STOCK MARKET WATCH, Wednesday, July 27, 2011

[Pale Blue Dot]

Source: du

STOCK MARKET WATCH, Wednesday, July 27, 2011

AT THE CLOSING BELL ON July 18, 2011

Dow 12,501.30 -91.50 (-0.73%)
Nasdaq 2,839.96 -2.84 (-0.10%)
S&P 500 1,331.94 -5.49 (-0.41%)
10-Yr Bond... 2.95 -0.01 (-0.20%)
30-Year Bond 4.27 -0.01 (-0.33%)

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Market Conditions During Trading Hours

Euro, Yen, Loonie, Silver and Gold

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Handy Links - Market Data and News:Economic Calendar    Marketwatch Data    Bloomberg Economic News    Yahoo! Finance    Google Finance    Bank Tracker    
Credit Union Tracker    Daily Job Cuts

Handy Links - Economic Blogs:
The Big Picture    Financial Sense    Calculated Risk    Naked Capitalism    Credit Writedowns
Brad DeLong      Bonddad    Atrios    goldmansachs666    The Stand-Up Economist

Handy Links - Government Issues:
LegitGov    Open Government    Earmark Database    USA spending.gov

Handy Links - Videos:
The Coming Collapse of the Middle Class    Charlie Rose talks with Roubini    Charlie Rose talks with Krugman
    William Black: This Economic Disaster    Bill Moyers with Kevin Drum and David Corn

Bush Administration Officials Convicted = 2
Names: David Safavian, James Fondren
Dishonorable Mention: former House majority leader, Tom DeLay

Bush Administration Officials Charged = 1
Name(s): Richard Lopez Razo

Financial Sector Officials Convicted since 1/20/09 = 12

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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[Pale Blue Dot]

1. Today's Reports

Jul 27 07:00 MBA Mortgage Purchase Index 07/23 NA NA +15.5%
Jul 27 08:30 Durable Orders Jun -0.1% 0.5% 2.1% 1.9%
Jul 27 08:30 Durable Orders -ex Transporation Jun -0.2% 0.5% 0.7% 0.6%
Jul 27 10:30 Crude Inventories 07/23 NA NA -3.727M
Jul 27 14:00 Fed's Beige Book Jul

Read more: http://www.briefing.com/investor/calendars/economic/2011/07/25-29/#ixzz1TIl2tyAe

[Pale Blue Dot]

2. Oil falls to near $99 after US crude supply jump

SINGAPORE – Oil prices fell to near $99 a barrel Wednesday in Asia after a report showed U.S. crude supplies unexpectedly jumped last week, suggesting demand may be weakening.

Benchmark oil for September delivery was down 36 cents to $99.23 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose 39 cents to settle at $99.59 on Tuesday.

In London, Brent crude fell 13 cents to $118.15 per barrel on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that crude inventories rose 4.0 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 2.3 million barrels.

http://old.news.yahoo.com/s/ap/oil_prices

[Po_d Mainiac]

16. A year ago it was $82-$83 on the NYMEX

Good thing this is not an inflationary factor.

[Pale Blue Dot]

3. Stock-Index Futures Little Changed; Amazon Shares Surge, Juniper’s Slump

U.S. stock-index futures were little changed as deliberations continued in Congress on a plan to raise the federal debt ceiling and investors awaited results from Boeing Co. and ConocoPhillips.

Amazon.com Inc. (AMZN), the world’s largest online retailer, jumped 5.7 percent in early New York trading after profits and sales were ahead of analyst projections. Juniper Networks Inc. (JNPR) plunged 18 percent as the second-biggest maker of Internet networking equipment posted earnings that missed estimates.

Futures on the Standard & Poor’s 500 Index expiring in September rose less than 0.1 percent to 1,326.7 at 10:44 a.m. in London. Dow Jones Industrial Average futures advanced 12 points, or 0.1 percent, to 12,444.

Negotiations over the nation’s debt limit have whipsawed stocks as Republicans and Democrats spar over separate plans to raise the federal debt limit and avoid a default. The government needs to boost the $14.3 trillion cap by Aug. 2 so it can keep paying its bills, according to the Treasury Department.

http://www.bloomberg.com/news/2011-07-27/stock-index-futures-little-changed-amazon-shares-surge-juniper-s-slump.html

[Po_d Mainiac]

32. Shitcan this story

The anal-ists missed again on durables (-2.1%)....This might leave a mark.

[Pale Blue Dot]

4. Stocks Fall, Euro Slips as Spanish Bonds Drop

European stocks fell for a third day, the euro weakened while Spanish and Italian bonds dropped on concern the region’s debt crisis will limit economic growth and earnings. The dollar declined to a record against the Swiss franc, while U.S. default risk increased.

The Stoxx Europe 600 Index lost 0.5 percent at 6:25 a.m. in New York and futures on the Standard & Poor’s 500 Index were little changed. The euro depreciated 0.3 percent to $1.4468, while the Australian and New Zealand dollars strengthened to all-time highs against the U.S. currency. The yield on the Spanish 10-year bond rose above 6 percent for the third day. The cost of insuring against default on U.S. Treasuries for five years climbed to the highest since February 2010, and gold traded at an unprecedented $1,625.70 an ounce.

Europe must prevent a breakup of the euro region and an “uncontrolled” exit of one of its members, German Finance Minister Wolfgang Schaeuble said in a letter to lawmakers. Banco Santander SA, Spain’s biggest lender, said second-quarter profit dropped 38 percent as domestic loan provisions rose. U.S. durable goods probably increased for a second month in June, economists said before a Commerce Department report today.

http://www.bloomberg.com/news/2011-07-27/treasuries-fall-gold-gains-on-u-s-debt-wrangle-aussie-climbs-to-record.html

[Po_d Mainiac]

12. Strange indeed, as the Dixie flirts with the bottom of the support level

@73.5, we're just pennies away from the record low. So much for the 'flight to safety' factor.

[Pale Blue Dot]

5. Gold Advances to Record as ‘Go-to Asset’ Amid U.S. Debt-Limit Standoff

Gold surged to an all-time high as investors sought to protect their wealth against the possibility of a U.S. default that may come as soon as next week amid a standoff over the country’s $14.3 trillion debt limit. Silver rose to the highest since May.

U.S. politicians remain deadlocked after a House vote on Speaker John Boehner’s two-step plan to raise the debt ceiling and pare the deficit was postponed from today. President Barack Obama has threatened to veto the measure, sending the dollar to a record low against the Swiss franc yesterday, while pushing the cost of insuring U.S. debt to a 17-month high.

“Virtually everybody expects the debt-ceiling issue in the U.S. to be resolved,” said Eugen Weinberg, head of commodity research at Commerzbank AG. “On the other hand, the huge debt burden is not going to disappear following the agreement, and if the agreement is not reached, it would be a massive blow to the market.”

Gold for immediate delivery rose 0.3 percent to $1,624.55 an ounce by 9:35 a.m. in London after touching an all-time high of $1,625.70. The December-delivery contract gained 0.5 percent to $1,626.80 on the Comex in New York after reaching a record $1,628.10.

http://www.bloomberg.com/news/2011-07-27/gold-climbs-toward-record-as-go-to-asset-amid-u-s-debt-ceiling-impasse.html

[Demeter]

17. “Virtually everybody expects the debt-ceiling issue in the U.S. to be resolved,”

Then everybody is a fool.

[hamerfan]

30. Sounds like

They'll all be "surprised" soon.

[Ghost Dog]

57. Let me repeat this must-read:

Debt Madness Was Always About Killing Social Security
By Robert Scheer
http://www.truthdig.com/report/item/debt_madness_was_always_about_killing_social_security_20110727

This phony debt crisis has now passed through the looking glass into the realm where madness reigns. What should have been an uneventful moment in which lawmakers make good on the nation’s contractual obligations has instead been seized upon by Republican hypocrites as a moment to settle ideological scores that have nothing to do with the debt.

Hypocrites, because their radical free market ideology, and the resulting total deregulation of the financial markets, is what caused the debt to spiral out of control this last decade. That and the wars George W. Bush launched but didn’t have the integrity to responsibly finance. The consequence was a banking bubble and crash leading to a 50 percent run-up of the debt that has nothing to do with the “entitlements” that those same Republicans have always wanted to destroy.

Even Barack Obama has put cuts in those programs into play, warning ominously that a failure to lift the debt ceiling could cause the government to stop sending out Social Security checks. Why, when the Social Security trust fund is fully funded for the next quarter-century and is owed money by the U.S. Treasury rather than the other way around? Why would we pay foreign creditors before American seniors? The answer, offered as conventional wisdom by leaders of both parties, is that we cannot endanger our credit by failing to back our bonds, even though the Republicans have aroused the alarm of the main U.S. credit rating agencies by their brinkmanship on the debt.

What a topsy-turvy world when the same credit rating agencies that gave the thumbs up to the bankers’ toxic mortgage-backed securities and credit default swaps now threaten the AAA rating of U.S. Treasury bonds. According to them, it will not be enough to merely lift the debt ceiling—what had been assumed by both Republican and Democratic presidents to be a routine act. In addition to that, as the credit agency Standard & Poor’s has insisted, more than $4 trillion has to be cut from programs that mostly benefit the victims of the banking meltdown. Otherwise the agencies will downgrade the U.S. credit rating, leading to higher interest rates that will destroy what remains of the U.S. housing market, dim the prospect for any improvement in employment and further enrich the Chinese government and other holders of U.S. debt.

...

What is at stake is a radical Republican agenda to totally reverse the progress in economic justice that began with the great reforms of Franklin Roosevelt and his New Deal.

[Pale Blue Dot]

6. Soros to End Four-Decade Hedge-Fund Career

George Soros, the billionaire best known for breaking the Bank of England, is returning money to outside investors in his $25.5 billion firm, ending a career as hedge-fund manager that spanned more than four decades.

Soros, who turns 81 next month, will hand back the money, less than $1 billion, by the end of the year, according to two people briefed on the matter. His firm will focus on managing assets solely for Soros and his family, according to a letter to investors. Keith Anderson, 51, chief investment officer since February 2008, is leaving, said the letter, signed by Soros’s sons Jonathan and Robert, who are co-deputy chairmen.

“We wish to express our gratitude to those who chose to invest their capital with Soros Fund Management LLC over the last nearly 40 years,” they said in the letter. “We trust that you have felt well rewarded for your decision over time.”

