Daily Digest

Daily Digest 8/4 - U.S.-Japan Currency War Update, 5 Things You Didn't Know About The Debt Deal, Fukushima Radiation Levels High

Thursday, August 4, 2011, 9:45 AM
  • China Rating Agency Downgrades U.S. Debt
  • Greece In Panic As It Faces Change Of Homeric Proportions
  • Wall Street Warns Tim Geithner That The Dollar Is Starting To Lose Its Reserve Status
  • Fewer Cops, More Potholes: How Debt Deal Could Hit States Hardest
  • 5 Things You Don't Know About The Debt Deal
  • More On The 2011 Edition Of U.S. - Japan Open Currency Warfare: "This Is Just The Beginning"
  • Fatal Radiation Level Found at Japanese Plant
  • End Times? Texas Lake Turns Blood Red

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


China Rating Agency Downgrades U.S. Debt (Johnny Oxygen)

China's Dagong Global Credit Rating has cut its credit rating on U.S. sovereign debt to A from A+, Chen Jialin, general manager of the international department at the firm confirmed to CNBC on Wednesday.

According to Xinhua, Dagong's decision was based on "the fact that the U.S. national debt growth had outpaced economic growth and fiscal revenue, hurting the country's debt-paying ability."

Greece In Panic As It Faces Change Of Homeric Proportions (TG)

One senior investment banker is more blunt: "People are scared that the government doesn't know what the f--- it's doing." He tells a story about an acquaintance who took out €30,000, wrapped it in a bag and stashed it in his garage. "The bag had previously had some food inside," he says. "So it attracted rats, who ate the notes."

Wall Street Warns Tim Geithner That The Dollar Is Starting To Lose Its Reserve Status (June C.)

The Treasury's Borrowing Advisory Committee, chaired by such luminaries as JPMorgan and Goldman Sachs, which according to some (and by some we mean anyone who cares about such things) is the brains behind the decision-making process of US debt issuance has released its quarterly minutes, in which it has issued one of the most stark warnings about the fate of the US Dollar to date. While it is now a daily occurrence for China and Russia to bash the dollar, for the most part still powerless to provide an alternative (but rapidly gaining), the same warning coming from Jamie and Lloyd has to be taken far, far more seriously. Which is precisely what happened today.

Fewer Cops, More Potholes: How Debt Deal Could Hit States Hardest (dons)

Federal spending cuts mean fewer dollars will flow to the states for unemployment benefits, education, health care, and other state-run programs. Many states will have to cut services or raise taxes.

Taxpayers can expect larger class sizes, fewer police officers, and more potholes, says Jo Comerford, executive director of the National Priorities Project, a left-leaning non-profit that monitors government spending.

“We’re way past cutting the fat or program efficiencies,” says Ms. Comerford. “Now we’re into cuts that are really affecting quality of life and forcing really hard choices.”

5 Things You Don't Know About The Debt Deal (Mike K.)

Congress just passed an 11th hour debt deal to keep the U.S. government from defaulting on its loans. Reuters Op-Ed Editor, Jim Ledbetter, walks us through his five main concerns with the new law.

More On The 2011 Edition Of US-Japan Open Currency Warfare: "This Is Just The Beginning" (pinecarr)

According to Credit Suisse, this is just the beginning of Transpacific central banking warfare. Per Dow Jones: "The Japanese Ministry of Finance's JPY-selling operation Thursday may be the first in a series of interventions over the coming weeks to curb further rises in the unit, and may have come Thursday in part as the Swiss National Bank's move Wednesday to weaken its own currency made it easier for Japan also to step in, says Koji Fukaya, director of fixed income and global foreign exchange research at Credit Suisse. "This may be the start of a number of actions, depending on the yen moves in the weeks ahead," Fukaya says.

The SNB's move Wednesday means Japan's own move "could be considered as a kind of coordinated action" in response to broad USD weakness, he says. As traders say the MOF has so far sold under Y500 billion, Fukaya says the total size ahead could rise as high as Y2 trillion, though the move Thursday should be enough to send USD/JPY above 79.00 later, where it should stabilize in coming sessions. The pair is now at 78.32, from 77.10 earlier." To anyone trading in these 100% correlated markets, which are now nothing but a battleground for those who yield the global electronic fiat printing presses, good luck.


Fatal Radiation Level Found at Japanese Plant (jdargis)

The company said the reading was taken near a ventilation tower, suggesting that the contamination happened in the days immediately after the March 11 earthquake and tsunami, when workers desperately tried to release flammable hydrogen gas that was then building up inside the reactor buildings. The release, known as venting, failed to prevent crippling explosions that destroyed the reactor buildings.

End Times? Texas Lake Turns Blood Red (Phil H.)

The drought has taken its toll on a number of reservoirs in West Texas, Cruz told LiveScience. OC Fisher has never been completely full, Cruz said, but it was stocked with catfish, bass, sunfish and other popular targets for fishermen.

