Daily Digest

Daily Digest 7/27 - U.S. Likely To Lose AAA Rating, Downgrade Will Add $100B To Funding Costs, L. America Learns Price Of Growth

Wednesday, July 27, 2011, 9:42 AM
  • U.S. likely to lose 'AAA' rating, say economists
  • Debt ceiling wiggle room runs out August 2: White House
  • Downgrade seen adding $100 billion to U.S. funding costs
  • White House threatens veto of Boehner debt bill
  • Reid says his plan will satisfy debt rating agencies
  • Latin America learns the price of growth
  • One in five Aussies have no spare money, finds Nielsen poll
  • Worried by inflation, India hikes rates by 50 points
  • 'Perfect storm' causing high vegetable prices - growers
  • Ala. county readies for possible record bankruptcy
  • Fresno Firefighters Agree to Pay Cut; Police Say Negotiations Not on the Table
  • U.S. Postal Service says it might shutter 3,700 post offices
  • Italian and Spanish borrowing costs rise as Greek bailout fails to convince

Follow our steps to prepare for a world after peak oil, such as how to store & filter water

Economy

U.S. likely to lose 'AAA' rating, say economists

The United States will lose its top-notch "AAA" credit rating from at least one of the major ratings agencies, said a slim majority of economists in a Reuters poll that also found wrangling over the debt ceiling has damaged the economy. Even though the poll showed only a one in five chance of another recession in the next year, 30 out of 53 economists surveyed over the past two days said the U.S. will lose its AAA credit rating from one of the three big ratings agencies -- Standard & Poor's, Moody's and Fitch. President Barack Obama's Democrats and their Republican rivals have one week left to agree a deficit-cutting plan in exchange for a hike in the legal debt limit, or risk a potentially devastating government debt default in August.

Debt ceiling wiggle room runs out August 2: White House

The United States has no wiggle room on the debt after next week's default deadline, White House spokesman Jay Carney said on Tuesday, adding he expected a deal to be reached through compromise before then.

"The United States hit its debt limit in May, and since May the Treasury Secretary ... has exercised all the wiggle room available to him and that runs out on August 2nd," Carney said.

Downgrade seen adding $100 billion to U.S. funding costs

A downgrade of the United States' AAA credit rating is a bigger risk than a default and could over time add up to 0.7 percentage point to bond yields, members of a U.S. securities industry group said on Tuesday.

"That's on the order of $100 billion over time that we will add to our funding costs," said Terry Belton, global head of fixed income strategy at JPMorgan Chase. He was speaking on a conference call organized by the Securities Industry and Financial Markets Association, also known as SIFMA.

White House threatens veto of Boehner debt bill

President Barack Obama's advisers would recommend that he veto a bill authored by House Speaker John Boehner to cut government spending and raise the debt ceiling in two stages, the White House said Tuesday. The House is expected to vote on the Republican bill on Wednesday. Senate Democrats have offered a competing proposal to cut spending and lift the debt ceiling. The Treasury Department says the debt ceiling needs to be raised before Aug. 2 or the government will begin defaulting on obligations.

Reid says his plan will satisfy debt rating agencies

Republicans characterized some of the savings in Reid's initiative as largely illusory. Sen. Mitch McConnell, R-Ky., said today it was "nothing more than another attempt to pull the wool over the eyes of the American people."

While President Barack Obama endorsed Reid's bill in his nationally televised speech on Monday night, House Speaker John Boehner, R-Ohio, said in his televised rebuttal that it was "filled with phony accounting and Washington gimmicks."

Latin America learns the price of growth

In Latin America, food prices make up about a quarter of average consumer costs. According to official data, food prices in Brazil have risen by 9.0 percent since November, well above the official inflation rate of 5.6 percent.

In Mexico, food prices have tripled, while in Argentina in 2010 they rose 37 percent.

One in five Aussies have no spare money, finds Nielsen poll

In a disastrous sign for already battered retailers, a Nielsen worldwide consumer confidence poll reveals almost one-in-five Aussies have no spare money after paying for essentials as they face an onslaught of rising utility and food prices.

And for the first time since 2009, consumers are focused on reducing every aspect of household expenditure from saving on electricity, gas and phone bills, to cutting down on entertainment, alcohol and new clothes, and switching to cheaper grocery brands.

