Daily Digest 4/19 - CM on the TF Metals Podcast, Gold Heading To $700, Real Earnings Collapse
- TF Metals Report Podcast #17 - Chris Martenson
- John Williams - Real Earnings Collapse, Nearly 50% Below 1973
- Spain debt costs set to leap as risk aversion grows
- More U.S. cities set to enter default danger zone
- Gold Heading to $700: Author Sees “Impending Collapse”
- Debt: The Politics and Economics of Restructuring
- ExxonMobil and Rosneft to Develop Arctic Oil in $500 Billion Deal
- The Oil and Natural Gas Ratio Explodes To 52:1
- Mutant-flu researcher plans to publish even without permission
On Thursday, I had an opportunity to visit with Chris Martenson. Chris is obviously very smart but, best of all, he's just a regular guy. Like most of us, Chris had an "awakening" a few years ago and he has devoted his efforts ever since to preparing his family, as well as the general public, for what we all know lies ahead. I think you'll enjoy this podcast and appreciate getting to know Chris a little bit better.
Temporary consumption gains could be fueled by debt expansion, but that option also is not available to most consumers. With limited prospects for income growth and debt expansion in the near future, broad economic activity remains likely to bottom-bounce for the foreseeable future, while healthy, sustainable gains in real retail sales remain improbable.
On Monday, 12-month T-bill yields on the secondary market stood at around 2.7 percent, a guide to the outcome of the primary auction, compared to an average yield of 1.418 percent last month. The 18-month bill previously sold at auction for 1.711 percent but traded at over 3 percent on Monday. The results of Tuesday's auction will be released at about 0840 GMT.
"Bills are basically an overdraft facility for the government with the banks, so this tells us how much distress there is in the banking sector," Ostwald said.
Take a look at Miami. The city just added a futuristic baseball stadium to its skyline and is gaining prominence as a global business center even as Miami's exposure to declining housing values, low reserves and high pension obligations worry some bond buyers.
The long-running housing crisis threatens Miami because drops in city property values are only now strongly hurting tax payments, according to institutional investor Chris Ihlefeld of Thornburg Investment Management.
While tipping his hat to the bullish arguments and sympathetic to reasons why people own gold, Jacobs says the metal's inability to rally despite Europe's ongoing crisis and renewed tensions in the Middle East are negative signs. "The froth is coming off," he says.
Michael asserts that our economic models are quite flawed. In the U.S. 40% of the American labor budget goes to housing, about 15% goes to wage withholding for Social Security and medical care; other debt services (credit cards, student loans) is about 10%, and other taxes (income, sales) are about 10 to 15%. Of the take-home budgets of American workers, 75% is spent on non- goods and services. Only 25% is available for spending in the market. U.S. labor cannot compete with labor in economies that are less financialized, that have lower housing costs, where the government picks up infrastructure costs, and where the government basically has a lower cost structure.
Industry analysts agree that extracting oil in the harsh Arctic environment will be a costly process and only profitable with heavy tax benefits. Sechin has promised that any Arctic project would be exempt from export duties and property tax, and only be charged oil extraction tax at flexible rates. Exxon’s CEO, Rex Tillerson said that these tax breaks “will allow us to develop these resources now.”
Crude oil and natural gas are both energy commodities and should logically have a high degree of correlation. Theoretically, based on an energy equivalent basis, crude oil and natural gas prices should have a 6 to 1 ratio. However, due to various market characteristics, the price of oil typically had traded 8-12x that of natural gas in the past 25 years or so (see chart above). That historical pattern has started to deteriorate since 2009 primarily due to the combination of rising domestic production from unconventional shale gas depressing price levels, while geopolitical events in the MENA region (Middle East & North Africa) adding fear premium to the global crude oil prices.
“After this conference, and when an application [for an export permit] is received, the Dutch government will decide on an export licence,” says van Diepen, adding that although the NSABB decision will “carry weight” in the discussions, the Dutch government wants to make up its own mind on whether to allow publication.
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