The Coming Depression: July 2011

Sunday, July 31, 2011

US Economy Needs To Rid Itself Of Debt Addiction

Larry Elliott

The US can solve its debt crisis but sustainable prosperity lies in improved productivity and real wage growth not asset bubbles; A country where a plutocracy is firmly in control. A country that has racked up whopping trade and budget deficits over the past quarter century. A country where the tax system is biased towards the rich and spending is lavished on the military rather than the poor. This country – where the politics are dysfunctional and the economy a train wreck – is not some tinpot Latin American dictatorship circa 1980 but the United States in 2011.
If the US were any other country it would be seeking help from the International Monetary Fund (IMF). It is considered a blessing that the dollar's role as the global reserve currency of choice means that Washington does not have to suffer this indignity, but in reality the blessing has turned out to be a curse. The security blanket provided by the dollar has allowed Americans to believe that if they close their eyes all their problems will go away . . . . .

Senate Takes A Break As Debt-Limit Talks Move Forward

Catalina Camia

The top Senate leaders expressed optimism today that a deal will be reached to raise the nation's debt limit and avoid a default that could wreak calamity on the global economy.
After taking a procedural vote, the Senate is in recess. Furious negotiations are going on between the White House and Senate Minority Leader Mitch McConnell, R-Ky., to reach a deal before Tuesday's deadline.
The outlines of the proposal on the table would raise the nation's $14.3 trillion debt ceiling in two stages . . . . .

US Debt Crisis: Capitol Hill Ready To Strike Deal - But At What Cost?

Jill Treanor

Compromise should stave off default but America could still lose its triple A credit rating America could soon lose its much-coveted triple A credit rating – possibly by the end of this week – as politicians in Washington race to clinch a deal to solve the debt crisis in what is likely to be a volatile week for global financial markets.
Just hours before the dollar started trading in New Zealand, the Senate was voting on a deal to raise the $14.3tn ceiling on borrowing to enable public workers to be paid, and the country to keep functioning. But while there was relief that an outright default on debt payments by the US might now be avoided, there was lingering concern that congressmen might not fall behind the $3tn of cuts needed in return for a $3tn rise in the debt ceiling before Tuesday's deadline – when the White House has warned the money will run out . . . . .

US Debt Crisis: Deal 'Very Close' But Key Deadline Could Still Be Missed

Ewen MacAskill,

Despite cautious optimism from both sides the US could still default on its debts, risking economic chaos around the world
A last-gasp compromise began to take shape in Congress on Sunday night aimed at ending the US debt deadlock that has threatened to throw the US and world economy into chaos. But, with time fast running out, Congress may have left it too late to meet the Tuesday deadline set by the Treasury for raising the debt ceiling above its current $14.3tn limit.
The US Treasury had said that if the ceiling was not lifted by Tuesday, America would no longer have the cash needed to pay all its bills and faced the prospect of defaulting for the first time in its history.
The White House hinted on Sunday that the deadline could be extended for a few days to allow Congress to get legislation through. The Democratic leader in the Senate, Harry Reid, said he was "cautiously optimistic" of a deal, a view echoed by his . . . . .

Senators Hold Out Hope for Debt Measure Compromise

Kent Hoover

For once in the long debate on lifting the nation's debt ceiling, Democrats and Republicans are talking about progress finding a compromise. The Senate is expected to vote on a measure Sunday that would lift the ceiling while calling for $3 trillion in cuts over the next 10 years. Senate Majority Leader Mitch McConnell said today that Congress and the White House are “very close” to a deal that would raise the debt ceiling and avoid a possible government default on Tuesday.
On CNN”s State of the Union program this morning, the Kentucky Republican said GOP leaders and the White House have “made dramatic progress” toward agreeing on a deal that would reduce the federal deficit by $3 trillion over the next 10 years. In return, the debt ceiling would be raised.
Saturday night, Senate Majority Leader Harry Reid, a Nevada Democrat, postponed a scheduled 1 a.m. Sunday vote on his debt reduction plan. Another vote on the Reid measure had . . . . .

Don’t Raise The Debt Ceiling, Says Gary Johnson: Pain Today Beats Economic Collapse Tomorrow

Steven Nelson

Gary Johnson is an unusual politician. Contrarian but constructive, Johnson hopes to move the Republican Party in the direction of being a socially “tolerant” party that emphasizes limited government above all else. In a lengthy interview with The Daily Caller, Johnson, a popular New Mexico governor from 1995 to 2003, described a range of policy positions that he brings to the Republican presidential primary. New Hampshire, the early primary state with a large pool of independent and libertarian votes, is where Johnson hopes to break through. He cites the Granite State as the place where . . . . .

Inouye, Akaka Statements On Debt Negotiations

MEDIA RELEASE

U.S. Sen. Daniel K. Inouye issued the following statement after a meeting with Senate leaders Saturday afternoon:
“At this moment, we have a plan before us that will stave off the certain financial disaster that will occur if the United States defaults on its financial obligations. We have already scared off significant investment in our country and our failure to reach an agreement at a time when millions of Americans are struggling to find work is irresponsible. In my nearly five decades as a member of this body, I have never seen such reckless behavior. Here we are, days before our country is unable to make good on its debts, and we are still talking and talking about revisions and amendments and vote schedules . . . . .

Welsh Take More Antidepressants Than The Rest Of The UK

Our Correspondent, Wales On Sunday

DOCTORS in Wales last year gave out more prescriptions for depression than there are people in the nation, according to startling new figures.
Experts fear the current economic climate may be tipping people into a spiral of depression, while mental health campaigners have warned of the dangers of GP over-prescribing.
A total of 3.5 million prescriptions were issued in Wales in 2010, in a population of three million people.
By contrast in Scotland in the same year, 4.3 million prescriptions were issued among a population of 5.2 million. In England the most recent figures for 2009 there were 39.1 million prescriptions compared to a 52.5 million population.
As well as having a higher level of prescriptions relative to population, Wales has also experienced the biggest increase in prescriptions in the UK, up nearly 70% in eight years, compared to . . . . .

Italy, Spain Worries Complicate Greece Aid

MATTHEW DALTON

Investor concerns over Italy and Spain are complicating efforts to deliver Greece its next chunk of rescue aid, underscoring the increasing difficulty Europe faces in reining its more than year-old credit crisis.
Greece is due to receive the next installment of its original, €110 billion ($158 billion) bailout in September. But Italy and Spain, both of which committed to extend bilateral loans to Greece with other euro-zone countries, have seen their own borrowing costs rise recently.
Living up to that commitment could put further pressure on Italian and Spanish bonds, just as officials in Madrid and Rome have been scrambling to reassure markets. Euro-zone finance officials are now considering allowing Italy and Spain to opt . . . . .

Debt Drags Down The West

The Economist | Commentary

A government’s credibility is founded on its commitment to honor its debts. As a result of the dramas of the past few weeks, that crucial commodity is eroding in the West. The struggles in Europe to keep Greece in the euro zone and the brinkmanship in America over the debt ceiling have presented investors with an unattractive choice: Should you buy the currency that may default, or the one that could disintegrate? In the early days of the economic crisis, the West’s leaders did a reasonable job of cleaning up a mess that was only partly of their making. Now, the politicians have become the problem. In both America and Europe . . . . . .

Using Your Options During a Financial Crisis

Credit.com

When a financial disaster strikes, whether it be a medical emergency or overwhelming credit card bill, it’s important to research your options and take action immediately. Formulating a step-by-step plan can help you explore different repayment avenues and gain a handle on your finances.
Know What You’re Dealing With
Before you take any action, analyze the entirety of your financial situation and determine what you’re trying to overcome. The particular crisis you find yourself in will influence how you strategize your payments . . . . . .

