Full article chocked full of nuts and charts

Nevada Treasurer Kate Mrshall says “This kind of approach is like comparing a family’s income of $100,000/year to the total owed on their home of $200,000 and arguing they cannot afford that home because the debt is twice their income.”

She goes on to say that some of the statements made by Debbie downers are incorrect or false…..

Full article

Premier Wen Jiabao said that China will continue to support Europe through bond purchases.

Full article

Geithner:

“It’s not going to be possible in the next decade. We’ve lost the chance,” Geithner told a conference in New Hampshire.

“We no longer have the luxury of that approach.”

Full article

Basically banks will have to raise capital requirements to become “safer” by 2019.

“The additional loss absorbency requirements are to be met with progressive common equity tier 1 capital requirement ranging from 1 percent to 2.5 percent, depending on a bank’s systemic importance,” the group said in a statement.

An additional 1 percent surcharge would also be imposed if a bank becomes significantly bigger, pushing the total to 3.5 percent.”

Full article

How ethanol production wastes corn.

FEELING the need for an example of government policy run amok? Look no further than the box of cornflakes on your kitchen shelf. In its myriad corn-related interventions, Washington has managed simultaneously to help drive up food prices and add tens of billions of dollars to the deficit, while arguably increasing energy use and harming the environment.

Even in a crowd of rising food and commodity costs, corn stands out, its price having doubled in less than a year to a record $7.87 per bushel in early June. Booming global demand has overtaken stagnant supply.

But rather than ameliorate the problem, the government has exacerbated it, reducing food supply to a hungry world. Thanks to Washington, 4 of every 10 ears of corn grown in America — the source of 40 percent of the world’s production — are shunted into ethanol, a gasoline substitute that imperceptibly nicks our energy problem. Larded onto that are $11 billion a year of government subsidies to the corn complex.

Corn is hardly some minor agricultural product for breakfast cereal. It’s America’s largest crop, dwarfing wheat and soybeans. A small portion of production goes for human consumption; about 40 percent feeds cows, pigs, turkeys and chickens. Diverting 40 percent to ethanol has disagreeable consequences for food. In just a year, the price of bacon has soared by 24 percent.

To some, the contours of the ethanol story may be familiar. Almost since Iowa — our biggest corn-producing state — grabbed the lead position in the presidential sweepstakes four decades ago, support for the biofuel has been nearly a prerequisite for politicians seeking the presidency.

Those hopefuls have seen no need for a foolish consistency. John McCain and John Kerry were against ethanol subsidies, then as candidates were for them. Having lost the presidency, Mr. McCain is now against them again. Al Gore was for ethanol before he was against it. This time, one hopeful is experimenting with counter-programming: as governor of corn-producing Minnesota, Tim Pawlenty pushed for subsidies before he embraced a “straight talk” strategy.

FULL ARTICLE AT THE NY TIMES

Note prices in article refer to Brent Crude

The oil price dropped a further $4 per barrel in London on worries about the stability of the eurozone and the word’s economic health.

The second day of dramatic oil price drops follows the global energy watchdog’s decision to release an extra 60m barrels of oil on to the market.

Oil and other commodities came under pressure as the dollar rose against the euro, driven by concerns that Greece’s parliament may not pass austerity measures that will release an international bail-out.

The second day of dramatic drops follows the global energy watchdog’s decision on Thursday to release an extra 60m barrels of oil on to the market over the next month.

The International Energy Agency’s move to sell 2m barrels of oil per day sparked an immediate sell-off, with oil falling $5 that day. It dropped a further $4, or 4pc to just under $105 per barrel on Friday.

FULL ARTICLE

The debt crisis enveloping the eurozone is “the most serious and immediate” threat to the British economy, according to the first report from the UK’s Financial Policy Committee.

The FPC was clear that the Greek debt crisis could spread, setting off a wider crisis that risked embroiling the UK financial system.  Photo: BLOOMBERG

Sir Mervyn King, Governor of the Bank of England and one of the founder members of the Committee, said the worsening financial problems of several European countries risked damaging British banks, even if they had little or no exposure to their indebted economies.

FULL ARTICLE

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Treasury prices extended their rally on Friday as more money flowed out of European bonds and equities and into safe-haven U.S. debt, but traders said prices could fall next week ahead of scheduled auctions.

The Treasury Department plans to sell $99 billion in new debt on Tuesday, Wednesday and Thursday. Selling ahead of the auctions to lower auction prices and raise yields could overpower the safety bid, which remained strong going into the weekend.

