Daily Digest

Daily Digest 6/27 - The 1913 Birth Of The Fed, China Willing To Buy Hungarian Bonds, Last Warning Before Autumn 2011 Shock

Monday, June 27, 2011, 10:56 AM
  • Currency Bill A Law (aka, The Birth Of The Fed)
  • Treasury urges British banks to take big losses to help Greece avoid meltdown
  • Pimco’s El-Erian Says U.S. Debt Default Might Have ‘Catastrophic’ Effect
  • Global systemic crisis – Last warning before the Autumn 2011 shock, when $15 trillion of financial assets go up in smoke
  • Goldman Sachs Boosts Brazil Hiring as Lender Targets Private-Equity Deals
  • China willing to buy Hungarian bonds
  • China Says It Will Bail Out Insolvent European Countries
  • Japanese fear authorities hide ugly truth about nuclear risks
  • In Minot, N.D., Flood Waters Stop Rising

Our 'What Should I Do?' guide has steps to cook, see & stay warm in times of power outage

Economy

Currency Bill A Law (aka, The Birth Of The Fed) (Jason L.A.)

Great and universal as was the satisfaction over the passage of the tariff bill, the feeling of relief as then shown was moderate by comparison with the subdued jubilation felt everywhere over the signing of the currency bill this week by President Wilson. The struggle over the measure has been severe and prolonged, and nothing but the recognized necessity of ultimate action and the dominant influence of the National Executive has availed to evolve, out of the previous chaos of conflicting views, a constructive and practical measure.

Treasury urges British banks to take big losses to help Greece avoid meltdown (pinecarr)

Britain's banks will be urged by the Treasury to take multimillion pound losses as part of Europe-wide plans to prevent a catastrophic meltdown of the Greek financial system.

Despite the assurance of David Cameron that the UK taxpayer will not pay towards the latest EU bailout of Greece, Treasury officials are working behind the scenes to persuade British banks holding Greek bonds to take a "haircut" now as the best way to avert a potential global crisis. Britain's banks hold about £2.5bn of Greek bonds.

Pimco’s El-Erian Says U.S. Debt Default Might Have ‘Catastrophic’ Effect (pinecarr)

Pacific Investment Management Co. LLC Chief Executive Officer Mohamed El-Erian said a short-term default by the U.S. on its debt might have “catastrophic” legal consequences.

“We would be in the land of the unpredictable” if lawmakers fail to reach an agreement to raise the $14.3 trillion debt ceiling and the U.S. misses a payment “simply because of the technical linkages,” El-Erian said in an interview on CNN’s “Fareed Zakaria GPS” program, scheduled to air today.

Global systemic crisis – Last warning before the Autumn 2011 shock, when $15 trillion of financial assets go up in smoke (pinecarr)

We estimated in 2009 that the world had about 30 trillion USD in ghost assets. Almost half went up in smoke in the six months between September 2008 and March 2009. For our team, it's now the other half’s turn, the 15 trillion USD of ghost assets remaining, purely and simply vanishing between July 2011 and January 2012. And this time, it will also involve government debt, unlike 2008/2009 where it was mostly private players who were affected. To gauge the extent of the coming shock, it is worth knowing that even US banks are starting to reduce their use of US Treasury Bonds to guarantee their transactions for fear of the increasing risks weighing on US government debt.

Goldman Sachs Boosts Brazil Hiring as Lender Targets Private-Equity Deals (pinecarr)

Brazil, Latin America’s biggest economy, is key for Chief Executive Officer Lloyd Blankfein’s strategy “to be Goldman Sachs in more places,” said Wainstein, who along with Andre Laport, head of equities for Latin America, became the first Brazilian partners at Goldman Sachs last year.

China willing to buy Hungarian bonds (pinecarr)

While Wen didn't specify the amount of Hungarian bonds China would be willing to buy, Hungary was among several European countries including Greece, Spain and Portugal, to which China has extended a helping hand with bond purchases.

"I have confidence in European economic development," said Wen, who left for the UK on Saturday. "China is a long-term investor in Europe's sovereign debt market. In recent years we have increased, by a quite big margin, our holdings of euro bonds.

China Says It Will Bail Out Insolvent European Countries (pinecarr)

All this means is that China will do everything in its power to prevent the ECB from launching an outright unsterilized monetization episode, which will double the amount of importable inflation (plunging EUR) to hit the Chinese domestic economy, and destabilize the already shaky stability, so critical for the Chinese communist party. And since the USD and the CNY are pegged, this has the added benefit of devaluaing the CNY instead even more if not against the USD, then against the CNY, which is now importing European sovereign risk and will continue to do so, until China finds itself in the same lock out as half of Europe currently.

