Daily Digest

Daily Digest 10/11 - Global Currency Spat, Iran Ups Reserves, Falling Palladium Stockpiles

Monday, October 11, 2010, 11:35 AM
  • Finance Chiefs Fail to Resolve Currency Spat as G-20 Splits
  • Why Ben Bernanke Is Smoking A Big Fat Cigar Tonight
  • Mauldin: The Ride of the Keynesian Cowboys
  • America Needs an Intervention
  • Iran ups its reserves cache
  • China's CNOOC tests U.S. with Chesapeake shale deal
  • Paris Oil Drillers Target 100 Billion Barrels Near Brie, Wine
  • A Painless Way to Save Energy: Save Food
  • State Palladium Stockpile Nears Depletion
  • Increase in grain prices tough on farms

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Economy

Finance Chiefs Fail to Resolve Currency Spat as G-20 Splits (Adam)

Leaders of the world economy failed to narrow differences over currencies as they turned to the International Monetary Fund to calm frictions that are already sparking protectionism

Exchange rates dominated the IMF’s annual meeting as Treasury Secretary Timothy F. Geithner, People’s Bank of China Governor Zhou Xiaochuan and their counterparts split over whose policies are the biggest threat to the world economy on concern countries are relying on cheap currencies to aid growth. China was accused of undervaluing the yuan, while low U.S. interest rates were blamed by emerging markets for flooding them with capital. Brazil took aim at both the U.S. and China.

Why Ben Bernanke Is Smoking A Big Fat Cigar Tonight (TomAdkins)

The gold moves were impressive. If I were at the Fed and watching this near daily slap in the face I would be unsettled. I wonder if they even care. At one time they did, but not in the last few years. Ben is probably pleased with the ratchet up in gold. He not only wants to boost inflation he wants to increase expectations on inflation. High marks on that score for the week.

Mauldin: The Ride of the Keynesian Cowboys (JRB)

To ease or not to ease? That is the question we will take up this week. And if we do get another round of quantitative easing (QE2), will it make any difference? As I asked last week, what if they threw an inflation party and no one came? We will take as our launching pad today’s unemployment numbers, which serve to demonstrate just why the Fed may in fact be ready for some monetary shock and awe.

America Needs an Intervention (Chris)

The United States has been living a lie.

As a nation, we have been kidding ourselves, repeating myths, hoping that if we say something enough times, it will become reality — no matter how untrue. The credit crisis and now foreclosure debacle has revealed to anyone who cares to look what we have sought to ignore: That the past decade has been based on a set of fundamental beliefs that are intrinsically false.

Energy

Iran Ups its Reserves Cache (Chris)

Last week, Iraq claimed it had overtaken Iran. Coming ahead of an Opec meeting on Thursday, one analyst said the two countries were in a "bidding war" over reserves, which is usually a consideration including other criteria such as production capacity when it comes to allocating quotas.

Oil Minister Massoud Mirkazemi told a news conference Iran had 150.31 billion barrels of reserves, up from a previous estimate of 138 billion barrels and added that figure would be revised even higher soon.

"This latest figure will definitely go up by the end of the year," Reuters quoted him as saying.

Last Monday, Iraq raised its proven oil reserves figure by a quarter to 143 billion barrels, surpassing Iran and putting it behind only Saudi Arabia in terms of conventional crude, and third after Venezuela if unconventional reserves are counted.

China's CNOOC tests U.S. with Chesapeake shale deal (Chris)

China's top offshore oil producer, CNOOC Ltd, agreed to pay $1.1 billion for a stake in a U.S. shale oil and gas field, testing the U.S. political climate for the first time since its 2005 failed bid for Unocal.

Most of the outbound acquisitions by China's oil firms have been in risky areas such as Africa, which Western rivals have avoided, or in locations with aging assets. Now they are also eyeing the United States, which was once deemed off limits to the Chinese due to protectionist sentiment.

Paris Oil Drillers Target 100 Billion Barrels Near Brie, Wine (SolidSwede)

These days Vermilion Energy Inc., Toreador Resources Corp. and partner Hess Corp. are targeting a bigger prize, oil trapped in Paris Basin shale rock that was previously too hard to tap. Techniques developed to pulverize rock and release petroleum have revolutionized exploration and boosted U.S. natural gas production 20 percent since 2006. Vermilion said it has had “positive” results so far in the area.