Worried by inflation, India hikes rates by 50 points

India’s central bank hiked interest rates by a higher-than-expected 50 basis points on Tuesday, its 11th increase since March last year as it struggles to combat near double-digit inflation.

India has the second highest inflation of any major world economy, after Russia, with the latest reading for June putting it at 9.44 percent over 12 months, up from 9.06 percent the previous month.

The central bank has expressed concern that inflation has spread from the food sector into the rest of the economy, leading to rising wages and a danger of a damaging price spiral.

'Perfect storm' causing high vege prices - growers (New Zealand)

The latest monthly figures on food prices show that fruit and vegetables rose 12.2% in June with tomatoes up a staggering 56.9% while capsicums rose 43.7% and cucumber prices increased by just over a third.

That contributed to the rise in annual inflation with it pushing up to a 21-year high of 5.3%.

Ala. county readies for possible record bankruptcy

Alabama's largest county began laying the groundwork Tuesday for what would be largest U.S. municipal bankruptcy after three years of trying to work out a solution with Wall Street to more than $3 billion in debt linked to a massive sewer rehabilitation project tainted by corruption....Two of the five commissioners said there's an 80 percent chance the county will file bankruptcy, and a vote could come at a meeting scheduled for Thursday in Birmingham, the county seat and Alabama's largest city.

Fresno Firefighters Agree to Pay Cut; Police Say Negotiations Not on the Table

"The 3% pay cut on top of the 2% our members have already been having due to the furloughs, it has been hard. We also have a lot of members that due to all the layoffs have been demoted over the last couple of years. Some of our members have already taken very large cuts," Dee Barnes, Fresno City Employees President, said.

But without concessions from all city unions, Mayor Swearengin says "Plan B" cuts like more layoffs, furloughs, reducing the senior hot meals programs and closing two fire stations are imminent.

U.S. Postal Service says it might shutter 3,700 post offices

The U.S. Postal Service, which might run out of money in September, said Tuesday it may close as many as 3,700, or 12 percent, of its post offices as customers buy more services online and through locations such as grocery stores.

Post offices in every state but Delaware may close, according to a list provided by the USPS. More than half are in rural locations, said Sue Brennan, a spokeswoman for the service. In communities without a post office, the USPS plans to sell stamps and offer services through local retailers.

The postal service, which reported a loss of $2.6 billion for the quarter ended March 31, is seeking to cut costs as it approaches its $15 billion borrowing limit.

Italian and Spanish borrowing costs rise as Greek bailout fails to convince

Just days after policymakers toasted a €109bn (£96bn) bailout aimed at hauling Greece back from the brink of insolvency, speculation gathered pace that some of its hapless bondholders might shun a distressed debt exchange.

There are also worries that the recent move to boost the powers of the European Union's bailout fund will not be enough to limit contagion and that its size will need to be increased to provide assistance for larger economies.

Italian and Spanish bond yields were at levels seen before the Greek second bailout agreement amid renewed worries about contagion to debt-laden countries. The main European debt concern is now whether larger countries like Italy and Spain will get sucked into the mire.

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10 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4235
China Needs to Hold Less Treasuries as Safety a ‘Mirage’

 

"Italian and Spanish government bonds slumped, increasing the yield relative to benchmark German bunds, on speculation Europe’s aid package may not be sufficient to prevent contagion. "
"Italian 10-year bonds yields rose 15 basis points to 5.77 percent as of 10:58 a.m. in London. The 4.75 percent security due September 2021 fell 1.025, or 10.25 euros per 1,000 euro ($1,449) face amount, to 92.84. Equivalent-maturity Spanish yields were six basis points higher at 6.03 percent. "
"The cost of insuring against default on Italian government debt rose eight basis points to 283 and Spain increased 10 to 333, according to CMA prices for credit- default swaps".

"Former Chinese central bank adviser Yu Yongding repeated his call for China to reduce its Treasury holdings amid an impasse among policy makers on raising the U.S. government’s debt limit.

