Daily Digest

Daily Digest - July 1

Thursday, July 1, 2010, 9:58 AM
  • Dollar Should Be Replaced As International Standard, U.N. Report Says
  • Is Obama Losing The Economic Argument?
  • Which Way Wednesday – Pattern Recognition Special
  • Personal Savings Rate: Worse Than We Thought
  • Should We Build More Bicycle Highways?
  • Winds From Gulf Storm Disrupt Cleanup Efforts
  • "Nicotine Bees" Population Restored With Neonicotinoids Ban

Economy

Dollar Should Be Replaced As International Standard, U.N. Report Says (Jeff B.)

The use of the dollar for international trade came under increasing scrutiny when the U.S. economy fell into recession. "The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency," the report said.

Is Obama Losing The Economic Argument? (joemanc)

Barack Obama was in effect stretchered off the field at the G20, having failed to persuade fellow world leaders to sign up to a further round of economic stimulus. Instead, the final communiqué was an austere affair, promising efforts to curb government spending, reduce deficits and start reducing the mountains of debt. In the World Cup of Economics, it was Austerity 4, Stimulus 1.

Which Way Wednesday – Pattern Recognition Special (Ilene)

Unfortunately, Technical Analysis has so many devout followers that it often becomes a self-fulfilling prophesy. Even worse (and certainly more significant) than the head and shoulders pattern is the coincident “death cross” or “dark cross” that is being formed on our indexes (see yesterday’s post) as the 50-day moving average falls below the 200-day moving average, as indicated on this chart from Barry Ritholtz...

Personal Savings Rate: Worse Than We Thought (Jeff B.)

In the short term, the savings rate has increased slightly, but based on the long term trend of interest rates down and savings rate down, it seems that a more sustained increase in savings is unlikely until consumers incentivized to save via higher interest rates. Given the recent rhetoric from the Federal Reserve, it seems unlikely that we will see a meaningful increase in interest rates anytime soon.

Energy

Should We Build More Bicycle Highways? (jdargis)

Among the hurdles are overcoming the culture of fear that can surround urban cycling (often for good reasons) and overcoming the almost inertial political resistance to giving cycling road space at the expense (perceived or real) of cars.

Environment

Winds From Gulf Storm Disrupt Cleanup Efforts (jdargis)

Alex started the day as a tropical storm, but its winds reached hurricane strength, exceeding 74 miles per hour late Tuesday. The storm was on track to make landfall Wednesday in northern Mexico and southern Texas. That would keep it far southwest of the well site, as well as coastal areas of Louisiana and other gulf states affected by the disaster.

"Nicotine Bees" Population Restored With Neonicotinoids Ban (Ben Johnson)

Following France and Germany, last year the Italian Agriculture Ministry suspended the use of a class of pesticides, nicotine-based neonicotinoids, as a "precautionary measure." The compelling results - restored bee populations - prompted the government to uphold the ban. Yesterday, copies of the film 'Nicotine Bees' were delivered to the US Congress explaining the pesticide's connection to Colony Collapse Disorder. Despite the evidence, why does CCD remain a 'mystery' in the US?

Please send article submissions to: [email protected]

13 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
Re: Daily Digest - July 1

"July 1 (Bloomberg) -- The European Central Bank said it will lend banks 111.2 billion euros ($136.5 billion) for six days to help them cope with the expiry of its landmark 12-month loan today.

The Frankfurt-based ECB said 78 banks asked for the six-day funds at the benchmark interest rate of 1 percent. Banks today need to repay 442 billion euros in 12-month loans, the biggest amount ever awarded by the ECB. Banks asked for 131.9 billion euros in three-month loans yesterday, less than economists expected."

