Daily Digest

Daily Digest 2/16 - The Way Greeks Live Now, Bad Week For Freedom, The Petro Business Cycle

Thursday, February 16, 2012, 11:46 AM
  • Chris Whalen: JPM and the Banks Have the MF Global Money And the Status Quo Is Protecting Them
  • Bill Black: How Fraud Leads to Recurrent, Intensifying Financial Crises, and Steps We Must Take To Stop that Cycle
  • The Way Greeks Live Now
  • Bad Week For Freedom
  • China Reduces Holdings of U.S. Treasuries to Lowest Level Since June 2010
  • Hillary Clinton Is Said to Rival Summers as Contender to Lead World Bank
  • Calls to break US monopoly on World Bank start as Zoellick steps down
  • Ritholtz Has the Main Theme Right, But Gets a Few Specifics Wrong About MF Global
  • Desperately seeking Americans for manufacturing jobs
  • The Petro Business Cycle
  • Why Not Thorium?
  • With Friends Like Moscow, Who Needs Venezuela's Oil?
  • Bumpy Ride Ahead: Gas Prices May Soon Hit $4 a Gallon
  • Regenerative Agriculture: Feeding the Future
  • Global suicide 2020: We can’t feed 10 billion

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Economy

Chris Whalen: JPM and the Banks Have the MF Global Money And the Status Quo Is Protecting Them (June C.)

But in quiet whispers, the Street knows the truth, that the money was stolen, not once but twice. And even these hard cases are shocked. The first time by MF Global and from the very top, and then afterwards in the courts and the regulatory bodies that used the bankruptcy to take the funds from the customers and give them to the creditors.

Bill Black: How Fraud Leads to Recurrent, Intensifying Financial Crises, and Steps We Must Take To Stop that Cycle (Jaime)

A borrower would come in to the bank seeking a $1m loan for a project such as a strip mall. The S&L would instead lend the borrower $80m on condition that $78m of that loan would be used to buy a project that the S&L had previously financed and which was not fiscally viable. The borrower would keep $2m and would vastly overpay ($78m) for the failing investment. The lender would often have an "equity kicker", meaning that the lender would get 50% of the profit at the time of a successful sale. The result would be the transformation of a real economic loss into a fictional gain. "When these frauds are dealt lemons, they don't make lemonade; they make Dom Perignon."

The Way Greeks Live Now (John M.)

At some point, I asked Hadjigeorgiou how the crisis was affecting him personally. Life was getting difficult, he acknowledged. Then, prodded a bit more, he mentioned that he had not been paid by his newspaper, the major left-leaning daily, in four months. Nor had any of his colleagues at the paper. Yet despite the lack of paychecks, few if any employees had left the paper (which has since filed for bankruptcy), for the good reason that there was nowhere else to go.

Bad Week For Freedom (JimQ)

Jon Corzine, a card carrying member of the ruling elite .01%, remains free to roam one of his five palatial estates after stealing $1.6 billion from the accounts of farmers, widows, and thousands of other “clients” of MF Global. In his spare time he raises money for Obama’s re-election campaign. The Federal government, Federal courts and Wall Street banking cabal have circled the wagons and declared the money just vaporized, even though it sits in Jamie Dimon’s vaults at J.P. Morgan.

China Reduces Holdings of U.S. Treasuries to Lowest Level Since June 2010 (pinecarr)

“We continue to see Chinese Treasury holdings trending lower as they are acting on their desire for diversification and as they may get more involved in the situation in Europe,” said Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut.

Hillary Clinton Is Said to Rival Summers as Contender to Lead World Bank (pinecarr)

Secretary of State Hillary Clinton and former White House economic adviser Lawrence Summers are two leading candidates to succeed World Bank President Robert Zoellick when he leaves at the end of June, according to two people familiar with Obama administration discussions.

While Summers has expressed interest in the position and has supporters inside the administration, the position would be Clinton’s if she sought it, according to the people, who spoke on condition of anonymity about the private conversations.

Calls to break US monopoly on World Bank start as Zoellick steps down (pinecarr)

The old alliance of Europe and America faces a huge row with the rest of the world over the identity of the next head of the World Bank, after president Robert Zoellick said on Wednesday he is to leave his post in June.

While his departure had been widely expected, the news kicks off the process of finding a new leader, who has traditionally been an American under an informal agreement dating to the founding of the bank 68 years ago. Speculation has focused on either US Secretary of State Hillary Clinton - who is also rumoured to have an eye on a run for the White House - or former Treasury secretary Larry Summers as Zoellick's likely successor. When Dominique Strauss-Kahn was succeeded by his countrywoman Christine Lagarde at the International Monetary Fund last year, it was widely rumoured that America had agreed to let Europe keep its traditional grip on the IMF – in the face of calls for a candidate from an emerging country – as long as France and other European governments backed Clinton as the new boss of the World Bank when the job came up.

Ritholtz Has the Main Theme Right, But Gets a Few Specifics Wrong About MF Global (June C.)

"The esteemed former Fed Chairman, Paul Volcker, introduced a very simple regulatory concept that bears his name: The Volcker Rule. It was part of the Dodd-Frank regulatory reforms passed after the financial crisis of 2008-09.

There has been enormous pushback against what should be a simple piece of prophylactic rules on proprietary trading by depository banks (see this Jamie Dimon commentary as an example). Why? The profits of speculation goes to banks, driving bonuses and compensation; but the ultimate risk of loss lay with the FDIC and taxpayer. If the banks blow up, someone else besides the banker pays."

