Fallout from US credit downgrade and European debt crisis

It would seem that these tent cities have a real future, especially after yesterday’s news.  We haven’t seen the reactions of the markets yet.  Guess we’ll have to wait until Tuesday (NZ time).

There Are So Many Homeless In Virginia Beach Officials Are Pondering Official Tent City

Business Insider

Aug. 5, 2011, 1:42 PM

With more than a dozen homeless camps and 453 displaced residents, Virginia Beach may be the first community in the state to sanction a homeless "tent-city."

According to Hampton Roads, the city shut down an encampment of more than 20 people in March, but following the death of a homeless woman last month they seem to be easing their position.

Proponents for the plan say it will allow for easier monitoring and provision of services.

"Until we solve the housing and poverty crisis, unfortunately, there will be people living outside," one resident says. "There's no other place to go."

Opponents don't agree. Sharon Chamard, a professor at the University of Alaska, author of a manual on homeless encampments, said homeowners often object to the idea. "Most communities are resistant to this," she told Hampton Roads. "Many people see it as supporting an illegitimate lifestyle."

The mayor agrees, but the decision will rest in the hands of the city council.

Chamard also points out sanctioned tent-cities face less opposition in the more liberal Pacific Northwest.

This is fairly blunt language coming from Christina Romer, former chair of Obama's Council of Economic Advisers.

S&P Downgrade: Ex-Obama Adviser Christina Romer Says U.S. 'Pretty Darn F**ked'

Huffington Post 

On the same night that Standard and Poor's downgraded the United States' top-level credit rating for the first time in history, Christina Romer, former chair of Obama's Council of Economic Advisers, didn't mince words when asked of downgrade's potential consequences. (h/t NewsBusters)

The U.S. is "pretty darn f**ked," Romer said during a segment on Real Time with Bill Maher called “How F**ked Are We?”, after Maher asked what the new could mean for the U.S. economy.

"I’ve been hanging around [Treasury Secretary] Tim Geithner too long," Romer said, explaining her foul language. Geithner, she says, swears "like a seventh grade boy."

For the entire article GO HERE

Global leaders race to stem panic over US credit rating downgrade

Finance ministers from G7 countries hold urgent talks to try to prevent loss of confidence in world's biggest economy

Guardian

World leaders are battling to prevent panic from spreading across financial markets as the sudden downgrading of the US credit rating triggered fears of global turmoil when stock exchanges open.

Finance ministers from the G7 leading industrial countries – many of them away on summer holiday – agreed to a series of urgent weekend telephone talks to try to prevent a loss of confidence in the world's biggest economy. But the uncertainty grew when the Saudi market dropped a massive 5.5%.

For article GO HERE

US credit rating downgrade prompts warning from China

The Guardian

China, the world's largest holder of US debt, condemned the "short-sighted" political wrangling in the US and said the world needed a new and stable global reserve currency.

In a comment article the official Xinhua news agency said China had "every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets. International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country."

For whole article GO HERE


And we may expect lots more of this I should think.

Standard & Poor's statement: US credit rating could be cut even further

the Telegraph

Standard & Poor’s says its unprecedented downgrading of the United States' AAA sovereign credit rating might be followed by further cuts if debt reduction measures slacken.

For article GO HERE

It Just Went From Bad To Far, Far Worse As Germany Says Italy Is Too Big For EFSF To Save, Refuses To Carry Euro Bailout Burden

Zero Hedge,
08/06/2011 12:20 -0400

Remember when we said (yesterday) that Germany will soon balk over the fact that it is pledging its entire economy to bail out an insolvent Europe? Well, that moment has come.

Dow Jones just hitting the tape

• German Govt: Italy Too Big For EFSF To Save - Spiegel

• German Govt: Doubts Whether Tripling EFSF Would Help It Save Italy

• German Govt: Italy Must Make Savings, Reforms To Exit Crisis - Spiegel

• Italy Debt Guarantee Could Raise Doubts Over Germany's Finances - Spiegel

• German Govt: EFSF Should Only Help Small, Mid-Size Countries - Spiegel

As a reminder, yesterday's stopgap announcement by the ECB to expand its SMP purchases of secondary market Italian and Spanish bonds was merely as a precursor to full EFSF monetization until its comes fully online in September (or sooner) in a vastly expanded format (between €1.5 and €3.5 trillion).

If Germany is now against this, which appears to be the case, it pretty much means, well, game over.

Add the uncerainty over the unwind of the Europe rescue "gamechanger" as one of the more naive CNBC anchors said yesterday, and Monday is now guaranteed to be a bloodbath.

For article GO HERE

Berlin thinks Italy economy too big for rescue fund: report

AFP

7 August, 10 am NZT

BERLIN — The German government fears that Italy's economy is too big to be rescued by the European stability fund, German weekly Der Spiegel is to report on Sunday.

According to the report, details of which were released before publication, doubts are growing within the German government that the 440-billion-euro ($625 billion) European Financial Stability Facility (EFSF) would be able to handle an Italian bailout.

The weekly said the German government is insisting that Italy resolve its debt problems on its own and that the EFSF is intended only to rescue smaller economies within the eurozone.

For article GO HERE