Daily Digest

Daily Digest 1/19 - 22 Signs Point To Global Recession, 2 Missing In Nigeria Oil Rig Fire, Chinese Dragon To Unshackle Renmibi

Thursday, January 19, 2012, 10:44 AM
  • Twenty Two Signs Pointing To A Devastating Global Recession
  • London Trader - Staggering Gold Demand Creating Shortages
  • 'Uncertainty And Danger': World Bank Warns Of Downturn Worse Than 2008
  • Activists push Philadelphia to recoup losses on interest-rate swaps
  • Chinese Dragon To Unshackle Renminbi
  • The Global Risks You Need To Freak Out About In 2012
  • Chevron Nigeria oil rig fire: Two missing
  • Investors: All You Need To Know About Iran, $200 Oil, and $6.00 Gas Prices
  • Why Wind Power Doesn’t Live up to its Environmental Promises
  • TSA to test its airport scanner operators for radiation exposure
  • Do Experts Assess Risk Better than the General Public?

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Twenty Two Signs Pointing To A Devastating Global Recession (David B.)

Investors are pulling money out of the stock market at a rapid pace right now. In fact, as an article posted on CNBC recently noted, investors pulled more money out of mutual funds than they put into mutual funds for 9 weeks in a row. Are there some people out there that are quietly repositioning their money for tough times ahead?

London Trader - Staggering Gold Demand Creating Shortages (June C.)

The demand for euro gold here in London is so intense it’s shocking to some of the players. This is what has left some market participants in the US wondering why the price of gold has risen along with the dollar. It’s because demand in the eurozone is unimaginably strong. The euro physical gold demand is off the charts and it is creating shortages for metal, in size, here in London.

'Uncertainty And Danger': World Bank Warns Of Downturn Worse Than 2008 (Jeff B.)

Developing countries that have enjoyed relatively strong growth while the United States and Europe struggled might be hit hard, Lin said. He said they should line up financing in advance to cover budget deficits, review the health of their banks and emphasize spending on social safety nets.

Activists push Philadelphia to recoup losses on interest-rate swaps (June C.)

Swaps "were heavily marketed" by bankers who stood to profit from the sales, Ward said. Schools and local governments that bought swaps were effectively betting on the future direction of U.S. interest rates. The banks helped the governments that bought swaps borrow money at competitive rates. But the swaps required that, if market interest rates fell below certain low levels, the governments had to pay the banks the difference. When interest rates fell instead of rising, governments owed millions.

Chinese Dragon To Unshackle Renminbi? (Joe P.)

Chinese consumers come from a different vantage point: afraid of inflation and limited in ability to invest abroad, the Chinese put much of their money into stocks, real estate, and precious metals. Of these choices, real estate has been most broadly embraced so far. We don’t doubt for a minute that Chinese real estate prices could plunge. However, we take exception to the conclusion that China is thus destined to suffer the same consequence as Spain or the U.S. When leverage is not employed, consumers may react to a drop in real estate prices similarly as they would to a drop in stock prices.

The Global Risks You Need To Freak Out About In 2012 (ScubaRoo)

The World Economic Forum names a new financial crisis among the biggest impact risk of the year. Equally worrying is the threat of a water or food crisis.


Chevron Nigeria oil rig fire: Two missing (ScubaRoo)

The BBC's Mark Lobel in Lagos says residents heard a loud explosion as the KS Endeavor exploration rig was engulfed in flames.

A major build-up of gas pressure from drilling caused the explosion in the gas exploration well, according to the Nigeria's state run oil company.

Chevron says it is still investigating the cause of the incident.

Investors: All You Need To Know About Iran, $200 Oil, and $6.00 Gas Prices (David B.)

Dr. Moors is an advisor to six of the world’s top 10 oil companies, including natural gas producers throughout Russia, the Caspian Basin, the Persian Gulf and North Africa. He also consults for high-level officials from the U.S., Russian, Kazakh, Bahamian, Iraqi and Kurdish governments on all things energy related.

