Daily Digest

Daily Digest 10/6 - More On The Currency Wars, Deficit Solutions, Competitive Devaluation And Gold

Wednesday, October 6, 2010, 9:47 AM
  • Fed's Evans Says Favors "Much More" Easing: Report
  • Fed Chairman Ben Bernanke Warns Against Hasty Action On The U.S. Deficit
  • IMF Chief Warns On Exchange Rate Wars
  • Dollar Falls to Eight-Month Low on Bets Fed Will Buy More Debt
  • U.S. To Press Currency Issues At IMF -- Treasury Official
  • Europe In A Spot Over China's Snub Of Yuan Plea
  • Currency Tensions Flare As Brazil, Japan Take Action
  • Cost Of Irish Borrowing Rises Again
  • EU May Revise Up Greek 2009 Deficit -- Finmin Official
  • Illinois Governor: Education Is Solution To Deficit
  • RBI May Intervene To Check Forex Inflows (India)
  • JeffCo. Commission President Now Backs Bankruptcy Option
  • Apartment Renters Rise From Real Estate Struggles
  • New York Personal Income Falls For First Time In 70 Years
  • L.A. Schools Face $268M Budget Gap For 2011-12
  • Gray Predicts $350-$400 Million Shortfall (D.C)
  • Covanta Energy Sues Town Over Missed Payments (Harrisburg)
  • Competitive Devaluation and Gold, or Gold and the Bond-Bubble(s)

Learn how to protect your wealth against the Three E forces using our 'What Should I Do?' guide

Economy

Fed's Evans Says Favors "Much More" Easing: Report

The Federal Reserve should do "much more" monetary easing to spur a sluggish economic recovery, a top Fed official said in an interview published on Tuesday.

"In the last several months I've stared at our unemployment forecast and come to the conclusion that it's just not coming down nearly as quickly as it should," Chicago Federal Reserve Bank President Charles Evans told the Wall Street Journal.

"This is a far grimmer forecast than we ought to have," he said, for which reason he favors "much more accommodation than we've put in place."

Fed Chairman Ben Bernanke Warns Against Hasty Action On The U.S. Deficit

"Economic conditions provide little scope for reducing deficits significantly further over the next year or two," Mr Bernanke told an audience in Rhode Island. "Indeed, premature fiscal tightening could put the recovery at risk."

IMF Chief Warns On Exchange Rate Wars

Governments are risking a currency war if they try to use exchange rates to solve domestic problems, the head of the International Monetary Fund has warned. The comments by Dominique Strauss-Kahn came before the yen fell as a result of the Bank of Japan shifting towards quantitative monetary easing, cutting its key interest rate and proposing a new fund to buy government bonds and other assets.

“There is clearly the idea beginning to circulate that currencies can be used as a policy weapon,” Mr Strauss-Kahn told the Financial Times on Monday.

Dollar Falls to Eight-Month Low on Bets Fed Will Buy More Debt

The dollar dropped to the lowest level since January against a basket of currencies including the euro and yen on speculation the Federal Reserve will debase the currency by increasing purchases of government debt.

Gold futures jumped to a record $1,341.20 an ounce as the greenback sagged.

U.S. To Press Currency Issues At IMF -- Treasury Official

U.S. officials plan to press their foreign counterparts to avoid interfering in global currency markets at this weekend's International Monetary Fund meetings, warning of the potential effect on the global rebalancing efforts.

A senior Treasury Department official, speaking to reporters at a briefing, said U.S. officials will stress the need for countries to allow for "market-oriented exchange rates" as part of a broader rebalancing of the world economy.

Besides China's undervalued yuan, intervention by South Korea, Brazil and Tokyo in their currencies have raised foreign-exchange tensions, propelling the sensitive issue to the forefront of international talks.

Europe In A Spot Over China's Snub Of Yuan Plea

European officials voiced disappointment on Tuesday that China didn’t go beyond a June pledge to ease the yuan away from a dollar peg, leaving the euro at the mercy of depreciating currencies in China, the US, Japan and Britain.

