Daily Digest

Daily Digest 1/1/11 - Home Prices High, 2011 Forecast, Forever Stamps for USPS

Saturday, January 1, 2011, 11:00 AM

Happy New Year!

  • Home Prices Are Still Too High
  • Pensioner Insolvency Rises Fastest As Baby Boomers Struggle To Pay Off Debts
  • Families £3,000 Worse Off
  • The Only 2011 Forecast With A Bizarro Chance Of Getting It All Correct
  • China Slows As Tightening Start To Bite
  • Forever Stamps Tell Us Much
  • Estonia's Entry Expands Euro Into Former Soviet Union

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Home Prices Are Still Too High (bill)

Most economists concede that a lasting general recovery is unlikely without a recovery in the housing market. A marked increase in defaults and foreclosures from today's already elevated levels could produce losses that overwhelm banks and trigger another, deeper financial crisis.

Pensioner Insolvency Rises Fastest As Baby Boomers Struggle To Pay Off Debts (pinecarr)

Pensioners, although they made up less than 4pc of the total, now form the age group that is seeing the highest growth rate for insolvency, with a 14pc rise that RSM said could point to a worrying trend. "This is the first generation of people who have been used to carrying debt," Mark Sands, RSM's head of bankruptcy and personal insolvency said. "They’ll take out a new loan to pay off the old loan and to tidy up their credit card, and it just carries on."

Families £3,000 Worse Off (pinecarr)

A family of four will lose out on £109 a year because child benefit is not being increased in line with inflation, as well as £545 because they will no longer be eligible for tax credit help from the Government. On top of this, they will be hit by the change in National Insurance, which the accountancy firm BDO calculated would cost £114 a year. Further changes to tax bands will cost them a further £100 a year.

The Only 2011 Forecast With A Bizarro Chance Of Getting It All Correct (pinecarr)

One of the traditional characteristics of the financial media world in the last few days of any given year is the veritable cornucopia of next year "predictions" from those who believe their opinions are relevant/important/credible. Of course, with this whole process being nothing but an exercise in vanity, and resulting in pervasive ridicule by the rest of the media world 365 days later, unless of course one has immaculate luck, in which case playing the lottery has far better fringe benefits, Zero Hedge has no interest in actually predicting parallel outcomes, when event iterations are serial and just getting the one main thing right usually ends up paying off in droves (as such our one and only very vague prediction for the end of 2011 is that the Fed will be one year closer to completely losing control of its centrally planned schizophrenic reality, and the market will be ever closer to realizing this). That said, the following list of forecasts by Charles Hugh Smith is certainly worth reading.

China Slows As Tightening Start To Bite (pinecarr)

The central bank has nudged up reserve requirements for banks five times and raised a range of interest rates, including a surprise move over Christmas to lift the one-year lending rate to 5.81pc. Beijing bared its fangs again on Thursday, pushing the money market rate to a three-year high of 6.25pc. Tightening fears has triggered a 12pc fall in the Shanghai stock market since early November. Professor Michael Pettis from Beijing University said the Communist Party will struggle to engineer a soft-landing after letting rip with credit over the last two years.

Forever Stamps Tell Us Much (pinecarr)

Over the past fifty years, the USPS has raised the rates on first class postage 20 times. During that time the stamp prices have gone up more than 1,100%. Given the increasing frequency of rate hikes (three in the last four years) the Post Office claims it made the move to forever stamps to save money on printing costs and to increase customer convenience. The public seems to appreciate the product and has snapped up a staggering 28 billion forever stamps since they became available in 2007. But the real reason behind the permanent switch is that it allows the Post Office to hide its insolvency behind phony accounting numbers, setting itself up for a massive taxpayer financed bailout in the not too distant future.

Estonia's Entry Expands Euro Into Former Soviet Union

As Europe grapples with the financial crisis, Estonia may be the last addition to the euro club for several years. Lithuania and Latvia, the next in line, aim to adopt the currency in 2014, while bigger eastern countries have shied away from setting target dates. “For Estonia, the choice is to be inside the club, among the decision makers, or stay outside of the club,” Prime Minister Andrus Ansip told reporters yesterday in Tallinn, the nation’s capital. “We prefer to act as club members.”

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."


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Re: Daily Digest 1/1/11 - Home Prices High, 2011 Forecast, ...

Cost Of Crude Oil Records 26-Month High To End 2010‎ - Oil prices registered a 26-month high $92/per barrel Friday, ending 2010 with a 15 percent increase on hopes that the improving economy would fuel higher demands next year and send prices into the $100/barrel mark. Stable growths from the Asian market, particularly in China, as well as the increase in demand from developing countries contributed to the four-month rally that catapulted the price of crude oil more than the $70-$80 mark it recorded for most of the year. According to a survey conducted by Reuters, the global demand for oil increased to 2.2 million barrels per day (bpd), its highest growth since 2004 with another 1.5 million projected for 2011. Although oil prices are expected to hit $100/barrel in 2011, experts are not seeing the price level to hit $150 as it did in 2008, the first time crude oil barged into triple digits.

