Daily Digest

Daily Digest - February 16

Tuesday, February 16, 2010, 10:44 AM
  • SocGen’s Edwards Sees Euro Breakup as Feldstein Predicts Change
  • King World News - Jim Sinclair Interview
  • The New Generation Leaving Ireland
  • What's Sustainable About This Budget?
  • Corporate America Is More Pessimistic Than You Know
  • China’s Central Bank Hits Brake on Hot Economy
  • Spanish Government Struggles With Crisis Message
  • Letter to Reintroduce Yucca Mountain


SocGen’s Edwards Sees Euro Breakup as Feldstein Predicts Change (mhoop)

The Greek budget crisis is a symptom of imbalances that will lead to the breakup of the euro region, according to Societe Generale SA strategist Albert Edwards, and Harvard University Professor Martin Feldstein said monetary union “isn’t working” in its current form.

Southern European countries are trapped in an overvalued currency and suffocated by low competitiveness, top-ranked Edwards wrote in a report today. Feldstein, speaking on Bloomberg Radio, said a one-size-fits-all monetary policy has fueled big deficits as countries’ fiscal records differ.

King World News - Jim Sinclair Interview (Davos)

Legendary Jim Sinclair known as Mr. Gold for his remarkably accurate timing regarding the gold bull market of the 70’s is the Founder of jsmineset.com and Chairman of Tanzanian Royalty Exploration. In this interview Jim discusses the reckless actions of an out of control banking system and also shares information that has never before been broadcast to the public, the gold market, criminal banking syndicates, their control of markets and governments as well as the fact that they are sociopaths, these sociopaths out of control and are now attacking countries - not just companies, loss of confidence in currencies, the problems in Greece, the fact that many states are bankrupt, bankruptcy of the system, why the little guy gets hurt, Bert Seligman & Jesse Livermore, JP Morgan’s appeal to Jesse Livermore, and more.

The New Generation Leaving Ireland (Ben Johnson)

When Simon Phelan started a civil engineering degree at Dublin's Trinity College four years ago, he figured his biggest problem upon graduation would be deciding which job to choose. Ireland's economy was growing at 5.4%, unemployment was a mere 4.4%, and construction was booming. Today, with graduation fast approaching, only two of Phelan's 100 classmates have even had interviews. Worse, in these recession-scarred times, just two people from the class ahead of him are employed.

What's Sustainable About This Budget? (Ben Johnson)

The president seems to understand that the fiscal plan presented in his budget is not sustainable and, as such, is not really a plan at all. That is why the budget prominently calls for a fiscal commission that will be charged with “identifying policies to improve the fiscal situation.” The goal, the budget says, is “to stabilize the debt-to-G.D.P. ratio at an acceptable level once the economy recovers. In other words, President Obama’s long-term fiscal strategy is to appoint a commission to figure out a long-term fiscal strategy.

Corporate America Is More Pessimistic Than You Know (Ben Johnson)

A whopping 66% of 1,200 corporate board members surveyed recently said U.S. companies wouldn’t return to “business as usual” until at least 2013, and will operate till then in an environment of sluggish sales and growth. Roughly 45% said the economy wouldn’t return to precrisis levels in terms of investment, employment and productivity before 2013, according to the survey, conducted by KPMG LLP, while 22% said it would come beyond 2014.

China’s Central Bank Hits Brake on Hot Economy (Ben Johnson)

China’s central bank moved late Friday to reduce lending to companies and individuals by requiring large commercial banks to increase the amount of cash they park with the central bank. The move, which came earlier than most economists had expected, was meant to slow China’s breakneck economy and inflation.

It was the second time in a month that the central bank had directed the country’s banks to increase reserves. In spite of the earlier edict, which took effect on Jan. 18, banks actually lent more money in January than in the previous three months combined, illustrating just how hard it is for Beijing to modulate its rapidly expanding economy.

Spanish Government Struggles With Crisis Message (Nickbert)

The collapse of a real estate- and consumer-fueled boom has left Spain with a eurozone high jobless rate of nearly 20 percent, and the government ran up a deficit that in 2009 equaled 11.4 percent of GDP. That is way over the eurozone limit of 3 percent and earned Spain a place as the letter "S" in the inelegant PIGS acronym coined by analysts (the others are Portugal, Ireland, and Greece).


