Daily Digest

Daily Digest 3/27 - Why Young Americans Aren't Buying Cars, Tax vs. Penalty, Japan's Final Reactor To Close In May

Tuesday, March 27, 2012, 9:57 AM
  • Why Don't Young Americans Buy Cars?
  • Countries 'Hoarding' Crude Oil, Say Analysts
  • IRS Audit Rate Nears 30% for Those Making $10 Million and Up
  • Can This Man Save the American Economy?
  • Financial Review Team Declares Emergency For Detroit; Agreement Can Avert Takeover In 10 Days
  • You Say Tax, I Say Penalty
  • Japan's Final Nuclear Reactor to Close in May
  • Geopolitics Informs Gaza's Energy Crisis 

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Economy

Why Don't Young Americans Buy Cars? (Ben Johnson)

This week, the New York Times pulled back the curtain on General Motors' recent, slightly bewildered efforts to connect with the Millennials -- that giant generational cohort born in the 1980s and 1990s whose growing consumer power is reshaping the way corporate America markets its wares. Unfortunately for car companies, today's teens and twenty-somethings don't seem all that interested in buying a set of wheels. They're not even particularly keen on driving.

The Times notes that less than half of potential drivers age 19 or younger had a license in 2008, down from nearly two-thirds in 1998. The fraction of 20-to-24-year-olds with a license has also dropped. And according to CNW research, adults between the ages of 21 and 34 buy just 27 percent of all new vehicles sold in America, a far cry from the peak of 38 percent in 1985.

Countries 'Hoarding' Crude Oil, Say Analysts (video, Jeff B.)

Across the Atlantic, President Obama is facing mounting criticism over sharp rises in the cost of gasoline.

The main reason for higher prices at the pump is the rising cost of crude oil on the global market.

IRS Audit Rate Nears 30% for Those Making $10 Million and Up (jdargis)

“We will take a unified look at the entire web of business entities controlled by a high-wealth individual, which will enable us to better assess the risk such arrangements pose to tax compliance and the integrity of our tax system,” IRS Commissioner Douglas Shulman said in a December 2009 speech. “We want to better understand the entire economic picture of the enterprise controlled by the wealthy individual and to assess the tax compliance of that overall enterprise.”

Can This Man Save the American Economy? (jdargis)

When faced with a recession and high unemployment, advanced economies ask the central bank to cut interest rates. Lower rates spur interest-sensitive purchases, primarily in vehicles for both consumer and business-investment purposes, and in physical structures like housing, offices, warehouses, and storefronts. This helps reduce unemployment in highly cyclical sectors and helps stabilize the economy by bolstering incomes. Conversely, if inflation is too high, the central bank does the reverse and raises interest rates. But economists have long observed that the short-term rates the Fed controls can’t really impact decisions about longer-term investment and durable goods. The relevant issue for those decisions is longer-term interest rates.

Financial Review Team Declares Emergency For Detroit; Agreement Can Avert Takeover In 10 Days (Phil H.)

Dillon said the financial review team, in a recommendation letter to Snyder, said they preferred to see the city and state enter into a consent agreement. He said there are three steps left in the process within the next 10 days: Mayor Dave Bing would have to accept the agreement, City Council would also have to vote to accept it and the governor would have to sign off as well.

You Say Tax, I Say Penalty (jdargis)

Long describes the Anti-Injunction Act as a “pay first, litigate later” rule that allows the collection of taxes to occur efficiently. (Justice Stephen Breyer will later describe taxes as “the life’s blood of the government.”) Long tries to persuade the court of the dangers of allowing the “taxpayer to go into court at any time,” but Justice Sonia Sotomayor seems dubious, asking him to lay out the “parade of horribles” that might happen if the tax law doesn’t apply here.

Japan's Final Nuclear Reactor to Close in May (James S.)

A veritable powerhouse in the nuclear power industry before the incident, Japan now has only one of its 54 reactors running, after another was closed down today. Its reactors are being idled in order to undergo safety check-ups, and general maintenance.

Geopolitics Informs Gaza's Energy Crisis (James S.)

The political wing of the Hamas militant outfit took control of Gaza from the Palestinian Authority (headquartered in the Wes Bank), led by President Mahmoud Abbas, in 2007. With that development, Israel and Egypt (under Mubarak) sought to minimize Hamas control by imposing a border blockade. This relationship, however, has been in flux since Mubarak’s ouster. This is the root of the energy crisis.

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."

17 Comments

saxplayer00o1's picture
saxplayer00o1
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cmartenson's picture
cmartenson
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China Hoarding?

