Quick Overview

• U.S. consumer confidence rose to 45.4 in September from 45.2 in August

• U.S. home prices rose for the fourth month in a row in July, according to the S&P/Case-Shiller 20-city composite. Prices rose 0.9% MoM, narrowing the YoY loss to 4.1%.

• Oil World warned that the current La Nina weather pattern has put Brazil's soybean crop, the world's second biggest, in jeopardy.

• New U.S. homes sales fell 2.3% in August to an annual rate of 295,000,-- the fourth decline in a row. The average selling price fell 8.7% to $246,000, the lowest level since early 2009. At current sales rates, unsold new homes on the market represented a 6.6 month supply.

• The Bank of Israel unexpectedly lowered its key interest rate by 25 basis points to 3%

• The staff of the Securities and Exchange Commission is considering recommending civil legal action against the Standard & Poor's debt ratings agency over its rating of a 2007 collateralized debt offering

It's the Inequality, Stupid A huge share of the nation's economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244.

Quick Overview

• The 111% MoM rise in the Swiss monetary base is by far the biggest since 1973.

• The IMF said that the global economy had entered a “new and dangerous phase”

• The Fed said there were "significant downside risks" to the economy.

• Robert Zoellick, the World Bank president, warned "the world is in a danger zone"

• The U.S. Fed announced that it intends to shift $400 billion in its shorter-term debt portfolio holdings to longer-term bonds hoping to stimulate more growth.

• The whole euro currency project is in danger due to member states' runaway spending and subsequent sovereign debt crises, a European Central Bank study said.

• Chinas PMI fell to a two-month low of 49.4 in September from 49.9 in August.

• The MBA said the Market Composite Index of U.S. mortgage applications rose 0.6% in the week ending Sept. 16th

• The IMF expects Indonesia's economy to grow by 6.4% this year.

• S&P lowered ratings on several Italian banks.

• Germany’s PMI fell to 50.3 in September from 51.1 in August.

• MoM French PMI fell to 47.3 from 49.1.

• Foster's rose after getting a sweetened A$5.10-a-share bid from SABMiller (SBMRY)

• HGSI rose on news that the company's new lupus drug Benlysta was selling better than expected.

• Moody cut BoA's (BAC) rating and argued the US government is now less likely to support the bank if needed.

• The latest tar balls that turned up on the US Gulf coast are again from BP’s oil spill, signaling that the area is far from cleaned up

• CERN said that measurements over three years showed  neutrinos moving 60 nanoseconds quicker than light over a distance of 730 km

Quick Overview

• S&P cuts Italy's sovereign-debt rating to A.

• German PPI YoY rose 5.5%

• Swiss exports fell 7% MoM in August

• Construction output in the Eurozone rose by 1.4 MoM

• The Greek economy may contract by 5.5%t this year said the IMF

• YoY Sweden's GDP rose by 4.9% in Q2

• YoY Chinas pork price in August rose 45.5%. Food prices account for about one third of the weighting in Chinas CPI.
• Talks continue about China buying corn… China has decided to release 3.7 Million tonnes from their state reserves… China's domestic Corn shortfall will reach 11 mil tons by 2015, up from 1 mil tons in 2010, a gov. official said…

• (AP) -- U.S. Attorney General Eric Holder says that the Obama administration will do its utmost to close the U.S. prison at Guantanamo Bay ahead of next year's presidential elections despite political opposition.

• The Fed's two day meeting, from which the market is hoping for QE3, starts today.

Can China escape as world's debt crisis reaches Act III?
Whatever the mix: there is simply too much global investment, and too little consumption. The system is out of joint. It does not feel like the 1930s because we are richer in the West, with a better safety net, and emergency stimulus has so far cushioned the effects, but Bertil Ohlin, John Maynard Keynes, and Irving Fisher would find it unnervingly familiar.

Quick Overview

• (FT) European central banks have become net buyers of gold for the first time in more than two decades.

• The bungling execs at UBS, announced that loss from unauthorized trading amounted to $2.3 billion, more than initially reported.

• (Guardian) At the same time, Webster insists, the threat from H5N1 has not gone away. On the contrary, if the latest the scientific data are to be believed, a new "mutant" strain of the virus, codenamed 2.3.2., has already moved from China and Vietnam to central Asia and eastern Europe, spread by migratory waterfowl.

