Daily Digest 10/1 - Solutions To Peak Oil, Less Than 900 Days To Hyperinflation?

Economy

In 2005 Raghuram Rajan Told Bernanke, Geithner, Summers, and Greenspan that We Were Headed for Economic Crisis (Jaime)

In 2005, Raghuram Rajan, who was then Chief Economist at the IMF, delivered a paper to the central bankers of the world. In attendance were Alan Greenspan, Ben Bernanke, Tim Geithner, and Larry Summers. He concluded that the financial world was becoming riskier. The paper focused on warped incentive structures which created huge short term profits and cash bonuses, but with no penalties for later losses. He argued that this encouraged bankers to take on huge losses that would potentially bankrupt their own firms or even crash the entire financial system.

Less than 900 days for hyperinflation in the US? (Taki T.)

We recently mentioned in our article “Money printing and inflation” that in fact inflation IS the expansion of the money supply. Inflation results in price inflation (the phenomenon of rising prices). Usually there is a time period between those two events, which makes it hard for most people to relate them to each other. Inflation and price inflation are often confused in spoken language but it’s mandatory to understand this fundamental difference.

Greek-Spanish Pension Split Illustrates Europe’s Dilemma (jdargis)

Politically, it is understandable that Mr. Rajoy would want to put a protective bubble around the country’s 10 million retirees at a time when people are marching in the streets and the economically crucial region of Catalonia is threatening to secede.

But pension expenditures represent the single biggest line item in the Spanish government’s budget, at nearly 40 percent of public spending and 9 percent of Spanish gross domestic product.

Super-Rich Irony (jdargis)

The growing antagonism of the super-wealthy toward Obama can seem mystifying, since Obama has served the rich quite well. His Administration supported the seven-hundred-billion-dollar tarp rescue package for Wall Street, and resisted calls from the Nobel Prize winners Joseph Stiglitz and Paul Krugman, and others on the left, to nationalize the big banks in exchange for that largesse. At the end of September, the S. & P. 500, the benchmark U.S. stock index, had rebounded to just 6.9 per cent below its all-time pre-crisis high, on October 9, 2007. The economists Emmanuel Saez and Thomas Piketty have found that ninety-three per cent of the gains during the 2009-10 recovery went to the top one per cent of earners. Those seated around the table at dinner with Al Gore had done even better: the top 0.01 per cent captured thirty-seven per cent of the total recovery pie, with a rebound in their incomes of more than twenty per cent, which amounted to an additional $4.2 million each.

Energy

Shift by Cuomo on Gas Drilling Prompts Both Anger and Praise (jdargis)

The fracking issue is the biggest environmental question, and the most polarizing, facing Albany, and New York’s decision is being closely watched nationally, as President Obama and Mitt Romney have both expressed support for increased use of natural gas as a means to reduce the nation’s dependence on foreign oil. The natural gas industry has been eager to drill in the Marcellus Shale, a deep underground repository that runs through West Virginia, Ohio, Pennsylvania and New York. Extraction there was too complex and costly until the advent of hydrofracking.

Solutions to peak oil – part III: 9 steps you can implement short term to get ready (Herve)

Here are a few short term steps you can start to implement today in order to get ready for the energy descent.

UK's Largest Coal Power Plant to be Converted to a Biomass Plant (James S.)

“We see a key part of our future as converting from essentially a coal station to a biomass station,” Chief Executive Officer Dorothy Thompson told Bloomberg. “It will take Drax from being the largest carbon emitter by site in the U.K. to being, probably, one of the largest renewable plants in the world.”

South Africa Decides to go Forward with Hydraulic Fracturing (James S.)

The DMR report, “Investigation of hydraulic fracturing in the Karoo Basin of South Africa” noted, "The study comprises reports written by specialists in their various fields as well as the results of a study tour to the United States which included field trips to Pennsylvania (Marcellus Shale) and Texas (Eagle Ford Shale) and visits to the Environmental Protection Agency and the Railroad Commission of Texas, both being US regulatory organizations directly involved with shale gas exploitation.” The report further continues, “The primary conclusion reached in this report is that South Africa’s regulatory framework must be robust enough to ensure that, if hydraulic fracturing associated with shale gas exploration and exploitation were approved, any resultant negative impacts would be mitigated. This will require a comprehensive review of the adequacy of the existing framework in order to identify any shortfalls or omissions and to ensure that it is sufficiently detailed and specific. The use of existing regulations from mature regulatory environments to inform the development of South African regulations in this matter is recommended.”

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."