Daily Digest

Daily Digest 11/4 - Quantitative Easing is Just Devaluation, Sugar Soars to 30-year High, The World's Biggest Debt Bubble

Thursday, November 4, 2010, 9:46 AM
  • Indiana Braces For Violence, Adds Armed Guards To Unemployment Offices In Anticipation Of 99-Week Jobless Benefits Expiration
  • QE2 risks currency wars and the end of dollar hegemony
  • iPod Nation's Revaluation Is No Panacea for U.S.: Yukon Huang
  • Hagens Berman Sobol Shapiro: JP Morgan and HSBC Face RICO Charges in Silver Futures Class Action Lawsuit
  • 3 Charts That Prove We Are Living In The Biggest Debt Bubble In The History Of Our World
  • Time To Blame The New Guys
  • Quantitative Easing Is Just Devaluation
  • Suicide Is Painless
  • Sugar Soars To 30-Year High As Supply Fears Grow

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Economy

Indiana Braces For Violence, Adds Armed Guards To Unemployment Offices In Anticipation Of 99-Week Jobless Benefits Expiration (pinecarr)

As America reaches its two year anniversary from the immediate economic collapse that followed the Lehman bankruptcy, punctuated mostly by vast and broad layoffs across every industry, arguably the most relevant topic that few are so far discussing is the expiration of full 99 weeks of maximum claims (EUC + Extended Benefits) for cohort after cohort of laid off Americans.

QE2 risks currency wars and the end of dollar hegemony (pinecarr)

As the US Federal Reserve meets today to decide whether its next blast of quantitative easing should be $1 trillion or a more cautious $500bn, it does so knowing that China and the emerging world view the policy as an attempt to drive down the dollar.

iPod Nation's Revaluation Is No Panacea for U.S.: Yukon Huang (Woodman)

The share of China’s exports from processing trade surged from about 25 percent in the mid-1980s to 55 percent in the mid- 1990s. Two-thirds of China’s imports for processing come from East Asia and only 5 percent each from the U.S. and Europe. But there’s an even split in the export of final goods from China -- as much as 45 percent go to East Asia and the same percentage to the U.S. and Europe.

Hagens Berman Sobol Shapiro: JP Morgan and HSBC Face RICO Charges in Silver Futures Class Action Lawsuit (TomA)

According to the complaint, JP Morgan amassed a sizeable short position in silver futures and options in part through its March 2008 acquisition of investment bank Bear Stearns. By August 2008, JP Morgan and London-based HSBC controlled more than 85 percent of the commercial net short position in silver futures contracts.

3 Charts That Prove We Are Living In The Biggest Debt Bubble In The History Of Our World (TomA)

These charts prove that we are now in the biggest debt bubble in the history of the world. As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none.

Time To Blame The New Guys (Ilene)

We have simply been enjoying the ride (see David Fry’s chart above of yesterday’s wild action) and making money off the chaos. After all, if we are going back down the road that almost wrecked the Global economy just 2 years ago, we are likely to get another fantastic buying opportunity so we stay in cash and do our hit and run moves like yesterday, where I sent out an Alert to Members on the SPY weekly $118 puts, which came in better than we expected at .70 and made a near double by the afternoon, topping out at $1.39.

Quantitative Easing Is Just Devaluation (Nathaniel V.)

Most of all, the greenback has fallen against gold, which is now a hair’s breadth from its all-time high. That’s because, unlike fiat currencies, bullion has no central bank to push back against the Fed’s devaluation efforts. Nor does gold have an export sector with millions of high-paid manufacturing jobs to protect. Gold is a currency with no economy to support, which makes it an ideal candidate as the other side of the US dollar trade.

Energy

Suicide Is Painless (JimQ)

The U.S. military knows we are on the verge of an oil crisis. There are no new supplies ready to come on line before 2015. The President and his advisors know that an oil crisis is in our immediate future. We have military bases in Saudi Arabia, Iraq, and Kuwait. We have active fighting forces in Afghanistan and Pakistan. We have a naval armada of aircraft carriers in the Persian Gulf. Our forces completely encircle Iran. Is this a coincidence when the countries with the largest oil reserves in the world are noted?

Environment

Sugar Soars To 30-Year High As Supply Fears Grow (adam)

On Tuesday ICE March sugar rose 4 per cent to a peak of 30.64 cents a pound, surpassing the level reached in February and rising to their highest point since 1980, when prices jumped to nearly 45 cents.

The dramatic rise in sugar prices is causing headaches for policymakers. While sugar is widely available in the west and its price is rarely considered, it is an essential source of cheap calories in emerging economies, where surging sugar prices are driving food inflation.

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." 

8 Comments

rjs's picture
rjs
Status: Gold Member (Offline)
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Posts: 445
saxplayer00o1's picture
saxplayer00o1
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Joined: Jul 30 2009
Posts: 4064
Re: Daily Digest 11/4 - Quantitative Easing is Just ...

"Asia-Pacific officials are preparing for stronger currencies and asset-price inflation as they blamed the U.S. Federal Reserve’s expanded monetary stimulus for threatening to escalate an inflow of capital into the region.

Chinese central bank adviser Xia Bin said Fed quantitative easing is “uncontrolled” money printing, and Japan’s Prime Minister Naoto Kan cited the U.S. pursuing a “weak-dollar policy.” The Hong Kong Monetary Authority warned the city’s property prices could surge and Malaysia’s central bank chief said nations are prepared to act jointly on capital flows.

