Daily Digest

Daily Digest 1/8 - Europe to Govern Reckless Banks, Brazil Curbs Rising Currency, New High for Food Stamps

Saturday, January 8, 2011, 12:58 PM
  • Why the World Is Financially Doomed in Four Charts
  • Thrilling Thursday – Comedy or Tragedy?
  • Europe Unveils Sweeping Plans To Govern Reckless Banks
  • Brazil Moves To Curb Rising Currency
  • Spanish and Portuguese Bonds Hit Hard on Sovereign Debt Financing Concerns
  • China Helps Take Pressure Off Euro
  • Food Stamp Usage Hits New High Of 43.2 Million

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Economy

Why the World Is Financially Doomed in Four Charts (adam)

The global economy is doomed to implosion, and here are four charts which explain why.

Though the complexities may appear endless, the global economy's coming implosion is really fairly easy to understand: here are four charts which do the heavy lifting. It boils down to these basics:

Thrilling Thursday – Comedy or Tragedy? (ilene)

Russell 8-0-0, Russell 8-0-0! Wherefore art thou Russell8-0-0? Deny thy dollar and refuse to fall, or, if thou spike not, be but consolidating at resistance and I’ll happily Capitulate….

If it's good enough for fair Juliet, it's going to have to be good enough for us as the Russell finally makes it over our 800 target - the last barrier that was keeping us on the bearish side. Above these lines - it's time to stop worrying and love the rally as we romanticize the deadly combination of QE2 the Obama tax cuts as: "A pair of star-crossed lovers take their life, whose misadventured piteous overthrows doth with their death bury their parents’ strife."

Europe Unveils Sweeping Plans To Govern Reckless Banks

 (pinecarr)

The European Commission’s "Framework for Bank Recovery and Resolution" draws on Scandinavia’s hard-line approach during their banking crises in the early 1990s. The goal is to end the pattern of moral hazard and mispricing of risk that generated Europe’s debt woes.

Brazil Moves To Curb Rising Currency (pinecarr)

A day after finance minister Guido Mantega pledged not to allow America to “melt the dollar”, Brazil’s central bank announced that domestic lenders would have higher reserve requirements against foreign exchange positions.

Spanish and Portuguese Bonds Hit Hard on Sovereign Debt Financing Concerns

 (pinecarr)

Portuguese and Spanish 10-year bonds are getting smacked hard as refinancing needs mount. Greek yields are at all-time highs and a milder (for now) selloff continues on Belgian and Italian bonds as well. A flight to safety on German bonds is again in play, with German 10-year yields dropping slightly. The Euro once again flirts with December and Mid-September lows.

China Helps Take Pressure Off Euro (pinecarr)

On Wednesday, Spain signed more than a dozen business accords with China, two days after Vice Premier Li Keqiang wrote in daily El Pais that his country will keep on buying Spain's public debt as a show of support. That follows similar deals and promises from China for already bailed-out Greece and Portugal, seen by many as the next weakest link in the 17-country eurozone.

Food Stamp Usage Hits New High Of 43.2 Million

 (pinecarr)

Ever wonder where all the money for equity inflows came from? Here's the answer: with all the money saved from participating in the Supplemental Nutrition Assistance Program, better known as foodstamps, which in October hit a brand new record, 43.2 million Americans decided to join in on this "wealth effect" they had been hearing so much about and buy Apple stock. After all 190 hedge funds are doing it: and there is no way that 190 hedge funds can possibly be wrong. As a result, the chart below shows our nation's pending wealth effect in its full glory. Just think: 43.2 millionaire in waiting. Just consider the guaranteed explosion to money velocity....

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."

7 Comments

Germanni's picture
Germanni
Status: Member (Offline)
Joined: Mar 20 2010
Posts: 14
Re: Daily Digest 1/8 - Europe to Govern Reckless Banks, ...

Great read: http://mises.org/resources/4098/Tiger-by-the-Tail

You can get the metaphor from the title. What Keynesianism unleashes is wicked inflation that no one can control. This might be the essential guide to our future.

