Daily Digest

Daily Digest 1/15 - Unprecedented Buying of Silver, Banks Loosen Purse Strings, Yuan Won't Ease Inflation

Saturday, January 15, 2011, 12:00 PM
  • How to Fix Mortgage Mess in Three Steps: Laurence Kotlikoff
  • US Mint Reports Unprecedented Buying Spree Of Physical Silver
  • Copper Deficit May be 600,000 Tons, JPMorgan Says
  • Banks Loosen Purse Strings
  • China Lawmaker Says Yuan Appreciation Won't Help Ease Inflation
  • Progress on Overhaul of Corporate-Tax Rules
  • Norway's $186 Billion Gas Loss to Cement Russian Grip on Supply

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

Economy

How to Fix Mortgage Mess in Three Steps: Laurence Kotlikoff (solidswede)



Much of these toxic assets, as well as many of Fannie and Freddie’s prime mortgages, aren’t performing or will likely default. Nationwide, 8 million mortgages -- or one in 10 -- are under water, with the property’s value at least 25 percent below what’s owed. The Federal Housing Financing Agency puts Fannie and Freddie’s losses at about $300 billion. But industry experts, like, Janet Tavakoli, suggest the real number is closer to $700 billion. And if home prices fall another 20 percent to return to their long-term trend, the tab might climb to $1 trillion.

US Mint Reports Unprecedented Buying Spree Of Physical Silver (suzie)



Three days ago we noted that in just the first week of January, the US Mint had sold 2,221,000 ounces of silver "a number which if run-rated would be an absolutely all time monthly record," A quick glance at the tally today, shows that something very scary is going on. In the subsequent three days, the number has surged by 50% and has hit 3,407,000 ounces of silver! In just the first 12 days of the month we have already surpassed the total monthly sales of 9 separate months of 2010.

Copper Deficit May be 600,000 Tons, JPMorgan Says (solidswede)



Copper for delivery in three months in London advanced to a record of $9,754 a metric ton on Jan. 4 after rising 30 percent last year as the improving global economy and rising investment demand for commodities prompted buying. The International Copper Study Group is expecting a 435,000-ton global deficit in the refined metal this year.

Banks Loosen Purse Strings



Consumers were more willing to pull out their plastic. Credit-card usage was up 10% year-over-year. The bank issued 3.4 million new credit cards in the fourth quarter, up 4% from the same period a year earlier. "We see the consumer is getting stronger," said J.P. Morgan Chairman James Dimon. He added that many Americans are still saving and paying down their debts, which he said will make them better borrowers.

China Lawmaker Says Yuan Appreciation Won't Help Ease Inflation



Earlier this week, U.S. Treasury Secretary Timothy Geithner said the U.S. wanted yuan appreciation to move "more rapidly," and tried a new argument. He discussed the larger change in the "real exchange rate"--that is, the exchange rate adjusted to account for the difference between China's inflation, which now tops 5%, and the U.S. inflation rate of about 1%. By that lens, China's real exchange rate is moving at an annual clip approaching 10%.

Progress on Overhaul of Corporate-Tax Rules



Some business executives at the meeting suggested a more lenient standard that could add somewhat to future budget deficits, but also would allow them to keep some existing tax breaks, according to industry officials with knowledge of the situation. A spokesman for Johnson & Johnson said company officials "welcome the opportunity to work with the administration and Congress to achieve corporate tax reform in a fiscally responsible manner that promotes economic growth and employment opportunities in the U.S."

Norway's $186 Billion Gas Loss to Cement Russian Grip on Supply (solidswede)



Europe’s second-largest supplier yesterday cut its estimate for gas yet to be discovered by 31 percent, or 570 billion cubic meters. That’s equal to more than five years of production at current rates and would be valued at about $186 billion based on today’s prices at the U.K’s trading hub. “This will rack up the pressure on the European Union to develop and secure access to reliable energy,” Thina Saltvedt, an analyst at Nordea Markets in Oslo, said by e-mail. “The EU will be forced to increase imports from the Middle East and Africa to compensate for and reduce Russia’s domination.”

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."

12 Comments

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Re: Daily Digest 1/15 - Unprecedented Buying of Silver, ...

FT on the global food crisis; a couple dozen articles

FT is a pain in the butt to copy, so... http://www.ft.com/foodprices

thatchmo's picture
thatchmo
Status: Gold Member (Offline)
Joined: Dec 14 2008
Posts: 461
Re: Daily Digest 1/15 - Unprecedented Buying of Silver, ...

Regarding the silver article-  for non-numismatic purchasers of silver or gold coins for investment or wealth preservation, does the date of the coin have any short or long term value?   Aloha, Steve.

