Daily Digest

Daily Digest 11/22 - Quantitative Easing Truth, Widespread Silver Shortages, Farmland Preservation Trends

Monday, November 22, 2010, 11:00 AM
  • The Truth about Quantitative Easing
  • Widespread Silver Bar Shortages
  • Exxon Sells Gulf of Mexico Stakes for $1.01 Billion
  • Lack of Hiring to Restrain U.S. Economy in 2011
  • 45 'Patriotic Millionaires' Call for Bush-Era Tax Cuts to Expire
  • Crude Oil Flat After Ireland Accepts Bailout
  • Farmland Preservation: A Growing Trend

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The Truth about Quantitative Easing (james knight)

Governments have been "manufacturing" money for as long as there has been cash. Since 1950 the amount of money in circulation has doubled every 15 years or at a rate of 5.7% per annum. The excuse for this has always been that the extra money was needed to accommodate growth and inflation. However, what it did was to provide the State with a regular source of new money year on year. The first organization that gets to use any new money is the State. After it has passed into circulation most new cash flows back to the Exchequer through the taxation system. Having the ability to create another 5.7% of money every year was a considerable boost to the Government.

Widespread Silver Bar Shortages (adam)

As of today, there are no longer any regular wholesale supplies of the 1 ounce through 100 ounce silver rounds and bars available for immediate delivery.  It may be possible to locate incidental quantities of some product, but most wholesalers are now promising two to four weeks delivery to allow time for the silver to be fabricated. As a result of the shortages, premiums have started to rise.  So far, the increases have been modest, on the order of 0.5-2%.  However, if the shortage grows, expect to see further and larger premium increases in the coming weeks.  We could see a repeat of the late 2008 gold and silver buying frenzy, where product availability got as slow as 1-4 months after payment.

Exxon Sells Gulf of Mexico Stakes for $1.01 Billion 

The assets currently produce about 20,000 net barrels of oil per day, about 53% of which is oil. The properties are estimated to contain net proved and probable reserves of 66 million barrels of oil equivalent, or BOE, 61% of which is oil. Proved reserves are estimated at 49.5 million BOE, 68% of which are proved developed. The properties include nine fields on the Gulf of Mexico continental shelf, generally located between Energy XXI's existing core South Timbalier and Main Pass operations. The six largest fields account for 89% of the net production.

Lack of Hiring to Restrain U.S. Economy in 2011 

Gross domestic product will increase 2.6 percent next year after growing 2.7 percent in 2010, according to the median forecast of 51 economists surveyed by the National Association for Business Economics from Oct. 21 to Nov. 4. “Growth is expected to be moderate,” Richard Wobbekind, president of the group and associate dean of the Leeds School of Business at the University of Colorado-Boulder, said in a statement. “Panelists remain concerned about high levels of federal debt, a continuing high level of unemployment, increased business regulation and rising commodity prices.”

45 'Patriotic Millionaires' Call for Bush-Era Tax Cuts to Expire 

Forty-five people have signed a letter to President Obama asking him to allow the Bush-era tax cuts to expire at the end of this year. The president gets many letters like that. But what was unusual about this petition was who signed it -- including the Grammy Award-nominated DJ, MOBY, as well as Jerry Cohen of Ben-and-Jerry's-Ice-Cream fame. All the signatories happen to be millionaires -- who stand to lose financially if they get their way.


Crude Oil Flat After Ireland Accepts Bailout 

Crude futures were flat Monday, paring earlier gains as the dollar strengthened following Ireland's decision to accept bailout money from the European Union and the International Monetary Fund. Light, sweet crude for January delivery was down 2 cents, at $81.96 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose 29 cents, or 0.3%, at $84.63 a barrel. Ireland over the weekend applied for an aid package from the EU and the IMF, bringing an end to unease over whether the debt-ridden country would accept the assistance. The news initially served to prop up broader markets, including the euro. But the euro zone currency slipped in early morning trading, lifting the dollar. A stronger dollar typically weighs on oil prices as the dollar-denominated commodity becomes more expensive in other currencies. The euro was down at $1.3642 from $1.3673 recently and the ICE Dollar Index, which tracks the greenback against a basket of currencies, was higher.


Farmland Preservation: A Growing Trend (joemanc)

Since 1978, when Connecticut began its Farmland Preservation Program, the state has purchased the development rights on 280 farms, which means that farmers can continue to farm the land or sell it someday, but never for development. The total amount of acreage saved for farming has been more than 36,000 acres. This represents about 28 percent of the state's ultimate goal of protecting 85,000 acres of crop fields on 130,000 acres of farmland.

