Daily Digest

Daily Digest 6/3 - A Way Through The Debt Mess, The Wacky World Of Gold, Mass. Begins Tornado Cleanup

Friday, June 3, 2011, 9:45 AM
  • A Way Through The Debt Mess
  • Awesome Wrongness
  • The Wacky World Of Gold
  • Can We Make Another Billion Today?
  • No Worse Than Expected
  • Is QE2 A Savior, Inflator, Or A Dud?
  • German Energy: Nuclear? Nein, Danke
  • Massachusetts Begins Cleanup After Tornadoes

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A Way Through The Debt Mess (jdargis)

Mr. Obama is not the first president to confront the Cerberus of debt limits, taxes and spending cuts. Indeed, Lyndon B. Johnson’s struggle in 1967 and 1968 to raise the debt ceiling, ward off draconian spending cuts and raise taxes offers important lessons for Mr. Obama.

Awesome Wrongness (jdargis)

About a year and a half ago, all the Very Serious People said that it was time for a pivot in economic policy. Recovery was underway, so no more efforts to stimulate demand; the big threat was the bond market vigilantes, so it was urgent to slash the deficit now now now.

The Wacky World Of Gold (jdargis)

Gold and gold-mining shares used to rise and fall in lockstep. Over the past five years, however, the price of gold has trebled while the value of gold miners has merely doubled. Investors in firms that shift, crush and process rocks are more grounded, it seems, than those who invest in bullion.

Can We Make Another Billion Today? (Ilene)

$1,129,860,000! That's how much money was made shorting 376,620 NYMEX contracts at $103 yesterday, as we planned! Congratulations to those of you who got your share playing along with us and, to the manipulators who got stuck with the bill - screw you bastards, we have your number and we're going to ring it now! I called a cash-out at the $100 line in Member Chat as 2.9% was more of a drop than we expected in one day andwe will re-load on the bounce as we cross back below the $100.50 line - as discussed in this morning's Member Chat - assuming the Dollar has bottomed out at 74.35.

    Crash Course DVDOwn the Crash Course Special Edition Set with Presenter’s Pack (NTSC or PAL)

No Worse Than Expected (jdargis)

Then there's the abysmal labor market. This week, ADP, a private payrolls firm, announced that the private sector added an anemic 38,000 jobs in May. That works out to just 760 jobs per state and is the worst growth since last September. (In April, by comparison, private employers added 177,000 jobs.) On top of that, initial unemployment claims—a leading indicator, suggesting where the unemployment rate is headed—are climbing back up. That has stoked fears that the May unemployment rate, which the Labor Department will announce Friday, might rise from last month's 9 percent.

Is QE2 A Savior, Inflator, Or A Dud? (jdargis)

In fact, QE2 didn't stimulate the economy, as the left had hoped, nor will it lead to the inflationary or bond-market disaster feared by the right. QE2 did basically nothing. But that is a deep and unsettling lesson: The Fed is essentially helpless in the current situation.

The chart attached to the left shows how interest rates behaved through the QE2 episode.


German Energy: Nuclear? Nein, Danke (jdargis)

The “energy transformation” is neither as revolutionary as Mrs Merkel suggests nor as hazardous as industry fears. Germany is returning to its policy of seven months ago. It has surplus generating capacity and low prices that are unlikely to rise much in the next few years, notes Mark Lewis of Deutsche Bank. Mrs Merkel’s shift was already under way. In 2000 30% of electricity came from nuclear. Since then, renewables like solar and wind have expanded their share from 6.6% to 16.5%.


Massachusetts Begins Cleanup After Tornadoes (jdargis)

Gov. Deval Patrick described two residential neighborhoods in Springfield — Sixteen Acres and East Forest Park — as having experienced “complete devastation” after touring the area Thursday morning. “We’ve got a real mess on our hands, but we’re in this together,” Mr. Patrick said.

