitors' hours and cutting staff to cope with lessened funding as the new budget year began July 1.

Military history enthusiasts and fans of football great Eddie Robinson can explore museums celebrating their interests only three days each week. Children on summer vacation will have less time to splash and swim in state-run pools. Visitors to Louisiana's historic sites and a trail of small museums crisscrossing the state will find trimmed-down schedules.

26 Percent Property Tax Hike Approved for DeKalb County (Georgia)

Tuesday, the DeKalb County Board of Commissioners approved a 4.35 mill tax hike 4-3. The 26 percent tax hike for the 2011 budget will add $50 million in revenue, according to the AJC. According to Commissioner Elaine Boyer, who voted against the hike, a home worth $300,000 that had no change in value would see a more than $400 tax increase.

“Each dollar that goes to DeKalb County government is one less dollar available to feed a family, fill up a gas tank or look for a job,” Boyer said in a press release. “Utility bills are higher and food is skyrocketing. We are all cutting our budgets, yet the county has refused to embrace layoffs or significant budget reductions.”

Ethiopian Inflation Rate Climbs to 38.1% as Food Prices Soar

Ethiopia's inflation rate climbed to 38.1 percent in June from a year earlier as food costs increased and the central bank boosted the money supply.

Inflation accelerated from 34.7 percent in May, the Central Statistical Agency, based in the capital, Addis Ababa, said in an e-mailed statement today. Food prices surged 45.3 percent in June after rising 40.7 percent in the previous month, it said.

Ireland cut to 'junk' status on bailout fears

Ratings agency Moody's on Tuesday cut Ireland's bonds to junk status and warned of further downgrades as the eurozone economy struggles to pull out of a financial crisis. Moody's Investors Service said it reduced Ireland's government debt ratings by one notch, to Ba1 from Baa3, saying there was a "growing possibility" that the country will need more bailout aid in late 2013 when the current European Union-International Monetary Fund support program ends.

Cal State Hikes Tuition 12 Percent

Tuition will be going up by another 12 percent for undergraduate students at California State University campuses, the university's Board of Trustees decided Tuesday, insisting the hike is necessary due to cuts in state funding.

"The enormous reduction to our state funding has left us with no other choice if we are to maintain quality and access to the CSU,'' Chancellor Charles B. Reed said.

Census: Share of children in US hits record low

Children now make up less of America's population than ever before, even with a boost from immigrant families.

And when this generation grows up, it will become a shrinking work force that will have to support the nation's expanding elderly population — even as the government strains to cut spending for health care, pensions and much else.

Currently, the share of children in the U.S. is 24 percent, falling below the previous low of 26 percent of 1990. The share is projected to slip further, to 23 percent by 2050, even as the percentage of people 65 and older is expected to jump from 13 percent today to roughly 20 percent by 2050 due to the aging of baby boomers and beyond.

Minnesota shutdown stirs debate over who gets paid

While thousands of Minnesota employees go without paychecks because the state government is shut down, many lawmakers are still being paid. And the list of workers whose services are deemed "essential" includes the governor's housekeeper and his personal chef.

The shutdown began its 11th day Monday, keeping 22,000 state employees at home without pay. The impasse has halted 100 road projects, closed 66 state parks, barricaded numerous highway rest stops and cut off many services. In that time, Dayton and GOP leaders have met just twice to discuss their differences.

Spanish bank IPOs threatened by worsening crisis

The worsening euro zone debt crisis threatens to sink the share flotations of two Spanish savings banks needing to raise billions of euros, analysts said on Tuesday. Both Bankia and Banca Civica are offering steeply discounted prices to investors, under pressure to get the deals done because they are seen as a key test of whether Spain is managing to strengthen its banks which were laid low by reckless lending during the country's property boom.

Euro states should hand over debt powers-Bini Smaghi

Euro zone countries should let a supranational organisation issue their sovereign debt, European Central Bank Executive Board member Lorenzo Bini Smaghi said in a German newspaper on Tuesday.

"In a certain framework, the euro zone states should pass the emission of sovereign bonds to a supranational organisation," Bini Smaghi said in a guest contribution for Handelsblatt newspaper. "That would ensure that each individual country would not take on more debt than agreed in the framework of stability programmes. We would have a real debt brake."