Letter to Reintroduce Yucca Mountain (mhoop)

When Congress passed the Nuclear Waste Policy Act in 1982, it set the stage for a safe and suitable permanent nuclear waste repository. In 1987, Congress designated Yucca Mountain as the only option for a long-term storage site and this was reaffirmed in 2002. Even though the Department of Energy was to begin taking waste to the site as early as 1998, nothing has ever changed about Yucca Mountain being the permanent site.

Please send article submissions to: [email protected]


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Re: Daily Digest - February 16

"Elsewhere, European sovereign CDS markets also lost some ground after opening tighter. Greece was one of the biggest underperformers, with the country's five-year sovereign credit-default-swap spreads widening more than 0.15 percentage point to 3.70 percentage points, according to CMA DataVision. That means the annual cost of insuring €10 million of Greek government debt against default for five years had risen €15,000 to €370,000."

"DUBAI World will have to sell more assets in order to restructure about $22bn of debt owed by the state-owned conglomerate's subsidiaries, global ratings agency Moody's said today.

"We believe that further major asset sales will constitute one of the conditions of any amicable restructuring agreement with Dubai World's creditor banks," said Philipp Lotter, senior vice president of Moody's in Dubai."

...................2A) Cost of insuring Dubai debt soars

"The cost of insuring five-year Dubai debt against default jumped to its highest level since March yesterday as concerns intensified over the debt restructuring of state-owned conglomerate Dubai World."

"Feb. 16 (Bloomberg) -- Indonesia canceled a sale of 1 trillion rupiah ($107 million) of Islamic treasury bonds today, according to the Finance Ministry.

The government rejected all of the 1.7 trillion rupiah of bids it received for the so-called sukuk notes due September 2015, January 2017, January 2025 and February 2021, the ministry said in a statement posted on its Web site. “No bid was won,” the statement said, without giving a reason. "

“I think investors demanded high returns and the government didn’t want to take it,” said Handy Yunianto, a Jakarta-based fixed-income analyst at PT Mandiri Sekuritas, a unit of PT Bank Mandiri. “The government is now more concerned about the cost.”

"As the U.S. housing market boomed in the past decade and fueled a bull market in mortgage investments, Norway's government-owned fund went along for the ride -- and the fall.

After that fund recorded its worst-ever year in 2008, managers cited investments backed by U.S. mortgages as a key culprit and began to cut back.

Now, U.S. officials are looking to foreign government funds again. The Federal Reserve is scheduled at the end of March to halt its purchases of mortgage-backed securities, a move that could drive up the low interest rates that have helped the housing market show new signs of life. The Fed is gambling that private investors will step in to buy the securities, helping to keep rates from spiking. Senior officials in the Obama administration and at the Fed say they are counting in part on foreigners to keep the housing market funded.

But financial analysts and advisers familiar with foreign government funds, known as sovereign wealth funds, predicted that the United States will get limited relief from abroad. "

"The report said Maiden Lane's losses were concentrated in commercial real estate assets, which had a face value of $8.4 billion and an estimated worth of $7.7 billion when acquired by Fed. They were marked down to $4 billion as of September, according to the report."

"Facing its worst financial crisis in its 90 year history, Jackson Memorial Hospital is expected to announce in the next week that it will lay off more than 1,000 of its 12,000 employees, according to sources familiar with the hospital's plans. "

"Moody’s Investors Service is forecasting another 8 percent decline in home prices over the course of 2010 before a bottom in residential property values is reached,

largely because of the “underwhelming” success of the administration’s Home Affordable Modification Program (HAMP). "

"There's been many letters and symbols used over the last year to describe the shape of the U.S. economic recovery. There's the strong V-shaped recovery; the square root shaped recovery to connote a strong recovery followed by a period of flat to no growth; and the W-shaped recovery favored by those believing in a double dip recession.