• Without fresh aid, Greece will run out of money by mid-October, the WSJ said.

• Magistrates investigating an alleged prostitution ring in Italy have published wiretaps in which Silvio Berlusconi boasts of spending the night with eight women.

• [AP] - Let the audits begin. As the U.K. tightens its belt during economic uncertainty, a senior government official said Sunday he was hiring more than 2,000 extra tax inspectors to make sure that Britain's wealthiest feel the squeeze.

• A new analysis from shipbrokers Gibson showed this week that just 223 single hull tankers of over 25,000 dwt remain in the fleet, representing about 5% of the total tanker population.

• Ships waiting to load sugar at Brazil’s main ports were less than half those lined up a year earlier as the nation harvests the smallest crop in four years, Cosan SA Industria & Comercio SA’s logistics arm said.

Quick Overview

• U.S. consumer sentiment rose to 57.8 in the preliminary reading for September after tumbling to a nearly three-year low 55.7 in August

• Luxembourg Juncker said “we don’t see any room for maneuver in the euro area which could allow us to launch new fiscal stimulus packages. That will not be possible.”
• The Finnish Finance Minister said it was unlikely that any agreement on collateral would be reached at this meeting…

• There are definitely some ongoing concerns of interbanking markets starting to freeze up at major European banks -- therefore central banks joined forces to provide liquidity. French banks hold €50 billion (£44 billion) of Greek debt. Trichet tells politician’s to get ahead of the curve.

• India’s central bank raised interest rates to 8.25 percent from 8 percent -- the 12th increase since the start of March 2010.

• (AP) -- Wildlife biologists on Friday will evacuate two species of minnows from the shrinking waters of a West Texas river in the first of what could be several rescue operations involving fish affected by the state's worst drought in decades.

Quick Overview

• UBS said a trader of its investment bank unit has caused a loss estimated at USD 2bln  
  

• Moody's cutting the long-term credit rating of Crédit Agricole and Société Générale

• The U.S. EIA reported:
• Oil inventories fell by 6.7 million barrels
• Gasoline supplies rose by 1.9 million barrels,
• Distillates fuel inventories rose by 1.7 million barrels

• Italy cleared a 54-billion-euro emergency budget plan aimed at balancing public finances by 2013

• Eurozone industrial production rose by 1.0% in July.

• Indian inflation rose to 9.78% in August from 9.22 in July.

• The number of U.S. homes that received an initial default notice rose 33 % MoM

Quick Overview

• Greek 10 year yields at 24%. German Chancellor Angela Merkel rejected the idea of a hasty bankruptcy by Greece.

• The dry bulk market kept its upward momentum to reach 1901 a new high for the year.

• In the euro area, the unemployment rate was  unchanged for the second consecutive month at 10.0%. The high unemployment rates are in Ireland, Portugal, the Slovak Republic and Spain which are hovering at 14.5%, 12.3%, 13.4% and 21.2% respectively.

• Australia’s business confidence index dropped 10 points to minus eight in August.

• France's CPI rose by 0.5% in August.

• (AP) James Murdoch is being recalled for another grilling before Britain's Parliament after former News Corp. executives raised serious doubts about his role in the country's tabloid phone hacking scandal.

• [AP] - The largest U.S. banks will be required to show regulators how they would break up and sell off their assets if they are in danger of failing.
  
  
• The ranks of the poor in the U.S.  rose to nearly 1 in 6 people last year. The number of uninsured rose to 49.9 million, the biggest in over two decades.
• Median household income in the U.S. at  $49,445 is down 7.1% adjusted for inflation from 1999 peak.
• Obama Announced a 1 year extension of the trading ban with Cuba.

Quick Overview

• The U.S. National Association for Business Economics (NABE) cut projections for U.S. economic growth in 2011 and 2012 to 1.7%t this year, down from its May prediction of 2.8 percent.

• The IMF releases nearly 4 billion Euros of rescue funding to Portugal.

• The USDA estimates the U.S. Corn crop at 12.497 billion bushels and a yield of 148.1 bushels per acre.

• The USDA estimates soybean production at 3.085 billion bushels and a yield of 41.8 bushels per acre.

• Indian industrial production showed tepid growth of 3.3% in July down from 8.8% MoM.

