Daily Digest

Daily Digest 11/24 - The Big Lie Of Defense Cuts, Most Americans Agree On Important Issues, A Blow To Pinstripe Aspirations

Thursday, November 24, 2011, 10:33 AM

To our U.S. readers: Happy Thanksgiving, from the CM.com Daily Digest team!

  • Super Tuesday Committee Failure - So What?
  • Defense Cuts - Another Big Lie
  • Supercommittee Fight May Tell Us Whether the GOP Is Beyond Salvage
  • A Spurious Motion on Behalf of the MF Global Trustee
  • A Majority of Americans (Including Both OWS and the Tea Party) AGREE on the Most Important Issues … We Just Don’t Realize It
  • Jim Rickards - Who Will Bail Out the Fed & How High for Gold?
  • ‘Aftershock’ Book Predicts Economic Disaster Amid Controversy
  • A Blow to Pinstripe Aspirations
  • Cycles & Indicators: Mike Murray
  • Greece Considering Plugging Aegean Islands into Turkish Energy Grid
  • Fukushima: "China Syndrome Is Inevitable" ... "Huge Steam Explosions", or "Nuclear Bomb-Type Explosions" May Occur

Crash Course DVDOwn the Crash Course Special Edition Set with Presenter’s Pack (NTSC or PAL)


Super Tuesday Committee Failure - So What? (June C.)

Long live the Debt! In case you are voting in the next election - here are 12 people to get rid of. Much as I may blame one party over another for this failure, they all deserve what's coming to them for A) Pretending they were going to accomplish something and B) For not now getting up and making very strong statements denouncing the corruption in politics that make it impossible for Congress to do the Nation's business anymore.

Defense Cuts - Another Big Lie (June C.)

If you follow the headlines, and believe them, you would probably think that defense spending is about to be slashed to the bone following the collapse of the “super committee”. Defense secretary Leon Panetta is warning of a “doomsday” scenario for national security spending. Congressman Buck McKeon, the chairman of the House Armed Services Committee, warns that automatic cuts will end up “crippling our military.”

Supercommittee Fight May Tell Us Whether the GOP Is Beyond Salvage (Phil H.)

There are only budget cuts if you use dishonest Washington budget math, which magically turns spending increases into spending cuts simply because the burden of government isn’t expanding even faster.

A Spurious Motion on Behalf of the MF Global Trustee (June C.)

In this motion the attorneys state the Trustee seeks cooperation and assistance from SIPC, the CFTC and CME group. (In other words, butt out customers!) SPIC is neither organized nor qualified to assist in return of segregated funds of futures accounts. Both the CFTC and CME have grossly failed their responsibilities to the industry and customers of the industry.

A Majority of Americans (Including Both OWS and the Tea Party) AGREE on the Most Important Issues … We Just Don’t Realize It (June C.)

Well-known Wall Street companies stand at the nexus of where OWS protestors and the Tea Party overlap on angered populism. Both the radical left and the radical right are channeling broader frustration about the state of the economy and share a mutual anger over TARP and other perceived bailouts. This combination has the potential to be explosive later in the year when media reports cover the next round of bonuses and contrast it with stories of millions of Americans making do with less this holiday season.

(Except that it is the majority of Americans – not “extremists” on either side of the aisle – that share this anger).

Jim Rickards - Who Will Bail Out the Fed & How High for Gold? (June C.)

From Occupy Wall Street to the halls of Congress there is anger at bailouts orchestrated by the U.S. Federal Reserve. These bailouts have not been limited to banks but include brokers, money market funds and foreign corporations. The Fed has released details grudgingly and some disclosures were forced by the Dodd-Frank legislation. Gradually the bailouts have been revealed as if a veil were slowly being drawn to display a densely formed mosaic. The bailouts have enriched stockholders, bondholders and CEO’s while unemployment remains at depression levels and forty-six million Americans survive on food stamps.

‘Aftershock’ Book Predicts Economic Disaster Amid Controversy (Dana T.)

This wasn’t the first time Wiedemer’s predictions hit a nerve. In 2006, he was one of three economists who co-authored a book correctly warning that the real estate boom and Wall Street bull run were about to end. A prediction Federal Reserve Chairman Ben Bernanke and his predecessor, Alan Greenspan, were not about to support publicly.

A Blow to Pinstripe Aspirations (jdargis)

Any sympathy for Wall Street’s huddled masses yearning to get rich should be tempered by the fact that financial sector recessions often deal a soft blow. Laid-off financial workers typically get large severance packages, including the use of outplacement services. During their job hunt, many can draw on substantial savings built off past bonuses, on top of collecting unemployment.

But for those laid-off Wall Street workers whose golden tickets have vanished, the disillusionment is real.

Cycles & Indicators: Mike Murray (adam)

Why there's going to come a day when gold will not be a good investment

How understanding wealthcycles is a key to true wealth accumulation


Greece Considering Plugging Aegean Islands into Turkish Energy Grid (James S.)

On 17 November Greece’s Energy and Environment Minister Giorgos Papaconstantinou said on the sidelines of the Atlantic Council Black Sea Energy and Economic Forum in Istanbul, “We have talked with Turkish officials previously on connecting Greek Islands to Turkey and we are still considering this. We have always wanted to connect the islands to mainland Greece, but there is a possibility that we might connect islands to Turkish grids.”


Fukushima: "China Syndrome Is Inevitable" ... "Huge Steam Explosions", or "Nuclear Bomb-Type Explosions" May Occur (June C.)

I've repeatedly noted that we may experience a "China syndrome" type of accident at Fukushima.