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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Fannie, Freddie To Cost US Another $42 Billion;Fed balance sheet
  • Headlines:

States' rising bills may outpace revenue: survey

Moody's downgrades Greek banks

Fed balance sheet grows to record $2.79 trillion ("to a record $2.792 trillion in the week ended June 1 from $2.78 trillion in the prior week")

Hungary Pension Funds Say May Transfer $15 Billion to Government

CORRECT: Fannie, Freddie To Cost US Another $42 Billion From 2012 To 2021-CBO

Illinois on track to end fiscal year owing $8 billion

Treasury Will Sell $117 Billion of Securities (Next week)

IRS Must Step Up Efforts To Close $345 Billion Tax Gap -Report

Bank of Ireland rescue hits share and bond holders

Ireland's Budget Deficit Widened 30% in First Five Months

Venezuela faces soaring public debt

New Portugal govt faces rush to start reforms

Conn. governor warns of massive layoffs if contract is rejected

Mich. seniors plotting costs of pension income tax

State facing unexpected $45 million Medicaid shortfall, officials say (Florida)

Greenspan 'Scared' Over Deficit; Debt Ceiling Must Rise (CNBC)

IMF should force Greek restructuring: ex-director

China's Boom Threatened by Enron-Style Tricks: William Pesek (Opinion)

Japan jobless rate rises, factory output anemic

Greece Is 'Kicking Can Down the Road' on Debt, Reinhart Says

Sudden China Slowdown May Mean 75% Drop in Commodities, S&P Says

Rahm Emanuel's $75M CPS cuts mean longer rides, dirtier schools (Chicago)

Caltrain weathers dreadful budget process

Jackson CEO Proposes $200M in Employee Cuts

Employers added 54,000 jobs in May, fewest in 8 months; unemployment rate rose to 9.1 pct.

Gold Rises Most in a Week as U.S. Jobs Data Signals Fed May Keep Rates Low

California controller says lawmakers won't get paid without budget deal

Japan’s Tea Industry Facing Shortage as Nuclear Radiation Taints Shipments

Realtor Income Off 7 Percent Since 2009

Political "accident" could derail new Greek bailout

EU Urges Slovenians to Back Pension Overhaul in Referendum

China's Dagong downgrades Greece's credit rating

Moody's Text: City Of Athens Downgraded To 'Caa1'; Neg Outlook




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Goolsbee Calls Jobs Report 'Little Bump' on Recovery Path

"Austan Goolsbee, President Barack Obama’s chief economist, said today’s jobs report represents a “little bump” in the road to recovery and that the broader trends are “substantially more positive” than when Obama took office.

“We should never read too much into any one month’s report,” Goolsbee, chairman of the Council of Economic Advisers, said in an interview on Bloomberg Television. “No doubt we face some headwinds and hit a little bump in the road.”"


Little bump in the road, Mr. Goolsbee!!? Surprised  Let's take a look at some updated employment graphs:

All Employees: Durable Goods Manufacturing

All Employees: Nondurable Goods Manufacturing

Average (Mean) Duration of Unemployment

All Employees: Construction

Civilian Participation Rate

Civilian Employment-Population Ratio


............................These graphs don't look to me like a "little bump in the road". Just my opinion, but it looks more like a

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Fukushima Water Radiation Higher Than Atmospheric Releases

Fukushima Water Found to Have More Radiation Than Released Into Atmosphere

The water level in basements and trenches at Tokyo Electric Power Co.’s Fukushima plant rose and may contain more radiation than is known to have been released into the atmosphere in the worst nuclear crisis since Chernobyl.

The amount of contaminated water rose to about 105 million liters (28 million gallons) from 100 million liters on May 18, and may start overflowing after June 20, the company known as Tepco said in a statement today. Radiation in the water is estimated at 720,000 terabecquerels, general manager Junichi Matsumoto said at a media briefing in Tokyo.


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Thanks for the links to the historical to now charts. When you see the whole picture you quickly realize why the talking heads on the financial networks and their buddies in the govt only show 1 year charts. This is so  it doesn't look so dramatic.

There is seriously something wrong here. I am not going to pretend I have all the answers, but I know one simple fact. If we are not building anything (construction and manufacturing) we will not see any real advances in the economy anytime soon.