'We Did Exactly What Al-Qaida Wanted Us to Do'
The Chinese military strategist Sun Tzu said a long time ago: "If you know your enemy and know yourself, you will win a hundred times in a hundred battles." Unfortunately with the war on terror we forgot who we are, but also we didn't know our enemy. Look at al-Qaida. On the eve of 9/11, they had about 400 operatives. They led us into a war longer than World War I and World War II. Not because they are such smart people, but because we did not understand our enemy. Instead, we applied waterboarding and enhanced interrogation techniques. We did exactly what al-Qaida wanted us to do. When you do this, what are you proving to the guy? You're proving that everything he thinks about you is right. But if you come with a cup of tea, he doesn't know how to act.

Quick Overview

• The parrot thinks the short term S&P cycle low should be right about now http://is.gd/VAPqgS

• The M’s are moving right along especially M1, ROC plus 20% -- most since 1975 http://is.gd/MwGAft

• Does the Baltic know something? http://is.gd/3sQ34N

• Is coal starting next leg up? http://is.gd/Z9wfVG

• (FT) New international bank capital rules are “anti-American” and the US should consider pulling out of the Basel group of global regulators, Jamie Dimon, chief executive of JPMorgan Chase, has said.

An Impeccable Disaster
What Mr. Trichet and his colleagues should be doing right now is buying up Spanish and Italian debt — that is, doing what these countries would be doing for themselves if they still had their own currencies. In fact, the E.C.B. started doing just that a few weeks ago, and produced a temporary respite for those nations. But the E.C.B. immediately found itself under severe pressure from the moralizers, who hate the idea of letting countries off the hook for their alleged fiscal sins. And the perception that the moralizers will block any further rescue actions has set off a renewed market panic.

Quick Overview

• Germany Said to Ready Plan to Help Banks If Greece Defaults. The resignation of a key official from the European Central Bank was the latest sign of deepening disagreement over how to solve Europe' economic problems.

• Canada's economy shed jobs for the first time in five months as the country's unemployment rate rose to 7.3% from 7.2% in July.

• YoY France budget deficit narrowed to 86.6 billion Euros (119.51 billion U.S. dollars) from 93.1 billion Euros (128.49 billion U.S. dollars)

• China's industrial value-added output is expected to grow 13.5% YoY
• China's inflation eased to 6.2% in August

Quick Overview

• U.S. Fixed mortgage rates fell this week to the lowest levels in six decades.

• U.S. weekly applications for unemployment benefits rose 2,000 to 414,000

• U.S. Trade deficit fell to $44.8 billion in July, down 13.1 % from June

• P&G says sales will rise by 5 to 9% in the coming year, with double-digit emerging market growth mitigating continued slow growth in the U.S., Europe and Japan.

• Spanish RE sales fell 40.8% YoY.

• Merkel greeted the verdict from the German constitutional court as pivotal in upholding the legitimacy of her government's Eurozone bailouts package, saying it justifies her policies in dealing with the debt crisis.

• Trichet warned there are increasing risks for the euro zone’s waning economic recovery and less chance of inflation.

• HuffPost: Each civilian sent to Afghanistan costs U.S. taxpayers up to $570,000 a year
• The DOE said:
• Crude supplies fell by 4 million barrels, or 1.1 percent, to 353.1 million barrels, which is 1.9% below year-ago levels.
• Gasoline supplies rose by 200,000 barrels, or 0.1 percent, to 208.8 million barrels. That was 7.2% below year-ago levels.
• Demand for gasoline over the four weeks ended Sept. 2 was 2.9% lower than a year earlier.
• U.S. refineries ran at 89 % of capacity.
• Supplies of distillate fuel rose by 700,000 barrels to 156.8 million barrels.
• The Cass Freight Index for U.S. shipments grew 4.4 percent in August over the same month a year ago, the smallest gain in a year-and-a-half and a sign of fragile demand in the American economy.
• Bulk freight shipments on major North American railroads rose 1.4 percent last week to the highest level since April 2, with gains across a wide range of cargoes.

Quick Overview

• (Bloomberg) The Swiss central bank imposed a ceiling on the franc for the first time in more than three decades and pledged to defend the target with the “utmost determination,”

• (Bloomberg)The Conference Board’s Employment Trends Index decreased 0.3 percent to 100.8 from the prior month’s revised reading of 101.0, the New York-based private research group said today. The measure was up 4.1 percent from August 2010.

