Those who point to falling Treasury yields since last year’s U.S. downgrade as a sign the rating should be higher show a “misunderstanding” of credit rankings, according to Standard & Poor’s.

Treasuries have returned 5.6 percent since the U.S. was stripped of its AAA ranking by S&P on Aug. 5, 2011, according to Bank of America Merrill Lynch index data, while yields have sunk to all-time lows. The rally in the past year may reflect investors seeking a “haven” from Europe’s debt crisis and demand for liquid securities, S&P said.

“Ratings are really just a rank ordering of our opinion of relative credit worthiness based on our criteria,” Peter Rigby, a credit analyst at S&P, said in a telephone interview. “It’s neither an objective nor goal or intent to determine yields or prices. Obviously, investors do that using a whole host of information and different investors have their different valuation objectives.”

The New York-based unit of McGraw-Hill Cos. cited the government’s lack of a plan to rein in its growing debt load and weakening “effectiveness, stability, and predictability of American policymaking and political institutions” in cutting the U.S. one step to AA+. The firm has a negative outlook on the U.S., as do Moody’s Investors Service and Fitch Ratings, which assign America their highest credit grades.

Foreign governments investment in the dollar, a reserve currency, and the dollar-denominated oil market provides an“insatiable demand” for the U.S. currency, S&P said....

http://www.bloomberg.com/news/2012-08-16/s-p-says-critics-of-u-s-downgra...

The Arctic Ocean’s ice cover is shrinking at a record pace this year after higher-than-average temperatures hastened the annual break-up of the sea ice.

The area of ocean covered by ice shrank to 4.93 million square kilometers (1.9 million square miles) on average for the five days through Aug. 15, according to the latest data from the U.S. National Snow and Ice Data Center in Boulder, Colorado. With as many as five weeks of the annual melt season left, it’s already the fourth-lowest annual minimum ever measured.

“Unless the melting really, really slows down, there’s a very real chance of a record,” Walt Meier, a research scientist at the NSIDC, said in a telephone interview. “In the last week or so it’s dropped precipitously. There’s definitely a chance it’ll dip below 4 million square kilometers.”

The shrinkage is the most visible sign of global warming according to Meier, and raises the prospect that the Arctic Ocean may become largely ice free in the summer. That opens up new shipping routes and is sparking a race for resources that’s led to Cairn Energy Plc (CNE) and Royal Dutch Shell Plc (RDSA) exploring waters off Greenland for oil and gas.

New Frontline

“There’s a whole new frontline from a strategic standpoint,” said Cleo Paskal, a geopolitical analyst atChatham House, a policy adviser in London. “Countries that have been kept apart by a wall of ice are now facing each other for the first time and countries like China are slipping up through the middle.”......

http://www.bloomberg.com/news/2012-08-17/arctic-sea-ice-heads-for-record...

Aug. 17, 2012, 1:52 a.m. EDT

China’s softening yuan could block rate cuts

By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) — China might not be able to cut interest rates if the yuan weakens further, according to Moody’s, which says the end of the strong Chinese currency era could limit Beijing’s policy actions.

Markets are coming around to the view that the Chinese currency could now be near its fair value — instead of moderately undervalued, as maintained by the International Monetary Fund — according to Moody’s analyst Alaistair Chan.

Chan said that while an overvalued yuan was once seen as highly unlikely, this possibility is now being priced into the futures’ markets.

Recent data showing that China is experiencing capital outflows as its economy slows could mean an important shift is taking place, he said, noting that the yuan’s long upward march against the dollar appears to have ended earlier this year.

“There is growing evidence that the yuan is fairly valued against both the dollar and a basket of major currencies. As such, continued yuan appreciation is no longer a one-way bet, and there is the possibility of a sharp yuan depreciation in the event of a global financial crisis,” Chan said.

Any efforts by China to lower interest rates could trigger further capital outflows, undermining efforts to rekindle economic activity....

http://www.marketwatch.com/story/chinas-softening-yuan-could-block-rate-...

