Daily Digest

Daily Digest 3/9 - Dow In Silver, Debt Clock Over $500 Billion, States Failing To Pay Bills

Wednesday, March 9, 2011, 11:42 AM
  • Dow In Silver
  • New CoreLogic® Data Shows 23 Percent of Borrowers Underwater with $750 Billion Dollars of Negative Equity
  • Europe May Face More Ratings Cuts, Greek Default, S&P Says
  • Southwest joins $10 increase in airfares
  • Rising prices stoke fuel thefts in B.C.
  • Adding Up China's Debt Load
  • Debt Clock shows National deficit over $500 billion
  • Nevada gas prices jump 46 cents in one month
  • Traffic tickets increase as N.J. towns look for revenue
  • Dartmouth to Raise Tuition Rates by 5.9%
  • Illinois Fails To Pay Its Bills
  • Redevelopment money Salinas seeks to shield from state rises to $31M
  • Mayor sees red over fire station #4
  • SRJC joins the rush to raise parking fines
  • NJ Lawmakers Consider Increasing Penalties For Drivers Using Cell Phones
  • US says Saudi oil boost can't keep crude under $100
  • Oil markets brace for Saudi 'rage' as global spare capacity wears thin
  • UN Seminars Start to Help States Cope With Food-Price Surge
  • Cotton price surge makes dollar bills more costly
  • Russia seeks to stem rise in food prices
  • Rising food costs could force U.S. eatery overhaul
  • Price of food in Canada could jump between 5 and 7 per cent in 2011: economist

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

Economy

Dow In Silver (adam)

The Dow Jones Industrial Average has had tremendous nominal growth since bottoming in March of 2009. Although the Dow has risen to over 12,000 it is important for investors to keep in perspective that nominal point gains of the Dow don't necessarily mean stock investors have increased their overall wealth and purchasing power versus other asset classes.

New CoreLogic® Data Shows 23 Percent of Borrowers Underwater with $750 Billion Dollars of Negative Equity

CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services, today released negative equity data showing that 11.1 million, or 23.1 percent, of all residential properties with a mortgage were in negative equity at the end of the fourth quarter of 2010, up from 10.8 million, or 22.5 percent, in the third quarter. The small increase reflects the price declines that occurred during the fourth quarter and led to lower values. An additional 2.4 million borrowers had less than five percent equity, referred to as near-negative equity, in the fourth quarter. Together, negative equity and near-negative equity mortgages accounted for 27.9 percent of all residential properties with a mortgage nationwide.

Europe May Face More Ratings Cuts, Greek Default, S&P Says

Some countries in the euro region may have their credit ratings cut further while a Greece debt default is a “possibility,” said Moritz Kraemer, managing director of European sovereign ratings at Standard & Poor’s.

Asked if the worst was over for the region’s sovereign credit-rating outlook, Kraemer said: “I wish I could say yes, but the answer is no.”.... Kraemer said a debt default by the Greece’s government is “a possibility” and that investors may recover between 30 percent and 50 percent of the total value if that happens.

Southwest joins $10 increase in airfares

Southwest Airlines Co. has joined a sweeping increase of $10 in the price of many domestic round-trip airfares, citing the need to offset high fuel prices....It's the sixth time airlines have raised fares already this year. FareCompare.com CEO Rick Seaney says leisure travelers may now have to pay $260 for a ticket that cost $200 back on Jan. 1.

Rising prices stoke fuel thefts in B.C.

“Guys are getting desperate. They don't know how they are going to pay for fuel,” said Marion Gamache of Dan Gamache Trucking. “People are getting desperate and they do desperate things.”...Which is likely why someone emptied one big rig of diesel overnight Saturday and another semi was almost bled dry. Trucker Wayne Coulson, 67, had just two inches of diesel in his tanks when he started his truck on Sunday. “I figure they took about 150 gallons,” he said, which equates to about $500.

