Daily Digest

Daily Digest 4/6 - Portugal Banks Urge Bailout, Auto Dealers Expect Shortage From Japan, Corn Futures Match All-Time High

Wednesday, April 6, 2011, 10:44 AM
  • Portugal Banks Threaten To Shun Debt, Urge Bailout
  • Geithner: Raise Debt Ceiling or Risk Another Financial Crisis
  • Georgia Teen Unemployment Hits 37%
  • Ford boosts prices $117 per vehicle as materials costs rise
  • Hard Disk Drives May Get More Expensive
  • Largest U.S. Dealer Expects Japanese Auto Shortage
  • Excerpt on policy from March FOMC minutes
  • IMF denies rumours that Greece about to default
  • Hawaii Hotels May Struggle to Repay Debt as Japanese Travel Dips
  • 37,000 in NC face sudden loss of jobless benefits
  • U.S. Corn Futures Match All-Time High On Supply Concerns
  • Retail Staple Food Prices Rise in First Quarter

Crash Course DVDThe Crash Course DVD: in-depth analysis on peak oil, debt, demographics, only $24.99 in our store (NTSC or PAL)

Economy

Portugal Banks Threaten To Shun Debt, Urge Bailout

"The banks defend a bridge loan because they have practically no more margin of maneuver to buy Portuguese sovereign debt," one of the three sources said. "The banks are close to their limits of exposure to Portuguese debt, whose risk is deteriorating."

A bond-buying strike by Portugal's major domestic buyers could shut it out of financing from the markets, pushing it to seek a bailout like Greece and Ireland.

Geithner: Raise Debt Ceiling or Risk Another Financial Crisis

“Default by the United States would precipitate a crisis worse than the one we just went through. I think it would make the crisis we went through look modest in comparison. It would force us of course to cut critical payments to our seniors and it would be a reckless, irresponsible act to this country. I find it inconceivable that the Congress would not act to increase the limit.”

The Treasury boss then said that if lawmakers do not raise the debt ceiling, it could cause a number of “inconceivable” consequences, such as a dramatic rise in unemployment.

Georgia Teen Unemployment Hits 37%

Nationally, the teen unemployment rate rose slightly to 24.5 percent in March, EPI reported, and the rate for black teens rose to 42.1 percent.

“The statistics are devastating -- Nationally, nearly one in four teens is looking for work without success,” said Michael Saltsman, research fellow at EPI, in a statement.

Ford boosts prices $117 per vehicle as materials costs rise

Ford Motor Co., the second-largest U.S. automaker, raised prices by $117, or 0.4 percent, per vehicle because of higher costs for raw materials such as steel. The increase isn't related to supply disruptions from the March 11 Japanese earthquake and tsunami, said Todd Nissen, a company spokesman.

"This was in the works for months," Nissen said in an interview. "We're responding to higher commodity prices, and this is in keeping with what we're seeing from our competitors."

Hard Disk Drives May Get More Expensive

Shortages of controllers and other components have already impacted pricing of mainboards and will thus boost costs of other similar devices, such as graphics cards. In addition to that, contract prices of hard disk drives (HDDs) are also likely to get higher because of the same reasons.

The recent earthquake in Japan interrupted production of controller chips for motors used in hard drives at Texas Instruments' plants and the latter may not resume shipments until September, according to sources of DigiTimes web-site. As a result, manufacturers like Seagate Technologies or Western Digital will have to rely on controllers from STMicroelectronics, which will boost pricing due to lack of competition.

    Crash Course DVDThe Crash Course DVD: in-depth analysis on peak oil, debt, demographics, only $24.99 in our store (NTSC or PAL)

Largest U.S. Dealer Expects Japanese Auto Shortage

Cars made by Japanese manufacturers will be in short supply at showrooms this spring and summer because of last month's earthquake and tsunami, the head of the largest U.S. dealership chain said Monday.

AutoNation Inc. CEO Mike Jackson expects disruptions at factories to limit the availability of vehicles from Japanese automakers. He based his prediction on information from the automakers, he said.

The company has 243 new vehicle dealership franchises in 15 states. More than half of its new vehicle sales last year came from cars and trucks made by Japanese manufacturers. About two thirds of those vehicles were assembled in North America

Excerpt on policy from March FOMC minutes

Although the unemployment rate had declined in recent months, it remained elevated relative to levels that the Committee judged to be consistent, over the longer run, with its statutory mandate to foster maximum employment and price stability. Similarly, measures of underlying inflation continued to be somewhat low relative to levels seen as consistent with the dual mandate over the longer run. With longer-term inflation expectations remaining stable and measures of underlying inflation subdued, members anticipated that recent increases in the prices of energy and other commodities would result in only a transitory increase in headline inflation.

IMF denies rumours that Greece about to default

European Union and International Monetary Fund (IMF) officials arrived in Athens yesterday as rumours swirled around the markets the IMF now favours a "restructuring" of Greece's crippling national debt - in effect a default. The IMF has denied this. Tensions are also high because a widely expected rate rise by the European Central Bank (ECB) this Thursday, from 1 per cent to 1.25 per cent, seems set to add to the troubles of all the peripheral eurozone economies by increasing the cost of servicing their debts and by depressing economic growth further.

Hawaii Hotels May Struggle to Repay Debt as Japanese Travel Dips

A decline in tourists from Japan after the earthquake and tsunami last month may reduce cash flow at Hawaii’s hotels, making it costlier for owners to refinance debt coming due this year and next. The disaster may have set back a recovery by the islands’ hotels “by one to two years,” Mary MacNeill, a managing director at Fitch Ratings in New York, said in a telephone interview. Talks to restructure an $848 million commercial mortgage-backed security that includes the Sheraton Waikiki, the largest Hawaii hotel loan tracked by Fitch, have been “sidelined,” she said.

