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Monday, June 13, 2011 Banks to cut their use of US Treasuries starting in early Aug as a precaution against any

market turbulence that may arise from a debt ceiling breach. Bank execs spoke to the FT about the strategy offline given the political sensitivities of the move. 40% of Treasuries are used as a cash equivalent in repos, futures, and swaps markets. Banks will look to have more cash on hand starting in Aug. FT Larry Summers oped in the FT how to avoid our own lost decade says the US is on its way to a lost decade of economic stagnation. Over the last 5 years growth has averaged less than 1%, similar to Japan when its bubble burst. Notes that the current problems are related to demand, not supply. Sustained austerity in this environment would be a mistake. Stimulus should be sustained and expanded. Employers should receive the same payroll tax cut enjoyed by employees. FT Economic growth a full double dip is unlikely but growth could wind up remaining sluggish for some time WSJ

GDP Forecasts started coming down when oil moved over $100/barrel. They have continued lower on the back of weaker than expected economic data. Israeli economist Stanley Fischer has officially announced his candidacy to head the IMF. He is considered a long shot w/C Lagarde the front-runner. PIMCOs El-Erian writes an oped in the FT praising Fisher, calling him an ideal candidate for the IMF and one who checks off all the right boxes FT Obama/Boehner golf match is previewed in the NYT (they play next Saturday) Boehner is said to be the better golfer (by as many as 15 strokes) although the Speaker has offered Obama an unlimited amount of strokes in exchange for $1T in spending cuts for each one. NYT