Daily Digest

Daily Digest 6/12 - It's The Debt, Dummy, AZ Wildfires Threaten Grid, The End Of Cheap Goods?

Sunday, June 12, 2011, 9:55 AM
  • Policy Fatigue
  • Karl Denninger's To Do List
  • It's The Debt, Dummy
  • America's Bail-Out Maths
  • Colleges Now Offering Education In Disaster
  • The End Of Cheap Goods?
  • Why We Should Care About Yemen
  • OPEC Meeting: Drill Will
  • Arizona Wildfire Threatens Electrical Grid
  • Small U.S. Farms Find Profit In Tourism

Crash Course DVDThe deluxe DVD features a helpful presenter’s pack and live segments by Chris (NTSC or PAL)

Economy

Policy Fatigue (jdargis)

Economic history seems to be repeating itself, in part. A promising recovery is again sputtering as job growth, which averaged 220,000 from February through April, slumped to 54,000 in May. The unemployment rate rose to 9.1%, the second monthly increase in a row (see chart). The economy grew at just a 1.8% annual rate in the first quarter and probably only a little faster in the second. Though not a double dip that barely qualifies as a recovery.

Karl Denninger's To Do List (June C.)

If you think that Bernanke, Obama and the rest have “fixed” the economy or the banking system, stop reading now and check into the nearest mental institution for evaluation. I’m quite serious about this; given what we now know about securitized mortgages, debt in Greece and elsewhere along with 12% of GDP being literally borrowed up and spent by the government to cover up what should have been a Depression you are badly addicted to Hopium and your head has not seen daylight in two years.

It's The Debt, Dummy (JimQ)

In order for this economy to become balanced again would require consumer debt to be reduced by $3 to $4 trillion and the savings rate to double from 5% to 10%. This will never happen voluntarily. Americans are still delusional. They are actually increasing their debt as credit card debt sits at $790 billion, student loan debt at $1 trillion, auto loans at $600 billion, and mortgage debt at $13.8 trillion. The debt will not decline until an economic Depression wipes out banks and consumers alike. America will go down with a bang, not a whimper.

America's Bail-Out Maths (jdargis)

When Congress held its nose in 2008 and approved the Troubled Assets Relief Programme (TARP) to spend up to $700 billion to alleviate panic, the White House reckoned it might end up losing half of that amount. In the end $411 billion was ploughed into financial firms, carmakers and schemes to reduce foreclosures and restart private lending. As of June 7th $308 billion of that had been paid back. The Treasury values the remainder at $130 billion but could quite plausibly garner more. In that case it will turn a cash profit on TARP, although the picture would be worse if the Treasury’s subsidised lending rates are also counted as a cost.

Colleges Now Offering Education In Disaster (jdargis)

“This generation has never known a time without terrorism or disaster, and I think it has drawn many of them to this field,” said Karla Vermeulen, deputy director of the Institute for Disaster Mental Health, which was founded in 2004 at SUNY New Paltz. “They were 10 at the time of 9/11 and 14 during Katrina, and it’s really shaped them.”

    Crash Course DVDThe deluxe DVD features a helpful presenter’s pack and live segments by Chris (NTSC or PAL)

The End Of Cheap Goods? (jdargis)

Nothing can replace the Chinese miracle. “There is no next,” says Mr Rockowitz. Prices will now start to rise by 5% or more each year, with no end in sight. And that may be optimistic. So far this year, Mr Rockowitz says, Li & Fung’s sourcing operation has seen price increases of 15% on average. Other sourcers of Asian toys, clothes and basic household products tell similarly ominous tales.

Why We Should Care About Yemen (jdargis)

Yemen's oil potential has turned out (so far) to be less exciting than was once thought, but its strategic location still matters. To the north and west, it has a long porous border with Saudi Arabia, which is very concerned that instability in Yemen -- and the growing al Qaeda presence there -- could spill over. Saudi Arabia has begun a multibillion-dollar project to make its 1,100-mile border with Yemen more secure, including fences and barbed wire in areas most vulnerable.