Vanityfox451's picture
Vanityfox451
Status: Diamond Member (Offline)
Joined: Dec 28 2008
Posts: 1636
Unprecedented Buying of Silver ...

I found this interesting ...

~ VF ~

truenorth's picture
truenorth
Status: Member (Offline)
Joined: Feb 1 2009
Posts: 21
Richard Fisher of the Dallas Fed

http://www.dallasfed.org/news/speeches/fisher/2011/fs110112.cfm

“The new Congress and the new staff in the White House have their work cut out for them. You cannot overstate the gravity of their duty on the economic front. Over the years, their predecessors — Republicans and Democrats together — have dug a fiscal sinkhole so deep and so wide that, left unrepaired, it will swallow up the economic future of our children, our grandchildren and their children. They must now engineer a way out of that frightful predicament without thwarting the nascent economic recovery.

“I have been outspoken about the limits of monetary policy as a salve for the nation’s fiscal pathology. The Fed has done much, in my words, to provide the bridge financing until the new Congress gets to work restructuring the tax and regulatory incentives American businesses need to confidently expand their payrolls and capital expenditures here at home.

“The Federal Reserve has held rates to nil. We have expanded our balance sheet to unprecedented levels. After much debate — which included strong concern expressed by one member with a formal vote and others, like me, who did not have voting rights in 2010 — the FOMC collectively decided in November to temporarily undertake a program to purchase U.S. Treasuries that, when added to previous policy initiatives, roughly means we are purchasing the equivalent of all newly issued Treasury debt through June.

“By this action, we have run the risk of being viewed as an accomplice to Congress’ fiscal nonfeasance. To avoid that perception, we must vigilantly protect the integrity of our delicate franchise. There are limits to what we can do on the monetary front to provide the bridge financing to fiscal sanity. Last Friday, speaking in Germany, [European Central Bank President] Jean-Claude Trichet said it best: ‘Monetary policy responsibility cannot substitute for government irresponsibility.’

“The entire FOMC knows the history and the ruinous fate that is meted out to countries whose central banks take to regularly monetizing government debt. Barring some unexpected shock to the economy or financial system, I think we have reached our limit. I would be wary of further expanding our balance sheet. But here is the essential fact I want to emphasize today: The Fed could not monetize the debt if the debt were not being created by Congress in the first place.

“Those lawmakers who advocate ‘Ending the Fed’ might better turn their considerable talents toward ending the fiscal debacle that has for too long run amuck within their own house. The Fed does not create government debt; fiscal authorities do. Deficits and the unfunded liabilities of Medicare and Social Security are not created by the Federal Reserve; they are the legacy of those who control the purse strings — the Congress, working with the president. The Fed does not earmark taxpayer money for pet projects in local communities that taxpayers themselves would never countenance; only the Congress does that. The Congress and administration play the dominant role in creating the regulatory environment that incentivizes or discourages job creation.

“… A reader of Shakespeare will recall the dialogue between Glendower and Hotspur in Henry IV. Glendower claims, ‘I can call spirits from the vasty deep.’ And Hotspur replies, ‘Why, so can I, or so can any man; But will they come when you do call for them?’

“We shall see if the new Congress will prove worthy of the power the American people have ‘loaned’ them, and, together with the president, actually draw the spirits of fiscal reform and sanity from the ‘vasty deep’ to at long last implement meaningful fiscal and regulatory policy that incentivizes private-sector job creation here at home while arresting the hemorrhaging of our Treasury. If they do, then more Americans will find work and be better off, better paid, and freer to make their own decisions about the economy.

“If they don’t, then woe to our children, their children, and the American Dream.”

 

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Daily Digest 1/15 - Unprecedented Buying of Silver, ...

Urban sprawl aided Aussie torrent: experts



SYDNEY, Jan 14, 2011 (AFP) - - Rapacious development in fast-growing Queensland magnified the horror of Australia's epic floods, experts said, with natural buffers paved over by concrete and new construction paying scant heed to environmental risks.

At least 30,000 homes have been swamped by the devastating deluge on the Brisbane River which swallowed entire suburbs of Australia's third-biggest city after weeks of heavy rains, which have flooded towns further north.

The Wivenhoe Dam, built after destructive floods which killed 14 people in 1974, helped moderate the worst of the unprecedented upstream flows by gradually releasing them into the river.

But experts said the rapid development of Brisbane and surrounding areas had worsened the damage by replacing absorbent green corridors with cement, and by erecting new buildings on vulnerable sites.

