Daily Digest 1/26 - A Look At The Gold Tree, What You Need To Know About The Petrodollar, Bird Flu Health Report

• Obama to Use Pension Funds of Ordinary Americans to Pay for Bank Mortgage “Settlement”
• Bill Gates on Using His Money to Save Lives and Fix U.S. Schools, and Steve Jobs
• Less Than Two Months Ahead Of The Greek D-Day, Rogoff Says "Europe Is Clearly Not Ready For A Greek Default"
• A Look At The Gold Tree: Where Gold Comes From And Where It Goes
• Detlev S. Schlichter, Paper Money Collapse
• Bottom Line: Federal Reserve Says No Rate Hikes Until At Least Late 2014
• City Controller Says Philly School District Must Cut $400,000 Per Day
• The Petrodollar, Iran, and Gold—What You Need to Know
• TITLECan Iran Survive Now That Europe Has Also Agreed to Boycott Its Oil?
• Obama Calls on Energy Companies to Disclose the Ingredients of Fracking Fluid
• Health Report: Bird Flu Threat
• Tokyo sees high quake probability, scientists warn

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Economy

Obama to Use Pension Funds of Ordinary Americans to Pay for Bank Mortgage “Settlement” (Ben Johnson)

...previous leaks have indicated that the bulk of the supposed settlement would come not in actual monies paid by the banks (the cash portion has been rumored at under $5 billion) but in credits given for mortgage modifications for principal modifications. There are numerous reasons why that stinks. The biggest is that servicers will be able to count modifying first mortgages that were securitized toward the total. Since one of the cardinal rules of finance is to use other people’s money rather than your own, this provision virtually guarantees that investor-owned mortgages will be the ones to be restructured. Why is this a bad idea? The banks are NOT required to write down the second mortgages that they have on their books. This reverses the contractual hierarchy that junior lien-holders take losses before senior lenders. So this deal amounts to a transfer from pension funds and other fixed income investors to the banks, at the Administration’s instigation."

Bill Gates on Using His Money to Save Lives and Fix U.S. Schools, and Steve Jobs (Dana T.)

After the Gates Foundation's vaccination efforts in India, that nation reported only one case of polio last year. And while the foundation promises to fight on against preventable diseases, the top focus of this year's letter is agriculture and Gates' belief that without technology, farmers could never feed the world's exploding population.

Less Than Two Months Ahead Of The Greek D-Day, Rogoff Says "Europe Is Clearly Not Ready For A Greek Default" (Doug)

Europe is "clearly unprepared for a Greek default", less than two months from the day when it very well may finally occur. He adds: "there's going to be an endgame to this and it's not going to be pretty... If you are just printing money and you are not making fundamental change you either lose money and you will have to recapitalize with the ECB or you will get inflation." And it gets worse: "it's not just Greece. You are going to see other restructurings before this is over." He ends with what we have been saying since mid-2011: "Once you set the precedent then say Portugal are going to say 'hey, look how much you gave Greece. How come we don't get the same?'."

A Look At The Gold Tree: Where Gold Comes From, And Where It Goes (David B.)

The Gold Tree info-graphic visualizes above-ground stock of gold, sources of gold broken down to continents and countries and uses of gold. The info-graphic pictures the different forms of gold investments – ranging from physical gold in the form of bullion gold to securities not backed by gold.

Detlev S. Schlichter, Paper Money Collapse (adam)

These highly controversial conclusions clash with the present consensus, which holds that elastic state money is superior to inflexible commodity money (such as a gold standard), and that expanding money is harmless or even beneficial for as long as inflation stays low.

Bottom Line: Federal Reserve Says No Rate Hikes Until At Least Late 2014 (Jeff B.)

Bernanke said the central bank’s ability to forecast that far out is limited, and that the Fed could adjust the time frame if economic conditions change. Still, he added, all signs suggest the Fed won’t change its record-low rate for nearly three years.

City Controller Says Philly School District Must Cut $400,000 Per Day (June C.)

"The controller's letter is further confirmation of the difficulties the district faces; those difficulties having been discussed by the School Reform Commission (SRC) last week. The SRC has the authority and the determination to correct the current course and intends to do so."

Energy

The Petrodollar, Iran, and Gold—What You Need to Know (woodman)

The short version of the story is that a 1970s deal cemented the US dollar as the only currency to buy and sell crude oil, and from that monopoly on the all-important oil trade the US dollar slowly but surely became the reserve currency for global trades in most commodities and goods. Massive demand for US dollars ensued, pushing the dollar's value up, up, and away. In addition, countries stored their excess US dollars savings in US Treasuries, giving the US government a vast pool of credit from which to draw.

Can Iran Survive Now That Europe Has Also Agreed to Boycott Its Oil? (James S.)

Iran sells 18 percent of its petroleum to Europe, and Greece, Italy and Spain are particularly dependent on it. Europe also sells Iran nearly $12 billion a year in goods, which likely will cease, since there will be no way for Iran to pay for these goods. Some in Europe worry that the muscular anti-Iran policy of the UK, France and Germany in northern Europe will worsen the economic crisis of southern Mediterranean countries such as Greece.

Obama Calls on Energy Companies to Disclose the Ingredients of Fracking Fluid (James S.)

Opponents of fracking note there've been more than 1,000 incidents of groundwater contamination tied to hydraulic fracturing and point to a video on the Internet of someone actually sparking a fireball in their kitchen sink presumably because of something tied to fracking. That's all fine and well and certainly there are some reports of livestock falling ill but is that any worse than any other practices associated with the extraction of natural resources? Is strip mining better? Oil? Coal? Natural gas is abundant and one of the cleanest forms of energy, the industry says, so what's the issue?

Environment

Health Report: Bird Flu Threat (TG)

Scientists in Europe and the US have created a highly transmissible form of the potentially deadly H5N1 bird flu virus. Laurie Garrett, a senior fellow for global health on the Council on Foreign Relations, talks about the implications of this research.

Tokyo sees high quake probability, scientists warn (Ben Johnson)

"Tokyo faces the possibility of being hit by a massive earthquake within the next four years, according to Japanese researchers.

The University of Tokyo's Earthquake Research Institute predicts there is a 70% probability that the capital's metropolitan area will experience a magnitude-7 quake within four years and a 98% probability within the next 30 years."

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