• The U.S. Institute for Supply Management’s index of non- manufacturing businesses increased to 53.3 last month from 52.7 in July.

• Informa forecasts U.S. corn yield at 151 bu. per acre, down from 158 in Aug. The Corn crop is estimated at 12.7 bbu. Soybeans at 3.06, avg yield of 41.5, one bu/a.
  (They are usually high!!)
• Allendale forecasts U.S. corn production at 12.466 billion bushels and the yield per acre at 147.7 bushels per acre. They estimate this year's U.S. soybean production at 3.007 billion bushels and soybean yield at 40.7 bushels per acre.
• The above figures are below the corn estimate from the USDA of a 12.914bn-bushel harvest, and a yield of 153.0 bushels per acre. Next USDA forecast Monday.
  
  
• YoY Australia’s GDP rose to 1.4% in 2Q
  

  
  
• 
  

  Bank of Japan says post-quake recovery intact, keeps policy rate unchanged at 0%-0.1%

Ready for the fall

Euro-zone governments have effectively spent the past year making a departure from the euro zone ever more attractive, and therefore vastly more likely.

• Baltic Dry Index is looking quite positive http://is.gd/3sQ34N

• and so is the Capesize http://is.gd/Ilicqu

• European markets are showed a growing concern that the sovereign debt crisis is worsening.
  
  
  
  

Quick Overview

• The U.S. jobless rate held at 9.1%. Private sector firms added 17,000 jobs while state and local governments continued to shed workers. The average workweek dropped by 0.1 hour, and average earnings also fell by 3 cents. The unemployment rate for black Americans is at 16.7% in August, up from 15.9% the previous month.

• MoM The PPI picked up by 0.5 % in the Eurozone.

• U.S. sues 17 big banks over mortgage-backed securities

• 186 million Americans are currently breathing in unhealthy levels of smog. Caving Obama, citing the nation's struggling economy, asked the Environmental Protection Agency to withdraw a key air-quality standard. 
• The EPA  noted that while compliance with the new rule would cost polluters between $19 billion and $90 billion a year by 2020, the benefits to human health will be worth between $13 billion and $100 billion every year.

• Lanworth estimates corn 143.3 (+/-3bpa) beans 40 (+/- 1.2bpa).

• In 2011, through Aug. 31, some 243 — nearly half of the companies in the S&P 500 — have either increased or initiated a dividend payment.

• British Police have so far arrested more than a dozen people this year as part of the probe into alleged voicemail interception and corrupt payments to police by Rupert Murdoch’s News Corp. James Murdoch says he's turning down $6 million bonus (may take one later, though.) Rupert is keeping his.

• After prison lobbyists and execs donated generously Texas Gov. Perry floated a proposal to privatize the state's prison health care network.

Quick Overview

• The U.S. advance figure for seasonally adjusted initial claims for jobless benefits was 409,000 in the week ending August 27, fell 12,000 from the previous week's figure.

• France's unemployment rate inched down by 0.1% to 9.1 % in Q2 of 2011 .

• Global iron ore production growth needs to be at a rate of at least 100 million tons a year over the next eight years to meet rising demand, the world's mining giant Rio Tinto said on Thursday.

• (FT) U.S. Defense Contractors have wasted or lost to fraud as much as $60 Billion over the past 10 years.

• (MSFT) said its Windows Phone operating system may capture more than 20 percent of the smartphone market over the next two to three years with the help of hardware manufacturers and increased marketing efforts.

Quick Overview

• Ukraine raised its forecast for exports of grains by 1 million metric tons to 25 million tons

• The amount of cargo handled at the port of Maputo between January and July of 2011 totaled 6.4 million tons, which was a YoY rise of 1.6 million tons or 33%.

• India's crude oil imports in July rose 2.6% YoY to 13.58 million metric tons, or 3.21 million barrels a day.

• YoY the S&P/Case-Shiller index of property values in 20 cities fell 4.5%, after a 4.6% YoY drop in May.

• U.S. Consumer confidence fell to 44.5 in August -- the lowest reading since April 2009.

• U.S. road freight growth has exceeded truck driver volume in the year so far and is likely to inflate salaries by as much as 30 per cent by 2014.The three-year deficit of drivers, which number 300,000 full-time posts, matches 2004 vacancies that remained unfilled for a year, said freight transport consultancy FTR Associates head Noel Perry.

