Daily Digest

Daily Digest 12/27 - Home Prices Fell, UK Inflation, Deepwater Horizon's Final Hours

Monday, December 27, 2010, 11:00 AM
  • Home Prices Probably Fell, Baring Weak Link in Accelerating U.S. Recovery
  • Foreign Central Banks' US Debt Holdings Rise - Fed
  • The UK Inflation Genie is Out of the Bottle
  • Mauldin: Some Thoughts on Market Timing
  • Gold Advances as Investors Buy After Dip on China Rate Rise Boosts Appeal
  • Central Arkansas Growing Weary Of Relentless Tremors
  • Deepwater Horizon’s Final Hours

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Economy

Home Prices Probably Fell, Baring Weak Link in Accelerating U.S. Recovery (chris)



A wave of foreclosures waiting to reach the market means home prices will remain under pressure in 2011, representing a risk to household finances. Rising equity values and an improving job market will probably help offset the damage, ensuring that confidence and spending continue to climb. “The inventory overhang is so big, with foreclosures looming, it’ll take five years to absorb the supply,” said Paul Ballew, chief economist at Nationwide Mutual Insurance Co. in Columbus, Ohio. “The consumer is feeling better although there is still a high level of caution and anxiety.”

Foreign Central Banks' US Debt Holdings Rise - Fed (chris)



The Fed said its holdings of U.S. securities kept for overseas central banks rose $17.26 billion in the week ended Dec. 22 to stand at $3.358 trillion. The breakdown of custody holdings showed overseas central banks' holdings of Treasury debt rose by $13.08 billion to stand at $2.625 trillion.

The UK Inflation Genie Is Out Of The Bottle (solidswede)



November's national accounts, released last week, were shocking. Government spending last month was sharply up on the same month in 2009 – yes, up! British state borrowing is still escalating, with the national debt rising very quickly. Anyone who takes an intelligent interest in current affairs could be forgiven for inferring from the political rhetoric that the UK's fiscal squeeze is not only well under way but that the worst is actually behind us. If this was indeed your impression, you may want to pour yourself a large Yuletide sherry and possibly take refuge in another bowl of trifle. For the grim reality, as the latest figures show, is that Britain's fiscal squeeze hasn't even begun.

Mauldin: Some Thoughts on Market Timing (jrb)



I am neither a market timer nor the son of a market timer. I left my office in the Texas Rangers ballpark this year, and they went to the World Series. I bought Dallas Cowboys season tickets for the first time in 50 years, as they went down in flames. But I do know a few very good timers, and they are sending out warnings.  Today, we look at a few of these, as it might pay to hedge some of your equity portfolio as we go into the New Year.

Gold Advances as Investors Buy After Dip on China Rate Rise Boosts Appeal



Immediate-delivery gold gained 0.2 percent to $1,384.20 an ounce at 1:06 p.m. in Seoul, reversing an earlier loss of as much as 0.6 percent to $1,372.80. The price rose 0.4 percent last week, the first weekly gain in three. Gold for February delivery on the Comex in New York was 0.3 percent higher at $1,384.10 an ounce. The market was closed on Dec. 24. The People’s Bank of China increased key one-year lending and deposit rates by 25 basis points on Christmas Day. The change took effect yesterday.

Environment

Central Arkansas Growing Weary Of Relentless Tremors (chris)



Although drilling for natural gas has been ruled out as a cause for the quakes, experts want to continue looking at salt water disposal wells, said Scott Ausbrooks, geohazards supervisor for the Geological Survey. Disposal wells occur when drilling waster is injected back into the earth after drilling.

Deepwater Horizon’s Final Hours (chris)



Nearly 400 feet long, the Horizon had formidable and redundant defenses against even the worst blowout. It was equipped to divert surging oil and gas safely away from the rig. It had devices to quickly seal off a well blowout or to break free from it. It had systems to prevent gas from exploding and sophisticated alarms that would quickly warn the crew at the slightest trace of gas. The crew itself routinely practiced responding to alarms, fires and blowouts, and it was blessed with experienced leaders who clearly cared about safety. On paper, experts and investigators agree, the Deepwater Horizon should have weathered this blowout. This is the story of how and why it didn’t.

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."

16 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

"Now that all the Christmas gifts have been unwrapped, it's time to pay the bills.

That's the dilemma in City Hall, too.

A report from Controller John Liu shows New York is carrying $69.5 billion in debt - the highest level ever.

That breaks down to $8,281 for every man, woman and child in the city, 7% higher than a year ago.

New York, like most governments, runs up those huge sums on long-term projects like parks and bridges and schools - as well as big tech projects like CityTime - then pays them back over time with interest.

