Daily Digest

Daily Digest 3/6 - Banks Pose Greek Debt Plan, Why It's Curtains For The Euro, The Big Fracking Bubble

Tuesday, March 6, 2012, 11:44 AM
  • Banks and insurers pose Greek debt plan
  • In China, Sobering Signs of Slower Growth
  • No Letup Seen As Pennsylvania School Pension Costs Soar
  • Illinois State ‘On Brink Of Collapse’
  • Marc Faber Assures Us That Gold Is Nowhere Near A Bubble Phase
  • Goldman Secret Greece Loan Shows Two Sinners as Client Unravels
  • Why It's Curtains For The Euro
  • Europe Maps Africa's Renewable Energy Potential
  • The Big Fracking Bubble: The Scam Behind the Gas Boom

Learn how to protect your wealth against the Three E forces using our 'What Should I Do?' guide

Economy

Banks and insurers pose Greek debt plan (Saxplayer00o1)

Here are the different scenarios:

Investors holding less than 66 percent of the debt sign up: Greece withdraws the offer, loses the second bailout and defaults on all of its debt. In that case, not only the private investors but the eurozone countries, the IMF, the European Central Bank and national central banks in the currency union face massive losses.

Investors holding between 66 percent and 74 percent of the debt sign up: Greece uses new legislation to force losses on holdouts. That would likely trigger payouts on so-called credit default swaps - complex financial products that act as bond insurance - which the eurozone fears could cause panic on financial market.

Investors holding between 75 percent and 90 percent of the debt sign up: Athens and eurozone finance ministers may force holdouts to accept the deal.

In China, Sobering Signs of Slower Growth (jdargis)

Premier Wen said in his annual report to the National People’s Congress on Monday morning in Beijing that the government had scaled its economic growth target back to 7.5 percent this year, down from the 8 percent that Beijing has set as a minimum growth target in recent years. If growth does come in at only

No Letup Seen As Pennsylvania School Pension Costs Soar (Saxplayer00o1)

This school year, the state made a $600 million pension contribution, about $316 million less than for 2012-13. That's about 6.7 percent of the total state K-12 public school budget. In 2012-13, the state PSERS payment will be more than 10 percent of the proposed K-12 total.

The increases will continue; the combined state and local contribution is projected to be almost $2.5 billion in 2013-14. By 2019-20, it would more than quadruple, compared with this school year, to almost $5 billion.

In recent state Senate testimony, Jay Himes, executive director of the Pennsylvania Association of School Business Officials, said a "financial tsunami" was on the way, with "the makings of a financial crisis in every school district across the state."

Illinois State ‘On Brink Of Collapse’ (Saxplayer00o1)

To save a system he says is “on the brink of collapse”, Mr Quinn proposes cutting $2.7bn from Illinois’ $11.5bn Medicaid bill. Few would dispute that the state needs to change its behaviour. Last year, Illinois underfunded Medicaid by $2bn as it struggled with debts totalling more than $280bn, an $86bn hole in its public pension funds and a $9bn backlog of unpaid bills.

Marc Faber Assures Us That Gold Is Nowhere Near A Bubble Phase (David B.)

After Standard & Poor’s (S&P) downgraded a cluster of Eurozone countries in January, you came out saying that downgrades should have been even deeper, depending on the country’s credit-worthiness. S&P did give below-investment-grade ratings to Portugal and Cyprus—BB and BB+, respectively—but you indicated that some of these countries warrant CCC ratings. Do you anticipate additional downgrades?

Goldman Secret Greece Loan Shows Two Sinners as Client Unravels (pinecarr)

On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said.

Papanicolaou and his predecessor, Christoforos Sardelis, revealing details for the first time of a contract that helped Greece mask its growing sovereign debt to meet European Union requirements, said the country didn’t understand what it was buying and was ill-equipped to judge the risks or costs.

Why It's Curtains For The Euro (David B.)

If you believe the messages from Europe … if you believe the constant bailout propaganda … if you believe it when the media tells you the problems in Europe have been solved … then you are likely in position to get side-swiped, again, by another global financial storm.

