Daily Digest

Daily Digest 8/5 - Dow Falls 512 Points, Italy's Predicament In 3 Bullet Points, World Stocks Markets In Turmoil

Friday, August 5, 2011, 9:44 AM
  • U.S. Incomes Fell Sharply In 2009: IRS Data
  • Dow Falls 512 Points
  • Pressured by White House, Treasury Secretary Is Expected To Stay At Post
  • What's At Stake
  • Stocks Plunge On Fear Of Global Turmoil
  • Summarizing Italy's Catastrophic Predicament In 15 Simple Bullet Points
  • The ECB throws Italy and Spain to the wolves
  • You Want to Create Jobs? Here's How Part II
  • Shale Gas, Emission Cuts Urged To Reduce China's Oil Imports
  • Concerns For U.S. Financial Outlook
  • World Stock Markets In Turmoil
  • Finding The Potential In Vacant Lots

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Economy

U.S. Incomes Fell Sharply In 2009: IRS Data (Phil H.)

Average income in 2009 was at its lowest level since 1997 when it was $54,265 in 2009 dollars, just $18 less than in 2009. The data come from annual Statistics of Income tables that were updated Wednesday.

Dow Falls 512 Points (jdargis)

Investors appeared concerned primarily with steep losses on European exchanges, which signaled that confidence in the European Union's ability to find a resolution to the woes of debt laden countries like Italy and Spain was wearing thin.

Pressured by White House, Treasury Secretary Is Expected To Stay At Post (jdargis)

Speculation from Washington to Wall Street has intensified because Mr. Geithner, the only holdover at the center of Mr. Obama’s original economic circle, said a month ago that he would decide on his future after the White House and Congress reached a deal to increase the nation’s debt ceiling. Mr. Obama signed that deal into law on Tuesday.

What's At Stake (jdargis)

Here’s what’s at stake should the economic crisis worsen: welfare states will cut deeper and inflict more austerity measures; there will be a weaker European voice on the world stage; and most importantly, Europe will drift further to the right, into the laps of Europe’s populist far-right parties, already enjoying success.

Stocks Plunge On Fear Of Global Turmoil (jdargis)

With a steep decline of around 5 percent in the United States on Thursday, stocks have now fallen nearly 11 percent in two weeks. Markets have been plunging as investors sought safer havens for their money — including Treasury bonds, which some had been avoiding during the debate over extending the nation’s debt ceiling.

Summarizing Italy's Catastrophic Predicament In 15 Simple Bullet Points (pinecarr)

The irony about the blow up over the past month in "all things Italian" is that the facts about its sovereign debt and viability profile have always been available for anyone to not only see, but make the conclusion that the situation is unsustainable. The fact that so few dared to do so only confirms that affirmative confirmation bias that dominates within 99% of the investing population. Sites such as Zero Hedge and others had been warning for over a year that the Italian "contagion" (which is a misnomer: Italy's lack of viability is perfectly-self contained: it does not need Greece or Portugal to blow up, and can do so perfectly well on its own, but the punditry certainly needs a scapegoat, in this case the incremental layering of "revelations" about how insolvent Europe is) and we have long presented primary source data confirming just how precarious the house of cards is not only in Italy but everywhere else too.

Regardless, no matter how conventional wisdom got to the big picture revelation of just how ugly Italy's reality is (and don't think for a minute that Spain is any better) the truth is that the cat is not only out of the bag, but is widely rampaging through the china store (no pun intended), high on speed and methadone. So for everyone who still wishes to know why the Italian jobs is very much hopeless absent the ECB stepping in an bailout out the country, below is a succinct list of 15 bullet points courtesy of The Telegraph, which explains all there is to know about the country's current predicament.

The ECB throws Italy and Spain to the wolves (pinecarr)

Its refusal to act in the face of an existential threat to monetary union has set off violent tremors across the global financial system, raising the risk that the crisis will spiral out of control.

Bank shares crashed in Madrid and Milan, with Intesa Sanpaolo down 10pc and Italy's MIB index reduced to its knees with a one-day fall of 5.2pc. Share trading was suspended at a string of bourses across Europe.

Yields on 10-day US debt fell to zero in a replay of panic flight to safety seen during the onset of the Lehman-AIG crisis three years ago.

You Want to Create Jobs? Here's How Part II (pinecarr)

The U.S. economy is bloated and inefficient; if we want to nurture enterprise and employment, we need to strip away what no longer works or is counter-productive. The bottom line is that there is a fantasy view of America as a dynamic, innovative, efficient economy, and the stark reality that it is actually grossly inefficient, bloated, wasteful and not innovative in any meaningful structural way. Rather, the U.S. economy and culture have become calcified and rigid, fixated on counter-productive rationales and "projects" which yield no real return but which feed self-protective fiefdoms that stripmine the nation to feed their insatiable appetite for revenue and political power.

Shale Gas, Emission Cuts Urged To Reduce China's Oil Imports (pinecarr)

China should accelerate the pace of its exploration of unconventional natural gas and introduce more stringent policies to cut emissions to cope with its heavier dependence on crude oil and natural gas imports, industry experts suggested.

The nation's dependency ratio of foreign crude imports hit a new high of 55.2 percent in the first five months of 2011, the Ministry of Industry and Information Technology (MIIT) said on Tuesday. That surpassed the 53.5 percent in the United States, it said.

Last year, China reported a dependency ratio of about 55 percent on crude imports.

