Daily Digest

Daily Digest 7/16 - The Debt Ceiling End Game, U.S. Tax Inquiry Disclosed By Credit Suisse, The Arab Awakening 6 Months On

Saturday, July 16, 2011, 9:40 AM
  • Debt Ceiling: What's The End Game For Republicans?
  • Europe Looks for Hope in Bank Test Results
  • Credit Suisse Discloses U.S. Inquiry Over Taxes
  • Wake Up America
  • 15 Examples That Show Many Americans Have Become So Desperate That They Will Do Just About Anything For Money
  • Israeli experts: Demise of Syria regime is only a matter of time
  • The Arab Awakening: Six Months On
  • As Gulf Tourism Rebounds, BP Seeks to Lower Payments

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

Economy

Debt Ceiling: What's The End Game For Republicans? (jdargis)

Maybe you think the deadline is artificial and Treasury is just exaggerating. I have been very much less than impressed by the arguments I have seen to this effect, because most of the people making them seem to be under the impression that on August 2nd Treasury can just start playing accounting games, when August 2nd is in fact the date when Treasury says it will have exhausted all the accounting games that we've previously used to finesse the debt ceiling. But even if it were true, so what? How does extending the crisis another month get us any closer to a deal? What's going to change?

Europe Looks for Hope in Bank Test Results (jdargis)

The banks’ stress test results come at a time of cresting market anxiety, spurred in particular by worries of a strike by domestic buyers for Italian government bonds. On Thursday, the yields on two-year Italian bonds — an accurate gauge of short-term market sentiment — were at 4 percent, higher than Spain’s and double what they were a year ago. (For Greece, two-year money is available at a rate around 30 percent.)

Credit Suisse Discloses U.S. Inquiry Over Taxes (jdargis)

Subject to our Swiss legal obligations, we will continue to cooperate with the U.S. authorities in an effort to resolve these matters,” the bank said.

Jeffrey A. Neiman, a former federal prosecutor who had been assigned to the UBS case, called Credit Suisse’s disclosure “déjà vu all over again.”

Wake Up America (Ilene)

The EU has called emergency meetings to respond to yet another banking/credit crisis. The European rescue fund now in place does not have enough assets to cover Italy’s problems. The cost of insuring against default on Portuguese, Irish and Greek government debt rose to records. In a classic act of misdirection, Italy is ordering short sellers to disclose their positions, because after all, the entire European credit crisis was caused by analysts who identified over valued stocks. A whiff of desperation hangs over this diversionary action, reminscent of similarly foolish attempts done in 2008 in the US.

15 Examples That Show Many Americans Have Become So Desperate That They Will Do Just About Anything For Money (June C.)

In Corpus Christi, Texas thieves have actually been breaking into funeral homes in order to steal the embalming fluid.

Israeli experts: Demise of Syria regime is only a matter of time (jdargis)

Protests have also increased recently in the suburbs of Damascus, though the regime has managed to head off demonstrations in the center of the capital. Israeli defense analysts stress the increase in the demonstrations' size and the protesters' greater willingness to risk their lives.

The Arab Awakening: Six Months On (jdargis)

A good reason to back the Libyan rebels at first was humanitarian—to forestall the savage reprisals against the people of Benghazi whom Colonel Qaddafi had sworn to hunt down as “rats” and “cockroaches”. But there has all along been a pragmatic cause, too: Libya’s Tunisian and Egyptian neighbours, though too fragile to embroil themselves openly in the fray, are strongly behind the rebels—and dream of a democratic northern strip of Africa stretching from Morocco to Egypt. Both Tunisia and Egypt would benefit hugely if Libya was reborn. Trade with oil-rich Libya and the resumption of remittances would be a welcome relief. The fall of Colonel Qaddafi would boost democracy and youthful energy across the Arab world.

As Gulf Tourism Rebounds, BP Seeks to Lower Payments (jdargis)

Since the spill last year, messages from the coast have been somewhat mixed, with some businesses arguing that it is continuing to hurt the coast and that more assistance is needed, and others, often led by tourism officials, emphasizing the positive to entice visitors and consumers.

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9 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4066
Debt Deal Seems Far As Deadline Draws Near
  • In my opinion the two most important headlines as we start the weekend:

Debt Deal Seems Far As Deadline Draws Near (NPR Audio)

Italian, Spanish, Irish, Portuguese Bonds Decline as Debt Crisis Spreads

Dscott's picture
Dscott
Status: Member (Offline)
Joined: Apr 27 2011
Posts: 10
Peak Copper

Peak Copper

resourceinvestingnews.com/19274-peak-copper.html

Oil production: runnning to stand still

blogs.wsj.com/source/2011/07/13/oil-production-running-to-stand-still

The dangerouse fedback loop between peak oil peak debt part 1

www.businessinsider.com/the-dangerous-feedback-loop-between-peak-oil-and...

The dangerouse fedback loop between peak oil peak debt part 2

oilprice.com/Energy/Crude-Oil/The-Relationship-between-Peak-Oil-and-Peak-Debt-Part-2.html

DavidC's picture
DavidC
Status: Silver Member (Offline)
Joined: Sep 29 2008
Posts: 243
Debt Deal Seems Far As Deadline Draws Near

Saxplayer,

Important headlines, but do you really feel that the debt ceiling WON'T be raised? After all, it has been in 93 of the last 94 years (if I remember the figures correctly). Despite all the political posturing I think it will be raised.

