Daily Digest

Daily Digest 10/31 - A Future Without Oil, Fed's QE2 Could Trigger Market Correction, Simulation of a US State Defaulting

Sunday, October 31, 2010, 10:48 AM
  • Gold Will Outlive Dollar Once Slaughter Comes
  • Simulation of a US State Defaulting
  • Eurozone unemployment rate up in September
  • Guess What's Coming to Dinner: Inflation!
  • Why The Upside of The Fed's Attempt To Spike Shadow Monetary Velocity Is Hyperinflation
  • Marc Faber: Fed's QE2 Could Trigger Market Correction
  • U.S. nuclear renaissance not here yet
  • Challenges will grow as reserves become harder to reach
  • A Future Without Oil
  • The Peak Oil Debate is Over

Economy

Gold Will Outlive Dollar Once Slaughter Comes: John Hathaway

The world’s monetary system is in the process of melting down. We have entered the endgame for the dollar as the dominant reserve currency, but most investors and policy makers are unaware of the implications.

The only questions are how long the denouement of the dollar reserve system will last, and how much more damage will be inflicted by new rounds of quantitative easing or more radical monetary measures to prop up the system.

Simulation of a US State Defaulting

At the recent Buttonwood economic conference in New York City, a team of economists addressed the question "What If a State Defaults". WHAT happens if an individual state defaults? That was the question posed to a panel of luminaries at the Buttonwood gathering in New York, including Robert Rubin, Josh Bolten, Glenn Hubbard, Laurence Meyer and Laura Tyson. The panel was assumed to be a bunch of Presidential advisers faced with a request for funding from New Jefferson, a fictional state with many of the problems of a typical state - unfunded pension promises, years of fiddling the numbers to balance the budget and a government divided between the parties.

Eurozone unemployment rate up in September

Yesterday Eurostat released the September unemployment rate figures for the European Union and the Eurozone. From the release: The euro area1 (EA16) seasonally-adjusted2 unemployment rate3 was 10.1% in September 2010, compared with [downward revised] 10.0% in August4. It was 9.8% in September 2009. The EU27 unemployment rate was 9.6% in September 2010, unchanged compared with August4. It was 9.3% in September 2009.

Guess What's Coming to Dinner: Inflation!

GUESS WHAT’S COMING TO DINNER: INFLATION! The surge in global food prices will soon arrive on the dinner table. However, to focus on the direct inflationary impact of higher food prices alone is to miss the bigger, far more inflationary picture implied by rising wage demands in developing countries. Beginning next year, consumers in most developed economies will discover to their surprise that “food” price inflation is creeping into an astonishingly wide variety of consumer goods.

Why The Upside of The Fed's Attempt To Spike Shadow Monetary Velocity Is Hyperinflation

It appears that the one topic pundits have the most problems grasping is the spread between the segregation of traditional and shadow monetary aggregates, overall economic deleveraging and aggregate monetary velocity, and how all that impacts GDP. A summary which confirms just how prevalent the confusion is, is this terrific post by the Calafia Beach Pundit, terrific not because it is even remotely correct (the post is so blatantly wrong - one wonders if Western Asset Management even expects its current and former asset managers to count beyond 2... M2 that is), but because it demonstrates how self-professed "pundits", whether of the beach variety or not, don't have the faintest grasp of more than merely trivial monetary topics.

The Myth of Dollar Correlation

Today is year-end for many funds. Monday they can "legally" sell. Monday also begins the first week of November when the three-week bias we mentioned at the beginning of the month culminates. While the market has held up into month-end, fiscal-year end, it hasn't blown off. It’s been choppy and mixed with earnings providing more than the usual Gapism.

Marc Faber: Fed's QE2 Could Trigger Market Correction

Marc Faber, publisher of the Gloom, Boom & Doom report, discusses the potential impact of further quantitative easing (QE2) by the U.S. Federal Reserve in a Bloomberg interview on Oct. 36 (clip below).

Correction Triggered by QE2?

