Daily Digest

Daily Digest 5/18 - Watching The Greek System Collapse, U.S. Ready To Strike Iran, Time To Worry About Peak Labor

by Daily Digest
Friday, May 18, 2012, 10:45 AM
  • We Are Watching The Greek Banking System Collapse Right In Front Of Our Eyes
  • Temporary Cabinet Named in Greece as Agency Lowers Nation’s Debt Rating
  • Why The Next Inflation Surge Is Closer Than You Might Think
  • US Envoy to Israel: US Ready to Strike Iran
  • The Inside Story on the Gold-for-Oil Deal that could Rock the World's Financial Centers
  • G8 Leaders Look To Head Off Euro Zone Crisis
  • Forget Peak Oil, Time To Worry About Peak Oil Labor

Crash Course DVDOwn the Crash Course Special Edition Set with Presenter’s Pack (NTSC or PAL)

Economy

We Are Watching The Greek Banking System Collapse Right In Front Of Our Eyes (David B.)

That is why the announcement on Tuesday was so dramatic. The ECB is starting to pull back and that is a very bad sign for the Greek banking system.

For the moment, the Greek Central Bank is continuing to support the Greek banks that the European Central Bank is no longer providing liquidity for. A Reuters article explained how this works….

Temporary Cabinet Named in Greece as Agency Lowers Nation’s Debt Rating (jdargis)

Fears over bank runs migrated from Greece earlier this week to Spain on Thursday, where shares in troubled Bankia, Spain’s fourth-largest bank, tumbled almost 30 percent during the trading session, before recovering later in the day. A report in the newspaper El Mundo on Thursday said customers had withdrawn more than $1.3 billion over the past week, equivalent to about 1 percent of the value of the accounts held by the bank.

As European leaders prepared for this weekend’s Group of 8 meeting in Washington, which was expected to focus on restoring growth, Prime Minister David Cameron of Britain warned that they needed to deal with the euro zone’s problems at a fundamental level, or risk disaster.

Why The Next Inflation Surge Is Closer Than You Might Think (David B.)

There’s no question that’s coming. Just look at what’s happening. Britain is now officially back in a recession. France’s economy is slumping. Spain’s economy is toast, in a depression. Portugal’s economy is collapsing again. Even Germany’s economy is starting to slow.

And in each one of the above countries — the debt crisis is getting worse. So I have no doubt the European Central Bank will soon print more money.

US Envoy to Israel: US Ready to Strike Iran (jdargis)

President Barack Obama has assured Israel that the U.S. is prepared to take military action if necessary, and it is standard procedure for armies to draw up plans for a broad range of possible scenarios. But Shapiro's comments were the most explicit sign yet that preparations have been stepped up.

In his speech, Shapiro acknowledged the clock is ticking.

The Inside Story on the Gold-for-Oil Deal that could Rock the World's Financial Centers (Ivo M.)

What matters most to us here at USAGOLD is ANOTHER's educational value to all who would take the time to read and think through his (at times) arcane and cryptic commentary of international economic dealings behind-the-scenes. ANOTHER demonstrates a feel for and understanding of the gold and oil markets that indicates connections at the highest echelons of international finance, yet for reasons having to do with his "position," as he has indicated, he wishes to remain anonymous. If his "THOUGHTS!" are theory; they are good theory. If they are speculation; they are reasonable speculation. If they are supposition; they are well-grounded supposition.

G8 Leaders Look To Head Off Euro Zone Crisis (Ernest W.)

What matters most to us here at USAGOLD is ANOTHER's educational value to all who would take the time to read and think through his (at times) arcane and cryptic commentary of international economic dealings behind-the-scenes. ANOTHER demonstrates a feel for and understanding of the gold and oil markets that indicates connections at the highest echelons of international finance, yet for reasons having to do with his "position," as he has indicated, he wishes to remain anonymous. If his "THOUGHTS!" are theory; they are good theory. If they are speculation; they are reasonable speculation. If they are supposition; they are well-grounded supposition.

Energy

Forget Peak Oil, Time To Worry About Peak Oil Labor (Ernest W.)

With the aging and retirement of the boomer generations that began their careers in the late 1970s (see chart below), the oil industry is suffering an acute shortage of experienced skilled professionals.

