Daily Digest

Daily Digest 3/10 - Bill Gross Nixes Gov't Debt From Flagship Fund, A Harshly Divided Planet, Winning The Biofuel Future

Thursday, March 10, 2011, 11:52 AM
  • "No Way Out" of Debt Trap, Gross Says: U.S. Living Standards Doomed to Fall
  • Gross Eliminates Government Debt From Pimco’s Flagship Total Return Fund
  • Montreal Turns To Corn Sugar In De-Icing Efforts
  • QE: Hyper-Inflation to Oblivion
  • Catherine Austin Fitts: Where Is The Money?
  • A Harshly Divided Planet
  • Live Video Stream Of Wisconsin Protests Where Hundreds Of Protesters Rush Wisconsin Capitol, Vastly Outnumbering Security
  • Hutton pension reforms could ‘light the blue touch paper’ for a wave of industrial action
  • "Spectacular" Cyber Attack Gains Access to France's G20 Files
  • Winning the Biofuel Future

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Economy

"No Way Out" of Debt Trap, Gross Says: U.S. Living Standards Doomed to Fall (Dana T., woodman, pinecarr)

PIMCO founder Bill Gross -- one of the world's largest mutual funds managers, who focuses mostly on bonds -- has previously said that if the United States were a corporation, no one in their right mind would lend us money. For the last decade, we’ve been “relying on the kindness of strangers” to help cover our debts, he tells Aaron Task in the accompanying clip.

Gross Eliminates Government Debt From Pimco’s Flagship Total Return Fund (Dana T., pinecarr)

Pimco’s $237 billion Total Return Fund last held zero government-related debt in January 2009. Gross had cut the holdings to 12 percent of assets in January, according to the Newport Beach, California-based company’s website. The fund’s net cash-and-equivalent position surged from 5 percent to 23 percent in February, the highest since May 2008.

Montreal Turns To Corn Sugar In De-Icing Efforts (joemanc)

Another vegetable has been recruited in Montreal’s war against slippery sidewalks. After running a pilot project testing a beet-juice based de-icing product on sidewalks earlier this winter, the downtown Ville-Marie borough is giving corn a try.

It’s now testing a product called Bleu Fuzion, which is a magnesium chloride brine that has had corn sugar and blue colouring added to it, said Jacques Raymond, a spokesman for Sebci Inc., the Bécancour-based company that manufactures it.

QE: Hyper-Inflation to Oblivion (Claire H.)

Fed Chairman Bernanke and the Quantitative Easing programs are caught in a negative feedback loop, the instruments at risk being the U.S. Dollar and the U.S. Treasury Bond. The former suffers from lost integrity and direct inflation effect. The latter suffers from direct intervention and market ruin.

Catherine Austin Fitts: Where Is The Money? (Claire H.)

Powerful interview regarding the state of US finances, government accountability and the future of our country.

A Harshly Divided Planet (Ilene)

At the end of 2010 - nothing had changed and I told Members to just refer to the prior outlook. What we did instead was add our "Secret Santa's Inflation Hedges for 2011" and our "Breakout Defense Part Deux - 5 More Trades that Make 500% in a Rising Market," which was the sequel to early December's "Breakout Defense - 5,000% in 5 Trades or Less," which we had to close out as we hit goal early and didn't want to risk overexposing our upside. We have been patiently waiting to see if it's time to take another bullish round as I like to try to put up one Virtual Portfolio per month and the last set of Breakout Defense trades were from Feb 5th so tick, tick, tick but I also know not to force a decision - we need to let the market tell us which way it's going and then make our plays.

Live Video Stream Of Wisconsin Protests Where Hundreds Of Protesters Rush Wisconsin Capitol, Vastly Outnumbering Security (pinecarr)

That didn't take long. Ann Althouse writes: "Meade, who is in the building now, tells me, by phone, that he saw a window on the Wisconsin Avenue side of the building opened and protesters entering through that window. He thought it seemed as if someone in one of the Democratic legislators' offices had opened a window to let them in, and — once they were in — many doors have been opened all around, and people have streamed into the building. He says he counted 3 "troopers" — I'm not sure what the official job title is for these security people — and that they were absurdly overwhelmed by the crowd." So...Wisconsin is not Cairo?

Hutton pension reforms could ‘light the blue touch paper’ for a wave of industrial action (pinecarr)

Radical proposals to reform the pension plans of six million public sector workers could ‘light the blue touch paper’ for a wave of industrial action, trade unions have warned.

