Daily Digest

Daily Digest 6/10 - China Surpasses U.S. As Largest Energy Consumer, The UN Power Grab, The Bernanke Chronicles

Friday, June 10, 2011, 9:41 AM
  • Much Ado About OPEC: Russia Is The True Wildcard, And Just Got Even More Powerful
  • China Surpasses U.S. As Largest Energy Consumer; World Has 46.2 Year Of Proved Oil Reserves; Crude Has Lots Of Upside In Real Terms
  • Home Invasion: Country vs. City after the Economic Collapse
  • China's SAFE Warns Excessive Dollar Holdings Risky, Promptly Retracts Statement
  • Merk Commentary: Bernanke - It's Complicated!
  • QE2 - The Bernanke Chronicles
  • Rogers: Only a Crisis Can Fix U.S. Debt Problem
  • Will Our Economy Trigger Violence In U.S.?
  • The Rise Of The Second-String Psychopaths
  • Mike Kieiger On The UN Power Grab
  • Analysis: Risks Too Great For Full Japan Nuclear Shutdown
  • New Battery Design Could Give Electric Vehicles A Jolt 
  • Power Outages at Japan's Fukushima Plant, Cooling Continues

Learn how to protect your wealth against the Three E forces using our 'What Should I Do?' guide


Much Ado About OPEC: Russia Is The True Wildcard, And Just Got Even More Powerful (pinecarr)

Today the world is transfixed with the dissolution of OPEC courtesy of yet another polarizing response to the most recent set of US MENA policies, with Saudi siding with the US (it has no choice in this: recent violent developments in the MENA region means Saudi Arabia is now even firmer attech to Uncle Sam's armed sleeve), yet the truth is that this is a completely non-event from a pure crude supply/demand perspective. Why? Because the real marginal supplier, in light of OPEC's secular decline in output, has been Russia for a long time.

China Surpasses US As Largest Energy Consumer; World Has 46.2 Year Of Proved Oil Reserves; Crude Has Lots Of Upside In Real Terms (pinecarr)

In its just released must read Statistical Review of World Energy, BP has many critical observations, the key of which, while not a surprise to most, is that as of 2010, the US is no longer the world's biggest consumer of energy. The new leader, with a 20.3% share of global energy consumption: China. Keep in mind that the Chinese economy is still (in whatever centrally planned terms it discloses) not even half the size of the US, thus one can only imagine how far this number will rise should China ultimately succeed in its goal of converting from an export-led to a consumer-led society. And here we have a market worried about a few million bpd in quota courtesy of the now defunct OPEC. From the report: "World primary energy consumption – which this year includes for the first time a time series for commercial renewable energy – grew by 5.6% in 2010, the largest increase (in percentage terms) since 1973.

Home Invasion: Country vs. City after the Economic Collapse (pinecarr)

This is one of those recurrent topics and I receive email asking about this very often. Where will I fare better? What’s the safest place to be in as everything goes down?

China's SAFE Warns Excessive Dollar Holdings Risky, Promptly Retracts Statement (pinecarr, via Stu)

While Official Washington grapples with how slowly to draw down troops in Afghanistan – and debates whether to complete the pullout from Iraq by year’s end – a new alliance of Asian states is expanding into the vacuum left by America’s decaying empire. By mid-June, the Shanghai Cooperation Organization may represent more than half the world’s people, Nicolas J S Davies writes.

Merk Commentary: Bernanke - It's Complicated! (Joe P.)

For practical purposes, we believe we should expect more easy money; Dimon is correct that headwinds caused by upcoming regulations, as well as those already introduced since the onset of the financial crisis, are enormous. To keep the economy moving ahead nonetheless, more money may need to be printed than even the Fed expects.

QE2 - The Bernanke Chronicles (JimQ)

His argument was that simple supply and demand has accounted for all of the price increases that have spread revolution across the world. His argument centered around growth in emerging markets that have driven demand for oil and commodities higher, resulting in higher prices. As usual, a dollop of truth is overwhelmed by the Big Lie.