“Extra liquidity due to quantitative easing will spill into Asian markets,” said Patrick Bennett, a Hong Kong-based strategist at Standard Bank Group Ltd. “It will put increased pressure on all currencies to appreciate, the yuan in particular has been appreciating at a slower rate than others.”"

"Market data collected by Lender Processing Services (LPS) during the month of September reveals that foreclosure timelines continue to increase, with borrowers in the latest stages of delinquency or in foreclosure languishing without having made a mortgage payment for up to 16 months.

The company’s Mortgage Monitor report released Wednesday illustrates the extreme congestion in foreclosure pipelines. LPS notes that the average time a loan remains delinquent in five particular judicial states – New York, Florida, New Jersey, Hawaii, and Maine – now exceeds 500 days."

"This month’s report also shows that approximately 1.13 million loans that were current at the beginning of January 2010 are at least 60 days delinquent or in foreclosure as of the end of September 2010 – a month-over-month increase of approximately 120,000 loans.

LPS says the last two months have seen an increasing trend in this new problem loan category – 1.84 percent of loans that were current six months ago are 60 or more days delinquent today.

The research firm puts the nation’s mortgage delinquency rate at 9.27 percent and the U.S. foreclosure inventory rate at 3.84 percent, for a total non-current loan rate of 13.11 percent."

  • Other news, headlines and opinion:

Look at the commodities headlines at Bloomberg

 

Asia May Coordinate to Prevent Currency Speculation, Thailand's Korn Says

China Will Boost Funds Investing Overseas to Curb Yuan Gains, Reduce Risks

Yuan Gains Drive Premium on Dollar Loans to a Two-Year High: China Credit

Hong Kong faces heat on dollar peg

Korea Should Cool Foreign Inflows, Central Bank Says

Tokyo threatens yen intervention

Brazil warns more Fed liquidity could lead to protectionist policies

Ireland Sovereign CDS Hit Fresh Record Wide Of 570 Bps

Bank of Japan Confronts Two-Decade Land Slump With Asset-Purchase Program

European Union Said to Plan Duties on Chinese Paper Goods to Fight Dumping

US money printing no 'magic wand' (ABC News)

Bank of America Edges Closer to Tipping Point: Jonathan Weil

'Fiscal squeeze' brought on by aging, economist says (Canada)

Tough Fiscal Problems Loom for Cities (Wall Street Journal on California pensions)

CDS costs on US Treasuries rise after Fed statement

Municipal Bond Market Isn't Facing Collapse, Wells Fargo Says

Romania Central Bank Raises Inflation Forecast on Effects of VAT Increase

Russia Bars Irish, Spanish Debt From Sovereign-Wealth Fund Investment List

Buffalo schools facing fiscal nightmare

Ireland is running out of time (by Ambrose Evans-Pritchard )

Applications for jobless aid rise sharply

Urban Decay in Flint, MI (Video)

Copper Rises 50% in `Red Gold' Rush on China Doubling Usage

$100 Oil Looms for JPMorgan, Merrill After Fed Stimulus: Energy Markets

Presenting The Fed's Balance Sheet Through 2012 - Fed Will Surpass China As Top Holder Of US Debt By The End Of The Month (zerohedge)

ICN 11/01/10 Constituion and Candidates, Social Security Underwater, TARP Losses Hidden (Informed Citizen News video)

Stock market losses kill Marin pension bonus bid

Hungarian Private Pension Funds Challenge Government Measures in Court

pinecarr's picture
pinecarr
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Re: Daily Digest 11/4 - Quantitative Easing is Just ...

Thanks for the link fixes, Saxplayer!

junkyard71's picture
junkyard71
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Posts: 22
Re: Daily Digest 11/4 - Quantitative Easing is Just ...

it's truning into a global circus act of clowns spinning plates on poles as other clowns erect new poles and add more plates.

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Re: Daily Digest 11/4 - Quantitative Easing is Just ...

from saxplayer's links:

CDS costs on US Treasuries rise after Fed statement (Reuters) - The cost to insure U.S. Treasury debt in the credit default swap market rose after the Federal Reserve committed to buy $600 billion more in government bonds in an attempt to help stimulate the economy. The cost of credit default swaps on U.S. government debt rose 3 basis points to 44 basis points, or $44,000 per year to insure $10 million in debt for five years, according to Markit Intraday.

would someone explain to me what these CDSs are paid off in if the US defaults?

jhart5's picture
jhart5
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Posts: 89
Re: Daily Digest 11/4 - Quantitative Easing is Just ...

Thats only 0.44% or $4.40 per $1000.00 for 5 years or 0.07875% or $0.78 per year. Where can I purchase these Treasury CDS's. Sounds like a good deal to me.

TechGuy's picture
TechGuy
Status: Gold Member (Offline)
Joined: Oct 13 2008
Posts: 367
Re: Daily Digest 11/4 - Quantitative Easing is Just ...

Thats only 0.44% or $4.40 per $1000.00 for 5 years or 0.07875% or $0.78 per year. Where can I purchase these Treasury CDS's. Sounds like a good deal to me.

 

Not if five years later the $1000 dollars is worth $0.10. I don't that the other side of that deal will pay out if the US defaulted. its unlikely that the US will default since it just going to print money to pay its debts (as it already is). why would anyone believe that the US would default when it can print?

 

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2219
Re: Daily Digest 11/4 - Quantitative Easing is Just ...
junkyard71 wrote:

it's truning into a global circus act of clowns spinning plates on poles as other clowns erect new poles and add more plates.

Nice image -- although maybe they're spinning peevish and angried-up chihuahuas?  Gonna end in teethmarks!

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