The move completes Soros’s transformation from a speculator, who in 1992 made $1 billion betting that the Bank of England would be forced to devalue the pound, to philanthropist statesman, a role he first imagined for himself as a Hungarian émigré studying at the London School of Economics after World War II, according to Soros’s writings. In the last 30 years, he’s given away more than $8 billion to promote democracy, foster free speech, improve education and fight poverty around the world, he said in a recent essay.
Family Assets

http://www.bloomberg.com/news/2011-07-26/soros-to-end-four-decades-as-hedge-fund-leader-by-returning-investor-cash.html

[xchrom]

7. good morning!

:donut:

[Demeter]

20. Good Morning

It is at least still good weather.

I have this nagging feeling I'm supposed to be somewhere, and I can't remember what or where.

It's driving me crazy.

Anybody know where I am supposed to be?

[fasttense]

8. It seems that Wall Street isn't so worried about this debt ceiling crisis.

The numbers are slightly down but nothing like a panic.

Seems to me this debt ceiling crisis is all fake.

[tclambert]

19. "This debt ceiling crisis is all fake." Why, yes. Yes, it is.

The whole thing is political theater. Republicans in Congress pretend they won't vote to increase the debt ceiling, yet everyone knows they will. The President pretends he's so scared of what he knows the Republicans won't do, that he's willing to negotiate with them on all spending issues. Republicans pretend they care about the deficit, yet they ignored it during all the Bush years and voted pretty much automatically to increase the debt limit every time they had to. They pretend to care about the deficit until anyone mentions ending the Bush tax cuts for the rich, the very thing that caused most of the deficit. Oh, at that point, they stop caring about deficits, you betcha.

Obama pretends he gives credence to the Republicans' "worries" about the deficit, when we can see right here on Stock Market Watch in Festivito's daily numbers that the deficit has come down remarkably in the last couple of years. The 2009 budget, the last one Bush had a say on, set the deficit record at $1.885 trillion. This year's (2011) may come in under $1T, a 2 year decrease of 47% and less than the 2008 deficit (which was all Bush).

What I haven't understood through this whole drama is why Obama acts like he takes the Congressional Republicans seriously when he could just ignore all their demands and call their bluff. He could simply say, "Go ahead. Prove you are irresponsible idiots, or prove to the Teabaggers that you don't care about them. You're in a lose-lose, and I'm not gonna help you. Kthxbai."

[Demeter]

27. Thing is, It's STILL Going to Happen

These guys aren't kidding, they are suicidal.

[Loge23]

35. A few falling rocks now...

..will become a landslide by Friday if there is no sign of closure.

[GillesDeleuze]

44. Why would they be worried? They PAY S&P to downgrade us. its part of the plan.

[Ghost Dog]

58. Once those in the know and those who intend to follow

are positioned correctly to take advantage...

[GillesDeleuze]

74. ...need more capital to take advantage... grr..

well, it'll help build the bankroll. hopefully when everything comes back into dollars, they will still be worth something..

[xchrom]

9. europe: Steel plant rescued from closure to create 1,000 jobs

http://www.independent.co.uk/news/business/news/steel-plant-rescued-from-closure-to-create-1000-jobs-2326680.html

A Thai firm which bought a huge steel plant, rescuing it from closure, is to create 1,000 jobs in a huge boost to the industry, it was announced today.

Sahaviriya Steel Industries (SSI), Thailand's biggest steel producer, will start recruiting next month for the new jobs at the Teesside Cast Products site in Redcar, Cleveland.

The firm bought the site from Corus earlier this year, sparking hopes of a return to major steel-making in an area with a long tradition in the industry.

The plant was mothballed more than a year ago under the ownership of Corus after a major contract fell through, causing the loss of 1,600 jobs.

Michael Leahy, leader of the Community trade union, said today's announcement was "fantastic news".

[DemReadingDU]

11. check the link, n/t

[Po_d Mainiac]

14. Yup...that was far too grim for AM viewing n/t

[xchrom]

18. fixed it! sorry! nt

[DemReadingDU]

10. Good toon today!

GOP = the party of NO

Really, it doesn't matter what Obama offers, even to cut SS and Medicare (what the GOP has always wanted), and still the GOP still says NO.

[Fuddnik]

15. I guess we can thank their obstinancy for a couple of things.

Everybody knows some idiot, somewhere, who will never agree with anything, anytime. Even if it was their idea in the first place, they think you must have ulterior motives to go along with their idiotic ideas.

But, to find so many of them. Gathered together in one room at the same time is unheard of. It's an assholes convention.

[DemReadingDU]

29. exacto

I ventured over into GD, WillPitt's despair thread, as many others. Quite the topic of discussion. It is hard to believe that Obama would offer up cuts to SS and Medicare. It is even harder to believe that the GOP would turn that down. Maybe that was the point of Obama...to prove how obstinate the GOP is.
:shrug:


But as the toon today says, GOP = NO. No to anything and everything. It appears the GOP would rather their/our country go deeper into depression than to compromise with Obama.

[hamerfan]

34. Thanks for the tip!

I enjoy reading Will Pitt, but rarely stray from SMW. Here's the link:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1578607

[Festivito]

13. Debt: 07/25/2011 14,342,841,083,049.67 (DOWN 32,896,993.24) (Mon, DOWN a little.)

(OVER the old debt limit of 14.294-trillion dollars by 49-billion dollars. Good day.)
A shower is a wonderful thing.
(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 9,747,197,103,331.70 + 4,595,643,979,717.97
DOWN 991,970,057.94 + UP 959,073,064.70

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 313-Million person America.
If every American, man, woman and child puts in $3.20 THAT'S 1B$, and $3,199.75 makes 1T$.
A family of three: Mom, Dad, Child: $9.60, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 12 seconds we net gain another American, so at the end of the workday of the report, there should be 312,524,192 people in America.
http://www.census.gov/population/www/popclockus.html ON 10/04/2010 04:37 -> 310,403,677
Currently, each of these Americans owe $45,893.54.
A family of three owes $137,680.62. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 19 reports in the last 30 to 31 days.
The average for the last 19 reports is -86,879,372.79.
The average for the last 30 days would be -55,023,602.77.
The average for the last 31 days would be -53,248,647.84.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 251 reports in 365 days of FY2010 averaging 6.58B$ per report, 4.53B$/day.
There were 201 reports in 298 days of FY2011 averaging 3.89B$ per report, 2.62B$/day.
Above line should be okay

PROJECTION:
There are 545 days remaining in this Obama 1st term.
By that time the debt could be between 14.3 and 17.2T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
07/25/2011 14,342,841,083,049.67 BHO (UP 3,715,964,034,136.59 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +1,651,794,027,380.00 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO
FY2011 +0,781,218,052,157.90 ------------* * * * * * * * * * * * * * * * * * * BHO
Endof11 +0,956,861,037,039.04 ------------* * * * * * * * * * * * * * * * * * * * * * * BHO

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
06/30/2011 +003,977,538,029.63 ------------*********
07/06/2011 +006,618,560,773.63 ------------********* Wed
07/07/2011 +001,077,509,146.64 ------------*********
07/08/2011 -000,834,469,945.40 ---
07/11/2011 -004,122,303,723.36 -- Mon
07/12/2011 -003,634,448,925.47 --
07/13/2011 +010,692,053,599.69 ------------**********
07/14/2011 -001,516,331,672.50 --
07/15/2011 +003,100,504,281.51 ------------*********
07/18/2011 +000,238,790,593.83 ------------******** Mon
07/19/2011 +000,061,099,321.97 ------------*******
07/20/2011 -000,246,591,087.61 ---
07/21/2011 -006,272,699,061.03 --
07/22/2011 +000,804,035,241.16 ------------********
07/25/2011 -000,991,970,057.94 --- Mon

8,951,276,514.75 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock
http://www.usdebtclock.org/
DUer primer on National debt

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4936078&mesg_id=4936764

[Festivito]

73. Debt: 07/26/2011 14,342,830,116,551.28 (DOWN 10,966,498.39) (Tue, UP a little.)

(OVER the old debt limit of 14.294-trillion dollars by 49-billion dollars. Good day.)
Quik trip up north.
(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 9,747,272,360,004.06 + 4,595,557,756,547.22
UP 75,256,672.36 + DOWN 86,223,170.75

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 313-Million person America.
If every American, man, woman and child puts in $3.20 THAT'S 1B$, and $3,199.68 makes 1T$.
A family of three: Mom, Dad, Child: $9.60, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 12 seconds we net gain another American, so at the end of the workday of the report, there should be 312,531,392 people in America.
http://www.census.gov/population/www/popclockus.html ON 10/04/2010 04:37 -> 310,403,677
Currently, each of these Americans owe $45,892.45.
A family of three owes $137,677.34. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 20 reports in the last 30 to 32 days.
The average for the last 20 reports is -83,083,729.08.
The average for the last 30 days would be -55,389,152.72.
The average for the last 32 days would be -51,927,330.67.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 251 reports in 365 days of FY2010 averaging 6.58B$ per report, 4.53B$/day.
There were 202 reports in 299 days of FY2011 averaging 3.87B$ per report, 2.61B$/day.
Above line should be okay

PROJECTION:
There are 544 days remaining in this Obama 1st term.
By that time the debt could be between 14.3 and 17.2T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
07/26/2011 14,342,830,116,551.28 BHO (UP 3,715,953,067,638.20 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +1,651,794,027,380.00 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO
FY2011 +0,781,207,085,659.50 ------------* * * * * * * * * * * * * * * * * * * BHO
Endof11 +0,953,647,445,704.74 ------------* * * * * * * * * * * * * * * * * * * * * * * BHO

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
07/06/2011 +006,618,560,773.63 ------------********* Wed
07/07/2011 +001,077,509,146.64 ------------*********
07/08/2011 -000,834,469,945.40 ---
07/11/2011 -004,122,303,723.36 -- Mon
07/12/2011 -003,634,448,925.47 --
07/13/2011 +010,692,053,599.69 ------------**********
07/14/2011 -001,516,331,672.50 --
07/15/2011 +003,100,504,281.51 ------------*********
07/18/2011 +000,238,790,593.83 ------------******** Mon
07/19/2011 +000,061,099,321.97 ------------*******
07/20/2011 -000,246,591,087.61 ---
07/21/2011 -006,272,699,061.03 --
07/22/2011 +000,804,035,241.16 ------------********
07/25/2011 -000,991,970,057.94 --- Mon
07/26/2011 +000,075,256,672.36 ------------*******

5,048,995,157.48 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock
http://www.usdebtclock.org/
DUer primer on National debt

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4937446&mesg_id=4937482

[xchrom]

21. Search for safe havens as US budget impasse continues

http://www.independent.co.uk/news/business/news/search-for-safe-havens-as-us-budget-impasse-continues-2326433.html

The US dollar fell to a record low against the Swiss franc and gold traded within a whisker of its all-time high as the failure to resolve the American debt crisis intensified the scramble among investors for safe-haven assets.

