Daily Digest

Daily Digest - February 7

Sunday, February 7, 2010, 10:57 AM
  • Geithner Says U.S. Will 'Never' Lose Its Aaa Debt Rating
  • Testy Conflict With Goldman Helped Push A.I.G. to Edge
  • Charting Europe's Crisis - Part 1
  • In Japan, Crisis Looms As Economy Slips
  • Germany Turns Up The Heat On Tax Evaders
  • G7: Europe must rescue Greece
  • Australian firm strikes $60B coal deal with China
  • Dealing With Peak Oil

Economy

Geithner Says U.S. Will 'Never' Lose Its Aaa Debt Rating (joemanc, tx_floods)

Treasury Secretary Timothy F. Geithner said the U.S. is in no danger of losing its Aaa debt rating even though the Obama administration has predicted a $1.6 trillion budget deficit in 2010.

“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast today whether a downgrade is a concern. “That will never happen to this country.”

Testy Conflict With Goldman Helped Push A.I.G. to Edge (pinecarr)

A.I.G. had long insured complex mortgage securities owned by Goldman and other firms against possible defaults. With the housing crisis deepening, A.I.G., once the world’s biggest insurer, had already paid Goldman $2 billion to cover losses the bank said it might suffer.

Charting Europe's Crisis - Part 1 (pinecarr)

With Europe finally regaining its rightful place as the epicenter of the peripheral economic crisis, it is time we shift focus, albeit briefly, from America and its increasing cadre of troubles, to those of the Euro area. Below we present some of the key charts and observations that will frame the imminent bail out/default of a whole host of minor EMU and EU countries.”

In Japan, crisis looms as economy slips (Nickbert)

Standard & Poor’s threatened to downgrade the Japanese government’s credit rating because Prime Minister Yukio Hatoyama is moving too slowly to reduce the debt. And China overtook Japan as the largest maker of cars, according to an announcement from the Japanese Automobile Manufacturers Association.

The triple whammy of manufacturing and fiscal problems is a harbinger of what Japan faces in the coming years as its listless economy slips into an era of reckoning and national loss of face.

Germany turns up the heat on tax evaders (Nickbert)

German Finance Minister Wolfgang Schaeuble said Switzerland's bank secrecy law was out of date in the 21st century and had to be abolished.

Bank secrecy cannot be an instrument in the 21st century used to evade taxes," he told the Sueddeutsche Zeitung newspaper in an interview published on Saturday. "There's no future for bank secrecy. It's finished. It's time has run out.

G7: Europe must rescue Greece (Nickbert)

Finance ministers and officials from the G7 countries, meeting in Canada yesterday, insisted there would be a “European” solution to the problems affecting Greece, Portugal and Spain and no need for an IMF rescue.

Energy

Australian firm strikes $60B coal deal with China (Nickbert)

The deal is the latest in a string of major contracts between Chinese firms and Australian resource companies as the Asian nation tries to secure the energy, steel and other materials it needs for its surging economy.

Dealing With Peak Oil (pinecarr)

We cannot go from a system that derives almost 40% of its energy from oil and over 80% from all fossil fuels, to another getting its energy from wind, sun, geothermal, and waves easily or quickly. To replace even one coal-fired power plant can require thousands of windmills. The other problem is that it takes energy to get energy. This concept is called energy returned on energy invested (EROEI), and it is clear that in the future we will be investing much more energy to get our energy. This means there is much less net energy to invest in the economy, and our transportation, food, buildings, and health systems. Thus, each of these will look much different in the future than they do now.

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6 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
Re: Daily Digest - February 7

"Nouriel Roubini, economics professor at the Stern School of Business at New York university, said in Davos last month: "If Greece goes under, that's a problem for the eurozone. If Spain goes under, it's a disaster.""

"Gerard Lyons, chief economist at Standard Chartered, says there have been several examples of monetary unions that have collapsed because they were not accompanied by fiscal union: "For monetary union to survive, it has to become a political union. If it doesn't there is likely to be some sort of implosion and a move towards a two-speed Europe."

Roubini agrees: "The eurozone could drift … with a strong centre and a weaker periphery, and eventually some countries might exit the monetary union.""

"Ostensibly, the epicentre of the crisis is Greece, in danger of defaulting on its debt payments to worldwide holders of its government bonds, or sovereign debt.

