Daily Digest 3/29 - Germany's True GDP At 140%, FDR's Inaugural Address, 21st Century Oil Production And Peak Oil

• Germany's true debt/GDP at 140%
• The Yen's Looming Day of Reckoning
• Is Inflation, A Stagnant Economy, And Lower Standard Of Living In Our Future?
• Franklin Roosevelt's First Inaugural Address
• $105,637 for Me, $80 for You!
• “We’re not playing here… You’re dealing with the federal government”
• Debt Bubble: Why “Too Big To Fail” Banks Still Face Much Trouble Ahead
• How To Save The U.S. Natural Gas Sector
• Oil Production in the 21st Century and Peak Oil
• Lethal Radiation Detected Inside Fukushima Reactor
• How You Can Profit From The “Year With No Winter”

Follow our steps to prepare for a world after peak oil, such as how to store & filter water

Economy

Germany's true debt/GDP at 140% (Ben Johnson)

Over the last several weeks I have tried to bring a more accurate picture of the debts of a number of nations to you. There has been no bias and the figures have stood on their own merit. The statistical component of the European Union, Eurostat, is quite clear; they do not count guarantees or contingent liabilities as part of any nation’s debt. We might all note that if Nestle or IBM or General Electric did this they would find their senior executives jailed for Fraud but never mind; this is the methodology of the EU which quite obviously masks the truth.

The problem then is not the simple math used to obtain a more accurate debt to GDP ratio but in digging out the various guarantees, contingent liabilities and obligations of any member nation of the European Union. “Time consuming” would be the accurate words because you have to sleuth around like Sherlock Holmes to come up with the data. Yes, it is all there somewhere or another but it is nowhere all together and so must be found.

The Yen's Looming Day of Reckoning (Matias L.)

Japan is on an unsustainable path of a strong yen and deflation. The unprofitability of Japan's major exporters and emerging trade deficits suggest that the end of this path is in sight. The transition from a strong to weak yen will likely be abrupt, involving a sudden and big devaluation of 30 to 40 percent. It will be a big shock to Japan's neighbors and its distant competitors like Germany. The yen's devaluation in 1996 was a main factor in triggering the Asian Financial Crisis.

The justification for the low JGB yield is deflation. The real interest rate (the nominal rate plus deflation) is comparable to that in other countries. This rationale requires deflation to persist. But, deflation shrinks the nominal GDP or tax base. How could the government pay back its escalating debt by taxing a shrinking economy? It can only sustain its debt by borrowing more. This fits the definition of a particular type of Ponzi scheme.

Is Inflation, A Stagnant Economy, And Lower Standard Of Living In Our Future? (David B.)

Unemployment was also elevated during that period, by historical standards: it averaged 7.3% across those nine years, topping out at 10.8% in late 1982, a post-war high that still stands. Meanwhile private investment as a percentage of GDP averaged around 12% during this period, nearly 1.5 percentage points below the subsequent high growth years of 1983-2000. Lastly, the Dow Jones Industrial Average, which had flirted with the 1000-level in both 1966 and 1972, sunk to a secular low of 776 in August, 1982, with U.S. equities having lost nearly 70% of their inflation-adjusted value across those 16 years.

Franklin Roosevelt's First Inaugural Address (Mike K.)

And a small group of wealthy Americans were already plotting a fascist military coup by a band of hired brigands designed to overturn the Constitution and place the country in the hands of the rich and the powerful as they had helped to do in Germany.

$105,637 for Me, $80 for You! (Ilene)

It sure is for those of us in the top 1% (1.4M) - people earning over $352,000 in annual income. We made $105,637 more Dollars in 2010 than we did in 2009 - thanks in large part to the Fed's fantastic policy of printing more and more money, which lets us borrow cheaply or invest with leverage in inflating equity as the Dollar collapses.

“We’re not playing here… You’re dealing with the federal government” (Coley H.)

Gotta love this from Bloomberg. Debt collectors are now going after college graduates who owe student loans… On behalf of the federal government. The story highlights the sorry saga of Oswaldo Campos, who is disabled from liver disease (presumably, although with all of the disability fraud, who can tell) and was harassed by debt collectors contracting with the US Department of Education with calls threatening “We’re not playing here. You’re dealing with the federal government. You have no other options.”

Debt Bubble: Why “Too Big To Fail” Banks Still Face Much Trouble Ahead (David B.)

The Federal Reserve made those decisions. There were no Congressional votes and no input from the public. The Federal Reserve determined who the winners and the losers would be in secret and without any public debate.

Sure sounds “democratic”, eh?

Energy

How To Save The U.S. Natural Gas Sector (James S.)

Perhaps we should be considering a different method of regulating natural gas, since in many ways natural gas is essential. It is needed for balancing wind and solar PV, and for allowing us to continue to continue to heat our homes and businesses with natural gas. In the early days of gas, gas was regulated to produce a reasonable rate of return for providers. Perhaps something closer to this approach needs to be used again today.

Oil Production in the 21st Century and Peak Oil (James S.)

The Deepwater Horizon incident demonstrated that most of the oil left is deep offshore or in other locations difficult to reach. Moreover, to obtain the oil remaining in currently producing reservoirs requires additional equipment and technology that comes at a higher price in both capital and energy.

Environment

Lethal Radiation Detected Inside Fukushima Reactor (guardia)

A dosimeter lowered into the containment vessel of the No.2 reactor registered 72.9 sieverts, or 72,900 millisieverts per hour at maximum -- a level where a human is certain to die within about 7 minutes of exposure.

How You Can Profit From The “Year With No Winter” (David B.)

While MOO isn’t a pure play on the fertilizer and chemicals sectors (it has a nice mix of agricultural-related industries), it offers wide exposure to increased demand for agricultural-related products.

Contrarian investors know that unique events create unique investment opportunities — which means to be a successful investor you must always be on the hunt for “one off” events and the potentially profitable opportunities they present.

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."