Daily Digest

Daily Digest 12/7 - Spain on Verge of Breakdown, Debunking Bernanke, Students Take On Smart-Grid

Tuesday, December 7, 2010, 12:00 PM
  • Multiple Simultaneous Games of "Chicken"; China Declares Shift to "Prudent" Monetary Policy
  • Fact, Fiction And Finally The Fix
  • Spain on the Verge of a Nervous Breakdown
  • Geen Enkel Bewijs Voor Speculaties Tegen Eurolanden
  • Debunking Bernanke’s Myth
  • Tax Cut Deal and Surprise Stimulus - The Cost
  • The Smart Grid: A Primer
  • Students Take On Smart-Grid Challenges

Ready yourself for any future, whatever the 3E’s may bring—read our 'What Should I Do?' guide today!

Economy

Multiple Simultaneous Games of "Chicken"; China Declares Shift to "Prudent" Monetary Policy (chris)



In response to these inflationary price pressures, China declared a shift to a "prudent monetary policy", including price controls at Walmart. This begs the question: Since when do price controls constitute "prudent policy"? Price controls have never worked in history and this time will be no different. This is a pretty long post, but please stay tuned until the end for an analysis of Multiple Simultaneous Games of "Chicken". Topics include a comparison of monetary and credit growth in the US vs China, a look at the problems in Japan, a detailed look at various games of "chicken" central banks play with each other, and a detailed look at various games of chicken that speculators play with the market.

Fact, Fiction And Finally The Fix (pinecarr)



Hearing The Bernanke fiction that he is 100 percent certain he can stop hyperinflation was as reassuring as hearing his continued commitment to continue Quantitative Easing. I know hyperinflation is ugly. I know stopping this train wreck years ago would have been the correct thing to do. The fact is – we are beyond any fix. Things like cutting government spending will only increase unemployment. We are bankrupt when: What we take in with taxes doesn’t pay the bills. When we borrow and that and the taxes still don’t pay the bills. Now we counterfeit so we don’t default.

Spain on the Verge of a Nervous Breakdown (johan)



Europe's debt crisis continues to spread -- Greece and Ireland have already had to seek shelter from the European Union and the International Monetary Fund, while bond spreads in Portugal and Spain are giving strong indication they might meet the same fate in the not-too-distant future. And as the crisis develops, far from sending a much-needed signal of confidence and self-assurance, the rhetorical register we're seeing from Europe's leaders is becoming increasingly nerve-racked and even at times apocalyptic. In a typically troubling example, European Council President Herman Van Rompuy warned recently that the eurozone, and even the European Union itself, were in the process of fighting for their lives, telling the astonished audience at a Brussels think-tank conference, "We're in a survival crisis."

Geen Enkel Bewijs Voor Speculaties Tegen Eurolanden (johan)



Sterker nog, landen als Griekenland, Portugal en Spanje konden dankzij speculerende beleggers relatief goedkoop lenen. Regeringsleiders, ministers en parlementariërs van Europese landen lopen daarmee ten onrechte te hoop tegen speculanten. Het onderzoek is pas vrijgegeven na een beroep op het Europese equivalent van de Wet openbaarheid van bestuur.

Debunking Bernanke’s Myth (joe)



In his interview with “60 Minutes”, Federal Reserve (Fed) Chairman Ben Bernanke suggested it is a myth that quantitative easing implies printing money. With all due respect, Mr. Bernanke, if it looks like a duck and quacks like a duck, it is a duck! Bernanke argues his policies do not amount to printing money, as neither currency in circulation, nor money supply has increased. This analogy is a bit like giving a loaded gun to a kid, then telling your friends that it’s not a deadly weapon because the shots that have been fired haven’t killed anyone. Granted, we are exaggerating here because, after all, it’s only money we are talking about. Yet, printing money may destroy one’s purchasing power and thus one’s life’s savings.

Tax Cut Deal and Surprise Stimulus - The Cost



About half of the measures in the announced package might be considered new short-term stimulus, meaning they may add to the deficits for two more years, but could help maintain the economic recovery and help spur economic activity and job creation.Many economists don't consider an extension of the Bush tax cuts stimulus, because it merely keeps current rates in place. But letting taxes go higher, they say, could impede growth. Several other measures announced Monday do count as stimulus, including a break on how much is deducted from workers' paychecks for Social Security and tax incentives that could encourage businesses to step up their investment.

Energy

The Smart Grid: A Primer (guardia)



From developed countries such as Italy, South Korea, the United Kingdom, and the United States to developing ones like China, India, Poland, and Vietnam, nations are investing in smart-grid systems. Cumulative global smart-grid spending by governments and utilities is expected to total US $200 billion worldwide from 2008 through 2015, according to Pike Research, a firm that analyzes global clean-technology markets. That spending doesn't even include investments needed merely to keep aging electric transmission and distribution infrastructures running. But what exactly is a smart grid, and how might it affect you?