“If the euro continues to bear a disproportionate burden in the adjustment of global exchange rates, the recovery of the euro-area’s economy might be weakened,” European Union Monetary Affairs Commissioner Olli Rehn told reporters after a Europe-China economic summit in Brussels on Tuesday.

Currency Tensions Flare As Brazil, Japan Take Action

Ultra-low interest rates in Europe and Japan and concerns that the U.S. Federal Reserve is about to embark on another round of money printing that could weaken the dollar have pushed currencies to the top of the agenda for the gathering of finance chiefs from the Group of Seven rich nations on Friday.

The International Monetary Fund, which holds its twice-yearly meeting this weekend, is also expected to discuss foreign exchange moves as part of its mission to get countries working together toward balanced global growth.

Cost Of Irish Borrowing Rises Again

The cost of Irish borrowing has begun to climb again after ratings' agency Moody's put Ireland's debt on review for a possible downgrade. The agency said it took the step due to the cost of fixing the country's banks, the outlook for domestic demand and recent rise in interest rates for Irish debt.....This afternoon, the cost of borrowing for Ireland reached 6.5%, up from 6.3% when the market opened.

EU May Revise Up Greek 2009 Deficit -- Finmin Official

EU statistics agency Eurostat may revise upwards Greece's 2009 budget deficit but this will not significantly impact this year's fiscal gap, a senior official at Greece's finance ministry said on Tuesday.

"Even if there is a significant revision for 2009, the impact on the 2010 deficit will be very small," the official, who did not want to be named, said.

Illinois Governor: Education Is Solution To Deficit

Illinois is facing a $13 billion deficit, but Gov. Pat Quinn isn't offering many details on what more he would do to fix it if he won a full term....In an interview Monday with The Associated Press, Quinn said he'd address the deficit by raising taxes for education. He says better schools will mean a better economy. He's also counting on more money from the federal government, but there's no indication Congress plans more major bailouts.

RBI May Intervene To Check Forex Inflows (India)

The Reserve Bank of India (RBI) said on Tuesday that it may consider steps to control the flow of foreign funds, which has already pushed the rupee to a five-month high of R45 against the US dollar. The RBI’s statement comes less than 24 hours after Finance Minister Pranab Mukherjee on Monday said that there was no immediate need to interfere in the foreign exchange market or cap foreign portfolio inflows.

JeffCo. Commission President Now Backs Bankruptcy Option

In Alabama’s most populous county, and in a region many consider the economic engine, the topic of filing for bankruptcy over Jefferson County’s $3.2 billion sewer debt is once again drawing attention.

This time, one of the key county commissioners adamantly against bankruptcy is changing her tune. On Tuesday, Commission President Bettye Fine Collins told reporters circumstances have changed.

“If we get to the point, when people refuse to cooperate with us, as hard as we have worked on this, then I myself will have no problem in filing for Chapter 9,” Jefferson County Commission President Bettye Fine Collins said.

Apartment Renters Rise From Real Estate Struggles

Apartments likewise offer a solution for some homeowners who can't afford their house, or need to sell.

"They'll be right out, open and front, I have either a bankruptcy on my account, or I'm in the midst of losing or selling my home," Lane says.

"I owned homes all my life," says apartment renter, Lenny Merzel. "I recently had to sell my home for half its original value. It's more convenient living in an apartment."

New York Personal Income Falls For First Time In 70 Years

The recession put a 3.1 percent dent in the personal incomes of New York state residents, who endured their first full-year decline in more than 70 years, according to a report released on Tuesday.

Paychecks or net earnings tumbled 5.4 percent, while dividends, interest and rent slid 8.4 percent, to a grand total of nearly $908 billion, the state comptroller's report said.

L.A. Schools Face $268M Budget Gap For 2011-12

The Los Angeles school district faces a $268 million budget deficit for the next academic year that could affect as many as 3,300 jobs, the superintendent said Tuesday. Superintendent Ramon Cortines said he was proposing to partially cover the shortfall by using $103 million in federal education jobs funding and reducing expenses by $5 million at central headquarters and district offices.