But the fear about state defaults quickly spread to Spain, Portugal and Ireland, fiscal train wrecks that together with Greece now go by the unfortunate acronym PIGS.

Even then, the scope of a potential second global financial crisis so soon after the credit crisis of 2008-09 goes far beyond the euro zone, the 16 nations sharing a common currency, the euro. "

"Greece's debt-to-GDP ratio is an eye-popping 95 per cent. But then, the U.S. isn't far behind at 84 per cent. (The Canadian ratio is estimated at 35.5 per cent in the current fiscal year.) Greece's deficit-to-GDP ratio is an alarming 13 per cent. But then, Britain isn't far behind at 12.6 per cent.

Just last month, California-based PIMCO, the world's biggest bond investor, warned that Britain's bonds ware "resting on a bed of nitroglycerine." And last week, Moody's, the U.S. bond-rating agency, warned the U.S. of a looming downgrade that would strip America of its coveted Triple-A bond rating, which would push up borrowing costs.

The world is awash in potentially unsustainable debt."

"However, during the press conference, the question of what are the procedures that the seven countries will undertake to resolve the debt problems, the Italian, German, and French finance ministers were reluctant to answer and did not mention any specific measures that will be adopted, while the Canadian Finance Minister stated that this issue will be addressed by the European Union and not by the G7. "

"Toledo's massive budget deficit has city leaders thinking outside of the box to find a solution.

The mayor and city council are looking at every possible option to balance the budget, and dozens of ideas have been put on the table to balance the city's $44 million budget deficit.

One idea is selling Toledo-owned properties like The Docks, The Erie Street Market, and land in Monclova. Councilman George Sarantou believes those properties could raise millions of dollars."

"Finance ministers from seven of the world’s biggest economies concluded a meeting in the Canadian Arctic on Saturday with pledges to maintain their fiscal stimulus programs, despite rising worries among investors about the mounting debts of some European governments.

“We are all absolutely committed to maintaining the support for our economies until we make sure that we have recovery established,” Alistair Darling, Britain’s chancellor of the Exchequer, said in Iqaluit, Nunavut, where finance ministers and central bankers from the Group of 7 nations were meeting.

The European debt crisis, and its spread from Greece to other countries in the euro zone like Portugal, Spain and Italy, were a focus of the two-day talks. "

"Denver (PRWEB) February 7, 2010 -- A Colorado business columnist has proposed a simple, but effective solution to the Federal government’s out-of-control deficits: invoice each and every American monthly for his or her share of the spiraling tab.

 The U.S. government’s current $12.3 trillion deficit balance amounts to about $40,000 per citizen. Layer in the Obama Administration’s latest proposed budget for the coming year, and that obligation ratchets up to $45,000 per person. For a family of four, the proposed debt burden, before interest, equals $180,000."

"Many jobless people have reached a conclusion that captures the depth of the unemployment crisis: Looking for a job is a waste of time.

(AP)The economy is growing. Yet it's creating few jobs. That's why in the past eight months, 1.8 million people without jobs left the labor market. Many had grown so frustrated by their failure to find a job that they threw up their hands and quit looking for one."

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - February 7

Hotrod's picture
Hotrod
Status: Silver Member (Offline)
Joined: Apr 20 2009
Posts: 177
Re: Daily Digest - February 7

It looks like reform of the too big to fail banking system is not in the cards.

http://www.nakedcapitalism.com/2010/02/guest-post-the-other-reason-that-the-u-s-is-not-regulating-wall-street.html

spinone's picture
spinone
Status: Bronze Member (Offline)
Joined: Jul 12 2008
Posts: 49
Re: Daily Digest - February 7

I cant believe that after the revelation that ratings agencies were so corrupt rating the MBS, that anyone believes the noises that are being made about US ratings are legitimate.  It is pure theater.

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
Re: Daily Digest - February 7

Here's Tim Geithner talking about our AAA rating at 6 minutes into the video.

 

.......In an unrelated video here's Beavis being interviewed by Letterman.

 

rmurfster's picture
rmurfster
Status: Bronze Member (Offline)
Joined: Apr 17 2008
Posts: 84
Re: Daily Digest - February 7

OK, so I watched the B&B video, but not the Geithner video as I couldn't bring myself to stoop THAT low!Smile

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