"Bids exceeded the total amount on offer 1.7 times, down from 2.35 times in a May 6 sale of five-year notes, news reports said, while the average yield rose to 3.657% from 3.532%. "

.........................2A) Moody's downgrades 5 Spanish regions on debt

"MADRID (MarketWatch) -- Moody's Investor Service on Thursday downgraded five Spanish regions -- Castilla-y-Leon, Extremadura, Madrid and Murcia to Aa2 from Aa1 and Castilla-La-Mancha to Aa3 from Aa2. The ratings agency, which shook the markets on Wednesday after warning that Spain could lose its Triple-A sovereign rating, said the outlook for all the regions remain negative. The review reflects the "fragility of the country's medium-term economic recovery prospects," Moody's said. Financial performance of those regions is expected to be impaired for some time, with a "significant fall" in tax revenue expected in 2010-2011 seen having a recurrent impact on their financing deficits over the next few years. "This trend, together with the subsequent rapid recourse to debt, will be difficult to curb given weak economic growth anticipated over the next few years," said Moody's who said average debt-to-operating revenue will rise to 100% in 2011 from 54% in 2008."

 

"SPRINGFIELD, Ill. (AP) - Gov. Pat Quinn plans to spell out how he'll use his emergency budget powers to keep state government afloat despite the biggest deficit in Illinois history.

Quinn is scheduled to announce his plans Thursday, the first day of the state's fiscal year.

Illinois faces a deficit of roughly $13 billion.

Rather than balance the budget, lawmakers voted to give Quinn special authority over spending. That means he'll decide which programs are slashed, which bills will go unpaid and which special funds will be raided."

"July 1 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke and then-New York Fed President Timothy Geithner told senators on April 3, 2008, that the tens of billions of dollars in “assets” the government agreed to purchase in the rescue of Bear Stearns Cos. were “investment-grade.” They didn’t share everything the Fed knew about the money.

The so-called assets included collateralized debt obligations and mortgage-backed bonds with names like HG-Coll Ltd. 2007-1A that were so distressed, more than $40 million already had been reduced to less than investment-grade by the time the central bankers testified. The government also became the owner of $16 billion of credit-default swaps, and taxpayers wound up guaranteeing high-yield, high-risk junk bonds.

By using its balance sheet to protect an investment bank against failure, the Fed took on the most credit risk in its 96- year history and increased the chance that Americans would be on the hook for billions of dollars as the central bank began insuring Wall Street firms against collapse. The Fed’s secrecy spurred legislation that will require government audits of the Fed bailouts and force the central bank to reveal recipients of emergency credit.

“Either the Fed did not understand the distressed state of some of the assets that it was purchasing from banks and is only now discovering their true value, or it understood that it was buying weak assets and attempted to obscure that fact,” Senator Sherrod Brown, an Ohio Democrat and member of the Senate Banking Committee, said in an e-mail when informed about the credit quality of holdings in the Maiden Lane LLC portfolio. The committee held the April 3 hearing."

"June 30 (Bloomberg) -- The governors of New York, Pennsylvania and Michigan led states pressing Congress to extend higher financing for Medicaid, the health-care program for the poor whose use surged during the economic crisis."

"The governors said the money is needed to prevent cuts to programs such as schools, whose funding has already been slashed.

“We’ve depleted our resources,” said Paterson, whose state was anticipating $1 billion for Medicaid. “Where are we going to go? We are going to have to go back to some of these same places and create unimaginable pain.”"

"WASHINGTON — More than 1.3 million laid-off workers won't get their unemployment benefits reinstated before Congress goes on a weeklong vacation for Independence Day.

An additional 200,000 people who have been without a job for at least six months stand to lose their benefits each week, unless Congress acts.

For the third time in as many weeks, Republicans in the Senate successfully filibustered a bill Wednesday night to continue providing unemployment checks to people who been laid off for long stretches. The House is slated to vote on a similar measure Thursday, though the Senate's action renders the vote a futile gesture as Congress prepares to depart Washington for its holiday recess."

"The California Public Employees Retirement System will be raising its health-care contribution rates by a total of 9.1 percent for its 1.3 million program members. These increases will be enacted by 2011.