US Treasury Admits It Conducted A Circular Ponzi Scheme For Years

Submitted by Tyler Durden on 08/17/2012 - 09:29 Nationalization Tim Geithner

While one may wonder about the implications of the just announced "accelerated windown" of the GSEs, predicated in no small part by the surge in animosity between Tim Geithner and the FHFA's Ed DeMarco, there is one aspect of the announcement that is completely and utterly unambigious: as part of its justification to demand faster liquidation of Fannie and Freddie's "investment portfolio" Tim Geithner gave the following argument:

 

 

This will help achieve several important objectives, including... Ending the circular practice of the Treasury advancing funds to the GSEs simply to pay dividends back to Treasury

Transfer one more conspiracy theory into the conspiracy fact bin.

http://www.zerohedge.com/

Cocaine is proving a more resilient commodity than chocolate in Colombia, the largest supplier of the narcotic to the U.S.

Prices of cocoa beans, used to make chocolate, have dropped 40 percent this year in Colombia, South America’s third-largest supplier, as the cost of leaves processed into cocaine holds steady, according to data compiled by police and growers.

The chocolate ingredient’s slump in the past year, as concern about Ivory Coast supply disruptions subsides and European demand weakens, is threatening a more than decade-long campaign in Colombia to eradicate drug production that funds guerrilla movements. It’s also jeopardizing growers’ plans to become South America’s largest cocoa producer after Brazil.

“If you make an effort to invest in cocoa and then get unprofitable prices, and someone else shows up and pays cash for the other stuff, the farmer migrates to what’s easier,” said Ciro Alfonso Ramirez, who heads a northern Colombian regional office of the National Cocoa Growers Federation.

The number of hectares planted with coca leaves rose 3.2 percent in 2011, faster than the area sowed with cocoa, based on federation and United Nations data. While the government eradication campaign saw cocaine production slip 1.4 percent to 345 metric tons last year, cocoa output tumbled 9.8 percent.

Rebel Funding

A drive to reduce cocaine production has eroded funding for the Revolutionary Armed Forces of Colombia, the nation’s largest guerrilla group, improving security and drawing record international investment to Colombia. Planting cocoa is a key strategy to provide revenue to farmers who now are dependent on illegal crops...

http://www.bloomberg.com/news/2012-08-15/chocolate-losing-to-cocaine-on-colombia-cocoa-slump.html

Spain will put its bank rescue fund in charge of the bad assets separated out from the nation’s struggling lenders that are receiving a European bailout.

The FROB fund will be the main shareholder in a so-called bad bank, according to a proposal that will be approved by the Cabinet on Aug. 24, Economy Minister Luis de Guindos told the Efe news agency in an interview today.

All the banks receiving loans from European rescue funds will have to transfer their non-performing assets to the bad bank, he said. The comments were confirmed by a Spanish official, who asked not be identified, citing government policy.

Prime Minister Mariano Rajoy is struggling to avoid a second bailout after his government signed off on 100 billion euros ($123 billion) of loans from EU rescue funds on July 24 to recapitalize banks amid its second recession since 2009 and surging borrowing costs.

Spain’s benchmark 10-year bond yield closed at 6.44 percent on Aug. 17, falling 76 basis points since European Central Bank President Mario Draghi said on Aug. 2 that the bank would buy sovereign bonds to bring down yields if countries applied for similar support from Europe’s rescue fund and accepted strict conditions in return.

Preferred Shares

Spain will also approve rules to restrict the sale of preferred shares on Aug. 24 to prevent repeating past errors, de Guindos said. Savings banks such as the nation’s third-largest lender, Bankia group, in 2009 resorted to selling preferred stock to retail clients through branch networks after debt markets dried up.

New issues will have to have an institutional participation of at least 50 percent and have...

http://www.bloomberg.com/news/2012-08-19/de-guindos-says-bailout-fund-to-manage-spain-bank-restructuring.html

DPH:   That last underlined sentence should get you thinking.  I can a see time where the sales of UST's will be the same way and certain institutions and funds of all types (pension, 401K, Muni's, money markets etc) will have to but UST's because it's a mandatory weighting that  the US Treasury will mandate....out of desperation and semi-insolvency.

