Daily Digest

Daily Digest 5/21 - Independent JP Morgan Investigation Needed, A Phone-Controlled Bicycle, Euro Policy Action Becoming Critical

Monday, May 21, 2012, 9:48 AM
  • China Will Speed Up Approvals for Qualified Foreign Investors
  • Global Markets Weekahead: Euro Zone Policy Action Becoming Critical
  • Cracks are appearing in Europe's state-backed lenders
  • The Need For An Independent Investigation Into JP Morgan Chase
  • Baby Boomers Confound Experts With Their Housing Choices
  • Ultra-Efficient Green Diesel to be Produced from Natural Oils and Animal Fats
  • Audi Develops 50 Mph, Smartphone-Controlled Bicycle
  • Illinois Department of Agriculture secretly destroys beekeeper's bees and 15 years of research proving Monsanto's Roundup kills bees

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Economy

China Will Speed Up Approvals for Qualified Foreign Investors (pinecarr)

China will work to speed up approvals of qualified foreign institutional investors looking to buy into its domestic securities, as part of reforms aimed at adding depth to the country’s capital markets.

Global Markets Weekahead: Euro Zone Policy Action Becoming Critical (pinecarr)

The now familiar European cycle of crisis followed by political action, temporary respite, then another crisis enters that crucial second stage next week when leaders of the 27-member European Union seek solutions in Brussels.

Cracks are appearing in Europe's state-backed lenders (pinecarr)

Financiers are becoming increasingly concerned that many taxpayer-backed borrowers are losing their ability to access private funding markets. The development raises the prospect of already heavily indebted eurozone national governments being forced to take on hundreds of billions of euros of additional debts.

“Cracks are appearing in the funding markets for these institutions. If you don’t like the sovereign risk, why would you take the risk of buying the debt of the institutions they support,” said one credit banker.

The Need For An Independent Investigation Into JP Morgan Chase (Thomas C.)

Hopefully, too-big-to-fail is not forever. The Federal Deposit Insurance Corporation is working on a mechanism that could conceivably allow that agency to handle the “failure” of a bank-holding company while protecting the creditors of operating subsidiaries – limiting the potential contagion effect.

Baby Boomers Confound Experts With Their Housing Choices (Thomas C.)

One problem is that you cannot pigeonhole any age group. Too many “experts” seem to have made too many assumptions about boomers. Anecdotal evidence now suggests that boomers are delaying moving until the real estate market improves, and that many are changing their houses to remain longer than planned.

There are people who want to move to something smaller. There also are those who have no plans to move.

Energy

Ultra-Efficient Green Diesel to be Produced from Natural Oils and Animal Fats (James S.)

The technology which was jointly developed by UOP and Eni SpA can create a biofuel which has far higher performance levels than other biofuels or petroleum-based diesels. It has a cetane value (A measure of the combustion quality; the higher the value, the more efficient the combustion.) of 80 compared with the normal 40-60 of petroleum diesel.

Audi Develops 50 Mph, Smartphone-Controlled Bicycle (pinecarr)

Audi, the German automaker, has developed a bicycle concept that uses an electric motor to assist its rider in pedaling up to 50 Mph. Named the Wörthersee, the bike is made with carbon fiber and can be locked and disabled via an app on a smartphone. The concept has not yet been put into production. Video courtesy of Audi. (Source: Bloomberg)

Environment

Government tyranny: Illinois Department of Agriculture secretly destroys beekeeper's bees and 15 years of research proving Monsanto's Roundup kills bees (Wendy D.)

Not only did Kivikko, as well as her colleague Eleanor Balson and superior Steven D. Chard, break the law by trespassing Ingram's property on numerous occasions without a warrant, but they also committed numerous crimes by stealing his hives and equipment and destroying pertinent evidence before a hearing, which Ingram believes may have ultimately been rooted in a deliberate conspiracy by the state to hide the truth about Roundup, and subsequently steal his most vibrant bees.

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15 Comments

saxplayer00o1's picture
saxplayer00o1
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Poet's picture
Poet
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How The Poor Are Made To Pay For Their Poverty

It's not just thieves and busineses. It's also American government. Reported in a British paper, of course...

How The Poor Are Made To Pay For Their Poverty (May 18, 2012)
"The poster case for government persecution of the down-and-out would have to be Edwina Nowlin, a homeless Michigan woman who was jailed in 2009 for failing to pay $104 a month to cover the room-and-board charges for her 16-year-old son's incarceration. When she received a back paycheck, she thought it would allow her to pay for her son's jail stay. Instead, it was confiscated and applied to the cost of her own incarceration."
http://www.guardian.co.uk/commentisfree/cifamerica/2012/may/18/how-poor-made-pay-for-poverty

Having worked in my younger years in retail, in housekeeping in the hospitality industry, and in farm fields, I found Barbara Ehrenreich's book, Nickel and Dimed, to be quite accurate. However, I was not at all impressed Bait and Switch: The (Futile) Pursuit of the American Dream.