A Painless Way to Save Energy: Save Food (Adam)

According to a new study of food waste in the U.S., it takes the equivalent of 1.4 billion barrels of oil to produce get a year’s worth of food to the market, but about 350 million barrels of that goes down the drain in the form of wasted food. The study, reported by The American Chemical Society, is noteworthy not only for what it includes about food-related energy, but also for what it leaves out.

Environment

State Palladium Stockpile Nears Depletion (Chris)

Norilsk Nickel, the world's biggest producer of autocatalyst metal palladium, said Friday that it expected Russian state stocks of the white metal to be "finished" next year.

"This year will be the last year when any substantial quantity from this stock has any chance to enter the market," deputy CEO for sales and distribution Viktor Sprogis said at a briefing.

"That is why we expect that next year this stock is finished." Officially levels of Russian metals stocks are a state secret.

Increase in Grain Prices Tough on Farms (Adam)

Grain prices moved sharply higher today, and that could have far-reaching effects. The jump came after the U.S. Department of Agriculture slashed its corn crop estimate.

Article suggestions for the Daily Digest can be sent to [email protected]. 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."

13 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4145
Re: Daily Digest 10/11

"At a time when governments around the world are facing growing debt, China’s bonds are becoming almost as safe as U.S. Treasuries in the market for insuring against defaults.

Five-year credit-default swaps contracts on the nation’s bonds fell 29 percent in the past month, the biggest drop among more than 80 nations, and ended last week at 56 basis points, according to data compiled by CMA and Bloomberg. Default swaps for the U.S. were little changed at 46.

China’s bonds have become cheaper to insure than those of the U.K. and France since August as the fastest-growing economy surpassed Japan to become the world’s second-largest. Moody’s Investors Service said last week it may raise China’s debt rating from A1, five levels below the top Aaa grade. "

  • Other news, headlines and opinion:

 

Currency wars are necessary if all else fails (By Ambrose Evans-Pritchard)

IMF annual meeting fails to halt slide to currency war

Switzerland hit by currency devaluation race

Cut rates to rein in rand, say analysts (South Africa)

Korean Won Rises to 5-Month High as Fed Policy Boosts Inflows

China's World-Record Currency Reserves May Hit $2.5 Trillion, Fuel Tension

Dollar Weakness Leads Philippines to Consider Diversification of Reserves

India's Central Bank To Intervene In FX Mkt If Flows Lumpy - Gov

Foreclosure freeze could undermine housing market

Federal Reserve May Boost Bond Purchases on Weak U.S. Jobs Data, UBS Says

IMF Considers Extension of Greece's Loan Package, ECB's Bini Smaghi Says

No boost for Social Security checks in 2011

Many physicians see Medicaid pay cut as enrollment rises

FG urges review of bailout for State agency pensions (Ireland)

Majority of Jefferson County commissioners now considering bankruptcy option in sewer case (Blog)

Fed Undaunted by Uncertain Prospects for Money Printing (CNBC)

British Pound Declines Against Euro as Osborne Stokes BOE Easing Concern

 

...........Paul Krugman Laughing

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Re: Older People Still Working...

 

Re: Mauldin: The Ride of the Keynesian Cowboys

"Think about that. Almost all the job growth has come from those who have reached “retirement age” (whatever that is) continuing to work or going back to work."

My mother is 65. She is still working more than full time doing data entry. My father is 69. He is also still working 6 days per week as a manager after coming out of 2 years of retirement earlier this year. (It's overseas: They've put him up in an apartment and given him a little golf cart to drive around a factory compound because he has difficulty staying on his feet for too long.)

It's not that they are in debt - they have great credit scores and are tenacious savers (but are not investors). But they do have a modest mortgage because they only finally purchased a home in their 50s, and therefore can't afford to live on Social Security alone after the mortgage and property taxes are paid.

Poet

 

leweke1's picture
leweke1
Status: Silver Member (Offline)
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Posts: 101
Re: Daily Digest 10/11 - Global Currency Spat, Iran Ups ...

With grain prices rising precipitously, we may be headed toward a  .corn bubble!

bklement's picture
bklement
Status: Silver Member (Offline)
Joined: Jan 26 2009
Posts: 108
Re: Daily Digest 10/11 - Global Currency Spat, Iran Ups ...

And when that bubble pops we'd get popcorn?

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Re: Daily Digest 10/11 - Global Currency Spat, Iran Ups ...