Adding Up China's Debt Load

Adding up the official data on debt from these other parts of the government as well as from state banks and an estimate of debt owed by asset-management companies puts China's total government liabilities at $3.55 trillion, equivalent to 59% of GDP. Some economists who follow the issue say those official data underestimate items like nonperforming loans created by a surge in lending over the past two years. Stephen Green, China economist at Standard Chartered Bank, estimates total debt, including contingent liabilities, at 77% of GDP. Arthur Kroeber, managing director of Beijing-based research firm Dragonomics, puts the total debt at 75% of GDP.

Debt Clock shows National deficit over $500 billion (Canada)

After being retired in 1997 with a balanced Canadian budget, the National Debt Clock is being rolled out again. Canada’s debt is now over $500 billion, so the Canadian Taxpayers Federation is taking the clock across the country to remind citizens how much the country is in the red. According to the clock, our national debt increases by $1,400 every second.

Nevada gas prices jump 46 cents in one month

At $3.62 per gallon, Nevada holds the unwanted distinction of having the sixth-highest average gas price in the nation, according to the latest AAA survey. California has the most expensive average price at $3.91 per gallon.

Nevada's $3.62 price tag at the pump — the average cost for regular, unleaded gasoline in the state — marks a 46-cent increase since the last AAA survey, conducted Feb. 8. One year ago, the average gas price in Nevada was $2.82, according to AAA data.

Traffic tickets increase as N.J. towns look for revenue

Eager, cash-strapped municipalities have doubled -- in some cases tripled -- the number of traffic and parking tickets issued, a move some motorists call a blatant grab for money. Half of the state's boroughs, townships and cities handed out 250,000 more tickets in the last six months of 2010, when compared to the same period a year earlier, a New Jersey Press Media investigation found. The ticket boost has easily added millions of dollars to local and county coffers.

And nearly half of the those new tickets were issued in municipalities that installed automated red-light cameras, which record every violation 24 hours a day, the investigation found.

Dartmouth to Raise Tuition Rates by 5.9%

Dartmouth’s Board of Trustees recently announced plans to increase tuition, room, board and fees for the upcoming school year by 5.9%. With the increase the total amount for all of these fees will equal $55,365, making Dartmouth the most expensive Ivy League school of those that have announced their tuition rates for the 2011-12 school year.

The cost of room and board for undergraduate students will rise from $12,297 to $13, 629 while the tuition rate will increase from $39,978 to $41,736. The increase in rates is designed to help the school deal with the growing budget gap, as funding from other sources continues to dry up.

Illinois Fails To Pay Its Bills (News video)

A group of local human service organizations are banding together to complain about the state's failure to pay its bills. The leaders of a variety of local human services groups say that because the state has not paid them they must find some way to pay the billions of dollars it owes.

They say a debt-restructuring plan is the state's best bet.

Redevelopment money Salinas seeks to shield from state rises to $31M

The redevelopment tax dollars the city of Salinas is seeking to shield from the state has risen to $31 million as city staff continue to update their report hours before the council’s emergency vote tonight.

The council’s action comes as city officials anticipate state lawmakers will vote this week to eliminate about 400 redevelopment agencies statewide to help balance the budget -- despite negotiation setbacks between Gov. Jerry Brown and lawmakers....It’s unknown if the strategy will work, but according to Brown’s proposal, the state wouldn’t take funding needed by RDAs to pay for existing debt and other contractual responsibilities.

Mayor sees red over fire station #4 (Sioux City)

He's worried whether there'll be enough money generated through speed cameras to pay for projects the city's budgeted this year.

City Manager Paul Eckert says a legislative proposal to set a maximum fine for tickets issued electronically will only affect cameras installed at intersections, like the city's red light cameras, not speed cameras.

SRJC joins the rush to raise parking fines (Santa Rosa)

SRJC’s board of trustees is slated to follow Sonoma State University, Santa Rosa, Sonoma County and other agencies that have hiked the cost of parking citations to offset Sacramento’s increased appetite for such revenue sources.

In December, the cash-strapped state government upped its claim on each ticket from $9.50 to $12.50, a 32 percent increase that prompted the city, county and SSU to bump up citations by $3 to replace the lost revenue. SRJC, though, is looking to get a little extra out of its response.

