Daily Digest

Daily Digest 1/29 - 150 Arrested In Oakland Protest, PA Town Blames Water Quality On Fracking, When Will Housing Hit Bottom?

Sunday, January 29, 2012, 10:53 AM
  • 150 Arrested in Daylong Occupy Oakland Protests
  • Elite Wall Street Donations Jumped 700% in the Last 20 Years
  • When Will Housing Hit Bottom?
  • Ex-Congressman Retreats on Energy Project
  • New Report by Agency Lowers Estimates of Natural Gas in U.S.
  • FirstEnergy closing 6 coal-fired power plants
  • Penn. town blames contaminated water on fracking
  • North Dakota Oil Boom Strains Roads, Schools

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Economy

150 Arrested in Daylong Occupy Oakland Protests (jdargis)

Police spokesman Jeff Thomason says most of the arrests came around 8 p.m. That's when police took about 100 protesters into custody as they marched through the city's downtown, with some entering a YMCA building.

Elite Wall Street Donations Jumped 700% in the Last 20 Years (jdargis)

"In 1990, 412 of the 1,091 elite donors from the finance industry came from the securities and investment industry, followed by 328 from real estate; by 2010, it was 2,178 from securities and investments, followed by 1,468 from real estate. In 1990, elite donors from securities and investments contributed $6.1 million and elite donors from real estate contributed $4.6 million. In 2010 elite donors from securities and investments contributed $84.0 million, while real estate donors contributed $44.5 million."

When Will Housing Hit Bottom? (jdargis)

There are a lot of reasons to think that it can't. Underwater houses constrain consumer spending; they make people feel poorer; they depress labor mobility, because people who can't sell can't move elsewhere to look for a job. Since new businesses are often funded with personal credit--or even loans against the house--it probably depresses firm formation, and the resulting innovation. And of course, construction is normally a substantial component of GDP.

On the other hand, there's no iron law that says that we can't have a strong economy with a weak housing sector. We just never have had, before.

Ex-Congressman Retreats on Energy Project (jdargis)

An apologetic Mr. Delahunt told town officials he wanted to eliminate the “black mark” created by questions of a possible financial conflict, Patrick Cannon, chairman of the Hull Light Board, said on Saturday.

“This was a great decision for the town, because it saves us a lot of money,” Mr. Cannon said.

New Report by Agency Lowers Estimates of Natural Gas in U.S. (jdargis)

The agency estimated that there are 482 trillion cubic feet of shale gas in the United States, down from the 2011 estimate of 827 trillion cubic feet — a drop of more than 40 percent. The report also said the Marcellus region, a rock formation under parts of New York, Ohio, Pennsylvania and West Virginia, contained 141 trillion cubic feet of gas. That represents a 66 percent drop from the 410 trillion cubic feet estimate offered in the agency’s last report.

FirstEnergy closing 6 coal-fired power plants (Retha A.)

It indicated that the number of affected workers might be less because some might be considered for other openings within the company and because of a new retirement benefit being offered to workers 55 and older.

Penn. town blames contaminated water on fracking (jdargis)

Residents of Dimock, Penn., have lived with contaminated water wells for more than three years, and they blame the contamination on fracking for natural gas. Tony Guida reports on the tiny town's struggle to get clean water.

North Dakota Oil Boom Strains Roads, Schools (jdargis)

Dave Hynek, a commissioner in Mountrail County, North Dakota, E. Ward Koeser, mayor of Williston, North Dakota, and Viola LaFontaine, superintendent of Williston School District, talk with Bloomberg's Jennifer Oldham about the impact of North Dakota's oil boom on their community.

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10 Comments

Bill Hicks's picture
Bill Hicks
Status: Bronze Member (Offline)
Joined: Jul 3 2011
Posts: 34
"On the other hand, there's

"On the other hand, there's no iron law that says that we can't have a strong economy with a weak housing sector."

 

I beg to differ:

 

The Truth is in the Housing Sales Numbers, Not the Stock Market

http://billhicksisdead.blogspot.com/2012/01/truth-is-in-housing-sales-nu...

Buying a home has always been, and remains, at the very heart of the American Dream. If people could still afford to buy real estate, especially at these mortgage rates, they would. The fact that they are not speaks huge volumes about the real state of the economy, despite the rise of the manipulated stock market.

The media has been hyping up the fact that the weekly unemployment claims numbers have fallen and that the monthly jobs data has shown a steady, if still sluggish increase in employment over the last year. The question they never ask in following up is: what kind of jobs are these that are being created? Are they higher paying jobs that provide the employee with a ticket to the middle class which will allow them to live the dream and buy their own home? Or are they menial, near minimum wage paying retail and service sector jobs that keep one on the edge of poverty and buying a house well beyond their means? The housing sales statistics seem to strongly indicate the latter.

radar99's picture
radar99
Status: Member (Offline)
Joined: Aug 12 2009
Posts: 1
Stock market fiasco

I really cant believe that the stock market just keeps going up.  They always talk about valuation and how much money they have on the books.  What they don't realize is as the us dollar basically goes down to zero that the value of their investments is going down also.  Hedge funds and big players seem to control the direction of the market and the little guy just gets sucked in to come in at the wrong time.  I find this really concerning and people need to know that the market is the biggest casino in the world and only the big guys win.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5062
buck is going to zero?