Energy

Europe Maps Africa's Renewable Energy Potential (James S.)

First, the report notes the disparity between EU and African energy consumption rates, blandly observing, “The available data which were used for this report indicate a wide range both of per capita energy consumption (100 to 2,000 kgoe [kilograms of oil equivalent]/capacity/year) and per capita electricity consumption (50 to 4000 kilowatt hour/capacity/year). Relative to the average of the European Union, this corresponds to up to 35 times less regarding all energy, and up to 100 times less regarding electricity. Even though electrification made considerable progress in the past 10 years, 600 million of Africa’s rural population has no access to electricity at all.”

The Big Fracking Bubble: The Scam Behind the Gas Boom (Davos)

It’s not only toxic – it’s driven by a right-wing billionaire who profits more from flipping land than drilling for gas.

"We're the biggest frackers in the world," he declares proudly over a $400 bottle of French Bordeaux at a restaurant he co-owns in his hometown of Oklahoma City. "We frack all the time. What's the big deal?"

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."

18 Comments

saxplayer00o1's picture
saxplayer00o1
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anexaminedlife's picture
anexaminedlife
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Housing Bubble Speculators Invited to the Feeding Trough?

This is unbelievable...no matter how it's explained!

Boom-Era Property Speculators to Get Foreclosure Aid: Mortgages

The Obama administration will extend mortgage assistance for the first time to investors who bought multiple homes before the market imploded . . . 

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Davos
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More on fracking...
Fracking uses 400 tanker trucks and 1-8 million gallons of—-drum roll please—fresh water.  
 
We'd think that the planet is awash in fresh water...Jim Quinn’s Peak Water article explains otherwise. 
 
 
 
 
KugsCheese's picture
KugsCheese
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Goldman Loan - Explain?

Can someone explain this loan in plain english?  

Full Moon's picture
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Davos ?

do you think these steam plume's  could be fracking related ? Just wondering .

FM

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Plumes

Full Moon.

The plume in SE Oklahoma is a forest fire. I live very, very close to the fire. I cannot speak for the other plumes. Hope this helps.

LG

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Infrared Weather Satellite Loops

LG wrote:

Full Moon.

The plume in SE Oklahoma is a forest fire. I live very, very close to the fire. I cannot speak for the other plumes. Hope this helps.

LG

FM, LG -

Some of the comments on the Dutchsinse YouTube clip are quite laughable.  It is an infrared contrast loop from the Geostationary Operational Environmental Satellites (GOES) weather satellite system.  Of course the plumes are going to be more visible just before the morning.  When the sun comes up the IR contrast is greatly decreased.

A quick check of any number of Wildfire links for OK (http://okfire.mesonet.org/public/?cat=fire), AR and LA yielded the same clips as shown on Dutchsinse so they are all most likely wildfires.(Either that or the exhalations of giant subterranean lizard alien bankers )  Some of the loops are only available for one or two past 12 hour loop histories and may be gone.  I guess that's part of the conspiracy......

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Fracking exposed

Man, that's one damning article on fracking.  It constantly amazes me the how big money and big oil/gas companies circumvent all the rules and inevitably get away with it only to leave the rest of the public to clean up their mess.  Then again maybe that's my problem......I continue to think some sort of morality or do the right thing mentality will prevent things like this from happening.  Silly me I guess.

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oppmsu wrote:Man, that's

oppmsu wrote:

Man, that's one damning article on fracking.  It constantly amazes me the how big money and big oil/gas companies circumvent all the rules and inevitably get away with it only to leave the rest of the public to clean up their mess.  Then again maybe that's my problem......I continue to think some sort of morality or do the right thing mentality will prevent things like this from happening.  Silly me I guess.

The psychopathy checklist breaks into four different aspects:

✓ Callous, kind of a lack of empathy towards others.

✓ Antisocial behavior, some kind of breaking rules, whether it be social rules or legal rules.

✓ Being a manipulative person or a liar.

✓ Impulsivity, or more specifically a lack of impulse control. 

"We’re only now beginning to realize how this clinical and personality research can really form kind of derailing type of behaviors that we see in corporations. Now never has it been more critical at this juncture....