 Copper Advances to Record on Speculation Supply Shortage Poised to Worsen - Copper futures rose to a record for the fourth time this week as speculation heightened that a supply deficit will widen as China, the world’s biggest consumer, leads a rebound in demand for industrial metals.  The price reached an all-time high of $4.452 a pound as the global economy recovered from its deepest recession since World War II. Supplies of copper, used in wiring and pipes, will lag behind demand by 825,000 metric tons next year, almost double this year’s deficit of 449,000 tons, Barclays Capital says.  The metal “continued to climb as the economy got better and better,” On the Comex in New York, copper futures for March delivery gained 8.45 cents, or 1.9 percent, to close at $4.447 at 1:16 p.m. In 2010, the price climbed 33 percent, posting an annual gain for the eighth time in nine years.

Cotton Caps Biggest Annual Rally Since 1973; Orange Juice Drops - -- ---------------------------------
Sugar Gains for Third Straight Year; Coffee Jumps 77% in 2010  ---------------------------------------------------------------
(i tried to separate those links to no avail)
es2's picture
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Re: Daily Digest 1/1/11 - Home Prices High, 2011 Forecast, ...

King World News Weekly Metals Wrap


jrf29's picture
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Posts: 453
Should you actually invest in Forever stamps?

In response to Peter Schiff's article, (accurate though it is in principle), it turns out that investing in and reselling Forever stamps is a horrible idea, even assuming that the U.S. Post Office keeps its promise to redeem them for first class postage. [quote=Nathaniel Rich (Slate Magazine)] Since 1971, postal rates have increased more slowly than the actual inflation rate, as measured by the U.S. Consumer Price Index. So, despite the numerous rate hikes over the last 36 years, stamps have actually been getting cheaper. The 20-cent stamp from 1981, for instance, would be equivalent to 45 cents in today's dollars—which makes today's rate 10 percent cheaper than it was 26 years ago. Should this historical pattern hold, you'd be paying more for today's forever stamps than you would for any stamp in the future, no matter how high the rate goes.

In fact, this pattern must hold—as a matter of law. In December, President Bush signed the Postal Accountability and Enhancement Act, which ensures that future price increases will be kept below an inflation-based ceiling. In other words, postage hikes will never surpass CPI inflation—and the forever stamp will never become a good investment. Incidentally, the USPS announced the introduction of the forever stamp less than two months after Bush signed the act into law.

If you believe that the BLS already understates the true rate of inflation, then Forever stamps are a really rotten deal.  This same law also condemns the postal service to inevitable bankruptcy.


Doug's picture
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Posts: 3200
Re: Daily Digest 1/1/11 - Home Prices High, 2011 Forecast, ...

I don't know if many people have heard of Daryl Schoon ( I hadn't until just a little while ago), but he has an article on Financial Sense http://financialsense.com/contributors/darryl-schoon/gold-bears-predicting-the-price-of-gold that starts out slamming gold bears, but then goes into darker matters going back to the frequently felonious Reagan administration.  He discusses the movie "Inside Job" that I had heard of but never saw hit local theaters.  Turns out there's a good reason for that.  It only opened in two theaters thanks to some allegedly nefarious backroom dealings.

I don't know anything about Schoon, but my curiosity is piqued.  Have others heard of him?


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Re: Daily Digest 1/1/11 - Home Prices High, 2011 Forecast, ...

Hi Doug-

   I've read Darryl Schoon before, and had printed out the article you referenced from Financial Sense to read when I get a chance.  To date, I haven't taken the time to really try to pin down what I think of his analyses; for me, the jury is still out.  But where I'm at right now is that I find some of the things he writes about -and the nature of his writing- interesting; interesting enought that I notice when he has a new article out and tend to at least scan it if not read it.  I also have noticed that there are a couple of people/topics he frequently hits on in his articles (not judging good, bad or otherwise; just observations): Dr. Antal Fekete, Austrian economics and economists, and gold. He also is not afraid to get into less mainstream topics like "the elites" and so on (which I find interesting, but some may interpret as "out there").  Anyhow,  I'll also be curious to hear what others have to say about him!
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Re: Daily Digest 1/1/11 - Home Prices High, 2011 Forecast, ...


FSN Top Interviews 2010: Nicole Foss & Richard Russell
-Deflationary aspects of peak oil in the years ahead; Richard Russell's long career, the markets and what he sees ahead for gold

FSN Top Interviews 2010: George Karahalios
-Global macro outlook

FSN Top Interviews 2010: Adam Fergusson & Colin Campbell
-"When Money Dies"; peak oil

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Re: Daily Digest 1/1/11 - Home Prices High, 2011 Forecast, ...

Zero Hedge's Top 10 Most Popular Posts In 2010


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