Poet

 

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Bill Hicks
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Peak Fish

billhicksisdead.blogspot.com/2012/05/peak-fish.html 

Pretty grim:

Between 1950 and 2006, the WWF report notes, the world’s annual fishing haul more than quadrupled, from 19 million tons to 87 million tons. New technology — from deep-sea trawling to long-lining — has helped the fishing industry harvest areas that were once inaccessible. But the growth of intensive fishing also means that larger and larger swaths of the ocean are in danger of being depleted.
 
Daniel Pauly, a professor of fisheries at the University of British Columbia, has dubbed this situation “The End of Fish.” He points out that in the past 50 years, the populations of many large commercial fish such as bluefin tuna and cod have utterly collapsed, in some cases shrinking more than 90 percent (see the chart to the right).

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saxplayer00o1
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Spain says Bankia needs more capital

"Spain's economy minister said Monday that the nationalized Bankia needs to strengthen its capital defenses by as much as €7.5 billion ($9.56 billion), but downplayed the need for bailout from European funds.

THE DETAILS: The minister, Luis de Guindos, said Bankia needed billions more to meet the Spanish government's new requirements to guard its banking industry against further economic shocks. If Bankia cannot raise the money itself, it will have to tap the state bank rescue fund. Bankia and others have until June 11 to tell the government how they plan to come up with the money."

"The head of Greece's far left Syriza party said Monday there can be no negotiations based on the latest memorandum for a Greek bailout because following those terms would lead to disaster and an exit from the euro zone.

Alexis Tsipras, the leader of the Coalition of the Radical Left, or Syriza, was speaking at a press conference at the French national assembly alongside France's far left leader Jean-Luc Melenchon, who took around 11% of the first round vote in recent French presidential elections.

Syriza, who came second in Greece's May general elections, is refusing to continue with the austerity terms of the country's international bailout, but demands Greece should continue accepting aid."

 

"Bundesbank President Jens Weidmann has warned Europe's central banks not to increase their exposure to Greece because of the high level of political uncertainty there ahead of next month's elections. "

"JPMorgan Chase & Co. may face even bigger losses on faulty bets in credit markets if Europe's debt crisis worsens, according to one of the hedge funds that took the other side of the trades."

 

 

 

 

saxplayer00o1's picture
saxplayer00o1
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Cash pulled from financial funds (Financial Times)

Cash pulled from financial funds. If that link doesn't work try getting it fromhere.

 

"Equity investors redeemed more cash from mutual and exchange traded funds that invest in banks last week than at any point since the height of the financial crisis, according to data from EPFR Global. "

angle's picture
angle
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Audi Develops 50 Mph, Smartphone-Controlled Bicycle

 I am tempted to post a long and scathing critique of the Audi bicycle. Instead, I will condense my thoughts into one line:

The Audi concept bike appears to have been designed by people who have never used a bicycle for utilitarian purposes.

ao's picture
ao
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the purpose of a concept vehicle
angle wrote:

 I am tempted to post a long and scathing critique of the Audi bicycle. Instead, I will condense my thoughts into one line:

The Audi concept bike appears to have been designed by people who have never used a bicycle for utilitarian purposes.

Concept vehicles (cars or bikes) are just that ... a means to present a new concept.  There are not designed for practical everyday use.  They're designed to show off technology, design, style, etc.  The practicality (i.e. utilitarian) aspect would come about if and when the machine ever entered production ... which it may not.

By the way, I just drove a rental 2012 Audi A4 Avant TDI 6 speed in Germany.  I was very impressed with the vehicle.   It was a great car for our purposes.  Good acceleration, good torque for hill climbing, good luggage capacity (unlike the BMW 3 series diesel that they were going to give us first), great fuel mileage (well into the 40 mpg range with steady autobahn cruising at 75-80 mph and one short blast to just under 120 mph with four passengers and luggage), very comfortable seats, and good handling and high speed stability.  And none of the problems typically associated with diesels ... e.g. it started easily in freezing temps up in the mountains, ran quietly, and had none of the typical stinky diesel exhaust smell.  Unfortunately, a lot of the European diesel cars aren't available here.  Too bad.