Gray Predicts $350-$400 Million Shortfall (D.C)

D.C. Council member Vincent C. Gray (D), the presumptive mayor, predicted today that he and the other council members will have to close a $350 million to $400 million shortfall before they approve the fiscal 2012 budget next year.

Covanta Energy Sues Town Over Missed Payments (Harrisburg)

Adding to the bevy of legal and financial challenges faced by Harrisburg, Pa., the company that operates the capital city's debt-laden incinerator sued the city Tuesday because of $1.9 million in skipped loan payments....Harrisburg is already being sued by Dauphin County; bond insurer Assured Guaranty Municipal Corp., a unit of Assured Guaranty Ltd.; and bond trustees TD Bank and M&T Bank Corp. over $19 million in skipped bond payments related to the failed revamp of the incinerator.

The incinerator's debt load is $288 million, over four times the city's annual budget.

Competitive Devaluation and Gold, or Gold and the Bond-Bubble(s) (Jeff Nielson...blog)

Unlike “hard assets”, like gold, silver and the raw materials which fuel our world, the banker's paper-assets only retain any value at all as long as the (paper) currencies they are expressed in retain their value. This means that destroying currencies also means destroying all banker-paper and the entire paper-empire of Western bankers. This brings us to the bond market.

What should be terrifying here to any/every person idiotic enough to hold any sovereign debt of the Western-debtors is that the argument being made about these bond-bubbles (and their imminent collapse) is 100% independent of the effect I just described: that destroying currencies must destroy all-banker paper.

11 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4060
Re: Daily Digest 10/6 - More On The Currency Wars, Deficit ...

"Oct. 6 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke is leaving little doubt that he has enough support for more unconventional easing as soon as November.

In one week, New York Fed President William Dudley, the Boston Fed’s Eric Rosengren and Chicago’s Charles Evans advocated further Fed action. Bernanke himself said Oct. 4 that restarting large-scale asset purchases would probably spur growth, after saying last week that the central bank has a duty to aid the economy as U.S. unemployment holds near 10 percent."

"Banks and hedge funds may have to pay out on Anglo Irish Bank Corp. debt insurance after the government insisted holders of its riskiest bonds share the pain of a $47 billion bailout.

The cost of credit-default swaps protecting Anglo Irish’s subordinated notes has more than doubled since Sept. 1 on speculation of a payout. Irish Finance Minister Brian Lenihan said last week that holders of the bank’s 2.45 billion euros ($3.4 billion) of junior notes must take on some of the “burden” of the rescue, raising the prospect of the swaps being triggered."

"LONDON (MNI) - Credit rating agency Fitch downgraded Ireland's long term foreign and local currency issuer default ratings Wednesday to A+ from AA-.

The agency issued the following statement:

"Fitch Ratings has downgraded the Republic of Ireland's (Ireland) Long-term foreign and local currency Issuer Default Ratings (IDRs) to 'A+' from 'AA-' respectively. The Outlooks on the Long-term IDRs are Negative. Fitch has simultaneously downgraded Ireland's Short-term foreign currency IDR to 'F1' from 'F1+'.

The Euro Area Country Ceiling of 'AAA' remains unchanged. The notes issued by the National Asset Management Agency (NAMA) have also been downgraded to 'A+' from 'AA-' and to 'F1' from 'F1+', in line with the sovereign ratings.

"The downgrade of Ireland reflects the exceptional and greater-than-expected fiscal cost associated with the government's recapitalisation of the Irish banks, especially Anglo Irish Bank," said Chris Pryce, Director in Fitch's Sovereign Group. "The Negative Outlook reflects the uncertainty regarding the timing and strength of economic recovery and medium-term fiscal consolidation effort." "

"Equity futures pared earlier gains after companies in the U.S. unexpectedly shed 39,000 workers last month, figures from ADP showed. Economists had forecast 20,000 jobs would be added, according to a Bloomberg survey. The release comes two days before the Labor Department’s monthly payrolls report, which is forecast to show companies added 75,000 people in September. "