“This increase mainly reflects higher costs that plans anticipate for hospital, medical and prescription drug use next year – not from members using more services or the new federal health care law,” CalPERS Board President Rob Feckner said in a prepared statement. “These are the best rates we could negotiate in the current market, where similar increases are forecast next year for other employer purchasers.”"

WASHINGTON (MNI ) - States and local governments should not count on future economic growth to solve the financial challenges stemming from public pension funding, and should instead take a proactive approach to retirement benefit funding, Standard & Poor's said Wednesday.

"Otherwise, they expose themselves to more "hardship," the rating agency said in a report titled Pension Funding And Policy Challenges Loom For U.S. States.

"If governments consistently ignore postretirement benefits and underfund contributions in the hope that future economic growth will bolster their finances sufficiently, they could be setting themselves up for greater hardship, in our view," Standard & Poor's said.

Overall, the report added its voice to mounting warnings against letting pension funding issues become massive financial burdens for states, threatening their ratings, with heavy implications for their financing costs.

"The decline in public pension fund assets that started in fiscal 2008 is now contributing to significant budget challenges for U.S. states as many of them are faced with having to increase their pension contributions even as federal stimulus funding dries up and before meaningful revenue recovery has taken hold," the report said. "

"Federal Reserve officials have also highlighted the burden of pension funding on state budgets and the issue is becoming more and more public, with many inter-related facets involved: pension funding, state budgets, state ratings, state financing costs, all as the economic recovery is losing steam.

It remains unclear how far local government finances would have to deteriorate before it becomes a real threat to the U.S. sovereign rating. "

"From NBC's Luke Russert

In a press conference on Capitol Hill today, House Democrats in the Ohio delegation vigorously attacked House Minority Leader John Boehner for his recent suggestion -- among other things -- to raise the qualification to receive Social Security benefits.

In an interview with the Pittsburgh Tribune-Review, Boehner put forth the idea of raising the Social Security age to 70 for those who are more than 20 years away from receiving a Social Security check. Boehner went on to say, “We need to look at the American people and explain to them that we're broke.” More: “If you have substantial non-Social Security income while you're retired, why are we paying you at a time when we're broke? We just need to be honest with people.”

Ohio Democrats -- many in extremely competitive districts -- slammed Boehner for these comments, calling him "out of touch" and accusing him of being an elitist.

Rep. Steve Driehaus referenced Boehner’s love of golf, saying: “Mr. Boehner’s comments are outrageous, and again it shows how out of touch Mr. Boehner is with the average Ohioan. You know when your point of reference is the manicured greens of country clubs, I can understand how he might not understand the suffering going on of average Ohioans across the state.”"

"HONG KONG (MarketWatch) -- Two closely watched surveys of Chinese manufacturing activity released Thursday indicated slowing growth in June, potentially signaling a reversal in economic momentum and raising questions about whether a more serious downturn is at hand."

"SPRINGFIELD — As Gov. Pat Quinn prepares to outline possible cuts in state services during an event today in Chicago, Illinois ended the fiscal year with $4.5 billion in unpaid bills.

Those still owed money by the state on Wednesday include schools, universities, caretakers of seniors and business owners, including Decatur pharmacy owner Dale Colee.

“It’s real frustrating,” said Colee, who routinely waits about 90 days for the state to reimburse him for Medicaid costs. He said he pays his taxes on time, even though the state is late on its payments."

"SACRAMENTO — The Great Recession continues to cast a deep shadow over Silicon Valley's economy, with new figures released by the Santa Clara County assessor's office today revealing the disturbing disappearance of thousands of businesses during the last year.

The report also confirmed a historic plunge in overall property values, with Santa Clara County's assessment roll for 2010-11 dropping about 2.4 percent, from $303.8 billion to $296.47 billion. Not counting a massive decline after Proposition 13 went into effect in 1978, this year's reduction is the largest since 1933 — in the early days of the Great Depression."

