Daily Digest

Daily Digest 2/22 - Home Prices Declined 2.4% This Year, Parabolic Flight To Silver, Oil Shock Fears As Libya Erupts

Tuesday, February 22, 2011, 10:42 AM
  • Equities Rising On "Rivers Of Blood"
  • American Shame
  • Home Prices in 20 U.S. Cities Declined 2.4% From Year Earlier 
  • Moody's Cuts Outlook For Japan Credit Rating
  • Parabolic Flight To Silver, As April Crude Touches $98.48, Irrelevant Dollar Unch
  • The Long Term Budget Problem Begins Now
  • The Shattered Myth Of A Moderate Qaddafi Heir
  • Oil Shock Fears As Libya Erupts

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Equities Rising On "Rivers Of Blood" (Ilene)

While the foundation Powell laid in England became the rallying cry for Conservatives in Arizona recently, when we see OTHER countries oppressing the rights of people we go nuts, right? About 250 protesters have already been killed by Kadhafi's storm troopers but we're not worried about the rivers of blood - we're worried about the rivers of oil that are controlled by Libya, which pumps 2Mb a day out of their estimated 42Bn barrel reserves.

American Shame (Ilene)

How the International Monetary Fund's "Advanced economy" countries compare on various measures.

Home Prices in 20 U.S. Cities Declined 2.4% From Year Earlier (jdargis)

The S&P/Case-Shiller index of home values in 20 cities fell 2.4 percent, the biggest year-over-year decrease since December 2009, the group said today in New York. The median forecast of economists surveyed by Bloomberg News projected a 2.3 percent decrease.

Moody's Cuts Outlook For Japan Credit Rating (pinecarr)

Moody's cited comments last month by Bank of Japan governor Masaaki Shirakawa, who said 'no country can continue to run fiscal deficits forever.'

Parabolic Flight To Silver, As April Crude Touches $98.48, Irrelevant Dollar Unch (pinecarr)

There was a time, long ago, when the dollar was a flight to safety instrument. Those days are gone. DXY barely budging as the overnight session begins, while silver has already put $34 in the dust. Last: $34.26 and parabolic.

The Long Term Budget Problem Begins Now (newztipper)

ou can see the assumption of the economy recovering as the blue revenue line recovers from an extraordinary low share of GDP. As more people get jobs, the government will get more income and wage revenues. You can also see spending declining from the 2009-2011 phase which spiked principally because of TARP and stimulus.

The shattered myth of a moderate Qaddafi heir (jdargis)

By now, you'll have seen Saif al-Islam al-Qaddafi, the second oldest son of the Libyan leader, on air defending the brutal decades-long rule of his father. In a speech that had echoes of his dad's long and rambling incoherence, Saif blaimed the ongoing protests on everyone from criminals to Islamists. He promised that Qaddafi would fight to the last protestor. And he was unapologetic about a death toll that he seems to have massively under-stated; he claimed that just 14 have died, while Human Rights Watch puts the number at over 200.


Oil Shock Fears As Libya Erupts (pinecarr)

The spectre of full civil war in oil-rich Libya and reports of the creation of an Islamic emirate in the country's "Barqa" region has moved the Mid-East crisis into a more dangerous phase, setting off an explosive rise in US crude prices.

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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1) California teachers'

"As California school districts anticipate possibly the worst budget crisis in a generation, many will try to lighten their burden by enticing older teachers into retirement. But as more and more teachers retire -- with a pension averaging 55 percent to 60 percent of salary -- they will be straining a system that already can't meet its obligations.

The California State Teachers' Retirement System is sliding down a steep slope toward insolvency. The threat isn't to teachers who have retired or plan to, but to the people of California. Taxpayers, who already pick up 23 percent of CalSTRS expenses, will be increasingly burdened as the giant pension system fails to meet its obligations.

"We're on a path of destruction," said Marcia Fritz, president of pension-reform group California Foundation for Fiscal Responsibility.

And merely rejiggering formulas for new employees won't rescue the system, she said. Simply put: "We overpromised.""

  • Other news, headlines and opinion:

Gallup poll shows underemployment at 20%

Mersch Says ECB May Warn Next Week of Rising Inflation Risks in Euro Area

BofA Doubles Writedown for Credit-Card Unit to $20.3 Billion

Spain's Cajas Have $137 Billion of Potential Bad Loans, Central Bank Says

Changes to Medicare criticized; up to 70000 could lose coverage (Wisconsin)

Hungary to Cancel $7.5 Billion of Bonds After Pensions Takeover

If Libyan unrest spreads, gas could reach $5

Md. faces $16b funding gap for retiree health care benefits

Housing data may have understated extent of collapse: report

Farmers Can't Meet Demand as Corn Stocks Drop to 1974 Low

Half of January Home Sales were Distressed Properties


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One might conclude from this

One might conclude from this that the sellers of labor don't matter, only the buyers.

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Here is just one more

Here is just one more disturbing trend:


As a former Microbiologist, I find it disturbing that drug companies are no longer seeking new drugs to fight infectious diseases because patients only take the drug for a short period of time (until the infection clears up) rather than having to take the drug for the rest of his/her life (such as Lipitor). Antibiotics are simply not profitable enough.