A Hapless Union Has Lost Its Direction

Edward Chancellor

There are many economic challenges around the world today. The US teeters on the brink of default, deleveraging continues across the west, cracks are appearing in China’s fixed asset investment boom, Japan remains stuck in the deflationary doldrums, while inflation is picking up in emerging markets. None of these problems, however, is as intractable as those facing the euro zone.
It is common to view Europe’s woes in terms of a crisis of public finances. Greece, after all, owes a lot of money to its European neighbors. The markets have also started to question Italy’s sovereign debt, which is currently around 120 per cent of GDP. Yet rising credit spreads among the periphery of Europe are a symptom of deeper troubles within the monetary union . . . . .

Europe’s Last Taboos

Jean Pisani-Ferry

Europe is not a federal state, but the euro zone’s resilience would be greatly boosted if deposit insurance were pooled
You can always trust the Americans, Winston Churchill said, because in the end they will do the right thing, after they have exhausted all other possibilities. For the last 18 months, this has been Europe’s method for confronting its sovereign debt crisis as well: it has taken the necessary decisions, but always as a last resort.
Once again, on July 21, the euro zone’s leaders proclaimed that what was previously unthinkable was, in fact, necessary. They gave up the pretense that Greece is solvent; admitted that excessive interest rates could only make . . . . .

COMMENT: On The Brink Of An Abyss

Lal Khan

From the US to Europe to Japan there is a panic in the echelons of power. The strategists of capitalism are frantically trying to avert a US default, collapse of the Euro and bankruptcy of Japan. The dangers are real and grave. The most serious newspaper of finance capital, The Financial Times, wrote the following on July 15, 2011:
“A week ago last Thursday, global equity markets were sitting pretty secure in the expectation of good US employment figures and some breathing space in the European sovereign debt saga. Now, that confidence has disappeared. In its place, investors see contagion gripping the eurozone, renewed weakness in the American economy and the looming possibility that the issuer of the world’s reserve currency . . . .

U.S. STALEMATE WILL HIT INTEREST RATES

Asher McShane

BRITAIN is heading for financial disaster unless the United States sorts out its enormous debt.
The knock-on effect will see UK interest rates on credit cards, car loans and mortgages rise sharply, financial experts said.
US Secretary of the Treasury Tim Geithner said if the country could not pay its debts, the result would be “catastrophic”.
American politicians were in deadlock over whether to extend the debt limit beyond £8.7trillion.. . . .

Saturday, July 30, 2011

US House Rejects Senate Democrats Debt-Limit Bill

ANDREW TAYLOR

The Republican-led House on Saturday rejected a Senate Democratic bill to raise the nation’s debt limit just three days before the deadline to avert a first-ever default on US financial obligations. President Barack Obama and lawmakers remained at an impasse on any possible compromise. With tensions high at a rare weekend session, the legislation failed on a 246-173 House vote that was largely symbolic. The Senate has yet to vote on the bill. Saturday’s result, however, could pave the way for negotiations on a compromise with Tuesday’s deadline on the government’s ability to pay its bills fast approaching. Shortly after the House vote, President Barack Obama stepped back into the debt-ceiling talks, calling Congress’ top two Democrats, Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi, to the White House . . . .

Republican Leaders, Obama in Talks on Debt Impasse

Sam Mamudi

As lawmakers scrambled late Saturday to come to an agreement to raise the U.S. debt ceiling, Senate Republican leader Mitch McConnell of Kentucky suggested that he was negotiating directly with President Barack Obama. Standing beside House Speaker John Boehner at a news conference, McConnell said he had spoken in the afternoon to Obama and Vice-President Joe Biden about a deal to avert what the administration says will be a default on Tuesday. “We are now fully engaged with the one person in America ... who can sign a bill into law,” said McConnell. “I’m confident and optimistic that we’re going to get an agreement in the very near . . . . .

Obama Summons Top Congressional Democrats To White House For Update On Debt Talks

Associated Press

President Barack Obama is stepping back into the debt-ceiling talks, calling Congress’ top two Democrats to the White House for a meeting. White House aides said Obama would receive an update Saturday from Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi. The invitation came shortly after the GOP-controlled House rejected Reid’s debt-ceiling proposal in a largely symbolic vote. The chief negotiations are taking place in the Senate. Reid and his GOP counterpart are seeking a compromise plan that . . . . .

U.S. Leaders Try To Find Compromise On Debt-Limit Deal

Erica Werner

After weeks of intense partisanship, the White House and congressional leaders made a desperate, last-minute stab at compromise Saturday to avoid a government default threatened for early next week. “There is very little time,” declared President Barack Obama.
Obama met with top Democrats at the White House and spoke by phone with Senate Republican leader Mitch McConnell. “He needs to indicate what he will sign, and we are in those discussions,” McConnell said of the president. He added he had also spoken with Vice President Joe Biden, who played a prominent role in earlier attempts to break the gridlock that has pushed the country to the verge of an unprecedented default. “We have until midnight,” said Reid before . . . . . . . . .

Treasury is ready for the worst in ongoing US crisis

By Simon Watkins

The Treasury is drawing up emergency plans this weekend in case America defaults on its debts as political bickering in Washington threatens to take the world’s biggest economy to the brink of disaster.

Chancellor George Osborne, the Governor of the Bank of England Sir Mervyn King, and the chairman of the Financial Services Authority Lord Turner, have held frequent discussions in recent days and are understood to be outlining plans in the event of American politicians failing to reach a deal on the budget deficit this week.

A default by America would send shock waves round global financial markets.

One analyst said the worst scenario of an ongoing default would be like a Lehman Brothers collapse happening every two weeks and would send the world into ‘a sudden and severe depression’.

Might Cash-Flush Apple and Steve Jobs Bail Out The Federal Government?

Amidst reports that the Apple Inc. (Nasdaq: AAPL) company has more cash on hand than does the beleaguered U.S. government, it might be fun to wonder if Steve Jobs could singlehandedly bailout the Feds?

While Jobs has apparently made no comments about the Washington debt ceiling crisis, the mountain of cash that Apple has in its reserves (in excess of $76-billion) raises speculation of such a historic bailout.

As unlikely as such a scenario might seem, it has actually happened in the past.

John Pierpoint Morgan, the U.S. financier who founded J.P. Morgan & Co. bank in 1871, bailed out the government and financial markets not once, but twice.

In the 1890s, following the financial panic of 1893, the U.S. Treasury found itself at risk of going bankrupt as frightened investors sought to get their hands on the gold reserves held by the government. Morgan stepped in and pledged $60-million to $65-million in gold at the behest of President Grover Cleveland – thereby saving the Treasury and likely preventing a financial collapse and rescuing the U.S. dollar.

Even the Tooth Fairy Knows It’s a Depression

The Dollar Vigilante

You sure don’t see too many idiots on TV talking about green shoots anymore… whatever happened to that?
After two years of “recovery”, does anyone see anything like a recovery in any of the unemployment figures (the blue line being reality and the red line being the government propaganda)? Oh, that’s okay, they say, it’s just one of those pesky “jobless recoveries”. It’s like the 2008 Detroit Lions who went 0-16. They weren’t bad, they were just winless champions. Pay Attention to Government Statistics At Your Own Risk. Feel sorry for anyone who still pays attention to any government economic statistics. It is pure, unadulterated lies and propaganda, plain and simple. You’d be better off listening to a financial adviser who uses the annual Tooth Fairy survey as a gauge of economic strength.

Weather Services -- It's Coming Again!

Barbara Cannegieter

Invest 91-L Located 900 Miles East Of The Lesser Antilles:
I think we have our first potential significant tropical cyclone threat of the 20111 Hurricane Season. Invest 91-L, located about 900 miles or so east of the Lesser Antilles, and continues to become better organized as shower and thunderstorm activity has become more concentrated during the overnight hours. It does appear looking at data this morning that a fairly well organized surface circulation exists with Invest 91-L and I fully expect this system to be upgraded to Tropical Depression #5 either later today or at the latest during Sunday morning. My thinking this morning is that this system will track in a general west-northwestward direction and track across the Lesser Antilles somewhere between the islands of Martinique and Guadeloupe on Monday night or early Tuesday morning.

When Does A Great Recession Become a Full-Fledged Depression?

