Daily Digest

Daily Digest 7/14 - Making The U.S. Dollar Safer, Judges Vow To Shut 11 Courts, Electrodes For Organic Solar Cells

Thursday, July 14, 2011, 9:42 AM
  • The Kaiser Report - Episode 163
  • Making the U.S. Dollar Safer: Return Of Your Money
  • Washington Could Learn a Lot from a Drug Addict
  • The Show Must Go On
  • America On The Precipice
  • The Big Banks Are Waging Warfare Against the People of the World
  • Judges Vow To Shut 11 Courts
  • The Start-Up of You
  • Most Hospitals Face Drug Shortages
  • Bernanke: Money for Nothing and Dollars For Free
  • Graphene Electrodes For Organic Solar Cells
  • Fluids From Hydraulic Fracturing Killed Trees, Study Says
  • Big Ag's Latest Attempt to Chill Free Speech

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

Economy

The Kaiser Report - Episode 163 (Guy M.)

In their weekly dig behind the financial news headlines, Max Keiser and co-host Stacy Herbert report on declaring war on ratings agencies and buying refrigerators to save the economy. In the second half of the show, Max talks to Professor Emeritus, Guy McPherson, who has exited the empire to build a post-carbon community.

Making the U.S. Dollar Safer: Return Of Your Money (Joe P.)

As a money market fund manager, where do you invest when only paltry, or negative yields are available? How about European banks? What? Don’t U.S. money market funds only invest in U.S. dollar-denominated securities? As we pointed out in a recent analysis, many taxable non-government money market funds ($1.6trn of the total money market assets) are heavily invested in U.S. dollar denominated commercial paper issued by European banks. How does almost 5% of total assets invested in commercial paper issued by BNP Paribas, the French bank with billions in exposure to Greek government debt, sound? In fact, our analysis found that 50% of total money market fund exposure to European financial institutions appears to be common; we have seen over 70% exposure. If you believe these institutions are too big to fail, you might not need to worry; but why engage in the risk that you are wrong when the reward (yield) is so small? That’s exactly the question institutional investors have been asking recently.

Washington Could Learn a Lot from a Drug Addict (Phil H.)

Washington's chronic overspending is just like a junkie's addiction to drugs. Unless the cycle of addiction is broken, our economic and unemployment situation will continue to suffer. Washington is out of time. To avoid hitting rock bottom, Washington must cut spending today. To spread this message, Washington Could Learn a Lot has created this video.

The Show Must Go On (JimQ)

I’ll let you in on a secret. The debt ceiling will be raised. Sorry to ruin the surprise, but this entire sordid episode has nothing to do with our dire economic situation. It is solely about the 2012 elections. Both parties are conducting overnight polling on which talking points are working best in convincing the sheeple that their party is less likely to be blamed. Posturing and polling are what passes for leadership in America. It is a disgusting display and will contribute to the ultimate collapse that is headed our way like a Japanese Bullet Train.

America On The Precipice (TG)

Without painful remedial action, the debt is expected to climb beyond $US20 trillion within five years, and hit $US25 trillion by 2021, just as the US is facing unprecedented challenges that threaten its global economic standing.

The Big Banks Are Waging Warfare Against the People of the World (Claire H.)

As I noted in 2009, a leading progressive economist that the true purpose of the bank rescue plans is "a massive redistribution of wealth to the bank shareholders and their top executives". As the wholly non-partisan Australian economist Steve Keen notes: "This is the biggest transfer of wealth in history", as the giant banks have handed their toxic debts from fraudulent activities to the countries and their people The big banks blew bubbles - using fraud - because that's the only way they could make obscene profits.

Judges Vow To Shut 11 Courts (David B.)

The request for a moratorium on judicial appointments was submitted in a separate letter sent to the governor by the seven justices of the Supreme Judicial Court, four of whom are Patrick appointees. After years of budget cuts, they said, the court system does not have enough support personnel for additional judges and would have to lay off three staff members for each judge appointed.

The Start-Up of You (David B.)

These are the fastest-growing Internet/social networking companies in the world, and here’s what’s scary: You could easily fit all their employees together into the 20,000 seats in Madison Square Garden, and still have room for grandma.

Most Hospitals Face Drug Shortages (David B.)

More than 80% of hospitals surveyed by the American Hospital Association reported they had to delay treatment, and nearly 70% said patients received less effective substitute drugs.

Three out of four hospitals reported rationing or restricting the use of drugs in short supply. For some drugs, such as a leukemia drug called cytarabine, there are no effective substitutes.

