Daily Digest

Daily Digest 6/13 - Edwin Viera Interview With James Turk, Fisher Stakes Claim To IMF Job, Why Don't We Ditch Nukes And Coal?

Monday, June 13, 2011, 9:43 AM
  • 2011 Economic Woes Hark Back To 1937
  • Snakebit
  • Edwin Vieira Interview with James Turk
  • Exclusive: The Fed's $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went
  • Stanley Fischer Stakes Claim To IMF Top Job
  • Hu’s Visit To Strengthen Kazakh Ties
  • Followup: Why Don't We Ditch Nukes And Coal?
  • Physician and Epidemiologist Say 35% Spike in Infant Mortality in Northwest Cities Since Meltdown Might Be the Result of Fallout from Fukushima

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


2011 Economic Woes Hark Back To 1937 (June C.)

That year, when Americans were expecting their economy to finally pull out of the Great Depression, the stock market took another dive, with the Dow Jones industrial average dropping from the 190s in March 1937 to less than 100 in March 1938. Nonfarm private unemployment, the measure of President Franklin D. Roosevelt's industrial economy, increased to more than 18 percent. Industrial production plunged by a third.

Snakebit (Ilene)

“About $9 billion in T-bills would have been paid down on Thursday, June 9, but the CMB issuance turned that into a $6 billion cash drain on the market. That’s not a big deal, but the swing from a paydown to a drain probably contributed to the market’s general weakness. It’s becoming increasingly apparent that POMO alone, without the help of the FCBs [foreign central banks] and commercial banks, cannot do the job of keeping both stocks and Treasuries levitated. Gains in one must come at the expense of the other.”

Edwin Vieira Interview with James Turk (TomA)

James and Edwin discuss constitutional money in the USA and the authority of states to use gold and silver as legal tender, as well as legal precedent from the Supreme Court. Edwin talks about how several states are contemplating legislation to allow gold and silver as alternative currencies.

Exclusive: The Fed's $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went (TomA)

Note the $630 billion increase in foreign bank cash balances since November 3, which just so happens is the date when the Fed commenced QE2 operations in the form of adding excess reserves to the liability side of its balance sheet. Here is the change in Fed reserves during QE2 (from the Fed's H.4.1 statement, ending with the week of June 1).

Stanley Fischer Stakes Claim To IMF Top Job (pinecarr)

Fischer's decision to enter the race to succeed Dominique Strauss-Kahn as head of the International Monetary Fund was announced over the weekend

Hu’s Visit To Strengthen Kazakh Ties (pinecarr)

Sino-Kazakh bilateral trade reached $20.4 billion in 2010, 50 times the trade volume during the early years of the two countries' diplomatic relationship in the 1990s. China is going to enhance practical cooperation in the economy, trade, energy and other areas while increasing multilateral coordination and security cooperation with Kazakhstan," Hu said.

Experts said that the progress in bilateral ties has benefited both sides politically and economically.


Followup: Why Don't We Ditch Nukes And Coal? (Gordon S.)

Ah, a believer in alternative energy. You think if we build enough windmills, install enough solar panels, and distill enough ethanol from corn we'll be able to dispense with noxious energy sources such as coal and nuclear power. I admire this noble goal. One needs to ask, however, whether it's actually possible...


Physician and Epidemiologist Say 35% Spike in Infant Mortality in Northwest Cities Since Meltdown Might Be the Result of Fallout from Fukushima (GBJ)

As I’ve previously noted, infants are much more vulnerable to radiation than adults. And see this.

However, radiation safety standards are set based on the assumption that everyone exposed is a healthy man in his 20s.

Now, a physician (Janette D. Sherman, M. D.) and epidemiologist (Joseph Mangano) have penned a short but horrifying essay asking whether a spike in infant deaths in the Northwest are due to Fukushima:

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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Irish govt eyes $8.88b fund for jobs (With pension fund money)


"Xu added that China could consider diversifying its foreign exchange reserves away from U.S. dollar assets by cutting the share of reserves held in the form of currencies and bonds, while adding resources, equities and energy and metals that are of strategic importance to China.

Many Chinese analysts have called for China to invest more of its foreign exchange reserves in areas like precious metals and commodities to diversify away from U.S. dollar holdings as the U.S. currency weakens. But others, including PBOC Vice Gov. Yi Gang, who heads the State Administration of Foreign Exchange, have argued that it is difficult for China to do so without having a large impact on the prices of those commodities."

...............1A) China PBOC official: Use forex to curb inflation

"Portugal’s 10-year bond yields climbed 65 basis points to a euro-era record of 10.45 percent, the biggest weekly gain since the five days ending April 1. Greece’s 10-year yields climbed 78 basis points to 16.72 percent, while Ireland’s increased 44 basis points to 11.25 percent.

