Daily Digest

Daily Digest 1/20 - Debt Supercycle Reaches Final Chapter, Letters From Detroit, The Hand Behind Wall St. Bonuses

Friday, January 20, 2012, 10:42 AM
  • The Debt Supercycle Reaches Its Final Chapter
  • World Bank; Warning Signs That We Should Prepare For The Worst
  • Letters From Detroit
  • China's economic growth slows to 8.9% in fourth quarter
  • As Further Sanctions Loom, Plunge in Currency’s Value Unsettles Iran
  • Ron Paul Hates The Federal Reserve But Loves Gold
  • The Invisible Hand Behind Bonuses On Wall Street
  • Scotland Well on the Way to Achieving 100% Renewable Energy by 2020
  • How Will The Economy Fare If High Oil Prices Continue?

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Economy

The Debt Supercycle Reaches Its FInal Chapter (adam)

A graphic depiction of this Debt Supercycle can be seen below. As of this writing, outstanding U.S. federal debt is close to $15.3 trillion dollars. For the first time in my lifetime US federal debt now exceeds U.S. GDP. In personal terms each U.S. citizen now owes $180,559.

World Bank; Warning Signs That We Should Prepare For The Worst (David B.)

When this crisis is over, all sorts of people are going to be running around claiming that they predicted it. But it does not take a genius to see what is coming. All you have to do is open up your eyes and look at the flashing red warning signs.

So what should we all be looking for next?

Letters From Detroit (jdargis)

The city used to require its employees to live inside Detroit, but the law was controversially repealed in 1999, which led to massive suburban flight among emergency responders and other city employees. The current mayor, David Bing, has an initiative called “Project 14” to lure police to live in the city again with massive subsidies (“14” is police code for “return to normal operations”). Bing argues that having police live inside city neighborhoods bulwarks safety. Detroit police who live in the suburbs counter that the city — with its high insurance rates, limited services, and poor school options — is a very difficult place to raise a family.

China's economic growth slows to 8.9% in fourth quarter (jdargis)

Tuesday's data showed that real estate investment in China rose 27.9% in 2011, down from an annual growth rate of 29.9% between January and November, the National Bureau of Statistics said.

As Further Sanctions Loom, Plunge in Currency’s Value Unsettles Iran (jdargis)

A report in Iran’s state-run news media that the government had decided to suspend trading relations with the United Arab Emirates in retaliation for that country’s support of American sanctions on Iran — denied later by Iran’s vice president — apparently contributed to a rush by Iranian merchants and trading companies to sell their rials for other currencies. The United Arab Emirates is a major gateway for Iran’s exports.

Ron Paul Hates The Federal Reserve But Loves Gold (David B.)

However, whatever is done to a fiat currency can be done to any replacement. If the US dollar were replaced by gold or a basket of commodities, that too could easily be manipulated by the public or private sectors.

The Invisible Hand Behind Bonuses On Wall Street (jdargis)

This year’s bonus season, which began in late December and will continue until February at some companies, is expected to be the worst for industry employees since 2008, as regulatory measures and economic uncertainty have cut deeply into profits and made pay pools smaller.

Energy

Scotland Well on the Way to Achieving 100% Renewable Energy by 2020 (James S.)

Whilst renewable energy is the sector, the Scots are focussing their efforts on offshore wind farms. This will be hugely helped by the recently declared partnership with Masdar, the Abu Dhabi clean energy company. The pooled resources of both institutions will be used to research and advance clean technology development. Salmond acknowledged that "the costs of offshore wind will have to be reduced by 20% to be competitive,” as will the costs of efficiently transporting electricity over long distances. But the aim is clear; the commercialisation of offshore wind farms. It is the big prize, and will give Scotland a strong foothold in one of the most promising industries of the future; which could reportedly be worth $30 billion. Needless to say, Scotland’s hopes are as high as their ambitions.

How Will The Economy Fare If High Oil Prices Continue? (James S.)

Another issue is that we have built millions of miles of electrical transmission, oil and gas pipelines, water and sewer pipelines, and roads. It becomes difficult to abandon parts of these systems, even if total resources for maintaining the system are constricted. If we think of the situation in terms of tax dollars (or charges by utility companies), it becomes increasingly difficult to collect enough tax dollars (or utility charges) to pay for the inflated cost of replacing worn out roads, pipelines, and electrical transmission, as the rising price of oil makes these costs rise much more rapidly than salaries.

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."

4 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2819
Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 2771
supercycle

I'm normally not a big fan of Jim Puplava, but his supercycle article is one of the best essays I've seen in explaining how we got here, exactly where 'here' is, the increasing chances of a 'black swan' and describing the variety of ways those 'black swans' might manifest.  Take away-be nimble.

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1271
Ron Paul's stance on currencies.....

Article by Johnathan Yates wrote:
Ron Paul Hates The Federal Reserve But Loves Gold

Wow, what a clueless article. Yes commodity markets can be manipulated but not just like paper. In a sound currency, you can't print more. The article claims Ron Paul wants to return to a gold standard, and that is not right. He wants gold and silver to be the currency, and for us to have competition in currencies. That is a huge difference.

Then the article goes on to talk about speculation in oil being the same as what would happen with gold. Here's news for you, without fiat currency printed for free and handed out to those connected to the central bank, there would be a lot less speculation. It's fiat currency that allows for huge speculation.....

Was this article included as an example of poor logic? Or was this just a hit piece on Dr. Paul?

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2545
Stoned

Or was this just a hit piece on Dr. Paul?

A hit piece.

Stoneleigh, interview.

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