Daily Digest

Daily Digest 3/3 -12 Countries Most Likely To Go Belly-Up, Maxwell's Silver Hammer, China To Allow All Trades In Yuan

Thursday, March 3, 2011, 10:43 AM
  • 12 Countries Most Likely to go Belly Up
  • USA Incorporated - a Look at the Grim Financial Situation of the USA
  • A Road Tour Of The Revolution
  • Pentagon Report Reveals Financial Terrorists May Have Triggered Economic Crash
  • China "Attacks The Dollar" - Moves To Further Cement Renminbi Reserve Currency Status
  • Merrill's Harley Bassman On Why This Is The "Big One" And Its Implications
  • Bang Bang, Maxwell's Silver Hammer
  • China To Allow All Trades To Settle In Yuan, Encourages Use As Reserve Currency

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

Economy

12 Countries Most Likely to go Belly Up (Alfredo E.)

While high national debt and public spending are two common denominators, the study finds it is the aging demographics that puts these countries at extreme fiscal risk. An aging population will place increasing pressure on public expenditure such as pension and health care, while a shrinking working-age population means less productivity and less tax revenues to support public spending and debt payments.

USA Incorporated - a Look at the Grim Financial Situation of the USA (woodman)

Take a step back, and imagine what the founding fathers would think if they saw how our country’s finances have changed. From 1790 to 1930, government spending on average accounted for just 3% of American GDP. Today, government spending absorbs closer to 24% of GDP.

A Road Tour Of The Revolution (jdargis)

From Tahrir to Lulu, a guide to the new Tiananmen Squares.

Pentagon Report Reveals Financial Terrorists May Have Triggered Economic Crash (David B.)

The 2009 report, Economic Warfare: Risks and Responses, said financial terrorism by Jihadists or countries such as China may have cost the global economy $50 trillion in a series of co-ordinated strikes against the U.S. economy.

In an astonishing conclusion, the report claims two unidentified traders deliberately devalued trillions of dollars' worth of stocks at the height of the crisis.

China "Attacks The Dollar" - Moves To Further Cement Renminbi Reserve Currency Status (pinecarr)

To all those who claim that China is perfectly happy with the status quo, in which it is willing to peg the Renmibni to the Dollar in perpetuity, this may come as a rather unpleasant surprise, as it indicates that suddenly China is far more vocal about its intention to convert its currency to reserve status, and in the process make the dollar even more insignificant.

Merrill's Harley Bassman On Why This Is The "Big One" And Its Implications (pinecarr)

Must read observations from Merrill's Harley Bassman, formerly head of the RateLab:

“…The reason there is no "Flight to Quality" bid for USTreasuries is that USTs are no longer the "Quality" asset. Since the FED has turned on the printing presses, the "value" of the dollar has steadily declined. This is why the "Flight to Quality" is happening in Gold, Oil, Copper, Cotton, etc.”

Bang Bang, Maxwell's Silver Hammer (pinecarr)

Little did the legendary Beatles realize they were providing the theme song for the linchpin of the USDollar in its lethal slide into the dustbin of fiat currency history.

China To Allow All Trades To Settle In Yuan, Encourages Use As Reserve Currency (Claire H.)

Previously, China also announced that bilateral trades with Russia and Malaysia will begin to be conducted with the yuan and the ruble and ringgit, respectively.

Other moves on the part of China to internationalize its currency include allowing foreign companies to issue yuan-denominated bonds and relaxing rules for foreign financial institutions to access the yuan.

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."

12 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2813
1) U.S. Postal Service

"The U.S. Postal Service will be unable to pay two major bills later this year unless Congress changes the law to eliminate Saturday mail deliveries, the postmaster general, Patrick R. Donahoe, told the House Postal Oversight Committee on Wednesday. Media reports say that as of Sept. 30, the end of the current fiscal year, the Postal Service must lay out $5.5 billion as an advance payment to cover future retirees' medical costs. And in October, it must pay $1.3 billion for workers compensation, Donahoe told lawmakers, according to the reports. "

"While the nation's unemployment nearly doubled to 9.5% from December 2007 through June 2010, Medicaid enrollment has jumped by 17.8%, according to the Kaiser Commission on Medicaid and the Uninsured.

Medicaid spending nationwide hit $381 billion in 2009, a 13% increase from 2007. States are responsible for anywhere from 20% to 50% of that bill, depending on the age of patients and average income levels. In 2009, states paid 34% of the total, according to the Department of Health and Human Services.

Enrollment is only expected to continue to rise, as unemployment stays high and more employers cut health insurance coverage. January's unemployment rate stood at 9%. The increase in Medicaid rolls in 2012 since 2008 is likely to be over 9%, according to Michael Leachman, assistant director of the state fiscal project at the Center on Budget and Policy Priorities.

