Daily Digest

Daily Digest 12/13 - Advice From The 1%, What's Next For UK Inflation, Rare Earth Shortages A Ticking Time Bomb?

Tuesday, December 13, 2011, 10:46 AM
  • Michael Lewis: Advice From the 1%: Lever Up, Drop Out
  • Suspend Habeas Corpus And Enact Martial Law?
  • Jim Rogers: I’m Being Forced To Buy More Real Assets Like Gold and Silver
  • Chart of the Day: Gold Not Living Up To Safe Haven Status
  • Six Tail Scenarios That Deutsche Bank Are Watching For Next Year
  • UK Inflation: What's Next?
  • India Embraces Solar Power, Says Price Will Equal Thermal Power in Five Years
  • Rare Earth Shortages - A Ticking Timebomb for Renewables?

Learn how to protect your wealth against the Three E forces using our 'What Should I Do?' guide

Economy

Michael Lewis: Advice From the 1%: Lever Up, Drop Out (cmartenson)

We have identified two looming threats:

The first is the shifting relationship between ambitious young people and money. There’s a reason the Lower 99 currently lack leadership: Anyone with the ability to organize large numbers of unsuccessful people has been diverted into Wall Street jobs, mainly in the analyst programs at Morgan Stanley and Goldman Sachs. Those jobs no longer exist, at least not in the quantities sufficient to distract an entire generation from examining the meaning of their lives.

Suspend Habeas Corpus And Enact Martial Law? (June C.)

President Obama is threatening to veto the legislation but not so much for its suspension of habeas corpus. Rather, the bill is objectionable to the president because it would prevent the government from transferring terrorism suspects from the prison at Guantanamo Bay, Cuba, to installations in the United States, even for trial.

Jim Rogers: I’m Being Forced To Buy More Real Assets Like Gold and Silver (June C.)

When GoldSeek Radio host Chris Waltzek asked Rogers whether he’s buying commodities right now, the 69-year-old commodities trader said, “Well, not at the moment, but I’m seriously considering it given what’s happening in the world . . . They [central banks] are going to loosen up even more on money. That’s not good for the world, not good at all, but that’s all they know how to do. So, I’m contemplating, being forced to buy more real assets.”

Chart of the Day: Gold Not Living Up To Safe Haven Status (ScubaRoo)

Though you wouldn't know it from Commerzbank's historical chart (above), the price of gold is falling, this morning dropping to a seven-week low of $1,650 a troy ounce. This is partly attributable to US dollar strength, as well as the disappointment of last week’s eurozone summit and subsequent warnings over a wave of credit rating downgrades. And when market liquidity is stressed, gold tends to get sold off in order to raise cash.

Six Tail Scenarios That Deutsche Bank Are Watching For Next Year (pinecarr)

Jim Reid and his team from Deutsche have produced another magnificent compendium of information and prognostication in their 2012 Credit Outlook and while their up-in-quality preference (non-financial) may not be earth-shattering strategically, their timing view is of note. Instead of viewing the looming refi-ganza among European sovereigns and financials in H1 2012 as a reason for doom and gloom, they see it as the necessary evil to drive the ECB into the markets in size only for the latter half of the year to disappoint significantly as the reality of the underlying problems rear their ugly head once more. The down-then-up-then-worse-down perspective on markets for next year hardly sounds optimistic but it is the following six scenarios away from European woes that keep them up at night. From the positivity of a US housing rebound or Election year cycle to much more extreme downside risks such as geo-political concerns and non-European sovereign risks, their views on China, QE-evolution and Inflation concerns are noteworthy.

UK Inflation: What's Next? (ScubaRoo)

‘Given the sharper declines in most world food price indices in recent months, this holds out the prospect of further significant declines in the UK rate in the months ahead.

Energy

India Embraces Solar Power, Says Price Will Equal Thermal Power in Five Years (James S.)

Entegra Ltd. is disputing New Delhi’s claims of sluggish performance, with its Chairman Mukul S. Kasliwal commenting that his firm faced problems raising financing for its $38 million development but that the company expects to complete the Rajasthan facility plant by its 2013 deadline. Shifting responsibility for delays to the Indian government, Kasliwal commented in an interview, “We haven’t started because we’re not going to do something that doesn’t make sense financially. Had we been allowed to function as an SPV (special purpose vehicle), then we would’ve finished financing long ago.”

