TheTiesThatBindPreview
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August 2011

1. Banks in BRICS showing increasing debt crisis with bad loans showing increasing credit risk NB

2. OBAMA says deal with Debt Limit approved

3. $2.1 t debt increase. $917 billion spending cuts

4. US still faces possible debt downgrade A2 to Baa1

5. CYPRUS ; Loans to Greece 160% of GDP. Assets to GDP 600%

6. CYPRUS attempts to rein deficit crisis

7. CYPRUS exposed to Greek banks-contagion fears

8. CYPRUS –controversial ammunitions dump explodes taking out power station or 50% of Cyprus electricity. With growth only forecast at 1, 5%, now estimated at . S& P have downgraded Cyprus and another bailout headache for Germany`s, Merkel

9. Roubini : Guns and Butter and Low Taxes: On Deficits, Debts, Debt Ceilings and the U.S. Fiscal Mess

1. The current U.S. fiscal path ensures that the already anaemic economy will double dip by next year or at the latest 2013, and also ensures that eventually bond vigilantes will drive up long-term interest rates if no credible plan for medium-to-long-term fiscal consolidation is approved. The optimal path of fiscal consolidation is back-loaded rather than front-loaded, given that the economy is still very weak and growing anaemically below trend. Still, a credible commitment to such a path needs to be made immediately.

2. Foreign Sovereigns Unlikely to Flee TreasuriesBy Rachel Ziemba: Concerns that major foreign holders will stop buying U.S. Treasuries, or sell off those they have, as a result of the U.S. debt ceiling negotiations are overdone. Domestic exchange-rate policies constrain diversification from USD assets in places like China, while other large reserve holders are restricted by portfolio size—there are few substitutes for Treasuries. In addition, as central banks and sovereigns have already been diversifying away from Treasuries, a knee-jerk reaction is less likely, while in the event of greater diversification, self-balancing effects could be seen as yields rise.

3. Macguineas Interview : President of the Committee for Responsible Government. A Deficit Warrior. The extension of   the debt limit of $2.1 trillion is immediate relief from the ‘gut retching rollercoaster’ while Congress has been deliberating debt default resolution. Yet the amount or resolution is not sufficient to comprehensively deal with the subject, and that will mean Congress will have to come back to the table. NB

10. HSBC to cut 30 000 jobs by 2013. Sells upstate New York branches

11. Spanish & Italian debt ratings send stock markets into spiral.

12. IMF –Romania agree on a 2nd tranche of $619 million

13. Putin says US is ‘leeching’ on global economy, living beyond its means. “They are living like parasites off the global economy and their monopoly of the dollar”, Putin said at an open air meeting with admiring Russians in what looked like early campaigning before parliamentary and presidential polls.”NB

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15. US; Deal is just a BAND AID to get past-Wilson advisor to president Obama

16. Suisse Franc hit a new all time record

* 2 August 2011

1. Barclays to cut 3000 jobs this year as Investment Bank revenue declines

2. Gold will rise until Fed tightens credit. Investors are insisting on physical o wnership, which changes the dynamic of previous investors. ISM no`s in the US are weak and the outlook is not positive, and Gold will continue to rise. Silver as an alternative investment is losing steam to Gold which has another 20-30% to go. Investors are very long on the gold market, because of the distrust in US $ and sovereign funds ability to avoid default. Michael Lewis (Deutsche Bank).

3. U.S. A 2 year period of mediocre growth with a double dip recession. Bob Parker Cr Suisse Asset Management.

4. IMF ‘harsh’ legacy may block Middle East loans after Egypt $3 billion U-TURN

5. Italy/ Spain stuck in a no-go debt zone for Merrill DWS funds-Euro credit

AUGUST 2011 – ONE YEAR LATER

Confidence, Contagion, Capital- the three topics that dominate the markets

* 2 August 2011, the U.S. avoided default at the 11th hour.

*  GOLBAL STOCK MARKET selloff-  $2.1 trillion wiped off in 6 days.

* Gold $1660

*  Flight to safety remains Gold $1662 and SF.

* 5  August 2011, $4.4 trillion wiped off global markets

* 6 August 2011, S& P downgrade of US AAA credit rating to AA+, is released by S&P; after close of trading hours.

* 6 August 2011. China reports $1.7 trillion in US Securities and calls for a NEW RESERVE CURRENCY

* 8 August 2011, $ 5,4 trillion wiped off global markets

* 9 August 2011, GLOBAL STOCKS ERASE $7.8 Trillion in value

* 9 August 2011, Gold $1770n & SF at record levels