On average, Medicaid consumes 22% of a state's budget, rising to as much as 28% in New York and 33% in Illinois, according to a report from the Wells Fargo Research & Economics team."

"Global food prices reached new highs in February, a U.N. food agency said Thursday, warning that oil price spikes could provoke further increases.

Skyrocketing food prices have been among the triggers for protests in Egypt, Tunisia and elsewhere and raised fears of a repeat of the food price crises in 2007 and 2008. Global oil prices have spiked on concerns about the potential impact of supply disruptions from Libya.

The Food and Agriculture Organization said in a statement that its food price index was up 2.2 percent last month, the highest record in real and nominal terms since the agency started monitoring prices two decades ago."

  • Other news, headlines and opinion:

Bank of Japan Easing to Make Yen `Worst' Currency, Morgan Stanley Says

Rising fuel prices could cost airlines $500 million in profits, group says

San Jose's budget deficit points to likelihood branch libraries will be open just three days a week

Forecast: LA facing $350M deficit in 2012

Detroit Public Schools Face 'Draconian' Cuts

District 205 Teacher Layoffs Could Cut into Tenured Ranks (Rockford...."well over 600 layoffs")

Williams says NYS budget could mean 750 layoffs (Buffalo)

Santa Clara County Faces Millions in Mid-Year Budget Shortfall

Almost half of city work force gets pink slips (Costa Mesa)

Reserves threatened as Miami's revenue falls short

Providence faces $180M deficit this year and next

NY protesters briefly take over Capitol; 17 arrested

Texas Tech Medical School Faces Massive Cuts

silvervarg's picture
silvervarg
Status: Bronze Member (Offline)
Joined: Mar 28 2010
Posts: 44
Re: 12 Countries Most Likely to go belly up

Kind of strange bias you have to have to manage not to put US in Extreme category while the author puts some rather solid countries in Europe as extremely high risk.

I dare to say that at least: Sweden (4), Germany (5) and Denmark (7) on the list is countries that are doing really well.

As I'm from Sweden and that it is the one highest on the list I would clarify a few facts on why that particular country is not close to go belly-up:

1. Demographics when you include imigrants is quite good.

2. Retirement age is normally 65 (or lower), so it is no wonder that quite few over that age still work. This is however allready slightly changing to a somewhat higher average retirement age.

3. Retirement funds are fine. There is allready laws that automaticly squeeze payments of retirement funds if funds are not adequate. This ensures that the system can never slowly build up a massive shortage as it has in US.
Nearly all people have corporate pensions on top of govement payed pensions. These are all stored in funds separated from the corporations, so funds will still be there is corporation vanishes.

4. Healthcare is also forced to handle its costs every year, so while there are some struggles and slight problems with long waiting for some care it does not have the option to slowly build up shortage of funds for years.

5. Country has a currency of its own (not Euro connected). Debt to GDP is about 40%. GDP is increasing 4.5-5.0 percent this year, and that is without any cheating of statistics or massive money printing. According to European Union Sweden as a country has gotten praise for handling the financial crisis best of all European countries.

6. On the country level there is a large surplus in the budget this year and predicted to be surplus at least until 2015. Unemployment is not particularly high, and is dropping fast. Predictions to go down to 5-6% in a few years.
Oh, and Sweden is a heavy net exporter in trade, so that means a fairly stable income for the country. 

I could go on, but I think these are the most relevant. To be fair I should also mention one drawback for Sweden: House prises has not collapsed since the financial crisis as it has in many other countries, so this is a major risk for the future. This is beeing battled with increasing interest rates in an attempt to slowly deflate the bubble or at least stop the bubble from growing more, giving the economy a chance to grow compared to house prices.

My point is that if you compare Sweden that is near the top of the list to US, that is not even close to the top of the list you have to wear highly pink-tinted-glasses to come up with the results that the author did.

Also, I find it strange that you don't find Greece, Ireland, Portugal and Spain at the top 10 list.
Greece and Ireland has allready taken help from IMF, and that could be the reason. Portugal and Spain is the most likely candidates to be next in line of European countries to need aid.
Having missed these 4 and have Japan as far down as place 9 and UK at place 10 and US outside the top 10 is just mind boggling.

earthwise's picture
earthwise
Status: Platinum Member (Offline)
Joined: Aug 10 2009
Posts: 832
Financial terrorism? Show me......

