Credit-rating agencies still threaten US debt recovery

As many had predicted, the deadlock over the US debt ceiling was broken at the very last moment.

On Monday night the House of Representatives approved the deal and Tuesday's senate vote is almost certain to go through.

But as the fears of a default on US debt are now receding, America faces the task of dealing with its huge deficit.

Credit-rating agencies have not yet commented on the deal, and their threat to downgrade the United States' credit rating remains.

http://www.bbc.co.uk/news/business-14372355

Debt Ceiling Agreement to Trigger Hyperinflation

President Obama just announced late this evening that a deal has been reached to cut government spending and raise the debt ceiling in order to avoid a debt default. If the deal is approved on Monday, it will raise the debt ceiling by between $2.1 and $2.4 trillion in three installments: $400 billion immediately, $500 billion this fall subject to a disapproval vote by Congress, and $1.2 to $1.5 trillion more after a special committee agrees on a matching amount of spending cuts that will be in addition to $900 billion in spending cuts proposed in the bill. With no tax increases included in this plan, all of this additional debt will eventually be monetized and paid for through monetary inflation.

http://www.rightsidenews.com/2011080114194/us/politics-and-economics/debt-ceiling-agreement-to-trigger-hyperinflation.html

Glenn Beck puts the Federal debt cap deal in prepper terms.

http://www.glennbeck.com/content/videos/?uri=channels/451373/1428412

China downgrades America

"China's credit rating agency Dagong downgraded the U.S. to A from A+ with a negative outlook, citing the increased debt limit and questions over creditor protection in the current political and economic environment."

America, you've been Dagonged.
The move "suggests that China may be getting more concerned about its U.S. exposure and that it may be stuck holding the bag should another financial or political crisis flare up," according to CMC Markets analyst Colin Cieszynski. China's problems have been well-documented -- including, depending on whom you talk to, a residential real estate bubble, rising inflation and questionable corporate governance. But the Asian powerhouse is also the top foreign holder of U.S. debt. That would be the debt that narrowly escaped getting downgraded by American ratings agencies in the wake of the theatrical U.S. debt ceiling fiasco.

So China has a direct stake in what happens south of the border, just as the rest of the world -- including Canada, increasingly -- has a direct stake in China's economy. Some commentators contend that the Chinese economy is sailing along on a bubble inflated by cheap government money and real estate speculation -- sound familiar, Canada? But it's hard to argue that in a world where the power balance is shifting from west to east, China's economic clout is rising as quickly as America's is falling.

http://communities.canada.com/vancouversun/blogs/yourmoney/archive/2011/08/04/china-downgrades-america.aspx

Unemployment rose in nearly all US cities

WASHINGTON (AP) -- Unemployment rates rose in more than 90 percent of U.S. cities in June, mirroring a national slowdown in hiring.

The Labor Department said Wednesday that unemployment rates rose in 345 large metro areas. They dropped in 20 cities and were unchanged in seven. That's worse than May, when rates rose in only 210 cities. And it is a sharp reversal from April, when unemployment rates fell in nearly all metro areas.

The biggest increase was in Joplin, Mo, which was hit by a major tornado on May 22. The city lost 9,400 jobs in June, and the unemployment rate jumped nearly 2 percentage points, to 9.6 percent.

The national unemployment rate ticked up to 9.2 percent in June, the highest level this year.

http://finance.yahoo.com/news/Unemployment-rose-in-nearly-apf-3394283988.html?x=0

Can't get no relief: Economic news sours investors

BOSTON (AP) -- What relief rally? Hope that the stock market would surge on news of Washington's debt ceiling deal has given way to pessimism. Increasingly defensive-minded investors are adapting to the reality that the economic recovery is stalling, if not ending.

Stocks rose slightly on Wednesday to snap an eight-day string of declines that sent prices down nearly 7 percent.

That stumble complicates matters for investors who recently pulled cash from the market, fearing a government default was a strong possibility. With that worry behind, the question is what to do next.

Richard Shortt had expected to be buying stocks, putting his sidelined money back to work. Yet he was at his home computer Wednesday, selling some of his stocks, and trimming investments in stock mutual funds. The 66-year-old from Somerville, Mass. put the proceeds into safer money-market mutual funds -- the same actions he took last week, when he sold stocks before Congress and President Obama reached the debt ceiling deal.

http://finance.yahoo.com/news/Cant-get-no-relief-Economic-apf-3742787640.html?x=0

US Yield Curve Flattening To Prompt Fed Easing and $1800 Gold

Weaker economic data from the US has caused the yield curve for US Treasuries to flatten significantly in recent months. However when the July manufacturing ISM came in at 50.9, well below the predictions of around 55.5, the curve flattened to a level not seen since August 2010. It was in August 2010 that the Fed first hinted at QE2 and therefore the fact that the curve has got back to this level puts pressure on the Fed to embark on another round of monetary easing. Whether this will be through QE3 or some other mechanism we do not know, however we are confident that further easing of US monetary policy is very bullish for gold prices.

http://www.skoptionstrading.com/updates/2011/8/3/us-yield-curve-flattening-to-prompt-fed-easing-and-1800-gold.html