NJ Lawmakers Consider Increasing Penalties For Drivers Using Cell Phones

The bill (A-3154), released unanimously by the Assembly Law and Public Safety Committee, would increase fines for motorists who get caught more than once while driving and talking on a hand-held device or texting.Under current law, the fine for using a hand-held electronic device while driving is $100. This bill would increase the fine for a first offense to $200; the fine for a second offense to $250-400 a second offense; and to $500-600 for third or subsequent offenses.

Energy

US says Saudi oil boost can't keep crude under $100 (EIA)

US oil price to reach record $102/barrel yearly average...U.S. gasoline may exceed $4 a gallon this summer... In its new monthly forecast, the EIA said it expected total OPEC crude oil production to fall from 29.79 million bpd in February to 28.95 million bpd in March, mainly reflecting a a loss of Libyan oil.

The agency also increased its 2011 forecast for U.S. oil by $9 to a record yearly average of $102 a barrel, near the very top end of analysts forecasts.

Oil markets brace for Saudi 'rage' as global spare capacity wears thin (Ambrose Evans-Pritchard)

Chris Skrebowski, editor of Petroleum Review, said the long-denied oil crunch is starting to bite. "We cling to the comfort blanket that spare capacity exists, but it is mostly fictional, or inoperable. If you take 2m bpd off the figure, the whole dynamic of global oil supply changes," he said.

A Wikileaks cable cited a Saudi geologist claiming that the kingdom's reserves had been overstated by 40pc. A second cable questioned whether the Saudis "any longer have the power to drive prices down for a prolonged period".

Environment

UN Seminars Start to Help States Cope With Food-Price Surge

The United Nations’ Food & Agriculture Organization is holding seminars across four continents to help governments cope with record food prices.

The meetings will include government officials and farm groups from 20 countries and cover policy responses, the Rome- based agency said in a notice on its website today. World food prices rose to a record in February, according to an index from the FAO, which is predicting higher prices in the coming decade. Rising prices contributed to riots across North Africa and the Middle East in the past several months that toppled leaders in Egypt and Tunisia.

Cotton price surge makes dollar bills more costly

In 2010, the cost of making one note jumped 50% from what it cost the government in 2008.The government produced 6.4 billion new currency notes last year. Each one cost 9.6 cents to produce, including the cost of paper and printing. In 2008, it only cost 6.4 cents a note, a tiny bit more than it did in 2007, according to the U.S. Bureau of Engraving and Printing.

With the price of raw cotton at a 140-year high, things could get worse.

Russia seeks to stem rise in food prices

It's a phenomenon that is fairly symptomatic for foodstuffs in the country. Cabbages and potatoes - other popular mainstays of the Russian diet - nearly doubled in price in 2010, according to the Federal State Statistic Service.

The prices for other staples such as bread, butter and milk rose upwards of nearly 23 percent last year.

Rising food costs could force U.S. eatery overhaul

Record-high food prices could be the tipping point this year for U.S. restaurants already struggling with high debt loads and tight-fisted consumers.

The economic downturn and drop in consumer spending has sent a handful of restaurant chains -- such as Uno Chicago Grill pizza, Fuddruckers and Charlie Brown's Steakhouse -- into bankruptcy court during the past year. And 2011 is not likely to be much better, experts say.

Price of food in Canada could jump between 5 and 7 per cent in 2011: economist

With the United Nations blaming higher crude oil prices for pushing global food prices to an all time high, Canadians have been spared so far because of cutthroat grocery store competition and the high loonie making the cost of imported goods cheaper.

But it's just a matter of time until higher commodity prices trickle down to Canadian grocery shelves and Canadians have to reach further into their wallets, says Douglas Porter, deputy chief economist at BMO Nesbitt Burns.