 The US dollar is currently not going to zero.   It hit a 52-week high of 81 and change a few weeks ago, and its currently dropping, but its nowhere near the low of 73 it hit back last May.  It often helps to check your feelings against what's really going on.  Sometimes the feeling isn't correct because other things are going on - such as the european crisis - that interferes.  We may be on a slow path to debasement hell, but if you have Greek bank deposits, you have far more urgent considerations than a little money printing.

http://stockcharts.com/h-sc/ui?s=$USD&p=W&b=5&g=0&id=p76202429935

However I do agree with you that the little guy gets sucked in at the wrong time.  The herd always likes to buy at the maximum point of safety - which seems to be after the market has gone up for quite a while.

As for why the market keeps rising - currently, companies are actually doing quite well.  Think about why that might be.  Low interest rates allow the big guys to refinance all that old debt at much lower rates, lowering their costs.  They have lower labor costs due to high unemployment.  And massive government spending supports consumption above levels it would normally be for this employment level.  Many big companies make a good chunk of their money overseas in the developing world, which is growing.  Lastly, dividend-paying stocks are more attractive now with your other options being your 0% savings account or money market fund.  There are reasons stocks are going up, and its not tactical manipulations by hedge funds that cause it.

How long this lasts - well, current government support is unsustainable, and there's China's possible slowdown, and the european recession which gets worse if and when reality is allowed to visit Greece & Portugal.  There are a lot of clouds on the horizon, but the amount of can-kicking that has happened over the past 2 years has trained investors that if a can may be kicked cheaply, it will be.

Take Greece for instance.  It owes 13B in March.  The EU can either pony up 13B to defer reality a few more months, or it can commit the 145B bailout traunche which now seems like money down a rathole, or it can tip Greece into bankruptcy.

Insofar as the market is saying something, I think it is saying we'll have yet another (13B euro) can-kicking exercise come March.

That said, if I were advising the little guy, I'd advise him to stay away.  Risks are way too high compared to any possible reward at the moment.

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
The Federal Reserve promises free money forever
 

The U.S. Federal Reserve Bank announced last week that it would make money available for free forever. This was in response to a persistently weak economy and a desire by fed board members to be asked back to the annual JP Merganser Chaste Bank costume ball.

"Free is a good word," said Federal Reserve Bank president, Ben Bankster, commenting of the Fed's action. "Everybody likes free stuff."

JP Merganser Chaste president J. Me Diamondback agreed. "We get all kinds of free stuff from the Fed, and we really like it," he said. "And, the board of governors of the Fed should definitely be checking their mailboxes for invitations to our annual costume ball."

Some critics pointed out that JP Merganser Chaste and other banks are not using the free money for lending which would help spur economic activity.

"Not true," replied Diamondback. "We're showing our appreciation for all this free money by lending it back to the Fed to earn interest and lending it to the federal government which has been so nice to us. How patriotic is that?"

 

Doug's picture
Doug
Status: Diamond Member (Online)
Joined: Oct 1 2008
Posts: 3125
Gross loading up on Treasuries

What are we to make of this?

http://www.businessweek.com/magazine/bill-gross-embraces-government-debt-01262012.html?chan=magazine+finance+channel_news+-+markets+%26amp%3b+finance

Quote:

Bill Gross saw investors pull $5 billion out of his Pimco Total Return Fund (PTTRX) last year when a bad bet against Treasury bonds led the fund to underperform its peers. Now he’s reversing course.

Gross increased the proportion of U.S. government debt in the $244 billion Total Return Fund to 30 percent of assets in December, the highest since November 2010, according to a report placed on the company’s website on Jan. 11. Newport Beach (Calif.)-based Pimco doesn’t comment directly on monthly changes in its portfolio holdings.

Gross eliminated his holdings of Treasuries in February 2011 and used derivatives such as swaps to wager that prices of Treasuries would fall. That strategy backfired when Treasuries had their biggest rally since 2008 last year, returning 9.8 percent. Total Return earned 4.16 percent in 2011, trailing 66 percent of similar funds, according to data compiled by Bloomberg. Gross apologized for the fund’s weak performance in a letter to investors titled “Mea Culpa” issued in October. By November, he had boosted U.S. government debt to 23 percent of the portfolio.

 

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Oops. There goes the Baltic Dry Index.

 

Credit Ilargi, the Automatic Earth.

The Baltic Dry Index (BDI) is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index tracks worldwide international shipping prices of various dry bulk cargoes.

The index provides "an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Handymax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain."[1]

From Wiki

Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, such as concrete, electricity, steel, and food, the index is also seen as an efficient economic indicator of future economic growth and production. The BDI is termed a leading economic indicator .   .   . because it predicts future economic activity.[7]

Thats got to mean something.

Doug's picture
Doug
Status: Diamond Member (Online)
Joined: Oct 1 2008
Posts: 3125
BDI

I've been watching the BDI also.  The last time it was this low was early 2009, at the bottom of the crash.

http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

A friend introduced me to the BDI a few years ago with the suggestion that the BDI is all you need to know about the global economy.  Don't know if that's true, but it certainly seems to be a good indicator.

Doug

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1982
Shipping Loans Go Bad for European Banks

Thats got to mean something.

It means this: http://www.zerohedge.com/contributed/shipping-loans-go-bad-european-banks

 

 

 

 

Doug's picture
Doug
Status: Diamond Member (Online)
Joined: Oct 1 2008
Posts: 3125
long term perspective

Here's a longer term perspective measured against our favorite commodity/money.

http://investmenttools.com/futures/bdi_baltic_dry_index.htm

Baltic Exchange Dry Index (BDI)
& Gold (gold)

 (Edited to add link)

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