"The US needs to find a way to increase revenues and reduce spending as quickly as possible, the congressional budget watchdog said on Wednesday, as it warned that the federal debt was on a path towards “unsustainable levels”.

The bipartisan Congressional Budget Office said that spending on Social Security and mandatory healthcare entitlement programmes was set to increase from a combined 10 per cent of gross domestic product at present to 16 per cent of GDP in 2035 on the back of America’s ageing population. The CBO noted that this increase in spending would occur in spite of the passage of healthcare reform legislation this year, which is projected to shrink the deficit over the next two decades.

Douglas Elmendorf, CBO director, said that, under a relatively optimistic scenario that involved little changes to current law, US debt would rise from 62 per cent of GDP this year to about 80 per cent of GDP in 2035. But under an alternative scenario, in which several changes were made by lawmakers, including the extension of tax cuts pushed through under George W. Bush, the former president, US debt could hit 185 per cent of GDP by 2035. "

"NEW YORK (AP) -- The number of buyers who signed contracts to purchase homes tumbled in May, a sign the housing recovery can't survive without government incentives.

The National Association of Realtors said Thursday its seasonally adjusted index of sales agreements for previously occupied homes dropped 30 percent in May from April. The index fell to 77.6 from 110.9. May's reading was the lowest dating back to 2001.

The index also was down 15.9 percent from the same month a year earlier.

The index provides an early measurement of sales activity because there is usually a one- to two-month lag between a sales contract and a completed deal."

  • Other news and headlines:

Ga Faces Worst Fiscal Crisis in 70 Years

With federal stimulus funds running out, economic worries grow

Back-It-Yourself Debt Adds Risk to Munis as Issuers Shun Banks

Sharp says finance delays Italy solar project-INTERVIEW-UPDATE 1

Sovereign Default Enters Apparatchik Vocabulary: Mark Gilbert

Gartner trims global IT spend f'cast on Europe woes

$2.3 Billion in Troubled CMBS Loans Coming Due Over Next 6 Months

Poland to Cut Bond Sales on Record Supply, High Yield

Corporate Bond Risk Rises in Europe, Credit-Default Swaps Show

Asia-Pacific Bond Risk Rises, Credit-Default Swap Prices Show

Brewer wants Arizona's Medicaid obligation cut

IMF may adopt financial safety net proposal

Foreclosure Crisis Still Gripping South Florida

Oil leak hits Florida property market

Fitch Downgrades Mendocino County, California Pension Bonds to 'A'; Outlook Remains Negative

Slovakia's public budget deficit reaches €2.4 billion after first half of 2010

Pension funds face '£100bn deficit' (UK)

Stocks suffer worst quarter since '08 panic

Bridge tolls in the Bay Area go up (California)

Lockyer: Every day of budget delay adds $50M to state deficit (California)

Cash-strapped Greeks hit by new sales tax hike

Jobless claims unexpectedly rise ("increased 13,000 to a seasonally adjusted 472,000")

"A Gigantic Ponzi Scheme, Lies and Fraud": Howard Davidowitz on Wall Street (Tech Ticker video)

Oil hitting Mississippi beaches by the ton

Hungary Debt Auction Misses Target 3rd Time in Month

vvolf's picture
vvolf
Status: Bronze Member (Offline)
Joined: Jan 3 2009
Posts: 29
Re: Daily Digest - July 1

A little history of silver I did not know.  Seems my interest in silver may hold some future after all :)

 

http://goldnews.bullionvault.com/silver_monetary_062920102

printfaster's picture
printfaster
Status: Bronze Member (Offline)
Joined: Sep 30 2009
Posts: 52
Re: Daily Digest - July 1

On the Democrats criticizing Boehner for "being out of touch and an elitist".

Now you see why no one in DC can tell the truth.  Boehner tells the truth, and he is quickly smothered with outrageous lies.  Everyone criticizes the Republicans for not cutting spending, but when the Democrats jump into the debate, the quickly charge the discussion with high voltage criticism:  eg, racism, elitism, out of touch, anti-immigrant, anti-poor, anti-humanitarian, anti-elderly, anti-education, yada yada.