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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bandvbandv's picture
bandvbandv
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Any thoughs on what Bob

Any thoughs on what Bob Chapmen is saying in this interview?

http://vinceseconomicblog.wordpress.com/2011/03/09/how-it-will-all-end-d...

fiatagogo's picture
fiatagogo
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canadian debt

$500 billion, so the Canadian Taxpayers Federation is taking the clock across the country to remind citizens how much the country is in the red. According to the clock, our national debt increases by $1,400 every second

omg the horror!!! Looks pretty good from this side.

idoctor's picture
idoctor
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SlV verses Physical....

SLV verses Physical....

Marc Faber

Arthur Robey's picture
Arthur Robey
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How the other players will react

When I bought silver from the Perth mint I triggered a bureaucratic tripwire. They want to see my passport before they hand over the metal.

This has me worried. They will have my name and address. What do I do now? It seems to me that it might be advisable to leave my very good job and vanish.

How real are my concerns? I want to be very long on silver, but if the authorities react by criminalizing  possession then what? 

idoctor's picture
idoctor
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Posts: 1731
Welfare State: Handouts Make

Welfare State: Handouts Make Up One-Third of U.S. Wages  http://www.cnbc.com/id/41969508

Government payouts—including Social Security, Medicare and unemployment insurance—make up more than a third of total wages and salaries of the U.S. population, a record figure that will only increase if action isn’t taken before the majority of Baby Boomers enter retirement.

Even as the economy has recovered, social welfare benefits make up 35 percent of wages and salaries this year, up from 21 percent in 2000 and 10 percent in 1960, according to TrimTabs Investment Research using Bureau of Economic Analysis data.

“The U.S. economy has become alarmingly dependent on government stimulus,” said Madeline Schnapp, director of Macroeconomic Research at TrimTabs, in a note to clients. “Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits.”

The economist gives the country two stark choices. In order to get welfare back to its pre-recession ratio of 26 percent of pay, “either wages and salaries would have to increase $2.3 trillion, or 35 percent, to $8.8 trillion, or social welfare benefits would have to decline $500 billion, or 23 percent, to $1.7 trillion,” she said.

Last month, the Republican-led House of Representatives passed a $61 billion federal spending cut, but Senate Democratic leaders and the White House made it clear that had no chance of becoming law. Short-term resolutions passed have averted a government shutdown that could have occurred this month, as Vice President Biden leads negotiations with Republican leaders on some sort of long-term compromise.

“You’ve got to cut back government spending and the Republicans will run on this platform leading up to next year’s election,” said Joe Terranova, Chief Market Strategist for Virtus Investment Partners and a “Fast Money” trader.

Beyond the money

Terranova noted some sort of opt out for social security or even raising the retirement age.

But the country may not be ready for these tough choices, even though economists like Schnapp say something will have to be done to avoid a significant economic crisis.

A Wall Street Journal/NBC News poll released last week showed that  less than a quarter of Americans supported making cuts to Social Security or Medicare in order to reign in the mounting budget deficit.

Those poll numbers may be skewed by a demographic shift the likes of which the nation has never seen. Only this year has the first round of baby boomers begun collecting Medicare benefits—and here comes 78 million more.

Social welfare benefits have increased by $514 billion over the last two years, according to TrimTabs figures, in part because of measures implemented to fight the financial crisis. Government spending normally takes on a larger part of the spending pie during economic calamities but how can the country change this make-up with the root of the crisis (housing) still on shaky ground, benchmark interest rates already cut to zero, and a demographic shift that calls for an increase in subsidies?

At the very least, we can take solace in the fact that we’re not quite at the state welfare levels of Europe. In the U.K., social welfare benefits make up 44 percent of wages and salaries, according to TrimTabs’ Schnapp.

“No matter how bad the situation is in the US, we stand far better on these issues (debt, demographics, entrepreneurship) than other countries,” said Steve Cortes of Veracruz Research. “On a relative basis, America remains the world leader and, as such, will also remain the world's reserve currency.”

guardia's picture
guardia
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Re: How the other players will react

Arthur Robey wrote:

When I bought silver from the Perth mint I triggered a bureaucratic tripwire. They want to see my passport before they hand over the metal.

This has me worried. They will have my name and address. What do I do now? It seems to me that it might be advisable to leave my very good job and vanish.