MICHAEL SILVERSTEIN

Economists have their standard definitions. They work their numbers and proclaim when we are in a recession, out of a recession, when an economic recovery is taking place, and when that recovery is merely hitting a “soft patch.”But really, who but the media, government officials, and economists themselves take these definitions seriously anymore when it comes to reflecting reality as experienced by most Americans? These days, not many people. For most Americans, the recession didn’t end two years ago, economist definition notwithstanding. A recovery did not begin then. And the “soft patches” that have been occurring regularly in the last two years are not natural and unavoidable dips on the road back to traditional American economic well-being.

Strategic Options for Pensions and Healthcare

Chiemi Hayashi

Strategies to address the challenge of financing retirement and healthcare in a rapidly ageing world.
The ageing of society is a current challenge in developed countries and an imminent challenge in others. By 2030, it will be a major issue in most of today’s emerging economies, and by 2050, few countries will be unaffected. With an ageing population, a declining labour force, and alarming healthcare and pension benefit costs . . .

Gold Hits All-Time High As Beacon Of Safety Amid US Debt-Ceiling Crisis

TATYANA SHUMSKY

JITTERY investors pushed gold to a record as it stood as a beacon of safety amid a US crisis accelerating to financial disaster.
GDP growth figures in the world's largest economy that were weaker than expected also fuelled the push to a price-record. Washington politicians have just four days left to raise the debt ceiling and prevent a government debt default. Yet the White House and Republican Party leaders remain split on how to cut spending and increase the national borrowing limit. Gold prices jumped to an intraday record . . . . . .

Watching A Slow-Mo Train Wreck

Tom Oleson

The United States appears to be on an inexorable march toward financial disaster. That might not be so bad in itself -- in fact, if that were all that's involved, a lot of Canadians and Europeans would happily buy tickets to watch America go over the edge, envy being the deadly sin that it is.
But that's not all that is involved. Canada -- in fact most of the world -- is tied to the United States like prisoners on a chain gang. Once Washington steps into the abyss, it is very likely it will pull the rest of us with it. China might be able to hang to a rock, but for Canada and everyone else, the world could be quite a different place after Aug. 2 than it is today, and not nearly so pleasant a one. . . .

Fiscal Sanity: 'Cut, Cap And Balance'

KELLYANNE CONWAY

Since the economic collapse, American families and businesses have taken three simple yet painful steps: Cut the amount of debt they owe, cap future spending and balance their budgets.
Why can’t Washington do the same?
The House already has, last week, by a bipartisan vote. “Cut, Cap and Balance” gives President Barack Obama the $2.7 trillion increase in the debt ceiling he seeks; requires the deficit be cut in half from last year; includes 10 years worth of enforceable spending cuts that will keep the budget in balance, and requires a Balanced Budget Amendment be sent to the states.
Cut, Cap and Balance does not touch Medicare. It does not touch Social Security. What it touches is a nerve in a president who has spent . . . .

How Europe Will Feel The Pinch If The US Defaults

Bettina Seidel, Ben Knight

The world markets are still hoping for a last-minute deal to save the day, but the fronts on the US Capitol seem entrenched. So what happens now? Will the world economy collapse if the US defaults on August 2?
Republicans and Democrats in the United States are stuck in bitter negotiations over raising the US debt above its current $14.3-trillion (10-trillion-euro) ceiling. At the moment, the two sides are simply muddling through from one day to the next. As soon as a deal seems to be within reach, it retreats to the horizon. Votes on possible solutions in the House of Representatives constantly get postponed.

Friday, July 29, 2011

Kentucky Voices: Constitution Allows Obama To Raise Debt Ceiling

Brian Cooney

There is an insane quality to the spectacle of President Barack Obama and the GOP leadership bargaining over the debt ceiling. Republicans are demanding huge cuts in basic social programs in return for allowing the nation to pay its debts and avoid sovereign default.
These demands amount to extortion and an assault on our political system. Yet, instead of rejecting them out of hand, Obama is treating them as if they were part of a legitimate debate over policy.
In the April 28 edition of The Atlantic, legal scholar Garrett Epps composed a speech that the president could give to the American people in case Congress failed to authorize raising the debt ceiling by the Aug. 2 deadline.
Obama would state that because it's his constitutional duty as president to uphold the law, he will unilaterally . . . . .

Making Sense of the Global Financial Crisis

Guy de Fontgalland

For many, the global financial crisis and the meltdown in value of money and wealth, the increasing shortage of funds in government treasuries, banks and corporate coffers, the bailouts of Ireland, Portugal, Spain and Greece, with the possibility of the United States defaulting on its treasury bonds interest rate payments over one trillion dollars to China alone, is nothing short of mystery.
Nigel Farage, UK’s firebrand independent politician with a seat in the European Parliament has been calling for the death of the euro zone, claiming that it is a menace to the global financial system. Peter Schiff, CEO and chief global strategist of Euro Pacific Capital has been predicting the coming financial and economic collapse as far back as 2006 and 2007. Most dismissed his arguments as baseless and . . . . . .

Strong Yen Hits Exporters Hard But Benefits Consumers

Mainichi Japan

The high value of the yen, which has been pushed higher over the past weeks as the European Union and the United States try to stave off full-blown financial disasters, is hitting Japan's exporters hard. The U.S. greenback recently fell to 77 yen -- a serious drop from the around 80 yen it cost to buy a dollar on July 1 -- putting the squeeze on Japan's core export-oriented businesses already reeling from the effects of March 11's Great East Japan Earthquake and tsunami. The Japanese auto industry, for example, is still trying to rebuild damage to its supply chain, and recover from a decline in output and sluggish sales caused by the disaster. The yen's ongoing appreciation is another . . . . . . .

Economy Too Fragile For Tea Party Games

Larry Schwartz

The Republican Party and their Tea Party zealots are taking this country to financial disaster. They are not students of history; they write and rewrite the facts of history to suit themselves. We are in the worst recession since the Great Depression.
The lesson of the Herbert Hoover and Franklin Roosevelt years: To come out of the Great Depression, the nation needed massive infusions of government stimulus, i.e., the New Deal, to help allay the terrible consequences of the 1930s. Now our national debt ceiling, which has been raised over 70 times since 1962, is being held hostage by the intransigence . . . . . .

The Democrats' Big Tax Lie

Michael Medved

President Obama keeps insisting that the rich haven’t had it this good in half a century. Michael Medved says the Dems are fudging the numbers to justify their soak-the-wealthy approach.
You’ve probably heard this line dozens of times in the seemingly endless debate over deficits and taxation, and chances are you’ll hear it many times more during the campaign of 2012, regardless of the final resolution of the debt-ceiling crisis.
Don’t be fooled.
Neither of the dueling plans currently on the table (one from Speaker of the House John Boehner, the other from Senate Majority Leader Harry Reid) contain tax increases of any sort, but President Obama remains firmly committed to raising the rates on top earners when the latest extension of the Bush tax cuts expires at the end of next year.
The Democratic line about “the lowest rate in 50 years” effectively reinforces two important liberal themes: first, that the rich don’t pay their fair share to support the operations of government, and second, that hiking rates . . .

The Rinse' Describes the Rainmaker's Dilemma Facing US Economy

Shathley Q

When the President of Pimco says to Tom Keene, host of Bloomberg Radio’s Surveillance, that it’s hard to restore a Triple A rating once it’s been lost, that is exactly too much to hear. Facing up to the idea of America possibly losing its Triple A and not recouping it within even the next generation is hard enough. Facing up to this idea while In the Loop host Betty Liu (the show that just crossed to Surveillance) interviews her guests with a steely resolve makes me want to hide out. There’s an even bigger economic collapse on the way, potentially. And it comes with its own countdown timer, one that marks the days and the hours, minutes and seconds until August second with the debt ceiling needs to be raised again, or…
It’s easy to escape into Gary Phillips’ first foray into comics, The Rinse. Courtesy of BOOM! Studios,The Rinse is a piece of ‘sunshine noir’ . . . . .