It is interesting that the BBC article on countries hoarding oil merely makes mention of China adding "nearly 500 thousand barrels a day to its stockpiles" ... and that is somehow hoarding?

When the US adds to its strategic stockpiles is that hoarding too?

To me 'hoarding' is a special act that occurs in the midst of a crisis of scarcity.  Adding to buffers while supplies are plentiful is called 'being responsible and prudent.'  The same logic applies whether it is a country adding oil to its strategic reserves of an individual adding to their stores of food.

phecksel's picture
phecksel
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Read the Detroit Financial

Read the Detroit Financial crisis link...

Quote:
"This is white on black crime," community activist and Minister Malik Shabazz said from a microphone during public comment. "This is white supremacy. Before you can take over our city, we will burn it down."

WRT saving the economy link, are we seriously to the point of screaming from the mountain top, all is good, nothing to see here?  Did I mis read that?

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shudock
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Jim Sinclair

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2012/3/27_Jim_S...

Along with his previous interviews listed to the right...

I found Currency Wars interesting reading recently as well.

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MarkM
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From "More municipalities to bet on bonds to cover pensions"

":The city is credited with issuing the first pension obligation bonds in the 1980s. Another set of pension bonds the city issued in 1997 have lost Oakland $245 million, according to the city auditor. Those losses have helped push the city administration to propose more than $200 million of new pension bonds in the coming months."

Read that a couple of times and realize the level of fiscal insanity in all levels of government these days. Doubling down typically ends in tears.

Read more here: http://www.bellinghamherald.com/2012/03/27/2455519/more-municipalities-bet-on-bonds.html#storylink=cpy
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saxplayer00o1
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The Big, Bad National Debt: Who is Afraid?

It really doesn't get much worse than this one. Pad the walls before reading or risk a major concussion:
 

The Big, Bad National Debt: Who is Afraid?

Doug's picture
Doug
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Robert Fitzwilson

There is an interesting interview on King World News:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/3/27_Countries_Swapping_Billions_%26_Transferring_Oil_Ahead_of_War.html

Quote:
“Another development that’s been happening in recent days is swaps are being made.  China and Australia just recently completed a $31 billion swap of their currencies.  To me that’s tantamount to barter.  These countries have essentially pre-positioned their currencies, probably because they are worried about being cutoff from international transfers.”

Quote:
“Jim Sinclair has pointed out what is taking place with the SWIFT system.  I would just like to add that SWIFT has now become a weapon in the currency wars and as Sinclair correctly stated, unfortunately the United States is now threatening other countries.  We are saying if they do not do what we want, we will cut them off from SWIFT, which will effectively shut down their economy.

Quote:
“As we now know, South Africa is actively trying to participate in dethroning the dollar as the reserve currency.  If you look at the pattern of what is happening, these are like mini earthquakes all over the world.  

When you add these seismic events together, it suggests that something may be imminent, perhaps in the next month or two.  Saudi Arabia is suddenly sending 22 million barrels to the United States.  Why did they do that?  

Are they trying to get paid for it before there is some sort of eruption in the Middle-East?  Is the US stockpiling oil ahead of war?  There are military assets being positioned all over the Middle-East, on all sides.  So something is building and these countries are taking action ahead of that for self preservation which is understandable.”  

We have already seen this with Iran, so India and Iran were trying to do an oil for gold swap.  Evidently we’ve warned the Indians because we’re not happy about that.  So SWIFT is being used to threaten our trading partners and allies....

I find these moves with currencies and trying to control international trade quite disturbing.  I don't really understand currency swaps well enough to figure out how they play into geopolitics or preparations for hostilities in the ME.  Nor do I understand how the US can unilaterally decide that other countries can't take part in SWIFT trade.

Nonetheless, it is quite worrying.  I'd like to get others' perspectives on what it all means.

Doug

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Damnthematrix
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Why Young Americans Aren't Buying Cars

Quote:
The Times notes that less than half of potential drivers age 19 or younger had a license in 2008, down from nearly two-thirds in 1998. The fraction of 20-to-24-year-olds with a license has also dropped.

Same thing's happening here in Australia.....  our twins are 24 years old, and don't hold a license, and neither do their friends!