...It’s amazing and baffling to me that we are almost starting now to ask these questions. 

...Depending on the short or long checklist you consult, you get 4 to 5 percent of these executives that were interviewed meeting the threshold criteria for being a psychopath.  That is quite frightening when you consider that in the general population that you have about 1 percent of people walking among us that are psychopathic."~Dr. Daniel N. Jones [Source: Psychopathic Economics podcast]

If we don't get these morons out of the highest levels of corporations where they are revolving in and out high positions in government an entire new meaning to the phrase inter-generational tyranny is going to be given as we—destin our little children to a life of hell.

"The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing." - Albert Einstein

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China in the Pink

With a staggering $3.2 trillion in reserve, China has put away a tremendous amount of money for a rainy day. China can literally recapitalize its banking system several times over and have change left over.

source

Money, money, money. 

Yes. But can they do it in an energy constrained world? My opinion? Yes because China's cadre of leaders is drawn from Engineers. Not Lawyers, actors and other charlatans, riff raff and clowns.

Point of Note.

Can they do it in an oil constrained world? My opinion? Yes because they can use coal as a feed stock for their chemical industries.

Can they do it in a water constrained world? Yes because they are agressively buying up food producing land in Africa etc. This diversification of biomes will stand them in good stead in times of climate uncertainties.

What haven't the polit bureau thought of?

The greatest prize is going to China          .,L4 and 5. ,(Countless numbers of L4s and L5's)

You had better be nice to the Chinese or you are going to be groundhogs.

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Whenever I hear these 2 words in the same sentence...

Marc Faber Assures Us That Gold Is Nowhere Near A Bubble Phase

I always run the "Bubble Checklist".  Now with Faber, I don't have to.  Greenspan used to work for him, Faber IMHO is a really, really bright guy:

Mark Faber, Hong-based investor and author of the monthly Gloom, Boom & Doom Report, could see far enough ahead to move to Asia in the 1970s. He remembers his meetings with Alan Greenspan (when Faber still worked in New York): I was put in charge of research liaison for White, Weld’s overseas offices…My job entailed…attending the monthly economic presentations [by Alan Greenspan]…When Mr. Greenspan first came on board at White, Weld as a consultant, 30 or 40 people from the firm’s various departments would attend the meetings. Within a few months, however, attendance had dropped to just a handful of White, Weld employees. By then I had also learned that the easiest way for me to communicate the (to me) incomprehensible remarks of [Greenspan] to our overseas offices was smply to summarize the previous day’s news from the front page of the Wall Street Journal”.

But anyway, here is the bubble checklist I run: Displacement, Prices rise, Easy Credit, Over-Trading, Euphoria, Insider Profit Taking, Revulsion.

I'd say we are at #2.  In FY2006 30% of all originations were subprime (easy credit.)  I'm not seeing that with gold.

Hyman Minsky’s Universal Framework For Identifying Bubbles

The late Hyman Minsky knew that there was nothing new under the sun. If her were alive today, he would have understood exactly the dilemmas raised by today’s explosive growth in real estate prices.Minsky developed a simple universal framework for understanding all bubbles. The circumstances of each bubble may differ, but each one goes through seven stages.

Stage One – Displacement

Every financial crisis starts with a disturbance. It might be the invention of a new technology, such as the internet. It could be a shift in economic policy. For example, interest rates might be reduced unexpectedly. Whatever it is, the world changes for one sector of the economy. People see the sector differently.

Stage Two – Prices start to increase

Following the displacement, prices in the displaced sector start to rise. Initially, the price increase is barely noticed. Usually, these higher prices reflect some underlying improvement in fundamentals. As the price increases gain momentum, people start to notice.

Stage three – Easy Credit

Increasing prices are not enough for a bubble. Every financial crisis needs rocket fuel and there is only one thing that this rocket burns – cheap credit. Without it, there can be no speculation. Without it, the consequences of the displacement peter out and the sector returns to normal.When a bubble starts, the market is invaded by outsiders. Without cheap credit, the outsiders can’t join in.