Environment

Japanese fear authorities hide ugly truth about nuclear risks (pinecarr)

The Japanese government is starting radiation checkups for more than two million people living near the crippled Fukushima plant. But many citizens of the country fear those in charge prefer face-saving public ignorance to life-saving knowledge.

In Minot, N.D., Flood Waters Stop Rising (jdargis)

The river remains wide and destructive. As it presses through low lying city neighborhoods and many other smaller communities along its winding banks as it loops down from Canada, officials are still working to protect critical infrastructure, such as the few remaining bridges, while shoring up the emergency levees keeping parts of the city dry.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

15 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4165
Portuguese, Spanish, Irish, and Italian 10-Year Yields (Mish)

"Eurozone sovereign debt yields pushed higher across the board today. Irish debt has topped 12% for the first time, Italian debt topped 5% and most Euroland debt yields are at all times high spreads compared to Germany.

Significantly, yields are at fresh new highs for Spain, Italy, Ireland and Portugal.

If by any chance you are wondering whether to believe EU officials or the bond markets, I suggest you believe the bond markets.

The charts below are delayed, but the quotes are accurate. Stress increases in Eurozone."

Spain 10-Year Government Bond Yield

Portugal 10-Year Government Bond Yield


Italy 10-Year Government Bond Yield

Ireland 10-Year Government Bond Yield

Greece 10-Year Government Bond Yield

Greece 2-Year Government Bond Yield

  • Other news, headlines and opinion:

 

China cities owe $1.65 trln, some 'may default'

China fund chief: U.S. must reduce deficit

Papandreou Faces Parliament on Second Austerity Call as EU Deadline Looms

Japan's Italian Bond Holdings Could Pressure Euro

Italy government tensions rise over austerity plans

Fed Seen Buying $25 Billion a Month in Treasuries After QE2 Comes to End

China's Wen signals doubt inflation goal can be met

Obama joins talks as US faces default

US default could be disaster: PIMCO

Greek debt restructure inevitable: PIMCO's El-Erian

Obama Targets $72 Billion Business Tax Break; Republicans Balk

U.S. to Take $100 Billion 'Hit' on Lower Bond Ratings, FT Says

Spain Banks Hide EU50 Billion in Bad Assets, Confidencial Says

Spain's Reyal Urbis in talks to refinance debt

Egypt Sells 39% Less Debt Than Planned at a Treasury-Bill

India's Fuel Tax Cut Threatens Deficit Target

Wisconsin municipalities start dealing with less under new state budget

Greece austerity package faces obstacles (Video)

Sovereign Debt Risk Surges to Record on Greek Default Concern

Yield on Spanish 10-year bonds higher

Belarus says foreigners can only fill tanks using hard currency

Japan could face a third "lost" decade-Moody's

Japan delays on fiscal reform are credit negative -Moody's

Italy bond sale sees high costs amid Greek crisis and Italy's treasury bond yields hit record

Santa Barbara County Grand Jury Wades into Unfunded Pension Liability Pools

Minn. budget talks end abruptly as shutdown looms

RI panel to begin brainstorming fixes for $7.3-billion unfunded pension liability

BIS Says Central Banks Need to Start Increasing Rates to Contain Inflation

Los Angeles Dodgers file for bankruptcy

Greek banks lost 8 pct of deposits in 2011-Moody's

Greek contagion may be worse than Lehman: D.Bank CEO

Irish Yields Reach Record on Greek Contagion; German Bunds Fall

California Fiscal Year Looms Without Plan as Brown Tax Falters

affert's picture
affert
Status: Silver Member (Offline)
Joined: Sep 22 2008
Posts: 100
http://fastlane.dot.gov/2011/

http://fastlane.dot.gov/2011/06/us-bike-route-growing.html

"In my latest "On the Go" video and in a blog last week, I talked about how bicycles are not just for recreation, but also for transportation.  Today, as schools across America are letting out for summer vacation and families are making travel plans, I want to remind everyone that you can use your bicycles for both transportation and recreation on our U.S. Bicycle Route System."

I tend to notice all the negative news out there, so it is very refreshing to hear some good news.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Alien Metrorologist spreads Alarm and Despondency

Oh well. Here we go . On with the fisticuffs.