37,000 in NC face sudden loss of jobless benefits

Roughly 37,000 North Carolinians will lose their unemployment benefits this month, an outcome that at least eight other states have managed to avoid by changing the calculations used to determine when the money can be paid out. North Carolina lawmakers, though, so far haven't shown interest in revising the formula, which some advocates say risks adding to the misery of an already stagnant job market by cutting off tens of thousands of the long-term unemployed from their benefits.

Environment

U.S. Corn Futures Match All-Time High On Supply Concerns

Since last summer, corn futures have more than doubled on strong export demand, record U.S. ethanol output and steady buying by domestic livestock producers. Farmers have struggled to keep pace, even though the U.S. crop last year was the third largest on record. "It appears that consumption is progressing at a rate that cannot be sustained by available supplies," said Darrel Good, an agricultural economist at the University of Illinois. The record prices are rippling through the agriculture sector, from fueling record U.S. cattle prices to increasing demand for fertilizer as farmers look to plant more acres this spring.

Retail Staple Food Prices Rise in First Quarter

Retail food prices at the supermarket increased during the first quarter of 2011, according to the latest American Farm Bureau Federation Marketbasket Survey. The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $49.07, up $2.10 or about 4 percent compared to the fourth quarter of 2010. Of the 16 items surveyed, 13 increased, two decreased and one remained the same in average price compared to the prior quarter. The total average price for the 16 items was up $3.53 (about 8 percent) compared to one year ago.

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6 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4147
Portugal sees "irreparable damage" in debt cost

"The Cleveland Metropolitan School Board voted 6-2 Tuesday evening to close seven schools, and layoff 702 Cleveland Teachers Union employees, including 643 classroom teachers in the district."

"The board said cost-cutting measures were necessary in trimming down the school district's projected $74 million deficit over the 2011-2012 and 2012-2013 school years."

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goes211's picture
goes211
Status: Diamond Member (Offline)
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Posts: 1114
Timothy Geithner "Inconceivable"

Who knew that Timothy Geithner was Sicilian?   I also guess that Afghanistan quaifies as a land war in Asia!

nickbert's picture
nickbert
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1208
Re: "inconceivable"
goes211 wrote:

Who knew that Timothy Geithner was Sicilian?   I also guess that Afghanistan quaifies as a land war in Asia!

.... but only slightly less well-known is this: "Never go against a Banker when Money is on the line!"

Laughing

- Nickbert

irongamer's picture
irongamer
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Joined: Sep 2 2009
Posts: 22
goes211 wrote: Who knew that
goes211 wrote:

Who knew that Timothy Geithner was Sicilian?   I also guess that Afghanistan quaifies as a land war in Asia!

Hah, classic. Well played goes211.

Damnthematrix's picture
Damnthematrix
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Joined: Aug 10 2008
Posts: 3998
What Japan's disaster tells us about peak oil

http://www.guardian.co.uk/environment/2011/apr/04/japan-disaster-peak-oil

What Japan's disaster tells us about peak oil

Life for survivors after the Japanese earthquake and tsunami gives a clue to what a peak oil world would look like

Brendan Barrett for OurWorld 2.0 guardian.co.uk,
Monday 4 April 2011 11.03 BST

For large parts of eastern Japan that were not directly hit by the tsunami on 11 March 2011, including the nation's capital, the current state of affairs feels very much like a dry-run for peak oil. This is not to belittle the tragic loss of life and the dire situation facing many survivors left without homes and livelihoods. Rather, the aim here is to reflect upon the post-disaster events and compare them with those normally associated with the worst-case scenarios for peak oil.

The earthquake and tsunami affected six of the 28 oil refineries in Japan and immediately petrol rationing was introduced with a maximum of 20 litres per car (in some instances as low as 5 litres). On 14 March, the government
allowed the oil industry to release 3 days' worth of oil from stockpiles and on 22 March an additional 22 days' worth of oil was released.

The Tokyo Electric Power Company (TEPCO), which serves a population of 44.5 million, lost one quarter of its supply capacity as a result of the quake, through the closedown of its two Fukushima nuclear power plants (Dai-ichi and Dai-ni), as well as eight fossil fuel based thermal power stations. Subsequently, from 14 March 2011 onwards, TEPCO was forced to implement a series of scheduled outages across the Kanto region (the prefectures of Gunma, Tochigi, Ibaraki, Saitama, Tokyo, Chiba, and Kanagawa).

While the thermal power stations may restart operations soon, the overall shortfall will become even more difficult to manage over the summer period when air conditioning is utilized. The reality is that these power cuts could continue for years, especially since the one of the two Fukushima nuclear plants has effectively become a pile of radioactive scrap.

Related to this, when the Tokyo Metropolitican Government began to announce levels of radioactive contamination of drinking water above permissible levels, this was immediately followed by the rapid sell-out of bottled water, even after the levels dropped again. When bottled water is on sale in local convenience stores after some restocking took place, each customer is only allowed to purchase one 2 litre bottle.

Immediately after the quake, supermarkets outside the disaster area in Tokyo and other major cities began to sell out of foodstuffs, including various instant meals. The electrical appliance stores sold out of batteries, flashlights and portable radios.  <MORE>

Nick and Maggie's picture
Nick and Maggie
Status: Member (Offline)
Joined: Mar 20 2008
Posts: 9
Vicinni said it best

"Never try to match wits with a banker when DEBT is on the line"

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