Daily Digest 1/30 - Export Land Model Analysis, China Bank Pledges Vigilance, Egypt Unrest Sparks Canal Concerns
- A Tangled Mess - Why Oil Mixes With Gold
- Davos: Two Worlds, Ready Or Not
- An Export Land Model Analysis for the USA-Part2
- Jim Rickards Podcast: Senior Managing Director for Market Intelligence at Omnis, Inc
- China Central Bank Pledges Vigilance
- Saudi Arabian Stocks Tumble Most in Eight Months as Egyptians Defy Curfew
- Tankers Gain As Egypt Unrest Sparks Concerns About Suez Canal
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The U.S. national debt of $14.1 trillion is at an unsustainable level, at more than $170 thousand per each of the over 81.6 million U.S. families. The U.S. Treasury, however, reports debt on a cash basis so it does not take into account unfunded obligations for entitlement programs such as Social Security, Medicare and Medicaid. According to Shadowstats.com, the total debt on a GAAP basis from 2002 to 2009 was on average 6.4x greater than the debt on a cash basis. Applying this same methodology equates to total national debt of close to $1.1 million per U.S. family today. To make matters worse, in 2009 nearly half of American households paid no federal income tax; so with only half of households paying taxes, the national debt burden on a GAAP basis could be over $2.0 million per tax-paying family. This is clearly unsustainable and likely past the point of no return.
Davos: Two Worlds, Ready Or Not (kelvinator)
Many of the people who control the world’s largest corporations are quite comfortable with the status quo post-financial crisis. This makes sense for them – and poses a major problem for the rest of us.The thinking here is fairly obvious. The CEOs who provide the bedrock of financial support for Davos have mostly done well in the past few years. For the nonfinancial sector, there was a major scare in 2008-09; the disruption of credit was a big shock and dire consequences were feared. And for leaders of the financial sector this was more than an awkward moment – they stood accused, including by fellow CEOs at Davos in previous years, of incompetence, greed, and excessively capturing the state.
An Export Land Model Analysis for the USA-Part2 (crash watcher)
In Part 1, I presented my best estimate Export Land Model analysis for the USA, based on my analysis of trends in petroleum production and consumption for the USA and its top ten import sources. In the article I laid out my explicit assumptions. Here, in Part 2, I examine some different possible future scenarios, based on alternative pessimistic and optimistic assumptions about the trends in petroleum production and consumption for the USA and it top ten import sources.
Jim has been a direct participant in many of the most significant financial events over the past 30 years including the 1981 release of hostages from Iran and was also the principal negotiator for the government sponsored bailout of LTCM. His clients include private investment funds, investment banks and government directorates in national security and defense. He is an advisor to the Committee on Foreign Investment in the United States and Support Group of the Director of National Intelligence and recently testified before Congress on the causes of the financial crisis.
Speaking to Dow Jones Newswires on the sidelines of meetings in Kyoto, Zhou Xiaochuan pointed out that Chinese price growth slowed slightly in December, but he signalled it had more room to climb. Rising consumer prices have prompted a series of monetary-tightening measures since the beginning of last year; the central bank has twice raised interest rates and seven times increased banks' reserve requirements.
Savola, whose Egyptian units include Afia International Co. Egypt and United Sugar Co. Egypt, fell the most in two years to 27 riyals. Halwani Bros. Co., a Saudi food processing company, tumbled 10 percent to 36 riyals. Egypt represented 32 percent of the Jeddah-based company’s revenues in 2009. “The market will probably remain negative until a clearer picture evolves,” said Fuad Aghabi, investment director at Ajeej Capital in Riyadh.
The Suez Canal is a key transit point for oil and fuel shipments from the Persian Gulf to the Western Hemisphere, and a closure there would mean ships would have to travel around the southern tip of Africa instead, adding thousands of miles to their journeys, and likely tightening shipping capacity. There doesn't appear to be any solid indication the canal is in danger of shutting down, but it's seen as a possibility as protestors rallied in the streets of Egypt for the fourth straight day against President Hosni Mubarak. Many tanker stocks had been weighed down recently by soft freight rates, so speculation about the canal may have attracted bargain hunters Friday.
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