Daily Digest

Daily Digest 4/19 - CM on the TF Metals Podcast, Gold Heading To $700, Real Earnings Collapse

Thursday, April 19, 2012, 9:44 AM
  • 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

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Economy

TF Metals Report Podcast #17 - Chris Martenson (adam)

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.

John Williams - Real Earnings Collapse, Nearly 50% Below 1973 (Ernest W.)

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.

Spain debt costs set to leap as risk aversion grows (Ernest W.)

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.

More U.S. cities set to enter default danger zone (Thomas C.)

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.

Gold Heading to $700: Author Sees “Impending Collapse” (Dana T.)

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.

Debt: The Politics and Economics of Restructuring (Ilene)

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.

ExxonMobil and Rosneft to Develop Arctic Oil in $500 Billion Deal (James S.)

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.”

The Oil and Natural Gas Ratio Explodes To 52:1 (James S.)

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.

Mutant-flu researcher plans to publish even without permission (VeganD)

“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.

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."

7 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2846
Japan posts record deficit in year since disasters

Just a few headlines:

Japan posts record deficit in year since disasters

India overtakes Japan to become third-largest economy in purchasing power parity

Fitch doubts Dutch AAA as property slump reaches 'coma' (So bad that it makes you want to stick a pen up your nose)

Obama Won’t Sign Republican Spending Bills, Official Says ("possibility of a government shutdown")

Rector's picture
Rector
Status: Gold Member (Offline)
Joined: Feb 7 2010
Posts: 358
No echo chamber, but c'mon. . .

The $700 gold pimply kid doesn't know his a#$ from a hole in the backyard.  Don't waste your time.

Rector

jeffinflorida's picture
jeffinflorida
Status: Member (Offline)
Joined: May 30 2011
Posts: 1
pimply gold kid

What is his position at the fed ?

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2846
Northern Mariana Islands Retirement Fund files Chapter 11

Northern Mariana Islands Retirement Fund (38.8% funded)

Google news search to compare funding of our pension funds

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2585
A Hill of Beans.

I am on a roll. Another Idea!

"If we have a recession or slowing global growth then all assets fall -- it's a deflationary period," Jacobs says. "Even though a lot of people are expecting inflation, if we enter recession that means the price of assets falls. Gold will fall together with the rest of commodities."

From the Pimply Kid.

That is the position taken by Nichole Foss. The issue is that of your timespan.

The way I see it is there is an inflationary pressure on commodities. There are three causes of inflation. Money printing, Wage demands and Scarcity.

What I see is that the FED can't print beans. Soya beans. Scarcity inflation takes off. People have to pay more for their green slime. Everyone is poorer. They haven't the extra cash to buy precious metals. In fact they have to sell off the dowrey in order to eat. PM's drop way down. Commodities do not drop, gold and silver do. The FED does what it does best and pretty soon paper finds other uses.

And then Precious Metals come into their own.However.   .   .

There is no such thing as a sure bet.

Scientists are playing around with  the sea of virtual particles for thrust. Who knows where that will take us. What with artificial intelligence and all. (Mental note to self: Buy artificial intelligence. You need it.)

“In a test article that we ran at 2 MHz and 4 MHz, the predicted force was very close to the observed force. We’ll be building a much larger test article, we’re trying to get to the 0.1 million newton level of thrust, and we’ll be working on that over the next year.”

Now 100 000newtons of force= 980Tonnes of force. In other words this thing will have a gross lift of 980 Tonnes without burning propellant.. Now that is a hill of beans. No wonder they dumped the Shuttle.

One thing Dr Martenson and I agree on. The future is not going to look anything like the past.

Edit: This was transcribed from a sound recording. There is a posibillity that the force is .1 milli Newtons.  Apologies.

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
on inflation

Arthur Robey wrote:

The way I see it is there is an inflationary pressure on commodities. There are three causes of inflation. Money printing, Wage demands and Scarcity.

Arthur, wage demands are NOT a ause of inflation, they are a symptom, which turns out to be a positive feedback... but not a cause.  People demand higher wages when rising prices make things unaffordable for the working man.

Mike

jbander's picture
jbander
Status: Member (Offline)
Joined: Sep 27 2008
Posts: 1
$ 700 gold

My coffee came out of my nose as I was laughing so hard at this interview !!! Can someone explain to me how you write a book on a bubble when you dont even understand what a bubble is ?!?!  Sad to see those sell gold because of this guy. 

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