"We surveyed the lake, I believe it was last year, and we had a pretty good fish population out there," Cruz said. "It was pretty sickening going out there, watching lake levels just drop and drop and drop and seeing these nice trophy-sized bass just floating dead."

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."


saxplayer00o1's picture
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US borrowing tops 100% of GDP: Treasury

"Spain sold 3.31 billion euros ($4.72 billion) of bonds at higher interest rates after the yield on the country’s 10-year bond approached the 7 percent mark that heralded the bailouts of Greece, Portugal and Ireland.

The Treasury in Madrid sold 2.2 billion euros of April 2014 bonds at an average yield of 4.813 percent, compared with 4.291 percent when it sold similar debt on July 7."

"US gross debt shot up $238 billion to reach 100 percent of gross domestic product after the government's debt ceiling was lifted, Treasury figures showed.

On Tuesday, the Treasury had to add more than $200 billion of commitments immediately after President Barack Obama signed into law an increase in the debt ceiling.

The liabilities had been temporarily taken off the federal government's balance sheet since May 16, when the Treasury reached the $14.29 trillion official cap.

It then used extraordinary measures to remain under the legal limit while deeply polarized Republicans and Democrats battled over raising the debt ceiling and reining in the country's massive deficit.

The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, putting the United States in a league with highly indebted countries like Italy and Belgium."

  • Other news, headlines and opinion:

Dollar’s Reserve Status Waning, U.S. Treasury Borrowing Committee Says

Bank of Japan to expand asset purchases

El-Erian Says S&P Will Downgrade U.S. If It Holds to Outlook


Jefferson County’s Bankruptcy Vote Tomorrow May Be Delayed, Officials Say

Ireland’s Budget Deficit Widens on Bank-Recapitalization Costs

New York will face a $2.4 billion budget gap in 2012

EU urges changes to bailout fund

Spanish banks face new financing threat: analysts

Trichet Says ECB to Offer Banks More Cash

Japan Follows Switzerland in Acting to Weaken Currency to Protect Exports

ECB to protect Europe by buying bonds

ECB Resorts To Unlimited Six-Month Tender To Stem Crisis

Eurozone crisis: Italy's debt pile comes under scrutiny

Italy is 'bound to default', says CEBR


MarkM's picture
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TX and OK cattle people...

are in a world of hurt. No rain, no grass, no hay to buy. Even if we get some rain this fall, hay stocks will be so low that overwintering will be another test.

In spite of huge selloffs, feeder cattle prices have held up fairly well. Which makes one wonder what prices will be next year and for some time after. Not only feeder cattle, but replacements as well.


"Cattle ranchers either have to sell cattle during droughts or buy feed because their barren pastures can't sustain the animals. If they opt to buy hay while watching for rain clouds, they risk running into bankruptcy. If they sell off cows of calf-bearing age instead, they do it knowing rebuilding the herd later will be a long, costly process."



"Even if rebuilding of the nation’s cattle herds were to begin today, it would be several years before inventory would reach a significant number, according to an economist.

“Even in best case scenario, we will not see additional beef on the table until 2015,” Brett Stuart, an economist with CattleFax, told 1,450 attendees Monday at the 57th Annual Texas A&M Beef Cattle Short Course, sponsored by the Texas AgriLife Extension Service.


Drought through much of the southern U.S. continues to force deep herd reductions. And Stuart said steer and heifer slaughter numbers continue at a steady clip.

The volume of heifers that continue to go into feedlots indicates the beef industry is still “in a contraction phase,” he said."

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TX stock yards

I spoke with my sister yesterday (Ft Worth/Dallas), she was saying things are so bad hay and feed is sky-rocketing and the stock yards have been turning sellers away because too many ranchers can't afford to keep their herds until this lets up. - Sad, sad indeed.



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exponential growth

Copied from Slashdot:

"Dr. Tom Murphy, professor of astrophysics at UCSD, has a new blog called 'Do The Math,' and the first few posts are doozies. In the first, he shows the impossibility of continued exponential growth in energy use. Even if a new, 'free' energy source is developed, thermodynamic limits on efficiency mean that the heat associated with converting this energy into useful work will increase the temperature of the earth to unbearable levels within 300 years. In the second, he extends the argument to economic growth. The timescales there are faster, only 50-100 years. Fascinating stuff. Time to stop breeding, folks, or to get our butts into space."


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energy independence stretched to the limit!

Man builds nuke reactor in kitchen

A Swedish man who tried to build a nuclear reactor in his kitchen says he started the experiment "just for fun".

Richard Handl, 31, from Aengelholm municipality in south-western Sweden, was detained by police two weeks ago and says he started the project as a hobby.

"I have always been interested in nuclear physics and particle physics," he said.

In May, he launched an English-language blog, 'Richard's Reactor', in which he charted his progress in the project, complete with picture.

His plan was "to build a working nuclear reactor. Not to gain electricity, just for fun and to see if it's possible to split atoms at home."