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Daily Digest Linking To A Copy-And-Paste Blog?

Regarding "Can We Make Another Billion Today?"

Looks like "Ilene" (of ilene.typepad.com/) copied and pasted everything from a post on a web site called "Phl's Stock World" to their own web site, then submitted their copy to Daily Digest. Shouldn't we be trying to point to an original source?

Original Source at Phil's Stock World:

Also, rather than being the article being an post with actual news, the Phil's Stock World blog entry itself starts off with a whole self-promoting trading strategy self-pat-on-the-back preamble of the kind one might find on a commercial rather than real news or opinion article. Maybe it has real news and analysis, but... Hmm...


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Matt Holbert
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Cop and Paste


It should be pointed out that Ilene is an associate of Phil's. (See lower right-hand corner of Phil's Stock World page.) As to the reason for duplication of articles on the two sites...

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Matt Holbert wrote:


It should be pointed out that Ilene is an associate of Phil's. (See lower right-hand corner of Phil's Stock World page.) As to the reason for duplication of articles on the two sites...

Alright. I get it now. Thank you.


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John Embry discusses gold and silver with James Turk

Good interview (Video and transcript), gold, silver and more...



In this video, John Embry – Chief Investment Strategist at the Canadian firm Sprott Asset Management – discusses the recent correction in the silver price with James Turk, Director of the GoldMoney Foundation. John argues that long-term savers and investors in precious metals should not panic in the face of such corrections, and also discusses the growing divergence between the paper and the physical silver market, and how we are in the early stages of a big rise in precious metals prices.

Embry also argues that the gold-silver price ratio is likely to move back in favour of silver. He is surprised by how bearish the mainstream media is in its assessment of silver. John and James also comment on the consistent purchasing power of precious metals, in contrast to the ever-diminishing purchasing power of paper money.

They also discuss the worsening fiscal position of the US government. In John’s view, America is likely heading for hyperinflation thanks to the current fiscal policies of the Federal Reserve. John and James notice the growing problem of rising prices, and how the US authorities remain determined not to notice growing inflationary pressures.

Furthermore they talk about the problems that still exist in the international banking system. Given the astonishing quadrillion-dollars worth of OTC derivatives still lying on banks’ balance sheets, in Embry’s view, quantitative easing was implemented primarily in order to ease the pressure on banks. As he points out though, the derivatives problem has not been solved

They also talk about the reasons for the relative underperformance of shares in gold and silver mining companies versus the performance of the metals, and offer some reasons for why this has been the case. John also discusses how “hot money” flows into commodity producing nations are driving up the value of currencies like the Australian and Canadian dollars, resulting in booming housing markets in these countries.

At the end, they talk about the recent Canadian election that saw Prime Minister Stephen Harper’s Conservative Party triumphant. James quizzes John about the likely trajectory of Canadian politics and whether or not anti-government Tea Party-style politics is gaining a foothold in Canada.


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The Weimar Republic

Haven't visited this site for a while, just wondering if the view has changed with regards to inflation or deflation.


Interesting clip from John Taylor on CNBC, with QE2 ending, deflationary forces at work pulling oil and other commodities down including the equity markets before QE3 starts.

And US dollars up as once again a flight to safety. Can't belive it ,but thats the prediction.

What's the forecast here?

Thanks in advance


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Arthur Robey
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Not as thick as I thought.

"HSBC Australia chief executive Paolo Maia said a growing number of corporate clients in Australia were "seeking to work with Chinese trading partners in renminbi, not only to minimise foreign exchange risk but also to improve their pricing and trading terms".

from http://www.theaustralian.com.au/business/rio-eyes-switch-from-us-dollars...

I apologise. I had accused the mining magnates of gross incompetance, on the understanding that China is passing it's exposure to the American dollar onto Australia in exchange for Australia's once off bonanza. The commodities.

"You give me the gold, and I will give you my cheque."

I guess you don't become boss if you are thick.

Then again Gadafi tried to introduce the gold standard instead of the Greenback, and look whats happening to him.

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