Timothy Geithner

Here Comes The Non-Boring Weekend: G7 Says "Central Banks Ready To Provide Liquidity As Required"

The G-7 is in full panic mode. The organization for the prevention of harm to the Status Quo was expected to release a communique possibly over the weekend, but the speed with which one was dropped for mass circulation is stunning and confirms that its members are in full meltdown as the weekend comes. It is now certain that the G-7 will attempt some major intervention over the next 48 hours to inject a last dose of hope into capital markets, or else the Monday open will be an epic collapse.

smartknowledgeu's picture

First, concentration does not equal risk though the commercial investment industry really wants all their clients to believe this rubbish concept. Second, corrections in gold and silver, though they are very frequently sold by the commercial investment industry as the “bursting of the precious metals bubble”, are just that – corrections, and additionally buying opportunities to accumulate more physical, when they happen. Not owning a single ounce of physical gold and physical silver in this environment is absolute insanity.

S&P Says Likelihood US Is Downgraded To AA As Soon As Early August Is 50-50

A rather sobering report out from S&P, which has no other function than to tighten the screws even more on those who prudently are holding out against extending the debt ceiling. As for S&P: please explain to US how 120% debt/GDP is better than 100% debt/GDP, and thus more worthy of a AAA rating? Please. Because we must be bloody stupid: "In our view, the need for an agreement to raise the debt ceiling before it is breached--which the government has said would occur on or around Aug. 2--remains a major risk to the U.S. economy, in our view. Because we see a real risk that efforts to reduce future deficits may meaningfully miss the targets that Congressional leaders and the White House have discussed, we put the likelihood that we would lower the long-term rating on the U.S. within the next three months and potentially as soon as early August--by one or more notches, into the 'AA' category--at about 50-50."

Gold To Rise On $14.3 Trillion U.S. Debt Limit Increase – Bloomberg Chart of the Day

The Bloomberg Chart of the Day (see above) shows how gold in dollars is correlated with increases in the U.S.’s debt limit, particularly in the last 10 years. Julia Yoo, a Seoul-based analyst at Korea Investment told Bloomberg that “gold’s rally is quite explosive.” “Increasing the debt limit means you print more dollars, which will weaken the dollar and consequently lift the gold price,” adding to gains this year that were driven by demand from countries including China.”

Obama To Address Nation At 11:00 AM, Announcing Lack Of Agreement On Debt Ceiling, Or T Minus 10 Working Days Until T-Day

After meeting for exactly 75 minutes, the president and members of congress achieved absolutely nothing except for what ZH readers already knew: that a debt deal has to be reached by July 22 or else. "President Barack Obama said Sunday that "we need to" work out a debt deal within the next 10 days as he convened a meeting with congressional leaders, aiming to fashion a deficit reduction package for the next 10 years. As the meeting opened, Obama and the leaders sat around the table in Sunday casual dress. Asked whether the White House and Congress could "work it out in 10 days," Obama replied, "We need to." Despite Boehner's preference for a smaller, $2 trillion plan for deficit reduction, White House aides said Sunday that Obama would press the lawmakers to accept the larger deal. Republicans object to its substantial tax increases and Democrats dislike its cuts to programs for seniors and the poor. The aides, however, left room for negotiations on a more modest approach." And just like on Friday when the president's appearance was heralded as a harbinger of a massive NFP beat only to be the biggest let down since Geithner's TV appearances in February which sent the market down by 10 S&P points each time, so the president will address the nation tomorrow. From Reuters: "U.S. President Barack Obama will hold a news conference at 11 a.m. EDT (1500 GMT) on Monday about the status of negotiations to cut the deficit and raise the debt ceiling, the White House said on Sunday. Obama met with congressional leaders for about 75 minutes Sunday evening and will meet again with them on Monday "to discuss the ongoing efforts to find a balanced approach to deficit reduction," the White House said, without giving a time for that session."