The only one able to swim upstream in this political sewer has been Chris Christie.

To which I need to add, the one administration most responsible for cutting Social Security benefits has  been the Clinton administration which adeptly destroyed the CPI by making it totally meaningless through adaptive substitution and hedonics.  Look for the Republicans to propose simple across the board cuts, and the Democrats to surgically cut benefits to Republican segments.

 

 

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Re: Daily Digest - July 1

re "Nicotine Bees"

"Nicotinyl pesticides, containing clothianidin, thiametoxam and imidacloprid, used to coat plant seeds, are released into the lymph as a permanent insecticide inside the plant. But after just sucking dew from maize leaves that absorbed neonicotinoids, disoriented bees can't find their way to the apiary. Massive numbers of bees get lost and die."

i dont use or advocate any pesticides, but i have a problem with this theory; first, nicotine pesticides have been in use for at least 40 years, and nicotinyl for at least 20...and most CCD is observed from fall thru early spring, whereas corn is germinating & unfurling in late spring and early summer...

that said, nicotine and sevin (carbaryl) are both very toxic to bees, and neither should be used anyhow...

osb272646's picture
osb272646
Status: Silver Member (Offline)
Joined: Mar 14 2010
Posts: 120
Re: Daily Digest - July 1

To Printfaster-

I used to get upset with the constant bickering and division that our elected representatives engage in.  Then I realized that it's just one of the sideshows to the real story, which Chris' Crash Course does an excellent job of telling.  I decided to quit getting heartburn over things I cannot control, like divisive politics, and focus on things that I can control.  This means positioning my investments and lifestyle to try to minimize damage from dislocations that appear to be imminent.

The little theatricals that our elected officials are engaged in are merely diversionary for the masses, to keep them looking in the wrong direction.  I think most folks suspect that we're in for some very rough sledding, but they have absolutely no idea what to do about it, or that it simply won't happen in the good 'ol U.S. of A.

It's unfortunate, but until the politicans can get their act together and focus on fixing the very important issues facing our nation; and quit playing their little partisan games, there's no reason to expect that significant economic and social dislocation will be averted.

Take a cruise through the forums section of the this web site.  There's a lot out there that will explain what I'm getting at.  There's also some stuff in there might seem a little over the top, but at least it's entertaining.

 

Sam's picture
Sam
Status: Bronze Member (Offline)
Joined: Jun 5 2009
Posts: 51
Re: Daily Digest - July 1

Amen rjs. I make a comfortable living from my land without using pesticides. My customers are quite happy with the taste of my slightly bug chewed fruit and veggies. Ugly melons and tomatoes taste better to them because they know that the bees (as well squash bugs and a multitude of catapillers) are protected. This practice would be more difficult if I had a large mortgage on the land, and payments on lots of heavy machinery. I dont know how some of the conventional farmers make ends meet even with the help of the miracle chemicals.

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
Over $13.2 Trillion

National Debt

Date Debt Held by the Public Intragovernmental Holdings Total Public Debt Outstanding
06/24/2010 8,556,293,486,630.55 4,481,786,497,087.81 13,038,079,983,718.36
06/25/2010 8,556,551,627,690.59 4,481,754,159,120.66 13,038,305,786,811.25
06/28/2010 8,555,694,983,404.56 4,483,221,853,538.84 13,038,916,836,943.40
06/29/2010 8,556,448,489,602.01 4,481,094,226,101.80 13,037,542,715,703.81
06/30/2010 8,633,680,393,089.93 4,569,793,360,878.17 13,203,473,753,968.10
jhart5's picture
jhart5
Status: Bronze Member (Offline)
Joined: Jul 25 2009
Posts: 89
Re: Daily Digest - July 1

Howard Davidowitz: U.S. Economy "Is a Complete Disaster"

The U.S. economy is in shambles and Americans will continue to see high unemployment and lower living standards in the years to come, Howard Davidowitz tells Henry and Aaron in the accompanying clip. 