"Spectacular" Cyber Attack Gains Access to France's G20 Files (guardia)

International news media are reporting today of a successful cyber attack by unknown parties against the French Government that occurred late last year. The incident was first reported by the magazine Paris Match yesterday, which the French government later confirmed.

According to this article in the Financial Times of London, the attack targeted "sensitive information relating to France's presidency of the Group of 20 industrialised nations."

Economy

Winning the Biofuel Future (David B.)

Today, the Department announced that a research team at our BioEnergy Science Center achieved yet another advance in the drive toward next generation biofuels: using a microbe to convert plant matter directly into isobutanol. Isobutanol can be burned in regular car engines with a heat value higher than ethanol and similar to gasoline. This is part of a broad portfolio of work the Department is doing to reduce America's dependence on foreign oil and create new economic opportunities for rural America.

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."

21 Comments

saxplayer00o1's picture
saxplayer00o1
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Posts: 4168
1) Gross Dumping Treasuries

1) Gross Dumping Treasuries Leads Managers Calling Rally's End (See also news in the DD above )

"Bill Gross has dumped all Treasuries from the world’s biggest mutual fund, Warren Buffett is shifting to shorter-term debt, and Swiss Reinsurance Co. is boosting equities and corporate bonds.

Some of the biggest private investors in the bond market, from fund managers to insurers and pensions, are preparing for an end to the three-decade Treasury rally, as interest rates near zero and unprecedented spending by the U.S. government and the central bank threaten to fuel inflation. Their strategies range from reducing the longest-dated holdings and shifting to higher-yielding corporate debt, to investing in stocks, commodities, non-U.S. bonds and even holding cash. "

  • Other news, headlines and opinion:

Debasing dollar not solution to US-China trade imbalances: experts

Euro slides as Spain rocked by ratings downgrade

China unexpectedly swings to February trade deficit

California February Receipts $139 Million Below Forecast, Chiang Reports

Social Security Commissioner Warns of Painful Cuts

Overflow crowd at Idaho hearing on Medicaid cuts

CalPERS mulls reducing investment-return forecast

"$100000 Club" Draining CalSTRS

Greece asks EU to take urgent steps on rating agencies

Unemployment in Greece jumps to 14.8 percent

Flint City Council weighs in on emergency management legislation

Task Force: San Diego's Deficit is $130 Million

Portugal bond yield hits record high (Reuters Video)

fiatagogo's picture
fiatagogo
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Bond Market and Back Door QE thru Ag derivatives

Bond Market and Back Door QE thru Ag derivatives

interesting perspective

dps's picture
dps
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Posts: 442
Blue Sugar is a bad idea

It's a bad idea to spread around artificially colored (blue) sugar/corn mixture.  The bees will take it to the hive and turn the honey blue.  This same thing happened with red when a manufacturer was dumping red sugar outside thier plant.  The local beekeepers ended up with worthless red honey ... yucky taste too. 

Beekeeper ... dons

rjs's picture
rjs
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depends
dps wrote:

It's a bad idea to spread around artificially colored (blue) sugar/corn mixture.  The bees will take it to the hive and turn the honey blue.  This same thing happened with red when a manufacturer was dumping red sugar outside thier plant.  The local beekeepers ended up with worthless red honey ... yucky taste too. 

Beekeeper ... dons

basically, i agree...but at this time of year the bees arent flying, and if they do whatever sugar the find will be used in raising brood...its not uncommon to feed bees sugar water when there are no plants in bloom...

ao's picture
ao
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many thanks

saxplayer,

You are the bestest!!!  Thank you so much for all that you do here.  We really appreciate it!!!

Tall's picture
Tall
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Decline of honey bees now a global phenomenon, United Nations

The mysterious collapse of honey-bee colonies is becoming a global phenomenon, scientists working for the United Nations have revealed.

Declines in managed bee colonies, seen increasingly in Europe and the US in the past decade, are also now being observed in China and Japan and there are the first signs of African collapses from Egypt, according to the report from the United Nations Environment Programme (UNEP).

The authors, who include some of the world's leading honey-bee experts, issue a stark warning about the disappearance of bees, which are increasingly important as crop pollinators around the globe. Without profound changes to the way human beings manage the planet, they say, declines in pollinators needed to feed a growing global population are likely to continue.

http://www.independent.co.uk/environment/nature/decline-of-honey-bees-now-a-global-phenomenon-says-united-nations-2237541.html#

 

dhise's picture
dhise
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Michigan craziness

Looks like this is really going to happen here in Michigan.