Tech Ticker guest Michael Pento has a new twist on the discussion. Pento, senior market strategist with Delta Global Advisors believes this is a tee-pee shaped recovery with the top of that tee-pee having already formed in the fourth quarter. "

"When Nevada issued bonds to finance the Las Vegas Monorail 10 years ago, one of the objections was that the state was, in effect, putting its good credit rating at risk by banking on the success of the monorail.

Now that the monorail is in default on those bonds and has filed for bankruptcy protection, it could force Nevada taxpayers to pay higher interest rates on money that the state borrows through bond financing, an attorney for a major creditor in the bankruptcy case warns."

"Feb. 16 (Bloomberg) -- International demand for long-term U.S. stocks, bonds and financial assets grew at a slower pace in December than a month earlier, as China sold U.S. government securities, a U.S. Treasury Department report showed.

Net buying of long-term equities, notes and bonds totaled $63.3 billion for the month, compared with net purchases of $126.4 billion in November, the Treasury said in Washington. Including short-term securities such as stock swaps, foreigners purchased a net $60.9 billion in December, compared with net buying of $30.7 the previous month."

"WASHINGTON — President Barack Obama, defending his economic stimulus plan on its first anniversary, is dispatching his Cabinet across the country to try to calm an anxious public as Democrats head into potentially devastating midterm elections.

A weeklong push to highlight the stimulus program's first year was starting with a Tuesday trip by Vice President Joe Biden to hard-hit Saginaw, Mich., to tour a small business, a jobs training program and a solar factory that all received Recovery Act dollars.

Obama's fellow Democrats planned to tout programs putting people back to work under the $787 billion spending bill. Health and Human Services Secretary Kathleen Sebelius was touring a medical center in Atlanta on Tuesday; Homeland Security Secretary Janet Napolitano was promoting stimulus projects in Virginia and Texas the same day.

In all, senior administration officials are scheduled to visit 35 communities before Friday to counter Republican claims the massive deficit-spending program has failed. Obama plans to surround himself at the White House on Wednesday with people who have jobs because of the stimulus plan, then travel to Colorado and Nevada."

"LONDON (Reuters) - Euro-priced gold extended earlier gains to hit a record high 816.35 euros an ounce on Tuesday, as investors spooked by fears over the fiscal health of peripheral euro zone economies bought the metal as a haven from risk.

Gold denominated in euros was bid at 815.82 euros an ounce at 0948 GMT, against 809.01 euros an ounce late on Monday. Its earlier peak beat a previous record high of 812.43 euros an ounce set in December."

"3,090 retired teachers and administrators

receive pensionsin excess of $100,000 from CalSTRS.

They're all listed here."

"Feb. 16 (Bloomberg) -- Argentina’s peso fell to a record low as investors bought dollars amid speculation the government will push the currency weaker to bolster tax revenue from commodity exports and ease the country’s financing needs."

"WASHINGTON — China's holdings of US Treasury bonds tumbled in December, allowing Japan to take over as the top holder of American government debt, according to Treasury data released Tuesday.

China's bond holdings dropped substantially to 755.4 billion dollars in the last month of December from 789.6 billion in November, said the Treasury's international capital data report.

Japan's holdings increased to 768.8 billion dollars in December from 757.3 billion dollars in November, according to the data."

......................15A) New York manufacturing picks up but China sells U.S. debt

"At the same time, U.S. capital flows data underscored analysts' worry that the economic recovery could be stymied by a steep rise in bond yields, making borrowing more expensive for homeowners and companies.

The data showed China sold U.S. Treasuries in December for the fifth straight month, analysts said, underscoring the risk that waning appetite for U.S. debt among major foreign holders could spark a selloff and send yields rising in future."

idoctor's picture
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Posts: 1731
Re: Daily Digest - February 16

Foreign Demand for US Treasurys Takes Record Fall

The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion.


lpowell23's picture
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Re: Daily Digest - February 16


Bomb explodes outside JP Morgan Athens, none hurt

The plot thickens!   Next time I'm pretty sure the "none hurt" will be left out.    Hope this isn't a precursor to debt bombs turning into real bombs!

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