Students Take On Smart-Grid Challenges (guardia)



Craig Carlson was intrigued when he first learned of the smart grid. A graduate student in the School of Electrical and Information Engineering at the University of the Witwatersrand, in Johannesburg, Carlson was inspired by the need to improve South Africa's electric grid because of the increasing number of regional blackouts. "Researching the smart grid was like delving into the depths of the unknown because it's so different from our current grid structure, which is more than 100 years old," Carlson says. "I started off with grand ideas of designing an entire system by myself—which proved to be quite absurd!"

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."

15 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...

"France will be the next country to come under attack from government bond investors after Portugal and Spain, according to the head of the London Stock Exchange (LSE).

Xavier Rolet warned the UK’s Independent on Sunday: “France’s deficit is much, much higher than anyone realises. My view is that markets are not prepared to finance it unless there is serious structural reform.”

“It won’t be long before bond investors turn to France after they have finished with Portugal and Spain,” added Rolet, who is a French citizen. “No one, not even France, can hide anymore.”

Bond attack

A country is 'attacked' by bond investors when they sell or simply stop buying new bonds, which results in their value falling.

When this happens, the yield, or the return investors expect to get back from their bonds, goes up.

This increase in interest can be so extreme that governments lose their credit rating and, as in the case of Greece and Ireland, need to be bailed out."

"Dec. 7 (Bloomberg) -- Global derivatives trading in over- the-counter and exchange-traded futures and options will represent a $700 trillion market with $3.7 quadrillion in annual turnover by the end of this year, research company TABB Group said."

"New York City’s projected budget deficit for fiscal 2012 may widen by $2 billion, to $4.5 billion, because cuts in state aid may be greater than forecast, Budget Director Mark Page said.

Mayor Michael Bloomberg’s proposal last month to cut the city workforce by 10,000 as part of plan to save $1.6 billion during the next 18 months may not be enough to close the gap, Page told the City Council’s Finance Committee today.

“The reality that we’re facing is that the future could be considerably worse,” Page told the council members. “This is something we are solemnly worried about.” "

"The biggest culprit in Texas’ growing debate over escalating Medicaid costs? A mathematical formula that calculates how much the federal government pays and what’s left over for the state.

Already facing a record budget shortfall, Texas’ Federal Medical Assistance Percentage (FMAP) will drop more than 2 percentage points in late 2011, equivalent to a $1.2 billion hit. Only two states — Louisiana and North Dakota — will face a bigger percentage drop. And that’s after federal stimulus funds that have been artificially enhancing this match dry up in the spring, another blow to cash-strapped state Medicaid programs in Texas and across the nation.

The problems with the Medicaid matching formula “have been talked about for the last 15 years,” says Tom Suehs, the state’s Health and Human Services Commissioner. “But the magnitude of the problem and the growth rate of health care spending in general is going to make this a front-line issue.”

Texas’ Medicaid costs have grown a staggering 170 percent in the last 11 years and now account for a quarter of the state’s biennial $182 billion budget — a spike that has far exceeded the growth in state tax revenue, inflation and population."

..................4A) Texas Considers Dropping Medicaid as States Face Budget Crisis

"Nine months before Argentina stopped paying its obligations in 2001, Jonathan Binder sold all his holdings of the nation’s bonds, protecting clients from the biggest sovereign default. Now he’s betting Greece, Portugal and Spain will restructure debts and leave the euro.

Binder, the former Standard Asset Management banker who is chief investment officer at Consilium Investment Management in Fort Lauderdale, Florida, has been buying credit-default swaps the past year to protect against default by those three nations as well as Italy and Belgium. He’s also shorting, or betting against, subordinated bonds of banks in the European Union. "

"Extending all the tax cuts for two years would cost $501 billion, according to the congressional budget office, at a time when Obama is under pressure to cut the $1.3 trillion budget deficit. The CBO said renewing the rates will boost the economy in the short term but be harmful in the long term."

.................6A) Tax Deal Suggests New Path for Obama ("The package would cost about $900 billion over the next two years, to be financed entirely by adding to the national debt")

(Please also see above in the Daily Digest: Tax Cut Deal and Surprise Stimulus - The Cost

)

  • Other news, headlines and opinion:

 

China to Pay Rubles for Timber and Seafood

Euro could fail says UK fiscal watchdog official

Illinois's Pension Funding May Weaken Further Despite Bonds, Moody's Says

Debt-hit Ireland faces toughest budget in history

Copper Faces a Two-Year Shortage, Will Climb Above $10,000, Trafigura Says

Trepp Reports a Jump in CMBS Delinquencies as Rate Nears 9% Again

Inflation vs. Deflation: Peter Schiff and Gary Shilling Discuss, Debate and Argue

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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...