"The credit card bills are coming due," Liu said.

Many of those projects are worthy, but Mayor Bloomberg has plowed the taxpayers' money into them like never before - even as he plans to lay off workers and close fire companies at night.

"There always has to be a balance. We're trying to strike that," said Bloomberg spokesman Marc La Vorgna. "We do haveto deal with the growing cost of debt service."

When Bloomberg took office, the city's annual bill to pay off the debt was $3 billion. This year, it's $5.4 billion - and it's projected to rise to $7 billion in three years."

"The global copper market is estimated to have a 550,000-metric ton deficit next year as falling stockpiles push prices to $5 a pound, Macquarie Bank Ltd. said in a research report today.

The forecast was based on an assumption of 4 percent mine supply disruption, or 720,000 tons, with global stocks falling to below three weeks of world consumption, according to the report. It also excluded material that may be held by exchange- traded products launched by BlackRock Inc. and JPMorgan Chase & Co., it said. "

  • Other news, headlines and opinion:

Deutsche Bank: Portugal likely to seek bailout

Japan's Budget May Fail to Spur Growth While Debt Stays High

Massachusetts Gov. Deval Patrick prepares $1.5 billion in cuts to balance budget

Bailed-Out Banks Slip Toward Failure

China ratings agency rattles cages of Western rivals

4 of 7 state museums targeted for closure (Nevada)

Ebb of stimulus funding could hit Texas workers hard

Investors Attempting to Dump Bonds Push Bid Index Near Record: Muni Credit

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

This is interesting...looks like the idea of a liquid fuels emergency is at least somewhere on the national radar screen of Australia, even if not yet in the dead center:

Oil shortages could turn outer suburbs into slums

December 28, 2010

AUSTRALIA will be forced to rely on huge quantities of imported oil unless it radically overhauls its transport and urban policies, according to a study by the Planning Institute of Australia.

It warns that without urgent national action the trade deficit will spiral and many outer suburbs will become slums.

The study comprises a series of papers in the latest edition of the journal Australian Planner. One of the authors, Professor Peter Newman of Curtin University, who is also an adviser to the federal government, said the most compelling finding was that ''urban sprawl is finished''. ''If we continue to roll out new land [releases] and suburbs that are car dependent, they will become the slums of the future,'' he said.

Professor Newman, who serves on the board of the federal agency Infrastructure Australia, has begun briefing the Council of Australian Governments on the need to test all future urban development against the potential for an oil shortage.

Australia hit peak oil in 2000 and, perhaps not so coincidentally, joined the "coalition of the willing" in 2002 to attack Iraq on what were obviously trumped up charges.

If you look at the entire motley group that banded together under the US to attack Iraq, now the brightest star in the oil universe, they might as well have been named the "coalition of the already past peak oil."

The chance of that being a pure coincidence is vanishingly small.

At any rate, it's good to see that the idea that peak oil and residential/urban planning are being connected in some parts of the world.  In the US?  Not so much.  Not yet, at any rate.  Which is really too bad because it means the eventual adjustment will be far more difficult than it needs to be.

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

Treasury sell-off continues

Treasury prices picked up where they left off before Christmas: heading lower.

Investors sent bond prices down just a bit Monday, following a surprise interest rate hike in China and ahead of a $99 billion auction of long-term government notes scheduled for this week.

The yield on the benchmark 10-year note rose to 3.4%. The 30-year bond yield held steady at 4.47%.

http://money.cnn.com/2010/12/27/markets/bondcenter/treasuries/index.htm

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

cmartenson wrote:

At any rate, it's good to see that the idea that peak oil and residential/urban planning are being connected in some parts of the world.  In the US?  Not so much.  Not yet, at any rate.  Which is really too bad because it means the eventual adjustment will be far more difficult than it needs to be.

We are way too busy green-washing everything, and finding ways to use green consumerism to make money.  My town, by becoming a "MA Green Community", got three free Big Belly Solar trash cans.  So, instead of reducing our trash, or using more low-tech trash cans, we have these complex machines to compact our trash ostensibly to save us money and the planet from carbon.  I wonder how much carbon it took to create and ship them?  Many of those who mean to do well by the planet still think we can consume our way out of this mess.

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200 Years of Human Life Expectancy and Prosperity.

Very interesting and enlightening animation of modern civilizational advances since 1809, plotted on a graph:
http://www.flixxy.com/200-countries-200-years-4-minutes.htm (embedded below)

Y-axis is life expectancy
X-axis is income/prosperity
Animated in time over the course of 200 years (in a kind of "Z-axis").