Medical Principle - Make No Harm - For Modern Economy

Irina Tsyplakova

A political analyst, Fyodor Lukyanov, the Editor-In-Chief of the magazine “Russia In the Global Policy”, has appeared on the Voice of Russia today. Issues, which present a great deal of interest not only for politicians, economists and mass media today but also the ones that are of great interest for ordinary citizens in all countries featured prominently in the interview with Fyodor Lukyanov. On that list are the upheavals in the eurozone, a possible economic collapse in Greece, Spain and Portugal, and the shadow of the default hanging over the USA… What is it? The world economic crisis on the rise? So who is to blame and what should be done in a situation that has emerged? Fyodor Lukyanov has something to say on that score.
"What is happening today shows that the existing economic models have exhausted themselves. At the same time, it is the result of the policy of the leading countries and the place they occupy in the world economic and political system. Till recently we thought that the new problems of the 21st century might be caused by the untenable states, by the terrorist networks, and by the interethnic and religious differences. Least of all we thought that the policy . . . . . . .

Deal Or No Deal, Pain Is Coming

Matt Assad

Default might be a doomsday scenario, but major federal cuts could bring pain to most everyone.

If warring politicians in Washington are somehow able to join hands in a rousing verse of debt-ceiling kumbaya , Pennsylvanians might be tempted to breathe a collective sigh of relief.
But experts say that even if the government can strike a deal to prevent the nation from defaulting on its debt before the money runs out Tuesday, no one should feel too comfortable. Deal or no deal, pain is coming..
"No matter what, we're looking at severely reduced spending on the federal level," said Michael Wood, research director at the Pennsylvania Budget and Policy Center. "There's no way that can't affect all of us in some way.". . . . .

Study: Richer Countries Have Higher Depression

Steve Hartsoe

We've all heard money can't buy you love. It looks like money can't buy happiness, either.New research unveiled this week in the journal BMC Medicine reveals that not only does money not create happiness, it may in fact do the opposite. Using a diagnostic test from the World Health Organization (WHO), an international team of researchers polled 90,000 people from 18 countries and across income levels and found surprising results.In the countries considered high-income, an average of 15 percent of respondents reported experiencing at least one major depressive episode in their lifetime. In the remaining eight low-to-middle income countries, the number was much lower – only 11 percent admitted depression, reported the Los Angeles Times .
The countries with the highest rates of depression were the United States, France, the Netherlands and New Zealand – all with rates upwards of 18 percent. The lowest were Mexico, India, South Africa and China, with levels dipping below 12 percent in some places, according to the study. “On one level, it seems counterintuitive that people in high-income countries should experience more stress than those in low- to middle-income countries. However, it has been suggested that depression is to some extent an illness of affluence," the authors wrote in the study......

Equities Are Hit With Panic Selling, What Does It Mean?

Chris Vermeulen

It was an exciting trading session Wednesday to say the least… With all the uncertainty floating around it is causing the stock market to be more volatile than normal. It seems like every other day there is some big headline news causing either strong buying of stocks or strong selling to take place. It’s this type of price action which spooks the average investor causing them to panic out of positions at key support areas just before a continued move higher.
I like to focus on the market when I see extreme buying or selling taking place. During times of extreme buying or selling in equities, investors are reacting on emotions rather than logic and that’s when I benefit from everyone rushing to the door trying to get rid of their positions at any price they can get.
Let’s take a look at what the market is telling us right now…...

Barbarians at the Gate Restructuring the World

Martin Armstrong

Being the world reserve currency is something that obviously Congress does not comprehend. About two-thirds of central bank reserves are in US treasury paper. What is going on in Washington right now demonstrates the total lack of comprehension of what is the role of the dollar (i.e. the flight to Swiss & gold). This also illustrates my point that the world cannot afford the dollar to be the reserve currency anymore because we are plagued by internal political conflict with no real hope in sight. This is no way to lead the world. At Princeton Economics, being multinational corporate advisor, we got called into so many disasters it was becoming second hat. . . . . . . . . .

Don’t Start Wars You Don’t Know How To End

Ian Bremmer

The Saudis and Iranians don’t agree on much, but they do share a deep dislike for Muammer Gaddafi. In fact, outside of Venezuela’s President Hugo Chávez, there really is no one in the international community who does. That is why it was so easy to build international support for a Nato bid to push him from power.
The trouble is that, unless it gets exceptionally lucky, Nato is unlikely to either force Col Gaddafi from his stronghold or cut a politically saleable deal with him anytime soon. Meanwhile, the opposition are making little progress, a fact now worsened by the death of their military leader, Abdel Fattah Younis, who defected from Col Gaddafi in February. The most likely outcome remains a country in pieces, with substantial volumes of crude oil offline for at least the new few months. . . . . . . . .

Thursday, July 28, 2011

Our Plan Will Rescue Greece And Protect Europe

François Baroin & Wolfgang Schäuble

Europe and the euro are at a crossroads. Dealing with Greece’s debt and lack of competitiveness is crucial for containing the risks of contagion to the rest of the eurozone. The recent summit approved a road map for Greece to find its way back to sustainable growth and debt levels.
Given the Greek government’s commitment to stabilise its finances and strengthen its competitiveness, eurozone countries, together with the International Monetary Fund, will offer new financing, in view of Greece’s difficulty regaining market access. The private sector will bear its responsibilities, assuming a large part of Greece’s financing needs and easing its debt burden. The European financial stability facility, and later the European stability mechanism, will be strengthened too, including allowing them to act preventively where contagion threatens eurozone countries.
Greece can succeed in making its debt sustainable in the long term if it succeeds in both increasing growth and reducing its debt ratio. Greece has committed itself to . . . . . . . .

Robots Don't Buy Cars

Christopher Quigly

the central force behind these crises. The flaw relates to the general LACK OF PURCHASING POWER in contemporary society.This weakness in classical economic theory is not new and many scholars have explained the problem however, increasingly, the issue is being conditioned out of people's consciousness. The collapse of the international banking system, as a result of the Sub-Prime; "Originate to Distribute" catastrophe, has brought this Achilles heel of Keynesian economics into sharp focus.The elite fear that the prospect of a "greater depression" is forcing change that will eliminate their position of control and privilege. Hence the current "spin" emanating from controlled media outlets. The growth of the "tea party movement" is . . . . . . . . .

Nothing Left to Loot

Bob Chapman

As we write the US government short-term debt extension is still up in the air. Both sides are not about to give up and lose a political victory. The President still is trying to recover from his ill-timed attempt at extortion. That is if a solution is not found by August 2nd, that he will let US bonds fall into default and terminate government’s Social Security obligations. Our question is how can you loot what has already been looted? The account is already empty.We also found it very strange the opposing party members had nothing to say on the issue, but then again it isn’t so surprising. They are all being paid off and controlled by the same group of people. This sort of behavior is fraud, but what does that mean to an illegal alien, who has already broken so many laws that he cannot keep up with the number. If the facts be known the government has plenty of money to keep running uninterrupted. There are those who call the President a scoundrel, but we have better adjectives to describe . . . . . . .

New Fall Looks For The Dollar: The Debt Ceiling Collection

EconMatters

After House Speaker John Boehner (R-Ohio) abruptly withdrew from the debt talks with the White House last Friday, the latest development is the dueling proposals from the Republican leader in the House and Democratic leader of the Senate to hopefully get the federal $14.3-trillion debt ceiling lifted.Nevertheless, Lawmakers remain at odds over how to avoid a debt default. With a fast approaching Aug. 2 deadline, the impasse saga at Washington only serves to sharpen the image of an unprecedented U.S. sovereign default into HD 3D.Investors' fear and worries over the potentially devastating default have tanked the equities and commodities, while gold hit a record of almost $1,620/oz. Rather than the conventional risk-off trade--"sell commodities, buy the dollar"-- investors threshed the dollar, but still have faith in the U.S Treasury. The U.S. dollar has lost 7% year-to-date, while Treasury has not . . . . . . .