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 11/22 - Quantitative Easing Truth, ...

"By the time the eurozone crisis began to blow up in Greece a year ago, it was probably too late already for Portugal. The government then made matters worse by letting its budget deficit creep higher over the first half of the year, while the rest of the Club Med slashed frantically. It is hard to see how Portugal will meet a deficit target of 7.3pc for 2010 agreed with EU."

.........................1A) Portugal Default Risk Rises After Irish Rescue on Concern Over Debt Levels

..........................1B) Portugal opposition says deficit underestimated

"(Reuters) - Portugal's budget deficit and public debt are higher than those reported by the government, which is trying to regain investor confidence amid a debt crisis, the leader the main opposition party said on Saturday.

Pedro Passos Coelho told a meeting of his Social Democratic Party items like state-run companies' debts were not included in the overall public debt, which the government puts at 82 percent of gross domestic product this year.

He said that the "true" total public debt stood as high as 112 percent of GDP, while the budget deficit should be at 9.5 percent of GDP, far above the minority Socialist government's target of 7.3 percent for the end of the year.

"The state has for many years been removing from the budget a series of activities, which has made a large part of our numbers fictitious," he said in televised remarks."

"Nov. 22 (Bloomberg) -- Chinese central bank adviser Li Daokui said China can consider selling U.S. Treasuries as a way to seek compensation for losses caused to its foreign exchange investments by the U.S.’s decision to undertake so-called quantitative easing.

China could sell some of its Treasury holdings when the Federal Reserve buys the debt, Li said in an interview with state broadcaster China Central Television."

..........................2A) China PBOC Advisor: Sell Tsys In Response To QE2 - State TV

"Li Daokui, a Beijing-based economist and member of the central bank's Monetary Policy Committee, told China Central Television that the $600 billion program will trigger U.S. inflation and create losses for China.

"In order to rescue its economy, the U.S. government printed a lot of paper and once their monetary easing takes effect, they need to consider compensating other countries," he said.

"We can sell some of our Treasury bonds.""

"SHANGHAI, Nov 22 (Reuters) - China's yuan started trading against the Russian rouble in the Chinese onshore forex market on Monday, the latest currency pair to be introduced as part of Beijing's efforts to promote the use of its currency.

The step is part of Beijing's efforts to expand the use of the yuan for trade and even investment purposes, as a way of reducing reliance on the dollar and thereby simplifying the settlement of trade in everything from energy to manufactured goods."

"Nov. 22 (Bloomberg) -- Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, said the rescue package for Ireland will total less than 100 billion euros ($137.5 billion) and the exact figure should be known by the end of November. "

.....................4A) Rescue of Ireland Would Dwarf Greece's Bailout on Cost of Shoring Up Banks

......................4B) Multi-notch downgrade likely for Ireland: Moody's

"LONDON (MarketWatch) -- A "multi-notch downgrade" of Ireland's Aa2 rating is now the "most likely" outcome of a review of the nation's sovereign-credit rating, Moody's Investors Service said Monday in its weekly credit outlook. Such a downgrade would leave Ireland's rating within the investment-grade category, the agency said. Ireland on Sunday applied for a European Union-International Monetary Fund aid package that is expected to be used to make direct capital injections into the nation's banks. While the move is positive for the standalone credit quality of the banks, it will shift the burden of support to the Irish government, underline bank-contingent liabilities on the government balance sheet and increase the sovereign's debt burden, the agency said, "a credit negative for Ireland and, consequently, the credit quality of bank deposits and debt that the sovereign explicitly and implicitly supports." "

"LONDON (Reuters) - The new Basel III banking rules will leave the biggest U.S. banks short of between $100 billion and $150 billion in equity capital, with 90 per cent of the shortfall concentrated in the top six banks, the Financial Times said, citing research from Barclays Capital."

"BERLIN—German measures of fiscal consolidation so far have been helpful and successful, but nevertheless the budget deficit this year will be the highest ever, the finance ministry said Monday in its monthly report.

"In the long run, only a reduction in the debt ratio can lead to higher economic growth," Deputy Finance Minister Hans Bernhard Beus said in the report.

A 2010 budget deficit of around €50 billion ($68.43 billion) is possible, but the deficit will still come in higher than the previous deficit record of €40 billion reached in 1996, the report said. From January through October, the budget deficit has been €54.8 billion. "

"Parts of Greece’s government may be forced to “shut down” as early as next week if the country isn’t able to cover a revenue shortfall after its European Union partners delayed its next tranche of aid money, High Frequency Economics Ltd. said.