“There’s so much uncertainty, even beyond Greece, in Europe that we’re getting yields that are low despite the fact that we have nearly $100 billion of twos, fives and sevens to sell next week,” said David Coard, head of fixed income sales and trading at Williams Capital in New York.

“I think the street is going to do its level best to get a concession, because the only way these yields are justified is if we continue to have news out of Europe that creates this safe-haven buying. The economy is sluggish but it’s not falling out of bed and unless it were falling out of bed there would be no justification for these yields.”

Two year notes continued their rally for an 11th straight week, the longest in more than 30 years, coming close during trading on Friday to a record intraday low touched on November 4, 2010 at 0.3200 percent.

Two year notes closed unchanged in price from Thursday and yielding 0.346 percent.

Nervousness about the Greek debt situation potentially becoming “contagious” and affecting the euro zone and global financial system whetted investors’ appetite for Treasuries.

SOURCE: REUTERS

Madoff Trustee Picard No Hero To Many Victims

Irving Picard, the bankruptcy trustee charged with recouping funds for victims of Bernard Madoff’s vast fraud, began his mission just over two years ago with the potential to emerge as a hero.

That would have made him a rarity among the long list of financiers, CEOs and politicians blamed for dragging the U.S. economy into the gutter and obliterating the savings of millions of Americans along the way. Think of Madoff and Allen Stanford, once prominent Wall Street wizards now accused of stealing billions; subprime mortgage king Angelo Mozilo, the former CEO of Countrywide Financial; Congressman Barney Frank, patron saint of teetering home loan giants Fannie Mae and Freddie Mac; and, in some people’s minds, just about anyone employed by Goldman Sachs (GS).

Like a new sheriff, Picard was going to ride into town and clean up the considerable mess left by Madoff, widely viewed as the biggest scoundrel of all.

But that hasn’t been the case.

Instead, among the many thousands of former Madoff clients who lost their life’s savings in the fraud and who may never see a dime in return, Picard’s name has been added to the list of bad guys.

Read more: http://www.foxbusiness.com/markets/2011/06/21/madoff-trustee-picard-no-hero-to-many-victims/#ixzz1QDsATBTV

This is how quickly the European debt crisis devolves: Austerity, viewed by markets as saving grace for Greece just a day ago, has quickly moved into irrelevance as banks and insurers continue to find a path around default.

No doubt cutbacks are an integral part of the Greek future.

Violent street protests aside, the county’s financial standing simply won’t allow it to continue along the path of bloated government, massive public giveaways and the debt-on-top-of-debt strategy it has employed for too long.

But without some type of structural default on its current obligations, all the austerity in the world won’t make Greece’s problems go away.

“Greece and a number of other European countries cannot repay their debt. In fact they will never be able to repay their debt under current conditions because their economies are not competitive globally,” banking analyst Dick Bove at Rochdale Securities wrote in an analysis. “Therefore, these countries must, and in my judgment will, repudiate their debt.”

Indeed, looking at Greece’s onerous debt maturity schedule, it is almost impossible to imagine another alternative.

Starting with a 2.4 billion-euro repayment on July 15, Greece then has to pay, in euros: 900 million on July 19, 1.5 billion on July 20 and 1.6 billion on July 22. August doesn’t get much better, when the nation has a 1.6 billion-euro payment due on Aug. 19 and 9 billion euros due to the next day.

FULL STORY HERE

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Nevada State Treasurer Takes on Meredith Whitney

Notable analyst Meredith Whitney told CNBC earlier this month that the fiscal situation in Nevada is “terrible,” something Nevada’s State Treasurer rebukes.

“If I take Nevada’s debt and if I add in the pension liability, and I add in the benefit liability, I’m still only at 8.6 percent. I can’t speak for Ms. Whitney … but I do have to say it would be nice if she did a little homework, drilled down a little bit into what those numbers are,” Kate Marshall told CNBC Friday.

“Basically what we think happened is she [Meredith Whitney] took a PEW report, which looked at the total pension plan, but the state of Nevada is one out of 180 employers that participate in that pension plan. We only represent about one-sixteenth of that plan, and in addition our state employees pay half,” Marshall explained.

“It’s as if she said, well, a family of four makes $100,000 a year and they buy a house for $200,000, oh my goodness that’s half their income is half the cost of that house, they can’t possibly afford it. But you and I know know that’s not [an] apples-to-apples” comparison, she went on to say.

SOURCE: CNBC

If you’re looking for an underlying theme, it’s “China isn’t giving up nuclear power.”

Nuclear stocks are up on the news, amidst speculation that the nuclear spring may not have withered after all.

Read here.

The economist and housing index master Gary Schilling is calling for a new recession to begin next year.