..................4A) Private sector job cuts raise Fed easing chances ("as early as next month")

  • Other news, headlines and opinion:

Competitive Currency Devaluation: The Biggest Loser Wins (McAlvany audio....Skip to about 24 minutes into this to listen to the info about the competitive currency devaluations)

Irish Consumer Confidence Plunges as Fiscal Problems Spark `Great Panic'

Japan experts see economy worsening: report

Global banks face funding crunch, IMF warns

Goldman Sachs Says US Economy May Be 'Fairly Bad'

Michigan faces 'spooky' retiree health care costs (Watchdog)

S&P Downgrades $2.04 Billion More Of CDOs On Subprime Woes

US offers mortgage aid to the jobless

Soros Calls For More U.S. Stimulus Spending

Corn, Wheat Extend Gains as Dollar's Drop May Increase Demand

NJ stops 100 road, rail projects

Georgia Sells $654 Million After Postponing a Portion Amid Glut

Businesses will see unemployment insurance rate rise in January '10 (Nevada)

Slovak Government Is Set to Raise Funds Cheaper Than Spain in Bond Sale

State budget $100 million in red in last fiscal year (Louisiana)

UK families hit by cuts in welfare (Video)

Romanian teachers rally over 25% wage cuts

FDIC's Bair wonders about bond bubble caused by longterm ZIRP

Trepp: CMBS delinquency rate tops 9% for first time in September

Medicare drug costs up 10%

City Manager proposes more job cuts to close $51 million budget deficit (Tucson)

Atlantic City agrees to state control over finances

Portugal's economy expected to contract by 1.8 pct in 2011, S&P says

S. Burlington councilors want investigation into pension problems ("city's pension fund is 50 percent short")

IMF Says Public Debt, Fragile Banks Pose Risks to Global Economic Growth

California Faces Gloomy 2011 "Real estate sales in America’s largest state will decline 10 percent this year with hopes for a lackluster 2 percent rise in 2011"

Health reform to worsen doctor shortage: group

SailAway's picture
SailAway
Status: Gold Member (Offline)
Joined: Aug 11 2010
Posts: 404
Re: Daily Digest 10/6 - More On The Currency Wars, Deficit ...

FYI

From The Economist: The global debt clock: $39 trillion and counting

interactive overview of government debt across the plane

http://www.economist.com/content/global_debt_clock&fsrc=nwl

 

 

 

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Medical Costs

Re: Health reform to worsen doctor shortage: group

Here are some COMMON SENSE suggestions I have that stand little to no chance of being implemented:

1. A doctor's malpractice insurance is often $40,000 to $100,000 or more per YEAR, depending on the specialty. That's a terrible onus and burden to bear. Laws to cap damages in lawsuits would be very helpful. Despite what trial lawyers say, most doctors are good people.

2. It's outrageous that pharmacists make $80,000 to $100,000 per year because they require expensive Ph.D's and legally mandated certification to handle and count pills that a doctor tells them to dispense, and pass along information that a computer software program spits out when cross-checking against contra-indications. These things in other countries are handled by pharmacy techs who have a few months of training - it should be handled the same way here. Drugs would be much cheaper.

3. Allow non-profit health insurance companies to compete with for-profits - just as credit unions are allowed to compete against banks.

4. Allow Medicare to purchase medicines and equipment at BULK discounts just as countries like Canada may do - which legislators in Congress specifically have forbidden Medicare from doing because Big Pharma has bought and paid for their souls.

5. More vigilantly investigate and enforce penalties for Medicare fraud, which is estimated to cost tens of billions annually. Start with government verification letters to patients asking them if a doctor really did conduct a pelvic exam on them when all they went to see the doctor about was for the flu (this actually happene to my wife, though the letter was from our private insurance company since we are too young and above the official poverty levels for Medicare). Heavily penalize physicians and their billers.

6. Make hospitals pay for mistakes. (Apparently Medicare was paying for mistakes made by hospitals - like MRSA contracted at a hospital, surgery errors, etc.)