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."

10 Comments

Fri, May 18, 2012 - 11:36am
#1
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Spanish Debt Insurance Costs Hit Another Record High At 562 BPs

Headlines:

  1. Spanish Debt Insurance Costs Hit Another Record High At 562 BPs
  2. Spanish Banks' Bad Loans Worsen as Recession Bites: Economy
  3. JPMorgan May Lose $5 Billion on Derivatives, WSJ Reports
  4. JPMorgan Unit Has $100 Billion of Risky Bonds
  5. Europe thinks the unthinkable on Greece
  6. Euro austerity example Ireland 'may need second bailout'
  7. Ireland 'may need' second bailout
  8. Allentown school taxes could rise 4.8 percent amid looming budget crisis
  9. EU, ECB working on Greece exit contingency: trade commissioner
  10. Scranton City Council adopts $26.6 million bond issue, and advances plan to borrow another $9.85 million
Fri, May 18, 2012 - 11:57am
#2
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Forget Peak Oil, Time To Worry About Peak Oil Labor

Forget Peak Oil, Time To Worry About Peak Oil Labor

 
By EconMatters

In a recent working paper, researchers at the the IMF (International Monetary Fund) attempt to reconcile the Peak Oil debate that whether resource constraints will dictate the future of oil output and prices, or advance in technology motivated by high oil price would eventually provide a solution to more production, as well as higher oil prices.

An economic model was developed incorporating both views, and identified two biggest factors contributing to the recent run-up in oil prices:

  1. Relative price insensitivity on the supply side - We have to point out that this IMF observation is partly due to oil production increase/decrease typically significantly lags the oil price movement.   
  2. "Shocks to excess demand for goods and to demand for oil" due to the recent phenomenal growth from countries like China and India. 

The paper also gives out this dire warning:
 

"....our prediction of small further increases in world oil production comes at the expense of a near doubling, permanently, of real oil prices over the coming decade. This is uncharted territory for the world economy...."

In general, various forecasts by different agencies seem to agree that world oil production will likely continue to have small increases with producers venturing out to exploit the more difficult and challenging formation.

However, what most forecasts as well as the IMF paper did not discuss is the scarce human capital that's already seriously plaguing the oil industry, which could have serious implication in the future oil production and technology development.

With the aging and retirement of the boomer generations that began their careers in the late 1970s (see chart below), the oil industry is suffering an acute shortage of experienced skilled professionals.

A separate study by the Petroleum Human Resources Council estimates about 39,000 workers will be needed in Canada along to replace those who are expected to retire before 2020 just to maintain the status quo.  The industry could need as many as 130,000 new hires by the end of the decade with more bullish oil and gas prices.

Already at least one analyst firm is scaling back its drilling activity forecast for 2012, in part because there aren't enough workers who can drill big, complicated wells.  For now, NES Global Talent sees a depletion of skilled workers in oil and gas fields in the United States, Great Britain and Australia, three of the busiest oil and gas regions, will become a major problem.

Schlumberger, the largest oilfield services company in the world, sees significant negative effect from peak oil labor manifesting by 2015, a short three years from now, with increasing inexperienced oil professionals, and that the talent problem will only get worse.

For now, most forecasts expect crude prices would remain high in 2012, mostly due to the Iran tension.  Meanwhile, OPEC just revised its 2012 world oil demand outlook slightly upwards citing a stable US economy and the shutdown of nuclear plants in Japan.  So if the IMF prediction comes true, it seems the peak oil labor could be just enough to tip the scale for doubling in oil price scenario a lot sooner than year 2022.

The future will not be easy. 

 

Fri, May 18, 2012 - 11:56am
#3
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A Smoking Gun RE Goldman et al Naked Short Selling

This is a MUST READ 

Accidentally Released - and Incredibly Embarrassing - Documents Show How Goldman et al Engaged in 'Naked Short Selling'



Read more: http://www.rollingstone.com/politics/blogs/taibblog/accidentally-released-and-incredibly-embarrassing-documents-show-how-goldman-et-al-engaged-in-naked-short-selling-20120515#ixzz1vEkiMcNH

Fri, May 18, 2012 - 3:04pm
#4
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re: quick question

I'm a novice here...and have what may be a dumb question, but I'm curious about the 10-yr Portugese gov bonds.  At the moment, they appear to be at 12.24% yield:

http://www.bloomberg.com/quote/GSPT10YR:IND

That is the bond yield that is listed at the top of that webpage, right?...or is that some other figure?  It looks like it was over 17% at the end of January.  Am I misunderstanding these figures?

