Daily Digest
Daily Digest 11/7 - Fed Borrowing Mounts While Household Debt Shrinks, Zombie Wars, Coal On A Roll
by Daily Digest
Monday, November 7, 2011, 10:49 AM
- The Euro Crisis Has Turned Us Into Wile E. Coyote: We’ve Run Off A Cliff, Legs Spinning
- It's Greek To Me
- Zombie Wars
- Federal Borrowing Mounts While Household Debt Shrinks
- Rough Seas Ahead for Brazil's Booming Economy
- The True Picture Of U.S. Unemployment
- Key Lesson From Iceland Crisis Is 'Let Banks Fail'
- Nigeria Moves Towards Indigenous Solar Panel Production
- Coal On A Roll
Follow our steps to prepare for a world after peak oil, such as how to store & filter water
Economy
The Euro Crisis Has Turned Us Into Wile E. Coyote: We’ve Run Off A Cliff, Legs Spinning (ScubaRoo)
I shared this nagging worry with a friend: that I feel growing paralysis through an overwhelming sense of contingency, on the fact that my – our – future is dependent on the historical actions of banks over which, apparently, we had no control; on the current plans of – God help us – Nicolas Sarkozy; and on the outcome of a Greek referendum (cancelled at the time of writing – but who knows what the day will bring?).
It's Greek To Me (Ilene)
Our worries came to fruition this week. Monday began with a massive Yentervention that pushed the Dollar all the way from 76 to 77.6 in less than 24 hours. This was followed by a surprise announcement from Greek Prime Minister George Papandreou ("G-Pap"). He revealed plans for a national referendum on last week’s proposed expansion of the EFSF and the 50% “haircut” for holders of Greek debt. Completing the trifecta for the bears, in its statement on Wednesday, the Federal Reserve didn’t include additional stimulus for our ailing economy, despite Bernanke’s hinting about the potential for more money printing in late October. President Obama’s $60Bn infrastructure bill being blocked in the Senate did nothing to boost bullish sentiments.
Zombie Wars (Stan G.)
The financial bailout zombified much of the economy. Businesses that should have closed their doors were able to keep the lights on. Managements that proved they were incompetent were given bonuses and kept on the job. Industries that needed to be shaken up became even further entrenched.
Federal Borrowing Mounts While Household Debt Shrinks (Jeff B.)
Households have reduced debt by $549 billion since 2007, mostly by cutting mortgages through defaults and paying down credit cards. During that time, the federal government has added more than $4 trillion in debt, pushing the country's total borrowing to a record $36.5 trillion, excluding the financial industry, according to the Federal Reserve.
"Government will eventually need to reduce the deficit," says Susan Lund, research director at McKinsey Global Institute, part of the business consulting firm. "But it's a very difficult balancing act to avoid withdrawing stimulus too soon while stopping before you borrow too much."
Rough Seas Ahead for Brazil's Booming Economy (James S.)
The government of Ms. Dilma Rousseff has not been standing idly by as the rest of the world has been focused on debt woes. The central bank has already cut central bank rates 0.5 percent to 12.0 percent, a move that is expected to be repeated later this year and next year down to a (still eye-wateringly high) 10.5 percent by mid-next year, according to the EIU Viewswire report. This in spite of consumer inflation running at 7.3 percent year-on-year in September, well above the target of 4.5 percent and with a 14-percent increase in the minimum wage in the pipeline for January.
The True Picture Of U.S. Unemployment (Jeff B.)
The October US non-farm payrolls, due at 12.30pm UK time, are forecast to rise by 95,000, according to a Reuters poll. That's a slight improvement to build on September's rise in employment. But still the unemployment rate of 9.1% has more than doubled from its pre-crisis low of 4.4% in 2007, notes M&G's Anthony Doyle in his latest post on the Bond Vigilantes blog.
Key Lesson From Iceland Crisis Is 'Let Banks Fail' (Phil H.)
After three years of harsh austerity measures, the country's economy is now showing signs of health despite the current global financial and economic crisis that has Greece verging on default and other eurozone states under pressure.
Energy
Nigeria Moves Towards Indigenous Solar Panel Production (James S.)
A NASEI source speaking off the record disclosed that NASEI would be a major supplier for power equipment in the Rural Information Technology Centers (RITCs), commenting, "They will be our major supplier. The National Information Technology Development Agency has inspected their plant and they have tendered (for provision contracts). With the solar panels, we will be assured of constant power supply there. Despite the fact that we are not in the same ministry, there is still high synergy between us."
Coal On A Roll (Stan G.)
The Eagle Butte mine, which belongs to Alpha Natural Resources, is barely a mile north of the Gillette airport. It is one of a trio of virtually suburban mines that make up the northernmost of the three distinct mining clusters in the Powder River Basin. I arranged to take a tour of Eagle Butte, meeting my guide at the Flying J truck stop in downtown Gillette. She was a chipper junior high school P.E. teacher named Shannon, who said she had been working for Alpha for the past eight summers. It’s the third-biggest coal company in the nation, she told me proudly. (Peabody Energy is number one; Arch Coal is second.) She promised lots of other "fun facts," most of which seemed to involve extremes of size, weight, and volume.
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."
Join the discussion