"If you look at the Gold Coast, Brisbane, those kind of areas over the past 10, 20 years, there's been an enormous increase in buildings and hard surfaces," Rob Roggema, an urban planning expert at The Royal Melbourne Institute of Technology, told AFP.

"If spatial planning people ... would have listened a little closer to what you can expect (from the climate) over a longer period of time, a lot of the damage could have been prevented."

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1326
Re: Daily Digest 1/15 - Unprecedented Buying of Silver, ...

That article by Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas strikes me as completely hypocritical and missing the point that the Fed is the main cause of the problems and really makes me want to puke!.  Without the Fed none of the massive problems from Congress could have occurred.  It would have required either direct taxation (no way that would have flown) or borrowing from people who actually care about their wealth who would not allow the Federal government to borrow at such low rates.

In addition the free flow of money from the Fed via low interest rates resulted in the housing bubble, since without the essentially free money from the Fed, who would have lent the money for the houses to be built?

Richard Fisher wrote:

I have been outspoken about the limits of monetary policy as a salve for the nation’s fiscal pathology.[4] The Fed has done much, in my words, to provide the bridge financing until the new Congress gets to work restructuring the tax and regulatory incentives American businesses need to confidently expand their payrolls and capital expenditures here at home.

There should be no monetary policy.  As soon as you have policy it means you have manipulation.  He even admits here that they provided the "bridge financing" to allow more reckless spending by Congress.

I find that statements from Mr. Fisher to simply be a method to redirect blame from the root cause.  It's time to end the Fed, return to sound money (gold, silver) so that money cannot be manipulated by the banking cartel or governments.

truenorth's picture
truenorth
Status: Member (Offline)
Joined: Feb 1 2009
Posts: 21
Fisher of the Fed

Richard Fisher is only now in a voting position.  His record shows that he directly spoke against the actions of the fed for years now.  Sounds a lot different than helicopter Ben..

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Bad debt season.

Bad debt season.
http://delusionaleconomics.blogspot.com/2011/01/bad-debt-season.html

The flood recovery continues in Queensland, but for many the economic disaster
has just begun. As we said in an earlier post

So imagine this; You purchased a house in the last two years, you didn't
insure it for flooding because you were told that the Wivanhoe dam meant
Brisbane would never flood. Now you have a $300,000 mortgage on a house that it
under 10 feet of water that is literally worthless in every way.

You owe $21,000 per year on a property that you can't live in and you cannot
sell, but the debt on it means you can't afford to move somewhere else. The
banks are giving you a 3 month reprieve.

Which will give you 3 months to find a solicitor to declare bankruptcy.

oldvanman's picture
oldvanman (not verified)
Re: Bad debt season.

Yes and our problem is that we cannot walk away from our liabilities. Bankruptcy also means very little chance of owning another home.

The word on the street is that Insurance Companies are refusing claims. Hows this for a rort, people have flood insurance OK, but because the water rose vertically and up through the floor boards, and not horizontal and gushing through the front door, their claims are refused. BS, I say a flood is a flood, last I heard 4 out of 5 claims were being refused for that reason.

The flooding in Australia has been wide spread and over a many weeks. We live in the Central West of NSW and we had water through our house in December due to localised flooding caused by terrential rain of a type that I have not seen in the 30 years that I have been here. Wheat crops around here were all but ruined and after many years of drought local farmers are at their witts end (and many also at their financial end).

2011 is going to be an interesting year.

 

Regards

Chris

vinnya's picture
vinnya
Status: Bronze Member (Offline)
Joined: Jan 5 2009
Posts: 27
Re: Daily Digest 1/15 - Unprecedented Buying of Silver, ...

New Peter Schiff

http://vinceseconomicblog.wordpress.com/2011/01/16/peter-schiff-washingt...

SingleSpeak's picture
SingleSpeak
Status: Platinum Member (Offline)
Joined: Dec 1 2008
Posts: 506
Re: Daily Digest 1/15 - Unprecedented Buying of Silver, ...
rhare wrote:

That article by Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas strikes me as completely hypocritical and missing the point that the Fed is the main cause of the problems and really makes me want to puke!.  Without the Fed none of the massive problems from Congress could have occurred.  It would have required either direct taxation (no way that would have flown) or borrowing from people who actually care about their wealth who would not allow the Federal government to borrow at such low rates.

+1

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
Re: Daily Digest 1/15 - Unprecedented Buying of Silver, ...
rhare wrote:

That article by Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas strikes me as completely hypocritical and missing the point that the Fed is the main cause of the problems and really makes me want to puke!. 

I thought the exact same thing.  A classic case of the pot calling the kettle black and passing the buck all rolled into one.  Diogenes would have a hard time finding his honest man among the upper echelons of government and power.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments