Daily Digest

Daily Digest 8/10 - Collector Gold Products Not For Sale, MI Cuts Food Stamps, PX School Gets Rid Of Buses

Wednesday, August 10, 2011, 9:41 AM
  • German Officials Want Italy and Spain to Sell Gold
  • Germany Riskier Than U.K. for First Time Since January 2008
  • Mint Pulls Collector Gold Products Off Sale
  • Worst 40-Year Bond Sale Shows Cash King as Investors Flinch: Japan Credit
  • Mich. cuts food stamps for 30,000 college students
  • States have closed $527 B budget gap since 2007
  • Company Pension Underfunding Jumps by $97 Billion as Economic Growth Slows
  • CalPERS portfolio has lost $18 billion in value since July 1
  • California Revenue Falls 10.3% Short of Forecast in July
  • Gregoire warns Washington state agencies of deeper cuts
  • Phoenix school forced to get rid of buses
  • High Teen Unemployment Molding 'Lost Generation'

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Economy

German Officials Want Italy and Spain to Sell Gold

Members of Angela Merkel’s CDU party, as well as junior coalition partner FDP are suggesting that Spain and Italy should tap into their gold reserves in order to balance their debt issues....

Financial Times Deutschaland reports about this. It is quoted here, with one member saying that gold should be used as collateral for the ECB:

Meanwhile, economist Frank Schäffler, the liberal FDP, the junior partner of the German government considered “necessary” for states to sell part of its debt and deposit gold from its reserves in the European Central Bank (ECB) as collateral.

Germany Riskier Than U.K. for First Time Since January 2008

"It's clear that infection is spreading right up the euro credit ladder," said Bill Blain, a strategist in London at broker Newedge Group. "Suddenly, like a wildfire, it's leapt into Germany."

The euro area's debt crisis is contaminating countries that investors traditionally considered to be havens, even after the European Central Bank resumed buying bonds of peripheral nations. German bunds fell as speculation mounted the region's largest economy will be forced to pick up the tab for its neighbors, pushing the 10-year yield up from near the lowest since October.

Mint Pulls Collector Gold Products Off Sale

Gold soared as much as $72.30 a troy ounce above the prior day’s close in early trading Aug. 9 reaching as high as $1,782.50 a troy ounce. This followed a $61.40 gain the day before.

The Mint uses a grid system to price its numismatic products on a weekly basis, but market movements threatened to push bullion values to or beyond the posted sales prices prior to their being pulled down.

Worst 40-Year Bond Sale Shows Cash King as Investors Flinch: Japan Credit

The worst demand on record for 40- year Japanese bonds sold yesterday signals growing concern about Japan’s ability to service the world’s biggest debt pile and the risk of holding long-term securities while markets are volatile.

The 400 billion yen ($5.2 billion) sale drew bids valued at 2.03 times the amount on offer, the weakest since the Ministry of Finance began selling the securities in 2007.

Mich. cuts food stamps for 30,000 college students

Michigan says it has removed about 30,000 college students from its food assistance program since it began enforcing federal guidelines this spring.

Michigan Department of Human Services Director Maura Corrigan tells The Detroit News for a story published Monday that's about twice as many as officials expected and it's expected to bring about $75 million a year in savings.

States have closed $527 B budget gap since 2007

New data shows state governments have lost $527 billion in revenue since 2007, forcing lawmakers to slash state spending nationwide. According to data released Tuesday, state lawmakers expect slow to moderate economic growth in the next few years and expect to make fewer cuts. But that was before the recent political turmoil over the debt ceiling, a precipitous drop in the stock market and the downgrading of government bonds.

Company Pension Underfunding Jumps by $97 Billion as Economic Growth Slows

The gap between the assets of the 100 largest company pensions and their projected liabilities has widened by $97 billion in August to $351 billion, actuarial and consulting firm Milliman Inc. said today in a statement. That compares with the record $446 billion deficit in August 2010.

“July was a brutal month for these pensions,” John Ehrhardt, a principal and consulting actuary in New York with Milliman, said in the statement. “Unfortunately it looks like we may be in for more bad news, with August off to a miserable start.”

CalPERS portfolio has lost $18 billion in value since July 1

The value of the country's largest public pension fund was $220 billion at market's close on Monday, down 7.6% or about $18 billion, CalPERS said Tuesday.