“U.S. bonds are not safe, but people think they are safe,” Yu, a researcher at a Beijing institute under the Chinese Academy of Social Sciences, told reporters at a briefing in Mumbai, India, today. “That is a mirage.” "
 

 

 

  • Other news, headlines and opinion:

China’s hands tied on U.S. debt threat

U.S. default could spark CDS confusion

S&P sees 2nd Greek debt haircut, new downgrade: report

U.S. May Lose Top Debt Rating, BlackRock Says

Top general warns against deep US defense cuts

Is US default deadline truly Aug 2? Analysts say no

Md. faces another $1.1b budget gap

U.S. debt situation ‘very worrisome’: Flaherty (Canada)

States Miss Pension Targets by 50% Even With Private Equity

N.Y.'s MTA Plugs Deficits by Raising Fares While Freezing Wages

Don’t Let Them Bully You! The Debt Ceiling is NOT the Issue (McAlvany audio)

Euro Declines as Germany’s Schaeuble Says Region’s Rescue Fund Has Limits

Spain’s Biggest-Deficit Region Rules Out Tax Increases to Narrow Shortfall

Orders for U.S. Durable Goods Fell in June

Study Finds Foreclosures Lead to Long-Term Vacancies

 

 

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Mad in America.

Just because you have a brain, dosen't mean we will allow you to use it.

You might want to read http://www.madinamerica.com/madinamerica.com/Delano.html before you open your mouth.

Laura Delano currently does research for a systems psychologist in Cambridge, MA.  She graduated in 2006 from Harvard University, where she studied Social, Medical, and Psychiatric Anthropology.  Her thesis, Psycho-pharmaceuticals and Selfhood: Negotiating Identity as a Consumer of Mood Disorder Medications, explored the ways in which individuals living with mental illness and taking medications construct a sense of self and negotiate agency.  Initially diagnosed with and medicated for major depression at the age of fourteen and re-diagnosed with bipolar disorder at the age of eighteen, Laura tapered off of her last 'psychotropic' medication in September of this year and no longer lives with a psychiatric diagnosis.  She can be reached at [email protected].

 

Isn't  capitalist free-market medicine wonderful?

Suggested further reading. http://www.madinamerica.com/madinamerica.com/Home.html

 

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Those whom the Gods would create, they first make mad.
  • Older units worked continuously for months and produced 2× to 4× energy gain, but the actual energy balance was higher, as the cells reached self-sustaining mode.
  • Several unnamed third parties have confirmed that the older units worked in self-sustaining mode for long periods of time.
  • Several of these older units were recently reactivated. After some maintenance they turned on easily and produced 2× to 3× energy gain, but they haven’t yet been pushed to high excess energy levels.
  • New units with new fuel should be completed in about two months, and are expected to produce 200× energy gain.

http://coldfusionnow.wordpress.com/2011/07/25/roy-virgilio-releases-more...

Nermal people are not special. Just sick.

http://leftinthedark.org.uk/

Modern science (or more accurately the brains and minds of modern scientists) continues to interpret a wealth of data from a number of disciplines on the basis of the untested presumption that our neural system is fully functional and at the pinnacle of its evolution.
Such a presumption or untested belief is according to scientific protocol ‘bad science’.

 

 

crash_watcher's picture
crash_watcher
Status: Silver Member (Offline)
Joined: Aug 12 2008
Posts: 146
Hotspots: Greece

 

This short film by Max Keiser and Stacy Herbert succinctly sums up the causes of Greece's economic problems and suggests that the people of Greece follow Iceland's example by defaulting on the debt.   

 

part 1:

  

part 2: http://www.youtube.com/watch?feature=player_embedded&v=LnsWEXqhd7M  

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

The blue line is government spending. The red line is government receipts (taxes). The green dot shows where the spending would drop to if USD$91.5 billion is cut from the budget:

 From http://www.moneymorning.com.au/20110728/hedge-fund-bets-on-aussie-house-...

Chris Sayse thinks that the pollies are trying to position themselves for the inevitable so that each can blame the other for intransigence.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Also

A visulisation of US debt

 http://www.wtfnoway.com/

 

 

 

VeganDB12's picture
VeganDB12
Status: Platinum Member (Offline)
Joined: Jul 18 2008
Posts: 756
free market mental health

Ok. I am giving opinions here but informed opinions. Opinions nonetheless. As always, move on to the next post if my rant is of no interest.  I may not know about farming but I know something about this topic.  I have read two of Whitaker's books as well.
 

Dr. Whitaker has very strong opinions and as I understand it he sometimes makes his living doing court testimony on these cases. That is his right. Some of his ilk even deny the existence of mental illness. I think that is biased and grossly unfair to people suffering with same but I digress.

His books obviously  sell well.   I believe he is on a mission and that he is hitting a cord with many consumers of these services (formerly known as patients) as his books are popular.