How real are my concerns? I want to be very long on silver, but if the authorities react by criminalizing  possession then what? 

Become a smuggler? That'd kill two birds with one stone Laughing

Samuel

karsa's picture
karsa
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Posts: 3
  In a stunning vote of no

In a stunning vote of no confidence in the policies of the US central bank, the world’s largest bond fund, PIMCO, has dumped all of its investments in US government-related debt, including US Treasury bonds and agency debt

http://abcnews.go.com/Business/wireStory?id=13099388

be interesting to see the ramifications of this

Marteen's picture
Marteen
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Posts: 40
Silver

Arthur Robey wrote:

When I bought silver from the Perth mint I triggered a bureaucratic tripwire. They want to see my passport before they hand over the metal.

This has me worried. They will have my name and address. What do I do now? It seems to me that it might be advisable to leave my very good job and vanish.

How real are my concerns? I want to be very long on silver, but if the authorities react by criminalizing  possession then what? 

If you think that you can hide yourselve you are living on the wrong continent. Everything is monitored by all kind of government agencies. You will have to live in a country with cash payment only like Africa or so.

In the US or Europe everyting is monitored. If i drop more then 10.000 euro of my own money on my own bank account i have to identify myself. If you buy something in europe in cash with a value over 10.000 euro the company has to "report" it. Can you imagine. .

Marteen

Wendy S. Delmater's picture
Wendy S. Delmater
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Posts: 1398
@ Arthur Rodney Next time

@ Arthur Rodney

Next time have the silver made into a belt buckle. Smile

nigel's picture
nigel
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Posts: 82
The limit in australia is

The limit in australia is $5000 before they are required to report it. So find a local bullion dealer and go and buy $4500 of silver. You can do it every day of the week as long as you keep the amount under $5000.

Having sat in a bullion sales office watching people I can say you would be a very long way be the strangest person if you did that everyday. It's quite normal for people to pay cash and for small amounts.

I will pre-empt damn the matrix and suggest you spend your money on water tanks and gardening supplies rather than metal you can't eat.

Arthur Robey's picture
Arthur Robey
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Posts: 2072
Belt Buckles

Thanks Safewrite.

I like it. Let's see...........

Ikg for the buckle, half a kg each for the ear rings, 100 grams for the nose ring, half a kg on each hand in rigs and the rest as a beautiful torc around my neck.

Laughing

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
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Posts: 3998
The limit in australia is

nigel wrote:

I will pre-empt damn the matrix and suggest you spend your money on water tanks and gardening supplies rather than metal you can't eat.

That's me boy...... :-)

SingleSpeak's picture
SingleSpeak
Status: Gold Member (Offline)
Joined: Dec 1 2008
Posts: 417
Indigestion

nigel wrote:

I will pre-empt damn the matrix and suggest you spend your money on water tanks and gardening supplies rather than metal you can't eat.

If you think an oz. of silver is difficult to digest, wait until you try a water tank or two..... talk about indigestion! Tongue out

avardy's picture
avardy
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Joined: Apr 28 2010
Posts: 4
Canadian Debt

Keep in mind that our deficit is 1/3 the US but our population is only 1/8th or so. Not sure how the GDP's compare but I would suspect that our deficit over CDN GDP doesn't look much better than the US (although our prospects do)

jkrimer's picture
jkrimer
Status: Member (Offline)
Joined: Sep 8 2008
Posts: 7
Yes It is! We could build more free hospitals and good schools.

Yes It is! We could build more free hospitals, toll free highways, good schools, inexpensive universities (5k tuition).

guardia's picture
guardia
Status: Platinum Member (Offline)
Joined: Jul 26 2009
Posts: 592
Re: Canadian Debt

avardy wrote:

Keep in mind that our deficit is 1/3 the US but our population is only 1/8th or so. Not sure how the GDP's compare but I would suspect that our deficit over CDN GDP doesn't look much better than the US (although our prospects do)

I wouldn't count on it.. Google "Dutch Disease"...

Samuel

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