Daily Digest

Daily Digest 1/16 - Housing as Economy's Achilles Hell, BP Arctic Oil Deal, Major Ruling on Coal

Sunday, January 16, 2011, 12:00 PM
  • Data To Show Housing As Economy’s Achilles Heel
  • A.I.G. Repays Fed Debt and Looks Toward Big Stock Sale
  • Mauldin: Thinking the Unthinkable
  • Early Warning: Misflation
  • Miliband Environmental Worries Over BP Arctic Oil Deal
  • Masdar City ’Energy Positive,’ Produces More Power Than Needs
  • Major Environmental Ruling On Coal

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Economy

Data To Show Housing As Economy’s Achilles Heel



Experts say housing construction has leveled off but show no signs of recovery. In December, starts are expected to fall 2.2% to a seasonally adjusted annualized rate of 543,000 after rising 3.9% to a 555,000 rate in November. Building permits are at their lowest levels since April 2009.

A.I.G. Repays Fed Debt and Looks Toward Big Stock Sale



Friday signaled the closing of the A.I.G. recapitalization plan, in which the insurer drew on proceeds from recent asset sales and Treasury funds to pay off its debts to the New York Fed. At the same time, the Treasury converted its preferred shares in A.I.G. into common stock, which it planned to sell off beginning in either March or May, according to people briefed on the matter. “It’s a major milestone,” Robert H. Benmosche, A.I.G.’s chief executive, said in a telephone interview from Washington, where he had lunch with Treasury Secretary Timothy F. Geithner. “Now we’ve got to get on to running the company.”

Mauldin: Thinking the Unthinkable (jrb)



Last week, in the first part of my annual forecast, I suggested that 2011 would be better than Muddle Through, with GDP growth in the US north of 2.5%. World GDP growth should be even better. This week we look at what I see as the real downside risks to that prediction. Oddly enough, the risks are not in the US but on the other side of both our oceans, in Europe and China. Plus, we will visit a few other items, assuming we have space (Bernanke’s recent speech just screams for some comments).

Early Warning: Misflation (bill)



I was thinking the word "deflation" seems to have slipped in status in the economic blogosphere lately.  From being in every other blog post, suddenly it seems to have slipped back into the trees with the recent influx of slightly better economics news. Intrigued, I went and updated the graph above, which shows the monthly changes in the CPI ex food and energy. As you can see, the last two data points (Nov and Dec 2010) show a bit of an uptick.  Possibly one could attribute this to the Fed's QE2 program.  So this presumably explains why people stopped talking about it.

Energy

Miliband Environmental Worries Over BP Arctic Oil Deal



"BP has done little to address the issues raised by the Deepwater Horizon disaster, while last year the Greenland government refused to grant drilling concessions to the company because it wasn't convinced BP has rigorous enough safety protocols," said Charlie Kronick of Greenpeace. "Now BP has bought its way into the Arctic by the back door. "It seems the company learned nothing last year in the Gulf of Mexico."

Masdar City ’Energy Positive,’ Produces More Power Than Needs



“Right now, Masdar City is energy positive,” Afshin Afshari said during a site visit today. “The power it sends to the grid exceeds the amount used at Masdar Institute and the site offices.” Masdar City produces 10 megawatts from a photovoltaic solar plant and 1 megawatt from solar panels on the roof of the Masdar Institute, Afshari said. The institute is a renewable energy research university.

Major Environmental Ruling On Coal



What seems to have happened here, according to Ward, is this. After Haden's ruling, Arch, the operator, scaled the site back by 700 acres (the current 2,300 acres is still about the size of downtown Pittsburgh) and got a new permit from the Army Corps of Engineers in 2007. The Obama administration came in and signaled its intention to review the matter. A full year was spent in negotiation between the EPA and the company trying to find a compromise that would let the mining go ahead but with stronger safeguards, according to Ward. But no deal could be reached.

Article suggestions for the Daily Digest can be sent to dd@PeakProsperity.com. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

10 Comments

Clay's picture
Clay
Status: Member (Offline)
Joined: Mar 28 2010
Posts: 5
Re: Daily Digest 1/16 - Housing as Economy's Achilles Hell, ...

Housing is just one of the canaries in the coal mines,  plural on both counts.  But the one to watch REAL close is inflation, and it has been showing up in so many ways. 