I thought when a country's yield went over 7%, everyone got hot and bothered...but I'm not seeing much of a peep about Portugal.  It's all about Spain as the next shoe to drop.  It makes me think I may be misunderstanding something. 

If anyone has a moment, could someone let me know what I'm missing?

Thanks in advance for any comments!

thelorax

Fri, May 18, 2012 - 3:50pm
#5
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Nightmare foretold if Greece heads for euro exit

"In Athens, the homeless are on the streets in growing numbers, soup kitchens feed twice as many people as a year ago, and the poor are diving into garbage bins in search of scrap they can sell.

Greece is close to breaking point as it struggles with austerity targets set by creditors, but this is just a foretaste of the nightmare of unrest, hunger and even anarchy that could engulf the debt-crippled nation if it is forced out of the euro.

If the exact economic impact of such a move is hard to nail down - newly issued drachmas devalued by up to 70 percent, runaway inflation, a banking meltdown, a collapse in trade - the implications for ordinary Greeks crushed by the debt crisis are even harder to predict.

Without international bailout cash, salaries and pensions would go unpaid and violence, political extremism and uncontrolled emigration could quickly follow."

Agricole May Face $12 Billion Loss on Greek Exit, Analyst Says

Greek euro exit could throw UK 'into long-term recession'

........................I would like to also add to the Reuters "Nightmare" story that without their "international bailout cash" that Greece will also be invaded by zombies, every Greek citizen's hair will turn purple, and then each and every Greek citizen will be rounded up and taken to a location where they will be forced to listen to and watch the most horrific thing that can be imagined.

Fri, May 18, 2012 - 4:24pm
(Reply to #4) #6
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re: quick question

Mr. Lorax, Portugal is indeed in a bad situation, but they are a much smaller problem than Greece, Spain, or Italy due to their size and how far along the default train they are.   Spain's possible default will have a much bigger impact on the EU and global economy, and Greece (although also relatively small) is possibly weeks away from getting booted out of the Euro.  So, there's definitely news out there for Portugal, its just being drowned out.

Fri, May 18, 2012 - 6:21pm
#7
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just because..

Have a beautiful 4 year old vid...

But remember, the world can stay crazy longer than you can stay soylent..

disclosure: long crazy.. with hedged sanity.

Fri, May 18, 2012 - 10:46pm
#8
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anyone watching gold and

anyone watching gold and silver?

Sat, May 19, 2012 - 3:49am
(Reply to #8) #9
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Re: anyone watching gold and silver?

Arthur Robey wrote:
anyone watching gold and silver?

Forget gold, buy yen! The yen's beating the crap out of gold! :)

Samuel

Sat, May 19, 2012 - 5:52am
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U.S. Solar Tariffs On Chinese Cells May Boost Prices

http://www.bloomberg.com/news/2012-05-17/u-s-solar-tariffs-on-chinese-cells-may-boost-prices.html

The U.S. yesterday imposed tariffs of as much as 250 percent on Chinese-made solar cells to aid domestic manufacturers beset by foreign competition, though critics said the decision may end up raising prices and hurting the U.S. renewable energy industry.

[...]

SolarWorld said its Hillsboro, Oregon-based U.S. unit can’t compete with Chinese exporters, including Suntech Power Holdings Co. (STP), the world’s largest solar-panel maker, and Trina Solar Ltd. (TSL) unless tariffs are imposed.

If you can't beat em, impose a tariff so there's even less incentive to try? The Chinese will find a way around this (outsource production) and meantime you're also disincentivising the adoption of solar power.

President Barack Obama “is trying to create a market for solar in the U.S., so it’s curious why he wants to impose tariffs, which will make it more expensive,” said Dan Ikenson, director of the Washington-based Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. “It will imperil jobs in the much more economically significant downstream.”

But but...he gave $737m to SolarReserve and $535m to Solyndra.

So phat grants and tariffs? What next, war?

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