Christine Lagarde, the new chief executive of the International Monetary Fund, put pressure on Republican and Democrat politicians to end their deadlock over the terms of an agreement to raise the US debt ceiling to $14.3 trillion (£8.7trn), as they edged closer to a devastating default which she said would have serious consequences for the global economy.

Ms Lagarde said: "On the debt ceiling, the clock is ticking and clearly the issue needs to be resolved immediately. Indeed, an adverse fiscal shock in the United States could have serious spillovers on the rest of the world. But, more fundamentally, a credible fiscal adjustment plan is needed sooner rather than later."

The dollar dropped to a record low of 0.799 Swiss francs and slid below 78 yen for the first time since March, while gold hovered around Monday's all-time high of $1,622.49 an ounce as the US debt stand-off undermined the American currency and its Treasuries – traditionally regarded as safe-haven bonds in times of trouble. Ms Lagarde was speaking the morning after a live televised address from President Barack Obama late on Monday night in which he warned that failure to raise the debt ceiling would have grave consequences.

[JDPriestly]

69. Yeah, sure. Lagarde is furious with American banks

and quite willing to take her furor out on millions of seniors in America who worked and paid into Social Security and Medicare all their lives.

See Inside Job. Lagarde was in one of the movies about the banking fraud, and I think maybe that was the one.

I can't blame her anger, but Social Security benefits in the US are much less generous than they are in most European countries.

And, we don't have single-payer healthcare or the free or low-cost college tuition and other government largesse that Europeans enjoy.

We have one of the highest disparities in income between rich and poor among developed countries -- maybe the highest.

Lagarde is over-reaching here and way off mark here. Her austerity measures will hit people who have been suffering from austerity all their lives and permit the spendthrifts and gamblers to continue their crimes as usual.

[xchrom]

22. Stephen Foley: Raising the debt ceiling may not be enough to prevent financial disaster

http://www.independent.co.uk/news/business/comment/stephen-foley-raising-the-debt-ceiling-may-not-be-enough-to-prevent-financial-disaster-2326058.html

The US television networks and major news websites have started displaying countdown clocks. With all the drama of an episode of MacGyver, the Eighties action series, President Barack Obama is sweating to defuse the ticking timebomb primed to rip through financial markets one week from now. That is when the government of the world's most powerful economy will run out of money to pay its bills, for the entirely self-inflicted reason that its Congress hasn't raised an arbitrary legal limit on the size of the federal debt.

The plot is exactly as predictable as MacGyver, too. The debt ceiling will be lifted, one way or another, but only with seconds to spare. This is the way of things in the land of the free and the home of cowardly lawmakers; only a threat of Armageddon rouses lawmakers to unpalatable decisions. The irritating thing yesterday was that credit markets refused to play their role. They are supposed to provide the dramatic music, the drum roll of collapsing share prices and soaring interest rates, to elevate the tension in its concluding phase.

But the stock market was flat at lunchtime, even as President MacGyver seemed as far away as ever from corralling his sidekicks into a team effort that will defuse the situation. The yield on Treasuries, though it spiked a little in the morning, was back to flat by lunchtime trading in New York. Congressional leaders have been privately praying for a tumultuous week on the markets, to concentrate the minds of the deniers on the right who doubt the US will default if the ceiling is not raised and to send a message back home to their constituencies that, hey, what else was there to do but vote for a raise?

Unfortunately, this episode doesn't end when the credits roll. Both Standard & Poor's and Moody's have said they will factor the nature of the process, as well as the outcome, into their decisions on whether to downgrade US government debt. S&P even says that, if there is no immediate, or no immediate prospect of a $4trn (£2.45trn) deficit reduction deal to go along with the debt ceiling raise, then it will axe the country's AAA credit rating – and the consequences of that are impossible to calculate.

[Demeter]

31. Life imitates...well, it's not Art

rather disgusting, isn't it?

[Demeter]

23. US money market funds build liquidity

----------
US money market funds are stockpiling cash in case Congress fails to raise the debt ceiling, distorting the short-term market for US government debt and raising borrowing costs for banks and other financial institutions.

While the funds will continue to hold US Treasuries in the event of a downgrade or default, they are building up liquidity and shunning certain securities due to fears that a failure to raise the debt ceiling could trigger client redemptions.

Read more >>
http://link.ft.com/r/NA70KK/YBG2WE/LSLXF/3OG0KK/R33FBG/4O/t?a1=2011&a2=7&a3=26

----------

[Demeter]

37. Money market funds cut euro bank exposure

Crucial providers of short-term financing withdraw from all but extremely short-term lending amid sovereign debt concerns

Read more >>
http://link.ft.com/r/H60H77/XHBG7U/ULCJB/IYWXFY/YBHJXY/RF/t?a1=2011&a2=7&a3=25

[Demeter]

24. Shares in small refiners surge with crude spread

A batch of obscure US petroleum refiners has become one of the hottest trades of the commodities market as hedge funds bid for their shares to profit from an anomaly in global crude oil prices

Read more >>
http://link.ft.com/r/YIQXNN/MSJN7B/6ADGM/3OB88Z/EXWAM0/AZ/t?a1=2011&a2=7&a3=25

[Demeter]

25. The case for more quantitative easing is growing UK

The latest figures show that Britain’s economy grew by only 0.2 per cent in the second quarter, which the Office for National Statistics says was equivalent to 0.7 per cent after taking account of the extra bank holiday for the royal wedding, and the effects of the Japanese earthquake.

One excuse after another! Taking a slightly longer view, the economy has barely grown at all, according to the official statisticians, over the past three quarters. What should be done about this?

Read more >>
http://link.ft.com/r/IOCBMM/YBGCLF/A5Q0X/HDWDFO/168BL5/YT/t?a1=2011&a2=7&a3=26

[Demeter]

26. POISON FROM UNCLE AL: Alan Greenspan: Regulators must risk more, and intervene less

Since the devastating Japanese earthquake and, earlier, the global financial tsunami, governments have been pressed to guarantee their populations against virtually all the risks exposed by those extremely low probability events.

But should they? Guarantees require the building up of a buffer of idle resources that are not otherwise engaged in the production of goods and services. They are employed only if, and when, the crisis emerges.

Read more >>
http://link.ft.com/r/M2ZOXX/5V24DY/VTVRG/HDWDY2/PFRSXG/OS/t?a1=2011&a2=7&a3=26

YEAH, AND YOUR POINT IS? ARE YOU THE IDIOT WHO SOLD OFF ALL THE GRAIN RESERVES, AL?

[Po_d Mainiac]

33. No need for grain

Cake is on the menu for the foreseeable future

[Demeter]

28. Deven Sharma: Policymakers must reduce reliance on credit ratings

What is the appropriate role of independent credit ratings in the financial system? That is the question raised by recent events in the eurozone and one that has prompted a flurry of suggestions from European policymakers, from intervening in ratings methodologies to suspending certain sovereign ratings.

Eurozone governments are making strenuous efforts to tackle the very serious challenges facing the bloc and to secure near term liquidity support for those most affected. But moves to limit the independence of credit ratings would be counterproductive.

Read more >>
http://link.ft.com/r/8P1R88/KQ9JF8/DXJ2Y/C5A79O/2O6LUH/E4/t?a1=2011&a2=7&a3=25

[Demeter]

36. Bank of Ireland to avoid state control

A group of investors has agreed to buy up to €1.12bn of the lender’s shares in a move that limits the state’s final ownership to 32%

Read more >>
http://link.ft.com/r/YIQXNN/FKD9FI/9MEOW/GK4X8B/U1URCS/36/t?a1=2011&a2=7&a3=26

PROVING THAT THE RICH DON'T REALLY NEED OTHER PEOPLE'S MONEY...THEY JUST PREFER IT.

[Demeter]

38. Major banks hesitate to commit to Greek package

Several European banks have yet to sign up to a plan for private-sector bondholders to contribute €37bn to a second rescue package

Read more >>
http://link.ft.com/r/DHGUVV/5V2A0F/DXJ2Y/6V6OK3/YBHJKR/PJ/t?a1=2011&a2=7&a3=25

[Demeter]

39. Is Gold Money?

http://dailyreckoning.com/is-gold-money/

That question, directed to Federal Reserve Chairman Ben Bernanke by Congressman Ron Paul in last week's hearings before the House Financial Services Committee, strikes terror in the heart of all central bankers.

Bernanke looked stunned and then answered, "No: Gold is an asset."

The rising price of gold reflects global uncertainties, he explained. "The reason that people hold gold is as a protection against what we call tail risks: really, really bad outcomes."

...With every headline, it is becoming increasingly apparent how much the governing class has overreached. Those who believe in government are simply running out of other people's money. For example, President Obama's call to reverse the tax break given to owners of corporate jets in his 2009 stimulus bill would supposedly raise $300 million a year in revenue, enough to cover less than two hours of current deficit spending. Even if the Federal government could tax 100% of personal income in excess of $250,000 a year, it would collect little more than half of the revenue needed to balance the budget...These real world results mock the conventional wisdom that given the power to spend, borrow, tax and print money, elite public servants can manage the economy and protect the average individual against the vicissitudes of life.

Instead, government itself has become a source of systemic risk, and a direct threat to our prosperity and liberty. At the center of this political upheaval is the quality of money itself. "Is gold money?" is a showstopper because it raises the questions: "What is money and what power should government have to manipulate its value?" The answers to these questions reveal how our most basic trust in government has been betrayed...Trust is always an assessment of some future action. Making a grounded assessment requires us to understand who is making the promise, what action they are promising, and whether they are sincere and competent to fulfill their promise. When an individual, company or government has a good credit rating, we are saying that we trust they will keep their promise to pay off their debts in the future...