Attention Governor Perry: Evolution is a fact
The population of the United States is more than 300 million and it includes some of the best and brightest that the human species has to offer, probably more so than any other country in the world. There is surely something wrong with a system for choosing a leader when, given a pool of such talent and a process that occupies more than a year and consumes billions of dollars, what rises to the top of the heap is George W Bush. Or when the likes of Rick Perry or Michele Bachmann or Sarah Palin can be mentioned as even remote possibilities.

Graphics Gallery: The Most Important Facts about the Global Debt Crisis

Quick Overview

• (WSJ) Widely grown corn plants that Monsanto Co. genetically modified to thwart a voracious bug are falling prey to that very pest in a few Iowa fields, the first time a major Midwest scourge has developed resistance to a genetically modified crop.

• U.S. Rough rice stocks in all positions on August 1, 2011 rose 37% YoY

• Bloomberg: Chinese industrial companies’ profits rose 28.3 percent in the first seven months from a year earlier, helping to support the expansion of the world’s fastest-growing major economy.

• German Finance Minister Wolfgang Schaeuble said that the world risks a 7-year recession due to slowdown and debt troubles in America, Europe and Japan, urging debt-ridden countries resort to drastic austerity.

• The Russian Ministry of Economic Development expects Russia's 2011 GDP to grow by 4.1, lower than a previous forecast of 4.2%.

• Spain's economy grew 0.2% QoQ

• JOHN Fredriksen’s flagship tanker operator Frontline is urging other owners in the very large crude carrier market to take a $500m gamble and scrap 50 older double-hull vessels to help ease oversupply.

Quick Overview

• Betting on a bailout again? Buffett is investing $5 billion in B of A -- and plans to hold a Sept. 30 fundraiser in New York City to benefit President Barack Obama’s re-election bid. (See Matt Taibbi below)

• Investors are betting Germany will ban short selling.

• China was the third highest filer of patents in 2010, just behind the U.S., which registered 326,945 and Japan with 337,497.

• Thailand intends to pay farmers Bt 15,000 a tonne for unmilled paddy rice, over 50 % more than the current rate.

• South Korea's consumer confidence fell to a 5-month low of 99 in August, down 3 points MoM.

• German business confidence fell from 112.9 in July to 108.7 in August.

• Rabobank lowered its estimate for the world sugar inventories in 2011-12 by 300,000 tonnes to 9.5m tonnes.

• CME raises COMEX gold margins by 27%.

• England: people aged 16 to 24 not in Education, Employment or Training number 16.2% in 2009.

• U.S. Delinquency rates on one-to-four-unit properties are currently at 8.4%.

• Japan's July CPI rose 0.1% vs. forecasts for 0.1% drop

Obama Goes All Out For Dirty Banker Deal
Why? My theory is that the Obama administration is trying to secure its 2012 campaign war chest with this settlement deal. If Barry can make this foreclosure thing go away for the banks, you can bet he’ll win the contributions battle against the Republicans next summer.
Which is good for him, I guess. But it seems to me that it might be time to wonder if is this the most disappointing president we’ve ever had.

Obama Administration Pressures Prosecutors To Drop Criminal Investigations Of Banks Over Mortgage Fraud Various organizations have denounced the actions of the Obama Administration as caving into this powerful lobby — as it has caved into the oil/gas lobby on offshore drilling, pharmaceutical lobby on health care legislation, and telecom lobby on immunity from privacy lawsuits.

Quick Overview

• YoY U.S. Truck tonnage rose 3.9% in July American Trucking Associations said.

• U.S. new home sales fell 0.7% in July -- near expectations.

• Moody's downgraded Japanese Government Debt to AA3 from AA2

• China passed the US as the largest market for personal computers in Q2

• Japan creates $100 billion credit line as a step to cope with yen's recent spike

• Austrian woman Gerlinde Kaltenbrunner became the1st woman to conquer all 14 8,000-metre summits without oxygen http://is.gd/Y8wQ2i

Quick Overview

• Early warning sign: GLD overtakes SPY (S&P) as world’s largest ETF.

• U.S. feedlots placement at 2.15m cattle last month is up 22% YoY.

