Daily Digest

Daily Digest 8/6 - S&P Downgrades U.S. Debt, The Precious Metals Puzzle, End Game For The Fed

Saturday, August 6, 2011, 10:47 AM
  • S&P Strips U.S. of Top Credit Rating
  • Learning to Live With Debt
  • U.S. Debt Downgrade Charade
  • The Precious Metals Puzzle
  • The Ultimate Problem With A Higher Ed Bubble
  • Silver price update from James Turk and Eric Sprott
  • Bread, Circuses, Spending Cuts, Unicorns, And The Appearance Of Wealth
  • End Game For The Fed
  • Rise of the Mob: Wisconsin Fairgoers Attacked, Violently Beaten
  • Japanese Internet Giant To Push Home Solar

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

Economy

S&P Strips U.S. of Top Credit Rating (jdargis)

The unprecedented move came after several hours of high-stakes drama. It began in the morning, when word leaked that a downgrade was imminent and stocks tumbled. Around 1:30 p.m., S&P officials notified the Treasury Department that they planned to downgrade U.S. debt and presented the government with their findings. Treasury officials noticed a $2 trillion error in S&P's math that delayed an announcement for several hours. S&P officials decided to move ahead, and after 8 p.m. they made their downgrade official.

Learning to Live With Debt (jdargis)

A considerable part of the current economic strain stems from the fact that the credit overhang continues to haunt borrowers around the world. The lenders may have been bailed out, but the borrowers were not — or at least not enough to return them to health. Millions of Americans remain underwater on mortgage loans. Countries that lack printing presses for their own currency find themselves unable to borrow from private lenders.

The Precious Metals Puzzle (Claire H.)

The purpose of this article is to describe the apparent failure on the part of the two largest precious metals exchange traded funds ("ETFs") to disclose material information to potential investors

The Ultimate Problem With A Higher Ed Bubble (adam)

The higher education bubble has many dimensions, and yet it has recurring themes with most other bubbles: easy credit, an excessive amount of debt, lax regulation, assets at the heart of the bubble serving as collateral, and a bit of "irrational exuberance". Many of these factors contributed to major financial bubbles of the past, including the infamous Dutch tulip bubble, the South Sea bubble, the dot-com bubble, and the recent housing bubble. In fact, there has been much recent discussion of the parallels between the housing bubble and the higher education bubble.

U.S. Debt Downgrade Charade (Anthony S.)

On Friday afternoon, hours before S&P publicly announced the downgrade, the agency revealed its plans to the Obama administration and sent an analysis to the Treasury Department. The senior administration official said the analysis inflated U.S. deficits by $2 trillion.

“Treasury analysts contacted S&P and challenged the analysis, and S&P acknowledged the mistake, the official said. But S&P said it still would stick with its decision to downgrade the United States’ credit rating, according to the official.

“This is a facts-be-damned decision,” the senior official said. “Their analysis was way off, but they wouldn’t budge.”

Silver price update from James Turk and Eric Sprott (adam)

In this video, recorded on August 4 2011, Eric Sprott, Chairman of Sprott Asset Management, and James Turk, Director of the GoldMoney Foundation, talk about how there isn't enough silver in the silver market to back existing "paper silver" commitments. Sprott thinks that "silver will be the investment of this decade".



 

Bread, Circuses, Spending Cuts, Unicorns, And The Appearance Of Wealth (JimQ)

I hope Huxley is right. The welfare state is bankrupt. The rations are going to be cut. There is no choice. The money is gone. The jobs are gone. The do-do’s that haven’t flown in years are unlikely to clamor for their wings. They are already clamoring when even the potential of cuts in their bird feed are mentioned. The Millenial generation is our last great hope to reverse our decline. They have not become addicted to “social benefits” yet. Their parents and grandparents are handing them an un-payable bill as they graduate college with no jobs. A generational war is in the offing. I for one will side with the youth against the Boomers. The future of the country depends upon the outcome of this war.

End Game For The Fed (June C.)

What is the least-risky course of action for the Fed? Announce some wimpy half-measures to dodge the accusation of doing nothing, but also avoid any grand QE3 measures which would shift the blame for the coming meltdown on the Fed.

Rise of the Mob: Wisconsin Fairgoers Attacked, Violently Beaten (June C.)

Earlier this year Tess Pennington wrote Teenage Mobs: A Rising Epidemic, in which she discussed mob mentality and future trends. Within a week flash mobs became front page news as loosely tied large groups of individuals coordinating via text messages and social networks began robbing pharmacies, convenience stores, jewelry stores, and other businesses.