"It's bad, but it's not 2008," said Joseph Dear, CalPERS' chief investment officer, in an interview on CNBC. "We have a crisis induced by lack of confidence in the U.S. and European political systems, combined with gloomier and gloomier economic growth forecasts."

California Revenue Falls 10.3% Short of Forecast in July

California, the most populous U.S. state, collected $538.8 million, or 10.3 percent, less revenue in July than projected as higher taxes adopted in 2009 expired.

Gregoire warns Washington state agencies of deeper cuts

Rattled by global economic uncertainty, Gov. Chris Gregoire has asked state agency leaders and front-line workers to start getting ready for budget cuts as deep as 10 percent, or $1.7 billion, in January – in case state revenue plunges again.

Phoenix school forced to get rid of buses

The latest casualty of education budget cuts left a Phoenix school with one less transportation option.

According to ABC15, the Machan School decided to get rid of bus services due to budget cuts and a drop in enrollment.

High Teen Unemployment Molding 'Lost Generation'

The Labor Department's latest unemployment report offered a small sign of hope, with the nation's jobless rate dipping to 9.1 percent in July. But the new numbers also showed that teen unemployment is still on the rise, now at 25 percent.

Across the country, 16- to 19-year-olds are facing the end of the third summer in a row of unemployment rates above 20 percent. Economists warn that if the trend continues, a generation of young people could face a bleak future in the workforce.

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8 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4239
Fed Dissenters Won’t Impede Additional Asset Purchases

 

"Philippines President Benigno Aquino asked Central Bank to open up to growing currencies, and start changes in the country's dollar-based economy, as his financial experts weighed losses and gains following a scrutiny of the economic woes in the United States (US), an ally, a local paper and other sources said.
The country's dollar-based foreign reserves must be checked, Aquino told the Star, indicating the importance of changing Central Bank's policy to make it open to "a broader basket of currencies… (since) there is an old saying that you don't put all of your eggs in one basket."
Earlier, Philippine finance secretary Cesar Purisima said the dismal economic developments in the US, "highlights the need for alternative global reserve currencies and benchmarks that are more stable and as liquid and convertible". He did not give details. "
 

 

  • Other news, headlines and opinion:

China Denounces American “cowardice” after US Downgrade

Japan Signals Concern as Yen Returns to Intervention Level

ECB provides $71 billion in credit to banks

Sarkozy calls crisis meet over AAA fears (France)

The Worldwide Redefinition of “Riskless-Assets.” (McAlvany audio)

Greek Bond Swap Offer May Go Beyond 2020
 

Greek bank deposits drop 1.9 pct m/m in June- cenbank

Bank of England takes interest rate rises off the agenda (Analysts say bank is unlikely to raise rates until 2013)
 

ECB may need €2.5 trillion to save Europe

Harrisburg Mayor Plans to Risk City Payroll to Pay Debt Service

U.K. Pension Plans’ Shortfall Widens on Turbulence, FT Reports
 

Mayor defends $150M property tax hike to fund Chicago schools

Bernanke Indicates Fed Dissenters Won’t Impede Additional Asset Purchases

Goldman says QE3 likely after dovish Fed statement

Bank of New York Mellon cutting 1,500 jobs

 

 

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4239
U.S. moves to sell, rent 92,000 foreclosed homes

 

"Struggling to clear its inventory of foreclosed properties, the Obama administration said Wednesday it’s looking for investor ideas for converting over 92,000 foreclosed properties owned by the U.S. government into rental units, in a sign of the depths to which the U.S. housing market has sunk."
"Administration officials, in a conference call with reporters, said that in some circumstances local jurisdictions have talked about seeking to have certain properties owned by the U.S. government be demolished because they are dangerous and a blight on communities. They added that they are seeking proposals from investors that would assist in these efforts".

Damnthematrix's picture
Damnthematrix
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Japan Food Riot Fears on the

Japan Food Riot Fears on the Rise
Posted by Brittany Stepniak - Wednesday, August 10th, 2011
http://www.wealthwire.com/news/headlines/1660

Japan is back in the headlines. Nearly five months ago, Japan suffered an epic disaster. Today, they embark on another unfortunate journey in a related disaster: a food supply crisis.  The lives of the people are in jeopardy as samples of tainted food threatens the future production and distribution of Japan's food supply.