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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From Zerohedge (Goldcore article)

Goldcore article on Zerohedge-


Gold GBP 1,092/oz, JPY 130,890/oz – IMF: Japan Debt Could "Quickly Become Unsustainable"

Geopolitical risk remains elevated and Middle East tensions are
escalating globally with Russia appearing to be prepared to risk
conflict over Syria with NATO and the US. Yesterday, Russian President
Dmitry Medvedev threatened to target and, if necessary, destroy the U.S.
missile defence shield in Europe once it is built.

A marked deterioration in US–Russian relations and concerns of a new ‘Cold War’ may support gold prices. 

While all the focus has been on Europe, and to a lesser degree the US
in recent months, two of the other largest debtor nations in the world,
Japan and the UK (including corporate and bank debt), have been under
the market's radar. 

This will change soon and will likely lead to the next phase of the
global financial crisis. The fact that we have a global debt crisis
which will almost inevitably lead to an international monetary crisis is
as of yet not acknowledged or realized by the markets and the media.

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Germany Buys Itself First-Class Ticket on Titanic



Germany Buys Itself First-Class Ticket on Titanic


Click on some of these and then click on the 3 month charts:

Italian 10 Year yields

Italian 5 Year yields

Spanish 10 Year yields

Belgian 10 Year yields

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Aussie share market takes tumble

Share market slips below 4,000 mark

the 4000 mark is a psychological benchmark, not seen since 2008....

The benchmark ASX 200 index has slipped below 4,000 points on concerns that Germany is not prepared to back European Central Bank measures to bail out troubled eurozone countries.

Also, interesting graphic....

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Italian Short-Term Debt Sale Turns Drastically Expensive


(For 11/25 )

"Italy's Treasury was forced to pay the highest yields on record for the country, since the launch of the euro, to lure investors to its latest sale of short-term debt Friday, but it managed to garner enough demand to sell the amount targeted despite investors' growing distrust of euro-zone sovereign debt.
Friday's sale was seen as warm-up before next week's tougher government bond auctions.
Italy sold EUR8 billion of six-month Treasury bills at an average yield of 6.504%, up from 3.535% at the previous auction Oct. 26. This auction was supported by EUR8.8 billion redeeming Treasury bills. The offer received EUR11.735 billion in bids.
Italy also sold the EUR2 billion it had planned to shift in September 2013-dated CTZ, or zero-coupon bonds, paying a yield of 7.814% to investors, up from 4.628% previously. The offer attracted EUR3.189 billion in bids. "

....................1A) Italy Borrowing Costs Almost Double as Euro Tumbles 

"Yields on Hungarian sovereign bonds soared and the forint dropped on Friday after Moody's downgraded Hungary's credit rating to non-investive status.
Traders said that investors were shunning Hungarian bonds and that domestic players were also absent from the market.
Yields on three-year, five-year and 10-year treasury bonds went up 0.6-0.8 percentage points to about 9.1-9.5 percent, Daniel Bebesy, portfolio manager at Budapest Fund Management, told the economy site portfolio.hu in late morning trading.
Earlier, yields on the same bonds stood between 8.51 and 8.98 percent, according to analysts at Intesa Sanpaolo's Hungarian unit.
Hungary's CDS spreads -- the cost of insurance against a default -- also rose 620 points from 510 in the beginning of November, coming close to all-time high of 640 points reached in October 2008, when Hungary first turned to international lenders for assistance to avert a default."

"Portugal's efforts to climb out of its economic crisis suffered a double setback Thursday as its credit rating was downgraded to junk status and a major strike gave voice to broad public outrage over austerity measures that have squeezed living standards."

"Standard and Poor's said Japanese Prime Minister Yoshihiko Noda's administration hasn't made progress in tackling the public debt burden, an indication it may be preparing to lower the nation's sovereign grade.

"Japan's finances are getting worse and worse every day, every second," Takahira Ogawa, director of sovereign ratings at S&P in Singapore, said in an interview. Asked if that means he's closer to cutting Japan, he said it "may be right in saying that we're closer to a downgrade. But the deterioration has been gradual so far, and it's not like we're going to move today"."

"U.S. economic conditions are “terrifying” Mohamed El-Erian said yesterday. El-Erian, as you may know, is Bill Gross’ right-hand man at Pimco, the world’s largest bond fund. He gives the U.S. a 50/50 chance at a renewed recession.

“What’s most terrifying?” El-Erian asked rhetorically in a Bloomberg TV interview. “We are having this discussion about the risk of recession at a time when unemployment is already too high, at a time when a quarter of homeowners are underwater on their mortgages, at a time then the fiscal deficit is at 9% and at a time when interest rates are at zero.

“The big concern is the U.S. getting tipped over by Europe. Things in Europe are getting worse, not better.”"

Other headlines:

  1. German, French debt insurance costs hit record
  2. Japan Sharpens Warning on Euro Crisis Impact
  3. Europe debt crisis poses grave risk to Japan, says Furukawa
  4. IFR-European banks' asset sales face failure
  5. Moody's warns US not to back off deficit cuts
  6. German Parliament backs $35 billion in new borrowing in 2012
  7. France Telecom Debt Risk at Record in Crisis: Corporate Finance
  8. Detroit’s council and mayor war over city's financial death spiral ("City will run out of money by April: Report")
  9. Jefferson County using capital funds to pay daily expenses
  10. Ruling on bankruptcy clears the way for state takeover of Harrisburg
  11. Italian, Spanish Yield Curves Start Looking Greek: Euro Credit  
  12. S&P cuts Egypt sovereign rating
  13. Japan's Benchmark Yields Rise Above 1% Amid Fiscal Concern  
  14. Monti Says Merkel, Sarkozy Agree Italy Default Would Lead to End of Euro


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