Japanese Internet Giant To Push Home Solar (guardia)

Imagine if Amazon’s Jeff Bezos announced he’d use his site to promote putting solar panels on home roofs and also help consumers find the money to pay for it (well, Bezos has personally backed nuclear power). That’s what Hiroshi Mikitani, president of the Japanese’s massive online retailer, Rakuten, said after the company issued its quarterly earnings Thursday. The Internet giant plans to not only start selling solar panels online but also offering financial options for customers.

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."

21 Comments

littlefeatfan's picture
littlefeatfan
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3E Links, Resource and Cartoons posted

 Weekly summary posted at http://3es.weebly.com/

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pinecarr
Status: Diamond Member (Online)
Joined: Apr 13 2008
Posts: 2245
Some global reactions to US credit rating downgrade...

From ZH: @ http://www.zerohedge.com/news/it-just-went-bad-far-far-worse-germany-says-italy-too-big-efsf-save-refuses-carry-euro-bailout- ,

"It Just Went From Bad To Far, Far Worse As Germany Says Italy Is Too Big For EFSF To Save, Refuses To Carry Euro Bailout Burden"

Remember when we said (yesterday) that Germany will soon balk over the fact that it is pledging its entire economy to bail out an insolvent Europe? Well, that moment has come.

Dow Jones just hitting the tape referencing Spiegel

  • German Govt: Italy Too Big For EFSF To Save - Spiegel
  • German Govt: Doubts Whether Tripling EFSF Would Help It Save Italy
  • German Govt: Italy Must Make Savings, Reforms To Exit Crisis - Spiegel
  • Italy Debt Guarantee Could Raise Doubts Over Germany's Finances - Spiegel
  • German Govt: EFSF Should Only Help Small, Mid-Size Countries - Spiegel

 

From ZH: @ http://www.zerohedge.com/news/pimco-us-downgrade-heralds-new-financial-era ,

PIMCO: "U.S. Downgrade Heralds A New Financial Era""

"From PIMCO

There will be endless debate on whether S&P, the rating agency, was justified in stripping America of its AAA rating and — adding insult to injury — even attaching a negative outlook to the new AA+ rating. But this historic action has now taken place, and the global system must adjust. There are consequences, uncertainties, and a silver lining.

Not so long ago, it was deemed unthinkable that America could lose its AAA. Indeed, “risk free” and “US Treasuries” were interchangeable terms — so much so that the global financial system was constructed, and has operated on the assumption that America’s AAA was a constant at the core, and not a variable.
 
Global financial markets will reopen on Monday to a changed reality. There are immediate operational consequences, from re-coding risk and trading systems to evaluating collateral and liquidity management. Key market segments will be closely watched, including the money market complex and the reaction of America’s largest foreign creditors.
 

From The Guardian, @ http://www.guardian.co.uk/business/2011/aug/06/us-credit-rating-downgrade-china 

"US credit rating downgrade prompts warning from China"

• S&P cuts US credit rating from AAA to AA+ for first time
• China says it has 'every right to demand' US tackles debt
• Barack Obama repeats call for parties to work together

 

More from ther Guardian article (bold mine):

The British economist Baroness Vadera, a former Labour minister and G20 adviser who played a role in devising a rescue package for the international banking system at the time of the 2008 crash, said the current crisis could be even worse.

She told BBC Newsnight: "It feels as scary, but it is different. The reason it is potentially worse is that governments stepped in [in 2008-09] all over the world and saved the banking system in order to save their economies, but now who is going to step in to save governments?

"When we went into that crisis, interest rates were quite high, so we did have monetary policy to use as a tool and now we are at the outer limits of that. Lastly, we are currently facing quite a lot of inflationary pressures, particularly coming from commodities and emerging markets, so our room for manoeuvre is a lot more limited."

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doorwarrior
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How paper gold works

Here is a great interview with Jim Rickards about who owns the gold at Fort Knox and West Point. He also goes into gold leases and how the paper market works.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/8/6_Jim_Rickards.html

Rich

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doorwarrior
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How paper gold works

sorry double post

Rich

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dps
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The Losers Club

http://dailyreckoning.com/the-losers-club/

Investors were staggered yesterday.   Stocks got walloped.

Dow down 512 points.

Today, bond yields are falling… oil is below $86.   London, Paris, Frankfurt – all down heavily.  Only gold has resisted the general rout.  It lost only $7 yesterday.

Why?

The reason is debt.  It won’t go away.  It won’t say ‘adios’ and get on a bus.    Like a bad houseguest, it won’t leave!