MUCH MORE OF THE GOLDBUG RELIGION AT LINK....INTERESTING VIEWPOINT

[Demeter]

40. US unveils sanctions against global organized crime

WELL, SOME GLOBAL ORGANIZED CRIME....THE COMPETITION FOR LA COSA NOSTRA, US CORPORATE VERSION

http://uk.news.yahoo.com/us-unveils-sanctions-against-global-organized-crime-182832328.html;_ylt=ApwFPmoDw40IetJXcNRLZKzSfMl_;_ylu=X3oDMTNhaTk0a2lnBHBrZwM4YWVlOTA5YS1lMWY2LTMzYjQtYmFiZi1kYjc4NTE2N2M1ZDcEcG9zAzExBHNlYwNNZWRpYVRvcFN0b3J5BHZlcgM5OGFhMmRjMC1iNmY0LTExZTAtOWVmMi03YTkxMzNhODE0ZWQ-;_ylg=X3oDMTFuNWkyZmY4BGludGwDZ2IEbGFuZwNlbi1nYgRwc3RhaWQDBHBzdGNhdAN3b3JsZHx1c2EEcHQDc2VjdGlvbnM-;_ylv=3

The United States Monday unveiled a series of tough sanctions aimed at cracking down on international organized crime, including gangs from Russia, Japan and Mexico, as well as the Italian Mafia.

The Japanese Yakuza, the Camorra from Naples and Mexico's Los Zetas as well as The Brothers' Circle, based mainly in the former Soviet Union, were among those slapped with economic sanctions, the White House said.

US President Barack Obama signed an executive order setting out 56 priority actions aimed at smashing transnational criminal organizations by breaking their economic power and protecting the financial system.

The order froze all property belonging to those groups designated as transnational criminal organizations, and barred American citizens from engaging in any business with them....


MY IRONY METER JUST EXPLODED

[Po_d Mainiac]

61. WTF...Wall St ain't on a globe? n/t

[Demeter]

41. Americans 'Disgusted' as Politicians Fail to Compromise on Debt By Bloomberg

http://www.informationclearinghouse.info/article28689.htm

MISSION ACCOMPLISHED

[Pale Blue Dot]

42. US may have way to cover bills after deadline, for week

Thanks to an inflow of tax payments and maneuvering by the Treasury Department, the government can probably continue to pay all of its bills for several days after Aug. 2, providing potentially critical breathing room for Congress to raise the debt ceiling, according to estimates by several Wall Street banks and a Washington research organization.

The consensus is that the government will not run short of money until Aug. 10, when it would be unable to cut millions of Social Security checks without borrowing more money.

President Obama has described Aug. 2 as a “hard deadline” for Congress to increase the maximum amount that the government is allowed to borrow.

“We have to do it by next Tuesday, Aug. 2, or else we won’t be able to pay all of our bills,” Mr. Obama told the nation in his speech on Monday night.

http://www.msnbc.msn.com/id/43904136/ns/politics-the_new_york_times/

:eyes:

[Demeter]

46. We ARE Being Played for Fools

see posts below. There is no other reason for all this melodrama.

I just don't think the People are as foolish as they have been since 1980. 8 years of W cured that tendency.

At least, I sincerely hope so.

[Demeter]

43. The Unintended Consequences of Debt Ceiling Intransigence

INTRASIGENCE BY HE WHO CANNOT BE NAMED



.........Citibank alone received $2.5 trillion in government loans, an amount larger than the Gross Domestic Product of Great Britain and larger than the GDP of all but five countries in the world. If one bank can borrow this much from the Fed, the US Treasury should be able to continue borrowing as well. ............

One important fact that many Republicans overlook is that in a market economy large numbers of people can find themselves without resources through no fault of their own. Ordinary run-of-the-mill business cycles can leave millions jobless. Once jobless, people cannot make mortgage and car payments and become homeless. Unable to pay credit card bills, they have no recourse to credit. No country can simply say, “OK, hard luck, go die in the streets with your wives and children.” These problems are more acute today, because so many American jobs have been moved abroad to increase profits, thus making the income distribution extremely unequal. There are no longer family farms to which to return, as during the Great Depression of the 1930s....In the 1930s Marxism was a force. The new Soviet Union and its promises had raised hopes for workers and the poor, hopes that proved to be unfounded, but the prospect of revolt in America softened hard hearts, and President Franklin D. Roosevelt and Congress were able to put in place a social safety net to provide for those who were cast aside by the crises of capitalism. Many Republicans believe that the “New Deal” was the undoing of the Republic. I know this both because I have spent my life among Republicans and because I am a scholar. For Republicans, or many of them, everything started going wrong with the New Deal, which created “leechdom,” expanded by President Johnson’s “Great Society” three decades later.

Republicans have been trying to "rescue the Republic" ever since.(THE QUOTES ARE MINE--DEMETER)

*************************************************
We are talking about a crisis beyond anything the world has ever seen. Does anyone think that President Obama is going to just sit there while the power of the US collapses? He doesn’t have to do so. There are presidential directives and executive orders in place, put there by George W. Bush himself, that President Obama can invoke to declare a national emergency, suspend the debt ceiling limit, and continue to issue Treasury debt. This is exactly what would happen. The consequences would be that the power of the purse would transfer from Congress to the President. It would be the end of the power of Congress. Congress, Republicans and Democrats alike, have already given away to the President Congress’ Constitutional right to decide whether the country goes to war. Now Congress would lose its power over debt, taxes, and the budget itself.

Republicans need to decide whether the advantage of delivering a blow against “leechdom” is worth such extreme risks....Some readers will say “this could never happen.” But Congress is already emasculating itself as a result of the Republicans’ intransigence over the debt ceiling increase.
...Republican Mitch McConnell and Democrat Harry Reid have come up with a proposal for a committee of Congress, called a Super Congress, that could fast-track legislation by prohibiting amendments. In other words, the few members of the Super Congress could bypass any citizen opposition that might still be represented in the ordinary old Congress. The more likely outcomes would be an end to the mortgage interest deduction and the deductions for retirement savings. Legislation to gut the social safety net could not be amended....A Congress that is willing to destroy its remaining power over a debt ceiling increase that is less than a Federal Reserve loan to one US bank is a Congress moved to folly by Republican intransigence.

[Demeter]

45. Are We Being Had?

SAME LINK AS ABOVE--TWO OPINIONS FOR THE CLICK OF ONE

In my last column (above) I suggested that an unintended outcome of the debt ceiling impasse could be Congress’ loss of the power of the purse. In this column I suggest an intended outcome that the ongoing political theater might be designed to produce. President Obama has said that he will not resort to the various powers open to him to keep the government running should Congress fail to deliver a debt ceiling increase. This is a suspicious statement, as it is not credible that a president would leave troops at war unpaid and without supplies, Social Security checks unsent and stand aside while the US dollar collapses and the credit rating of the US government is destroyed.There are national security directives and executive orders already on the books, as well as the 14th Amendment, that Obama can invoke to set aside the debt ceiling. Congress would sigh with relief that Obama had prevented the lawmakers from destroying the country.

So what might be going on?

One possibility is that the political theater is operating to bring about otherwise politically impossible cuts in the social safety net. If the drama continues to the absolute deadline without a deal, Obama, who perhaps favors cutting the safety net as much as do the Republicans, would have to accept the Republican package in order that the troops are not cut off from supplies, Social Security checks can continue to go out, and the dollar be saved. Having opposed the Republicans to the last minute, Obama can say that he had no other recourse....{B]It would be a perfectly orchestrated scenario for getting rid of the New Deal and the Great Society that use up money that could be spent on wars and bailouts and tax cuts for the rich. If the American public is not sufficiently softened up by August 2, the political theater can continue with temporary debt ceiling increases until things really begin to crack.

On July 15 S&P put all AAA-rated insurance companies on CreditWatch citing ties to the US sovereign credit rating. On July 25, the US dollar fell to a new low against the Swiss franc, and gold reached a new high. Some more of this, and the public will see benefit cuts as preferable to economic Armageddon. If Bush and Cheney were still in office, they would use the debt ceiling impasse to seize more power from Congress. Obama, however, might be so well aligned with financial interests that the opportunity he sees is to cut Social Security, Medicare and education loose from the federal budget. Then Wall Street can privatize them.

Whatever emerges from the debt ceiling impasse, it will not be in the interest of the American people.

WELL, THAT GOES WITHOUT SAYING

[Demeter]

51. The Enemy is Washington / An Economy Destroyed

yet another offering same source, different link

ECONOMY


Recently, the bond rating agencies that gave junk derivatives triple-A ratings threatened to downgrade US Treasury bonds if the White House and Congress did not reach a deficit reduction deal and debt ceiling increase. The downgrade threat is not credible, and neither is the default threat. Both are make-believe crises that are being hyped in order to force cutbacks in Medicare, Medicaid, and Social Security. If the rating agencies downgraded Treasuries, the company executives would be arrested for the fraudulent ratings that they gave to the junk that Wall Street peddled to the rest of the world. The companies would be destroyed and their ratings discredited. The US government will never default on its bonds, because the bonds, unlike those of Greece, Spain, and Ireland, are payable in its own currency. Regardless of whether the debt ceiling is raised, the Federal Reserve will continue to purchase the Treasury’s debt. If Goldman Sachs is too big to fail, then so is the US government.

There is no budget focus on the illegal wars and military occupations that the US government has underway in at least six countries or the 66-year old US occupations of Japan and Germany and the ring of military bases being constructed around Russia. The total military/security budget is in the vicinity of $1.1-$1.2 trillion, or 70 per cent -75 per cent of the federal budget deficit....In contrast, Social Security is solvent. Medicare expenditures are coming close to exceeding the 2.3 per cent payroll tax that funds Medicare, but it is dishonest for politicians and pundits to blame the US budget deficit on “entitlement programs.” Entitlements are funded with a payroll tax. Wars are not funded... The criminal Bush regime lied to Americans and claimed that the Iraq war would only cost $70 billion at the most and would be paid for with Iraq oil revenues. When Bush’s chief economic advisor, Larry Lindsay, said the Iraq invasion would cost $200 billion, Bush fired him. In fact, Lindsay was off by a factor of 20. Economic and budget experts have calculated that the Iraq and Afghanistan wars have consumed $4,000 billion in out-of-pocket and already incurred future costs. In other words, the ongoing wars and occupations have already eaten up the $4 trillion by which Obama hopes to cut federal spending over the next ten years. Bomb now, pay later.