Torture in Bahrain Aided by Nokia Siemens The toolbox allows more than the interception of phone calls, e-mails, text messages and Voice Over Internet Protocol calls such as those made using Skype. Some products can also secretly activate laptop webcams or microphones on mobile devices. They can change the contents of written communications in mid-transmission, use voice recognition to scan phone networks, and pinpoint people’s locations through their mobile phones. The monitoring systems can scan communications for key words or recognize voices and then feed the data and recordings to operators at government agencies.

E-mails Suggest Bear Stearns Cheated Clients Out of Billions

Wall Street Aristocracy Got $1.2 Trillion in Secret Fed Loans

..as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, ..

Quick Overview

• (NYT) Broad areas around the stricken Fukushima Daiichi nuclear plant could soon be declared uninhabitable, perhaps for decades, after a government survey found radioactive contamination that far exceeded safe levels, several major media outlets said Monday.

• Germany now has more renewable energy installed than the USA.

• July U.S. single-family housing starts fell 4.9%; Building permits fell 3.2% in July.

• July U.S. industrial output rose 0.9%, in line with expectations and the biggest gain this year.

• The Conference Board reported that the index of leading economic indicators increased by 0.5% in July, suggesting modest growth ahead.

• The Department of Labor reported that first time claims for unemployment benefits rose by 9,000 to 408,000 in the week ending August 13.

• The Philadelphia Fed region reported this morning that industrial activity weakened sharply this month. The bank's index is reported at a negative 30.7, down from 3.2 in July and the lowest since March 2009.

• The U.S. CPI rose 0.5% in July, increasing inflation concerns once again.

• The Euro-area expanded by only 0.2% according to first estimates.

• YoY India’s industrial output rose by 8.8%.

• A few of Observations:
  
  U.S. Rail Traffic continues strong.
  
  Steel and Iron Ore prices are strong.
  
  Libor and Fed Funds Spread is showing signs of life.
  
  Coal continues strong
  
  Baltic Dry Index producing a P&F buy signal.
  
  M2 is growing at 10% +
  
  M1 growing at 20% +, fastest since 1975
  
  Money Multiplier still below 1 at 0.78
  
  
  
  
  
  

Next Update Sunday 8/21

Don’t look down
The poor like taxing the rich less than you would think One paradoxical consequence of this “last-place aversion” is that some poor people may be vociferously opposed to the kinds of policies that would actually raise their own income a bit but that might also push those who are poorer than them into comparable or higher positions.
..In keeping with the notion of “last-place aversion”, the people who were a spot away from the bottom were the most likely to give the money to the person above them: rewarding the “rich” but ensuring that someone remained poorer than themselves

Quick Overview

• (Bloomberg) Insiders buying stocks are at the Highest Rate since 2009.

• The USDA projected 2011 U.S. soybean yields at 41.4 bushels per acre, 2 bushels below last month's yield projection. The first survey-based forecast of U.S. soybean production is 3.056 billion bushels, 169 million below the July projection, and 273 million below last year's crop.

• The USDA's Corn yield projection of 153 bushels per acre was down sharply from a July estimate of 158.7. The USDA estimates new-crop ending stocks at 714 million bushels, or a 19.8 day supply.

• First time claims for U.S. unemployment benefits fell by 7,000 in the week ending August 6 to 395,000.

• European regulator announces bans on short selling in France, Italy, Spain and Belgium

Richard Koo: The Ratings Agencies May Destroy The Global Economy Once Again  These experiences demonstrate that during a balance sheet recession, when businesses and households are struggling to deleverage, the correct policy—fiscal stimulus—is exactly the opposite of what is needed under normal circumstances. Active application of stimulus will ultimately minimize the fiscal deficit.
Standard & Poor’s does not understand this and says America’s AAA* rating may be restored if the government succeeds in trimming its deficit by $4trn. The adoption of such a policy by the US government today would plunge the economy into another Great Depression.

Quick Overview

• Stiglitz: "We don't know the kinds of exposures to say European [credit default swaps] American banks have," he says. There are rumors that as much as 50% of European sovereign bonds are insured thru CDS by American banks, he notes. "But we don't really know." As was the case in 2008, the lack of knowledge of what's on bank balance sheets poses the risk of banks refusing to lend to other banks, Stiglitz says. "If one of these countries has a real difficulty [interbank lending] markets will freeze up."

