Daily Digest

Daily Digest 5/29 - UN & Bill Gross Warn of Dollar Crisis, Gold's Future, China's Appetite for US Farmland

Sunday, May 29, 2011, 11:38 AM
  • U.N. sees risk of crisis of confidence in dollar
  • Gross Believes Not Raising Debt Ceiling Would Crush Dollar
  • Another Volcker Moment at Hand? An Appraisal of $1500 Gold
  • BBC HARDtalk - Jim Rogers Interview (part 1)
  • Biggest Inflection Point of the Year
  • What To Do With All The Nuclear Waste
  • China is ravenous for farmland: Attempting to buy up millions of acres here
  • Estimating the critical levels of petroleum consumption necessary to sustain the modern food production system

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Economy

U.N. sees risk of crisis of confidence in dollar (Adam)

The United Nations warned on Wednesday of a possible crisis of confidence in, and even a "collapse" of, the U.S. dollar if its value against other currencies continued to decline.

In a mid-year review of the world economy, the U.N. economic division said such a development, stemming from the falling value of foreign dollar holdings, would imperil the global financial system.

Gross Believes Not Raising Debt Ceiling Would Crush Dollar (Adam)

PIMCO's Bill Gross appeared on CNBC's Squawk Box Friday morning. In his appearance, he echoed statements made by Treasury Secretary Timothy Geithner, President Obama, and Federal Reserve Chairman Ben Bernanke, stating that if the U.S. defaults on any future debt payments--even for a period of just six days--there will be disastrous consequences for the dollar.

Warning that such an event would amount to a default on the U.S. dollar, he predicted that if the debt ceiling is not raised, the world will switch to a different reserve currency in short order.

Another Volcker Moment at Hand? An Appraisal of $1500 Gold (Adam)

In any given market, it is essential to ask “what is reflected in the price?” This admonition is as true for gold as it would be for any particular stock, interest rate, credit default swap, junk bond, or farm acreage. Market prices are the sum total of known facts, opinions, sentiment, and expectations. The point of investing on the basis of contrary opinion is to take advantage of unexpected change.

BBC HARDtalk - Jim Rogers Interview (part 1) (Adam)

Stephen Sackur talks to one of the world's most influential investors. Aged five, Jim Rogers was selling peanuts for profit; he became a hedge fund pioneer, a commodities trader and, years ago, he shifted much of his money, and his family too, out of the US and into Asia. But can even this maverick investor see new opportunities in a world riddled with economic uncertainty?

We need some brave leadership and knowledgeable decision making in the UK and elsewhere to bring back our manufacturing from China, enact agricultural and energy reforms and the necessary fiscal and monetary control/planning. Maybe then Jim would bring back some of his money to invest here given the opportunity.

Biggest Inflection Point of the Year (Adam)

Typically there are a few major inflection points in the year where assets either switch gears and reverse their prior trends or undergo an acceleration of their current trend. One of the key themes that have often marked these inflection points over the last few years is the general trend of the USD. At present the USD is at yet another major inflection point and what it does from here will have direct implications for not only asset allocation (bonds, stocks, commodities, currencies) but also sector allocation (cyclicals, non-cyclicals).

Crash Course DVDGet Yours Today! The Crash Course Special Edition Set with Presenter’s Pack (NTSC or PAL)

Energy

What To Do With All The Nuclear Waste (Adam)

This week the International Atomic Energy Agency (IAEA) visited Fukushima Daiichi, to investigate the accident, and TEPCO’s emergency response actions. At Fukushima, massive amounts of high radioactive waste have been created, with no clear plan for long-term or permament storage. Spent nuclear fuel is about 95% Uranium, another 1% consists of heavy elements such as curium, americium, and plutonium.

As of May 18th 2011, almost 100,000 tons of radioactive water had leaked out of containment at Fukushima. The data also shows that the amount of radiated water may double by the end of December.

As a comparison, it is estimated that the United States has 71,862 tons of waste, according to state-by-state numbers obtained by the Associated Press. .

Environment

China is ravenous for farmland: Attempting to buy up millions of acres here (Adam)

It's no secret China has been buying up vast amounts of natural resources like gold, copper, oil, and coal in recent years.

As more and more of its people begin eating meat, the country has now turned its attention to securing millions of acres to grow its own soybeans and other crops necessary for animal feed.

Estimating the critical levels of petroleum consumption necessary to sustain the modern food production system (CrashWatcher)

In Part 7, I examined the relationship between increasing global population and global petroleum production rates and found that they have a very strong linear correlation.

