Daily Digest

Daily Digest 4/15 - U.S. Dollar Review And Outlook, The BRIC Wall, Matt Talibbi On Goldman Sachs

Friday, April 15, 2011, 10:42 AM
  • U.S. Dollar: Review And Outlook
  • Japan Update: Cars, Cigarettes, And Confidence In Short Supply
  • Economics Focus: BRIC Wall
  • The Fed Obliterates the Savings Ethic
  • Gold Prices Pop; Silver at 31-Year High
  • U.S. Embassy Families Cleared to Return
  • Matt Taibbi “Justice Department Has No Appetite"
  • U.S. economy is improving but energy costs are a drag, Fed says
  • The Planet Strikes Back

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Economy

U.S. Dollar: Review And Outlook (Joe P.)

In late August 2010, Fed Chair Ben Bernanke, through a speech in Jackson Hole, WY, alluded to the Fed’s intention to conduct an expanded quantitative easing program. Subsequently, in November 2010, a $600 billion quantitative easing program was announced (“QE2”), aimed at acquiring longer-term U.S. Treasury securities through the end of June 2011. The Jackson Hole speech marked the start of a significant rally in the price of many assets that typically help provide investors with protection against inflation, from equities to oil to gold. Over the same time period, we witnessed a significant increase in the market’s implied expectations for future inflation, a gauge we watch closely, as it tends to be a leading indicator of inflation itself.

Japan Update: Cars, Cigarettes, And Confidence In Short Supply (guardia)

People are buying food, but holding off on restaurants, hotels and hairdressers. While some of the decline is due to the Japanese tendency to self-restraint, or jishuku, there are still supply disruptions and power outages.

Economics Focus: BRIC Wall (jdargis)

Rapid growth is initially easy because the leader has already trodden a clear path. Developing countries can borrow existing technologies from countries that have already become rich. Advanced economies may be stuck with obsolete infrastructure; laggards can skip right to the shiniest and best. Labour productivity soars as poor economies shift workers from agriculture to a growing manufacturing sector. And rapid income growth among young workers boosts savings and fuels investment.

The Fed Obliterates the Savings Ethic (Alfredo E.)

There is no caveat to the counsel that says, "Keep six months of savings around if the money is earning at least six percent." Even if the money sits there all shiny, not earning a thing, it's the liquidity and insurance against the unknown that's the issue.

Unfortunately, a central bank's debauchery of the currency serves to raise people's time preferences and impair their judgment. In a blog post recently, I highlighted the advice of life coach and author John P. Strelecky, who advises people to spend their tax refunds on an experience they will remember forever, rather than saving the few hundred or thousand dollars that the IRS may be giving back.

Gold Prices Pop; Silver at 31-Year High (Alfredo E.)

Gold for June delivery added $16.80 to settle at $1,472.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,475.20 while the spot gold price was rising more than $14, according to Kitco's gold index.

U.S. Embassy Families Cleared to Return (Debu)

“Today, while the situation remains serious, and there is still a possibility of unanticipated developments, cooling efforts are ongoing and successful, power, water supply, and back-up services have been partially or fully restored, and planning has begun to control radioactive contamination and mitigate future dangers.” The advisory maintains U.S. citizens should steer clear of a 50-mile radius around the troubled plant.

Matt Taibbi “Justice Department Has No Appetite"

Anderson Cooper: Eliot Spitzer, Matt Taibbi and Carl Levin go after Goldman Sachs.

Energy

U.S. economy is improving but energy costs are a drag, Fed says (David B.)

"While many districts described the improvements as only moderate, most districts stated that gains were widespread across sectors, and Kansas City described its economic gains as solid," the U.S. central bank said in its "beige book" summary.

"Manufacturing continued to lead, with virtually every district citing examples of steady improvement, often with reports of increased hiring," the Fed said.

Environment

The Planet Strikes Back (Alfredo E.)

In his 2010 book, "Eaarth: Making a Life on a Tough New Planet," environmental scholar and activist Bill McKibben writes of a planet so devastated by global warming that it's no longer recognizable as the Earth we once inhabited. This is a planet, he predicts, of "melting poles and dying forests and a heaving, corrosive sea, raked by winds, strafed by storms, scorched by heat." Altered as it is from the world in which human civilization was born and thrived, it needs a new name -- so he gave it that extra "a" in "Eaarth."

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

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4167
Moody's cuts Ireland rating to just above junk

"The Fed's asset holdings in the week ended April 13 climbed to $2.670 trillion, from $2.653 trillion a week earlier, it said in a weekly report released Thursday.

The Fed's holdings of U.S. Treasury securities rose to $1.375 trillion on Wednesday, from $1.358 trillion the previous week."

"The recent surge in oil prices is no prelude to broader price increases that would force the Federal Reserve to raise interest rates, top Fed officials said on Thursday in what appears to be the predominant view at the central bank.