Poet

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Daily Digest 10/6 - More On The Currency Wars, Deficit ...

Construction industry downs tools

By finance reporter Rebecca Hyam

http://www.abc.net.au/news/stories/2010/10/07/3031712.htm?section=justin


Economists say the outlook for the Australian housing industry isn't good. (ABC News: Michael Janda)

Construction activity in Australia slowed for a fourth straight month in September, with the home building sector showing particular weakness.

The latest Performance of Construction Index by the Australian Industry Group and Housing Industry Association fell 2.4 points to 40.8 last month.

That is well below the key 50-point level which indicates growth.

Home building activity fell six points to 32.4, which was its lowest level since March last year.

The Australian Industry Group's director of public policy, Peter Burn, says there was a drop in new orders across the entire construction industry.

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
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Posts: 3998
Re: Daily Digest 10/6 - More On The Currency Wars, Deficit ...

Obama Set To Flee America As US Dollar Faces 50% Devaluation

By: Sorcha Faal, and as reported to her Western Subscribers

 

A grim report prepared for Prime Minister Putin by Russian Ministry of Finance experts warns today that the United States is expected to be ordered by its G-20 counterparts at its October 21-23 meeting in South Korea to devalue the US Dollar by no less than 50% in order to stave off what is widely believed to be an imminent collapse of the World’s economic system.

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
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Posts: 3998
Re: Daily Digest 10/6 - More On The Currency Wars, Deficit ...

Aussie dollar hits record high

 

The Australian dollar has rallied to its highest level since the currency floated in 1983.

It has climbed above 98.7 US cents after the latest rise in jobs smashed expectations and added to the case for an interest rate rise.

The Australian Bureau of Statistics (ABS) says almost 50,000 new jobs were created in September, well ahead of market forecasts.

The unemployment rate held steady at 5.1 per cent as the increase in jobs was offset by more people searching for work.

ICAP chief economist Adam Carr says signs of strength in the labour market increases pressure for a rate hike next month, but the Reserve Bank also has other factors to consider.

"You want to be sure inflation is a problem, you want to be sure that some other global uncertainties have died down before you hike unnecessarily," Mr Carr said.

The Australian dollar rallied on the employment data and has now hit its highest level in 27 years.

ejanea's picture
ejanea
Status: Bronze Member (Offline)
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Posts: 53
Re: Daily Digest 10/6 - More On The Currency Wars, Deficit ...

In the news today...

http://www.theaustralian.com.au/business/markets/australian-dollar-march...

LogansRun's picture
LogansRun
Status: Diamond Member (Offline)
Joined: Mar 18 2009
Posts: 1443
Re: Daily Digest 10/6 - More On The Currency Wars, Deficit ...

Mike,

Where's the actual article for this?  Thanks!

 

Damnthematrix wrote:

Obama Set To Flee America As US Dollar Faces 50% Devaluation

By: Sorcha Faal, and as reported to her Western Subscribers

 

A grim report prepared for Prime Minister Putin by Russian Ministry of Finance experts warns today that the United States is expected to be ordered by its G-20 counterparts at its October 21-23 meeting in South Korea to devalue the US Dollar by no less than 50% in order to stave off what is widely believed to be an imminent collapse of the World’s economic system.

wstanhall's picture
wstanhall
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Joined: Aug 14 2008
Posts: 6
Re: Daily Digest 10/6 - More On The Currency Wars, Deficit ...

sorcha faal is a hoax, google the name and you'll find this is a pseudonym for an american named David Booth who likes to create fake news.

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3124
Re: Daily Digest 10/6 - More On The Currency Wars, Deficit ...
wstanhall wrote:

sorcha faal is a hoax, google the name and you'll find this is a pseudonym for an american named David Booth who likes to create fake news.

That was my initial reaction.  I can't imagine the US accepting "orders" from any non-US entity.

Doug

alcatwize's picture
alcatwize
Status: Bronze Member (Offline)
Joined: Dec 24 2008
Posts: 78
Re: Medical Costs

Poet,

These sound like some good ideas.

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