Based on this correlation, and suggestions that the Green Revolution in food production and delivery was made possible by petroleum consumption, I hypothesized that the increase in petroleum production was the cause of the increase in population. I further hypothesized that, because petroleum exports and production are likely to continue to decline in the near future (Part 5 and Part 6), there could be an immediate decline in population that follows the previous correlation between increasing global population and global petroleum production rates, but in reverse. An alternative hypothesis I posed was that global population will continue to increases, even in the face of declining petroleum consumption, possibly through further gains in the efficiency of the food production system.

Please send article submissions to: dd@PeakProsperity.comAll 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

Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
China is ravenous for farmland

From the article about China buying farmland:

China itself does not allow private ownership of farmland, and it cautioned local governments against granting large-scale or long-term leases to companies in a 2001 directive. China also bans foreign companies from buying mines and oil fields.

If China does not allow ownership of land then why should any other country allow China to own it?

es2's picture
es2
Status: Bronze Member (Offline)
Joined: Dec 31 2010
Posts: 68
Gross: Globally, if we’re not bldg houses, there aren’t enuf job
Gross: Globally, if we’re not bldg houses, there aren’t enuf jobs & countries compete 4 them w/financial repression & currency depreciation.
saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2466
Arab oil faces higher ‘break-even’ price

Arab oil faces higher ‘break-even’ price

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2068
Crash Watcher impressions.

Crash Watcher  derives 1.7 Barrels per person per year devoted to food production as the minimum required for population growth.

When tested against (unsatisfactory) real world models his graphs show weak correlation.

My qualitative impression is that when organisms are stressed they increase their breeding rate. Therefore if food aid is insufficient it exacerbates the problem. 

Other factors seem to have a greater impact on population growth although I suspect that their impact is strengthened if the per person person consumption of oil falls below 1.7 barrels per year.

Few countries are anywhere near this figure at present. It remains to be seen how tolerant developed economies are to falling discretionary consumption of oil. Are you prepared to kill for that big car?

My prognosis is that population will spike before crashing.

Worthy effort from Crash Watcher.

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1024
The first daily digest

The first daily digest article suggests the US needs to reduce deficits and borrowing to avoid collapse of the dollar while the next article suggests the US needs to raise the debt ceiling and borrow even more to service our growing debt and avoid a collapse of the dollar.  We're stuck!

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Worst ever carbon emissions leave climate on the brink

<http://www.guardian.co.uk/environment/2011/may/29/carbon-emissions-nuclearpower>

Worst ever carbon emissions leave climate on the brink

Greenhouse gas emissions increased by a record amount last year, to the highest carbon output in history, putting hopes of holding global warming to safe levels all but out of reach, according to unpublished estimates from the International Energy Agency.

Exclusive: Record rise, despite recession, means 2C target almost out of reach

The shock rise means the goal of preventing a temperature rise of more than 2 degrees Celsius – which scientists say is the threshold for potentially "dangerous climate change" – is likely to be just "a nice Utopia", according to Fatih Birol, chief economist of the IEA. It also shows the most serious global recession for 80 years has had only a minimal effect on emissions, contrary to some predictions. Last year, a record 30.6 gigatonnes of carbon dioxide poured into the atmosphere, mainly from burning fossil fuel – a rise of 1.6Gt on 2009, according to estimates from the IEA regarded as the gold standard for emissions data.

"I am very worried. This is the worst news on emissions," Birol told the Guardian. "It is becoming extremely challenging to remain below 2 degrees. The prospect is getting bleaker. That is what the numbers say."

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2068
Carbon catastrophe.

Worst ever carbon emissions leave climate on the brink

Here are the culprits.

http://en.wikipedia.org/wiki/File:CO2_per_capita_per_country.png

(2000 data)

It is not clear to me if exports of coal are accounted against the exporter, so either China has come a long way since 2000 or yes, Australia gets a medal.

If it can be shown that more pearson/years will lost to climate change than to having targeted nuclear strikes against the sources of carbon, then Nuclear strikes will be the moral imperative.

Squeemishness has little to do with the moral equations.

I anticipate that it will be in the form of "You have 1 month to stop burning carbon."

maceves's picture
maceves
Status: Gold Member (Offline)
Joined: Aug 23 2010
Posts: 279
carbon

Arthur,

Canada and China have me somewhat confused.  Is it because the data is analyzed per country and China is such a large country?  We all know that Canada has vast expanses of untouched wilderness--do the tar fields make that much difference?

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

maceves wrote:

Arthur,

Canada and China have me somewhat confused.  Is it because the data is analyzed per country and China is such a large country?  We all know that Canada has vast expanses of untouched wilderness--do the tar fields make that much difference?

NO.......  it's the per capita bit that makes all the difference!

Australia and Canada are vastly less populated than China.

Mike

maceves's picture
maceves
Status: Gold Member (Offline)
Joined: Aug 23 2010
Posts: 279
got it

Thanks,

Interesting way to look at the data,

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