A radical pessimist's guide to the next 10 years - The iconic writer reveals the shape of things to come, with 45 tips for survival and a matching glossary of the new words you'll need to talk about your messed-up future.

dave s's picture
dave s
Status: Bronze Member (Offline)
Joined: Feb 20 2009
Posts: 56
Love this headline

Fed's Yellen: Possible that low rates feed bubbles

DENVER (Reuters) – Low interest rates can contribute to financial bubbles even if they are not a primary culprit, Janet Yellen said in her first speech as vice chair of the Federal Reserve.

At a time of growing concern about the international repercussions of another possible round of monetary easing by the U.S. central bank, Yellen's comments suggested Fed officials are cognizant of the risks to its zero rate policy.

"It is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk-taking in the financial system," Yellen said in prepared remarks to the National Association for Business Economics.

http://news.yahoo.com/s/nm/20101011/bs_nm/us_usa_fed_yellen

Some hard hitting analysis there...

TechGuy's picture
TechGuy
Status: Gold Member (Offline)
Joined: Oct 13 2008
Posts: 414
Re: Daily Digest 10/11 - Global Currency Spat, Iran Ups ...

Paris Oil Drillers Target 100 Billion Barrels Near Brie, Wine

Reserve Size isn't as import as extraction rate and cost. It might contain 1 Trillion barrels, but if the production rate is measured in thousand barrels per day and the cost is $120 it won't help lower prices. 

I also wonder out much the French like benzene and other frack containments in their water supply.

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Stock Up On Shoes

 

Shoes. Don't forget good, comfortable, sturdy shoes that will fit your feet - especially if you have feet in need of special shoes. Don't buy them all at once now. But keep an eye out for when you start seeing a scarcity of shoes or shoes starting to get intolerably more expensive due to transportation and material costs.

Poet

 

Nacci's picture
Nacci
Status: Silver Member (Offline)
Joined: Apr 22 2009
Posts: 194
Re: Stock Up On Shoes
Poet wrote:

Shoes. Don't forget good, comfortable, sturdy shoes that will fit your feet - especially if you have feet in need of special shoes. Don't buy them all at once now. But keep an eye out for when you start seeing a scarcity of shoes or shoes starting to get intolerably more expensive due to transportation and material costs.Poet

Poet, I think this is great advice and I have been following it for years for myself and my family.  Comfortable, sturdy shoes and boots are a must as are good socks, rugged clothes and outerwear, few of which are made in this country anymore.  In a post oil world when supply lines grind to a halt and these necessary items are no longer available those who follow this advice will benefit greatly.  Nacci.

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Stock Up On Shoes
Poet wrote:

Shoes. Don't forget good, comfortable, sturdy shoes that will fit your feet - especially if you have feet in need of special shoes. Don't buy them all at once now. But keep an eye out for when you start seeing a scarcity of shoes or shoes starting to get intolerably more expensive due to transportation and material costs.

Shoes are very high on my list.....  even though I have actually been thwarted, learning much in the process.

When I started building our house, I bought myself an expensive ($90+ in 2002) pair of sturdy steel capped boots.  I wore them every day for five or more years, they were great, I simply wore them out utterly.

A store near here bought an entire warehouse lot of boots under the Makita (power tool) brand name, Makita were getting out of apparel.  They looked great, quadruple stitching, steel capped, very sturdy looking, and whist they normally retailed at $140 (no joke..) they could be had at half that price.

I bought three pairs.

The soles of the first pair started cracking within less than six months...  so I returned them, and they were replaced free of charge.  Less than a year later, same thing...  returned those, but they were running out of stock, and my size was no longer available.  Opened up the next lot...  same disappointment, and my wife hasn't even started wearing the size sixes I bought her.

Research led me to find out that modern shoes are soled wilth Polyurethane treads, and PU has a life of five years, and that's it.

This really sucks.  It means it's now virtually impossible to "stock up" on boots/shoes, they are all going to fall apart, EVEN IF YOU DON'T WEAR THEM!

As an aside, quality footwear should have the manufacturing date stamped in the sole.....  do not buy anything more than a year old.

Mike

Montana Native's picture
Montana Native
Status: Silver Member (Offline)
Joined: Mar 17 2009
Posts: 166
Re: Stock Up On Shoes
Damnthematrix wrote:

 

This really sucks.  It means it's now virtually impossible to "stock up" on boots/shoes, they are all going to fall apart, EVEN IF YOU DON'T WEAR THEM!