Bernanke: Money for Nothing and Dollars For Free (Joe P.)

Bernanke firmly embraces the U.S. dollar as a monetary policy tool; in our analysis, he has worked on weakening the dollar in both word and action. In the past, Bernanke has testified that going off the gold standard has helped the U.S. recover faster from the Great Depression than other countries that held on to the gold standard for longer. Bernanke has argued that a weak dollar is not inflationary (we disagree). The action of buying government securities by a central bank causes such securities to be intentionally overvalued; rational investors may look overseas for less manipulated returns.

Energy

Graphene Electrodes For Organic Solar Cells (Johnny Oxygen)

While the specific characteristics of the graphene electrode differ from those of the ITO it would replace, its overall performance in a solar cell is very similar, Kong says. And the flexibility and light weight of organic solar cells with graphene electrodes could open up a variety of different applications that would not be possible with today’s conventional silicon-based solar panels, she says. For example, because of their transparency they could be applied directly to windows without blocking the view, and they could be applied to irregular wall or rooftop surfaces. In addition, they could be stacked on top of other solar panels, increasing the amount of power generated from a given area. And they could even be folded or rolled up for easy transportation.

Environment

Fluids From Hydraulic Fracturing Killed Trees, Study Says (Mike K.)

he study, by researchers from the United States Forest Service, was published this month in the Journal of Environmental Quality. It said that two years after liquids were legally spread on a section of the Fernow Experimental Forest, within the Monongahela National Forest, more than half of the trees in the affected area were dead.

Big Ag's Latest Attempt to Chill Free Speech (guardia)

For many good food advocates, the end of a legislative session often means disappointment that their bills to help fix our broken food system did not pass. But in some states, when lawmakers go home we should really all breathe a big sigh of relief.

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."

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saxplayer00o1's picture
saxplayer00o1
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China Must Quickly Diversify From Dollar: PBoC Advisor

"China should speed up diversification of its $3.2 trillion foreign exchange reserves away from dollar assets to hedge against risks of the U.S. currency's possible long-term decline, an advisor to the People's Bank of China said on Thursday.

"We should accelerate diversification in reserve investment," Xia Bin, an academic member of the central bank's monetary policy committee, told Reuters in an interview."

"China has urged the U.S. Administration to take measures to protect the interests of investors.

The statement followed a warning by the rating agency Moody’s to place the United States’ triple-A credit rating on review for a possible downgrade if the country’s national debt threshold is no raised by August 2, which may lead to a partial default."

"China needs to "seriously assess the risks" of its holdings of U.S. Treasuries, Yu Bin, director of the macroeconomic research department of the State Council's Development Research Center, said today.

The U.S. economic outlook is "worrisome," he said at a briefing in Beijing."

"Italy sold five-year bonds at the highest yield in three years and the government was forced to call a confidence vote on an austerity package that aimed to show the nation can tame Europe’s second-largest debt burden.

The Treasury priced 1.25 billion euros ($1.8 billion) of the bonds, the maximum set for the sale, to yield 4.93 percent, the highest since June 2008 and up from 3.9 percent at the previous auction on June 14. It was the first sale of longer- term debt since Italy’s 10-year yield reached a 14-year high of 6.02 percent on July 12."

"Irish bond yields hit record highs again today following Moody’s downgrade of Irish debt to junk status on Tuesday evening.

Irish 10-year bonds fell for a seventh consecutive day, raising yields by 12 basis points to a euro-era record of 14.11 per cent.

European stock markets enjoyed a relief rally yesterday as investors speculated that the recent sell-off sparked by Italian contagion fears may have been overdone, and that a solution to the currency bloc’s sovereign debt crisis may yet be found.

However, this was short-lived as Greek and Italian debt markets were today again on the slide. Greek two-year notes slumped, raising yields on the securities by 207 basis points to 32.11 per cent.

Italian bonds also fell, with yields on 10-year government securities increasing five basis points to 5.59 per cent while two-year note yields rose seven basis points to 4.13 per cent."

"Greece needs an additional 71 billion euros ($100.6 billion) in European Union aid and 33 billion euros from private creditors to weather its debt crisis, the IMF said Wednesday.

The International Monetary Fund , in a report on the state of its May 2010 rescue loan to Athens, said it intended to continue its financing program but noted stiff challenges to recovery."

"Rating agency Moody’s has downgraded the Government-guaranteed debt ratings of five Irish financial institutions to junk status, indicating that Allied Irish Banks, Bank of Ireland, Anglo Irish, Irish Life Permanent (ILP), and EBS Building Society now all carried a ”negative outlook”.