• Süddeutsche Zeitung writes: The prospects of these youth in London are as dismal as those of young people in Cairo or Sana'a: They need unemployment benefits, odd jobs, state handouts and perhaps a bit of petty crime to stay afloat. The message to the British underclass couldn't be any clearer: Born poor, you will remain poor and that naturally also applies to your children and grandchildren. Your chances of winning the lottery are greater than breaking out of your class."

• Violence erupted on the streets of Chile's capital and other cities as tens of thousands of students staged another protest demanding changes in public education.Masked demonstrators burned cars and barricades, looted storefronts...

• Australia's consumer confidence fell in August to 89.6, its lowest level since May 2009.

• (Reuters) - Investors pulled the most money out of U.S. mutual funds in the week ended August 3 since the depths of the stock market collapse in March 2009, with net redemptions of $16.9 billion, data from the Investment Company Institute showed on Wednesday.
  
  
  
  
  

Quick Overview

• The Fed promised to keep interest rates near zero for at least two more years and said it would consider further steps to help growth, sparking a rebound in stocks. DJ down 635 yesterday - up 430 today. For once, the worn-out expression about roller coaster stock markets was apt.

• (Bloomberg) China may join Asian nations from South Korea to India in delaying interest-rate increases after the nation’s leaders urged global cooperation to stabilize financial markets.

• World crude oil and liquid fuels consumption will grow by 1.4 million barrels per day in 2011 and by 1.6 million barrels per day in 2012, outpacing average global demand growth of 1.3 million barrels per day from 1998-2007, the U. S. Energy Information Administration (EIA) said.

• Japans consumer confidence rose to 37.0 in July from 35.3 in June.

• Republicans’ No-Tax Stand Unsupported by History or Facts: View

634.76 -- the sixth-worst point decline for the Dow in 112 years

We face recession without shock absorbers as Berlin loses patience with the eurozone

SP should have acted six years ago when the rot was setting in. To do so now is fatuous.

Gwynne Dyer: Food crisis looms as a result of cutbacks in irrigation A lot of those aquifers are “fossil”, meaning that they filled with water long ago and are now cut off from the surface. They will eventually be pumped dry. Others still recharge from surface water that filters down, but they are almost all being pumped at many times their recharge rate, so they will effectively go dry, too. Then the world will have to make do with the one-third of irrigated land that gets its water from the weather. It won’t be enough.
Obviously, the aquifers won’t all go dry at once. Some are bigger than others, and some have been pumped much longer or more heavily than others. But most of them are going to go dry at some point or other in the next 30 years.

Quick Overview

• The subprime and "A" rating for Lehman  expert S&P downgrades US debt to AA+, late on Friday.

• The U.S. unemployment rate edged down to 9.1 percent in July from 9.2% in June. The total number of unemployed stood at 13.9 million. The number of long-term unemployed who have been jobless for at least 27 weeks stood at 6.2 million, accounting for 44.4% of the total unemployed.

• (Bloomberg) China’s annual corn imports may grow to more than 10 million metric tons in five years as the increase in demand outpaces expansion in output, a researcher at South China Grain Trade Center said.

• U.S. Consumer credit grew 7.7% in June.

Quick Overview

• Powerful typhoon Muifa likely to land in east China over the weekend creating -- damage to corn and soy?

• The Fox, Tea, Republican generated sell-off in Wall Street accelerated on Thursday, with the blue-chip Dow plunging more than 500 points, as investors rushed out of equities.
• IT's Dow Theory prediction is now bearish

• The number of U.S. people initially applying for unemployment aid last week declined to 400,000 in the week ending July 30, a decrease of 1,000 from the previous week's. THE BIG Employment NUMBER IN THE MORNING.

The Wrong Worries
But the policy disaster of the past two years wasn’t just the result of G.O.P. obstructionism, which wouldn’t have been so effective if the policy elite — including at least some senior figures in the Obama administration — hadn’t agreed that deficit reduction, not job creation, should be our main priority. Nor should we let Ben Bernanke and his colleagues off the hook: The Fed has by no means done all it could, partly because it was more concerned with hypothetical inflation than with real unemployment, partly because it let itself be intimidated by the Ron Paul types.

Quick Overview

• Arctic sea ice is melting at a near- record pace, opening shipping lanes for cargo traffic between Europe and Asia, Russia’s environmental agency said.