Energy

Desperately Seeking Americans For Manufacturing Jobs (Steve)

This article shows how machinists are in short supply. It doesn’t take that much training, pays reasonably well at the moment, and could be a quite useful skill in a world where the ability to figure out how to create a replacement part that is no longer available from the global supply chain or create a simple machine from scratch will be in high demand. Small machine shops might also be able to run on locally available electricity (hydropower, biogas, solar panels for the peak demand of the day shift).

The Petro Business Cycle (adam)

If you want to know where the economy is heading, watch the price of oil. Oil is used to power over 90% of our transportation fleet from land, sea, to air. It is responsible for 95% of the production of all goods found in stores. It is also directly linked to 95% of our food products, from the fertilizer used in the planting cycle to the diesel used in tractors to the trucks that transport the food to processing plants and grocery stores. Look behind any consumer item, building material, to medical device and you will find it linked to oil in some way. Plain and simple, we live in a petroleum based society. It is the common thread behind all industrial/modern economies. Without oil our present way of life would cease to exist.

Why Not Thorium? (Retha A.)

So why on earth are we using uranium? As you may recall, research into the mechanization of nuclear reactions was initially driven not by the desire to make energy, but by the desire to make bombs. The $2-billion Manhattan Project that produced the atomic bomb sparked a worldwide surge in nuclear research, most of it funded by governments embroiled in the Cold War. And here we come to it: Thorium reactors do not produce plutonium, which is what you need to make a nuke.

With Friends Like Moscow, Who Needs Venezuela's Oil? (James S.)

When Iranian President Mahmoud Ahmadinejad toured Latin America last month, he said his Western adversaries should no longer consider the region their "back yard." Before he arrived, Rep. Ileana Ros-Lehtinen, R-Fla., chairwoman of the U.S. House Foreign Affairs Committee, said Ahmadinejad's visit was a "tour of tyrants," a tour that included talks with the likes of Venezuela's Hugo Chavez and the Castro brothers in Cuba. So why are there no complaints about Moscow's ambitions in the "back yard" of the United States?

Bumpy Ride Ahead: Gas Prices May Soon Hit $4 a Gallon (ScubaRoo)

"I think it's going to be a chaotic spring," says Tom Kloza of the Oil Price Information Service. He expects average prices to peak at $4.05, though he and other industry trackers say prices could be sharply higher in some markets.

Environment

Regenerative Agriculture: Feeding the Future (James S.)

The scale of the transition may be compared with other milestone transitions throughout human history, such as the hunter-gatherers becoming farmers, and then modern industrial societies. It is the latter that are under threat and unsustainable, and a compromise devolution to a more localised collective of small communities (pods) is required, supplied by local farms and infrastructure with rail links between them for essential movement of goods and people. The maintenance of the Internet and electronic communications would seem desirable since ideas and knowledge can be transmitted from pod to pod and between countries and continents.

Global suicide 2020: We can’t feed 10 billion (Retha A.)

Yes, the planet’s “carrying capacity” cannot feed 10 billion people. So that’s a constraint on known research solutions. Grantham concludes, “as the population continues to grow, we will be stressed by recurrent shortages of hydrocarbons, metals, water, and, especially, fertilizer. Our global agriculture, though, will clearly bear the greatest stresses.”

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."

6 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2690
saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2690
Spain haunted by ghost towns built during boom years

Empty: Sesena, a 45-minute drive from Madrid, is a ghost town as the Spanish economy continues to crash

Empty: Sesena, a 45-minute drive from Madrid, is a ghost town as the Spanish economy continues to crash

Phantom: Landscaped areas, which were due to be constructed on, lie vacant on the outskirts of ghost town Sesena as the Spanish housing crisis continues to take its hold

Phantom: Landscaped areas, which were due to be constructed on, lie vacant on the outskirts of ghost town Sesena as the Spanish housing crisis continues to take its hold

Alone: A single jogger runs past empty apartment blocks in Sesena, where 30,000 people were due to live

Alone: A single jogger runs past empty apartment blocks in Sesena, where 30,000 people were due to live

 

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 376
We're Spending Less On Debt Payments Than The '90s

America Is Spending Less On Debt Payments Than It Was In The '90s: (3 charts) This is kind of remarkable. America is currently paying less on an annual basis to finance its debt than it was paying in the '90s. 

And as a percentage of GDP, we're REALLY getting off cheap these days.

chart

 

Bill Hicks's picture
Bill Hicks
Status: Bronze Member (Offline)
Joined: Jul 3 2011
Posts: 34
Flights By U.S. Airlines Hit 10-Year Low

http://billhicksisdead.blogspot.com/2012/02/flights-by-us-airlines-hit-10-year-low.html

The story:

U.S. airlines in 2011 operated the fewest number of flights since the hijack attacks on New York and Washington depressed air travel and accelerated the industry's worst-ever financial downturn, government figures on Tuesday showed.



The Transportation Department said major airlines, their chief low-cost competitors and the biggest regional carriers, recorded 6.08 million departures last year. Takeoffs were not that low since 2002, when they totaled 5.27 million.


And my reaction:

Cutting flights are they? There is only one reason why they would do that...air travel is on the wane and they can no longer make money with the high price of aviation fuel. The past half-century or so of routine middle class air travel is quickly drawing to a close. In not too many years, it will be exclusively the privilege of the wealthy...before that inevitable day when it becomes just another forlorn and rapidly fading memory from the all-to-brief age of petroleum.

ckotrainer.com's picture
ckotrainer.com
Status: Member (Offline)
Joined: Feb 13 2012
Posts: 2
Interesting article

Heres a pretty, depressing, but good interesting article

http://theeconomiccollapseblog.com/archives/many-of-you-will-not-believe...

Thanks

Mike

www.ckotrainer.com

Time2help's picture
Time2help
Status: Gold Member (Offline)
Joined: Jun 9 2011
Posts: 488

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