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Marc Faber Videos


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From Cairo to Madison, some pizza
Someone in Egypt has been paying attention to what’s happening in Madison and wanted to send a message of solidarity from across the globe — so they ordered a pizza.

Read more: http://www.politico.com/news/stories/0211/49888.html#ixzz1EiPSn8zu

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The articles on zerohedge

The articles on zerohedge are flying out, here's another interesting titbit....

Mohamed El Erian....we cannot assume the dollar will retain it's reserve currency status


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OIL - markets adjusting to peak oil?

My instinct is that all the unrest in the middle east being reported is a distraction for the market adjustment underway for peak oil.

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J. Kyle Bass Newsletter

Here is an excerpt, I encouarge everyone to read the entire article, it's excellent.  Anytime Kyle Bass speaks, u should listen...



Inflation – An Immediate Concern 

We will keep our thoughts on this subject brief and straightforward. While the inflation/deflation debate is vigorously defended on both sides, and we certainly recognize the ongoing need for deleveraging which should apply deflationary pressures, it is difficult to ignore simple data which points to the contrary. 

In fact, we find very few assets around the world outside of US housing that are actually deflating in value. Hard and soft commodities across virtually all classifications continue to climb in value (in nominal terms) and many are at or near all‐time highs. 

A very interesting chart from a recent Goldman Sachs research publication caught our attention. The authors highlighted the severe risks to headline inflation stemming primarily from global food prices. 

More specifically, they assess the risk to headline inflation on a country‐by‐country basis in a scenario where local food prices catch up to international food prices in local currency (as was the pattern in the 2007‐2008 food inflation spike). 

The results are alarming: 

We believe that that commodity price inflation has primarily been driven by demand coupled with (in some cases) supply‐side shocks in 2010. Interestingly, United States "core" inflation will not move materially until the US housing market turns, which we believe could be up to 3 years away. The reason for this phenomenon is that housing (excluding the energy component) comprises roughly 37% of the headline CPI calculation and 49% of the core CPI calculation3. The rest is just details, especially when food and energy are removed. 

Unfortunately, if you eat or drive every day, you are already feeling the impact of inflation. 

Hyperinflations are always caused by public budget deficits which are largely financed by money creation. If inflation accelerates these budget deficits tend to increase (Tanzi's Law). 

‐ Peter Bernholz, Monetary Regimes and Inflation. (Emphasis Added) 

With "Helicopter Ben" printing $3.3 billion per day ($2.3 million every minute), the consequences of this financial experiment could be staggering.

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Fed shouldn't rush to

"SAN FRANCISCO (MarketWatch) -- The president of the Federal Reserve Bank of Chicago has cast doubt on the tightening of U.S. monetary policy, according to a report published Tuesday. The Financial Times reported that Chicago Fed President Charles Evans said that there should be no hurry to tighten monetary policy, despite improving economic growth. "While I'm very pleased at the improvements in the economy I think it's going to continue to be a while before we're safely past these conditions," said Evans, who is a voting member of of the rate-setting Federal Open Market Committee this year, according to the report."

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Gaddafi orders forces to sabotage oil production

Gaddafi orders forces to sabotage oil production


Embattled Libyan leader Moamar Gaddafi has ordered his security forces to sabotage the country's oil facilities, according to Time magazine.

In a column posted on Time's website, intelligence columnist Robert Baer said the sabotage would begin by blowing up pipelines to the Mediterranean.

But he added that his source, which was close to the government, had also told him two weeks ago that unrest in neighbouring countries would never spread to Libya - an assertion that has turned out to be wrong.

"Among other things, Mr Gaddafi has ordered security services to start sabotaging oil facilities," Baer wrote.

"The sabotage, according to the insider, is meant to serve as a message to Libya's rebellious tribes: It's either me or chaos."

Baer, a former Middle East CIA officer, said the source told him that as of Monday Mr Gaddafi had the loyalty of only about 5,000 of the country's 45,000-strong regular army.

Paraphrasing the source, he said that Mr Gaddafi had also ordered the release of Islamist militant prisoners in hopes they would act on their own to sow chaos.

Earlier today, Mr Gaddafi declared he would not step down and ordered his followers to "capture the rats".

He said standing down would be an embarrassment to his ancestry and he would die as a martyr leading what he called the "revolution".

The growing violence in Libya, Africa's third-largest oil producer, has forced a number of oil companies to shut and disrupted flows from the country's export terminals.

Security forces have cracked down fiercely on demonstrators across the country, with fighting spreading to Tripoli after erupting in Libya's oil-producing east last week.

Halting production

Two more oil companies have halted output as unrest keeps crude prices near a two-and-a-half-year high.

A pipeline bringing Libyan natural gas to Italy was also closed and export terminals that ship both crude and oil products were disrupted as violence and confusion gripped the country that pumps nearly 2 per cent of world output.

Oil prices, which surged yesterday, steadied as Saudi Arabia reassured consumers OPEC members would be ready to meet supply shortages, while an official at the International Energy Agency said it stood ready to release stockpiles in the event of a real disruption.

Several oil companies said they were shutting down operations as they evacuated staff.

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South Korea's bubble

If anyone has any doubts about South Korea's bubble, check out this documentary of Samsung:

L'Empire Samsung - Un Oeil sur la Planete "http://www.youtube.com/watch?v=OO39mCdWNvM"

No need to know French to figure out what the reporter conveys, trust me!!


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