Seattle May Fix Battered Streets With Big Increase In Car Tab Fees

Though the city of Seattle committed $3 million to fix potholes and broken pavement this week, city leaders are considering a huge increase in the fee to license cars to help with the costs of fixing battered streets.

Seattle car owners already pay an extra $20 fee for their license tabs, and now the mayor and City Council are thinking about adding an additional $80 to that fee. “Wow, that's a lot. I mean considering we're in hard times, I guess who needs more taxes, right?” said driver Dewayne Daviow.

Kane tacks $10 onto traffic fines to fund child center (Illinois)

The cost of speeding and other petty offenses in Kane County is going up by $10, after the County Board passed a resolution Tuesday to add a fee that would fund the Child Advocacy Center.

The county already added a $30 additional fee to criminal and misdemeanor offenses, following state guidelines on funding for child centers. Several board members Tuesday objected to the additional fine, saying a nonprofit organization should not be funded through the traffic system.

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8 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Online)
Joined: Jul 30 2009
Posts: 2846
Dagong is likely to downgrade US rating; Bernanke on QE3

"The US' sovereign credit rating is likely to be downgraded regardless of whether the US Congress reaches an agreement on raising its statutory debt limit, Chinese rating agency, Dagong Global Rating Co Ltd, said on Monday.

"If the debt limit is raised and the public debt continues to grow, it will further damage the US' debt-paying ability, which is a key factor in Dagong's evaluation, and we will consider lowering its ratings accordingly," said Guan Jianzhong, chairman and CEO of Dagong.

"If the raised limit fails to pass and the US faces default, the rating will be immediately and substantially downgraded," he said.

According to Guan, the downgrading is really just "a matter of time and extent"."

"Compared with a year earlier, import prices rose 13.9 percent, the biggest 12-month advance since August 2008, today’s report showed. "

"At the end of 2010, French banks carried $392.6 billion in Italian government and private debt, according to data from Basel, Switzerland-based Bank for International Settlements. That’s the most for financial institutions from any foreign country and more than double held by German lenders. "

"While the Federal Reserve believes that the temporary shocks holding down economic activity will pass, the central bank is examining several untested means to stimulate growth if conditions deteriorate, including another round of asset purchases, dubbed QE3, Fed chairman Ben Bernanke said Wednesday in remarks prepared for the House Financial Services Committee. Bernanke discussed three approaches to further easing in his prepared remarks. One option, Bernanke said, would be for the Fed to provide more "explicit guidance" to the pledge that rates will stay low for "an extended period." Another approach would be another round of asset purchases, or quantitative easing, or for the Fed to "increase the average maturity of our holdings." Finally, the Fed could also reduce the quarter percentage point rate of interest that it pays to banks on their reserves..."

  • Other news, headlines and opinion:

Public sector pension liabilites balloon to £1.1 trillion (UK)

Japan’s Nuclear Crisis Extends To Agriculture Sector

Bernanke May Tell Congress Deficits Imperil Decline in U.S. Borrowing Cost

Berlusconi Vows to Hasten Passage of Italy’s $56 Billion Deficit Reduction

IMF urges Italy to take 'decisive' action on deficit

Quinn’s Medicaid reduction means five-month payment delay (Illinois)

China's Three-Year Local Government Bonds Undersubscribed

A Small City’s Depleted Pension Fund Rattles Rhode Island

Germany digs in heels over Friday summit on Greece

Irish 10-year bonds jump to 14.1%

Los Angeles' bond rating downgraded

Six New Jersey cities on watch for downgrade: Moody's

An Interview With 2012 Presidential Candidate Herman Cain (McAlvany audio...listen to their first few minutes, when they talk about the real employment and inflation numbers. Lots of info on the Euro crisis.)

Struggling U.S. Capitals Seek More From Tax-Exempt Landowners

Spain May Need Deeper Spending Cuts: Salgado

U.K. Unemployment Claims Climbed Last Month at Fastest Pace Since May 2009

U.S. Default May Trigger Commodity Rally, UBS Securities Says

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1844
Foreclosure Fraud Investigators Forced To Resign

It appears that even the perception of law and order is now tossed out the window... Why bother keeping up the pretense, right?