Gold Noise Growing Louder

Doug Casey

Yesterday the Subcommittee on Domestic Monetary Policy and Technology held another meeting, titledImpact of Monetary Policy on the Economy: A Regional Fed Perspective on Inflation, Unemployment, and QE3. Its only witness was Thomas Hoenig, the retiring president of the Federal Reserve Bank of Kansas City.
Some of our readers may recall a favorable article on Hoenig by our own Doug Hornig. As Doug noted in the article, Hoenig is the closest thing to a good guy at the Fed. Hoenig was a dissident on QE2 and now opposes QE3 as well. Furthermore, he has advocated moving away from near-zero interest rates. On top of this, he has warned of the disastrous effects of prolonged low rates, which lead to bubbles and misallocations of capital.
In this hearing, he testified that conditions to create a bubble are ripe in farmland and the bond market. Many of his statements are almost consistent with Austrian economics, a strong influence here at Casey Research. Hoenig notes that he has read the nearly thousand-page Austrian economics masterpiece Human Action, by Ludwig von Mises (check out his comment on Austrian economics after 1:12:00). Compared to his colleagues, Hoenig is the black sheep at the Fed.
So, what can we learn from this hearing? Not much, from the actual questions and testimony. Once again, Representative Al Green (D-TX) gave his two cents on the necessity and “wisdom” of the bank bailouts. Why Green continues to discuss the bailouts almost every meeting is . . . . . . . . .

New Requirement to Report ALL Offshore Assets May Foreshadow U.S. 'Wealth Tax'

Mark Nestmann

The Tea Party contingent of the Republican Party won’t like it. But, if President Obama and his minions have their way, U.S. taxpayers may soon be paying a new tax – one based on their net worth.Such “wealth taxes” are nothing new. Among other countries, France, India, the Netherlands, Norway, and even Switzerland levy a tax based on the net worth of individual residents. I last wrote about wealth taxes here.The mechanics of a wealth tax couldn’t be simpler. You prepare a balance sheet of your worldwide assets. Then, you subtract an exempted amount. (For instance, in France, the first EUR 600,000 of assets are exempt from wealth tax. This exemption is slated to increase to EUR 1.3 million in 2012.)If your net worth is higher than the exempted amount, wealth tax is due on the balance. In France, the rates vary from 0.55% to 1.8%, although they’re scheduled to be reduced in 2012 to a top rate of . . . . . . . . .

Debt Ceiling Dilemma: The Foul Choice Facing Investors

Tyler Durden & Chris Martenson

For the record, I still believe that there will not be a breach of the debt ceiling and no overt default for the US. Things will be worked out in the nick of time, like they always are.
However, the media is full of articles wondering about what ‘investors’ might do in response to a US default and/or credit downgrade. What will happen to Treasury prices? Will they go down as investors dump them en masse in response to a credit downgrade forcing interest rates to climb?
It’s a big question and the most likely answer is “No, not really”. Partly because these so-called investors have been well-conditioned to believe that another bailout is always around the corner, but mainly because they have nowhere to go.
The big money is trapped.
For example, imagine that you are in charge of a money market fund with $100 billion under management and your job is to both cover your expenses and assure a return for your depositors and you are heavily invested in US Treasuries. Or imagine that you are in charge of a public pension with $200 billion under management with the same basic concerns of managing expenses and delivering returns and a heavy exposure to US Treasuries but with a much longer time horizon . . . . . . .

Ghost Towns On The Increase As Rural America Accounts For Just 16% Of Population

DAILY MAIL REPORTER

Migration will form a virtual mega-city stretching through Boston, New York City, Philadelphia, Pennsylvania, Baltimore, Maryland and ending in the capital Washington D.C.
Vast swathes of the U.S. countryside are emptying and communities becoming ghost towns as rural America now only accounts for just 16 per cent of the population.
The 2010 census results suggest that by 2050 many of these areas could shrink to virtually nothing as businesses collapse and schools close.
This dramatic population implosion is the culmination of a century of migration to cities, as in 1910 the share of rural America was at 72 per cent.
In 1950 the countryside remained home to a majority of Americans, amid post-World War II economic expansion and the baby boom.
However, once busy areas have been abandoned, in South Dakota for example, the town of Scenic is up for sale for $799,000 as today just eight people ..

What is the U.S. debt ceiling and why does it matter?

FREDDA SACHAROW

On May 16, the federal government announced the United States had hit its legal debt limit, launching a battle of wills and words between President Obama and Congress about how to proceed. John Longo, a clinical associate professor of finance and economics at Rutgers Business School–Newark and New Brunswick and chief investment officer with the MDE Group of Morristown, spoke with Rutgers Today about the looming crisis. Frequently quoted on CNBC and Bloomberg Television, Longo has taught in Rutgers’ undergraduate, MBA, Executive MBA, and International Executive MBA programs for more than a decade.
Rutgers Today: Can you explain the meaning of a “debt ceiling” to those of us for whom economics is not our native language? To whom, exactly, does the government owe this $14.2 trillion?
Longo: It actually owes it to two broad groups or parties. One is the people and entities who have bought U.S. Treasury securities, roughly half of whom are foreign investors – China and Japan are the biggest creditors of the U.S. Treasury, holding 26 percent and 20 percent, respectively, of outstanding debt obligations. The other is payment to keep the federal government running and meet its obligations: employees, members of the military, vendors – anybody on the government payroll – as well as entitlement programs such as Social Security and Medicare.
Rutgers Today: What does it mean that the United States government hit its debt ceiling on May 16? How did we get into this jam?
Longo: We got into the jam for two reasons: a weak economy and, generally, politicians like to spend. Our expenses are greater than what we are getting in taxes and fees and other revenues. We have had a deficit in excess of a trillion dollars a year over the last three years. In order to keep borrowing money, it has to be authorized by Congress, and they’re holding it up because the members – at least on the Republican side – want to see a . . . . . . . . . .

Investors lose patience with US debt standoff

Neil Dennis

Global markets continued to send the signal to US senators that the political standoff over the country’s debt ceiling is hurting, while disappointing earnings in Europe added to the gloom.
Stocks in Europe were lower for a fourth-consecutive session on Thursday, while Asian stocks fell sharply following the losses seen overnight on Wall Street, where investors voted with their feet over the failure of Congress to resolve the US debt issue.
Meanwhile, yields on Italian bonds pushed higher, with the 10-year note yielding close to 6 per cent after the latest debt auction. Rome sold nearly €8bn in three-, four- and 10-year bonds, and although the total amount raised was at the top end of expectations, yields paid were higher than at previous auctions and the bid to cover ratio was on the low side.
By early afternoon in London, the FTSE Eurofirst 300 was down 0.8 per cent at 1,079.94. In Germany, sharp losses for BASF and Siemens dragged the Xetra Dax index down 1.8 per cent to 7,126.11.

Wednesday, July 27, 2011

Budget common sense

ERIC WEST

As we teeter on the brink of self-induced, worldwide financial disaster, the rhetoric has labeled millionaires, billionaires and oil companies as "job creators" as a justification for not taxing them. But look at the reality. These folks are not creating jobs.

I propose helping them really become the engines for job creation, by closing the tax loopholes they enjoy and repealing their tax subsidies (made up for by taxing the middle class) and then using that money to stimulate jobs.

There are so many simple, cost-effective things that could be done. One small example would be to allocate revenue dollars the Treasury receives from these folks to grants for hotels, hospitals, prisons, nursing homes, etc., that use large amounts of hot water -- to allow them to install solar water heaters on their roofs.
Think of the benefits: These are relatively low-cost systems, but they would employ thousands of plumbers, electricians, engineers, vendors, manufacturers, shipping companies and others in every city in America.
And for a very low cost, they would reduce the amount of energy needed from utilities, reduce the amount of water wasted by utilities on this unnecessary energy and reduce the long-term need for additional polluting power plants to be built. Such a move would also help ensure that, in the event of natural disasters that interrupt the power service, the needs of these institutions can still be met at virtually no cost after the units are paid for.