Full Moon's picture
Full Moon
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100 Hours :(

I held back on my 17 getting a license  because I was  tired of teaching . But now with a job I am tired of driving her back and forth and   then the 15  YO was needed to drive things around the place .    So now I have 100 hours of student driving  UUUUGGGGHHH  .. I  MIGHT  get done before the 14 YO  thinks it is his turn !!!       Seriously  I think it is the husbands turn  after all I did  all of the older kids .     Kids are different ... the 15 yo is a better driver   and I am only having to yell  for 50 hours of his sister .    The younger one (14)is paying very close attention  so I do not have to yell at him the whole time  .   Honestly   I should not have waited one  at a time .   The last one I had so much challange with  never slowed down  until  he was at the stop sign and as an adult now I have seen his name on page 2 of the newspaper  for California rolling stops . Only the $$ ticket will catch his attention .

Is it fair? Maybe not but, there are only so many teen drivers that you want on your insurance policy  at one time . It goes up  $30  per teen driver .       THis is also why  we drive crappy old cars .. I will not have to yell at them for ending up in a ditch and the insurance is much cheaper !

FM

RogerA's picture
RogerA
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The well from hell.

http://in.reuters.com/article/2012/03/27/total-gasleak-idINDEE82Q0L320120327

A cloud of explosive natural gas boiling up from the North Sea out of a leak at Total's (TOTF.PA) evacuated Elgin platform forced another shutdown off the Scottish coast on Tuesday as the French firm warned it could take six months to halt the flow.

KennethPollinger's picture
KennethPollinger
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The Big, Bad National Debt

It strikes me that Chris needs to address the article above for it certainly runs totally counter to everything

I see Chris writing.  How does one find out the TRUTH about this issue of National Debt??

KennethPollinger's picture
KennethPollinger
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Posts: 307
Is it possible to

have all of the Daily Digest and other info placed in many different translations so that many others

could easily learn from this great resource.  For example, I'm in Costa Rica now and would like

to pass on the info about goat cheese to my "Tico" friends but do not see where this info is in Spanish???

Many thanks, Ken

Arthur Robey's picture
Arthur Robey
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Sax and Strubel

Hi Sax,

I traced the author of the article Struebel to this site.

My understanding (as hazy as it is) is that he is saying that a countries debt is not really debt but a transferance of wealth from the government to the private sector.

He has a graph that shows goverrnment debt to be the inverse of public saving.

The green is the foreign trade balance, the blue is the private sector balance (that’s you and me), and the red is the government. When the government runs deficits it allows the private sector to grow, save, and invest. Quite the opposite of what you hear! But you can see the indisputable proof in the graph. When the government ran a budget surplus, like during the Clinton years, the private sector was forced to stop saving and to start taking on debt. You can see how the blue and red bars reverse.

From here.

The graph comes from his website but is read protected.

There is quite a bit of cognitive dissonance for me in this view and I would like Dr. Martenson's comment.

Doug's picture
Doug
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Arthur

Is this a related topic?  I admit to being flummoxed by both these charts.

http://www.zerohedge.com/news/worlds-balance-sheet

robie robinson's picture
robie robinson
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kids-n-cars?

My son got his license before his enlistment @19yrs of age. Bought his first car,used VW golf, two weeks ago @20yrs. He was never jazzed up about driving, and made quite a sum of coin buying used/broken Honda scooters repairing 'em and selling 'em. I bought a '79C70 and '81 CT110 from him and ride them to work quite often.  He preferred mopeds and scooters to cars.  the robinsons

Full Moon's picture
Full Moon
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Posts: 1258
circumstances ?

I  feel a lot safer with the kids having cell phones .  Used to be I would drive them to work  for fear of  a flat tire and some yahoo stopping to help one of the girls .     The 15 YO  will start working at a dairy soon  milking 130 cows  .. He will have a drivers permit to go to work and back and  on farm runs . It is 10 miles over to his work .. not so good on the bike .   He has been rebuilding a 70's chevy truck for a couple years .. lots of sanding painting and overhaul . Since he put so much work into it I am sure he will take good care of it .

FM 

Poet's picture
Poet
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Re: Why Don't Young Americans Buy Cars?

Re: Why Don't Young Americans Buy Cars?

Just about person I know in their early 20s here in Southern California is carless (and this is a suburban culture!) or driving a used car, usually at least 10 years old, sometimes a model from the late 1990s.

Many are trying to go to community college part time or full time. If they've graduated college and found work, they're still paying off student loans.

They work mostly part-time jobs. Even if it's full-time, it doesn't pay much.

When you're making only, say, $8 or $10 per hour for 20 hours per week, your gas cost alone can easily be 20% or more of your $130 to $600 weekly net pay, not to mention insurance and other auto-related payments or repair expenses.

Poet

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