Books excerpted include:

Prices and Production (1931)
Monetary Nationalism and International Stability (1937)
The Pure Theory of Capital (1941)
‘A Commodity Reserve Currency’, Economic Journal (1943)
Studies in Philosophy, Politics and Economics (1967)
The Constitution of Liberty (1960)
‘Personal Recollections of Keynes and the “Keynesian Revolution”,’ The Oriental Economist (1966)
‘Competition as a Discovery Procedure’, New Studies in Philosophy, Politics and Economics (1978)
‘Caracas Conference Remarks’, Mont Pèlerin Conference (1969)
‘Good and Bad Unemployment Policies’, Sunday Times (1944)
‘Full Employment Illusions’, Commercial & Financial Chronicle (1946)
‘Full Employment in a Free Society’, Fortune (1945)

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Daily Digest 1/8 - Europe to Govern Reckless Banks, ...

Geithner warns Congress: Raise debt ceiling

January 7, 2011 

by Joel Larson

ORLANDO, FL - In an outreach effort to Congress on Thursday, Secretary Geithner wrote a pleading letter to raise the debt ceiling.

In recent years, raising the debt ceiling has been somewhat clockwork for lawmakers in Washington. However this time around, newly elected members of the 112th Congress may not see such a process as business as usual.

On Thursday Geithner wrote, “Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses and could lead to loss of millions of American jobs. Even a very short-term or limited default would have catastrophic economic consequences that would last for decades.”

While news of the necessity to raise the debt ceiling is certainly frustrating and reason to stoke further resentment towards those in Washington, Geithner says it is important to understand that raising the debt level is not permitting further obligations by the United States.

For example, in his letter Geithner notes, “Raising the debt limit is necessary to allow the Treasury to meet obligations of the United States that have been established, authorized and appropriated by the Congress. It is important to emphasize that changing the debt limit does not alter or increase the obligations we have as a nation; it simply permits the Treasury to fund those obligations Congress has already established.”

Speaker Boehner commented on the debt ceiling in saying, “While America cannot default on its debt; we also cannot continue to borrow recklessly, dig ourselves deeper into this hole and mortgage the future of our children and grandchildren.”

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Daily Digest 1/8 - Europe to Govern Reckless Banks, ...

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8244160/Europe-unveils-sweeping-plans-to-govern-reckless-banks.html

Europe unveils sweeping plans to govern reckless banks

8 Jan 2011

By Ambrose Evans-Pritchard

Brussels has called for sweeping powers for regulators to seize failing EU banks, sack board members, and impose haircuts on senior bank debt, aiming to ensure that taxpayers are never again held hostage by high finance.

The European Commission’s "Framework for Bank Recovery and Resolution" draws on Scandinavia’s hard-line approach during their banking crises in the early 1990s. The goal is to end the pattern of moral hazard and mispricing of risk that generated Europe’s debt woes.

"Banks will fail in the future and must be able to do so without bringing down the whole financial system," said Michel Barnier, the internal market commissioner Mr Barnier’s consultation paper will lead to a "legislative proposal for a harmonized EU regime" as soon as this summer, with an insolvency structure in place by 2012.

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
Joined: Nov 23 2008
Posts: 1503
Re: Daily Digest 1/8 - Europe to Govern Reckless Banks, ...

Don't know if this has been posted yet, but everyone should see at least some of the document fraud examples presented by the Florida State Attorney General in this power point presentation: http://www.businessinsider.com/presentation-florida-attorney-general-for...

This will (or should) blow your mind.

Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
Joined: Aug 13 2008
Posts: 348
Re: Daily Digest 1/8 - Europe to Govern Reckless Banks, ...

On the subject of fraud, today's Charles hugh Smith:

If the Fraud Stops, the Financial System Collapses

 

 

Romans12.2's picture
Romans12.2
Status: Silver Member (Offline)
Joined: Jul 14 2009
Posts: 227
Re: Daily Digest 1/8 - Europe to Govern Reckless Banks, ...

Denny - I get that.  But what if the fraud never stops?  Will it never collapse?

guardia's picture
guardia
Status: Platinum Member (Offline)
Joined: Jul 26 2009
Posts: 592
Re: Daily Digest 1/8 - Europe to Govern Reckless Banks, ...
Romans12.2 wrote:

Denny - I get that.  But what if the fraud never stops?  Will it never collapse?

Yes, when we run out of fuel :)

Samuel

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