Faber sees Democrats--"sadly enough"--would get a shot at still retaining the majority, which would mean the monetary and fiscal policy will most likely stay on its current course. 


Energy

U.S. nuclear renaissance not here yet

Three decades after the Three Mile Island accident seemed to doom the nuclear power industry, the idea of a nuclear renaissance has been gaining public acceptance as a way to generate energy without greenhouse gas emissions and meet the nation's electricity demands.

But not one new plant is even close to being built.

A Future Without Oil

[Excerpt] Our current system of trade is based on the availability of cheap fossil fuels. Yet the time nears when prices will rise and oil will become increasingly scarce. If we want to avoid this vulnerability, we must now begin to think about ways to reduce our dependency and promote the idea of self-sustaining towns and communities.

Challenges will grow as reserves become harder to reach

Kamel Bennaceur, the chief economist of Schlumberger who will participate on Tuesday in an ADIPEC panel discussion on new frontier challenges, shares his views on the oil and gas industry

The industry is facing more challenges because of the need to replenish the production base. That's for both oil and gas. The industry needs to make a large effort to replace its current production sources. The other message is that the reserves will be harder to produce because they will be in remote and challenging areas. The size of the discoveries is not going to increase and in the past five years 50 per cent of oil and gas discoveries were in offshore. Even in OPEC countries the cost of production will increase.

The Peak Oil Debate is Over

The following is a transcription of Dr. James Schlesinger’s keynote address: "The Peak Oil Debate is Over." Transcript provided by Rick Munroe Dr. Schlesinger served as Chairman of the Atomic Energy Commission (1971-73), Secretary of Defense (1973-75), Director of the CIA and was the first Secretary of Energy (1977-79). His wealth of experience at the highest levels of public administration is consolidated by his octogenarian wisdom.

Please send article submissions to: [email protected]

3 Comments

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest 10/31 - A Future Without Oil, Fed's QE2 ...

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Re: Daily Digest 10/31 - A Future Without Oil, Fed's QE2 ...

this: The Myth of Dollar Correlation links to the faber article: http://www.zerohedge.com/article/marc-faber-feds-qe2-could-trigger-market-correction

and it should be this: http://www.minyanville.com/businessmarkets/articles/jeffrey-cooper-dollar-us-dollar-dollar/10/29/2010/id/30846

and the faber article link is http://www.peakprosperity.com/blog/LINK and i assume that is the link above...

 

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest 10/31 - A Future Without Oil, Fed's QE2 ...

 China's official purchasing managers' index (PMI) for manufacturing rose to a six-month high of 54.7 in October from 53.8 in September, blowing past expectations and highlighting the strength of the world's second-largest economy.

Eriko Koga | The Image Bank | Getty Images

The figure, released by the China Federation of Logistics and Purchasing (CFLP) on Monday, defied predictions of a moderate seasonal slowdown in the country's factories last month. It was higher than the median forecast of 52.9 in a Reuters poll of 12 economists and, in fact, higher than every individual forecast.

In the details of the survey, which is designed to provide an early indication of conditions in a broad range of industries, there was evidence that momentum was being driven by domestic growth and not external demand.

While the sub-index for total new orders climbed to a six-month high of 58.2 from 56.3, that for new export orders dipped to 52.6 from 52.8.

But Zhang Liqun, a government researcher, cautioned against over-optimism, saying that growth was likely to ease and that inflationary pressures were a concern.

"The continued pick-up in the October PMI shows that the trend of economic stabilization is becoming clearer. However, we need to note that economic expansion might slow in the future as investment and export growth both slowed in the third quarter," he said in a comment on behalf of the logistics federation, which compiles the index for the National Bureau of Statistics.

"Input prices climbed fast, meaning rising cost pressure for companies. We need to pay close attention to the economic trend and must not be over-optimistic," he added.

Input prices rose to a six-month high of 69.9 from 65.3 in September. China reports inflation data for October next week and many economists expect that consumer prices will have risen to a nearly two-year high, though they could also be at their cyclical peak.

 

 

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