The feds have tried to ignore it.  They’ve tried to postpone it.  They’ve tried make the problem go away by stimulating the economy to grow faster.

But nothing has worked.  Day by day the debt grows larger…  And day by day, the moment of truth grows closer.

What truth?

That you can’t make excess debt disappear.   It has to be paid…either by the borrower, or by the lender.  Someone has to suffer.

Why is that?  Because borrowing takes from the future.  Sooner or later, the future shows up and wants to be paid.  It wants its ‘pound of flesh.’  Its recompense.  It wants what is due.

 

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Rob111
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Karl Denninger - And So It Begins

IMO - Karl calls it correctly:

 

http://market-ticker.org/akcs-www?post=191576

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frobn
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Posts: 184
The debt ceiling circus--I

The debt ceiling circus--I mean debate--was unnecessary, both parties believed they could advance neoliberal capitalism while gaining political points. What the politicos didn't expect was the unintended consequence that S&P would take advantage.


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jumblies
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FBI launches free Child ID app

 http://www.reuters.com/article/2011/08/05/us-apps-fbi-idUSTRE7746M520110805

(Reuters Life!) - The FBI has launched a new app, its first mobile application, for parents to store and access pictures and other vital information about their children in case they ever go missing.

The free Child ID app is only available for use on iPhones but the Federal Bureau of Investigation said there are plans to expand it to other types of mobile devices.

"In the unlikely event that your child goes missing, you can quickly email the photos and information to the authorities," the FBI said in a statement.

The app includes tips on how to keep children safe, a checklist and a tab to easily email the secure information. Other features include guidance on what to do in the initial hours after a child goes missing, which the FBI says occurs every 40 seconds in the United States.

The agency also plans to add another feature that will enable users to upload other photos stored on their smartphone.

It said all data on the smartphone will remain only on the device unless it is sent to the authorities.

The app can be downloaded for free from the App Store on iTunes.

As a parent I already have pictures of my child and I know his vital information. If he went missing I'd be talking directly to the police, not f'ing about with my iphone.

I guess they're anticipating an increase in kidnappings. Or they want to scare us into chipping our kids.

 

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Damnthematrix
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Karl calls it correctly:
Awareness wrote:

IMO - Karl calls it correctly:

 

http://market-ticker.org/akcs-www?post=191576

"We suffer from the utter inability of either political party to stand at a podium and tell the truth.  We cannot have $100,000 in income and spend $170,000+ a year. "

We could do it too.......  IF we could print our own money legally!

Karl is clearly angry - and who can blame him, but he has obviously not done the Crash Course, otherwise he would recognise that the whole world needs a reboot.  Nowhere in that whole rant does resource depletion get a mention.  The system is beyond repair, we need a whole new one.  Coming to a town near you, and not soon enough either....

There's only one public person who "calls it correctly"... and that's our own Chris Martenson!

Mike

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Full Moon
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thumbs up

  I will give you the thumbs up 'Like ' sign    you are likely to  got to the basement with this one .

 

 FM 

 

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SagerXX
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If I was invested in a "paper" PM ETF...

...right now, I'd be very, *very* nervous about it... Viva -- Sager

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Quote:There's only one
Quote:

There's only one public person who "calls it correctly"... and that's our own Chris Martenson!

Yes, although there are plenty getting on the bandwagon now, at last.

But where are the solutions? We need to start talking about them soon, or...

Quote:

 A generational war is in the offing. I for one will side with the youth against the Boomers. The future of the country depends upon the outcome of this war.

I would suggest the amendment - the future of the WORLD depends… 

Get along to a Zeitgeist Movement meeting and see what generation it attracts - in rapidly growing numbers. If we were half as smart as we think we are, we'd be hard at work designing a replacement system for what is now doomed and crumbling. It would be nice to have a say in what ever's next before they take charge, lock us away in boomer homes, and build something to suit themselves.

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UncleRocco
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Zeitgeist

Hello Derek,

Many moons ago I happily hosted a showing of the first Zeitgeist film, and found it to be quite courageous. Then I watched them steadily drive off the tracks of reality with the Addendum. Don't know what your experience in Australia is, but mine, watching the stuff they put out featuring Peter Joseph and Jacque Fresco, it is easy for me to see that they have little idea what they are talking about. Maybe they've changed spokespeople, or their focus? They are growing fast there?

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VeganDB12
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Posts: 740
what the heck is happening at zerohedge?

hard to log on, "sacrilege" says there is a freeze on comments at 11am eastern, and no updates since 11pm last night? are they under attack?