 

dickey45's picture
dickey45
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Posts: 77
Wholly crap, is that

Wholly crap, is that Michigan story true?

rhare's picture
rhare
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Posts: 1326
So where the hell was Rachel Maddow on the Patriot Act?

I guess this is just like Rahm Emanuel's, "You never want a serious crisis go to waste".   It's amazing Maddow doesn't seem to be concerned with the Patriot Act or Obama Care eliminating our rights, but she's all up in arms about this?  Perhaps a little less political rhetoric and a bit more disucssion about the real issues would be nice - certainly not going to happen from Maddow or any of the people as MSNBC. Frown

Unfortunately this type of the evil Democrats, evil Republicans, evil Libertarian rants means we are going to go down fighting each other rather than actually addressing the problems we face. 

wags999's picture
wags999
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Do people understand that NO

Do people understand that NO business pays taxes? Only individuals pay taxes. All costs of business is passed on to their customers.  Of course, many lawmakers rather tax business since it's a hidden tax that many people are too stupid to see it for what it is.

As far as Union busting, interesting that  Carter a Democrat took away collective bargining for federal workers.  And we all know how under paid, and what low benefits federal workers enjoy.  How could we ever want a state government worker to have only  the same rights as federal workers. Perhaps it's time to privatise all government work, eliminate government workers.  But then it would be more difficult for sleazy politicians to buy votes.

Poet's picture
Poet
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Wags999 And Businesses
wags999 wrote:

Do people understand that NO business pays taxes? Only individuals pay taxes. All costs of business is passed on to their customers.  Of course, many lawmakers rather tax business since it's a hidden tax that many people are too stupid to see it for what it is.

As far as Union busting, interesting that  Carter a Democrat took away collective bargining for federal workers.  And we all know how under paid, and what low benefits federal workers enjoy.  How could we ever want a state government worker to have only  the same rights as federal workers. Perhaps it's time to privatise all government work, eliminate government workers.  But then it would be more difficult for sleazy politicians to buy votes.

Do people understand that NO sellers pay taxes? Only buyers pay taxes. All costs of selling (whether as a business or as an sole proprietor or as a non-corporate/non-business individual selling a baseball card or a gold coin or hair from their head) are passed on to the buyers. Of course many people think that taxing businesses is bad, even though businesses have quite a great deal of interests to protect and use the police and criminal justice system to protect their interests.

Please do cite your studies. I would like to know if it is comparing all private sector (from millionaires to burger flippers, of which there are MANY more burger flippers/taco fillers than there are millionaires) to private sector borrowers, or only people of specific levels of educational achievement and management or skillset expertise.

Although I do think we have seen what happens when government work is privatized. One example is called private prisons and while workers in private prisons earn very little, the owners and executives earn quite a great deal more than a public prison warden - enough to buy politicians with, to help shut out outside competitors, enable rigged, no-bid contracts, and hide mistreatment, torture, and deaths (yes, corporate private prisons have had very questionable deaths in custody with a lot of obstruction and withheld evidence - just like in questionable deaths involving state prison guards whether unionized or not).

Not saying you're entirely wrong, wags999. Just offering a more balanced perspective by showing another side as well.

Poet

Doug's picture
Doug
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There are two kind of people

There are two kind of people who pay for everything - taxpayers and consumers.  We are all both.

Doug

irongamer's picture
irongamer
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Yikes
dhise wrote:

Looks like this is really going to happen here in Michigan.

 

Wow. Yes! When you need money from people, taxing those with the least amount of money is the sure place to get it. It is less work to take from those that are least equiped to defend themselves. I mean...really...who would want to go up against those that have lobbyists, vested leverage, lawyers, and vast wealth at their disposal.  /sarcasm

There is a lot of fiction that have corporations acting as governments in the future. Perhaps the writers are not too far off. Although, this seems so blaringly obvious...perhaps that is why it could work.

Marty59's picture
Marty59
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Outrage in Michigan

 

If the video about Michigan is accurate it should cause outrage in any American. The idea of taking over a jurisdiction with elected officials by fiat is obscene and unconstitutional.  The proposal to let a designated private corporation then take it over is fascist and treasonous.

Whatever earlier outrages we may have already suffered, and there is some political disagreement regarding many of them, this would be one which we should all agree about.

Poor people in North Africa are getting their first whiff of democracy as I write. Are we to allow some crackpot governor to set up a system that dismantles democracy for us in areas where we become poor?