Cheap credit is the entrance ticket for outsiders. For example, gas prices have risen sharply in recent years. However, banks aren’t giving out loans so that people can store gas in their garages in the hope that the price will double in three months. The banks, however, are prepared to give loans to people with poor credit to hold condos in the hope that they can be quickly flipped.

The rise in easy credit is also often associated with financial innovation. Often, a new type of financial instrument is developed that miss-prices risk. Indeed, easy credit and financial innovation is a dangerous cocktail. The South-Sea Bubble started life as new-fangled legal innovation called the limited liability joint stock company. In 1929, stock prices were propelled into the stratosphere with the help of margin calls. Housing prices today accelerated as interest-only mortgages emerged as a viable means for financing overpriced real estate purchases.

Stage Four – Over-trading

As the effects of easy credit kicks in, the market starts to overtrade. Overtrading stimulates volumes and shortages emerge. Prices start to accelerate, and easy profits are made. More outsiders are attracted, and prices run out of control. Accelerating prices attract the foolish, greedy and the desperate to enter the market. As a fire needs more fuel, a bubble needs more outsiders.

Stage five – Euphoria

The bubble now enters its most tragic stage. Some wise voices will stand up and say that the bubble can no longer continue. They put together convincing arguments based upon long run fundamentals and sound economic logic. However, these arguments evaporate in the heat of the one over-riding fact – the price is still rising. The wise are shouted down by charlatans, who justify insane prices by the euphoric claim that the world is different and this new world means higher prices.

Of course, the “new world” claim is true; the world is different every day, but that doesn’t mean that prices run out of control. The charlatan wins the day and unjustified optimism takes over. At this point, the charlatans bolster their optimism with the cruelest of all lies; when prices finally reach their new long run level, there will be a “soft landing”. The idea of a gentle deceleration of prices calms the nerves.The outsiders are trapped in knowing denial. They know that prices can’t keep rising forever, but they rarely act on that knowledge. Everything is safe so long as they quit one day before the bubble bursts.Those that did not enter the market are stuck in a terrible dilemma. They can not enter but neither can they stay out. They know that they have missed the beginning of the bubble. They are bombarded daily with stories of easy riches and friends making massive profits. The strong stay out and reconcile themselves to the missed opportunity. The weak enter the fire and are damned.

Stage Six – Insider profit taking

Everyone wants to believe in a new brighter future but a bubble takes that desire and turns it upside down. A bubble demands that everyone believes in a brighter future, and so long as this euphoria continues, the bubble is sustained.However, as madness takes hold of the outsiders, the insiders remember the old world. They lose their faith and start to panic. They understand their market, and they know that it has all gone too far. Insiders start to cash out. Typically, the insiders try to sneak away unnoticed, and sometimes they get away with it. Other times, the outsiders see them as they leave. Whether the outsiders see them leave or not, insider profit taking signals the beginning of the end.

Stage seven – Revulsion

Sometimes, panic of the insiders infects the outsiders. Other times, it is the end of cheap credit or some unanticipated piece of news. But whatever may be, euphoria is replaced with revulsion. The building is on fire and everyone starts to run for the door. Outsiders start to sell, but there are no buyers. Panic sets in; prices start to tumble downwards, credit dries up, and losses start to accumulate.

Here is the paradox of all bubbles – everyone knows how the fatal combination of easy credit, overtrading and euphoria will affect prices. Minsky didn’t need to write down a thing about the madness of speculation. America’s investors have a lifetime of experience. Within the space of five years, America moved from the tech stock bubble into the real estate bubble.Today’s housing prices are grossly overvalued. Everyone knows that prices will collapse. It might be tomorrow, or it might be two years from now. One thing, however is certain, the longer it takes for the bubble to burst, the more painful it will be.

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Davos wrote:oppmsu

Davos wrote:

If we don't get these morons out of the highest levels of corporations where they are revolving in and out high positions in government an entire new meaning to the phrase inter-generational tyranny is going to be given as we—destin our little children to a life of hell.