As taxing the rich is not part of the political solution, the focus is on rewarding the insurance companies by privatizing Medicare at some future date with government subsidized insurance premiums, by capping Medicaid, and by loading the diminishing middle class with additional Social Security tax. Washington’s priorities and those of its presstitutes could not be clearer. President Obama, like George W. Bush before him, both parties in Congress, the print and TV media, and National Public Radio have made it clear that war is a far more important priority than health care and old age pensions for Americans. The American people and their wants and needs are not represented in Washington. Washington serves powerful interest groups, such as the military/security complex, Wall Street and the banksters, agribusiness, the oil companies, the insurance companies, pharmaceuticals, and the mining and timber industries. Washington endows these interests with excess profits by committing war crimes and terrorizing foreign populations with bombs, drones, and invasions, by deregulating the financial sector and bailing it out of its greed-driven mistakes after it has stolen Americans’ pensions, homes, and jobs, by refusing to protect the land, air, water, oceans and wildlife from polluters and despoilers, and by constructing a health care system with the highest costs and highest profits in the world.

The way to reduce health care costs is to take out gobs of costs and profits with a single payer system. A private health care system can continue to operate alongside for those who can afford it. The way to get the budget under control is to stop the gratuitous hegemonic wars, wars that will end in a nuclear confrontation. The US economy is in a deepening recession from which recovery is not possible, because American middle class jobs in manufacturing and professional services have been offshored and given to foreigners. US GDP, consumer purchasing power, and tax base have been handed over to China, India, and Indonesia in order that Wall Street, shareholders, and corporate CEOs can earn more. When the goods and services produced offshore come back into America, they arrive as imports. The trade balance worsens, the US dollar declines further in exchange value, and prices rise for Americans, whose incomes are stagnant or falling...This is economic destruction. It always occurs when an oligarchy seizes control of a government. The short-run profits of the powerful are maximized at the expense of the viability of the economy. The US economy is driven by consumer demand, but with 22.3 per cent unemployment, stagnant and declining wages and salaries, and consumer debt burdens so high that consumers cannot borrow to spend, there is nothing to drive the economy...Washington’s response to this dilemma is to increase the austerity! Cutting back Medicare, Medicaid, and Social Security, forcing down wages by destroying unions and offshoring jobs (which results in a labor surplus and lower wages), and driving up the prices of food and energy by depreciating the dollar further erodes consumer purchasing power. The Federal Reserve can print money to rescue the crooked financial institutions, but it cannot rescue the American consumer. As a final point, confront the fact that you are even lied to about “deficit reduction.” Even if Obama gets his $4 trillion “deficit reduction” over the next decade, it does not mean that the current national debt will be $4 trillion less than it currently is. The “reduction” merely means that the growth in the national debt will be $4 trillion less than otherwise. Regardless of any “deficit reduction,” the national debt ten years from now will be much higher than it presently is.

[Demeter]

47. Why there is a deficit WARREN MOSLER

http://moslereconomics.com/2011/07/26/sometimes-nothing-is-a-real-cool-hand/

The main reason we have a large budget deficit is because of all the tax advantaged savings plans- pension funds, IRA’s, insurance and corporate reserve. All of these financial assets, which compound continuously, represent unspent income. And unless they are offset by some other agent spending that much more than his income, the dollars won’t be there to be saved in these tax advantaged entities.

And also realize this is an accounting identity, beyond dispute.

Like 1+1=2.

Like how your checkbook must balance or you made an arithmetic mistake.

It works like this:

People work to produce and sell goods and services and someone get the dollars from all those sales.
Those dollars that came from the sales are exactly the amount needed to buy those things in the first place. If anyone doesn’t spend the dollars he gets from the sales, there isn’t enough spending for the sales to happen in the first place.

So when a large chunk of our dollars that we get paid from wages and profits go into pension funds,
and don’t get spent, all the things for sale can’t get sold unless someone spends that much more than his income. And if we (both residents and non residents) don’t want to- or can’t- spend more dollars than our dollar incomes by borrowing dollars to spend, sales fall short, so income and jobs are lost in a downward spiral that doesn’t end until someone finally fills that spending gap by spending more than his income to replace the spending power lost when earned dollars go into pension funds.

That’s where the government comes in.

When those dollars piling up in pension funds cause spending to fall short, government can spend more than its income to make up for that lost spending power, fill the spending gap, and keep everyone working and producing and selling real goods and services.

So right now the high unemployment and low sales tell us there is still a big spending gap to fill.

In the past, this spending gap might have been filled by people borrowing to spend on houses and cars and all that. But this time around people aren’t willing or able to fill the spending gap.
The current level of government spending that exceeds taxes (deficit spending) is only partially filling the current spending gap. It’s a big economy and pension funds and corporate reserves are huge and growing, which means the spending gap is huge and growing, which means the amount government spends that’s more than it taxes (government deficit spending) is still too small to fill the spending gap.

the answer is quite simple- cut taxes and/or increase government spending until output and employment is restored and the spending gap is filled. Unfortunately our fearless leaders have a large gap between their ears, and have it all backwards, and we’re all paying the price. And it will get a lot worse if they keep cutting the government deficit and make the spending gap wider instead of narrower.

(as always, feel free to distribute and re post)

ACTUALLY--I WOULD SAY RAISE TAXES, SINCE THAT DECREASES THE ACCUMULATION OF MONEY...BUT OTHERWISE, I CONCUR WITH THIS--DEMETER

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48. “Sometimes nothing is a real cool hand” WARREN MOSLER

Perhaps the chilling reason no bill is even beginning to emerge from Congress is raising its ugly head. Could it be that members of Congress and the President, deep down, want to see the US government go cold turkey to a balanced budget? Like taking away the drugs from an addict, might they all believe it’s for our own good and our children’s future to take away the government’s credit card now, before it’s too late?

We know they all believe that because of the deficit we are on the verge of a Greek-like financial crisis. We know they all believe we need deficit reduction to prevent catastrophe. We know they all believe the government has been borrowing from China to spend like a drunken sailor, leaving the debt to our grandchildren. We know they all believe we either make the tough choices now, or soon face the undeniable consequences. And we know they all believe that even the most aggressive packages under consideration won’t be sufficient to solve the problem.

So what’s a patriotic politician to do? What solves the problem and, while there will be near term pain, minimizes the total long term pain? Yes, running out the clock and doing nothing, which is exactly what’s happening. And all the while trying to make sure your opposition gets the blame for the initial pain, while positioning yourself to take credit for the good that will surely follow. Is that not what’s happening?

They are dead wrong, of course, and, consequently, we’re all dead ducks, as the price of nothing is far higher than anything I’ve seen discussed anywhere. With the automatic fiscal stabilizers disabled (Treasury spending can’t increase in a slowdown, and in fact is forced to decrease as revenues fall) the downward acceleration of the economy from the sudden cut in government spending will be far more severe than anyone has begun to imagine. The lack of general concern for what might happen is directly evidenced by the current market complacency, allowing those properly alarmed to get their hedges in place at very attractive prices.

What happens in the do nothing scenario?
Stocks go down globally, the US dollar goes up, commodities go down, US Treasury rates fall, credit sensitive interest rates rise, sales and GDP fall, unemployment rises, all in the context of a general global deflationary spiral.

So continue to hope for the best while being prepared for the worst.

MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

INTERESTING GUY--PROBABLY LIBERTARIAN, HAS SOMEWHAT BETTER GRASP OF REALITY THAN MOST

[spotbird]

60. But how to prepare? nt

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50. The President's Address on the Debt Ceiling: An Exercise in Fantasy

http://www.correntewire.com/the_presidents_address_on_the_debt_ceiling_an_exercise_in_fantasy

Many people have been, deservedly, very quick to jump on John Boehner for the lies he told in answering the President's Address; but they have been a lot less anxious to lay out the lies or at least falsehoods told or implied by the President, himself. I don't intend to excuse the Speaker's lies or the Speaker, by showing that the President doesn't have clean hands. I don't intend to say that lying is alright because everybody does it. All I want to do is show that the President was feeding us fantasy too, because I believe, strongly, that we won't solve our national problems if we don't firmly reject fantasy, whoever may be its author. So, let's look at some quotations from the President's speech, and see where the fantasy is.

“For the last decade, we’ve spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation’s credit card.”

No. Mr. President, during the years the Government had a budget surplus, the Government simply borrowed less than it did in other years, and also less than it paid back when its debt instruments came due. So, the Government did use its surpluses to “pay back” part of the debt during the years of surplus, and no money was saved for future years when it was then spent on new tax cuts, new wars, and the drug prescription program.

As for the “our nation's credit card” business, the Government's “credit card” situation is very different from our own. First, the limit on the Government's ability to issue debt is not based on the Government's ability to borrow, or on the Government's ability to generate financial assets, which, aside from Congressional constraints, is constitutionally unlimited. Nor is the limit imposed by any creditor, as it is with us.

Instead, the limit on what the Government can borrow is determined by the Government itself. Specifically, it is determined by Congress which imposes the debt ceiling, now causing a fiscal crisis. Without that ceiling, that self-imposed constraint, the limit on what the Government can borrow in US Dollars is indeterminate, if it exists at all.

Second, you and I can't keep adding debt to our credit cards, not only because we have a limit, but long before we reach such limits, we may well want to stop adding debt, because our ability to maintain and pay off our debt burden, may be running out. That ability is limited because we can't produce financial resources at will.

The Government is different however. It is not like a household or even the largest corporation. It is not the user of our national currency. It is the creator of it. All of our dollars come from the authority of the Government to spend, and, in the act of spending to create dollars.

If the Government has debt, it can always pay that debt simply by marking up the accounts of its creditors. Also, unlike your household or mine, it doesn't matter how much is on the Government's credit card, it can always repay its debts whenever they come due, unless Congress does something stupid to stop it from doing so.

In fact, its own constraints aside for a moment, the Government has precisely the same ability to repay its debts, however high those debts are, and however high its debt-to-GDP ratio is, so long as those debts are owed in the currency (USD) it has the authority to create. It doesn't matter whether the Government owes $14.3 Trillion, or $30 Trillion, or only $50,000. Its ability to pay, self-constraints aside, is exactly the same. It doesn't matter if its debt-to-GDP ratio is 10% or 100% or 300%, it's ability to meet its debt obligations is exactly the same, if it only decides to shed its self-constraints.