Unlike many earlier outrages, this would not be a nuisance like the modern airport experience, which may - hopefully - be temporary, or some program where one group benefits over the other like health care, or even a serious issue with wide spread consequences like paper money which the official wizard can create like soap bubbles with a wave of his wand.

That proposal strikes at the very foundation of the republic. If enacted there would be no going back without bloodshed.

I am sure it would never make it through the courts but it would be a national shame if it ever got that far. Long before that  every American who understands history should oppose it and make sure his/her voice is heard.

 

Marty59's picture
Marty59
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silver shorts
fiatagogo wrote:

Bond Market and Back Door QE thru Ag derivatives

interesting perspective

Yes, interesting, but labored.

An easier explanation is that the JP Morgan silver shorts are a bit  exaggerated. After all, what is all the silver in the world worth anyway and the only shortages are in small denomination retail type amounts.  Plenty in the warehouses. Plenty 100 oz bars if one can afford them.

In 2008 there was a shortage of gold ounce coins. Flea market peddlers made a killing with them. There was plenty in the ETF, though.  6 months later they were 25% + off.

 

sjdavis's picture
sjdavis
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Rachel Maddow did call out Patriot Act.

[quote=rhare]

Unfortunately this type of the evil Democrats, evil Republicans, evil Libertarian rants means we are going to go down fighting each other rather than actually addressing the problems we face.

[/quote]

Think that's spot on.  Until all 3 parts of the budget are openly in play for cuts then it's all ideological posturing, each side protecting their pet ideals.  Progressives protecting working class and Conservatives empowering large corporations.  The elephant in the room is defense.

[quote=rhare]

It's amazing Maddow doesn't seem to be concerned with the Patriot Act or Obama Care eliminating our rights, but she's all up in arms about this?  Perhaps a little less political rhetoric and a bit more disucssion about the real issues would be nice - certainly not going to happen from Maddow or any of the people as MSNBC.

[/quote]

You may be judging Maddow too quickly.  For starters, I don't think she was on tv when the Patriot Act was first enacted.  But she took Obama to task for expanding it, somewhere around the 7:12 mark if can't be bothered to watch full clip.

As for health care reform, she is no doubt a progressive so probably doesn't think it went universal enough.  But as far as Patriot Act, consider it common ground.  Can't speak for the rest of the network, but Maddow usually seems reasoned, well researched and straight-forward about her political leaning.

rhare's picture
rhare
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Rachel Maddow on the Patriot Act
sjdavis wrote:

You may be judging Maddow too quickly.  For starters, I don't think she was on tv when the Patriot Act was first enacted.  But she took Obama to task for expanding it, somewhere around the 7:12 mark if can't be bothered to watch full clip.

Thanks for posting the clip.  Normally I can't stand much of her because she is so overtly left biased, same as watching Ann Coulter and her right bias.  It always seems not to be about the issue as much as it is the players, so it was refreshing not hearing about how evil and racist the tea party followers are (a common theme from Maddow no matter what the topic).

 

TechGuy's picture
TechGuy
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Posts: 428
Do people understand that NO

Do people understand that NO business pays taxes? Only individuals pay taxes. All costs of business is passed on to their customers. Of course, many lawmakers rather tax business since it's a hidden tax that many people are too stupid to see it for what it is.

 

Well Business do pay taxes on earnings. If businesses have a profit that the deposit in a bank account for future growth, it it taxed at 35%, plus state corporate income tax. This is a ridiculous high tax rate  that forces business into debt in order to grow. Few business are willing to pay the corporate income tax in order to save money. Instead the borrow money to expand because it cheaper to borrow then it is to save. This is part of the problem why many businesses are drowning in Debt.

 

 

 

 

 

Poet's picture
Poet
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Posts: 1891
TechGuy, Companies Are Sitting On Trillions In CASH! 35% is FAKE
TechGuy wrote:

Well Business do pay taxes on earnings. If businesses have a profit that the deposit in a bank account for future growth, it it taxed at 35%, plus state corporate income tax. This is a ridiculous high tax rate  that forces business into debt in order to grow. Few business are willing to pay the corporate income tax in order to save money. Instead the borrow money to expand because it cheaper to borrow then it is to save. This is part of the problem why many businesses are drowning in Debt.

I am a little skeptical about your statement, because of the following:

American companies have nearly $2 trillion sitting on their balance sheets (December 2010):
"Rather than pouring their money into building plants or hiring workers, nonfinancial companies in the U.S. were sitting on $1.93 trillion in cash and other liquid assets at the end of September, up from $1.8 trillion at the end of June, the Federal Reserve said Thursday. Cash accounted for 7.4% of the companies' total assets—the largest share since 1959."
http://online.wsj.com/article/SB1000142405274870376670457600950116197348...