I believe  that many who work in the field of mental health in the US actully care about their patients. And most do not force anyone to accept treatment. Many are trying to help.  Of course if you are the an individual who has been harmed those assessments do not matter much.

Big Pharma after the advent of blockbuster Prozac saw a market that could be tapped and came up with a bunch of new meds. Many work pretty much the same way and are "me too" knockoffs of prozac in particular.  Before that it was thorazine elavil lithium etc..... These new meds are so much safer but still dangerous to some.  Dr. Whitaker says they are dangerous to all. 

My sadness comes in seeing that the mental health field is now seen by many as just a bunch of drug pushers.  According to Dr. Daniel Carlat (a psychiatrist who wrote a kindred book which a less rabid tone) psychiatry is complicit and that may be true.  The insurance industry doesn't like to pay for talk therapy. It pays people who trained and educated themselves anywhere from 12-17 years  less money to provide psychotherapy than to write a script and talk. Why would that be??

Yes free market healthcare would have its disadvantages, if only we had a free market instead of one that is manipulated and controlled by the industries. Direct to consumer advertising of psychiatric meds is a big part of the problem.   FYI many if not most of these meds are prescribed by family doctors, pediatricians, and internists, .not by psychiatrists. These folk do not have the time to do talk therapy and do what they can to help but still that may be part of the problem with respect to overprescribing of meds. Or maybe not....

 

 

 

Mikey1052's picture
Mikey1052
Status: Bronze Member (Offline)
Joined: Dec 8 2008
Posts: 41
free market health vs the FDA

 

There are very few things I would trust a government to manage as it only leads to something like we see in the FDA...

Dr Burzynski (this was posted here in June I believe)

 

tictac1's picture
tictac1
Status: Silver Member (Offline)
Joined: Sep 25 2009
Posts: 175
One of the huge fallacies

One of the huge fallacies promoted by the US medical cartel ( i think that word is appropriate) is that we are not fit to treat ourselves.

I can procreate, raise children, buy a home, make long-term financial plans, sign up to shoot and be shot in our military, and yet I am not smart enough to treat my own health condition?  It's hard to believe this idea would have any weight whatsoever, and I do not think it would, without massive, long-term propaganda, and a legal system designed to force compliance.

Take pain relief as an example.  The opium flower is easy to grow, easy to use as pain relief, and has been proven to be safe, when used responsibly.  It is also completely illegal, presumably because it can be made into high-strength, addictive drugs that lead to ruined lives.

Like Oxycontin.

Never mind that addiction to LEGAL drugs outweighs addiction to cocaine, heroin, meth, etc.

Take methamphetamine.  According to law enforcement, meth is a dangerous, poison-filled, addictive killer, that turns people into murderous junkies with more tattoos than teeth.  But that's only ILLEGAL meth.  LEGAL meth is an effective drug for the treatment of a variety of ills-

Desoxyn- http://en.wikipedia.org/wiki/Methamphetamine

The bottom line is, responsible people don't have a problem "self-medicating", and for the irresponsible, all the regulation in the world won't help.

I'm NOT suggesting all these drugs should simply become legal.  I AM suggesting people should do their own research, know their own bodies, and come to their own conclusions.  Don't believe the hype.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Mad models

Denise I am sure that the mental health carers do care.

The problem is that we have a model making Left brain that is damaged and running amuck.

http://leftinthedark.org.uk/

The models that have been created about mental distress are so wildly inaccurate and bizarre that they qualify as a disease.

If you have read Mad in America I do not have impress apon you inhuman teatment of our delusional. (Sub orbital lobotomy fortunately is able to spring to mind)

The first dictum of medicine is "Do no Harm." 

 

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4235
Greek Bondholders May Shun Rescue as Potential Losses Top 21%

 

 

(For 7/29 news. Thanks in advance if anyone can repost when today's Daily Digest is out, since I can't stick around that long. Monday I'm not sure if I'll have the usual morning news, but Tuesday should be back to normal.)

 

"Rating agency Moody’s on Friday placed Spain on review for a possible downgrade, citing weak growth and funding pressures, hitting the euro on concerns a Greek rescue package has not laid contagion fears to rest.

Moody’s placed Spain’s Aa2 government bond ratings on review for possible downgrade and said funding costs would remain high for the Spanish government in the wake of the Greek package which signalled a clear shift in risk for bondholders."