• TEA Republicans have erased $1.07 trillion from American equities in less than two weeks. They are good at this – and hard at work on more.

• U.S. factory orders dropped 0.8% in June.

• The number of planned layoffs at U.S. firms rose to a 16-month high in July

US: Obstacles to progress
Indeed, the US spends only 2.4 per cent of gross domestic product on infrastructure – less than half the average of 5 per cent that prevails in European countries – and half the level of 1960

Quick Overview

• (FT) Investors should remember that national accounts must sum to zero. Falling rich world public deficits lead to lower corporate profits, all else being equal. Something Mr. Market seems to know!!

• Chinas Purchasing Managers’ Index rose from 50.7 in July to 50.9 in June – better than expected.

• (Reuters) - Macau, the world's largest gambling market, blew past expectations to post a 48.4 percent rise in July gambling revenue, underscoring unflagging demand from China's newly minted millionaires and burgeoning middle class.

• WXRISK (the weather site) has a category 4-5 hurricane potentially hitting east central China (Corn / Soy)
  
  
• U.S. personal income rose 0.1% in June, while spending fell 0.2% -- on no confidence.

• The U.S. ISM’s factory index fell to 50.9 last month from 55.3 in June.

• The PPI remained stable in the EU 17 in June, rising by 0.1%

• YoY Japan's monetary base rose 15.0 % in July.

• Brazil’s trade surplus rose 74.4% YoY.

• South Korea said it will expand the zero- tariff quota for refrigerated pork imports without limit by the end of September. Previously, 130,000 tons of fresh and frozen pork were subject to zero-tariff imports.
  
  
• US corn futures climb the one-day 30c limit on increasing concerns about hot weather reducing output.
• The Institute of Energy Economics for Japan (IEEJ) reported that alternative energy imports (Coal  ?) would rise significantly if local authorities kept reactors shut after routine maintenance due to safety concerns after Fukushima.
• The 10 sieverts of radiation detected on Aug. 1 outside reactor buildings was the highest the Geiger counters used were capable of reading, indicating the level could have been higher!

How the Billionaires Broke the System
There are two ways of cutting a deficit: raising taxes or reducing spending. Raising taxes means taking money from the rich. Cutting spending means taking money from the poor. Not in all cases of course: some taxation is regressive; some state spending takes money from ordinary citizens and gives it to banks, arms companies, oil barons and farmers. But in most cases the state transfers wealth from rich to poor, while tax cuts shift it from poor to rich.

Quick Overview

• The U.S. Treasury will give priority to making interest payments to holders of government bonds if the clowns don’t reach an agreement.
• The House canceled a Thursday night vote on Boehner's debt plan.
• U.S. first time claims for unemployment benefits dropped below 400,000. Claims fell 24,000 during the week to 398,000.
• U.S. home sales rose 2.4% in June.

• The economic sentiment indicator (ESI) for the EU 17 fell by 2.2 points to 103.2

• Bloomberg: “I want to get away from this situation where I’m not even allowed to alert children about radiation exposure,” said Shishido, a 48-year-old Japanese teacher.

• China announced this week that it is considering a 4 point reduction in its 13% Value Added Tax

• Japan's jobless rate out at 4.6%, up from May’s 4.5%.
• YoY Japan’s consumer price index rose 0.4 % in June

• (MarketWatch) -- Verizon Wireless said late Thrusday its board approved the distribution of $10 billion in dividends to its owners Verizon Communications Inc. and Vodafone Group . The dividend will be paid Jan. 31 in proportion to their ownership stakes. Verizon owns 55% and Vodafone owns 45% in Verizon Wireless.

• (MarketWatch) -- Starbucks, boosted by rising customer visits to its coffee shops, reported late Thursday profit rose to $279 million, or 36 cents a share, up from $208 million, or 27 cents a share, in the year-ago period. Sales totaled $2.9 billion, up from $2.6 billion, as same-store sales increased 8%. Starbucks topped the consensus analyst targets for a profit of 34 cents and same-store sales of 5.4%, according to FactSet. Starbucks also lifted its fiscal 2011 outlook and laid out plans to accelerate new store openings. Starbucks shares, trading near 52-week highs, closed at $39.98 ahead of the report. The stock is up 60% over the last year.

• Global population will reach seven billion this year.