The Smart Grid: A Primer

"A smart grid would help make everything better, thus improving reliability, security, and efficiency, which are of critical importance given that electric power consumption worldwide is expected to triple by 2050."

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rjs
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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...

Global Derivatives Trading Estimated by TABB at $700 Trillion (Bloomberg) -- Global derivatives trading in over- the-counter and exchange-traded futures and options will represent a $700 trillion market with $3.7 quadrillion in annual turnover by the end of this year, research company TABB Group said.

would someone care to explain that? $700 trillion is 50 times US GDP...

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Geen Enkel Bewijs Voor Speculaties Tegen Eurolanden

 

Op: Geen Enkel Bewijs Voor Speculaties Tegen Eurolanden

Dagelijkse Digest, nu in de Nederlandse taal!

Dichter

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mesaboogieman
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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...
rjs wrote:

Global Derivatives Trading Estimated by TABB at $700 Trillion (Bloomberg) -- Global derivatives trading in over- the-counter and exchange-traded futures and options will represent a $700 trillion market with $3.7 quadrillion in annual turnover by the end of this year, research company TABB Group said.

would someone care to explain that? $700 trillion is 50 times US GDP...

It's an insane amount but I think a lot of these contracts cancel each other out so dont panic just yet :-)    What I'd like to know is why anyone buys credit default swaps when no country has actually defaulted yet!  They all get bailed out!  

  Of course they'll run out of bail out money sooner or later, but who knows when?

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WikiLeaks will release encrypted 'doomsday file' if site blocked
 
 
 
 
 
WikiLeaks will release encrypted 'doomsday file' if site blocked
5 Dec 2010
 

WikiLeaks founder Julian Assange has circulated across the internet an encrypted “poison pill” cache of uncensored documents suspected to include files on BP and Guantanamo Bay.

One of the files identified this weekend by The (London) Sunday Times — called the “insurance” file -- has been downloaded from the WikiLeaks website by tens of thousands of supporters, from America to Australia.

Assange warns that any government that tries to curtail his activities risks triggering a new deluge of state and commercial secrets.

The military papers on Guantanamo Bay, yet to be published, believed to have been supplied by Bradley Manning, who was arrested in May. Other documents that Assange is confirmed to possess include an aerial video of a US airstrike in Afghanistan that killed civilians, BP files and Bank of America documents.

Wikileaks founder Julian Assange has circulated an encrypted "poison pill" of uncensored documents, and will release them if he's arrested.

One of the key files available for download -- named insurance.aes256 -- appears to be encrypted with a 256-digit key. Experts said last week it was virtually unbreakable.

Assange has warned he can divulge the classified documents in the insurance file and similar backups if he is detained or the WikiLeaks website is permanently removed from the internet. He has suggested the contents are unredacted, posing a possible security risk for coalition partners around the world.

Assange warned: “We have over a long period of time distributed encrypted backups of material we have yet to release. All we have to do is release the password to that material, and it is instantly available.”

The “doomsday files” are part of a contingency plan drawn up by Assange and his supporters as they face a legal threat. He is wanted in Sweden over sexual assault allegations, and the US is reviewing the possibility of legal action after the release of 250,000 diplomatic cables.

Ben Laurie, a London-based computer security expert who has advised WikiLeaks, said: “Julian’s a smart guy and this is an interesting tactic. He will hope it deters anyone from acting against him.”

Nigel Smart, professor of cryptology at Bristol University, said even powerful military computers would be unable to crack the encryption. He said: “This isn’t something that can be broken with a modern computer. You need the key to open it.”

The file is 1.4 gigabytes in size, which would be big enough for a compressed version of all the files released this year and additional data.

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Re: WikiLeaks will release encrypted 'doomsday file' if ...
Damnthematrix wrote:
Wikileaks founder Julian Assange has circulated an encrypted "poison pill" of uncensored documents, and will release them if he's arrested.

One of the key files available for download -- named insurance.aes256 -- appears to be encrypted with a 256-digit key. Experts said last week it was virtually unbreakable.

Assange has warned he can divulge the classified documents in the insurance file and similar backups if he is detained or the WikiLeaks website is permanently removed from the internet. He has suggested the contents are unredacted, posing a possible security risk for coalition partners around the world.

Assange warned: “We have over a long period of time distributed encrypted backups of material we have yet to release. All we have to do is release the password to that material, and it is instantly available.”