Energy

OPEC Meeting: Drill Will (jdargis)

Rather than reading from an official communiqué, OPEC’s secretary-general, Abdalla el-Badri, admitted that after a “thorough debate” on the oil markets the group had been “unable to reach a consensus” between those countries wanting a production increase and those happy to do nothing. Hardly fighting talk but an unusual admission that not all was sweetness and light. The news that OPEC production quotas would not budge immediately sent oil prices upward.

Rumours circulated that Saudi Arabia had walked out. The lack of agreement counts as a defeat for the kingdom, which had wanted to signal that more oil would be available to a market where a barrel of Brent crude now fetches $118 compared with an average of $80 in 2010.

Environment

Arizona Wildfire Threatens Electrical Grid (jdargis)

Despite the improved conditions, the fire continued to burn dangerously close to several mountain towns that have been evacuated in recent days and also threatened electrical transmission lines that, if severed, could affect electricity to hundreds of thousands of customers in the region.

Small U.S. Farms Find Profit In Tourism (jdargis)

“The whole idea is to get the farm in a productive state so that it carries itself, so that it pays its own way,” Mr. Maguire said early on a recent morning as he watched sheep file onto the raised stainless steel platform of an automatic milking machine. “The farm stay is an important economic portion of that.”

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5 Comments

RogerA's picture
RogerA
Status: Silver Member (Offline)
Joined: Jun 18 2009
Posts: 106
Germany

http://www.e24.se/makro/varlden/merkel-morkar-tyska-trubblet_2853531.e24

This is copy/paste and google translated from the link above.

 

 

There are always the winners who write history. When the smoke from the burnt-out wrecks of state finances as Greece and Ireland are spreading across Europe, it is easy to forget how it all began. There was a time when almost all EU countries felt it was important to follow the rule book. Even the section of the budget deficit must not exceed 3 percent of GDP was taken seriously. One of the most vocal proponents of strict budgetary discipline was Germany. At least until the country itself began to break the rule in the early 2000s. Today, respect for this fiscal traffic light was zero. Last year, only Finland and Luxembourg of the Euro countries that stayed on the right side of the law. Today the roles are reversed to say the least. Angela Merkel has become the euro neighborhood pawnshop lady there luspanka neighbors turning to mortgage future generations in exchange for new emergency liquidity assistance. In return for saving countries such as Greece, Ireland and Portugal, Germany has insisted that they must learn to household economy, ABC, for example, expenditure must not be greater than revenue. Among others, Angela Merkel has proposed that the EU introduces a new system with a kind of "debt brake" to prevent wasteful countries to borrow more money even in a pinch. The model is the system that Germany itself has set its own state government and to eliminate all deficits by 2020. The problem is that it does not appear to work even at home. The other week, overshadowed by the debate surrounding Greece's potential bankruptcy, the news came that Germany has decided to launch an economic point guard of four states that despite the tough new rules continue to show deficits. The measure is unique because the Länder, or federal states as the units in Germany, has a high degree of autonomy. When it comes to collecting taxes, they certainly are tied by federal regulations. However, it has been freedom to borrow money. They have also done on a massive scale over the past decade. Several of the German states are as large borrowers as some European countries. The most populous, North Rhine-Westphalia with 18 million inhabitants, has an equally large outstanding debt to Portugal and Ireland. Several are also severely indebted. Little Bremen with barely 700,000 inhabitants has a debt per citizen at 27 000 euros, on a par with Greece. We often talk of the poor finances of the largest U.S. state of California. But where the corresponding debt only 5 percent of national GDP. Almost all German states is several times higher. In Berlin, the figure is 65 percent. The poor regions is dependent on a steady stream of money from his wealthy and more well-behaved state neighbors, exactly the kind of contribution Union that German politicians are trying to fight in Europe. At the local level, in Germany's municipalities, the situation is in some places even worse. Europe's richest country can hold hundreds of mini-Greece, said recently the British magazine The Economist. All this has contributed to the debt for all of Germany surged to a record level of 80 per cent of GDP. It is certainly lower than in many other countries in Europe, but the problems pile up with a population that is aging. If the cost of future pensions and medical care included are Germany's real national debt 250 percent of GDP, some economists argue. Although the Germans learn words sooner or later be forced to prepare themselves for tougher times, although it right now looks brighter than ever with a German export industry that turns sales records to sell records. Even more troubling to Angela Merkel is the German banks. Here too the provinces play a key role, since they own more of the very shaky most financial houses that were saved from bankruptcy in the financial crisis. Nordea chairman Wahlroos has gone so far that he called the German banking system insolvent and the worst in Europe. The German think tank DIW German banks have assets at a staggering 7600 billion, three times Germany's GDP, but only a paltry 350 billion in equity. Even more nervous, it will be to discover that these banks lent a total of 230 billion to corporate and government borrowers in crisis countries, Greece, Ireland, Portugal and Spain. Then still enormous assets removed from the banks and put in state-controlled sopupplag of stinky problem loans, where the German taxpayers may bear the losses. Every time it warned of a new banking crisis in Europe, Angela Merkel is every reason to start squirming and flat with her eyes. Perhaps that is why she is the last week seems to have swung and is ready to once again send a new round of money to Greece, without requiring that the banks are sitting on the Greek government should be forced to swallow the losses. The longer the grim poker party on the future of the euro going on, the clearer it becomes that the losers are many and the winners get. Even the richest player sits with half shabby cows