The cost of insuring against default on government debt sold by Greece, Portugal and Ireland rose to records, according to traders of credit-default swaps.

The yield difference, or spread, between 10-year German bunds and Portuguese securities of a similar maturity widened 70 basis points to 745 basis points, the most since at least 1997 when Bloomberg began collecting the data."

..............2A) Peripheral CDS at new highs as Greek worries fester

"IRELAND'S government wants to use 5 billion euros (S$8.88 billion) from the state pension fund to bankroll an employment stimulus plan, The Sunday Times newspaper reported.

Citing government sources, the newspaper said Dublin would have to get the approval of its creditors at the International Monetary Fund and the European Union before it can take funds out of the National Pension Reserve Fund (NPRF), which has already helped fund a bailout of the banking sector.

'Hopefully we can work it out with the IMF that the money will be used for the stimulus package. It is going to happen in the near future,' the newspaper quoted a government source as saying."

"Germany’s new central bank president Jens Weidmann warned debt-laden Greece that international creditors will pull out aid if it fails to pursue painful cuts to tackle its huge deficit as promised.

“Greece’s capacity for [debt] payment depends foremost on the attitude of the government and the people,” the hawkish Bundesbank chief told Welt am Sonntag daily in an interview that was published yesterday."

"Stockton PD is down 200 police sworn officers and civilian personnel. More people could be leaving. Because of budget cuts, 116 layoffs have been proposed--including 16 sworn officers. There's concern that fewer officers will be able to respond to growing street violence.

According to the FBI, Stockton ranked 10th nationwide last year when it comes to violent crime. Budget cuts and a 25 percent cut to department staff were factors according to the police department spokesman.

"We've been reduced to a reactive department," said officer Pete Smith, spokesman for Stockton Police Department. "Criminals aren't laying off or quitting committing crimes just because we're down officers.""

"Aging power transmission lines that failed under the stress of high demand left a handful of Detroit’s public buildings blacked out for more than a day, and provided a stark reminder of the rapidly deteriorating infrastructure in a city struggling to provide basic services.

Even patchwork repairs to power grids, water pipes and crumbling streets are proving too costly for cash-strapped cities like Detroit, which faces a $155 million budget deficit amid steady revenue losses."

"Outside of selling bonds and adding more long-term debt to the city, Detroit’s mayor will be hard-pressed to pay for upgrading or totally revamping the city’s electrical system. Bing also is dealing with crumbling city streets, scores of broken or malfunctioning fire hydrants and other ills while trying to cut $200 million from next year’s budget.

He’s also trying to provide police, fire and other services for 700,000 people in a city designed for more than a 1.5 million residents.

Robin Boyle, a professor in Wayne State University’s Center for Urban Planning, said Bing must first demonstrate how city lighting services can be re-engineered to more efficiently serve a much smaller population.

Then “he needs to go outside the city and find resources,” Boyle said. “Rattle his can in Washington and with the state. It’s not going to come from residents.”"

"The country is pulling out of the Great Recession, but an Associated Press review of 50 balance sheets shows state budgets ravaged by declining tax revenue and bank accounts far leaner than they were when the downturn took hold.

Many face massive liabilities for years to come. Budget and other fiscal data compiled by the AP show that across the 50 states, the $734 billion in cumulative revenue available for the coming fiscal year has dropped by about $34 billion, or 5 percent, from the 2007-08 fiscal year, when the recession began."

"A greater number of school districts might have to borrow more money this summer because of delays in state aid payments.

Because of a combination in the delays and a property tax bookkeeping shift, school districts will have up to $2 billion less in their coffers at the end of this month than they did at the same time last year.

Last year, 130 districts, or nearly 40 percent of those in Minnesota, borrowed money. Financial advisers expect to see more of them doing so now. A possible government shutdown could also affect borrowing decisions."

  • Other news, headlines and opinion: 

Fed prepares for last spurt of easy money flood

China's new bank lending shrinks to 551.6 billion yuan in May

Taxpayers face $1.7 billion bill as nuclear lab pensions soar

ECB Stance on Greece Means Higher Debt Costs for Italy, Spain: Euro Credit

Spain Regulator May Ask for Cut on Debt to Utilities, Cinco Says

Default would be dire, Greek leader says

Port of Brisbane proceeds washed away in year of natural disasters

Dubai cancelled over 200 property projects: prospectus

City faces $7.4-billion building shortfall (Calgary)

Contentious vote expected Wednesday on state budget (California)

Greeks protest for 19th day, utility union to strike

In Greece, Some See a New Lehman

Los Angeles schools budget woes hit arts programs hard

1,000 Clark County teachers wait to hear if they'll have job next year

One in three buyers of newly built London homes are Chinese

Arizona adults at risk of losing Medicaid

‘Perfect Storm’ May Threaten Global Economy: Roubini

Japan’s Machinery Orders Drop 3.3% in Sign Companies Are Paring Spending

"Meaningful probability" of a China hard landing: Roubini

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James Howard Kunstler is in

James Howard Kunstler is in peak form today.