This is currently a hot potato on the bit-torrent network....lots and lots of seeders. Good luck trying to contain this info big brother Laughing

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Re: WikiLeaks will release encrypted 'doomsday file' if ...
JAG wrote:
Damnthematrix wrote:
Wikileaks founder Julian Assange has circulated an encrypted "poison pill" of uncensored documents, and will release them if he's arrested.

One of the key files available for download -- named insurance.aes256 -- appears to be encrypted with a 256-digit key. Experts said last week it was virtually unbreakable.

Assange has warned he can divulge the classified documents in the insurance file and similar backups if he is detained or the WikiLeaks website is permanently removed from the internet. He has suggested the contents are unredacted, posing a possible security risk for coalition partners around the world.

Assange warned: “We have over a long period of time distributed encrypted backups of material we have yet to release. All we have to do is release the password to that material, and it is instantly available.”

This is currently a hot potato on the bit-torrent network....lots and lots of seeders. Good luck trying to contain this info big brother Laughing

So let me get this right - Assange is threatening to play dirty pool with the very  people who invented the game??? 

If I was a betting man I would bet the house that Assange can't cover the spread or the over/under.

And you couldn't pile enough silver, gold, platinum, rhodium, cheap oil, wheat, oats, rice, heirloom seeds, ammunition, clean water, cheap energy, renewable this, sustainable that, etc., to download or host this bit torrent.

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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...

http://theland.farmonline.com.au/news/nationalrural/grains-and-cropping/general/soggy-demise-to-bumper-hopes/2019506.aspx

 

The australian wheat and grain crop has been downgraded, expect food prices to rise.

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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...

I was reading up on internet rumors all weekend on this. Too many speculators. The most far-out-there was The Gulf of Aden Vortex story. Of course, there are far too many reasons for all the countries of the world to be active in those waters to speculate.   EGP

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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...

The Telegraph has an article on Jim Rogers, "Jim Rogers: 'US government's inflation data is a sham'", at http://www.telegraph.co.uk/finance/economics/8187875/Jim-Rogers-US-governments-inflation-data-is-a-sham.html:

Leading investor Jim Rogers has blasted the US government's inflation data as a "sham" that is causing the central bank to massively understate price pressures.

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Damnthematrix
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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...

I wonder if they'll invite Assange.....?

http://www.state.gov/r/pa/prs/ps/2010/12/152465.htmU.S. to Host World Press Freedom Day in 2011

Press Statement

Philip J. Crowley
Assistant Secretary, Bureau of Public Affairs
Washington, DC
December 7, 2010

The United States is pleased to announce that it will host UNESCO’s World Press Freedom Day event in 2011, from May 1 - May 3 in Washington, D.C. UNESCO is the only UN agency with the mandate to promote freedom of expression and its corollary, freedom of the press.

The theme for next year’s commemoration will be 21st Century Media: New Frontiers, New Barriers. The United States places technology and innovation at the forefront of its diplomatic and development efforts. New media has empowered citizens around the world to report on their circumstances, express opinions on world events, and exchange information in environments sometimes hostile to such exercises of individuals’ right to freedom of expression. At the same time, we are concerned about the determination of some governments to censor and silence individuals, and to restrict the free flow of information. We mark events such as World Press Freedom Day in the context of our enduring commitment to support and expand press freedom and the free flow of information in this digital age.

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Damnthematrix
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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...

Bank of America agrees to $140m fraud settlement

By finance reporter Sue Lannin

The largest bank in the United States, Bank of America, has agreed to pay nearly $140 million to settle a fraud case with the US Department of Justice.

Bank of America admitted its employees had rigged bids in their marketing of financial contracts linked to municipal bonds.

The settlement follows a four-year investigation by US authorities into anti-competitive practices in the sale of investment agreements linked to the bonds.

Municipal bonds are sold by government departments, local councils and non-profit groups in the US to raise money for their services, such as schools and roads.

The US Department of Justice says Bank of America employees were involved in illegal conduct, including a conspiracy to rig bids on investments linked to the bonds.

So far eight executives from financial institutions, including Bank of America, have pleaded guilty to criminal charges brought by the department.

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Dorrian
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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...

Bank of America...

I guess they'll be in trouble soon: Wikileaks Next Document Drop May Target Bank Of America

But at least the know how to respond: Bank Of America Sets Up Swat Team To Combat Wikileaks

Gonna be interesting weeks.

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Re: Daily Digest 12/7 - Spain on Verge of Breakdown, ...

They buy the swaps to insure that they will get bailed out.  Default swap insurance is like dominoes, once one has to pay they are likely to all have to pay and that simple won't work.  Just wait, one default will start the whole thing off.

 

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