 

12trees's picture
12trees
Status: Member (Offline)
Joined: Sep 29 2009
Posts: 5
sums it all up nicely!

Even the richest player sits with half shabby cows

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
More flights cancelled in 'exceptional' ash event

More flights cancelled in 'exceptional' ash event

http://www.abc.net.au/news/stories/2011/06/12/3241974.htm?section=justin

A volcanic ash plume from Chile which has made its way across the Atlantic and Indian oceans is wreaking havoc on Australian airways, forcing a number of carriers to cancel all services.

Thousands of travellers have been left stranded in Australia and New Zealand, with hundreds of domestic and international flights in and out of Australia cancelled.

Tiger Airways and Virgin Australia are the latest airlines to suspend services until further notice. Tiger has suspended all Australian services and Virgin has grounded flights in and out of Melbourne.

Qantas and Jetstar expect about 16,000 passengers will be affected with their cancellation of all flights in and out of Melbourne and Tasmania, flights between Sydney and the Gold Coast and Australia and New Zealand.

Passengers at Hobart Airport have told the ABC they may have to wait several days for another flight.

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4066
U.S. banks prepare to lower use of Treasuries: report

"A number of Wall Street's biggest banks are preparing to lower their use of U.S. Treasuries in August, the Financial Times reported on Sunday.

The decision comes as a precaution against any turbulence that could follow if conflicting Republicans and Democrats fail to increase soon the U.S. debt ceiling, the newspaper said, citing a senior bank chief.

The report did not provide names of specific banks that would be cutting their use of U.S. Treasuries.

One alternative strategy that bank executives disclosed to the FT is to have more cash on hand to put up as collateral against derivatives and other transactions, decreasing the financial system's reliance on Treasuries."

ECB tries to squash 'fruitless' EU plans for Greece

Trichet’s ‘Cold War’ With Germany Risks Damage That May Force Compromise

 

tomwil's picture
tomwil
Status: Member (Offline)
Joined: Aug 31 2008
Posts: 13
Volcano Ash Cloud in Buenos Aires
Damnthematrix wrote:

More flights cancelled in 'exceptional' ash event

http://www.abc.net.au/news/stories/2011/06/12/3241974.htm?section=justin

A volcanic ash plume from Chile which has made its way across the Atlantic and Indian oceans is wreaking havoc on Australian airways, forcing a number of carriers to cancel all services.

Thousands of travellers have been left stranded in Australia and New Zealand, with hundreds of domestic and international flights in and out of Australia cancelled.

Tiger Airways and Virgin Australia are the latest airlines to suspend services until further notice. Tiger has suspended all Australian services and Virgin has grounded flights in and out of Melbourne.

Qantas and Jetstar expect about 16,000 passengers will be affected with their cancellation of all flights in and out of Melbourne and Tasmania, flights between Sydney and the Gold Coast and Australia and New Zealand.

Passengers at Hobart Airport have told the ABC they may have to wait several days for another flight.

Volcano Ash Cloud in Buenos Aires

Here’s the photo of the volcano ash cloud

http://www.themodernsurvivalist.com/?p=1371

--TW

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