A key point absent in DC: American people care about jobs and the economy

Joe Sudbay

While Washington dithers and brings the country to the brink of another economic collapse, the American people are pretty cranky about jobs and the economy. And neither party is free of their wrath. It really is the economy, stupid. And jobs, stupid. From the Washington Post:
More than a third of Americans now believe that President Obama’s policies are hurting the economy, and confidence in his ability to create jobs is sharply eroding among his base, according to a new Washington Post-ABC News poll.
But Americans’ discontent does not stop there. The survey also found that Americans harbor negative feelings toward congressional Republicans. Roughly as many people blame Republican policies for the poor economy as they do Obama. But 65 percent disapprove of the GOP’s handling of jobs, compared to 52 percent for the president.
There's bad news for both parties in this poll. That's because people aren't feeling particularly good about the economy:
The dissatisfaction is fueled by the fact that many Americans continue to see little relief from the pain of a recession that technically ended ......

IMF chief warns on US default’s far-reaching impact

Euronews

The new International Monetary Fund chief Christine Lagarde has said that Washington must speedily resolve a political stalemate over raising the debt ceiling and the euro zone should “quickly” implement its sovereign debt crisis fighting plan to avoid more “turbulence”.Speaking in New York she warned of serious consequences for the world economy if US politicians fail to reach an agreement on raising the debt ceiling by next Tuesday’s deadline: “The critical objective is now for the United States to be able to increase the debt ceiling with a view to avoiding a default, which would be terrible for the United States, which would be terrible for the economy at large.Lagarde said she hoped “the political courage shown by European leaders will soon be followed by bold fiscal action in the US”.

Weak growth pressures UK government

Euronews

The British economy barely grew between April and June.As industrial output shrank, GDP expanded by just 0.2 percent from the first three months of the year. That took the annual growth rate to 0.7 percentThe figures cast doubt on the government’s ability to cut the budget deficit with austerity measures.Finance minister George Osborne blamed temporary factors — like lost productivity due to the Royal Wedding — and insists the UK is doing better than many others: “There’s enormous instability in the euro area, there’s a big argument in the United States at the moment about debt and here in Britain we’ve got a plan that has provided stability in a very unstable world and has brought our interest rates down and, you know, that has helped the economy grow.”

Do Americans care about the debt ceiling?

Rich Mintzer

Politicians and financial experts warn of economic collapse if there's no deal to raise the ceiling by next week. The vast majority of Americans don't share that concern, according to a survey.
As congressional leaders continue to duel ahead of the Aug. 2 deadline for raising the U.S. debt ceiling without signs of a deal, a large contingent of respondents to a recent MSN Money poll make clear what they think of the matter: They're sick of hearing about the whole thing.
From July 19-22, just more than 9,100 readers voted in the informal online poll, which asked, "Are you concerned about the debt ceiling?"
Forty-three percent answered that they were sick of hearing about it, while 39% reported feeling a little concern. Only 15% said they were concerned enough that the issue keeps them up at night, and a small minority, 3%, said they didn't know anything about the issue....

Consequences Of No US Debt Deal Spelt Out

Greg Milam

The United States remains on course to default on its debt for the first time in history in six days time, as politicians continue to squabble over the answer. There are signs the American public is growing increasingly frustrated that the White House and Congress cannot strike a deal.
And stock markets around the world are watching closely, with credit ratings agencies threatening to downgrade America's AAA-rating unless a significant solution to the debt and deficit crisis is found.
Officials from two of those agencies, Moody's and Standard and Poor's, are due to address a congressional hearing later today.
So far, all attempts at compromise among the Republican-controlled House, the Democratic-run Senate and President Barack Obama have failed.
The President and Speaker of the House John Boehner have repeatedly clashed, with Mr Obama refusing to accept a plan that would effectively put off the debate for six months, saying that would fail to provide stability to the US economy . . . . . . .

US AAA Credit Rating At Risk

Martin

According to Standard & Poor, the U.S Government is facing a 50% risk of losing its AAA credit rating as the current indicators are suggesting that government deficit targets may not be achieved. The U.S Government is approaching its $14.3 trillion borrowing capacity limit in August. This will directly affect the Treasury debt payments and failures on federal and military employees’ paychecks. The American government is looking at their credit rating downgraded to the AA rating if there is no demonstrated meaningful activity towards reduction in their deficit.
The deficit reduction debate is scheduled for August 2nd, and the U.S Government needs to focus of implementing policies and programs to repay their debt.
Standard and Poor said that Freddie Mac and Fannie Mae debt will be downgraded; also, Federal Home Loans Banks and Federal Farm Credit System Banks AAA credit ratings will be downgraded to match the U.S Government’s sovereign credit rating. They did indicate that in general banks and brokerages would probably not suffer downgrades immediately. S&P also explained that there is a correlation between . . . .

In Iowa, Bachmann reaffirms ‘no’ vote on debt ceiling increase

Meghan Malloy

In the wake of President Barack Obama‘s Monday night national address about the debt ceiling, GOP presidential candidate Rep. Michele Bachmann called the president out on his voting record, saying “you (voted against raising the debt ceiling) too, while you were in the Senate.”Bachmann met voters in the Des Moines suburb of Ankeny, Iowa, Tuesday to reiterate her position on the debt ceiling. The congresswoman has vehemently refused to vote in favor of raising it from $14.3 trillion to $16.7 trillion, and said she will continue to do so, amid talk of conditions under which the debt would be raised, as opposed to if it will actually happen or not.“We need to change the premise here,” she said. “We need a fundamental . . . . . . .

Wall Street set to open lower on debt deadlock

Angela Moon

U.S. stocks were set for a third straight day of declines as the political deadlock over raising the debt ceiling and a decline in durable goods orders kept investors away.A Republican plan to cut the U.S. deficit met stiff opposition, reducing the chances of a late compromise to avoid a crippling debt default.Even if there is no default, the government could face a downgrade in its triple-A rating, which would raise borrowing costs and deal a blow to the economic recovery.Credit Suisse strategists see a 50 percent chance of a credit rating downgrade on U.S. debt, even if the ceiling is raised as key decisions on fiscal tightening are delayed until after the 2012 U.S. elections.Further pressuring market sentiment, new orders for long-lasting U.S. manufactured goods fell . . . . . . .

Tuesday, July 26, 2011

The New York Times Bemoans the Lost Opportunity to Cut Social Security and Raise the Age of Medicare Eligibility to 67

Dean Baker, CEPR

That's right, you can read about the "unique opportunity" that was lost right here. The complains that the likely deficit deals to be produced in the days ahead will not feature:
"significant future savings from Medicare, Medicaid and Social Security — the entitlement programs whose growth as the population ages is driving long-term projections of unsustainable debt." As every budget analyst knows, Social Security is not a major driver of the deficit. Under the law, it cannot contribute to the deficit. It can only spend money that was raised from its designated tax or from interest earned on the Treasury bonds bought with this revenue. If the trust fund lacks the money to pay benefits then full benefits will not be paid. Furthermore, the projected increase in Social Security benefits over the decades ahead is relatively modest. The projected increase in the cost of the Medicare and Medicaid is much . . . . . . .

3 Ways to Trade the U.S. Default Talks No Matter What Happens

Follow My Alpha

The end is near! Or at least that’s what the media keeps telling use every day. It seems that a U.S. debt apocalypse is all but certain. Before you conjure up images of cataclysmic fire and brimstone raining down, let’s remember that nothing is accomplished with stress. In our view, the prudent path is to objectively look at the default situation and see how to make money - no matter what happens.

We doubt the U.S. government will actually default on its debt, but credit rating agencies might downgrade the U.S. regardless. Why would they do this? First, because they can - and it’s that simple. Second, the reality is that the U.S. hasn’t put on its best face in dealing with the situation and isn’t instilling much confidence among the rating agencies. After all, going to the media to point fingers and try to gain favor with voters isn’t helping to resolve the situation. It just makes U.S. look childish.