 

  

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saxplayer00o1
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Record California school districts in "financial jeopardy"

"A record 188 school districts in California are in "financial jeopardy," the office of the state's top schools official said on Monday, just a week after Governor Jerry Brown warned of the potential for deep cuts in education spending.

Another 61 local education agencies have been added since February by the state superintendent of public instruction's office to its list of districts with either negative or qualified certifications. Local education agencies include school districts, county offices of education and joint powers agencies."

Poet's picture
Poet
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Maybe...

I wonder... Maybe if they stopped providing $8,500 of free education per year to each "undocumented" child, or "anchor" child of "undocumented workers", then there might be enough funding for the education of children who are citizens and legal residents.

Poet

saxplayer00o1 wrote:

"A record 188 school districts in California are in "financial jeopardy," the office of the state's top schools official said on Monday, just a week after Governor Jerry Brown warned of the potential for deep cuts in education spending.

Another 61 local education agencies have been added since February by the state superintendent of public instruction's office to its list of districts with either negative or qualified certifications. Local education agencies include school districts, county offices of education and joint powers agencies."

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rheba
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Electric Bicycle

Please do go ahead and write it. I have spent the last ten years getting my recumbent bikes and a trike retrofitted with electric assist motors. They are pretty good now and would be better if batteries were not so tricky. I am getting old and I expect that I will still be mobile when they take away my car. But in order to pedal properly a bike must be light. And, if it is light you don't want it to go 50 mph. It is a shame there isn't more discussion of how to use chains and gears to do work.

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woomera
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Audi Bike could only go about 15-20 km MAX

G'Day, 

I had the fastest legal bike in Australia.  I put customized Lithium battery packs on it.  Over $1000,00 worth of lithium batteries.  The most I could get was 50km.  It was real cool, until I had a spill on it.  I broke my arm and after it healed,  I tried to charge up the bike.  I had damaged a litium cell and nearly burnt down the house.

I called the manufacturer in Sydney.  He said his whole shop burnt down, making it the biggest fire in Sydney...(that year?).  The batteries literally melted the the entire building, including all of the push-bikes.  They were literally pools of melted steel.  The Fire Department doused the fire with water, didn't they.  Like adding fuel to the fire.

Something like a Moped that I saw in China is the go.  They run on lead acid and are utilitarian.  Audi is kool, but the world needs something that can go 60km/hr for 50-100km and has quick removeable lead acid batteries.

Look to China.  If it works there, it will work anywhere.

Regards,

Woomera

saxplayer00o1's picture
saxplayer00o1
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Double trouble at JP Morgan: trader's losses could exceed $7bn

Double trouble at JP Morgan: trader's losses could exceed $7bn

Damnthematrix's picture
Damnthematrix
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Real Estate Crash in China Underway
 

Real Estate Crash in China Underway

 

Inquiring minds are reading an excellent report China Real Estate Unravels by Patrick Chovanec, a professor at Tsinghua University's School of Economics and Management in Beijing, China.

The report confirms many of the things I said would happen in regards to the Chinese real estate bubble and GDP.

Here are a few items of note.

Developers, burdened by 70% leverage ratios and loans threatening to come due, rushed to complete projects already in their pipeline, to put those units onto the market and raise cash.

That rush to complete inflated real estate investments, allegedly up 23.5% in the first quarter. Other statistics from the report tell the real story.

  • Year-on-year sales in Q1, for all real estate, was down 14.6%.
  • Residential property sales were down 17.5%
  • Office sales were down -10.2%
  • Sales in January-February were a disaster, falling 20.9% overall, compared to the first two months of 2011, -24.7% for residential.
  • Total amount of floor space “for sale” was up 35.5%, compared to the same date last year
  • Floor space of residential units “for sale” grew 47.4%.
  • At the end of 2011, total floor space “under construction” was roughly 4.6 times the floor space sold
  • A year and a half worth of excess inventory is hidden somewhere in the pipeline
  • New starts in April fell 14.6% year-on-year and 27.0% month-on-month, for property as a whole
  • Housing starts fell -14.4% year-on-year and -23.4% month-on-month
  • Office starts fell -21.0% year-on-year in April, and -45.1% compared to March
  • Retail property starts fell -18.7% year-on-year, and -36.8% compared to March
  • Land sale revenues in April (RMB 27 billion) were down -54.7% compared to April last year
  • Foreign funding for property development was down -91.4% in March and -80.8% in April, compared to the same months last year.

Clearly a crash is underway. The above stats also show the soft-landing thesis is written on toilet paper.

GDP Analysis

I like the analysis by Chovanec on GDP implications and the highly-overrated "soft landing" theory.

