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Daily Digest 11/18 - Prison Of Debt Paralyzes West, Who Will Dictate Europe's Future?

Sunday, November 18, 2012, 12:10 PM

Economy

Prison of Debt Paralyzes West (cmurray)

Until 1971, gold was the benchmark of the US dollar, with one ounce of pure gold corresponding to $35, and the dollar was the fixed benchmark of all Western currencies. But when the United States began to need more and more dollars for the Vietnam War, and the global economy grew so quickly that using gold as a benchmark became a constraint, countries abandoned the system of fixed exchange rates. A new phase of the global economy began, and two processes were set in motion: the liberation of the financial markets from limited money supplies, which was mostly beneficial; and the liberation of countries from limited revenues, which was mostly detrimental. This money bubble continued to inflate for four decades, as central banks were able to create money out of thin air, banks were able to provide seemingly unlimited credit, and consumers and governments were able to go into debt without restraint.

Here Are The New Taxes You're Going To Pay To Pay For Obamacare...
(adam)

A 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is "investment income?" Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Taxes on dividends will rise from 15% to 18.8%--if Congress extends the Bush tax cuts. If Congress does not extend the Bush tax cuts, taxes on dividends will rise from 15% to a shocking 43.8%.

No saving grace: Are our best savings intentions hitting the wall? (westcoastjan)

“The studies are pretty clear. We will have an increasing population of retirees who, it would appear on all evidence, have not adequately saved for retirement,” says David Denison, who, until June, ran the Canada Pension Plan Investment Board which invests the funds not needed to pay current CPP benefits.

Who will dictate Europe's future? (westcoastjan)

In their punchy new book, Democrisis, David Roche and Bob McKee say Italy is the "circuit-breaker" that could make a lot of the crisis go away: "Italy represents more than half of every form of measurable economic contagion of the eurozone sovereign debt crisis... If the markets believe Italy is 'saveable', a virtuous outcome is possible and contagion will go into reverse."

Living With Risk and Learning from Disaster Post-Sandy (westcoastjan)

Annan's words strike at the heart of that other side of humanitarian work -- also known as disaster risk reduction. In fact, while humanitarian agencies and communities have gotten better at responding to emergencies and saving lives, the lesser known fact is that risk reduction is part and parcel of this work. It's not often considered front-page news though, meaning it gets less attention and donor investments than emergency relief efforts after a disaster strikes.

Negative Real Interest Rates Continue To Drive The Gold Price (Taki T.)

In its essence, it’s a perfidious form of redistribution of wealth, taking it away from the saver. The beneficiary is obviously the debtor (think about the government in the first place). On a short term basis it helps to alleviate the huge debt mountain. Unfortunately, there is a significant long term effect that is not taken into account well enough. As the dependence on financial repression rises, so does the collateral damage that comes on the longer run. It will pave the way for an even bigger crisis in the future.

South Korea warns of rolling power blackouts in winter (guardia)

South Korea may have to bring in rolling power blackouts this winter after the closure of nuclear plants for safety checks means the electricity network will have less than a third of normal reserve capacity. Asia’s fourth-largest economy said it plans to add 4,000 megawatts (MW) of power supply capacity through savings and new plants in a bid to head off potential blackouts.

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."

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