For investors, what matters is controlling what you can control and knowing the options relative to this situation. In our view, there are three simple strategies regardless of. . . . . . . .

Bank of America: A Calculated Risk or Russian Roulette?

Follow My Alpha

A year ago it looked like Bank of America (NYSE:BAC) was coming out from the black hole that so many financial firms had entered during the Financial Crisis. Big name hedge funds even took sizeable stakes in the firm because they were so confident everything was on the up and up. Fast-forward to today and the phrase “you can’t get them right every time” couldn’t be truer when it comes to this firm.
Bank of America in our view has officially taken Citigroup’s (NYSE:C) place as the “black sheep” in the financials group. In the last two months the firm has just taken a beating in the media primarily due to the fact that it lost $9.1B in the most recent quarter, had $20.7B mortgage-related charges, and the CEO still insists it doesn't need to raise capital. Maybe it doesn't but you can’t blame people for asking or suggesting the thought.
When we look at the picture with Bank of America today we feel that it’s gone from a calculated risk to Russian roulette. We rate Bank of America right now a “pass” because in our view the Merrill Lynch acquisition has materially changed the earnings structure, Countrywide has turned into a closet full of skeletons . . . . . . .

Drought Withers Smallest Hay Crop in Century

Whitney McFerron and Jeff Wilson

The smallest U.S. hay crop in more than a century is withering under a record Texas drought, boosting the cost of livestock feed for dairy farmers and beef producers from California to Maryland.
The price of alfalfa, the most common hay variety, surged 51 percent in the past year, reaching a record $186 a short ton in May, government data show. Hay and grass make up about half of what cattle eat over their lifetimes, so parched pastures are forcing ranchers to find alternative sources of feed, pushing some spot-market corn to the highest ever.
Farmers in Oklahoma and in Texas, the biggest producer of hay and cattle, may harvest only one crop from alfalfa and Bermuda grass this year, compared with three normally, said Larry Redmon, a state forage specialist at Texas A&M University. Cattle that usually graze on fields through September or October are instead being sold to feedlots, where they are confined in pens and eat mostly corn.
“We’re just running out of grass,” Bo Kizziar, the feedlot manager at Hansford County Feeders, said by telephone from Spearman, Texas. With pastures disappearing, Hansford is moving cattle into its 50,000-head feedlot three months earlier than normal, boosting costs . . . . . . . . . . . .

Dollar Drops to Record Versus Franc as U.S. Struggles With Debt Deadlock

Catarina Saraiva and Lukanyo Mnyanda

The dollar fell against all of its major counterparts as politicians struggled to agree on raising the U.S. debt limit and reducing its deficit.
The greenback slid below 78 yen for the first time since March and fell to a record versus the Swiss franc on concern America may default and face a reduction in its credit rating. The pound rallied to a one-month high against the dollar after the U.K.’s economic growth matched the forecasts of analysts. Sweden’s currency gained as producer prices increased.
“The uncertainty is weighing on the dollar,” said Aroop Chatterjee, a currency strategist at Barclays Plc in New York. “The smaller the package and the more short-term the measures that are put in place, the more concerned the market will get. The rating agencies have weighed in on the need for a long-term plan to rein in the fiscal deficit.”
The dollar fell 0.3 percent to 78.07 yen at 11 a.m. in New York, from 78.29 yesterday, after sliding to 77.90, the lowest level since March 17. The greenback dropped 0.5 percent to 80.24 Swiss centimes after touching the all-time low of 79.98. The dollar slid 0.8 percent to $1.4497 versus the euro after reaching $1.4522, the weakest since July 5. . . . . . . . . .

Analysis: Europe's "Marshall Plan" for Greece may disappoint

Greg Roumeliotis

Europe is promising to help kick-start economic growth in Greece as a way of dragging the country out of its debt crisis, but the scheme looks likely to move too slowly to have much impact in the next couple of years.
At last week's summit announcing a second international bailout of Greece, leaders of the 17-nation euro zone pledged "a comprehensive strategy for growth and investment in Greece" that would "relaunch the Greek economy."
The emphasis on growth is an important shift in Europe's approach to the crisis; the first bailout of Athens, launched in May last year, focused instead on slashing the Greek budget deficit, and the reduction in spending hit the economy hard.
Greece's recession was a key reason that it missed targets for cutting its debt under the first bailout. So ending its economic slump quickly would increase its chances of bringing its debt down to manageable levels over the next several years.
Details of Europe's plan so far, however, suggest it will be a limited scheme that concentrates on channeling funds for infrastructure development to Greece and has little impact over the next ......

Frenemies: Two Greek Rivals Hold Nation's Fate in Balance

MARCUS WALKER

As protesters battled police outside parliament last month in a hail of rocks and tear gas, Greece's beleaguered prime minister put his hopes in a secret phone call to an old friend.
"Let us form a government of national salvation," George Papandreou, the Socialist prime minister, said to his chief rival, Antonis Samaras, head of Greece's conservative opposition and a buddy since the two men were roommates at Amherst College in Massachusetts 40 years ago.
The details of their secret mid-June talks reveal the degree to which two friends—each with far different prescriptions for economic salvation—hold the fate of Greece in their hands as the nation tries to get its nearly $500 billion in government debt under control.
Their success or failure weighs on the potential survival of Europe's shared currency, the euro, the crowning achievement of 60 years of European unification.
On Monday, European bond markets fell after Moody's Investors Service cut Greece's credit rating three notches deeper into "junk" territory, warning that a bailout deal struck last week between . . . . . . . . . .

Warring politicians are playing with fire.

The Australian

NEVER before has a US president felt compelled to give a nationally televised speech on a matter usually so routine or esoteric. But these are desperate times: the US government is at grave risk of defaulting on debt for the first time next week because Republicans and Democrats in congress cannot reach an agreement. The insanity of this situation is that it is totally unnecessary -- and like playing with fire. A default, if it occurs, could trigger a global financial crisis that bears no relation to the economic health of the US government. This debt crisis has been entirely manufactured by two warring parties putting their government's good credit in jeopardy because of ideological differences over the size and content of federal budgets in future years. Raising the debt limit is essential to pay for money already spent, not for future spending. . . . . . . . . .

Trees Cocooned in Spiders Webs

An unexpected side-effect of the fl00ding in parts of Pakistan has been that millions of spiders climbed up into the trees to escape the rising flood waters. Because of the scale of the fl00ding and the fact that the water has taken so long to recede, many trees have become cocooned in spiders webs. People in this part of Sindh have never seen this phenonemon before – but they also report that there are now less mosquitos than they would expect, given the amoungt of stagnant, standing water that is around. It is thought that the mosquitos are getting caught in the spiders web thus reducing the risk of malaria, which would be one blessing for the people of Sindh, facing so many other hardships after the fl00ds. UK aid – in response to the Pakistan fl00ds – is helping millions of survivors return home and rebuild their lives.

Monday, July 25, 2011

Debt Free League - Killer Economy Prolonged by Domestic Violence, Debt Consolidation, and Bankruptcy

Source Debt Free League

CHULA VISTA, -- A new Spanish radio program warns of domestic violence and other unconscious acts influenced by the bad economy. It also exposes the dangers of debt consolidation and bankruptcy, helping consumers and businesses to recognize a better path to debt elimination.
Debt Free League subsidiary, Libre de Deudas exposes dangers over the alarming tension on financial hardships. Their message to Christian families, How to Become Debt Free without Bankruptcy, on Radio Nueva Vida, helps to prevent mental and financial collapse.
It responds to a series of extreme acts and tragedies including homicides, suicides, and intentional fires, exposed in the San Diego local news.
Recently, where Libre de Deudas is located in Chula Vista, financial desperation pushed a father to murder his two children at gunshot, burn down his house, and murder himself. In the same city, another man shot and killed his live-in partner and her two daughters, also killing himself. In City Heights, a father drowned his two daughters and his wife before also drowning himself. And in Santee, a victim

Sunday, July 24, 2011

Practical Solutions to Surviving Collapse

David Martin

I just finished reading an article – and have read many others – recommending sending what money you have off shore, moving from the United States if possible and obtaining a second citizenship in some country “likely to maintain the rule of law” when the dollar collapses. This article did not suggest where to go, but I suppose the author was thinking of a place where “the rule of law” is currently observed and was assuming it would continue to be when the people in that place have no food or fuel because the dollar collapsed.