Even supposedly highly-taxed European companies are sitting on a small hoard (December 13, 2010):
"A recent analysis by Bloomberg showed that Europe’s biggest companies sitting on £445bn cash. This is 16pc higher that the position at the end of 2007, before the credit crunch hit."
http://www.telegraph.co.uk/finance/newsbysector/industry/8198623/Compani...

A corporation keeps or distributes reserves if it can't invests it into land, capital, or other assets other than cash for growth. If it's sitting on cash, it's because the economy current SUCKS.

The 35% is FAKE
Most of the Fortune 500 companies pay little or no income tax to the IRS, due to many loopholes.

Most firms pay no income taxes
(sorry link is a little dated, from 2008):
"Nearly two-thirds of U.S. companies and 68% of foreign corporations do not pay federal income taxes, according to a congressional report released Tuesday."
http://money.cnn.com/2008/08/12/news/economy/corporate_taxes/

Google, for example, has a complicated situation involving routing income through Ireland and the Netherlands to the Bahamas. The 35% touted by the self-serving U.S. Chamber of Commerce is as FAKE as the numbers it makes up on on how many businesses it actually represents.

But even a small business that doesn't have the resources to run these loopholes can always find "miscellaneous expenses", "shrinkage", and other depreciable assets to invest in to reduce taxable income. Because taxes, after all, are on INCOME after expenses. Expenses can be a lot of different things. It isn't uncommon to find small businesses dishonestly deducting meal expenses, toiletries and cleaning supplies for home use, laptops/notebooks for personal use, fudging on mileage and gasoline records, exaggerating the size of a home office to help on the home office deduction, etc.

Poet

TechGuy's picture
TechGuy
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Posts: 428
Companies can hold overseas

Companies can hold overseas profits in overseas accounts, Or domestic companies can hold capital overseas if they set up a parent company that is overseas. If  they want to spend that money inside of the US they have to pay income taxes (repatriot overseas investments

I was also referring to Pure US based companies that don't have any offshore offices. Not every US company does this. The major of all business are small to mid-size companies that are the creators of jobs and wealth in the US. These are the companies that borrow instead of saving to fuel growth.

 

The 35% is FAKE
Most of the Fortune 500 companies pay little or no income tax to the IRS, due to many loopholes.

Mostly because the set up overseas parent companies. I believe every fortune 500 company is international or has an offshore parent. They simply invest the money else where instead of the US. Money flows in to China, Vietnam, India, etc.

Of the alledge $2 Trillion sitting on "Balance Sheet" How much of that is "Mark-to-Fanasy" accounting? If business really have that amount of free cash it would be invested or  paid out  using either dividends or stock buy-backs for  executives and major stock owners.

Poet's picture
Poet
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Posts: 1891
Links Please!
TechGuy wrote:

Companies can hold overseas profits in overseas accounts, Or domestic companies can hold capital overseas if they set up a parent company that is overseas. If  they want to spend that money inside of the US they have to pay income taxes (repatriot overseas investments

I was also referring to Pure US based companies that don't have any offshore offices. Not every US company does this. The major of all business are small to mid-size companies that are the creators of jobs and wealth in the US. These are the companies that borrow instead of saving to fuel growth.

 

The 35% is FAKE
Most of the Fortune 500 companies pay little or no income tax to the IRS, due to many loopholes.

Mostly because the set up overseas parent companies. I believe every fortune 500 company is international or has an offshore parent. They simply invest the money else where instead of the US. Money flows in to China, Vietnam, India, etc.

Of the alledge $2 Trillion sitting on "Balance Sheet" How much of that is "Mark-to-Fanasy" accounting? If business really have that amount of free cash it would be invested or  paid out  using either dividends or stock buy-backs for  executives and major stock owners.

TechGuy

I am glad you have provided some clarification for your statements.

Now, I don't think cash and liquid assets would be considered "mark-to-fantasy". If you find it to be different accounting, or if you find that the $2 trillion is being held mostly offshore, please post links. Thank you.

As I stated, even if a company doesn't have the ability to set up offshore systems like tens of thousands of companies in the U.S. have, there are other ways they "game" the system as I have also explained. Every small business owner here knows what I'm talking about - even if they don't personally do it, small business owners and employees alike know of people or competitors who do. The things that can be done are very impactful to the actual tax rates paid.

Poet

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