And no one will have a choice because it will be portrayed and enforced as "patriotic' to buy them.

Assange berates U.S. from Ecuador embassy

LONDON - WikiLeaks founder Julian Assange berated the United States from the balcony of the Ecuadorean embassy where he has sought refuge from arrest, demanding President Obama end what he called a witch hunt against his whistle-blowing website. Full Article

Analysis: Merkel's Italian ally at the ECB

By Noah Barkin

BERLIN | Sun Aug 19, 2012 11:31am EDT

BERLIN (Reuters) - When Angela Merkel backed Mario Draghi to become president of the European Central Bank in May last year, many in Europe assumed it was with resignation, a setback for her and Germany.

Axel Weber, the hardline head of the Bundesbank had resigned in a huff months before, leaving the German chancellor little choice but to throw her weight behind the slick Italian who was Weber's only real rival for the prestigious central bank job.

More than a year later, however, as the euro zone descends ever deeper into crisis and fears of a humiliating break-up grow, it is becoming increasingly clear that Merkel got the man she needed after all.

On a visit to Canada last week, she offered a robust defense of Draghi, after he triggered a stormy debate in Germany by promising to do "whatever it takes to preserve the euro" and signaling his readiness to resume the European Central Bank's controversial bond buying program.

Draghi's comments on July 26 fuelled fears that the ECB was now in the hands of a southern cabal, willing to bend the rules of sound monetary policy to shield stricken countries like Spain and Italy....

http://www.reuters.com/article/2012/08/19/us-eurozone-germany-ecb-idUSBR...

CME Group Inc. (CME), owner of the world’s biggest futures exchange, plans a derivatives market in London, setting up in direct competition with Eurex and Liffe, the largest venues, three people familiar with the situation said.

The exchange will start with currency futures, the people said, declining to be identified as the information isn’t public. CME’s European exchange will be led by a chief executive officer and have a separate management team to CME’s existing London office, they said. CME Clearing Europe will process trading for the new London exchange, the people said. Chicago-based CME plans to file with the U.K. securities regulator in the coming weeks as the first step in the process.

Ten years after going public, CME Group has become the most valuable exchange operator in the world, capitalizing on the higher profitability of derivatives while the value of equity trading has declined. The company controls 98 percent of the U.S. futures market and gets about 20 percent of its business outside U.S. trading hours. It opened a London-based clearinghouse, CME Clearing Europe, last year.

The new exchange represents competition for Liffe and Eurex, whose owners, NYSE Euronext (NYX) and Deutsche Boerse AG, had their plan to merge blocked by European antitrust authorities in February....

http://www.bloomberg.com/news/2012-08-19/cme-said-planning-europe-exchan...

DPH: I never saw  this type of verdict coming. Thsi whole thing was unusual from the start and I'm not so sure this wasn't about dragging her powerful husband down more then herself.

It worked.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 

Gu Kailai, the wife of ousted Politburo member Bo Xilai, received a suspended death sentence for the murder of British businessman Neil Heywood, the lawyer for Heywood’s family told reporters.

Heywood’s family will respect the court’s decision, He Zhengsheng said outside a court in the Chinese city of Hefei, where Gu was tried Aug. 9 for killing Heywood. Gu received a death sentence with a two-year reprieve, He said.

Gu’s sentence concludes one chapter in a scandal that triggered the most serious political upheaval in China since the Tiananmen Square protests of 1989, and shifts attention to how the party will handle Bo’s case. The country’s leaders have sought to cast his downfall as an isolated episode involving an errant senior official ahead of the Communist Party Congress that will choose the next generation of leaders this year.

There was no mention of Bo in the official account of the trial in which the Xinhua News Agency said Gu, 53, confessed. Xinhua recounted her fear that Heywood had threatened her son, highlighting her mental anguish and remorse for causing “great losses” to the party and the country.

She admitted to dripping cyanide into Heywood’s mouth as he lay drunk in a hotel room, and said the time since his death in November had been a “nightmare,” Xinhua said.

http://www.bloomberg.com/news/2012-08-20/bo-xilai-s-wife-gets-suspended-...