Worlds weather gone wonky with good graphics.

http://www.wunderground.com/blog/JeffMasters/article.html?entrynum=1831

Every year extraordinary weather events rock the Earth. Records that have stood centuries are broken. Great floods, droughts, and storms affect millions of people, and truly exceptional weather events unprecedented in human history may occur. But the wild roller-coaster ride of incredible weather events during 2010, in my mind, makes that year the planet's most extraordinary year for extreme weather since reliable global upper-air data began in the late 1940s. Never in my 30 years as a meteorologist have I witnessed a year like 2010--the astonishing number of weather disasters and unprecedented wild swings in Earth's atmospheric circulation were like nothing I've seen. The pace of incredible extreme weather events in the U.S. over the past few months have kept me so busy that I've been unable to write-up a retrospective look at the weather events of 2010.

Dr Jeff Masters comes with good credentials. He teaches Meteorology.

One could hypothosize that he is in cahoots with nefarious conspiritors determined to impliment an alien world government.    

 

Aaron M's picture
Aaron M
Status: Diamond Member (Offline)
Joined: Oct 22 2008
Posts: 2369
Alien Meteorologists

Arthur,

That's a pretty well written and compelling document.
Not doubting it when I say this, but I'd like to see one for "every" year.

It's definitely interesting. Thanks for the link.
Cheers,

Aaron

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1326
What hubris!

[quote=Currency Bill A Law]

When the new financial regime is in running order there will be supreme satisfaction with the thought that from this time forward the financial disorders which have marked the history of the past generation will pass away forever.

I think that last line says it all! I'm sure glad the government has saved us from financial disorder.  Are y'all supremely satisfied? Tongue out

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2606
Tribute to Mrs. Wamsley
rhare wrote:

[quote=Currency Bill A Law]

When the new financial regime is in running order there will be supreme satisfaction with the thought that from this time forward the financial disorders which have marked the history of the past generation will pass away forever.

I think that last line says it all! I'm sure glad the government has saved us from financial disorder.  Are y'all supremely satisfied? Tongue out

No.

Being averse to split infinitives I am however, satisfied supremely.

PS - Mrs. Wamsley was my 4th grade English teacher

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Little old agent provocateur me.

No fisticuffs?

How about this piece from Russia Today to get the juices flowing.

Meanwhile, those affable American CEOs – not one of whom spent a single night pondering their indiscretions through prison bars – are relaxing on the proverbial beach while the people who rescued them can not even get a two-week vacation from their jobs. Even China, the other great oppressor state, still gives its workers more vacation time than American employers.

Take that!

Actually, I had difficulty deciding which juicy paragraph to quote. They are all good enough to provoke a bar room brawl.

http://rt.com/politics/corporate-america-mafia-russia-kagan/

 

 

Aaron M's picture
Aaron M
Status: Diamond Member (Offline)
Joined: Oct 22 2008
Posts: 2369
No sir

No fistacuffs there either.

In fact, I see the damage and benefits of corporate America every day.
I don't have a problem calling a spade a spade - my problem is confusing corporate America with civil America.
Americans, for the most part, are decent and hardworking folks who don't deserve the reputation they've earned through their TV proxies. Hell, I don't know a single person who acts like someone off T.V.

Corporatism in our system has created a disparity and a critical one at that.
That said, I think countries who decry America's tenacity with regards to wealth would gladly accept the same wealth without strings attached.

By the way - of all the Global Warming/Climate articles posted here - that one so far has been far and away the most convicing.

Cheers,

Aaron

Tall's picture
Tall
Status: Platinum Member (Offline)
Joined: Feb 18 2010
Posts: 564
Populations around US nuke plants soar

As America's nuclear power plants have aged, the once-rural areas around them have become far more crowded and much more difficult to evacuate. Yet government and industry have paid little heed, even as plants are running at higher power and posing more danger in the event of an accident, an Associated Press investigation has found. Populations around the facilities have swelled as much as 4 1/2 times since 1980, a computer-assisted population analysis shows.  

But some estimates of evacuation times have not been updated in decades, even as the population has increased more than ever imagined. Emergency plans would direct residents to flee on antiquated, two-lane roads that clog hopelessly at rush hour.

And evacuation zones have remained frozen at a 10-mile radius from each plant since they were set in 1978 - despite all that has happened since, including the accidents at Three Mile Island, Chernobyl and Fukushima Dai-ichi in Japan.

