|
Yuan has now risen 6% against the dollar in the last year.
This means guarantied
inflation.
Fed’s Balance Sheet
The Fed’s balance sheet is expanding
rapidly…
…and so is the monetary base.
The growing imbalance in agricultural commodities
The Amount of soybean
export sales outstanding for this
time of year are at
record highs. In English, there
is a huge, growing backlog of unfilled orders for US soybeans.
The ongoing state
budget crisis
Zero Hedge reports that California Runs Out Of Money Again.
California
Runs Out Of Money Again, Comes Begging To Wall Street As Moody’s
Threatens To Go Nuclear On Muni Market
Submitted by Tyler Durden on
07/14/2011 08:58 -0400
First New Jersey, now California. The cash-strapped state, which begged for, and got, a
“bridge” loan from JP Morgan as recently as October 2010 (the
same bank that recently bailed out Chris Christie), is asking for another
bridge to the old bridge loan, ergo a “bridge bridge”
loan. The excuse: the potential upcoming government shutdown, which would
lock California out of the muni market. Surely the fact that it already has
little to no cash left was not a part of the equation. BusinessWeek reports: “California is considering seeking a bridge loan from Wall Street
ahead of an Aug. 2 deadline for raising the federal debt ceiling, in case talks fail and send the bond market into turmoil, Treasurer Bill Lockyer said. Proceeds from the loan would be used to
help pay the state’s bills until Lockyer can
sell an estimated $5 billion of so-called revenue-anticipation notes, or
RANs, scheduled for late August. Without
those notes, the state could run out of cash as it did in 2009, when it issued $2.6 billion of
IOUs.” Of course if the US is downgraded, Meredith Whitney’s prediction will come
true with a bang: as part of its warning yesterday,
Moody’s also threatened to downgrade 7000 municipal ratings which would
halt RAN, and any other, issuance for an indefinite period of time. And while
this is merely more M.A.D. posturing to help the debt ceiling dispute come to
a speedy resolution, the fact that California is now
forced to issue new bridge loans to “bridge” old ones is oddly
troubling.
The US moves closer to default
CalculatedRisk reports that
US
Government Bond Rating on Review
for Possible Downgrade.
Wednesday, July 13, 2011
Moody’s
Places US Government Bond Rating on Review for Possible Downgrade
by CalculatedRisk on 7/13/2011 05:07:00 PM
From Moody’s: Moody’s Places
US Aaa Government Bond
Rating and Related Ratings on Review
for Possible Downgrade
Moody’s
Investors Service has placed
the Aaa bond rating of the government
of the United States on review for possible downgrade given the rising possibility that the statutory debt limit will
not be raised on a timely basis, leading to a
default on US Treasury debt
obligations. On June 2, Moody’s had announced that a rating review would be likely
in mid July unless there was meaningful
progress in negotiations
to raise the debt limit.
…
The review of the US government’s
bond rating is prompted
by the possibility that
the debt limit will not be raised
in time to prevent a missed
payment of interest or
principal on outstanding bonds and notes. As such, there is
a small but rising risk
of a short-lived default.
…
And when treasury yields finally head up, the US dominated global financial
system will collapse.
What is happening to US retail sector
Look at the graph below
and imagine if it were adjusted for inflation. While retail sales continue to stagnate,
stores are selling less at higher prices.
CalculatedRisk reports that
Retail Sales increased 0.1% in June.
Retail Sales increased
0.1% in June
by CalculatedRisk on 7/14/2011 09:10:00 AM
On a monthly basis, retail
sales increased 0.1% from
May to June (seasonally adjusted, after revisions), and sales were up
8.1% from June 2010. From the Census Bureau report:
The U.S. Census Bureau announced
today that advance estimates of U.S. retail
and food services sales for June,
adjusted for seasonal
variation and holiday and trading-day
differences, BUT NOT FOR PRICE CHANGES, were $387.8 billion, an increase
of 0.1 percent (±0.5%) from the previous month, and 8.1 percent (±0.7%) above June
2010.
This graph shows retail sales since
1992. This is monthly retail sales and food service, seasonally adjusted (total and
ex-gasoline).
…
My reaction: Working
to get caught up on current events after finishing video series on the
ESF and its history.
Eric de Carbonnel
|
