Daily Digest

Daily Digest 4/17 - U.S. Chastised On Budget Gap, The Cure For High Prices, Japan, Oil, and the Fragility of Globalization

Sunday, April 17, 2011, 9:02 AM
  • World Finance Chiefs Chastise U.S. On Budget Gap
  • Mauldin: The Cure for High Prices
  • Yuan Exchange Rate To Be More Flexible: China's Central Bank Governor
  • Goldman Sachs Execs: Going To Jail, After All?
  • Oops: JP Morgan Liability on Alabama?
  • Did The World’s Largest Futures Exchange Enable $200 Oil?
  • China Grids To Connect 90 Mln Kilowatts Of Wind Power By 2015
  • Japan, Oil and the Fragility of Globalization
  • Chemicals Were Injected Into Wells, Report Says
  • Estimating the End of Global Petroleum Exports
  • Emails Expose BP's Attempts To Control Research Into Impact Of Gulf Oil Spill

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Economy

World Finance Chiefs Chastise U.S. On Budget Gap (E.S.)

Finance ministers in Washington for semi-annual talks took sharper aim than in previous years at the United States' $14 trillion debt. While most of the criticism came from emerging market economies, some advanced nations joined the chorus.

Mauldin: The Cure for High Prices (JRB)

Today we once again think about the inflation/deflation debate, turn our eyes to Europe and the very interesting election happening there this Sunday, and speculate a little about what could derail the US economy.

Yuan Exchange Rate To Be More Flexible: China's Central Bank Governor (pinecarr)

China will make the yuan's exchange rate more flexible, but in a "step-by-step" manner, China's central bank governor Zhou Xiaochuan said here on Friday. Zhou, governor of the People' s Bank of China (PBOC), made the remarks when discussing issues related to the Group of 20 (G20) countries at the ongoing Boao Forum for Asia.

Zhou said that he welcomes the international discussions on the inclusion of the renminbi, or yuan, in the basket of currencies that forms the Special Drawing Rights (SDR), a monetary unit of international reserve assets maintained by the International Monetary Fund.

Goldman Sachs Execs: Going To Jail, After All? (pinecarr)

Goldman Sachs manipulated financial markets, profited from the housing crisis, and misled its clients and Congress, according to a 635-page report released Wednesday by a Senate subcommittee. Sen. Carl Levin (D-Mich.), the chairman of the Senate Permanent Subcommittee on Investigations, says some of the findings of the panel's two-year investigation will be referred to the Justice Department for possible criminal or civil action. He calls the investment bank a "financial snake pit rife with greed, conflicts of interest, and wrongdoing."

Oops: JP Morgan Liability on Alabama? (pinecarr)

We have a few judges that are starting to "get it", and as these cases slowly get to them they are holding - repeatedly - that these events of the last decade were not "accidents", were not "bad bets" that were simply a gamble that didn't pay off and similar nonsense.

They are instead finding that there's a cause of action that deserves to be heard (as in this case) or even better, that fraud upon the court did in fact occur…

Energy

Did The World’s Largest Futures Exchange Enable $200 Oil? (pinecarr)

Is this a nothing-to-see-here moment? What is known, however, is that the world’s largest futures exchange has made it possible for any entity to enter into Euro-denominated oil trades. If these contracts get traction and grow, there may be a significant effect upon the USD/Euro relationship. USD 200/bbl oil is in the cards and a petrocurrency change may be a reason cited should the oil market achieve that round number.

China Grids To Connect 90 Mln Kilowatts Of Wind Power By 2015 (pinecarr)

The market for wind power consumption is found primarily in northern China, eastern China and central China, while wind power farm projects are largely located in northern China, northeastern China and northwestern China, making it necessary to boost grid infrastructure construction, according to the white paper.

Japan, Oil and the Fragility of Globalization (Debu)

Improbable events not only make the world go around but expose what is rotten. And I suspect the Great Sendai Earthquake will go down in the annals of human history as just one of a series of unfortunate events that helped to illuminate the world's downward energy spiral.

Or as the Japanese writer Kenzaburo Oe wisely put it: "Japanese history has entered a new phase."

Chemicals Were Injected Into Wells, Report Says (jdargis)

The chemicals were used by companies during a drilling process known as hydraulic fracturing, or hydrofracking, which involves the high-pressure injection of a mixture of water, sand and chemical additives into rock formations deep underground. The process, which is being used to tap into large reserves of natural gas around the country, opens fissures in the rock to stimulate the release of oil and gas.

Estimating the End of Global Petroleum Exports (Crash_Watcher)

In a previous series, I performed an export land model analysis for the USA which considered the petroleum export trends of the top ten exporting countries to the USA. I estimated this to amount to about 57% of the total world supply of exportable oil (as discussed in part 3 of the series).

In the present series, I have expanded my analysis to consider petroleum production and consumption trends for the entire world to quantify the regional global pool of exports and to predict how this will change over time.