Why Wind Power Doesn’t Live up to its Environmental Promises (James S.)

n reality, the U.S. industrial wind business was rescued by Ken Lay and Enron with quick, low-risk profit as its core goal. As Gabriel Alonso, chief executive of Horizon Wind Energy LLC – one of America’s biggest wind developers, often reminds his employees … their goal isn’t to stage a renewable-energy revolution … “This is about making money!”


TSA to test its airport scanner operators for radiation exposure (durablefaith)

Critics of the TSA support the idea of testing TSA workers. But they continue to call on the TSA to perform independent studies of the full-body scanners to ensure that airline passengers are not being exposed to dangerous levels of radiation.

Do Experts Assess Risk Better than the General Public? (guardia)

Scientists and experts have always tended to rate the risks associated with nuclear weapons proliferation as rather high, while the general public has always been much more concerned about catastrophic reactor accidents. Arguably, the empirical record of nuclear energy and nuclear weapons suggests that the public’s concerns have been better founded than those of scientists.

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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U.S.Loses High-Tech Jobs as R&D Shifts Toward Asia

Saw this in yesterday's copy of the Wall Street Journal paper.

Here's the on-line version. (Note: You may have to search the title in Google to avoid the pay wall.)

U.S.Loses High-Tech Jobs as R&D Shifts Toward Asia (January 18, 2012)
"The U.S. is rapidly losing high-technology jobs as American companies expand their research-and-development labs in China and elsewhere in Asia, the National Science Board said Tuesday."

I think the bottome line is, you can get several of the brightest Chinese, Indian, or Brazilian engineers or researchers or scientists for the price of an average American one... The support staff (janitors, clerks, etc.) would also be ten times cheaper.



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Petroyuans or Petrodollars?

This is an excellent article by Pepe Escobar (Asian Times) on the changing dynamics between

the usa, china and the Gulf Cooperation Council.

"Beijing may approach the House of Saud and quietly whisper, "Why don't you sell me your oil in yuan?"  Just like China buying Iranian oil and gas with yuan.  Petroyuan, anyone?  Now that's an entirely new Star Trek.

The United States power projection and psychodrama over Iran can be understood only by shining light on the miasma of Washington's relationship with the six oil-rich Persian Gulf monarchies that make up the Gulf Cooperation Council,  also known as the Gulf Counter-revolution Club.  As friends of the US with benefits, for decades they have received massive, unconditional support in exchange for pricing oil in dollars.  But the days of that fatal attraction are numbered." - Pepe Escobar (Jan19, '12)


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The Debt Supercycle Reaches Its Final Chapter

 Excellent, just excellent analysis by Jim Puplava... and easy to read too. 

(click here for link to entire analysis)



We now live in a new era of uncertainty—Pimco’s new “paranormal,” if you will. Our financial system continues to leverage up as governments replace the private sector in gearing up their balance sheets. Central banks are now embarked on a policy of reflation, monetizing a major portion of rising government deficits. The ECB’s balance sheet expanded by $947B (euro 727B), or 36% last year, to a record $3.5T. The Fed expanded its balance sheet by $513B to $2.92T, an increase of 21%.

We are now at a state where the sovereign bond market has grown to become the largest financial bubble in history; a bubble that could succumb to three potential market shocks. The first type of shock would come from a spike in commodity prices triggered by additional rounds of quantitative easing. It could be as simple as an "act of God" such as an earthquake, tsunami, or the failure of an important agricultural crop. The bond market would react in fear that higher commodity prices would be absorbed in the price of goods and services via loose monetary policy.

A second shock could be triggered as a result of political instability and loss of confidence in government policy. An example is what is occurring right now in Europe regarding an attempt toward a fiscal union or the debt ceiling debate in the U.S. The bond market would view negatively a failure by governments to rein in spending and control their deficits.

The third shock would emanate from a potential default or restructuring of a sovereign debt that would lead to a domino effect in the banking system. A large international bank or group of banks might not be able to meet their obligations which would lead to a rise in fear of uninsurable losses among the banks or their counterparties.