Rogers: Only a Crisis Can Fix U.S. Debt Problem (Phil H.)

In an interview with WSJ's Simon Constable, famed investor Jim Rogers weighs in on what it will take to solve the U.S. debt crisis, why he's shorting U.S. tech companies, why the stimulus package was a bad idea, and the looming energy crisis.

Will Our Economy Trigger Violence In U.S.? (June C.)

The Rise Of The Second-String Psychopaths (June C.)

The United States corporate and government spheres have become, Vonnegut suggested, a perfect habitat for psychopaths.

Mike Kieiger On The UN Power Grab (June C.)

The main reason I write these pieces is because over the past eleven years of my life I have time and time again realized that I have a talent for foreseeing the big macro trends. All along the way I have also noticed that most people continue to always think I am exaggerating no matter how many right predictions I have made in the past. Normalcy bias is a powerful force. For the last few years I have focused on getting people financially ready because a broke population is vulnerable to lies and demagoguery and such societies tend to fall victim to authoritarian dictatorships. Gold, silver and other assets have been and continue to be absolutely crucial to making it through the times ahead. That said, at this point there are even greater threats I see on the horizon.

Analysis: Risks Too Great For Full Japan Nuclear Shutdown (guardia)

Unless Tokyo overrides resistance from local officials, orders reactor restarts and faces down public disapproval, by April next year Japan's last plant would shut for maintenance and leave the country with no nuclear power.

New Battery Design Could Give Electric Vehicles A Jolt (jkibbe)

The new battery relies on an innovative architecture called a semi-solid flow cell, in which solid particles are suspended in a carrier liquid and pumped through the system. In this design, the battery’s active components — the positive and negative electrodes, or cathodes and anodes — are composed of particles suspended in a liquid electrolyte. These two different suspensions are pumped through systems separated by a filter, such as a thin porous membrane.

Power Outages at Japan's Fukushima Plant, Cooling Continues

The company is also considering dumping low-level radioactive water into the sea from another nearby plant slightly damaged by the March disasters.

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."


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China ratings house says US defaulting: report

"A Chinese ratings house has accused the United States of defaulting on its massive debt, state media said Friday, a day after Beijing urged Washington to put its fiscal house in order.

"In our opinion, the United States has already been defaulting," Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.

Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies -- eroding the wealth of creditors including China, Guan said."

"The balance sheet -- a broad gauge of Fed lending to the financial system -- swelled to $2.795 trillion in the week ended June 8 from $2.772 trillion the prior week."

...............2A) Fed became second-largest Treasury investor in Q1

"The Federal Reserve overtook household investors as the second-largest holder of Treasuries in the first quarter, after foreigners, as the U.S. central bank purchased bonds as part of its second round of quantitative easing, Fed data released on Thursday showed.

The Fed's $600 billion bond purchase program has displaced a number of traditional Treasury buyers as the central bank sought to stimulate the economy and drive investment into alternative asset classes."

"As state labor unions continue to negotiate with Gov. Andrew Cuomo's administration on expired contracts, the governor is moving forward on plans to lay off 9,800 workers beginning July 15.

Cuomo promised months ago to trim the workforce if he couldn't get $450 million in concessions from the workforce. None of the contracts have been settled, but union leaders claimed Thursday that the governor is negotiating in bad faith by moving forward with layoffs."

"Portugal’s 10-year bond yield rose to a record, leading a surge in the borrowing costs of Europe’s most indebted nations, as policy makers clashed over a solution to the region’s funding crisis.

German debt rose as consumer-price inflation eased in May and equities declined, boosting demand for safety. Greek, Irish and Spanish benchmark bonds slumped after German Finance Minister Wolfgang Schaeuble stepped up his calls for bondholders to assume a “fair” share of further Greek aid, pitting him against the European Central Bank, whose President Jean-Claude Trichet yesterday rejected any direct participation in a second bailout to the debt-stricken nation."

...................4A) Greece, Portugal, Ireland Credit-Default Swaps Rise to Records

"OPEC followed this week's failure to reach an output deal with a forecast world oil supplies would begin to fall short later this year, draining inventories just when demand is expected to hit a seasonal peak.

In its monthly report published Friday, OPEC said world demand for its oil would average 30.7 million barrels per day (bpd) in the second half of the year, much higher than the 28.97 million bpd the 12-member group produced in May.

The figures suggest the world will be undersupplied by 1.73 million bpd -- enough to meet demand in an economy the size of France -- if the Organization of the Petroleum Exporting Countries does not increase supplies."

....................5A) Head of Saudi Electric Company Says "Oil Runs Out in 2030 if Current Consumption Maintained" (Mish)

"German ratings agency Feri EuroRating Wednesday said it downgraded its credit rating on the U.S. to double-A from triple-A, citing the "continuing deterioration of the creditworthiness of the country due to high public debt, inadequate fiscal measures, and weaker growth prospects."

The ratings firm said U.S. deficits "are not a sustainable fiscal policy," and said it would reconsider the rating if the government "creates a long-term sustainable budget." The ratings firm, which claims about 1,000 clients worldwide, is small compared with industry peers and focuses on Germany, France and the U.K. "

  • Other news, headlines and opinion:

Fitch: "Crunch Time" To Resolve Greek Situation

Moody's: Greek Default Would Raise Default Risk For Ireland, Portugal

Moody's Warns on Portuguese Banks

Mounting US debt 'threatens' Saudi investment: Experts

Fed: US Lost $7 Trillion In Household Wealth

Retirements Fuel NJ Pension Deficit (Video)

Anglo Irish may sell $10 billion US portfolio: report

US may inflate its way out of debt, says Schroders expert

Shiller Says U.S. Home-Price Declines of 10% to 25% 'Wouldn't Surprise Me'

Harrisburg parents sound off over proposed school closings

Inflation in India May Quicken as Government Raises Crop Prices to Record

High US unemployment forecast to persist for years

Deadline for Sacramento budget 5 days away

Greek Debt Crisis Causing Company Bond Sales to Be Pulled as Spreads Widen

Import Prices in U.S. Unexpectedly Increase on Automobile, Clothing Costs ("Costs advanced 12.5 percent from May 2010")

Japan’s Producer Prices Rise for Eighth Month on Climbing Commodity Costs

Crop Weather Mayhem Delays U.S. Corn, Rice Planting as Prices Extend Gains

Analysis: Civil war fears grow in Syria

Fitch: Greek Default 'Could Tip' Fragile Bank Funding Market

Germany in standoff with ECB over Greek aid

rhare's picture
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Another Confirmation of Peak Oil

EDIT - Sorry missed the 5A item in Sax's daily posting.... This was a duplicate of it found at Zerohedge.

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Getting by Without the Middle Class

Getting by Without the Middle Class

NEW YORK — The big mystery in the United States today is why the job crisis is not at the center of the political and economic debate. After all, the numbers — and the human tragedies they reflect — could not be bleaker.

Nearly 14 million Americans — 9.1 percent of the working population — are unemployed. That’s just a couple of a million shy of the populations of Greece and Ireland, Europe’s two problem children, combined. Another 8.5 million would like to work full time, but can only find part-time jobs. A further 2.2 million have been so discouraged by the grim labor market that they have given up looking for jobs altogether.

It is hard to blame them — those still actively looking for work have been unemployed for an average of 39.7 weeks. These are cruel numbers, and they depict an unemployment crisis that is deeper and more sustained than at any time since 1948, when records first started to be kept.

Yet the debate in Washington is focused on deficit reduction, rather than job creation. The news media are following the same playbook. A recent database analysis by The National Journal found that over the past two years, the leading newspapers in the United States had dramatically shifted their attention from unemployment to the deficit and were now publishing more than three times as many stories about the budget as they were about jobs.