DavidC

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
DavidC
DavidC wrote:

Saxplayer,

Important headlines, but do you really feel that the debt ceiling WON'T be raised? After all, it has been in 93 of the last 94 years (if I remember the figures correctly). Despite all the political posturing I think it will be raised.

DavidC

this looks like they're lining up:

 House Republicans brace for compromise on debt - Republican leaders in the House have begun to prepare their troops for politically painful votes to raise the nation's debt limit, offering warnings and concessions to move the hard-line majority toward a compromise that would avert a federal default. For weeks, GOP conservatives, particularly in the House, have issued demands about what they would require in exchange for their votes to increase the debt limit. In negotiations with the White House, Republican leaders have found those demands were unattainable. Unwilling to risk the economic and political consequences of a federal default, which could come as early as Aug. 2, they have started the difficult process of standing down.At a closed-door meeting Friday morning, GOP leaders turned to their most trusted budget expert, Rep. Paul D. Ryan of Wisconsin, to explain to rank-and-file members what many others have come to understand: A fiscal meltdown could occur if Congress fails to raise the debt ceiling. House Speaker John A. Boehner of Ohio underscored the point to dispel the notion that failure to allow more borrowing is an option. Freshman Rep. Steve Womack (R-Ark.) said the presentation about skyrocketing interest rates that could result from downgraded bond ratings was "sobering."
rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
unemployment
Number of the Week: 5% Unemployment Could Be Over a Decade Away - 162: Number of months it would take at this years pace of job growth for unemployment rate to fall to 5%. U.S. employers have added 757,000 jobs to their payrolls in the first half of this year. That actually wouldn’t be so bad if there weren’t so many people out of work. The June unemployment rate of 9.2% was well above the 5% it logged in December 2007, when the recession got under way. What would it take to get the unemployment rate back down to 5%? Much stronger growth in jobs — or a whole lot of time. Here’s a back-of-the-envelope calculation: The unemployment rate, based on a Labor Department survey of households, is the share of the work force (people with jobs plus people seeking jobs) who are unemployed. Out of a workforce of 153.4 million people, there were 14.1 million unemployed in June. Next, we have to factor in labor force growth. If we assume that it grows at the same pace as the Census projects the working age population – people aged 16 and over – will increase by about 1.4 million people next year. With employment growing just a smidge faster than the labor force, then, the unemployment rate would still be a disappointingly high 8.9% in June 2012.

this doesnt account for the low labor force participation rate, which is lowest in a quarter century, before women entered the workforce…so those who arent counted will likely reenter the workforce & stretch out the hypothetical time frame even longer...

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4066
DavidC
DavidC wrote:

Saxplayer,

Important headlines, but do you really feel that the debt ceiling WON'T be raised? After all, it has been in 93 of the last 94 years (if I remember the figures correctly). Despite all the political posturing I think it will be raised.

DavidC

zerohedge has some news stories on if it will be raised. This isn't the only risk, though, as the S&P warning states:

"John Chambers, chairman of Standard & Poor's sovereign ratings committee, told Reuters in an interview that "this is the time" for the White House and Republicans to reach a credible budget agreement to tackle the country's long-term debt problems.

"If you get a small agreement, that will lead to a downgrade," Chambers warned."

dps's picture
dps
Status: Martenson Brigade Member (Offline)
Joined: Jun 27 2008
Posts: 442
DavidC
DavidC wrote:

Saxplayer,

Important headlines, but do you really feel that the debt ceiling WON'T be raised? After all, it has been in 93 of the last 94 years (if I remember the figures correctly). Despite all the political posturing I think it will be raised.

DavidC

You can't solve a "too much debt" problem by adding more debt ... even if you try it 100 times.  ... dons

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Medical Insurance Industry and the Poisoned Chalice.

Why would the GOP want the poisoned chalice?

If I were a member of the GOP I would make things catastrophic, and then forfit the elections,

The one who pays the piper calls the tune. I heard O;Bama say that in order to fix the problem Americans would have to pay more to the medical Insurance industry. Right.Undecided

 

jpitre's picture
jpitre
Status: Gold Member (Offline)
Joined: Mar 3 2009
Posts: 366
Copper discovery

Shortage of copper and high prices are with us and may continue for some time to come. The good news is that there appears to be more copper to be discovered. For instance, near Superior, Arizona close to where we live, there is a flurry of activity in the proving up of copper reserves that are the extension of a silver mine originally started in the 1800s. Later operated as a copper mine after the silver played out until 1995 when it closed due to dwindling ore reserves and low prices. New exploration started a few years ago and what may be the largest copper deposit ever found is being proven. Seems like every core sample they take expands the size. The grade is running 2 to 3% (many of the large copper deposits are being mined as grades of .5%). Several sizable areas are running as high as 8% copper. 

The companies (Resolution Copper - Rio Tinto & partners) involved are investing nearly a billion $ to bring it into production  about 8 years from now. This one deposit is suggested to have enough copper to supply the entire US needs for over 35 years. The downside is that it is 7,000 feet below the surface and will be costly to extract. The original economic studies concluded that at $1.35 per pound, it would be profitable - imagine the profitability at today's pricing. Costs will increase  with increasing enegry prices however.

I haven't seen much in the news about this, however it seems to me to be some good news in a general scenario of gloom, so thought it was worth commenting upon.

Jim

 

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