“With a big tax revenue shortfall, cash requirements are surely greater than the 6.5 billion euros ($8.95 billion) Athens was meant to receive next week,” Carl B. Weinberg, chief economist at Valhalla, New York-based High Frequency wrote in a note to clients today.

“Unless the government gets funds soon after Nov. 30, it will run out of cash,” Weinberg said. “If so, the government will have to shut down, at least in part.”

Greek government bonds declined for a second day, with the 10-year yield increasing three basis points to 11.78 percent as of 7:44 a.m. in London."

"U.S. Treasury Secretary Timothy F. Geithner said the Obama administration would oppose any effort to strip the Federal Reserve of its mandate to pursue full employment and warned Republicans against politicizing the central bank.

“It is very important to keep politics out of monetary policy,” Geithner said in an interview airing on Bloomberg Television’s “Political Capital with Al Hunt” this weekend. “You want to be very careful not to take steps that hurt our credibility.” "

"Silver-coin sales will climb as investors seek to protect their wealth from weakening currencies, according to the Perth Mint, producer of about 6 percent of the world’s gold bullion.

“There seems to be more upside with silver than gold right now,” said Ron Currie, sales and marketing director. The mint, founded in 1899, also wants to sell more gold to China even as it scales back production rates from the peak levels seen last year after the 2008 financial crisis, Currie said.

The mint’s outlook adds to signs that global demand for silver, which trades for about 50 times less than gold per ounce, will increase. The Royal Canadian Mint said last week that silver-coin sales will jump more than 50 percent this year. The Perth Mint may match that gain, Currie said in an interview. "

  • Other news, headlines and opinion:

UK banks threatened by Ireland's economic crisis

Chinese gas output from unconventional sources may double by 2015

Dublin financial centre at risk from corporation tax

Social Security, Medicare Face The Age Of Austerity (NPR)

S&P warns on New Zealand ratings and currency skids

Riskiest Bonds Are Haven as Fed Seeks Inflation: Credit Markets

Hungarian Bonds to Suffer on 'Poor' Fiscal Policies, SocGen Says

Forint Will Probably Gain on Hungary Pension Conversion, KBC, Barclays Say ("use private pension fund assets to plug its budget shortfall")

Every family in Britain will have to pay £300 to bail out the Irish

Cop ticketing surge a response to layoffs? (NJ)

Economists worried about U.S. inflation: survey

Value of public pensions falls by quarter (UK)

Pessimistic Fed to slash growth forecasts (Financial Times)

Why You Should Be "Extremely Scared" by China's Food Price Inflation (Tech Ticker video)

Ukraine Must Raise Pension Age to Get Access to IMF Funds, Tigipko Says

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Re: Daily Digest 11/22 - Quantitative Easing Truth, ...
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Re: Daily Digest 11/22 - Quantitative Easing Truth, ...


"NEW YORK (CNNMoney.com) -- The Great Recession has forced states to borrow $41 billion from a federal fund to cover unemployment checks for their jobless residents.

Now the bill is coming due.

Some 31 states will have to shell out an estimated $1.4 billion in interest payments on these loans next year. They had been spared this expense because of an obscure provision of the 2009 Recovery Act that expires on Dec. 31.

The burden to cover this cost will fall mainly on businesses, who will see their unemployment taxes rise. But states will be hit too since the increased expense will likely deter companies from hiring new employees.

"To escape the recession, we need economic recovery," said Rochelle Webb, the president of the National Association of State Workforce Agencies and head of Arizona's unemployment insurance system. "If local employers are facing increased taxes, they are going to say they can't afford to expand their businesses."

Some states might also have to cover at least part of the payment from their general revenues, a step they can ill-afford since many are facing hefty budget deficits.

As a result, state officials and employers are lobbying Congress to extend the interest-free borrowing provision in the stimulus package for another two years."

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Re: Daily Digest 11/22 - Quantitative Easing Truth, ...

This country is done! Bring on the collapse so we can rebuild.



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Re: Daily Digest 11/22 - Quantitative Easing Truth, ...

vvolf's picture
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Widespread Silver Shortages

I guess it depends where you buy.  I've noticed an increase to be honest with y'all.  All three of my dealers have lots for sale.  New stock every day from all the 'bubble' messages out there.  Good for me I guess.

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Denny Johnson
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Re: Daily Digest 11/22 - Quantitative Easing Truth, ...

N Korea fires on S Korea, injuring at least 4


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