So, when President Obama says or implies that we can't keep putting debt on our national credit card what is he really talking about? He's not talking about the Government's intrinsic ability to pay or not. What he's talking about is that Congress has 1) placed a debt ceiling on the Executive Branch's ability to borrow, and 2) passed a mandate requiring the Government to issue debt when it deficit spends. These are Congress's constraints on the Treasury and they are causing our current so-called fiscal crisis, assuming the President's continued unwillingness to raise revenue for deficit spending other than by issuing more debt.

The austerity mavens, including the President are telling us that we, the people, have spent too much and run up debts that are too large on our national credit card when Congress has a) required us to use our credit card and, as a result, maintain and increase our national debt, and then b) given us a ceiling of debt which they raise from time-to-time, which has nothing to do with our Government's ability to pay. How unjust is it to create this Catch-22, claim there is an objective problem with a national debt that only exists due to their own restraints, and then say to us, after they've just finished extending the Bush Tax Cuts for the rich and providing an estate tax giveaway, that this phony fiscal crisis requires that everyone (except the rich, of course) accept “shared sacrifice”?

It is not true that we can't keep placing debt on our national credit card, so long as Congress removes its arbitrary and unnecessary debt ceiling. If it does that we can keep placing debt on that credit card if we want to without threatening our solvency as a nation.

It is also not true that we must keep issuing debt instruments and keep increasing the national debt when we want to deficit spend, because of some intrinsic feature of the economic system. As I've written in many recent posts, we can generate all the revenue we need by using proof platinum coin seigniorage, including the revenue we need to pay the national debt entirely, as US debt instruments fall due.

In connection with his reconstruction of how the nation came to this pass Mr. Obama said that as a result of the tax cuts, wars, and the prescription drug plan:

“. . . . the deficit was on track to top $1 trillion the year I took office.”

But this anticipated deficit was not due simply to these factors. Most of the anticipated $1 Trillion deficit was due to the loss of tax revenues accompanying the Crash of 2008. If not for the recession, the tax cuts, wars, and prescription drug costs would not have produced a deficit of this size.

“To make matters worse, the recession meant that there was less money coming in, and it required us to spend even more -– on tax cuts for middle-class families to spur the economy; on unemployment insurance; on aid to states so we could prevent more teachers and firefighters and police officers from being laid off. These emergency steps also added to the deficit.”

They did, but what is misleading in this account is that the President fails to tell us is that his grossly inadequate stimulus left too many people unemployed, and provided so little assistance to the States, that while it stabilized the unemployment rate, it did so at a very high level ensuring that Federal tax revenues would remain low and that the deficit would still be very high; but without the benefit of having enabled full employment.

“Now, every family knows that a little credit card debt is manageable. But if we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy. More of our tax dollars will go toward paying off the interest on our loans. Businesses will be less likely to open up shop and hire workers in a country that can’t balance its books. Interest rates could climb for everyone who borrows money -– the homeowner with a mortgage, the student with a college loan, the corner store that wants to expand. And we won’t have enough money to make job-creating investments in things like education and infrastructure, or pay for vital programs like Medicare and Medicaid.”

And later he says:

“For the first time in history, our country’s AAA credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet. Interest rates would skyrocket on credit cards, on mortgages and on car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis -– this one caused almost entirely by Washington.”

The falsehood here is assuming that the bond market actually controls the interest rates that Governments like the United States must pay. Sure, they can determine interest rates if the Government and the Fed sit idly by, and lets them do so. However, the Federal Reserve and the Treasury, can target bond interest rates and set these for the bond markets by manipulating overnight bank reserves. Specifically, one way to do this, is that the Treasury can cease issuing long-term bonds, and sell only three-month bonds. Three-month bond interest rates are generally controlled by overnight rates for bank reserves, and overnight rates can be driven down to near zero by flooding the banks with excess reserves. That's basically how the Japanese keep their bond interest near zero, even with a debt to GDP ratio of nearly 200%, and that's how we can do the same.

Alternatively, the Fed has driven down interest rates through its policy of Quantitative easing (QE). QE currently involves providing banks with cash reserves in return for non-cash bank assets including Treasury Bonds. QE results in an increase in cash reserves, which drives down overnight interest rates for borrowing such reserves. Low rates in the reserve market again, drives down bond market interest rates on three month Treasuries, and exerts downward pressure on bond market interest rates across the board.

Yet another move we can make to remove the effects of the bond markets and the ratings agencies upon public finances, is for the Treasury to stop issuing debt for every dollar it deficit spends. It can do this by using coin seigniorage to generate additional revenue, and by borrowing only for a portion of its deficit spending. If Treasury did this, interest rates in the bond market would be driven down because of the shortage of treasury bonds in the marketplace.

Of course, if Congress allowed the Executive to deficit spend without issuing debt, or the Executive decided to deficit spend only after raising revenue through coin seigniorage, then the Executive Branch could choose to issue no more debt, and then bond market interest rates wouldn't be an issue at all. So none of the effects described by the President just above would happen, all the problems he points to are due to more debt causing higher interest rates through the bond markets. If increasing debt can't cause that, because of interventions outlined above, then the bond market/interest rate scare is “off the table.”

In short, the bond markets aren't in control of US public finances. They are not in a position to influence what our taxing or spending policies ought to be, or whether we will default on our obligations.

“This balanced approach asks everyone to give a little without requiring anyone to sacrifice too much. It would reduce the deficit by around $4 trillion and put us on a path to pay down our debt. And the cuts wouldn’t happen so abruptly that they’d be a drag on our economy, or prevent us from helping small businesses and middle-class families get back on their feet right now.”

Calling his plan “balanced” is just propaganda. First, it assumes that there is a deficit/debt problem; but this assumption is based on the idea that the US Government can become insolvent or is otherwise constrained in its spending by economic necessity. It also assumes that we've borrowed too much, and that this requires us to slow down deficit spending over time. However, these assumptions are just false. As the currency issuer, the US can't ever run out of money, and the only real world constraint it has on its spending is demand-pull inflation, which we needn't worry about until we've reached full employment.

Second, $4 Trillion over 10 years in spending cuts and/or increased taxes, averages out to $400 billion per year less money either going into the private economy from the Government sector, or being taken back by the Government. If the spending is high fiscal multiplier spending, as much of it appears to be, then we may be looking at as much as $1 Trillion per year in reduced GDP. Anyway you slice it friends, that will cost jobs, careers, family hardship, and lower economic growth, and it is unlikely to reduce deficits very much or at all, simply because the effects of the economy's automatic stabilizers will ensure that more government spending and less taxes will result from these cuts.

Third, this $400 Billion per year of “shared sacrifice” which is supposed to ensure that no one suffers too much is, to use a popular phrase of yesteryear, “lipstick on a pig.” We know that the impact of the spending cuts contemplated will fall disproportionately on the poor and the middle class. They will be “sacrificing” income, jobs, and services that are very important to them, but any “sacrifices” made by the wealthy and large corporations will be largely symbolic and will not cut to the bone.

Fourth, the President says that the cuts wouldn't happen so abruptly that they'd hurt the economy. But this assumes that current Government deficits are large enough to compensate for savings desires and imports, and that the economy has already received enough of a boost that it will fully recover by the time the full impact of austerity is felt. If they are not large enough, and the economy doe not recover; then what? Do we then follow this inflexible austerity plan and go ahead withdrawing net financial assets from the private sector at the rate of $400 Billion per year, in the expectation that this will lower the debt-to-GDP ratio?

“So the debate right now isn’t about whether we need to make tough choices. Democrats and Republicans agree on the amount of deficit reduction we need.”

Democrats and Republicans do not agree on the amount of deficit reduction we need. Nor do they agree on how deficit reduction should be achieved. There are even many Democrats, though, perhaps not in Congress, who believe that there is no debt or deficit problem at all, and that the President's whole exercise in austerity is motivated by a false economic ideology, and by a desire to show “the independents” that he is a responsible “bipartisan” grown-up who deserves their support in 2012. Here he is using the left-right frame, viewing the independents as people in the middle who are relatively homogeneous and ideologically disillusioned with the right and the left.

So, he thinks he can pick up these folks “en bloc” by showing that he has made both progressives and conservatives angry at him. In this, I think he is ignoring the possibility that there are independents from all parts of the left-right spectrum, who have become independent because the two parties represent their interests very badly, preferring to see to it that the wealthy and the corporations are represented at the expense of their constituents. In any event, President Obama's attempt to appeal to independents may fail, because they really have no interest in his independence relative to the bases of the legacy parties; but care much more about his actions in supporting the big banks, a corrupt financial system, continued globalization of the economy, and failure to produce jobs, and viable health care reform for everyone.

“That’s not right. It’s not fair. We all want a government that lives within its means, but there are still things we need to pay for as a country -– things like new roads and bridges; weather satellites and food inspection; services to veterans and medical research.”

We do have to live within our means; but a phrase like this is meaningless, when it comes to the Government's ability to generate new net financial assets in the private sector. That capacity is unlimited. And while we do have to worry about demand-pull inflation under certain conditions. The US never has worry about running out of money as do, for example, the members of the Eurozone or other nations that aren't sovereign in their own fiat currency system. What “our means” really refers to is our real resources and our capacity to produce further real resources in a sustainable way. It does not refer to financial sustainability, or to fiscal sustainability in the meaning of that term spread by Peter G. Person, and Barack "Hoover" Obama.

“Understand –- raising the debt ceiling does not allow Congress to spend more money. It simply gives our country the ability to pay the bills that Congress has already racked up. In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it. President Reagan did it 18 times. George W. Bush did it seven times. And we have to do it by next Tuesday, August 2nd, or else we won’t be able to pay all of our bills.”

This is one of the biggest falsehoods told by the President. Let's say there is no agreement, then, is it true that we won't be able to pay our bills? Only if the President fails in his own constitutional duty and doesn't take the measures he is able to take to make it possible for Treasury to spend appropriations. Yves Smith, in a recent interview with Paul Jay of the Real News Network, points to three alternatives the President can use: 1) the constitutional challenge; 2) selective default; and 3) Proof Platinum Coin Seigniorage (PPCS).