I wonder how much it would costs to travel around the world looking for a suitable country? Certainly many thousands of dollars. If you are not independently wealthy, you would have to arrange time off from work and spend precious resources looking for a safer place to move. If you did find a place you wanted to go, wouldn’t it be imperative that you spoke the language? Won’t a dollar collapse create chaos worldwide? Won’t indigenous peoples attack foreigners first?

Get the full story here:

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Human, animal DNA mixing needs oversight

CBC News

The fast-moving field of mixing animal and human DNA may need new ethical or regulatory boundaries for some experiments, a British panel says.

Friday's report from the Academy of Medical Sciences looks at the use of "animals containing human material" in biomedical research.

Most experiments don't need stricter regulation, said Martin Bobrow, chair of the group that wrote the report. "But there are a small number of future experiments, which could approach social and ethically sensitive areas, which should have an extra layer of scrutiny," he told reporters in London.

Those sensitive areas include:

* Those where human brain cells might change animal brains.
* Those that could lead to the fertilization of human eggs in animals.
* Any modifications of animals that might create attributes considered uniquely human, like facial features, skin or speech.

Space shuttle: The darker view of the end of an era

By Jason Palmer Science and technology reporter, BBC News

s space shuttle Atlantis's wheels touched down in Florida on Thursday, the shuttles' epoch of defining manned spaceflight came to a close. What comes next for the US space agency is a new way of running things - but not everyone is happy about it.

For now, American astronauts and their long-time partners in Canada, Europe and Japan will depend on Russian Soyuz vehicles to get to orbit and the job of developing the shuttles' successors will be carried out in the private sector.

Much of the news coverage of the end of this era has looked wistfully back on the shuttles' accomplishments, principal among them the development of the International Space Station.

As for what's next, Nasa administrator Charles Bolden is just one of many at the agency insisting that the "future of human spaceflight is bright".

However, those rosy views of both past and future are not shared by everyone.

One concern is the sweeping job cuts at the agency. But former Nasa administrator Mike Griffin and space policy expert John Logsdon say that Nasa's grip on leadership in space has this week been lost - possibly forever.

"When you push aside all the puffery and high-flying political announcements, with the landing of Atlantis, the human spaceflight programme of the US will come to an end for the indefinite future," Professor Griffin told BBC News.

Sarkozy drops proposal for bank tax

By Peter Spiegel and Quentin Peel in Brussels

Yields on peripheral European government debt rallied sharply on news that French president Nicolas Sarkozy had agreed to drop a plan to help fund a €115bn Greek bail-out with a €50bn ($71bn) bank tax. The move marks a significant victory for Angela Merkel, the German chancellor, who extracted the concession at a late night meeting in Berlin on Wednesday ahead of an emergency summit of eurozone leaders.

The tax plan, which would have raised €10bn a year for five years through a 0.0025 per cent levy on all assets held by eurozone banks, was strongly resisted by Berlin, which saw the plan as taking too long to implement and raise funds which would have been used for a massive Greek bond repurchase programme.

Debt-limit talks at standstill as House, Senate pursue parallel approaches

By Lori Montgomery,

Hours before Asian financial markets were set to open Sunday evening, talks over the federal debt limit were at a standstill and House and Senate leaders were threatening to pursue two different approaches to averting a government default in a messy legislative showdown.

In a conference call with House Republicans, Speaker John A. Boehner (R-Ohio) called for the party to unify behind a plan that he declined to detail, saying he would provide more information when lawmakers return to the Capitol Monday. But aides in both parties said they expected Boehner to press ahead with a two-stage strategy that would give the Treasury only about $1 trillion in additional borrowing authority, forcing another debt-limit battle early next year when the parties are embroiled in the heat of the 2012 presidential campaign.

“If we stick together, we can win this for the American people,” Boehner told his troops, participants said.

Mining: Zimbabwe’s Achilles’ heel

Zimbabwe’s ecological well-being remains in a precarious position.

But it is the problem of acid mine drainage (AMD) that may be its most perilous hazard in terms of its ramifications.

AMD refers to the phenomenon whereby underground, highly polluted, acidic water flows outwards onto the surface, often, in very high dosages from abandoned mines.

It is necessary to comprehend that ecologically, Zimbabwe is a country that is bereft of water security, while on the economic front, the country is driven by a strong mining industry, most notably gold, and lately diamonds.

The decade-long economic collapse ensured the burgeoning mining sector came to a standstill as firms closed their mines, as a result causing insurmountable environmental disaster for communities whose lives evolved around these mines.

One would think of Harare’s water source Lake Chivero, Zvishavane, Gwanda, Chiadzwa, Bindura, Nkayi, Kamativi, Mhangura, to name but a few places.

Fighting the scourge of AMD becomes not only a matter of environmental importance, but also one of protecting vulnerable local communities that depend upon the country’s finite natural resources.

Saturday, July 23, 2011

Debt Ceiling's Impact is Overrated

By Zebulen Riley

The government's debt ceiling has been the focus of heated debate in Washington, as many economists, politicians, and pundits buy into the notion that the debt ceiling must be raised to avoid economic disaster. The reality is that many potential catastrophes have been threatening the U.S. for years now, as a consequence of our growing debt. Treating our unhealthy fiscal state with more debt may stave off withdrawal symptoms for a while, but the underlying addiction to spending remains, and grows worse by the day.

Despite the fact that a debt ceiling increase only provides temporary, superficial respite, many of those who favor such a move give too much weight to the impact of the debt ceiling. In a recent op-ed in the Washington Post, Virginia Senator Mark Warner argues, "Failing to raise the debt ceiling will increase interest rates, gut consumer confidence, and drag down business investment and job creation." The notion that changing an artificial construct like the debt ceiling will have such a massive impact on real economic conditions comes from viewing the economy in the abstract. Rather, the economy is comprised of people who engage in millions of exchanges every day. Because the economy is not an abstraction but is very real, it is unlikely that an arbitrary debt limit would dramatically affect real economic conditions. Some parts of the doomsday scenario posed by officials like Senator Warner, Treasury Secretary Tim Geithner, and the president may well come to pass: rising interest rates, consumer confidence falling, job creation declining. However, it is not likely to be the sole result of a failure to raise the debt ceiling, as we already see many of these symptoms occurring.

Euro zone's debt woes postponed but not forgotten

barrie mckenna

The nationalization of a major Spanish bank and the first euro zone debt default underscore the major challenges still facing the region even after this week’s major aid package for Greece.

European Union leaders saved Greece from financial collapse Thursday with a plan to pump €109-billion ($148-billion) into the country and bolster a European bailout fund.

For now, the deal appears to have encouraged investors and stopped a run on European sovereign bonds. Long-suffering Greek bonds soared Friday, while European stocks gained.

But the danger of renewed bouts of financial stress is expected to continue for months. And over the long haul, Europe’s still crippling debt problems will stunt economic growth as the poorer countries face years of painful austerity and the wealthier ones, such as Germany and France, pay the price of propping up their weaker neighbours.

China to Wall Street: The Side-Door Shuffle

By DAVID BARBOZA and AZAM AHMED

Dalian, China
IT was the hot new thing on Wall Street — one of those exotic investments that seem to promise untold riches for the lucky few.

And, like so many hot new things, it went cold fast.

Such was the fabulous stock-market flameout of a company called Rino International, an untested enterprise that, until recently, would have raised nary an eyebrow in the United States.

But over the last few years, Rino International and scores of other young Chinese companies slipped into the United States stock market through the back door. Rino’s American stockholders later lost hundreds of millions of dollars when accusations surfaced that the company had fudged its books. All told, investors’ losses on these Chinese ventures have stretched into the billions.

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