A Distant Sound of Churning

Our own money management team here in the USA is in a box even worse than Europe's. It's not even a hall of mirrors. It's a broke-down Winnebago with moldy upholstery and the propane line is leaking inside. Everybody's wondering if Ben Bernanke is going to light a cigarette. What else can he do?

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Rich Chinese Are Set On Emigration

You don't see rich Americans applying for Chinese citizenship and pickin up to move to China. What you see instead is the opposite. As soon as they are wealthy enough, they want to leave - or at least have the ability to leave.

China's "Wealth Drain": New Signs That Rich Chinese Are Set On Emigration
"So why are wealthy Chinese so eager to leave their country? The simplest answer is that there are a lot of things in China that even the richest cannot buy... ...Issues like laws and regulations, the education system, social welfare, inheritance tax, quality of air, investing atmosphere, food safety, ability to travel, and so on. In short, these are the material factors that any State must provide to its people in order to ensure their happiness. In emerging countries such as China, these factors are still often found wanting. Emotional reasons behind rich people's immigration are generally linked to the lack of a sense of personal safety, including safety of personal wealth, as well as fear about an uncertain future."

Maybe they see the writing on the wall...


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S&P downgrades Greece on higher default risks

Thanks again to zerohedge for catching this


"Standard and Poor's slashed its credit rating for Greece on Monday by three notches to CCC, saying there is a significantly higher probability of a default in the struggling eurozone member.

"The downgrade reflects our view that there is a significantly higher likelihood of one or more defaults, as defined by our criteria relating to full and timely payment, linked to efforts by official creditors to close an emerging financing gap in Greece," said the rating agency.

It said its estimate of a 30 to 50 percent recovery upon default remained unchanged."

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Electric cars could produce higher emissions


Electric cars could produce higher emissions over their lifetimes than petrol equivalents because of the energy consumed in making their batteries, a study has found.

    An electric car owner would have to drive at least 129,000km before producing a net saving in CO2. Many electric cars will not travel that far in their lifetime because they typically have a range of less than 145km on a single charge and are unsuitable for long trips. Even those driven 160,000km would save only about a tonne of CO2 over their lifetimes.

    The British study, which is the first analysis of the full lifetime emissions of electric cars covering manufacturing, driving and disposal, undermines the case for tackling climate change by the rapid introduction of electric cars.

    The Committee on Climate Change, the UK government watchdog, has called for the number of electric cars on Britain’s roads to increase from a few hundred now to 1.7 million by 2020.

    Britain’s Department for Transport is spending $66 million over the next year giving up to 8,600 buyers of electric cars a grant of $7700 towards the purchase price. Ministers are considering extending the scheme.

    The study was commissioned by the Low Carbon Vehicle Partnership, which is jointly funded by the British government and the car industry. It found that a mid-size electric car would produce 23.1 tonnes of CO2 over its lifetime, compared with 24 tonnes for a similar petrol car. Emissions from manufacturing electric cars are at least 50 per cent higher because batteries are made from materials such as lithium, copper and refined silicon, which require much energy to be processed.

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Public fears over default on the rise


US must block IMF aid for Greece: senators

Public fears over default on the rise (44% of Americans think we'll default in the next decade)


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EVs and Emissions

One of the things to keep in mind is that there are ways of mitigating carbon emissions.  For instance,  solar hot water can save 3100 kwhr of electricity a year.  If you drive 310 times a year, that is banking 10 kwhrs per drive.  That is enough to get an EV down the road 30 to 40 miles.  Basically, your electric bill stays the same and you are not using any gasoline.  Is that mentioned in the above study?

The difference between the cost of electricity and gasoline is enough to pay for the solar hot water unit in less than 10 years.  At $4/gallon, the payback is under 4 years if you use 2 gallons to go the same distance.  What is the carbon footprint of solar hot water?

While I think we are headed to EV usage, bicycling and walking are better for us.  The carbon footprint of horses (methane) and hydrogen/fuel cells (where hydrogen is produced from electrolysis) are higher.  I'm not sure of biofuels (where biofuels are grown from cultivated crops).

After reading "The Long Descent" by Greer,  it begs the question on what methods will farmers use to get their crops to market?  Will we have to bicycle out into the countryside to get our daily bread (milk, eggs and cheese)?  What can we bring the farmer from town?

I'm hoping that the combination of solar and batteries will mitigate the Long Descent.  As we discovered Kevlar to replace steel in our tires, we will develop better PV cells and batteries.  "Well Mr. Boeing, what do you mean by "in-flight" meals?  Orville Wright did not have enough time to unwrap a sandwich."