The scary part after listening to your interview is that the majority lie in middle to upper management but not necessarily at the executive level.  You multiply the number of positions * the number of companies * the percentage that could be classified psycopath and you get a huge number of people.  THEN, you have the task of actually identifying these individuals amongst the 95-96% of the "normal" population.  Daunting task as people barely recognize a CEO's name, but even more rare does anyone know the middle manager, sub executive level people by name outside those that actually work for an organization. 

I realize females are a much smaller percentage of the psycopathy population, but sure would like to see Pelosi tested! 

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LG wrote: Full Moon. The

LG wrote:

Full Moon.

The plume in SE Oklahoma is a forest fire. I live very, very close to the fire. I cannot speak for the other plumes. Hope this helps.

LG

GodD$%4n-it man caused a forest fire!   100% safety...nature would never do this!!!

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Davos wrote: oppmsu

Davos wrote:

oppmsu wrote:

Man, that's one damning article on fracking.  It constantly amazes me the how big money and big oil/gas companies circumvent all the rules and inevitably get away with it only to leave the rest of the public to clean up their mess.  Then again maybe that's my problem......I continue to think some sort of morality or do the right thing mentality will prevent things like this from happening.  Silly me I guess.

The psychopathy checklist breaks into four different aspects:

✓ Callous, kind of a lack of empathy towards others.

✓ Antisocial behavior, some kind of breaking rules, whether it be social rules or legal rules.

✓ Being a manipulative person or a liar.

✓ Impulsivity, or more specifically a lack of impulse control. 

"We’re only now beginning to realize how this clinical and personality research can really form kind of derailing type of behaviors that we see in corporations. Now never has it been more critical at this juncture....

...It’s amazing and baffling to me that we are almost starting now to ask these questions. 

...Depending on the short or long checklist you consult, you get 4 to 5 percent of these executives that were interviewed meeting the threshold criteria for being a psychopath.  That is quite frightening when you consider that in the general population that you have about 1 percent of people walking among us that are psychopathic."~Dr. Daniel N. Jones [Source: Psychopathic Economics podcast]

If we don't get these morons out of the highest levels of corporations where they are revolving in and out high positions in government an entire new meaning to the phrase inter-generational tyranny is going to be given as we—destin our little children to a life of hell.

"The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing." - Albert Einstein

Check out www.amazon.com/Snakes-Suits-When-Psychopaths-Work/dp/0060837721

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Snakes in Suits

Yup, Dr. Babiak & Dr. Hare did that book, Dr. Jones that I interviewed for that podcast is Dr. Hare's postdoctorial researcher.  Neat stuff!!

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oppmsu wrote: Davos

oppmsu wrote:

Davos wrote:

If we don't get these morons out of the highest levels of corporations where they are revolving in and out high positions in government an entire new meaning to the phrase inter-generational tyranny is going to be given as we—destin our little children to a life of hell.

The scary part after listening to your interview is that the majority lie in middle to upper management but not necessarily at the executive level.  You multiply the number of positions * the number of companies * the percentage that could be classified psycopath and you get a huge number of people.  THEN, you have the task of actually identifying these individuals amongst the 95-96% of the "normal" population.  Daunting task as people barely recognize a CEO's name, but even more rare does anyone know the middle manager, sub executive level people by name outside those that actually work for an organization. 

I realize females are a much smaller percentage of the psycopathy population, but sure would like to see Pelosi tested! 

Hysterical, me too, but for now there's Visa.

Nancy getting 5 million from Visa in an IPO for shooting down anti-card legislation and then lying about it.  Link here.

✓ Callous, kind of a lack of empa 

✓ Being a manipulative person or a liar thy towards others.

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KugsCheese wrote: LG

KugsCheese wrote:

LG wrote:

Full Moon.

The plume in SE Oklahoma is a forest fire. I live very, very close to the fire. I cannot speak for the other plumes. Hope this helps.

LG

GodD$%4n-it man caused a forest fire!   100% safety...nature would never do this!!!

Apparently the AR fires were caused by lightning strikes from the storms that swept through the southern-central US last week.

It's not nice to fool (with) Mother Nature......

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