Just to make sure everything was above board, he sent an email to Sweden's Radiation Safety Authority.

"Hi! I'm really interested in nuclear physics and radiation," he wrote.

"As a hobby, I have ... gathered the basic materials (and) planned a project to build a very primitive nuclear reactor. You can see my plans here," he added, complete with a link to his blog.

"I'm now wondering if I am breaking a law with this?" he asked in the email.

At that point, his experiment came to an abrupt end.

Two days later "the police and the radiation safety authority came to my apartment," Mr Handl said.

Police questioned him for about half an hour, before releasing him, he said.

Mr Handl's blog can be found at http://richardsreactor.blogspot.com.

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Dow Falls 512 Points Today (August 4, 2011)

Dow Down 512 Today (August 4, 2011)

Dow Falls 512 Points
"Stocks closed sharply lower on Thursday, reeling from renewed fears over the debt crisis in Europe and the possibility that sluggish job growth in the U.S. will drag down an economic recovery."


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Larry Kudlow..."Sources tell me Italy has to restructure bonds"



Thanks to zerohedge for catching this one.





Larry Kudlow
Sources tell me Italy has to restructure bonds.Deposit run on Italian banks.EU will have to mount Tarp rescue.Big stress on interbank loans.
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EURCHF Crashing After Hours On Italian Bank Run Concerns

Ditto what Sax just posted!  -See Zerohedge's story "EURCHF Crashing After Hours On Italian Bank Run Concerns" @ http://www.zerohedge.com/news/eurchf-crashing-after-hours-italian-bank-run-concerns.  Per ZH:

Less than an hour ago, Larry Kudlow tweeted the following: "Sources tell me Italy has to restructure bonds.Deposit run on Italian banks.EU will have to mount Tarp rescue.Big stress on interbank loans." Basically, this is the worst possible combination for Europe which means that another bailout is not only imminent but has to happen tomorrow. Incidentally Reuters is reporting of an emergency meeting between Sarkozy and Merkel and Zapatero on "the markets" which can only mean damage control following today's disastrous Trichet performance. Too bad the markets won't buy it any longer absent some actual actions to back up the deeds. Yet what we are more concerned about is whether or not there really is a bank run in Italy which would be the end of the euro.

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Update on national debt...$14.57 trillion




Link to Treasury Direct


The Daily History of the Debt Results

Historical returns from 08/01/2011 through 08/04/2011

The data for the total public debt outstanding is published each business day. If there is no debt value for the date(s) you requested, the value for the preceding business day will be displayed.

( Debt Held by the Public vs. Intragovernmental Holdings )


Date Debt Held by the Public Intragovernmental Holdings Total Public Debt Outstanding
08/01/2011 9,783,069,049,952.69 4,559,289,391,016.41 14,342,358,440,969.10
08/02/2011 9,907,752,744,860.54 4,672,951,998,220.43 14,580,704,743,080.97
08/03/2011 9,907,654,619,535.26 4,666,953,320,526.99 14,574,607,940,062.25



Link to the debt clock

The estimated population of the United States is 311,060,298
so each citizen's share of this debt is $46,867.95.


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Japan NIKKEI 225 open down -3.7%




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r.i.p. BAC


What you are watching is an assassination of a bank. Bank of America (BAC) will not last another week without government intervention. Their European debt exposure along with heavy trading bets that are all losing combined with a weak stock price equal doom. If the Asian, European and US markets have another 2% or greater fall tomorrow. Mark my words that over the weekend the vultures will start swirling. Then Monday comes and another 2% or greater drop in the markets while the ECB and Fed sit by and watch. Then you will start hearing some serious rumbling about BAC. Then Aug 10, Brian Moynihan will appear  Berkowitz's Fairholme Capital Management has announced that it will hold a 90-minute conference call with Moynihan on Aug. 10


Read more: Bank of America CEO Moynihan to appear before hedge fund investors - FierceFinance http://www.fiercefinance.com/story/bank-america-ceo-moynihan-appear-hedge-fund-investors/2011-08-04#ixzz1U7NUK4hy 

Subscribe: http://www.fiercefinance.com/signup?sourceform=Viral-Tynt-FierceFinance-...


When this was planned Moynihan had no idea this was to be his swan song. BAC is down close to 40% ytd. A few more dings and there done. Remember you read it hear first



Major Harris

The Truth

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  Mark ,  sorry to hear

  Mark ,

 sorry to hear  of no rain in your parts ,  we have been catching some just at the right times .  I will have extra hay for just  3-4 more head  but when I went to the sale barn  the price of Bucket calves and feeder steers  had not gone down at all . Thought I might grab a few goats to keep the weeds down and they were way high .

  They were giving away horses though LOL .

  Farmers here are busy putting up and and cutting silage   socking it away for  a hard winter coming .  The fogs have been heavy .

  I'd say that I will  p_ _ _   for you to get some much needed rain  but ....well you know .


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