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anonymous declares war on Ben Bernanke

and advocates public disobedience, mass withdrawals june 14

I don't really have an opinion on this, just thought it was interesting. 

Damnthematrix's picture
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it is different this time.

Legendary investor Jeremy Grantham of GMO has published a treatise on the root
cause of exploding commodity prices.

He has also offered a startlingly depressing outlook for the future of humanity.

Grantham concludes that the world has undergone a permanent "paradigm shift" in
which the number of people on planet Earth has finally and permanently
outstripped the planet's ability to support us.

Specifically, Grantham says, the phenomenon of ever-more humans using a finite
supply of natural resources cannot continue forever--and the prices of metals,
hydrocarbons (oil), and food are now beginning to reflect that.

In other words, Grantham says, it is different this time.

Grantham believes that the trend of the last 100 years, in which the prices of
almost all major commodities have steadily declined, is permanently over. And
from here on in, humans will be competing more--and paying more--for
ever-scarcer resources.

From an investment standpoint, this paradigm shift need not mean disaster:
Grantham says the obvious play is to own "the stuff in the ground" (and the
ground itself, as the huge boom in farmland prices illustrates). The less
obvious but equally compelling play is to own companies and technologies that
facilitate resource conservation.

From a societal standpoint, the news is far worse. Grantham believes that the
planet can only sustainably support about 1.5 billion humans, versus the 7
billion on Earth right now (heading to 10-12 billion). For all of history except
the last 200 years, the human population has been controlled via the limits of
the food supply. Grantham thinks that, eventually, the same force will come into
play again.

The hope of the optimists, of course, is that "science" will find a solution to
this problem, the way it has for the past 150 years. But unless the world
immediately wakes up to the severity of the problem--and makes fixing it a
global priority--Grantham doesn't see that happening.

Here's a snapshot of Grantham's argument, along with his key points at the end.

Read more:

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Oil and the Global Economy
Oil and the Global Economy
Last week the oil markets were dominated by the OPEC meeting in Vienna which failed to reach agreement on production levels; that Saudi Arabia allegedly is to raise its production to 10 million b/d; and new data showing growing weakness in the US economy. Oil prices fell early in the week touching a low of $98 a barrel. After OPEC failed to reach agreement, NY oil rebounded to over $102 and then fell to close out the week at $99 after a report that Riyadh was unilaterally increasing production.
The failure of the OPEC meeting to reach an agreement for the first time in at least 20 years came as a shock to the oil markets. As many OPEC members are already very close to full production, it was easy for Iran and Venezuela to form a coalition to block the Saudi call for a 1.5 million b/d increase. Most OPEC members have little concern for the state of the global economy and want to see still higher oil prices to offset falling production. The Saudis, who are facing unprecedented problems brought on by the uprisings across the region which in the long run could threaten the stability of their regime, still see their best interests lie in an alliance with the West which desperately needs to hold oil prices in check through higher production in the immediate future.
Following the OPEC meeting, the IEA issued a statement saying that a prompt increase in supply was necessary to meet rising seasonal demand at time when the global economy was fragile and output disruptions were ongoing in Libya and Yemen. OPEC itself issued a statement warning of a supply gap coming the second half of this year, but tempered the warning by noting recent reports of economic weakness in the US and sovereign debt problems in the EU.
Interestingly, the story of the Saudi production increase was not taken as seriously in London on Friday where Brent crude fell only 79 cents, as compared to $2.64 in NY, to close at $118.78. These moves increased the gap between NY and London oil to $18.49 a barrel, a new record for the spread. The increasing size of the gap, which is usually below $1, and the fact that stocks at Cushing,OK have dropped to the lowest level since February are raising concerns the NY futures market is broken and no longer reflects the true value of oil.
The EIA reported that US crude inventories fell by 4.8 million barrels the week before last. Whether this is the beginning of a trend towards tighter global supplies or simply an anomaly in tanker schedules remains to be seen. This news was offset by falling demand for gasoline in the US with MasterCard reporting demand down by 3.9 percent. Gasoline futures in NY continue to hover around $3 a gallon. The average US retail price for gasoline is now $3.70 according to the AAA.
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F.B.I. Agents Get Leeway to Push Privacy Bounds


Some of the most notable changes apply to the lowest category of investigations, called an “assessment.” The category, created in December 2008, allows agents to look into people and organizations “proactively” and without firm evidence for suspecting criminal or terrorist activity.

Under current rules, agents must open such an inquiry before they can search for information about a person in a commercial or law enforcement database. Under the new rules, agents will be allowed to search such databases without making a record about their decision.

Mr. German said the change would make it harder to detect and deter inappropriate use of databases for personal purposes. But Ms. Caproni said it was too cumbersome to require agents to open formal inquiries before running quick checks. She also said agents could not put information uncovered from such searches into F.B.I. files unless they later opened an assessment.

The need for evidence is too cumbersome. *sigh*


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