Environment

Emails Expose BP's Attempts To Control Research Into Impact Of Gulf Oil Spill (pinecarr)

Documents obtained under the Freedom of Information Act show BP officials discussing how to influence the work of scientists.

Article suggestions for the Daily Digest can be sent to [email protected]com. 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."

5 Comments

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
They Now Acknowledge The

Why We Are Totally Finished

by Davos Sherman Okst ~ FinancialSense.com

 In A Nutshell: Corporatocracy Has Replaced Capitalism

Capitalism Fixes Problems & Preserves Democracy: Capitalism is what we should be relying on to fix our problems. Capitalism has it’s own ecosystem, just like biology’s ecosystem. An economic ecosystem that weeds out the weak, has parasites that eat the failures and new bacteria that evolves and grows replacements for that which failed. A system that keeps everything in balance.

The problem is we are no longer a capitalistic society. What we were taught in school is now utter and absolute nonsense. Capitalism is a thing of the past.

As outlined in “It’s Not A Financial Crisis – It’s A Stupidity Crisis”, we created two back to back bubbles. The air out of the Tech Bubble was sucked up for fuel by our next stupidity crisis: The Housing Bubble.

Now, after the second Stupidity Crisis there isn’t a third bubble to inflate. If we still lived in a capitalistic environment the banks and financial institutions that created loans for folks who should have remained renters and then sold those loans as investments to pensions and countries would have been cleansed by capitalism’s ecosystem.

But that isn’t what happened.

In a very anti-capitalistic move the government decided that stupidity and criminal activity should be rewarded. I’d say they took our money, but it is worse, we didn’t have that much money. So they borrowed the money in our name. The loan has a variable rate. They borrowed so much money that our kids cosigned the loan. In fact, our kid’s future kid’s signed on the dotted line.

That is unequivocally immoral.

b

They gave that borrowed money to a bunch of morons as a reward for stupidity. Morons who created subprime loans, liar loans, no income no documentation loans and other fraudulent instruments. Morons bundled that trash, got it rated AAA and then sold these turds or weapons of mass destruction that they had the audacity to name complex financial instruments or derivatives to pension funds, countries and other “investors”.

Then it all blew up.

Big surprise.

For blowing up the world’s economy this Stupidity Crisis was falsely named an Economic Crisis by CNBC and 535 morons on a hill in DC (Ron Paul and a few other fiscally responsible adults excluded). The idiots who created the mess were rewarded with a 700 billion dollar “bailout”. This “bailout” was anything but a bailout and had a price tag of anything but 700 billion. The actual price tag is closer to 11 trillion and puts us on the hook for another 13-17 trillion – not counting interest.

1

Think about that for a second. This stupidity crisis is the equivalent of our Federal Debt which took a generations of politicians over a hundred years to wrack-up.

For anyone who still believes we live in a free country where capitalism reigns please show me one economic textbook which states that failure, and fraud get rewarded with borrowed taxpayer money. For anyone who believes we live in a democracy please show me a textbook that says the government will en-debt you and your kids and their kids to pay for a failed business. How is that democratic?

“Law of Morons”: Years ago, while serving on a committee I came to a sad realization. Like gravity, there is the another invisible force which I dubbed “The Law of Morons”. Put a group of very intelligent, well meaning people in a room together, put them on a committee or some governmental body that is devoid of guiding principles or merit-based decision making and “The Law of Morons” will prevail. The collective IQ will drop to the smallest shoe size in the room. And hope for loafers, because collectively this body won’t be able to tie anything together – not even a single shoelace.

Government Creates Problems: Basically our government is comprised of many well meaning intelligent people who for whatever reason, re-election, greed the “Law of Morons”, corporate puppet strings (read: lobbyist), self interest, corporatocracy or whatever else, do nothing but create massive problems. Lack of regulation, too much regulation.

And without any uncertainty — too much DEBT along with a deficit that will NEVER be paid.

They have failed us.

Terribly!

With debt and a failed capitalistic society our democracy is now at risk. Serious risk.

A democratic society requires a stable and effectively functioning economy. I trust that we and our successors at the Federal Reserve will be important contributors to that end.~ Alan Greenspan

Serious irony there unless he was talking about the end of a democratic society. Greenspan was primarily responsible for muzzling Brooksley Born’s attempt to regulate derivatives. 

Our deficit requires that we counterfeit “money” to service our debt payments.

Forget about GDP, it is a bogus measure cooked by the BEA (US Bureau of Economic Analysis) . GDP is so baked that it makes the folks who cooked Enron’s books look like saints. Let’s focus on what we take in and what we pay out. We take in about 2 trillion in taxes and other revenues. We borrow about 2 trillion of which about 1 trillion must be taken off for debt service, and we spend well over 4 trillion.