Meanwhile, the dangers have increased.

http://hosted.ap.org/dynamic/stories/U/US_AGING_NUKES_PART_3?SITE=COBOU&SECTION=HOME&TEMPLATE=DEFAULT

 

Macs's picture
Macs
Status: Bronze Member (Offline)
Joined: May 27 2011
Posts: 40
Pssst, DIAP...

.... that's not an infinitive, split or otherwise. Don't worry, I won't snitch to Mrs Warmsley Wink

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2606
Aha......
Macs wrote:

.... that's not an infinitive, split or otherwise. Don't worry, I won't snitch to Mrs Warmsley Wink

You descriptivist objector you.  Cool

I was more following the full infinitive argument - even though to is not used in rob's sentence, split from satisfied.  There is a case to be made based on classical language rules, but rob used "ya'll"  and I'm pretty sure 'southern redneck' doesn't qualify as a classical language.

Yet........

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1326
"THEY" make the rules..
DIAP wrote:

There is a case to be made based on classical language rules, but rob used "ya'll"  and I'm pretty sure 'southern redneck' doesn't qualify as a classical language.

I had a discussion a few years back with my neice.  She kept insisting that this mystical "THEY" created the rules of language - apparently English is my second language - I'm still trying to figure out my first. SmileI pointed out to her that the "THEY" is "US".  Correct language is determine by how it it used.    So want to make something be correct, just use it and convince others to do the same.

So y'all better get with the program! Wink  I'm just ahead of my time....

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Volcanic Punch
Arthur Robey wrote:

Oh well. Here we go . On with the fisticuffs.

Worlds weather gone wonky with good graphics.

http://www.wunderground.com/blog/JeffMasters/article.html?entrynum=1831

I still want to punch you Arthur Surprised, but not for posting Jeff Masters. I read his weather underground blog everyday during hurricane season and highly recommend his work. In his post this morning I particularly liked:

Looking back through the 1800s, which was a very cool period, I can't find any years that had more exceptional global extremes in weather than 2010, until I reach 1816. That was the year of the devastating "Year Without a Summer"--caused by the massive climate-altering 1815 eruption of Indonesia's Mt. Tambora, the largest volcanic eruption since at least 536 A.D. It is quite possible that 2010 was the most extreme weather year globally since 1816.

Imagine, humanity is putting so much crap in the air that it could make a mega-volcano insecure.

phecksel's picture
phecksel
Status: Silver Member (Offline)
Joined: May 24 2010
Posts: 204
Arthur Robey wrote: Oh well.
Arthur Robey wrote:

Oh well. Here we go . On with the fisticuffs.

Worlds weather gone wonky with good graphics.

http://www.wunderground.com/blog/JeffMasters/article.html?entrynum=1831

Every year extraordinary weather events rock the Earth. Records that have stood centuries are broken. Great floods, droughts, and storms affect millions of people, and truly exceptional weather events unprecedented in human history may occur. But the wild roller-coaster ride of incredible weather events during 2010, in my mind, makes that year the planet's most extraordinary year for extreme weather since reliable global upper-air data began in the late 1940s. Never in my 30 years as a meteorologist have I witnessed a year like 2010--the astonishing number of weather disasters and unprecedented wild swings in Earth's atmospheric circulation were like nothing I've seen. The pace of incredible extreme weather events in the U.S. over the past few months have kept me so busy that I've been unable to write-up a retrospective look at the weather events of 2010.

Dr Jeff Masters comes with good credentials. He teaches Meteorology.

One could hypothosize that he is in cahoots with nefarious conspiritors determined to impliment an alien world government.    

 

That was a well written summary!  Here's the permalink http://www.wunderground.com/blog/JeffMasters/comment.html?entrynum=1831

Can a mod maybe update Arthur's link?

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
The manipulation of Oil.

Hmmm.

In this piece by Max Keyser I understand Leah McGrath Goodman to be saying that the oil price is established and manipulated off the market. Further she says that the Oil price that we see is only used as a benchmark by the counterparties at their negotiations.

In a nutshell she says that the price discovery mechanism is broken.

http://rt.com/programs/keiser-report/keiser-report-episode-159/

Could theoildrum.com be a manipulative tool for the counterparties?

And by the way Max interviews Prof Steve Keen on his previous episode no 158 in which my favourite economics professor says that wages have to be increased to enable the population to participate in the economy. I shall present his opinion to my union.

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