It follows Moody’s downgrade of Irish Government debt to junk status on Tuesday evening."

"Moody's Investors Service placed 7,000 municipal ratings on review for possible downgrade after it warned the U.S. may lose its Aaa investment grade.

The ratings company said in a note that potential downgrades would affect $130 billion in municipal debt including mortgage-backed bonds secured by the U.S. or agencies such as Fannie Mae and Freddie Mac.

Moody's said any downgrade to the U.S.'s Aaa investment grade would automatically cut those 7,000 municipal ratings by the same degree. A second category of municipal lenders, those whose repayment is less directly linked to the federal government, also would be reviewed for possible action, Moody's said."

"California’s state treasurer said Wednesday that he’s preparing contingency plans to borrow as much as $5 billion for the state in case the federal government misses its Aug. 2 deadline to raise the nation’s debt ceiling.

The state was preparing to take out short-term loans to cover day-to-day state operating expenses if the federal government begins to run out of money to pay its bills, Treasurer Bill Lockyer told the Sacramento Press Club.

“We’re hoping to do our borrowing before Aug. 2,” he said."

"Standard & Poor's has privately told U.S. lawmakers and top business groups that it might cut the U.S. credit rating if the government fails to make any of its expected payments -- including Social Security checks -- even if it makes all its debt payments, the Wall Street Journal reported citing people familiar with the matter.

The U.S. Treasury Department has said if the debt ceiling is not raised by Aug. 2 it will have to start prioritizing payments."

"Finance Minister Evangelos Venizelos says Greece faces "no danger of bankruptcy" and the banking system is "totally safeguarded," even if the country is rated in selective default after a new international rescue package.

EU plans to give Greece a second bailout may cause ratings agencies to cut Greece's credit grade to selective default, in which debt repayment terms are not fully met.

Some experts fear this could shake markets in the country and across Europe."

"Global financial markets were rocked by a breaking wave of debt dangers across the globe on Thursday, ranging from the eurozone to the United States and Japan, dealers said.

European stocks fell but the euro clawed back some losses.

Investors are on red alert over the eurozone debt crisis which has already dragged down Greece, Ireland and Portugal -- all of which were rescued with vast bailouts -- and is spreading tentacles towards Italy and Spain.

Greece urgently needs the support of a second rescue package.

Moody's ratings agency fired an ominous shot at the United States overnight, warning of a possible downgrade to its top triple-A debt assessment, triggering comment that such a development could trigger a disastrous chain of events.

The warning shot came after agencies downgraded Greek and Irish debt to junk status.

There is also concern about huge amounts of public debt being carried by Japan, and more generally, but for differing reasons, about political grip in the European Union, the United States and Japan.

Mounting debt tensions sent gold rocketing to another record high level at $1,594.10 an ounce on the London Bullion Market on Thursday as investors flocked to the safe-haven precious metal."

"The head of Japan's banking lobby said on Thursday that Tokyo Electric could become insolvent if parliament fails to pass a bailout bill by the end of September, when the operator of the crippled Fukushima nuclear plant closes books for the fiscal first half."

 " Italy has reached breaking point and is set to hold four fixed-rate bond auctions on Thursday, aiming to sell €3-€5billion (£2.6-£4.4billion) of debt.

Success at the auctions is essential so that Italy, the EU’s third largest economy, can demonstrate it is not in danger of losing access to market funding.

However, the debt sale would still leave Italy short of the estimated €175billion (£154billion) it needs to fund itself for this year.

The sale is also crucial for the stability of markets around the eurozone, including Britain.

The International Monetary Fund has warned Italy that it had to ensure ‘decisive implementation’ of spending cuts. Italian government debt is now more than 120 per cent of the country’s annual economic output."

"Greek Prime Minister George Papandreou said the euro zone and International Monetary Fund must quickly approve a second bailout for his country to avoid its economic reform plans collapsing, a German newspaper reported.

"The current mood doesn't help us to get through this crisis," Papandreou told the Financial Times Deutschland, in a brief preview of an interview to be published in the paper's Thursday's edition."

"The number of homes taken back by lenders in the first half of this year fell 30 percent compared with the same 2010 period, the result of delays in foreclosure processing that threaten to stall a U.S. housing recovery.

Banks seized 421,212 homes in the first six months of the year, down from 529,633 between January and June last year, foreclosure listing firm RealtyTrac Inc. said Thursday.

