Daily Digest

Daily Digest 8/7 - U.S. Has 'Negative Outlook', China Tells U.S. 'Good Old Days' Are Over, Doubts Over Euro Stability

Sunday, August 7, 2011, 9:44 AM
  • S&P Cuts U.S. Credit Rating to AA+, Negative Outlook
  • China Tells U.S. It Must ‘Cure Its Addiction to Debt'
  • U.S. Credit Rating Downgrade Prompts Warning From China
  • Some Concern Abroad About U.S. Downgrade
  • Beneath jobs report surface lie some ugly truths
  • China Tells U.S. 'Good Old Days' of Borrowing Over
  • Doubts over Euro Stability
  • Revisiting Rolling Blackouts in Texas

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Economy

S&P Cuts U.S. Credit Rating to AA+, Negative Outlook (jdargis)

In what the Wall Street Journal’s Damian Paletta called a “wild back and forth” that played out Friday afternoon, the U.S. Treasury Department discovered that S&P miscalculated future U.S. deficit projections by nearly $2 trillion in its downgrade. S&P admitted to the bad math after affirming the downgrade Friday afternoon. But Treasury’s math discovery — and the budget deal brokered by legislators earlier in the week — were not enough to stave off the downgrade, which marks the first time that one of the three main ratings firms stripped the U.S. of it top rating. The U.S. had a AAA rating for 70 years.

China Tells U.S. It Must ‘Cure Its Addiction to Debt’ (jdargis)

Though Beijing has few options other than to continue to buy United States Treasury bonds, Chinese officials are clearly concerned that the country’s substantial holdings of American debt, worth at least $1.1 trillion, are being devalued.

U.S. Credit Rating Downgrade Prompts Warning From China (pinecarr)

In a comment article the official Xinhua news agency said China had "every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets. International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country."

Some Concern Abroad About U.S. Downgrade (jdargis)

Jean-Claude Trichet, the president of the European Central Bank, planned to convene a late-afternoon call Sunday from his vacation in France with the heads of Europe’s national central banks as they gird for what is expected to be a rocky opening of financial markets on Monday.

Beneath Jobs Report Surface Lie Some Ugly Truths (Johnny Oxygen)

Let's start with the reality that fewer people actually were working in July than in June.

According to a Bureau of Labor Statistics breakdown, there were 139,296,000 people working in July, compared to 139,334,000 the month before, or a drop of 38,000.

...It's a product of something the government calls "discouraged workers," or those who were unemployed but not out looking for work during the reporting period.

This is where the numbers showed a really big spike—up from 982,000 to 1.119 million, a difference of 137,000 or a 14 percent increase. These folks are generally not included in the government's various job measures.

China Tells U.S. 'Good Old Days' of Borrowing Over (Johnny Oxygen)

China bluntly criticized the US on Saturday one day after the superpower's credit rating was downgraded, saying the "good old days" of borrowing were over.

China -- the United States' biggest creditor -- said Washington only had itself to blame for its plight and called for a new stable global reserve currency.

"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary.

Doubts over Euro Stability (Regina F.)

In recent days, the euro crisis appeared to be under control again, but market declines this week have shaken European leaders. Speculators are mercilessly testing the weaknesses of the euro rescue package, and European Commission President Barroso is calling for the bailout fund to be increased.

Energy

Revisiting Rolling Blackouts in Texas (Crash_Watcher)

It was almost six months ago to the day that statewide rolling blackouts were imposed in Texas after frigid weather shut down dozens of generators.

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8 Comments

bogwood's picture
bogwood
Status: Member (Offline)
Joined: Jun 13 2008
Posts: 13
markets

 Israeli market down today but may be some local factors. Asian markets may be interesting tonight.

MAJOR's picture
MAJOR
Status: Member (Offline)
Joined: Mar 31 2009
Posts: 2
Downgrade

S&P was not the first downgrade of the US. The CME Group the world's leading and most diverse derivatives marketplace, was truly the first to downgrade US credit. On 07-25-11 the CME Group gave a .05% haircut to US Treasuries. This is the beginning of a credit downgrade rout. 

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
jimkell wrote:  Israeli
jimkell wrote:

 Israeli market down today but may be some local factors. Asian markets may be interesting tonight.

Israeli market fell up to 6.5% in pre-opening activity.  Opening delayed.

http://ca.news.yahoo.com/p-downgrade-us-israeli-stock-market-delays-opening-081725976.html

Things should get interesting.

dave s's picture
dave s
Status: Bronze Member (Offline)
Joined: Feb 20 2009
Posts: 56
Mutually assured destruction...

http://news.yahoo.com/americas-good-days-over-chinas-155036960.html

If America's good days are over, so are China's

 

China’s statement is against the country’s long-term interests, because America and China are the two poles of the same global economic sphere. American consumers are on the one pole and Chinese manufacturers are on the other: The more American consumers spend, the more Chinese factories produce, the more dollars end up in the chest of Chinese central banks; and the more dollars end up financing the US government, the more American consumers spend on Chinese products.

badScooter's picture
badScooter
Status: Silver Member (Offline)
Joined: Jun 20 2011
Posts: 152
ECB goes QE

 ECB apparently just announced they're fixing on buying sovereign bonds, probably Spain, Italy:

http://www.bbc.co.uk/news/business-14439224

Mighty big looking candlestick on Au in pre-market trading, NA market futures down 2%+.  Japan opens in less than an hour.  Wife is out to the store, getting some popcorn.

Cheers,
Mike

 

 

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4066
Scroll though zerohedge

 

 

 

Zerohedge link

Their headlines:

One Ounce Of Religious Non-Money Tradition = $1700

So Much For QE2: The Market Indexed For Dollar Devaluation Is Now Back To Jackson Hole Levels

China Enters Bear Market

The Farce Is (Again) Complete: Former Obama Budget Chief Orszag Says Official Economic Projections "Too Optimistic"

Why The ECB's Monetization Is Doomed In One Simple Chart

China Isn't Exactly Floating The Yuan But...

Muni Market Prepares For "Hundreds And Hundreds" Of Downgrades Tomorrow

Goldman Hikes Its 12 Month Gold Price Target From $1,735 To $1,830

Highlights From G-7 Statement Which Basically Says That The Plunge Protection Team Just Went Global

 

AinSophAur's picture
AinSophAur
Status: Member (Offline)
Joined: Sep 25 2009
Posts: 18
se

monday bloody monday

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

Has BenBo done the honerable thing yet?

I never had much truck with Economic Rationalism. I was right.

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