The “resilient” growth in real estate investment that seemed to promise a “soft landing” is not very resilient at all. It’s more like the last gasp of a market that’s running out of steam. Once the surge in completions plays out, the declining number of new starts will become the pipeline, and growth in property investment will flatten or go negative.

Property investment accounts for roughly a quarter of gross Fixed Asset Investment (FAI), and net FAI accounts for over half of China’s GDP growth. As Inoted in January, in a back-of-the-envelope thought exercise, if property investment plateaus (growth falls to zero), it could shave as much as 2.6 percentage points off of real GDP growth. If it fell 10% (in real, not nominal terms) it could bring GDP growth down to 5.3%.

At the time I first saw this dynamic in the data, when the Q1 numbers came out, I figured it would take several months to begin playing out. But the April numbers suggest it is already happening.

Chovanec notes if real estate investment drops by 10%, GDP will come in at 5.3%. What if real estate investment falls by 20% or 25%? Moreover, why shouldn't it?

Nails in the Hard Landing Coffin?

One of the sillier stories making the rounds earlier last month was China currency move nails hard landing risk coffin

I responded at the time with ...

The longer China puts off rebalancing its economy, the bigger the crash later on. Moreover, widening the band on its currency is a needed part of that rebalancing, and does not preclude in any way a huge slowdown in growth.

The structural imbalances in China are large and for now, still growing. However, huge cracks have appeared in real estate, and changes are coming up with a regime change. Finally, peak oil alone makes many of the growth estimates we have seen for China outright impossible.

The real estate crash has arrived. The GDP crash will follow. For details, please see 12 Predictions by Michael Pettis on China; Non-Food Commodity Prices Will Collapse Over Next Three to Four Years; Nails in the Hard Landing Coffin?

Source: Global Economic Analysis

angle's picture
angle
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The diesel Audi that you

 

ao wrote:
angle wrote:

 I am tempted to post a long and scathing critique of the Audi bicycle. Instead, I will condense my thoughts into one line:

The Audi concept bike appears to have been designed by people who have never used a bicycle for utilitarian purposes.

Concept vehicles (cars or bikes) are just that ... a means to present a new concept.  There are not designed for practical everyday use.  They're designed to show off technology, design, style, etc.  The practicality (i.e. utilitarian) aspect would come about if and when the machine ever entered production ... which it may not.

By the way, I just drove a rental 2012 Audi A4 Avant TDI 6 speed in Germany.  I was very impressed with the vehicle.   It was a great car for our purposes.  Good acceleration, good torque for hill climbing, good luggage capacity (unlike the BMW 3 series diesel that they were going to give us first), great fuel mileage (well into the 40 mpg range with steady autobahn cruising at 75-80 mph and one short blast to just under 120 mph with four passengers and luggage), very comfortable seats, and good handling and high speed stability.  And none of the problems typically associated with diesels ... e.g. it started easily in freezing temps up in the mountains, ran quietly, and had none of the typical stinky diesel exhaust smell.  Unfortunately, a lot of the European diesel cars aren't available here.  Too bad.

 

  

 

The diesel Audi that you drove seems to be a good example of a functional object with a well-defined design goal (one that suited your needs perfectly). A Formula One racing car has a very different design goal to fulfill a very different need, as does a John Deere tractor.

Imagine a concept car that attempted to combine the functions of all of these vehicles. That's what the Audi bicycle concept is.

I would argue that the utilitarian aspect of a functional object is not a feature that can be added on as an afterthought. Even in a concept car, if there's no overarching design goal that is guided by its intended real-world use or the needs of the people who will use it, then it's a bad design.

The Audi concept bicycle, though, is an exceptionally bad design. You can't just hammer a host of current whiz-bang technology into the shape of a bicycle and call it a day. It is critical to have a design focus with a bicycle, because it is a very minimal machine, where weight is the paramount concern. What Audi did is take elements from different kinds of bicycles (mountain bike, commuter bike, BMX bike, Trials bike) and mash them together, resulting in a bike that can't do anything well. I could detail each and every problematic component of the bike, and where they are at cross-purposes, but I'll suffice by summing up this way:

Audi's design decisions weren't guided by understanding or caring what cyclists actually need now, or by making a prediction about what people will need from a bike in the future. They didn't even make a decision about what kind of bike they were making. It's a very bad design.

I would also add that, in my opinion, it's not even particularly stylish.

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rheba
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Electric Bicycle

What a scary story. No wonder bike shops don't want to work on electric bikes. The SLA batteries are pretty limited in range. I have a 36 volt system on my nomad. I can go about 6 miles max if the terrain is mostly uphill.

I would like to upgrade to Lithium Iron Phosphate but they cost too much.

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