Politicians and pundits on the left have begun warning that this relative indifference to joblessness is worse than a crime, it is a mistake. In a blog post this month, Robert Reich, the former labor secretary, said that “the economic burdens of America’s vast middle class may be catching up with the Street.” Unless more jobs are created soon, he warned, “American consumers will not have enough purchasing power to buy what the private sector can produce.”

But the reality may be even more chilling: Perhaps U.S. business is learning to get by just fine, thank you, without middle-class U.S. consumers. And while that may be good news for chief executives and shareholders, it could be the beginning of a new and socially wrenching political logic that leaves the great American middle behind.


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Link posted by Stu at ZH

I meant to include this link in the Daily Digest (DD) entry attrinbuted to Stu above, entitled China's SAFE Warns Excessive Dollar Holdings Risky, Promptly Retracts Statement.  That ZH article contains a comment by Stu, dated 06/09/2011 - 00:51, which contained a link to this other article: http://consortiumnews.com/2011/06/07/asian-alliance-supplants-us-empire/ (whew!).  That's where the excerpt came from in the DD posting.  Sorry for any confusion.

Thanks for the link, Stu!


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World Has 46.2 Year Of Proved Oil Reserves

Not to worry--climate disruption will have us long gone before we run out of oil.

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p-c gardener wrote: Not to
p-c gardener wrote:

Not to worry--climate disruption will have us long gone before we run out of oil.

this weeks highs: http://mapcenter.hamweather.com/records/7day/us.html?c=maxtemp,highmin

(takes a few seconds to load)

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Mike Kieiger On The UN Power Grab -- Beware

Mike Kieger makes an impassioned plea for all of us to join in "acts of resistance" against the big banking institutions and the wealthiest 0.01% of our population.  While I couldn't agree more that the big banks are at the center of the financial problems we face as a nation (and a globe), I caution readers against supporting movements simply because they appear on the surface to align with their view of justice. 

Any movement that uses class warfare as a central theme is a movement that would have us trade one tyrant for another.  As citizens of a nation where we still have a vote, we must pay close attention to proposed solutions...not just grievances.  There are far too many who would have us subordinate personal liberty to a sense of security.  If we do so, we will have neither.

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46 years of low NET energy oil-- but don't tell our shareholders

China Surpasses US As Largest Energy Consumer; World Has 46.2 Year Of Proved Oil Reserves; Crude Has Lots Of Upside In Real Terms (pinecarr)

this article should not be taken at face value.  BP has many reasons to put out bad data.

This article addressed in the energy bullentin already


pinecarr's picture
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Good point, rbeck99
rbeck99 wrote:

China Surpasses US As Largest Energy Consumer; World Has 46.2 Year Of Proved Oil Reserves; Crude Has Lots Of Upside In Real Terms (pinecarr)

this article should not be taken at face value.  BP has many reasons to put out bad data.

This article addressed in the energy bullentin already


Good point, rbeck99.  I am afraid I got fixated on the 1st part of the headline and story. "China Surpasses US As Largest Energy Consumer..." to the point of missing the gorilla in the 2nd half.  Glad you found an appropriate counter to the 2nd part of the headline and article in the energybulletin.net.

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jobs vs debt reduction

Some now realize that it is more important to protect the 85% that are fully employed than to throw more money at the 15% who are underemployed.  If the 85% shrinks further, the crisis will deepen, and the debt must be serviced by the 85% going forward.

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Wendy S. Delmater
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experts are surprised

The linked Bloomberg article starts, "Prices of goods imported into the U.S. unexpectedly rose in May." Unexpectedly? Unexpectedly?!?

How could import prices NOT rise? It should be obvious that debasing our currency by printing money and the increase in transportation costs brought about by that and Peak Oil can have no other outcome. .

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