As the bond market continues to expand through sovereign debt expansion and central bank monetization, it is moving further away from reality as a result of speculative activity. This makes sovereign debt extremely sensitive to any unanticipated event. The probability of another black swan or rogue wave is beginning to multiply; from a failed bond auction, to larger than expected deficits, to political rancor over spending cuts. Sovereign debt can no longer be looked upon as a risk free asset. For the reasons cited above I continue to avoid U.S. treasury debt as the rates of return bear no resemblance to reality or are commensurate with the risk they entail. Caveat emptor!


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All evidence of this treachery went down the memory hole

This is a matter of serious national security concern but the Gillard Labor-Green-Independent minority government is so conflicted with its stance on global warming and the hated carbon dioxide tax that it cannot bring itself to address the crisis.

Instead, it has tried to hide the evidence.

Unfortunately for them, a Frenchman named Jean-Marc Jancovici has foiled their plans and put the document on the web. It is called Report 117: Transport Energy Futures -- Long Term Oil Supply Trends and Projections.

The report was prepared for the Minister for Infrastructure Anthony Albanese by Dr David Gargett of the Bureau of Infrastructure, Transport and Regional Economics (BITRE).

BITRE provides economic analysis, research and statistics on infrastructure, transport and regional development issues to inform both Australian government policy development and wider community understanding.

But in this instance, Albanese and the Gillard government don't want the community to understand what is going on and have removed the report from government websites -- despite the fact that the report actually invites comments.


According to BITRE, Albanese declined to release the report. It has been sent, however, to a number of European organisations (which probably explains how it eventually ended up on the French website).

Albanese has given no reason for not officially releasing the report.

If you seek the report on BITRE's website you will find all reports up to 116 in a neat numerical order but after 116 they are in no order at all. Some are not even numbered.

That's to confuse searchers and make it less obvious that Report 117 has disappeared down the memory hole.

In George Orwell's classic 1984, the totalitarian government used "memory holes" to make politically inconvenient documents and records disappear. A document placed down the memory hole was supposedly transported to an incinerator from which "not even the ash remains".

Well, this time the ashes of Report 117 have remained, and the report has ended up on a website of a private French citizen -- with the only plausible explanation being that it was leaked.

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12 Places To Go If The World Goes To Hell

Thanks ScubaRoo for "The Global Risks You Need To Freak Out About In 2012". I found these two articles linking from it quite interesting:

The 25 Countries That Will Be Screwed By A World Food Crisis

12 Places To Go If The World Goes To Hell

Neither Japan nor Canada is in either category, well minus Yukon, but no one considers Yukon a part of Canada


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As if you didn't already know.

Stoneleigh (Whose brain is awesome), discusses the big picture on this interview.

Topic of note: major attempts to shut down sites such as this one that are aimed at understanding the nature of our reality.

I wouldn't raise the subject if it were not significant.

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Trick question.

I thought you might like to look at this one tonne gold coin sold at the Perth mint. Value, $1Million.

For double your score answer this question. How many of these would make a Billion Dollars?

A Trillion?

$48 Trillion?

Who is that man and why is he smiling?

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Possible QE3 Wednesday, January 25

The market sure seems like it is fully expecting QE3 next Wednesday. According to Trim Tabs, institutional shorts at at near lows while retail investors are rapidly departing from the game..seems like a perfect point to hose it to the little guy.

About a week ago, Steve Liesman, the Fed schill, wrote a piece about how more QE may be coming and how he supports more QE. If anyone knows when QE is coming..it's Liesman.

Also, Treasuries just had their worst week in a month. On QE2, Treasuries also dropped as investors flocked to "riskier" assets so that same play may be going on now as QE3 is being leaked.

Of course, just because the market is expecting QE3 doesn't mean that it will happen. If it doesn't, though, it seems like Mr. Market will be awfully disappointed and the last thing the Fed needs is a market freak out right now. And if it does, it should propel silver to somewhere between $60 and $150 by the end of the year.


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