To deal with the 1.6 trillion ++ shortfall we just print/counterfeit it. This debases the value of every dollar we hold, stealing wealth from every hard working American. It causes the need for more dollars to be injected into the system, which increases the amount of taxes that Americans pay……MORE HERE

Ruhh's picture
Ruhh
Status: Gold Member (Offline)
Joined: Nov 12 2008
Posts: 259
Canadian Military Report

Energy security and environmental change could radically alter society: military report
http://www.ottawacitizen.com/technology/Energy+security+environmental+ch...

KINGSTON, Ont. — The planet is running out of oil and heading toward a future that could trap Canada in a violent spiral of decline in the economy and the environment, a special research unit within the Canadian military is predicting.

This "global quagmire" is one of four possible future scenarios advanced by the six members of the team who are developing a plan for the army of tomorrow based on existing scientific research and analysis.

In a best-case scenario, they predict that Canada could be at the forefront of a prosperous green economy, in which clean energy and environmental protection are priorities and living standards improve around the world.

Two other scenarios fall in between, but all four alternatives conclude that energy security and global environmental change are the most serious and unpredictable factors that could radically alter society as well as the role of Canada's army.

"It all depends on what kind of steps are taken today that could lead to various futures," Peter Gizewski, a strategic analyst on the team, told Postmedia News.

Members of the team said that climate change in particular could have a wide range of consequences, as well as oil shortages in a world with no alternative sources of energy.

"I don't think anybody would claim that we're all doomed in the sense that we're all going to face the same level," said Gizewski. "But there are parts of the world in some areas where armed conflict could occur that are particularly vulnerable to these things."

The team has also noted that the world is now consuming oil faster than it's being discovered.

"Globally, we find more (oil) all the time, but we haven't actually found as much as we've used in a given year since 1985," said Maj. John Sheahan, another member of the research team.

"From the long (term) view, it's guaranteed that something else will take over (as an energy source), we just don't know what or when. . . . Nobody has yet come up with the solution (so) that we can (continue to) do the things we do now and have done for decades. So it is possible that the time line is against us."

Sheahan noted that the price of a full tank of gasoline, even at $100, is a bargain when compared to estimates in some research that it would be equivalent to about 25,000 people each doing one hour of work.

The global quagmire scenario predicts a world ravaged by climate change and environmental degradation in which "markets are highly unstable" and there are high risks of widespread conflicts involving ownership and access to oil, water, food and other resources.

"Indeed, the danger of resource wars, both between and within states is acute," said a technical paper produced by the group in December. "Much of the violence occurs in the developing world, as dictators, organized crime groups and revolutionary movements fight for control of increasingly desperate societies. Yet developed countries are by no means immune from strife."

:

"As environmental conditions worsen, elements of society lash out against the ongoing exploitation of the Earth's resources and the irreparable damage it causes. Often, action turns violent with acts of terrorism directed against select government officials and corporations becoming ever-more salient."

In the best-case scenario, the team predicts that Canada could take a leadership role in the alternative energy and environmental fields after a series of technology sharing agreements with emerging economies and active support of developing sound international regimes and practices.

Other drivers of change analyzed by the team were: the impact of age and demographics on military composition; exponential technology growth; human/social response to technology; expansion of operating environments; globalization; conflicting/shifting identities; shifting power balance; resource security; distribution of wealth and weapons proliferation.

But members of the team said that energy security and environmental change are factors with the highest potential impacts and the greatest uncertainty.

The findings are similar to recent studies by oil giant Royal Dutch Shell as well as research from other countries such as the United Kingdom that warn excessive energy use can be an "Achilles heel."

:

"There is growing recognition that we need to factor this into our thinking," said Rear Admiral Neil Morisetti, the U.K.'s climate and energy security envoy from the Ministry of Defence and Foreign and Commonwealth Office.

"We need to try and treat it like any other threat we face. We need to understand more about it and how it's going to impact our national interests, how we can act to reduce the risks and the threats. We're not going to have 100 per cent certainty, but then we're not going to have 100 per cent certainty on the battlefield."

:

The Canadian research team, led by Lt.-Col. Michael Rostek from the Directorate of Land Concepts and Designs in the Canadian Forces, has finished a draft of a more complete document — Army 2040: A First Look — that is now under review.

"It's in the hands of the senior army staff as we speak, waiting to move it forward to publication," said Rostek, the concepts team leader at the directorate. "We figured it's the right time to publish it now and get it on the streets so that we could actually not only get some discussion, but also to provide a framework for our next step ahead."

[email protected]

pinecarr's picture
pinecarr
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Joined: Apr 13 2008
Posts: 2237
Good find, Ruhh!

Good find, Ruhh!

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4066
S&P cuts U.S. ratings outlook to negative

"Standard & Poor's cut its ratings outlook on the U.S. to negative from stable while keeping its Triple-A rating on the world's largest economy. "More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," said Standard & Poor's credit analyst Nikola G. Swann."

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