Yves characterized PPCS as the most "radical" of the three alternatives. Depending on the coin seigniorage option selected, that may be true; but I think that from the legal point of view, at least, PPCS is the least radical of the alternatives. I think that's true because it's the only one of the three that is completely within the law as currently written and interpreted.

The first option, the constitutional challenge, requires violating the debt ceiling, and then claiming that the law is unconstitutional and relying on the House's inability to have standing to take the President to Court in order to sustain the President's action. The President may get away with this, but it is radical in the sense that it claims the Executive's right to make a unilateral judgment of constitutionality in opposition to clearly written legislation, without getting a by your leave from the Supreme Court. Surely we can all see how dangerously radical this kind of practice is for the rule of law in the United States?

The second option, is the Treasury declaring a selective default only on Federal Reserve-owned debt instruments in order to wipe these off the books, and create headroom relative to the debt ceiling. This is clearly an extra-legal procedure. The Federal Reserve Board of Governors is a Government agency; but those bonds are owned by the Fed Regional Banks, which in our system, are not Government agencies, but rather privately owned "Federal instrumentalities." Here's wikipedia:

"The Federal Reserve Banks have an intermediate legal status, with some features of private corporations and some features of public federal agencies. The United States has an interest in the Federal Reserve Banks as tax-exempt federally-created instrumentalities whose profits belong to the federal government, but this interest is not proprietary.<74> In Lewis v. United States,<75> the United States Court of Appeals for the Ninth Circuit stated that: "The Reserve Banks are not federal instrumentalities for purposes of the FTCA , but are independent, privately owned and locally controlled corporations." The opinion went on to say, however, that: "The Reserve Banks have properly been held to be federal instrumentalities for some purposes." Another relevant decision is Scott v. Federal Reserve Bank of Kansas City,<74> in which the distinction is made between Federal Reserve Banks, which are federally-created instrumentalities, and the Board of Governors, which is a federal agency."

Since the Bonds held by the Fed are held by the regional banks, this second option would involve a major hit to the assets of these banks and also an operating loss. It would involve not just questioning, but also denying a debt of the United States, and would therefore violate the 14th Amendment to the Constitution. From a legal point of view I think the Treasury unilaterally deciding to inflict a substantial loss on privately owned banks, whether Federal Instrumentalities or not. and also violating the 14th Amendment, is a very radical option.

Getting to the third option of Coin seigniorage, the authority to do this was legislated by Congress in 1996. If the President uses PPCS, he 1) won't exceed the debt ceiling; 2) won't be challenging the constitutionality of the debt ceiling; 3) will be able to spend all Congressional Appropriations; and 4) will be able to uphold his constitutional obligation to see that all US debts are paid. In other words, there are no legal downsides to this course of action, even if it may involve a very different way of raising revenue than issuing debt instruments.

On the positive side, if the Administration were to use PPCS, it wouldn't have to make a deal with the Republicans about the debt ceiling at all. It wouldn't have to create hurtful cuts in the safety net or in discretionary programs, because it would not need a deal at all. I've argued elsewhere, that in case there is no agreement on extending the debt ceiling, that it becomes the President's constitutionality duty to use one of a number of PPCS options to avoid default, since only they are unambiguously legal. In that case, some form of PPCS, would no longer be a choice, but a mandate, which the President would have to fulfill.

So, it's not true that we won't be able to pay our bills on August 3rd, if the debt ceiling isn't extended, unless the President fails in his constitutional duty. The Congress may be acting stupidly in not extending the ceiling; but in doing so, it would not be forcing the US into default. It would, instead be placing a constitutional burden on the President. It is he who would force the US into default if he fails to shoulder this burden and do his duty.


This work is licensed under a Creative Commons License


TODAY'S MUST READ, MUST BOOKMARK, MUST QUOTE, MUST MEMORIZE AND RECITE, MUST MAIL TO EVERY ELECTED OFFICIAL AND APPOINTED OFFICE-HOLDER...ETC.

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53. Read the Reid Plan. Read the Boehner Plan. Get Back to Me. By David Weigel

http://www.slate.com/blogs/weigel/2011/07/26/read_the_reid_plan_read_the_boehner_plan_get_back_to_me_.html

complete pdf files at link

[Demeter]

54. Can Treasury just go overdrawn at the Fed? Felix Salmon

http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/

John Carney has an intriguing post today: what if, in the short to medium term, the debt ceiling really doesn’t matter at all?

This is nothing to do with the 14th Amendment or with coin seignorage — this is just the simple mechanics of bank accounts. Treasury has an account at the Fed; at last count it was in credit to the tune of roughly $77 billion. Money’s coming in; money’s going out. Come August 2, it’ll be down to zero. But hey, zero’s just a number. We’ve all gone overdrawn at our bank at some time or another: why should Treasury be any exception?...The idea here is that after August 2, Treasury can simply carry on with business as usual. Money will come in to its bank account; money will go out. And the balance will dip below zero: Treasury will have an overdraft at the Fed. You think the Fed’s going to bounce Treasury’s checks? The question is whether the overdraft counts as national debt for the purposes of calculating the debt ceiling. And Carney thinks there’s a good case to be made that it doesn’t:

The debt ceiling applies to the face amount of obligations issued under Chapter 31 of Title 31 of the U.S. Code—basically, Treasury notes and bills and the other standard kinds of government debt—and the “face amount of obligations whose principal and interest are guaranteed by the United States Government.” But overdrafts on the Federal Reserve wouldn’t be Treasurys and they aren’t explicitly guaranteed by the U.S. government.

There’s no reason why this state of affairs couldn’t continue for months. Treasury would continue to spend money, as instructed by Congress in the budget, and Treasury’s overdraft at the Fed would continue to rise. The Fed, for its part, would have two choices when it came to cashing Treasury’s checks: it could either simply print the money, or else it could sell some of its assets — it owns $1.6 trillion in Treasury bonds — and use those proceeds instead. Either way, any bank presenting a check from Treasury could cash it, no problem. This seems to me by far the most elegant solution to the debt-ceiling problem, should Congress not get its act together by August 2. Treasury just keeps on spending, and the Fed would of course continue to honor the checks: failure to do so would trigger a massive recession and directly violate its full-employment mandate, for starters. There would be people saying that the Fed overdraft should by rights be included in the total national debt, but they would have no particular standing to try to get that point of view enforced by a court of law.

And of course if Treasury has a back-up overdraft facility at the Fed, that would only serve to shore up — rather than endanger — its precious triple-A credit rating. So, have at it, people. Why isn’t this the first best solution to the debt-ceiling problem, should we find ourselves in that dreadful situation?

[Demeter]

55. Michael Hudson: Mr. Obama’s Scare Tactics to Get Democrats to Vote for His Republican Wall Street Pl

http://www.nakedcapitalism.com/2011/07/michael-hudson-mr-obama%E2%80%99s-scare-tactics-to-get-democrats-to-vote-for-his-republican-wall-street-plan.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

You know that the debt kerfuffle is as staged as melodramatically as a World Wrestling Federation exhibition when Mr. Obama makes the blatantly empty threat that if Congress does not “tackle the tough challenges of entitlement and tax reform,” there won’t be money to pay Social Security checks next month. In his debt speech last night (July 25), he threatened that if “we default, we would not have enough money to pay all of our bills – bills that include monthly Social Security checks, veterans’ benefits, and the government contracts we’ve signed with thousands of businesses.” This is not remotely true. But it has become the scare theme for over a week now, ever since the President used almost the same words in his interview with CBS Evening News anchor Scott Pelley. Of course the government will have enough money to pay the monthly Social Security checks. The Social Security administration has its own savings – in Treasury bills. I realize that lawyers (such as Mr. Obama and indeed most American presidents) rarely understand economics. But this is a legal issue. Mr. Obama certainly must know that Social Security is solvent, with liquid securities to pay for many decades to come. Yet Mr. Obama has put Social Security at the very top of his hit list!
...The most reasonable explanation for his empty threat is that he is trying to panic the elderly into hoping that somehow the budget deal he seems to have up his sleeve can save them. The reality, of course, is that they are being led to economic slaughter. (And not a word of correction reminding the President of financial reality from Rubinomics Treasury Secretary Geithner, neoliberal Fed Chairman Bernanke or anyone else in the Wall Street Democrat administration, formerly known as the Democratic Leadership Council.)

It is a con. Mr. Obama has come to bury Social Security, Medicare and Medicaid, not to save them. This was clear from the outset of his administration when he appointed his Deficit Reduction Commission, headed by avowed enemies of Social Security Republican Senator Alan Simpson of Wyoming, and President Clinton’s Rubinomics chief of staff Erskine Bowles. Mr. Obama’s more recent choice of Republicans and Blue Dog Democrats be delegated by Congress to rewrite the tax code on a bipartisan manner – so that it cannot be challenged – is a ploy to pass a tax “reform” that democratically elected representatives never could be expected to do. The devil is always in the details. And Wall Street lobbyists always have such details tucked away in their briefcases to put in the hands of their favored congressmen and dedicated senators. And in this case they have the President, who has taken their advice as to whom to appoint as his cabinet to act as factotums to capture the government on their behalf and create “socialism for the rich.” There is no such thing, of course. When governments are run by the rich, it is called oligarchy. Plato’s dialogues made clear that rather than viewing societies as democracies or oligarchies, it was best to view them in motion. Democracies tended to polarize economically (mainly between creditors and debtors) into oligarchies. These in turn tended to make themselves into hereditary aristocracies. In time, leading families would fight among themselves, and one group (such as Kleisthenes in Athens in 507 BC) would “take the people into his party” and create a democracy. And so the eternal political triangle would go on.

This is what is happening today. Instead of enjoying what the Progressive Era anticipated – an evolution into “socialism,” with government providing basic infrastructure and other needs on a subsidized basis – we are seeing a lapse back into neo-feudalism. The difference, of course, is that this time around society is not controlled by military grabbers of the land. Finance today achieves what military force did in times past. Instead of being tied to the land as under feudalism, families today may live wherever they want – as long as they take on a lifetime of debt to pay the mortgage on whatever home they buy. And instead of society paying land rent and tribute to conquerors, we pay the bankers. Just as access to the land was a precondition for families to feed themselves under feudalism, one needs access to credit, to water, medical care, pensions or Social Security and other basic needs today – and must pay interest, fees and monopoly rent to the neo-feudal oligarchy that is now making its deft move from the United States to Ireland and Greece.

