Daily Digest

Daily Digest 5/22 - China Can Now Monetize U.S. Debt Directly, The Real Oil Price Culprits, All The Water On Planet Earth

Tuesday, May 22, 2012, 9:47 AM
  • Comments from Italy on "Financial Terrorism", Taxes, General Economic Condition, and Mario Monti
  • Ex-ECB Head Proposes Giving Greece the Benton Harbor, Michigan Treatment
  • China Can Now Monetize U.S. Debt Directly
  • U.S. Said to Let China Buy Direct From Treasury
  • Merkel Pressed to Share German States’ Debt Costs
  • No One Can Afford Another Round of Iran Sanctions
  • Who Are The Real Culprits Behind High Oil Prices?
  • All The Water On Planet Earth

Follow our steps to prepare for a world after peak oil, such as how to store & filter water

Economy

Comments from Italy on "Financial Terrorism", Taxes, General Economic Condition, and Mario Monti (adam)

The phenomenon is so widespread and dramatic that a few figures should help explaining it. Statistics show that owners of luxury cars, yachts or private planes declare in average very few tens of thousands Euros income per year, much less of the value of the objects they own. Clearly, this is simply mathematically impossible!

Ex-ECB Head Proposes Giving Greece the Benton Harbor, Michigan Treatment (Rich B.)

Berlin is enraged that the Greeks have voted in favor of candidates opposed to the austerity deal Berlin coerced the disgraced and fallen Greek government to sign. The austerians have decided that since democracy is the problem, imperialism is the answer. Jean-Claude Trichet, former head of the European Central Bank (ECB), and a fiercer austerian than Chancellor Merkel, has proposed a plan to cripple Greek democracy. Naturally, the business press reacted with praise. Reuters’ headline gushed: Ex-ECB head unveils bold plan to save the euro.

China Can Now Monetize US Debt Directly (pinecarr)

The Treasury, apparently dissatisfied with the speed of indirect bank and/or Fed-inspired monetization of its exponentially rising debt-load at ever-cheaper costs of funds, decided in June 2011 to allow the Chinese, with their equally large bucket of USDs to bid directly for US Treasuries. As Reuters reports, China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury's first-ever direct relationship with a foreign government. The documents, viewed by Reuters, indicate that the US Treasury has given the PBOC a direct computer link to its auction system - which was first used in the 2Y auction of June 2011.

U.S. Said to Let China Buy Direct From Treasury (jdargis)

The other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for U.S. debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions.

China, which holds $1.17 trillion in U.S. Treasuries, still buys some Treasuries through primary dealers, but since June 2011, that route hasn't been necessary.

Merkel Pressed to Share German States’ Debt Costs (jdargis)

German borrowing costs plunged as investors sought a haven from the doubts that Greece can remain in the 17-nation currency zone. The yields on German two-, five-, 10-and 30-year bonds have declined to the lowest on record. States have benefited as well, with five-year debt from North-Rhine Westphalia dropping to as low as 1.5 percent last week from more than 3 percent in 2011. The federal government pays 0.5 percent to borrow for five years.

No One Can Afford Another Round of Iran Sanctions (James S.)

Among the deals the West could put on the table, despite Israel’s objections, are a stay for the 1 July European sanctions, and a reversal of European sanctions on insurance for tankers transporting Iranian petrochemicals, which is supposed to be extended to oil in July. The Obama administration will not remove sanctions as a result of Baghdad, but it could promise an incremental relaxation in return for a commitment from Iran.

Who Are The Real Culprits Behind High Oil Prices? (David B.)

The former are typically producers or suppliers with a vested interest in securing as high a price as possible for their output. They can also be manufacturers who depend on procuring as low a price as possible for their raw materials. Both parties are interested in delivery as a function of pricing.

Speculators don’t care about delivery and, in fact, go to great lengths to avoid it.

All The Water On Planet Earth (jdargis)

How much of planet Earth is made of water? Very little, actually. Although oceans of water cover about 70 percent of Earth's surface, these oceans are shallow compared to the Earth's radius.

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."

4 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4064
oldvanman's picture
oldvanman (not verified)
All The Water On Planet Earth

That is a powerful image that really makes me value water even more than I did.

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
And don't forget.......
oldvanman wrote:

That is a powerful image that really makes me value water even more than I did.

And don't forget that something like only 1% of that blue ball is fresh water.......

Mike

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2237
China Sovereign Wealth Fund: Renminbi to be Reserve Currency

ZH has an article out:

"There Can Be Only One: China Sovereign Wealth Fund Says Renminbi Will Become Reserve Currency" @ http://www.zerohedge.com/news/there-can-be-only-one-china-sovereign-wealth-fund-says-renminbi-will-become-reserve-currency.

  • CIC'S JIN SAYS RENMINBI WILL BECOME GLOBAL RESERVE CURRENCY

     

 

ALso on, ZH, an article by 'George Washington', 'Will China Make the Yuan a Gold-Backed Currency?" @  http://www.zerohedge.com/contributed/2012-21-22/will-china-make-yuan-gold-backed-currency" Here's an excerpt:

Larry Edelson – - writes today:

 
 

I know for a fact that Beijing wants its yuan to eventually become a gold-backed currency,
much like the Swiss franc was originally. Backing the yuan with some
gold will certainly help it become a major international currency.

Edelson
is a financial adviser who travels frequently to Asia, a former
high-volume gold trader who is interviewed a lot in the mainstream 
financial media.

I have no idea whether Edelson is right or not.  But he’s not the first to make the claim.

Doug Casey saysthat if one country – such as China – switches to a gold-backed currency, the dollar will be toast:

 
 

All it will take for the world to realize that U.S.
dollars are nothing more than hot potatoes is for one country (Doug
postulated that maybe China would be first) to introduce a gold-backed
currency. If China introduced a gold-backed yuan, for example, who on
earth would want anything to do with U.S. dollars?

Interesting reading, whatever you make of it.

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