......how they did it. First, how did the terrorists manipulate the price of oil? It's a huge market of vital importance. It would seem difficult to influence to that degree at all, let alone not leave any fingerprints. Second, even if these shadow figures were responsible for a 'bear raid' on Bear Stearns (pun?) how did that alone trigger such a massive meltdown that required trillions in relief from the US government? Yeah, there were other corporate victims, but this couldn't happen to a healthy company, they had to be on the ropes to begin with, (i.e. subprime crisis?). As to the "third phase", the government debt crisis, just how did they arrange that? This was debt incurred by our politicians, no economic terrorist did that. All of this theorizing neglects to account for the role that we, as a nation, from top to bottom played in this crisis. The subprime crisis, resorting to a fiat currency (Nixon 1971) and the accompanying debasement, offshoring manufacturing, living beyond our means governmentally, corporately and personally, and the list goes on and on....

This seems a little like scapegoating.

green_achers's picture
green_achers
Status: Silver Member (Offline)
Joined: Jan 3 2009
Posts: 203
USA Inc.

"Inquiring" minds might want to look at some of those charts with a little caution.  They seem to be designed to elicit a knee-jerk ideological reaction, but don't really say very much.

Example 1:  Can anyone tell me what the "Medicaid Underfunding" table means by "Net Present Value of Liabilities?"  (I'm not asking for definition of NPV, I know what that means.)  Sure, it's showing that costs of medicaid have increased since its inception, but what are they trying to show with "Underfunded ... with no dedicated funding?"  In other words, it's a budgetary expense.  Not many things in the US budget have dedicated funding, so what's the big deal with that?  If they think it's too high, then just say so and present your case, against a real baseline of some kind, not this deceptive crap.

Example 2:  "Healthcare Spending."  Shows US vs all other OECD countries.  Oooh!  US is as much as all of the rest combined!  Well, population of all OECD countries: 1,193,584 (2009, accd to OECD); population of US: 307,006.6 (same source, not sure what 0.6 of a person is.)  Hmm, that leaves population of non-US OECD = 886,577.4.  Fractional people aside, that's almost 3x the US population.

I could go on, but don't want to spend all night testing the credulity of "Mish."

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Love the ending of tis

Love the ending of this youtube LOL....

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
?!?

earthwise wrote:

......how they did it. First, how did the terrorists manipulate the price of oil? It's a huge market of vital importance. It would seem difficult to influence to that degree at all, let alone not leave any fingerprints. Second, even if these shadow figures were responsible for a 'bear raid' on Bear Stearns (pun?) how did that alone trigger such a massive meltdown that required trillions in relief from the US government? Yeah, there were other corporate victims, but this couldn't happen to a healthy company, they had to be on the ropes to begin with, (i.e. subprime crisis?). As to the "third phase", the government debt crisis, just how did they arrange that? This was debt incurred by our politicians, no economic terrorist did that. All of this theorizing neglects to account for the role that we, as a nation, from top to bottom played in this crisis. The subprime crisis, resorting to a fiat currency (Nixon 1971) and the accompanying debasement, offshoring manufacturing, living beyond our means governmentally, corporately and personally, and the list goes on and on....

This seems a little like scapegoating.

I'd say a lot more than a little.  The article strikes me as a geopolitical version of the dog ate my homework.  Is there anyone who actually believes the article?  I'm surprised more folks haven't commented on this. 

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
(No subject)

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
(No subject)

ikiddle's picture
ikiddle
Status: Member (Offline)
Joined: Oct 8 2009
Posts: 2
12 countries most likely to go belly up

!2 countries most likely to go belly up?The author has used one metric to reach a ridiculous conclusion.

Similarly with  the pentagon research team that decided  terrorists caused the financial crisis. Must have been the same guys who thought it would be a good idea to invade Iraq.

ppanza's picture
ppanza
Status: Member (Offline)
Joined: Sep 28 2008
Posts: 6
@ ao

"The article strikes me as a geopolitical version of the dog ate my homework."

+1. Good way of phrasing it. It reminds me of the explanation proferred that ' Afghans are burning their children to make the coalition forces look bad.'

  "I'm surprised more folks haven't commented on this."

I'd say that some reports (like hallucinatory explanations from the Pentagon) are not required to be read i.e. of the 'Keep moving - nothing to see here' ilk.

plato1965's picture
plato1965
Status: Platinum Member (Offline)
Joined: Feb 18 2009
Posts: 615
re: Maxwell's silver

re: Maxwell's silver hammer..

the video version.  Laughing

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 1625
Love the ending of this youtube LOL....

idoctor, I have to object to  the video on "Chairman Bernanke - National Recovery Here", idoctor...no WAY he's that buff!Tongue out

Finally, a way to communicate QE2+ to my son in a way he will understand!

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