The comments, from Minneapolis Fed President Narayana Kocherlakota and Fed Board Governor Elizabeth Duke, echoed recent remarks by Fed Chairman Ben Bernanke, adding to expectations the central bank will stay on course with its $600 billion debt-buying program through the end of June and will not look to reverse its super-easy monetary policy any time soon.

Daniel Tarullo, also a Fed governor, identified himself as in the same camp, saying there are no signs that higher overall inflation, spurred by surging energy and commodity prices, will translate to underlying inflation. Tarullo, answering questions while speaking on a panel in Washington, said commodity prices are notoriously volatile."

  • Other news, headlines and opinion:

Moody's cuts Ireland rating to just above junk

Greek 5-Year CDS Imply 65% Probability Of Default-Markit

Israel's Fischer Says US Deficits Cause for Concern

India Inflation Quickens to 8.98%, Increasing Pressure on Interest Rates

Muni Mutual Funds See $854 Million Outflow In Latest Week - Lipper

Broke US States' $48 Billion Debt Drives Unemployment Assistance Cuts

Treasury Sets Sales of $72 Billion of Debt (Next week)

San Diego Cuts Library Hours to Help Erase $57 Million Deficit

Alameda County faces $138 million deficit

Postage rates rising, but not for most letters

Detroit to send layoff notices to all its public teachers

New York's Nassau County Going Broke as No One Wants to Share Fiscal Pain

More US home price declines ahead, Moody's economist warns

Part of Maryland pension hike to go towards balancing state budget

 

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Silver's Above $42.50, Approaching $43... (Subject To Change)

Hope this works... Image from Kitco's 24-Hour Spot Silver Chart:

 

Poet

grl's picture
grl
Status: Silver Member (Offline)
Joined: Nov 30 2008
Posts: 188
Here's the Setup for the Con of the Decade

There has been a lot of discussion here and elsewhere about the future of QE. I maintain that if QE does end, there must something else up the Fed's proverbial sleeve. I think Charles Hugh Smith might have the answer to the question I have been trying to understand. His explanation might border on a conspiracy but it makes sense to me. 

I offer it here for the smartest website on the Internet (this one Wink). Anyone care to weigh in?

http://www.oftwominds.com/blogapril11/setup-con-of-decade4-11.html

1. Treasury market now dependent on one buyer: check.

2. That buyer stops buying, pushing rates higher: no QE3. Check.

3. "Austerity" is now seen as inevitable--but not just yet: check.

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Charles Hugh Smith = One Smart Cookie
grl wrote:

There has been a lot of discussion here and elsewhere about the future of QE. I maintain that if QE does end, there must something else up the Fed's proverbial sleeve. I think Charles Hugh Smith might have the answer to the question I have been trying to understand. His explanation might border on a conspiracy but it makes sense to me. 

I offer it here for the smartest website on the Internet (this one Wink). Anyone care to weigh in?

http://www.oftwominds.com/blogapril11/setup-con-of-decade4-11.html

1. Treasury market now dependent on one buyer: check.

2. That buyer stops buying, pushing rates higher: no QE3. Check.

3. "Austerity" is now seen as inevitable--but not just yet: check.

Grl

I've come across Charles Hugh Smith's articles from time to time - he's never disappointed. Fascinating! I loved reading the above article. I even looked back at his article from a year ago to see what he was talking about then. I have to do some more thinking about this. Thanks for providing the food for thought!

Poet

 

Nate's picture
Nate
Status: Platinum Member (Offline)
Joined: May 6 2009
Posts: 595
Poet and grl, CHS is part of

Poet and grl,

CHS is part of my daily reading.  He always provides interesting and usually different insights to balance other writers.  One point he makes is that bankers own both political parties (Tea party folks too?) and that Bernanke will not allow hyperinflation to destroy the bankers.  John Williams (shadow stats) thinks that we have crossed the inflation tipping point and putting the Jeanie back in the bottle is no longer possible.  The number of future senerios also seems to be growing exponentially.  Thanks for the post.

Nate

.

sammy's picture
sammy
Status: Bronze Member (Offline)
Joined: Feb 23 2010
Posts: 35
 6 failed banks today.

 6 failed banks today. http://www.fdic.gov/bank/individual/failed/banklist.html

slemarie's picture
slemarie
Status: Member (Offline)
Joined: Nov 7 2010
Posts: 3
QE3

I too read the article by Hugh Smith and it does address what has been nagging at me.  Hyperinflation does ruin it for the Federal Reserve and Big money should be smart enough to know that.  I think part of the problem is the retail investor (ultimate bagholder) has refused to get into this stock market run so that Big money can off load its stocks.  With unlimited borrowing and some strategic buying of futures overnight it would seem to me that Fed/Big Money can and will manipulate this market right into a panic buying spree of the masses if they need to.  It really is the only thing that makes sense....these guys (Fed and Big money) just can't be that stupid to let this thing ride off a cliff into hyperinflation. 

 

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