Daily Digest 5/19 - Global Banks Rally On Greek Exit, The Canary In The Gold Mine, Apocalypse Fairly Soon
- Global Banks See Market Rally On Greek Exit
- John Williams: The Recovery Is An Illusion
- The Canary in the Gold Mine
- 18 Signs That The Banking Crisis In Europe Has Just Gone From Bad To Worse
- Apocalypse Fairly Soon
- Tokyo: The Biggest City in World History Faces Down Its Ultimate Nemesis
- Harper Government Funded Study On 'Dutch Disease'
Global Banks See Market Rally On Greek Exit (pinecarr)
Gary Jenkins from the bond advisers Swordfish said those betting on a market crash should be careful. "The global central banks are going to respond with the biggest flood of liquidity the world has ever seen. It will make the LTRO (the ECB's €1 trillion lending to banks) look like small change," he said.
John Williams: The Recovery Is An Illusion (David B.)
Reported GDP activity for Q3/11, Q4/11 and Q1/12 was above where it had been going into the recession. Formally, that is a recovery. The problem is that no other major economic series shows that same pattern, which is a physical impossibility if the GDP numbers are accurate.
The Canary in the Gold Mine (pinecarr)
A recent study by Fitch ratings calculated that banks need to raise $566bn of Tier1 capital, a 23% increase. That implies much potential selling of liquid, non-Tier1 assets. At first glance, this would appear to be negative for gold. But in fact it is not that simple.
As it happens, given that so many banks are desperate to raise their capital ratios, there is in fact a discussion underway regarding whether or not gold should, in fact, be designated as Tier1 capital. In a recent articlein the Financial Times, it was reported that, “The Basel Committee for Bank Supervision, the maker of global capital requirements is studying making gold a bank capital Tier 1 asset.”
#10 According to a recent German documentary, financial records at the Ministry of Finance in Athens are being stored in garbage bags and shopping carts.
Apocalypse Fairly Soon (jdargis)
The story so far: When the euro came into existence, there was a great wave of optimism in Europe — and that, it turned out, was the worst thing that could have happened. Money poured into Spain and other nations, which were now seen as safe investments; this flood of capital fueled huge housing bubbles and huge trade deficits. Then, with the financial crisis of 2008, the flood dried up, causing severe slumps in the very nations that had boomed before.
Despite leading the world in Fortune 500 companies, the majority of Tokyo establishments are small -- with four or fewer employees -- and concentrated on local services that aren't internationally tradable. That looks more like a model for post-growth happiness than pro-growth dynamism.
The Harper government has funded research that argues Canada's economy suffers from so-called Dutch Disease, an economic theory the prime minister and other senior officials ridiculed when raised recently by NDP Leader Tom Mulcair. Study for Industry Canada found a third of manufacturing job losses due to inflated currency.
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."