.............1A) Spain Placed on Downgrade Review by Moody’s

..............1B) Moody's creates more trouble for Spain

"Moody's Investors Service downgraded six regions of Spain on Friday, and warned that other regions could also face a downgrade."

................1C) Spanish Bonds Fall On Moody's Rating Warning, Italy Also Weaker

"The yield on Spain's 10-year bonds rose nine basis points to 6.103% according to Tradeweb. The cost of Spanish sovereign credit default swaps, which would compensate buyers in the event of a default, also rose.

Italian bonds were also weaker in early trading, with 10-year yields rising five basis points to 5.87%."
 

 

"Greek bondholders may resist pressure to reinvest in the nation’s securities as part of a bailout agreement as potential losses exceed the 21 percent estimated by the Institute of International Finance.

JPMorgan Chase & Co. calculates the bonds may lose as much as 34 percent of their value, while Rabobank International anticipates losses of as much as 50 percent. That may be high enough to deter money managers from aiding the rescue, leaving European leaders to either foot a bigger share of the bill or compel private investors to chip in to meet a 90 percent participation goal.

“Our view is that IIF yield assumption in calculating this is too low,” said Pavan Wadhwa, JPMorgan’s global head of interest-rate strategy in London. “As the market stands right now, the haircut banks will take if they sign up to the IIF proposal would be much higher than 21 percent. "

"Demand for physical gold in China may exceed consumption in India by the end of this year, said Chuck Jeannes, chief executive officer of Goldcorp Inc. (G), the world’s No. 2 producer of the metal by market value.

“Three or four years ago there was no one who would have expected Chinese physical demand for gold to surpass India,” Jeannes said yesterday in a telephone interview from New York. “Now it looks like that could happen as early as the end of this year. And that’s while Indian demand is increasing.”

While global demand for gold is advancing on concerns about financial turmoil in the U.S. and some European countries, consumers in China are buying larger amounts of the metal as an inflation hedge, Jeannes said. "

"The U.S. is approaching the moment it may have to decide which bills to pay, a prospect Treasury Secretary Timothy F. Geithner has called “unacceptably risky and unfair” to Americans.

The Obama administration will brief the public no earlier than when financial markets close today about priorities for paying the nation’s obligations if the U.S. debt limit isn’t raised by then, a Democratic official said. "

"The US economy grew at an annualised rate of 1.3% in the second quarter, much slower than had been expected.

The Commerce Department also revised down the rate for the January-to-March quarter, from 1.9% to just 0.4%.

On Thursday, a key vote in Congress on a Republican bill to raise the US debt limit was delayed.

If Congress does not raise the debt limit by 2 August the US government could face funding shortfalls that it cannot meet by extra borrowing."

.....................5A) U.S. GDP Grows Just 1.3%

"The U.S. economy expanded at a slower pace than expected in the spring as consumers cut back on spending, while revisions showed the slowdown since the beginning of the year was much more drastic than previously thought.

The Commerce Department Friday said gross domestic product rose at an annualized seasonally adjusted rate of 1.3% in April through June, while first-quarter growth was revised down sharply to a 0.4% rate from the earlier estimate of a 1.9% gain."

  • Other news, headlines and opinion:

China news agency lambastes U.S. for debt crisis

IMF’s Lagarde Says U.S. Dollar May Lose ‘Privilege’ Amid Debt-Limit Crisis

China Fears U.S. Debt Default, But Has Few Options (NPR)

Agency seeks to double tolls to pay for $12 billion in projects (Illinois)

Will U.S. Default? $4.8 Billion Investment Says Yes

Moody’s Places 177 Local Muni Issuers on Downgrade Review Amid Debt Debate

Just Before Deadline, County in Alabama Delays Bankruptcy Move

S&P's: 15 Danish banks could collapse

S&P warns against US prioritizing debt payments-CNBC

Portland Audit: City On Unstable Financial Path

Radiation-Free Food Delivers Japanese Sales Boom to South Korean Exporters

Copper Rises as Strike at World’s Biggest Mine in Chile Spurs Supply Woes

Japan Ending Nuclear Age Risks $5 Trillion Economy as Komatsu, Sharp Walk

U.S. default insurance up on debt talks impasse

Fed's Williams Sees No 'Magic Wand' in Event of Debt Default

‘Great Recession’ even deeper than thought
 

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