You can read up on the issue here.

NEW YORK (AP) — The dollar is rising against the euro on slightly better U.S. economic reports.

The Commerce Department said that the economy grew at an annual rate of 1.9 percent in the first quarter, slightly higher than the 1.8 percent that was estimated a month ago.

Separately, the Commerce Department said businesses increased their orders for machinery, electronics products and airplanes last month. Durable goods orders increased 1.9 percent in May after a 2.7 percent decline in April.

In morning trading Friday in New York, the euro fell to $1.4165 from $1.4208 late Thursday. The British pound fell to $1.5969 from $1.5987. But the dollar fell to 0.8382 Swiss franc from 0.8388 Swiss franc and fell to 80.40 Japanese yen from 80.58 Japanese yen.

PITTSBURGH (AP) – President Barack Obama called on Friday for a “renaissance in American manufacturing” that would replace shuttered steel mills with plants producing robotics, nanotechnology and other high-tech advances.

The president said this resurgence is how the country will create new jobs and stay competitive in a global marketplace where other countries are making great strides.

Speaking at Carnegie Mellon University in Pittsburgh, a city that’s taken hits from the decline of traditional manufacturing sectors like steel, Obama called for a joint effort by industry, universities and the federal government to help reposition the United States as a leader in cutting-edge manufacturing.

“We have not run out of stuff to make, we’ve just got to reinvigorate our manufacturing sector so that it leads the world the way it always has, from paper and steel and cars to new products we haven’t even dreamed up yet,” Obama said at Carnegie Mellon’s National Robotics Engineering Center.

“That’s how we’re going to strengthen existing industries, that’s how we’re going spark new ones,” he said. “That’s how we’re going to create jobs, grow the middle class and secure our economic leadership.”

ATHENS, Greece (AP) – Greece’s finance minister presented details of harsh spending cuts and tax hikes to a parliamentary committee on Friday, after tough negotiations with the country’s international creditors.

The measures are to be voted on in parliament next week in two bills that must pass if Greece is to receive a critical installment of its international bailout loans next month, in time to prevent a potentially disastrous default that could drag down European banks and affect other financially troubled European countries.

“Yesterday was a very unpleasant day for me, because I had to tell bitter truths, and we had to agree on very tough measures, measures which also include the element of injustice and the element of overtaxation,” Finance Minister Evangelos Venizelos told the financial affairs committee.

He said he could not rule out having to impose even more measures during his tenure as finance minister, although he and his deputies would try to ensure that would not be necessary.

“We can’t keep coming back every so often and ask for corrective measures, but I won’t state that I will never introduce more measures while I am finance minister and am handling a crisis,” he said. “We … will make every humanly possible effort to execute the budget and the midterm program without new measures. But the result depends on the state as a whole, the public administration, the whole market, the tax compliance of all citizens.”

U.S. aluminum producer Alcoa Inc said Friday it won a multiyear contract worth about $1 billion to supply its new, lighter aluminum-based alloys for Airbus commercial aircraft.

The news sent Alcoa stock up almost 1.8 percent to $15.55 in early trading on the New York Stock Exchange on a day when the broader market fell. Later in the morning, the shares were up 8 cents to $15.36.

Alcoa said the deal with the European planemaker unit of EADS calls for Alcoa to provide aluminum sheet and plate using current and advanced-generation aluminum alloys, which are lighter and stronger than traditional metals and composites.

Read more: http://www.foxbusiness.com/industries/2011/06/24/alcoa-wins-1-billion-deal-with-airbus/#ixzz1QDM0zWRP

TOKYO (Reuters) – Asian nations moved to release emergency oil stockpiles on Friday as part of a rare global coordinated action by consumer countries to prevent high energy prices from stunting a stuttering economic recovery.

The move, led by Washington and criticized by the oil industry as an unnecessary distortion of markets, suggests a fundamental shift on the part of industrialized nations toward intervention in commodity markets as an economic policy tool.

Brent oil prices tumbled to a four-month closing low on Thursday and after rallying early on Friday, turned and fell again.

I missed this yesterday, but five federal agencies have extended open comments until July 11.

Five federal agencies have approved and will submit a Federal Register notice that extends the comment period on a proposed rule to establish margin and capital requirements for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The comment period was extended to July 11, 2011, to allow interested persons more time to analyze the issues and prepare their comments. Originally, comments were due by June 24, 2011.

The proposal was issued by the Federal Reserve Board, the Farm Credit Administration, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, and the Office of the Comptroller of the Currency.

Watch these developments closely; the potential impact from the Dodd-Frank bill, in all of its un-thought-out glory, is staggering.