Despite numerous attempts by officials to reassure people that the food was safe from radiation, tainted rice fears are now halting trade procedures for Japan. Yesterday, the country issued its first rice futures contract in the past 72
years. Prices per contract spiked almost immediately, putting trade at a standstill on suspension.

The price of 60 kilograms of rice had a reference price of $13,700 (£8,399) for delivery in 2012 but it reached more than $19,210 on the Osaka exchange, which carried on trading.  There is concern that crops may be damaged by radioactivity in the wake of the nuclear accident at Fukushima earlier this year.  Japan has begun rice trading to try to open up the market and increase transparency in the trade of its staple foodstuff. Analysts are predicting that stockpiles of rice will be at their lowest level in four years in 2012.

Meanwhile, Agricultural defense missions are making plans to test all of the latest crops before they make it to grocery stores.

Marty59's picture
Marty59
Status: Member (Offline)
Joined: Oct 23 2009
Posts: 10
This can't be right

he price of 60 kilograms of rice had a reference price of $13,700 (£8,399) for delivery in 2012 but it reached more than $19,210 on the Osaka exchange, which carried on trading.

 

This must be a mistake. 2.2 kilograms = 1 LB. x 60 = 132.

That would mean that rice was bid up to $145.53 per LB.

They must mean Yen which would still be very high at $1.89 LB.

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1892
Yen, Not Dollars. No Need To Panic

Let's take a look at the Japan Times, instead.

Rice Futures Quotations Established (August 10, 2011)
"The bellwether Koshihikari brand from the Kanto region for delivery in January exchanged hands at ¥17,280 per 60 kg, while the brand's November and December deliveries traded at ¥17,400 after soaring by the daily limit of ¥1,000 from the reference price of ¥16,400."
http://search.japantimes.co.jp/cgi-bin/nb20110810a5.html

Or, we can look to the Wall Street Journal...

After 72-Year Break, Rice Futures Back On The Market (August 20, 2011)
"For the first time since World War II, rice futures returned to the trading landscape on Monday, but it took another day for the first contract to be sealed on the Tokyo Grain Exchange. Not because there were no buyers - quite the reverse. In fact, Japan’s appetite for rice was heavily underestimated on the morning it was inducted back onto the exchange, and keen bidders at the Tokyo Grain Exchange walked away empty-handed Monday after a crush of buy orders came in far above the base price of ¥13,500 ($174) per 60 kilograms, twice triggering a trade suspension mechanism."
http://blogs.wsj.com/japanrealtime/2011/08/09/after-72-year-break-rice-f...

Looks like Brittany Stepniak over at Wealth Wire wasn't just ignorant of currency symbols, she's trying to foment panic with her article, entitled "Japan Food Riot Fears on the Rise". Nothing in the article indicates there's been any food riots or fears of food riots.

By the way, the Koshihikari rice is a high quality sushi rice and if grown in Japan, carries a premium. In supermarkets, it can be a thousand to two thousand yen for a 2-kilogram bag.

Poet

Travlin's picture
Travlin
Status: Diamond Member (Offline)
Joined: Apr 15 2010
Posts: 1322
Try this
Marty59 wrote:

This must be a mistake. 2.2 kilograms = 1 LB. x 60 = 132.

Marty

I think you reversed the formula.  1 kilogram = 2.2 pounds.  http://www.manuelsweb.com/kg_lbs.htm

Don't ask me how I learned that a "key" weighs 2.2 pounds.  It was a long time ago. 

Travlin 

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Life on the small planet.

An eventful day

I shook Prime Minister of Australia,Julia Gillard's hand and told her that she is doing a wonderful job introducing the carbon tax.

My bosses immediatly rushed in to silence me. The morons think it all about the money because of the failings of the Left hemisphere.

Rossi and Defkalion Have split. And then it seems that Defkalion says that Rossi's device is the Laboratory demonstration but they have the industrial application which they call Hyperion.

And then Professor Christos Stremmenos responded to the split with this plea for respect for the device. (Short PDF).

Make of that what you will, munchkins.

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