The decline reflects lenders taking longer to move against homeowners who have fallen behind on their mortgage payments. The banks are working through foreclosure documentation problems that first surfaced last fall and an ensuing logjam in some state courts. Lenders also have put off on taking action against delinquent borrowers as U.S. home sales have slowed this year.

As the processing delays mount, however, so has the backlog of potential foreclosures — homes that otherwise would have been repossessed by lenders this year.

RealtyTrac estimates that 1 million foreclosure-related notices that should have been filed by banks this year will be pushed to next year."

"The long-standing support from petrodollars for Western financial markets is gradually waning as oil-rich countries favor recycling their windfall revenues closer to home and away from low-yielding developed economies mired in the debt crisis.

Big oil producing countries provided a key source of stability and liquidity for developed markets in the past, and their purchases of Western assets also helped mitigate the impact of higher energy costs on economic growth.

Petrodollar savings flows over the coming year are expected to hit $70 billion a month, surpassing the level reached during the boom of 2005-2007, as the global economy resumes a recovery after the current soft patch.

But low real and expected rates of return in developed markets and debt crises in the euro zone and the United States will dissuade oil producers from making investments in the West."

  •  Other news, headlines and opinion:

Dollar to Slide as Reserve Currency Status Is ‘Undermined’, Sumitomo Says

Bank of China Exec: China's Forex Reserves "Excessive"

Nassau to Ask for Control Board, State’s Help in Refinancing Debt

Italian Banks Face Higher Borrowing Costs as Debt Crisis Enters New Phase

Budget woes force postal consolidation

Impacts of Minnesota shutdown piling up and State layoffs hit family's two breadwinners

Egypt seen struggling to finance spending this year

Four associated Las Vegas companies file for bankruptcy

First 328 Layoff Notices for State Employees Reported, Thousands More Expected (CT)

Several Thousand Jobs To Go As 3 Big Firms Said Likely To Wield Axe

Assisted living homes evict residents due to Medicaid reimbursement cuts (Montana)

Spain's Salgado says quick action needed on Greece

Italy Too Big to Bail Out as Crisis Enters ‘New Phase’: Chart of the Day

Greek Debt Deadlock Spreads Fears

California Professors are jumping ship

Belarus official inflation breaks 10-year record

Hollywood ups budget gap to $38 million

Proposed Social Security, Medicare changes draw fire from AARP and others

Nortel pensioners to see average 18% cut in benefits

Unfunded Liabilities: Oregon’s Hidden Debt

U.K. Long-Term Finances ‘Unsustainable’ Without Action, Budget Office Says

Euro Crisis in ‘Uncharted Territory’ Menaces East, EBRD Top Economist Says

Bars Count Shots as Minnesota Shutdown Threatens Booze Reserves

India’s Inflation Accelerates to 9.44%, Adding to Interest-Rate Pressure

Beef Contaminated by Radiation Intensifies Food-Safety Concerns in Japan

Bankers Pessimistic About Future of Mortgage Delinquencies

Los Angeles braces for weekend of "Carmageddon"

As copper soars, thieves extract a price

Underwater U.S. homeowners assess options: Stay or walk away (Video)

Italy money supply plunge flashes red warning signals (By Ambrose Evans-Pritchard)

Doug's picture
Doug
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Reinhart and Rogoff

http://www.bloomberg.com/news/2011-07-14/too-much-debt-means-economy-can-t-grow-commentary-by-reinhart-and-rogoff.html

Quote:

Several studies of financial crises show that interest rates seldom indicate problems long in advance. In fact, we should probably be particularly concerned today because a growing share of advanced country debt is held by official creditors whose current willingness to forego short-term returns doesn’t guarantee there will be a captive audience for debt in perpetuity.

Those who would point to low servicing costs should remember that market interest rates can change like the weather. Debt levels, by contrast, can’t be brought down quickly. Even though politicians everywhere like to argue that their country will expand its way out of debt, our historical research suggests that growth alone is rarely enough to achieve that with the debt levels we are experiencing today.

While we expect to see more than one member of the Organization for Economic Cooperation and Development default or restructure their debt before the European crisis is resolved, that isn’t the greatest threat to most advanced economies. The biggest risk is that debt will accumulate until the overhang weighs on growth.

Historical Precedents

At what point does indebtedness become a problem? In our study “Growth in a Time of Debt,” we found relatively little association between public liabilities and growth for debt levels of less than 90 percent of GDP. But burdens above 90 percent are associated with 1 percent lower median growth. Our results are based on a data set of public debt covering 44 countries for up to 200 years. The annual data set incorporates more than 3,700 observations spanning a wide range of political and historical circumstances, legal structures and monetary regimes.

We aren’t suggesting there is a bright red line at 90 percent; our results don’t imply that 89 percent is a safe debt level, or that 91 percent is necessarily catastrophic. Anyone familiar with doing empirical research understands that vulnerability to crises and anemic growth seldom depends on a single factor such as public debt. However, our study of crises shows that public obligations are often hidden and significantly larger than official figures suggest.

Nothing earth shaking, but always good to get  little scholarly confirmation.

Doug

Arthur Robey's picture
Arthur Robey
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Open secret. $US is toast.

Australian mines are being paid by the Chinese in Remimbi.

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horstfam
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From the Postal article, the truth is stranger than fiction

"The Postal Service is consolidating to save on our costs and improve our efficiency," DeSarro said. USPS has faced growing deficits with the rise of electronic communication, such as email and social media, DeSarro said. He added that the mail volume carried by the Postal Service has dropped by 20 percent over the last 5 years.

The federal organization, which receives no tax funding, posted an $8.51 billion deficit last year. DeSarro said it will likely post another $8 billion deficit this year.

"We are seeing a number of consolidation processes throughout the country," he said, adding that consolidation efforts have saved the Postal Service $140 million to date. "We've had great success so far. It allows us to keep the cost of postage — the cost of mailing for the American public — low."

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Damnthematrix
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Open secret. $US is toast.
Arthur Robey wrote:

Australian mines are being paid by the Chinese in Remimbi.

I'd like to see a source for that gem please.....  Is it actually true?

Mike

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Damnthematrix
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another nail in US$ coffin?

Fortescue now transacting in Chinese yuan

Andrew Forrest, CEO of the Australian iron ore miner says the group has started transacting in renminbi and is exploring the possibilities of being paid for some of its ore in renminbi

Posted:  Tuesday , 12 Jul 2011

PERTH (Reuters)  - 

Australia's third-biggest iron ore miner, Fortescue Metals Group , has started selling some of its ore in Chinese yuan, Chief Executive Andrew Forrest said on Tuesday.

"Fortescue has started transacting in renminbi. We are exploring the possibilities of being paid with renminbi and purchasing equipment in renminbi from our renminbi bank accounts," Forrest told a meeting of business leaders in Perth.

Fortescue sells the lion's share of its iron ore to Chinese steel mills and until now only accepted payment in U.S. dollars.

The company completed a business-to-business transaction in yuans on Friday but deal did not involve the sale of iron ore, Chief Operating Office Nev Power said.

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phecksel
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horstfam wrote: "The Postal
horstfam wrote:

"The Postal Service is consolidating to save on our costs and improve our efficiency," ...

The federal organization, which receives no tax funding, posted an $8.51 billion deficit last year. DeSarro said it will likely post another $8 billion deficit this year.

...consolidation efforts have saved the Postal Service $140 million to date. "We've had great success so far. It allows us to keep the cost of postage — the cost of mailing for the American public — low."

Damn, I need that calculator for my bills :(

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dps
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Posts: 442
horstfam wrote:"The Postal
horstfam wrote:

"The Postal Service is consolidating to save on our costs and improve our efficiency," DeSarro said. USPS has faced growing deficits with the rise of electronic communication, such as email and social media, DeSarro said. He added that the mail volume carried by the Postal Service has dropped by 20 percent over the last 5 years.

The federal organization, which receives no tax funding, posted an $8.51 billion deficit last year. DeSarro said it will likely post another $8 billion deficit this year.

"We are seeing a number of consolidation processes throughout the country," he said, adding that consolidation efforts have saved the Postal Service $140 million to date. "We've had great success so far. It allows us to keep the cost of postage — the cost of mailing for the American public — low."

Let me get this straight:

140 / 8,000 = 0.0175

So, they saved 1.75% of what they expect to lose and they are just all excited!

nice laugh.  ... dons

saxplayer00o1's picture
saxplayer00o1
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Posts: 4064
S&P Places U.S. 'AAA/A-1+' Rtgs On CreditWatch Negative

"Standard & Poor's has placed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings on the United States of America on CreditWatch with negative implications.

-- Standard & Poor's uses CreditWatch to indicate a substantial likelihood of it taking a rating action within the next 90 days, or in response to events presenting significant uncertainty to the creditworthiness of an issuer. Today's CreditWatch placement signals our view that, owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days."

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Arthur Robey
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Posts: 3936
Is it actually true?Partly

Is it actually true?

Partly true.

I heard it on the ABC news. After I posted, my friend told me that only one iron ore mine is accepting Remimbi.

So far.

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