Foreclosure Fraud Investigators Forced Out At Attorney General's Office
"A lead foreclosure fraud investigator for the state said she and a colleague were forced to resign from the Florida attorney general's office, unexpectedly ending their nearly yearlong pursuit to hold law firms and banks accountable. Despite positive performance evaluations, Edwards said the two were told during a meeting with their supervisor in late May to give up their jobs voluntarily or be let go. Edwards said no reason was given for the move."
http://www.palmbeachpost.com/money/foreclosures/foreclosure-fraud-invest...

Poet

MarkM's picture
MarkM
Status: Platinum Member (Offline)
Joined: Jul 22 2008
Posts: 755
  "Even though government

"Even though government officials have stated that consuming small amounts of the contaminated beef would not harm human health,..."

Apparently, radioactve beef is ok in Japan.

Nice.

alcatwize's picture
alcatwize
Status: Bronze Member (Offline)
Joined: Dec 24 2008
Posts: 78
Really good article on Gold

A new posting is on the web site below.  This posting summarizes a lot of the previous writings.  This is a must read!

http://fofoa.blogspot.com/

alcatwize's picture
alcatwize
Status: Bronze Member (Offline)
Joined: Dec 24 2008
Posts: 78
Brilliant Quote

Here is a quote from the web site...

And to complete FOA's quote at the top of this section:

"My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationists get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless dollars, of course, but no deflation in dollar terms! (bigger smile)"

alcatwize's picture
alcatwize
Status: Bronze Member (Offline)
Joined: Dec 24 2008
Posts: 78
Brilliant Quote

Here is a quote from the web site...

And to complete FOA's quote at the top of this section:

"My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationists get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless dollars, of course, but no deflation in dollar terms! (bigger smile)"

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Online)
Joined: Jul 30 2009
Posts: 2846
Budget deficit on track to top $1 trillion

"The federal budget deficit is on pace to break the $1 trillion mark for the third straight year, ratcheting up the pressure on the White House and Congress to reach a deal to rein in spending.

The deficit totaled $971 billion for the first nine months of the budget year, the Treasury Department said Wednesday. Three years ago, that would have been a record high for the full year.

With three months to go, this year's deficit will likely top last year's $1.29 trillion gap, according to an estimate by the Congressional Budget Office. But it is expected to come in below the record $1.41 trillion reached in 2009. The budget year ends Sept. 30."

"Greece suffered another sovereign downgrade on Wednesday, when the Fitch agency slashed its credit worthiness by three notches further into junk status and only one grade above default.

The agency cut Greece's rating from B+ to CCC, bringing it in line with the other two major agencies, Moody's and Standard and Poor's, which had downgraded the country's bonds to a similar level last month.

Greece relies on loans from a euro110 billion ($155 billion) international bailout from other eurozone countries and the International Monetary Fund, and discussions are under way for a second bailout to keep the country's crisis from destabilizing other larger European economies."

Bernanke: U.S. would pay bondholders after Aug 2

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Published Jul 13 2011 by

Published Jul 13 2011 by Decline of the empire, Archived Jul 13 2011
http://energybulletin.net/stories/2011-07-13/tin-production-%E2%80%94-classic-ca\
se-limits-growth

Tin production — A classic case of limits to growth
by Dave Cohen

The tin production story is out there is in plain sight, but only those directly involved in supplying the tin ore, refining it or consuming tin metal are paying any attention. Bloomberg's Bear Market in Tin Ending as Shortages Mean PT Timah's Profit Advances 55% explains what's going on now, and what's been going on for years now

Bloomberg alludes to the Bronze Age at one point. Tin is more than 31 times rarer than copper in the earth's crust and the two metals were combined to make bronze as long as 5,500 years ago, according to the U.S. Geological Survey. This year, global demand may rise 0.5 percent to an all-time high of 366,000 tons, exceeding supply by 6,000 tons, Barclay's Capital estimates. Based on last year's average price, that would value consumption at almost $7.5 billion. Although we can not trace the vagaries of tin ore mining and refining over 5,500 years, we can assert with increasing confidence that the world will never produce more tin than it is producing right now. And thus an expansionary phase that started in the Bronze Age is coming to an end.

Our depleting tin ore reserves are a classic example of limits to growth. This might be a good time to start paying attention. Last year was also a good time to pay attention. As was the year before that...

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