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
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Posts: 2237
ZH is facing unprecedented traffic

They've been getting some MSM publicity lately (NBC news, Rush Limbaugh), so their servers are getting flooded with new users. Attack of Joe 6-Pack! (smile). Viva -- Sager

pinecarr's picture
pinecarr
Status: Diamond Member (Online)
Joined: Apr 13 2008
Posts: 2245
ZH is facing unprecedented traffic
Sager wrote:

They've been getting some MSM publicity lately (NBC news, Rush Limbaugh), so their servers are getting flooded with new users. Attack of Joe 6-Pack! (smile). Viva -- Sager

Too funny, Sager!!...The "Attack of the Pack!!"

 

DurangoKid's picture
DurangoKid
Status: Silver Member (Offline)
Joined: Oct 25 2008
Posts: 174
Flash Mobs

Expect the following:

FBI and local police will be allowed by law to monitor all text messages for keywords and phrases that might lead to a flash mob occurance.  Also, voice recognition software will monitor all voice cellphone traffic for the same thing.  There will be additional penalties for using mobile com devices to plan and coordinate illegal acts.  There may be some protections such as evidence of other crimes not related to a flash mob will not be admissable in court.  For now.  Of course, names and addresses of people who obey the law but oppose and orgainize against the corporate state will be put on watch lists so their legal opposition at some point in the future can be disrupted.  After these laws have been on the books for a while the courts will rule that people using mobile devices have a reduced expectation of privacy and everything will be up for grabs.  People the state doesn't like will be put on watch lists and no-fly lists.  Their homes will be targets for sneak and peeks.  Their cars will have GPS stalking devices attached.  All of this will be monitored by ever more sophisticated software that will flag suspicious activities for human intervention.  Clockwork Orange meets 1984.  Can't wait.

earthwise's picture
earthwise
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Posts: 848
what the heck is happening at zerohedge?
Denise2257114 wrote:

hard to log on, "sacrilege" says there is a freeze on comments at 11am eastern, and no updates since 11pm last night? are they under attack?

I haven't been able to log on there for weeks. I keep getting re-routed to here http://www.iana.org/domains/example/  

Is anybody else experiencing this or is it just me?

SailAway's picture
SailAway
Status: Gold Member (Offline)
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Posts: 404
Re: what the heck is happening at zerohedge?

erthwise,

 

I had the same thing late at night a few days ago but it was back to normal in the morning.

ZH seems to be back now. Have you tried to delete the cookies in your WEB browser?

 

earthwise's picture
earthwise
Status: Platinum Member (Offline)
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Posts: 848
SailAway
SailAway wrote:

erthwise,

 

I had the same thing late at night a few days ago but it was back to normal in the morning.

ZH seems to be back now. Have you tried to delete the cookies in your WEB browser?

 

SailAway,

I tried deleting the cookies as suggested but to no avail. Seems like everyone else eventually gets through to Zerohedge but me (sigh!) so it must be something on my computer. That's a bummer 'cause I know about computers the way a hog knows about Sundays.

Thanks anyway.

derekrawson's picture
derekrawson
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Posts: 22
Re. Zeitgeist
Quote:

Many moons ago I happily hosted a showing of the first Zeitgeist film, and found it to be quite courageous. Then I watched them steadily drive off the tracks of reality with the Addendum. Don't know what your experience in Australia is, but mine, watching the stuff they put out featuring Peter Joseph and Jacque Fresco, it is easy for me to see that they have little idea what they are talking about. Maybe they've changed spokespeople, or their focus? They are growing fast there?

I've been slapped for posting about Zeitgeist here in the past, but since you've asked, it appears to me that Peter Joseph's offerings have matured significantly and anyone interested in where we're headed and who wants to keep an open mind ought to watch 'Moving Forward' (over 9 mil. views on YouTube), a much more intellectual work. Interestingly, Jacque Fresco has recently distanced himself from TZM (I've heard PJ's thoughts on that but not JF's so I won't comment).

TZM is attracting some quality public advocates now and their regular internet radio programs are being hosted by chapter leaders from the U.K., Canada, Italy, the U.S. of late. Of particular note was a recent talk by Douglas Mallette (just ex NASA) who has set up as leader of TZM Technology chapter and also Jim Phillips who has set up TZM Education chapter from the U.K.

I try to support TZM because they are the only group I've found with a fleshed out model of a system to replace the one that's presently drawing it's last gasps. And as hard as it is to think outside the box we've grown up inside of, we're going to have to learn to share or find another planet to live on very soon.

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