Concerns For U.S. Financial Outlook (pinecarr)

Chinese officials and economists expressed concern about further uncertainty in the US economy despite the debt ceiling being lifted.

The raising of the ceiling does not reverse the trend of debt growing faster than the US economy and actually marks a decline in the ability of Washington to pay its debts, Beijing-based Dagong said in a report. Quote 2: Dagong predicted that the US has to cut $4 trillion from its deficit in the next five years to sustain its current debt scale, and the debt will exceed GDP by the end of 2012.

"A third round of quantitative easing (QE3) will drag the world into crisis and shake the very foundation of the dollar's status," the report said.

World Stock Markets In Turmoil (pinecarr)

Almost £50bn wiped off leading British shares and huge sell-off on Wall Street amid economic fears.

Environment

Finding The Potential In Vacant Lots (jdargis)

The lot, four-tenths of an acre in size, once comprised four separate parcels. Foreclosure records indicate that in 1991, “the unknown heirs etc. of Willie James Smedley, a k a James Trask, deceased” lost title to part of the lot. (They had fallen behind by $4,155.70 on property taxes.) The Living Hope Baptist Church forfeited a different chunk in 2004.

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7 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4237
Food stamp use rises to record 45.8 million

 

"Nearly 15% of the U.S. population relied on food stamps in May, according to the United States Department of Agriculture.

The number of Americans using the government's Supplemental Nutrition Assistance Program (SNAP) -- more commonly referred to as food stamps -- shot to an all-time high of 45.8 million in May, the USDA reported. That's up 12% from a year ago, and 34% higher than two years ago."

  • Other news, headlines and opinion:

 

IMF weighs risk of bailout for Italy and Spain as debt crisis continues

China calls for global cooperation on debt risks

Belgium Put on Watch List

Portugal’s New Austerity Fails to Bring Down Borrowing Costs: Euro Credit

EU leaders to hold crisis talks, ECB offers only limited help

Japan forex move 'largest for single day'

Greece Demands Action on Debt Crisis .

Jefferson County moves bankruptcy decision to August 12

Subbarao Says India Inflation Is 'Far Above the Threshold Level'

Greece close to missing annual deficit targets: data
 

U.K. Producer-Price Inflation Accelerates to 5.9%, Fastest Pace Since 2008

Foreclosure Timeline Soars to 587 Days

Fannie Mae to ask US Treasury for $5bn

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
150,000 march for social justice in Israel

If this is a repost, my apologies.  Interesting how there was nothing in the MSM about this to my knowledge but I could have missed it being on vacation this week.

http://972mag.com/estimated-120000-march-for-social-justice-across-israel/

 

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
BofNY charging for deposits

Bank of New York Charging to Hold Cash, Driving New Frenzy for T-Bills -  They say that nothing comes for free, and now that includes cash. Bank of New York, the world’s biggest custodian bank, announced it is charging a fee of 13 basis points for unusually large cash deposits. That has pushed money funds to move even more of their cash into already in-demand T-bills, short-term agency notes and Treasury repos. “By forcing cash out into the marketplace, demand for money-fund investments is only going to grow, forcing investors into a pool with already incredibly shallow options,” says a money fund manager. “Most importantly, if other banks follow suit, then yield levels as a whole will have no where to go but lower as investors look to remain invested.” Three-month T-bills recently yielded 0.008%, and short-term bills have been darting in and out of negative territory this morning.

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4237
US Expecting Standard & Poor's Debt Rating Downgrade, Government

 

 

"The federal government is expecting and preparing for bond rating agency Standard & Poor's to downgrade the rating of U.S. debt from its current AAA value, a government official told ABC News.

Official reasons given will be the political confusion surrounding the process of raising the debt ceiling and lack of confidence that the political system will be able to agree to more deficit reduction.

According to a source, Republicans refusing to accept any tax increases as part of a larger deal will be part of the reason cited.

The official was unsure if the bond rating would drop to AA+ or AA. "
 

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
US credit rating cut for

US credit rating cut for first time ever

http://www.abc.net.au/news/2011-08-06/us-credit-rating-cut/2827294

The United States' credit rating has been cut for the first time ever, with Standard and Poor's lowering it from AAA to AA+, citing the country's looming debt and deficit burden.

S&P attached a "negative outlook" to the new rating, while government sources involved in the negotiations with the agency attacked its analysis as deeply flawed.

"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilise the government's medium-term debt dynamics," S&P said in a statement.

"More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011."

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1329
Ratings agencies are a joke...
Article from Damnthematrix wrote:

S&P attached a "negative outlook" to the new rating, while government sources involved in the negotiations with the agency attacked its analysis as deeply flawed.

I think I would have to agree with this, it's been deeply flawed for a very long time.  We should have had the rating cut long ago and much more than just to AA+. I wonder when the USD is worthless if it will be downgraded to AA.

 

Peter Schiff has a good article on S&P from April here:

S & P semi downgrade of US sovereign debt too little too late.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Innovate or perish.

 Burt Rutan was trying to spruik up space exploration and colonization. He was making heavy weather of it. So was Peter Diamandis.

Talking of space, it seems innovation has reached  apoapsis. Or so it seems in my darker moments.

On the other hand there are now three organisations that are promising nuclear energy at whatever scale you desire. Rossi, Pianteli and Star Scientific here in Australia.

Ruby is badgering me to get on my bicycle and go and interview them in Melbourne, no less. (+- 3000kms.). I have to work for a living, but this is the stuff of Life. Perhaps someone else is closer? 

Please form a que.

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