The inflection point on Chris's debt curve has been breached, and the west and most specifically the US as a unified nation of States is now firmly landed on the runway of the beginning to the end.  End of the States that is, as one by one they burn up as brakes are applied in attempts to slow down the debt overload of the US. 

Europe has the same issue, only there tires that blow are considered less damaging to a sucessful full stop which is why creditor nations have now given assistance.  But when a tire like California, Illinois and others blow, the remaining tires will be flattened with the weight of added debt and the whole landing gear will collapse.  Whether the US catches fire, rolls over, crashes or all three, the surviving passengers will be those sitting in the safest seats and have done everything they can in preparation.

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 372
Re: Daily Digest 1/16 - Housing as Economy's Achilles Hell, ...

Is JPM Covering Up a Naked Silver Short Held By China As a Claim Against the Yanks?  --  Jesse.

yoshhash's picture
yoshhash
Status: Martenson Brigade Member (Offline)
Joined: Sep 20 2008
Posts: 271
Re: Daily Digest 1/16 - Housing as Economy's Achilles Hell, ...

I was going to point out the typo in your title- "Achilles Hell"- but then I realized, no, that's quite right!

John Adams's picture
John Adams
Status: Member (Offline)
Joined: Jun 20 2009
Posts: 10
Re: Daily Digest 1/16 - Housing as Economy's Achilles Hell, ...

I think BP has learned plenty from the Deepwater Horizon fiasco -- most especially they have learned that if they do nothing, no one will do anything about it. When corporations rule the world there is no recourse, except by other corporations, who don't want to rock the cozy boat.

mrobinson's picture
mrobinson
Status: Bronze Member (Offline)
Joined: Jan 13 2009
Posts: 71
Re: Daily Digest 1/16 - Housing as Economy's Achilles Hell, ...

Great report by Max Keiser

Schizo-Psycho-Bermudaflation!

Food prices driven by speculative derivative trading.

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1441
Re: Daily Digest 1/16 - Housing as Economy's Achilles Hell, ...

jadams wrote:

I think BP has learned plenty from the Deepwater Horizon fiasco -- most especially they have learned that if they do nothing, no one will do anything about it. When corporations rule the world there is no recourse, except by other corporations, who don't want to rock the cozy boat.

YES!

I was just thinking about this the other day. If everyone that was pissed off about what BP did simply drove down the street to the next gas station to fuel up then BP would go bankrupt. But people just don't care.

maceves's picture
maceves
Status: Gold Member (Offline)
Joined: Aug 23 2010
Posts: 279
Re: Daily Digest 1/16 - Housing as Economy's Achilles Hell, ...

[

quote=Johnny Oxygen]

jadams wrote:

I think BP has learned plenty from the Deepwater Horizon fiasco -- most especially they have learned that if they do nothing, no one will do anything about it. When corporations rule the world there is no recourse, except by other corporations, who don't want to rock the cozy boat.

YES!

I was just thinking about this the other day. If everyone that was pissed off about what BP did simply drove down the street to the next gas station to fuel up then BP would go bankrupt. But people just don't care.

Actually, I think a lot of people did that.  I know I did, and I noticed that around here they weren't getting much business.  It's not my regular station anyway, but I avoided them when I was out of town too.

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1441
Re: Daily Digest 1/16 - Mauldin-Thinking the Unthinkable

“Those lawmakers who advocate ‘Ending the Fed’ might better turn their considerable

talents toward ending the fiscal debacle that has for too long run amuck within their own house.

The Fed does not create government debt; fiscal authorities do. Deficits and the unfunded

liabilities of Medicare and Social Security are not created by the Federal Reserve; they are the

legacy of those who control the purse strings

Fed does not earmark taxpayer money for pet projects in local communities that taxpayers

themselves would never countenance; only the Congress does that. The Congress and

administration play the dominant role in creating the regulatory environment that incentivizes or

discourages job creation.

Great quote!

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1267
Re: Daily Digest 1/16 - Housing as Economy's Achilles Hell, ...

Johnny Oxygen wrote:
I was just thinking about this the other day. If everyone that was pissed off about what BP did simply drove down the street to the next gas station to fuel up then BP would go bankrupt. But people just don't care.

Actually no.  The problem is most stations are locally owned, so you are simply hurting small businesses without really doing anything to BP.  Here and here are articles that discuss the issue.

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1441
Re: Daily Digest 1/16 - Housing as Economy's Achilles Hell, ...

Great info. Thanks rhare

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