The U.S. Government has spent $13 trillion in financial bailouts since Lehman Bros. failed in September 2008. But Mr. Obama warns that thirty years from now, the Social Security fund may run a $1 trillion deficit. It is to ward it off that he urges dismantling the plans for such payments now. It seems that the $13 trillion used up all the money the government really has. The banks and Wall Street firms have taken the money and run. There is not enough to pay for Social Security, Medicare or other social spending that the Blue Dog Democrats and Republicans now plan to cut....Not right away. The plan will be to “paper over” the current crisis by delegating the plans to a “Deficit Reduction Commission #2,” appointed from Congressional members.

Finally, we have “Change we can believe in.” Real change is always surprising, after all.

The faux crisis...CONTINUES AT LINK

[DemReadingDU]

72. Excellent article

Wall Street, Republicans and Democrats are creating a 'crisis' in order to get rid of Social Security, Medicare, etc.

Republicans couldn't do it on their own, they needed a Democrat President.

I don't think there is much time left before the SHTF.


another link for the same article
http://www.counterpunch.org/hudson07262011.html

[Demeter]

49. Six Challenges to Countrywide RMBS Settlement Already; Rundown Shows Pact Will Be No Easy Sell for B

http://www.subprimeshakeout.com/2011/07/six-challenges-to-countrywide-rmbs-settlement-already-rundown-shows-pact-will-be-no-easy-sell-for-bofa.html

LENGTHY AND CONCISE SUMMARY TO DATE...

[Demeter]

52. Quelle Surprise! Banks Don’t Want to be in IRA Business if They Can’t Treat Customers as Stuffees

http://www.nakedcapitalism.com/2011/07/quelle-surprise-banks-dont-want-to-be-in-ira-business-if-they-cant-treat-customers-as-stuffees.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Bloomberg reports that if brokerage firms who manage IRAs were required to act as a fiduciary, as in put their customers’ interests first, many would exit the business.

The dirty secret of the retail asset management business at brokerage firms is that their profits depend on treating you badly. Unless you are a big enough customer that they would not like to lose you, you are going to be abused (well, take it back, even being a billionaire is not rich enough to be safe from bank predation). The one check on this, ironically, is that salesmen are de facto small businessmen in a bigger corporate umbrella, and their clients are their book of business. They thus have incentives to make sure the customer thinks he is being treated well (whether he is actually treated well is another matter).

The big firms have generally if not completely inferior in-house fund management products they push (inferior by virtue of higher fees and/or not so hot performance). Your “investment advisor” also has an incentive to encourage you to trade if you are in a commission-paying account. The alternative, a wrap fee account, has annual charges that make a serious dent in your principal over time.

Now there may indeed be some imprecision in where the Labor Department draws the line between a fiduciary and someone who is merely peddling products. But the examples the industry defenders cite as practices they want to continue are troubling...

[Demeter]

56. That's it for now

my disgust bucket overfloweth.

[Ghost Dog]

59. Treasury Auctions $35 Billion Worth Of Five-Year Notes

WASHINGTON (dpa-AFX) - Following Tuesday's auction of $35 billion worth of two-year notes, the Treasury Department sold $35 billion worth of five-year notes on Wednesday.

The five-year note auction drew a high yield of 1.58 percent and a bid-to-cover ratio of 2.62.

Last month, the Treasury Department also sold $35 billion worth of five-year notes, drawing a high yield of 1.615 percent and a bid-to-cover ratio of 2.59.

/... http://www.finanznachrichten.de/nachrichten-2011-07/20910376-treasury-auctions-dollar-35-billion-worth-of-five-year-notes-020.htm

[xchrom]

62. asia: Energy woes boost Asian sweet crude demand

http://search.japantimes.co.jp/cgi-bin/nb20110726n3.html

The biggest jump in three years in the nation's imports of oil for power generation is driving a rally in demand for Asian sweet crude.

Minas, Indonesia's largest crude grade, traded Thursday at $6.12 a barrel more than Brent, the European benchmark grade, according to data compiled by Bloomberg. That compares with $1.89 on June 29 and an average $2.57 in the past 12 months.

Domestic power generators are burning more low-sulfur, or sweet, crude such as Minas and Vietnam's Su Tu Den and Bach Ho to make up for a slump in nuclear output following the March 11 earthquake, tsunami and ensuing nuclear crisis.

Purchases of oil for power generation more than doubled in June to about 127,000 barrels a day, the Federation of Electric Power Companies said July 12. That may climb to 315,000 barrels a day in the third quarter, according to Osamu Fujisawa, a Tokyo-based independent energy economist.

[xchrom]

63. Five-year, ¥10 trillion tax hike is considered

http://search.japantimes.co.jp/cgi-bin/nb20110727n1.html

The administration is considering a ¥10.3 trillion tax hike plan over a five-year period to secure funds for reconstruction work following the March 11 earthquake and tsunami, officials said.

It is also eyeing securing extra revenues of around ¥200 billion by selling its holdings in subway operator Tokyo Metro Co. and other government-owned assets, while aiming to ensure around ¥2.4 trillion over four years from fiscal 2012 by scaling down its key policy spending, including monthly child allowances.

Vice Finance Minister Fumihiko Igarashi said Monday the government is weighing selling assets including shares in NTT Corp. and Japan Tobacco Inc. to pay for earthquake reconstruction costs.

"I've already ordered officials internally to make their best efforts" to sell government assets, including equity holdings, Igarashi said at a news conference. "I don't think it would be a big sale though."

[xchrom]

66. Asian stocks higher, amid caution over US debt

http://timesofindia.indiatimes.com/business/international-business/Asian-stocks-higher-amid-caution-over-US-debt/articleshow/9368396.cms

HONG KONG: Asian stocks edged higher in cautious trade on Tuesday as Washington lawmakers try to hammer out a deal to avert a catastrophic US default.

The dollar touched a four-month low against the yen in early Tokyo trade after an address to the nation by President Barack Obama failed to indicate any progress on a debt agreement.

Tokyo was flat by the break, as the yen's strength pared gains made on the back of a batch of upbeat earnings reports on Monday as well as optimism over other results this week.

Hong Kong rose 0.74 percent and Sydney added 0.77 percent while Seoul gained 0.21 percent.

[xchrom]

64. south asia: Stock markets down for 2nd day; Sensex closes 86 pts lower

http://timesofindia.indiatimes.com/business/india-business/Stock-markets-down-for-2nd-day-Sensex-closes-86-pts-lower/articleshow/9384021.cms

MUMBAI: Extending losses for the second day, the Bombay Stock Exchange benchmark sensex closed 86 points down today, a day after the Reserve Bank raised key policy rates to tame inflation.

After recording the biggest loss of 353 points in five weeks yesterday, the 30-share index opened on a positive note but soon plunged by 160 points to touch the day's low of 18,358.76 points

It finally recovered some of the losses to end the day at 18,432.25, lower by 85.97 points from its previous close.

The 50-share National Stock Exchange index Nifty lost 28.05 points to 5,546.80 at close.

[xchrom]

65. India slips on global FDI chart from 8th to 14th slot

http://timesofindia.indiatimes.com/business/india-business/India-slips-on-global-FDI-chart-from-8th-to-14th-slot/articleshow/9376533.cms

NEW DELHI: India slipped from being the 8th largest recipient of foreign direct investment (FDI) in 2009 to the 14th largest in 2010, according to a UN report released on Tuesday. This happened because FDI flows into India dipped from $36 billion in 2009 to $25 billion last year even as global FDI flows recovered from the post-meltdown $1.19 trillion to $1.24 trillion.

The World Investment Report 2011, brought out by the United Nations Conference on Trade and Development (UNCTAD), expressed the hope that global FDI flows would recover to near pre-crisis levels this year and projected them to touch somewhere between $1.4 trillion and $1.6 trillion. That would still be below the $1.74 trillion recorded in 2008.

However, the WIR warned that the global business environment remains uncertain. Risk factors such as a possible widespread sovereign debt crisis, fiscal and financial sector imbalances in some developed countries as well as inflation and signs of overheating in major emerging market economies could derail the projected FDI recovery, the report said.

[xchrom]

67. India a difficult place to work: US report

http://timesofindia.indiatimes.com/india/India-a-difficult-place-to-work-US-report/articleshow/9385892.cms

WASHINGTON: Although Indo-US ties are on a positive trajectory, India remains a difficult place to work, with employees of the American mission there facing "health and security risks, including the threat of terrorism," says an official report.

"US diplomats' access to Indian officials is tightly controlled. The process by which the Indian government coordinates contacts internally can at times be an obstacle to broadened government-to-government activity that often requires high-level intervention to expedite progress," said the 90-page report of the Office of the Inspector General on the US diplomatic posts in India.

"Decision-making is cumbersome, and many influential officials and politicians are wary of a closer relationship with the United States. Mission employees face health and security risks, including the threat of terrorism," the report, which was made public yesterday, said.

[Demeter]

68. Today, the Plunge Protection Team Did Not Go to Work

For months now the PPT has propped up the markets, refusing to allow market forces to work. There is a tremendous bubble that has allowed the DOW to soar over many a crisis, real or imagined, to heights that are ludicrous.

And now, when the plot to steal Social Security and Medicare away from the people who paid for it all their lives is failing, the Great Correction is permitted to start...but not TOO much! Just enough to scare the **** out of people, so they will call Congress, demanding that their throats be cut to extend the debt ceiling.

I hope to God that this farce fails. After 8 years of W, people aren't that naive any more.

[tclambert]

70. I was gonna ask where they were.

I got kind of useta that 3:30 jump on an otherwise down day.

[bread_and_roses]

71. I do so hope you that people are not that naive...and truly, I think they are seeing thru it

... however, on the other hand....the electorate is still seduced by the word "compromise" - which seems to have some magical hold over them. Buried in the PEW report here http://people-press.org/2011/07/26/public-wants-a-debt-ceiling-compromise-expects-a-deal-before-deadline/ on page 3 way down, is an interesting item. Among Ds, only 5% say the best way is "cut major programs." A paltry but still over 3x more 16% says raise taxes. But when you ask "some combination of both" 67% agree (!)

That's the seduction of the prevailing narrative...not sure it is over-comeable -