Rare Earth Shortages - A Ticking Timebomb for Renewables? (James S.)

Guttman added that two ways that automotive manufacturers expect to meet tightening emission regulations are electric vehicles and reducing vehicle weight, and rare earth metals are required to construct batteries of the right cost, weight and size.

“Scarce supply and the associated price implications could make it more difficult for [manufacturers] to keep pushing emissions down cost effectively,” he said.

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

Tall's picture
Tall
Status: Gold Member (Offline)
Joined: Feb 18 2010
Posts: 290
Child homelessness up 33% in 3 years

One in 45 children in the USA — 1.6 million children — were living on the street, in homeless shelters or motels, or doubled up with other families last year, according to the National Center on Family Homelessness.

http://www.usatoday.com/news/nation/story/2011-12-12/homeless-children-increase/51851146/1?loc=interstitialskip

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2813
Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1844
Aunt Midge Not Dying In Hospice Reveals $14B Market

Hospice care for seniors who shouldn't be in hospice care. Milking the government cow...

Aunt Midge Not Dying In Hospice Reveals $14B Market (December 5, 2011)
"Hospice care, once chiefly a charitable cause, has become a growth industry, with $14 billion in revenues, 1,800 for-profit providers and a base of Medicare-covered patients that doubled to 1.1 million from 2000 to 2009. Compensation based on enrollment numbers, pay to nursing- home doctors who double as hospice medical directors, and gifts to the nursing facilities have helped fuel the boom, according to an examination of 1,000 pages of court documents and interviews with more than 45 current and former hospice employees, patients and family members."
http://www.bloomberg.com/news/2011-12-06/hospice-care-revealed-as-14-bil...

Poet

heffe's picture
heffe
Status: Bronze Member (Offline)
Joined: Dec 26 2009
Posts: 95
Homeless children via artificial scarcity

Tall wrote:

One in 45 children in the USA — 1.6 million children — were living on the street, in homeless shelters or motels, or doubled up with other families last year, according to the National Center on Family Homelessness.

http://www.usatoday.com/news/nation/story/2011-12-12/homeless-children-increase/51851146/1?loc=interstitialskip

What I find especially sad about this is that there is about 4-5 times the amount of vacant homes than homeless in the USA. 

Approx 4-5 million homeless in the US, approx. 19-20 million vacant homes. Market economics require scarcity to create value, thus restrict access to otherwise abundant resources for sake of maintaining an outdated economic model. At the same time millions are denied housing, contractors etc continue building more. The most bizarre thought delusion in all human history, without a doubt.

As Bernard Lieter once said "We can produce more than enough food to feed the world, but not enough money to pay for it all. The end result is that we fight each other."

I know no one here believes so, but open source, unrestricted access will reduce consumption, increase standards, reduce crime, and increase everyone's quality of life. Something called the four fold affect; increase access upto four times while reducing consumption. Seems backwards but lest you forget, most of the truths we've realized in the past centuries were backwards to millennia of beliefs (geocentric universe, flight, human ancestry, etc)  I think the next belief to be transcended is the belief in restricted access, force labor monetary market economics.

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2490
Michael Lewis, Boomerang Book Review, and German Bankers

I'm listening to Michael Lewis' latest....Boomerang, and I really like the perspective it offers on how different cultures reacted to the credit bubble of the 2002-2007. I was really surprised to learn that the dumbest of the "dumb money" during this period were in fact the German Banks.

For a country that showed such great financial discipline and didn't participate in the credit bubble in the mid 2000's, their bankers made one stupid bet after another on the international scene. What is worse, their bankers barely made any personal profitis from their gambles when compared to their Wall Street counterparts, but were actually prosecuted for their crimes post-crash.

A couple more take-aways from the stories in this book:

  • The euro never really had a chance, as there are too many cultural differences in this monetary union.
  • Kyle Bass wants your nickels.
  • There are so many ways to screw oneself with cheap credit.
  • Ireland bailed out its banks, even though they posed no systemic risk to the country, (until the taxpayer had to bail them out, that is).
  • The corruption in Greece makes Wall Street look like boy scouts.
  • Michael Lewis can make even the dullest subjects entertaining.

Best...Jeff

Matt Holbert's picture
Matt Holbert
Status: Bronze Member (Offline)
Joined: Oct 3 2008
Posts: 43
Lots of room for improvement...

I know no one here believes so...

There are a few here who are willing to think outside of the box. The following are excerpts from The Master and His Emissary: The Divided Brain and the Making of the Western World -- a book that I was directed to by a CM member!:

In Eric Fromm's study On Disobedience, he describes modern man as homo consumens: concerned with things more than people, property more than life, capital more than work. He sees this man as obsessed with the structure of things, and calls him 'organisation man', flourishing, if that is the right word, as much under the bureaucracy of communism as under capitalism. There is a close relationship between the mentality that results in bureaucratic organisation  and the mentality of capitalism. Socialism and capitalism are both essentially materialist, just different ways of approaching the lifeless world of matter and deciding how to share the spoils. To that extent one might say their antipathy represents little more than a farmyard scrap between two dogs over a bone....[p.401]

People in the West characteristically over-estimate their abilities, exaggerate their capacity to control essentially uncontrollable events, and hold over-optimistic views of the future. In fact, so much does our happiness depend on such illusions, that, in the West, lacking them is even correlated with psychiatric problems. [p.456]

In a famous passage [G.E.] Lessing wrote:

The true value of man is not determined by his possession, supposed or real, of Truth, but rather by his sincere exertion to get to what lies behind the Truth. It is not possession of the Truth, but rather pursuit of Truth by which he extends his powers and in which his ever-growing perfectibility is to be found. [p.461]

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 2770
JAG

Here's another dose of Bass. 

http://www.zerohedge.com/news/neutron-bomb-capital-calculations-and-kyle-bass-refresher

I became a fan of Lewis' with Money Ball.  You're right, a great writer.  BTW, I thought the section on Iceland the most entertaining and perhaps the most instructive.

Doug

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2490
Doug wrote: Here's another

Doug wrote:

Here's another dose of Bass. 

http://www.zerohedge.com/news/neutron-bomb-capital-calculations-and-kyle-bass-refresher

I became a fan of Lewis' with Money Ball.  You're right, a great writer.  BTW, I thought the section on Iceland the most entertaining and perhaps the most instructive.

Doug

Thanks Doug,

Great interview, but they cut him off, darn it. I look at Bass as what Dr.M would be like if he ran a hedge fund instead of a website.

I would love to see Bass' 40,000 ft2 bunker/fort/ranch house in the Hill Country and all its toys. 

You are right about the Iceland story. I left it out because I couldn't begin to describe it.

I enjoyed Moneyball as well, and I'm not a fan of baseball like you. The value-investing approach to filling out a baseball team's roster is a great story. Hope the movie does the story justice.

Best....Jeff

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2535
The Master and his Emissary.

In a famous passage [G.E.] Lessing wrote:

The true value of man is not determined by his possession, supposed or real, of Truth, but rather by his sincere exertion to get to what lies behind the Truth. It is not possession of the Truth, but rather pursuit of Truth by which he extends his powers and in which his ever-growing perfectibility is to be found. [p.461]

Here is a taste for those who lack the fortitude to read the whole book.

http://www.youtube.com/watch?feature=player_detailpage&v=dFs9WO2B8uI

The book has allowed me to understand that I have two brains and am aware of when I am using each. Before this understanding I was forever confusing the map with the terrain, the model with reality. I now lead a richer life.

If the forum will allow me an indulgence, In the Gospel according to Thomas (Doubting Thomas) Christ said "Bring forth that which is within you. If you bring forth that which is within you what you bring forth will save you. If you do not have that which is within you, what you do not have will destroy you."

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 2770
I look at Bass as what Dr.M would be like if he ran a hedge fund

I can't quite picture Dr. M. charging around the countryside in a Hummer tricked out with James Bond type accessories, but perhaps I misjudge him.

Doug

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