 

You should look into these

http://www.whitesboots.com/store/Whites_Boots.php

http://www.nicksboots.com/

I have a pair of Hawthorne Loggers (now made by Whites I think) Twenty years old, resoled last in the late 90's.......... still wearable and built for armageddon. Vasque Sundowner hikers made in Italy will last a looong time too.

that1guy's picture
that1guy
Status: Gold Member (Offline)
Joined: Jan 11 2009
Posts: 333
Re: Stock Up On Shoes

wow, very pricy, but if they are build as they say it looks like they will last forever...(reading Nicksboots now)...

 

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4145
Re: Daily Digest 10/11 - Global Currency Spat, Iran Ups ...

For 10/12:

 

"Big US cities could be squeezed by unfunded public pensions as they and counties face a $574 billion funding gap, a study to be released on Tuesday shows.

The gap at the municipal level would be in addition to $3,000 billion in unfunded liabilities already estimated for state-run pensions, according to research from the Kellogg School of Management at Northwestern University and the University of Rochester.

“What is yet to be seen is how this burden will be distributed between state and local governments and whether the federal government will be called upon for bail-outs,” said Joshua Rauh of the Kellogg School. "

......................1A) Philadelphia, Chicago and Boston Are University Study's Worst-Off Pensions

.......................1B) Municipal Pension Tabs Average $15000 Per Household

"General Electric Co. Chief Executive Officer Jeffrey Immelt said rising health-care costs in the U.S. may force companies to move jobs overseas, and he urged the government and employers to work together to trim expenses."

"“If health care gets to be greater, I’m going to have to move jobs out of this country. I have no choice.” Immelt said. “All the big companies that have lots of retirees and big health-care plans -- we have no choice.” "

"A record number of teachers, police officers and other public employees are retiring this year as Gov. Chris Christie's plans to overhaul pension benefits have many workers fearful of their future security.

But the rush to retirement has added new stress to the state's financially strapped pension systems.

As of Sept. 1, at least 16,400 public employees have retired this year. Those retirements will cost the state an additional $638 million in pension benefits, according to an Asbury Park Press review of state pension data.

By comparison, the state's pension rolls include 12,254 people who retired in 2009. There are approximately 466,000 government workers and teachers in the state."

"A halt in home foreclosures at the largest U.S. mortgage firms may sideline buyers worried about legal issues, further depressing sales at a time when distressed properties account for almost a quarter of all transactions.

Revelations of mistakes in foreclosure proceedings are causing buyers to have misgivings about property titles, the right of home possession, said Richard DeKaser, chief economist at Woodley Park Research in Washington. Confidence in the legality of repossessions will cut foreclosure sales more than a reduction of available properties because the market already is flooded with repossessed homes, he said.

“The legal problems we’re seeing will hit sales as people worry about the legitimacy of the process,” DeKaser said. “The implications are that there’s been shoddy work.” "

....................4A) Google news search on the term "Title Insurance" (Must read)

 

  • Other news, headlines and opinion:

Ireland open to talks on senior debt - finance minister

Above target inflation piles pressure on BoE

Treasuries Rise as Goldman Says Job Losses Will Spur Fed to Buy More Debt

Fed's Yellen acknowledges risks to ultra-low rates

Thailand sets debt tax to curb inflows and Asia stiffens resolve to resist capital inflows

Moody's see higher losses for RMBS senior noteholders from foreclosure halts

10,000 Wait In Line At Cal Expo In Bid To Save Their Homes

Bangladesh stock market boom fuels dire warnings

Maturity 'Wall' Dwarfs European Junk Bond Market, Moody's Says

Wall Street Pay: A Record $144 Billion

Bubble Warning as Low Yields Spur Tinkoff Rally: Russia Credit

Harrisburg's Entry Into State Program May Not Cure Its Ills

SF, Oakland buildings among 11 sold by state for $2.33B (California) and State building sales may cost tax payers more

Medicaid among Wisconsin's fastest-rising costs (Includes graphs of rising costs)

Obama renews push for $50-billion infrastructure program

Glendale saddled with $500 million in sports-district debt (AZ)

Further Fed Easing Writes The Dollar's Epitaph (Peter Schiff)

Christie to Sell $1.4 Billion Transport Bonds as Hudson Tunnel Imperiled

Two Pittsburgh councilmen want state to run pensions

Irish Swap Finance for Food as Economy Returns to Rural Roots

Noda Says Japan Ready to Take `Bold' Action When Yen Hits New 15-Year High

Marc Faber Says World Heading for `Major Inflection Point'

Did Too Many FHA Buyers “Borrow Forward?”

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