From BBC 4: The Joy of Stats
with Hans Rosling
http://www.bbc.co.uk/programmes/b00wgq0l

Now, how much of this was from fossil  fueled prosperity that provides an abundance of energy and food - meaning, what kind of chart will we see in the next 200 years?

Poet

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

Thanks Poet

Awesome presentation

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

cmartenson wrote:

If you look at the entire motley group that banded together under the US to attack Iraq, now the brightest star in the oil universe, they might as well have been named the "coalition of the already past peak oil."

The chance of that being a pure coincidence is vanishingly small.

I think that you give the US too much credit by implying that we went after Iraqi oil.  We clearly have not taken any steps to secure their oil production for our own use. The Iraqis are busy signing contracts with the rest of the world. I favor the explanation that our banker oligarchs didn't know peak oil from shinola, but felt threatened by Saddam's announced intent to cease using dollars to trade oil. If the dollar ever loses its peg to middle east oil, its days as the world reserve currency will end. That would not only harm the bankers, it would destroy our magic check book and force the US to live within its means. Life as we have known it would end in great hardship.

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

meant to post this yesterday...

As Commodity Prices Rise, Concentration Of Ownership Questioned - The Wall Street Journal is reporting that a single holder has bought 80% to 90% of copper in the London Metal Exchange’s warehouses. As we told you earlier, J.P. Morgan (JPM) was thought to hold 50% to 80% of the exchange’s copper.  But prices of copper hit record levels yesterday. The iShares Silver ETF (SLV) closed at $28.64 a share and has gained more than 73% so far this year. As commodity prices soar, concern is spreading about concentrations in other metals, as well. One trader holds as much as 90% of the LME’s aluminum, according to the WSJ. In the nickel, zinc and aluminum alloy markets, single traders own between 50% to 80% of those metals, according to filings with the exchange. Up to half of all tin held at the LME is also reported to be controlled by a single trader.

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

Poet,

Awesome video. I'm also wondering about the conclusion that "we all can make it" to the upper realms of the chart. In a limitless world, then yes. But, alas we are already encountering limits in almost everything that brought the crazy spurt of prosperity.

SS

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

Poet wrote:

From BBC 4: The Joy of Stats
with Hans Rosling
http://www.bbc.co.uk/programmes/b00wgq0l

Now, how much of this was from fossil  fueled prosperity that provides an abundance of energy and food - meaning, what kind of chart will we see in the next 200 years?

Poet

Great video, Poet, and great question.   You can't help but wonder 'what comes next?" (continued journey along projected path up and over, or abrupt contraction back down to where things started)  given our current circumstances and dynamically changing heading.

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

Damnthematrix's picture
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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

Johnny Oxygen wrote:

Thanks Poet

Awesome presentation

Except for ONE GLARING OMISSION:  not once does he mention that it was all due to cheap and abundant fossil fuels, and then he implies that the future holds more of the same only better..

BTW, did anyone notice China's "Great Leap Forward" about half way into the presentation?  Classic case of food and resources shortage, this one caused by the insane Moa Zedong, collapsing BOTH the age expectancy and wealth....

Mike

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

Damnthematrix wrote:

BTW, did anyone notice China's "Great Leap Forward" about half way into the presentation?  Classic case of food and resources shortage, this one caused by the insane Moa Zedong, collapsing BOTH the age expectancy and wealth....

Thanks for pointing this out and good point! Makes you wonder what will happen globally this time around due to "mismanagement"...

Samuel

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

pinecarr wrote:

Great video, Poet, and great question.   You can't help but wonder 'what comes next?" (continued journey along projected path up and over, or abrupt contraction back down to where things started)  given our current circumstances and dynamically changing heading.

I think Hans has possibly mistaken correlation for causation.

While I doubt he's that ignorant or sloppy, I assume he's using income as a shorthand proxy for clean water, abundant food, access to health care and other such life prolonging goodies.

That's OK, when trying to compress a lot of information into just 4 minutes, but let's be clear; income alone does not dictate lifespan.

I'll give you all the income in the world but it must be spent from a house built on top of the Chernobyl sarcophagus...

More to the point, let's have all the dollar based income anybody could want but begin withdrawing world energy supplies at 4% per year and then see what happens.  I suspect many of Hans' bubbles will begin an almost perfectly symmetrical retreat. 

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Re: Daily Digest 12/27 - Home Prices Fell, UK Inflation, ...

^ Especially since there are people on other not-to-be-named sites that insist shale and 2T barrels of oil in the US will save us all.  Damned be clean water and costs.

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