Davidowitz lays much of the blame for the economy's woes at the feet of the Obama administration, which he calls "the worst of my lifetime."

Obama "Mr. Mass Destruction"

http://finance.yahoo.com/tech-ticker/howard-davidowitz-u.s.-economy-%22is-a-complete-disaster%22-514505.html?tickers=xhb,tlt,%5Edji,%5Egspc,xrt,TBT,UUP&sec=topStories&pos=9&asset=&ccode=

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Re: Daily Digest - July 1
businessinsider:
Warning To Gulf Volunteers: Almost Every Cleanup Worker From The 1989 Exxon Valdez Disaster Is Now Dead - Are you sure that you want to help clean up the oil spill in the Gulf of Mexico?  In a previous article we documented a number of the health dangers from this oil spill that many scientists are warning us of, and now it has been reported on CNN that the vast majority of those who worked to clean up the 1989 Exxon Valdez oil spill in Alaska are now dead.  Yes, you read that correctly.  Almost all of them are dead.In fact, the expert that CNN had on said that the life expectancy for those who worked to clean up the Exxon Valdez oil spill is only about 51 years.  Considering the fact that the oil spill in the Gulf of Mexico is now many times worse than the Exxon Valdez disaster, are you sure you want to volunteer to be on a cleanup crew down there?  After all, the American Dream is not to make big bucks for a few months helping BP clean up their mess and then drop dead 20 or 30 years early.
idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - July 1

britinbe's picture
britinbe
Status: Gold Member (Offline)
Joined: Dec 28 2008
Posts: 381
Re: Daily Digest - July 1

"the world is starting to look like Japan"   quote from the latest Ambrose Evans-Pritchard

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7866896/Spectre-of-an-economic-relapse-stalks-markets-as-China-wobbles.html

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2219
Opinion, Belief, Fact...and Weasels

A few weasel words from the folks at the MSM:

(from yahoo, emphasis mine)

"Payrolls drop by 125K, jobless rate falls (AP)

AP - A wave of census layoffs cut the nation's payrolls in June for the first time in six months, while private employers added a modest number of jobs. The unemployment rate fell to 9.5 percent, its lowest level in almost a year."

 

 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Opinion, Belief, Fact...and Weasels
SagerXX wrote:

A few weasel words from the folks at the MSM:

(from yahoo, emphasis mine)

"Payrolls drop by 125K, jobless rate falls (AP)

AP - A wave of census layoffs cut the nation's payrolls in June for the first time in six months, while private employers added a modest number of jobs. The unemployment rate fell to 9.5 percent, its lowest level in almost a year."

 

 

+1

Amazing. Pagan relatives?

From my most recent write....

John Williams of Shadow Statistics can count, unlike the BLS which I'm convinced stands for BS Labor Statistics. Shadow Statistics calculated the unemployment rate to be 22% --- not this 9.7% drivel that you hear on CNBS or MSNBS. 22%

22%

And, while I was grateful to see 3 acquaintances get much needed employment from the Census, all 3 by the way worked a total of 3 part time jobs as they have all lost their primary job, I am even more grateful to know that the Census jobs are finished. Not because I'm some ogre, but because these jobs produced nothing but more numbers that some other bureaucracy will do nothing but scr#w up the numbers with them.

Amazing, in a time like this the government's Birth Death Model, whose bogus formula uses 12 month old data, managed to add 147,000 jobs to offset the 225,000 "jobs" that the "Census created."

THE AVERAGE WORK WEEK IS NOW 34.1 hours --- for emphasis/awareness/to make a point, that used to be how many hours a part timer worked.

Welcome to Russia & MSNBS, CNBS and the rest of the mainstream morons who call themselves "reporters."

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments