Daily Digest

Daily Digest 6/9 - Citizen Sues Atlanta Fed, Groupon 'Effectively Insolvent', OPEC Keeps Cap On Oil

Thursday, June 9, 2011, 9:54 AM
  • CNN's John King interviews Arnie Gundersen about the Hot Particles discovered in Japan and the U.S.
  • Citizen Sues Atlanta Fed Based on Allegation that It's Issuing Federal Reserve Notes That It Has No Intention of Redeeming, Which Amounts to Counterfeiting
  • How to Sell Your Gold & Silver
  • Groupon Is Effectively Insolvent
  • Markets Know QE2 Is “Transitory” - What's Next?
  • Wiping Out All Of 2011's Gains!
  • Third World America 2011: Forget "Fast Tracking to Anarchy," We've Arrived
  • Muskrat Math
  • Split by Infighting, OPEC Keeps a Cap on Oil
  • Cattle Industry Reeling Over Live Export Ban To Indonesia

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CNN's John King interviews Arnie Gundersen about the Hot Particles discovered in Japan and the US (Adam)


Citizen Sues Atlanta Fed Based on Allegation that It's Issuing Federal Reserve Notes That It Has No Intention of Redeeming, Which Amounts to Counterfeiting (Ivo)

The complaint alleges that all of the Federal Reserve Banks (including Atlanta) stopped allowing Federal Reserve Notes to be redeemed in the early 2000's and that - because 12 United States Code Section 411 requires the notes to be redeemable - continuing to issue notes without allowing redemption amounts to counterfeiting.

Beach thus asks that the Atlanta Fed's charter be forfeited.

How to Sell Your Gold & Silver (Adam)

In this article we describe the main criteria you should consider in selling your precious metals, as well as pros and cons in selling to different types of buyers. While we have done our best to cover all the relevant information, we may have neglected to answer the question that is most on your mind. If you have additional questions or thoughts, please post them in the comment section below.

Groupon Is Effectively Insolvent (jkibbe)

The income statement is even worse. In Q1 of last year they had net income of $8.5 million on $44.2 million in revenue, for a profit margin of nearly 20%. Not bad! At some point around that time, they decided to abandon a profitable growth strategy and went for the hypergrowth revenue strategy. For the remainder of the year they had $669 million in revenue (simply staggering), but had a net loss attributable to Groupon of $398 million. This year, Q1 results showed revenue growth continuing to soar, with revenues of $644 million, but a net loss attributable to Groupon of $102 million.

Markets Know QE2 Is “Transitory” - What's Next? (Ilene)

Here are some highlights from the latest Wall Street Examiner's Professional Edition. Lee Adler's perspective on the stock market is extremely insightful as he tracks factors we don't often consider well enough in anticipating how the markets are going to move. Unfortunately, the stock market is largely at the mercy of the money flows between the Fed, the Treasury, Primary Dealers, foreign central banks, the banking system, and the markets. Lee closely follows these money flows and explains how they are likely to affect the markets.

    Crash Course DVDShare the Crash Course with your friends and family – buy the DVD today (NTSC or PAL)

Wiping Out All Of 2011's Gains! (Ilene)

Speaking of robbing from the rich to give to the poor (see "The Dooh Nibor Economy"), it's time we said happy 10th anniversary to the Bush/Obama tax cuts that have, as Barry Ritholtz put it: "driven the balanced budget he inherited from President Clinton deep into the red." So deep in the red, in fact, that even now Congress is still debating about extending the $14.5Tn deficit that the Congressional Budget Office says will double over the next 10 years if these cuts remain in place.

Third World America 2011: Forget "Fast Tracking to Anarchy" We've Arrived (June C.)

This year, all hell has broken loose in downtown Chicago. Years of under-hiring have resulted in a police force that is unprepared for wildings and gang violence. Moreover, concealed carry in Chicago is illegal, unless one follows the Constitution.

Tourists and residents have been attacked by mobs of youths on buses, on beaches, on bicycle paths, near the shops of the Magnificent Mile, and outside their homes. Mobs of shoplifters plagued "Mug Mile" stores. The irony is that these disenfranchised youths are turning to crime -- and if justice is done, prison sentences --a gainst innocent targets. Their focus is misdirected. Participating in a peaceful five million man march -- a true show of force and power -- against elected culprits in Washington would get them better results for lasting change.


Muskrat Math (guardia)

No, it is far more likely that we will have to try and sell that power on the open US market. The problem with that is Hydro Quebec is already there and selling to them at roughly 6 cents per kwh. Take the 25 cents or so it will cost to produce this power, and then sell it for 6 cents. That leaves us a loss of 19 cents per kwh. That would be bad if it were only a small excess of power being sold, but as shown earlier it looks to be all the Lower Churchill power.That would leave the Province and Nalcor with a staggering $931 million dollar loss year after year - for 35 years!

Split by Infighting, OPEC Keeps a Cap on Oil (jdargis)

The discord highlights the widening split between Saudi Arabia and Iran, which are vying for influence in a Middle East that is being rapidly reshaped by populist uprisings throughout the region. The public disagreement also underscores that the 12 OPEC member countries are increasingly making their own decisions about production levels rather than bowing to the collective judgment of the group.


Cattle Industry Reeling Over Live Export Ban To Indonesia (TG)

Agriculture Minister Joe Ludwig today refused to mention compensation despite a number of specific questions from reporters and would only discuss the "significant impact" of the current ban.

He made clear that the priority was on animal welfare issues but said the long-term sustainability of the industry was at stake.

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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Greece Said to Need 45 Billion Euros in New EU, IMF Loans

"The cost of insuring against default on government debt sold by Greece, Portugal and Ireland surged to records, according to traders of credit-default swaps. Contracts on Greece soared 30 basis points to 1,522, Portugal increased 16 to 722 and Ireland rose 10 to 690 as of 2:30 p.m. in London, according to CMA."

  • Other  headlines:

Economy at tipping point and housing bad: Shiller

Gross Says U.S. Policy Prompting Foreigners to Question Dollar

Investor Jim Rogers: US Faces Staggering Debt Crisis, To Be Worse Than '08

German Government Advisor: Debt Swap Might Not Be Enough For Greece -Report

Juncker: Can't Put Price on Greek Aid

Bank of Ireland bondholders team up to oppose plan

B of I warns State stake may rise to 87% if investors hold off

Greek Austerity Numbers Don't Add Up: Analyst

California Budget Dispute Heads for Showdown as Deadline Looms

Govt. shutdown could mean 6000 layoffs for MnSCU

With San Jose homicide rate on track for 20-year high, community demands reforms

Cost to insure Greek debt soars on Schauble letter

Moody's Sees 'Serious Deterioration' in South Africa's Fiscal Position

Sacramento budget cuts put pressure on police, fire unions

Alcohol sales thrive in hard times

Audit confirms near $80-million gap at RCSD (Rochester schools)

Kent County Sheriff warns, more budget cuts, more risk for citizens

Govt must raise fuel prices to meet deficit target. Full Article (India)

NY Governor Cuomo: must slash "skyrocketing" pensions

Amid uncertainty, Vegas teachers taking unlikely jobs

Weekly U.S. jobless claims rise to 427,000

India’s Food Inflation Quickens to Eight-Week High on Onion, Fruit Costs

Corn Surge Spurring U.S. Hog-Herd Slaughter as Wholesale Pork Prices Slump

Greece Said to Need 45 Billion Euros in New EU, IMF Loans

China says hopes U.S. will take "effective" debt steps

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We may have wiped out the gains, but the article is propaganda

[quote=Wiping Out All Of 2011's Gains]

driven the balanced budget he inherited from President Clinton deep into the red.



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rhare wrote: Wiping Out All
rhare wrote:

[quote=Wiping Out All Of 2011's Gains]

driven the balanced budget he inherited from President Clinton deep into the red.

Whenever I see articles talking about the Clinton surplus, I know they are going to be propaganda pieces since without accounting gimmicks there was no surplus.  Chris covers the "Clinton Surplus" in this article: Understanding the Government "Deficit"

I think the Crash Course and many of Chris's other articles pretty well obliterate this other statement from the article:

[quote=Wiping Out All Of 2011's Gains]

This country does not have a spending problem, it has a collecting problem!

Yeah, we need to collect from those who produce and distribute to those that don't. Preferrably with guns locked and loaded. SurprisedWink

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China plans restructure of rare earths industry
China plans restructure of rare earths industry
June 8, 2011
China is giving its biggest, state-owned rare earths miner and producer a monopoly for the northern part of the country in reforms aimed at bringing the strategically important sector that's crucial to advanced manufacturing under tighter control.
The Ministry for Industry and Information Technology said in a statement seen Wednesday on its website that Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co.,Ltd, will be the only rare earths producer in the region -- China's biggest production base for the exotic metals.
It said 35 other companies would be restructured or closed down by the end of June and that Baotou Steel Rare Earth will handle all mining, processing and trading in Inner Mongolia.
The company was the only company able to satisfy capacity and production requirements of various government ministries, the state-run newspaper Global Times cited Liu Jingchun, a researcher at Inner Mongolia's Economic and Information Technology Commission as saying.
China has abundant reserves and produces 97 percent of the global supply of the 17 rare earth minerals, which have exotic names like dysprosium and terbium and are used in computer disk drives, hybrid car components, weapons and other high-tech products.
To cope with growing demand at home and to reduce environmental damage, China has been reducing export quotas of rare earths over the past several years.
Such moves have raised alarm in importing nations, especially after some in the industry accused China of holding back rare earth shipments to Japan due to a flare up in tensions last year.
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The answer to "the earth is flat"...

Worth a short read:




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" Is Credit On The Verge Of

" Is Credit On The Verge Of An Oversaturation "Perfect Storm" Implosion"? This is the question being asked by a new article at ZH, at http://www.zerohedge.com/article/credit-verge-oversaturation-perfect-storm-implosion.  I would be interested to hear comments on this from people here with more insight into the topic dicussed than I!  I.e., how key of a piece of news is this, and is it as ominous as it is made out to be?  Here's an excerpt:

Something quite disturbing happened during today's latest attempt by the Fed to sell $3.8 billion in face amount of Maiden Lane 2 assets: it had a busted dutch auction. In fact, the auction was so massively busted, the New York Fed managed to sell only half of the bonds for sale, or $1.898 billion in 36 Cusips of the total 73 Cusips offered for sale. Suddenly, the Fed's attempts to sale piecemeal portions of the $31 billion Maiden Lane II portfolio that was offered to be repurchased by AIG, and subsequently was offered for open auction as Zero Hedge first suggested, is starting to backfire, after a month ago several traders complained that instead of "dribbling" out small piece of the portfolio (the previous average auction block notional for sale was under $1 billion). As per Housing Wire from May 17, which cited a complaint by an MBS trader: "if you charge ahead and bleed out one or two lists a week for the next 10 to 12 weeks, prices will continue to go lower, and in the interest of maximizing value for the taxpayer, I think it is time to re-engage the large portfolio bid you had or make available to other counterparties the ability to bid large chunks of what you have left to sell." Well, the trader got what he wanted... And in the process may have blown up the credit market. As Bloomberg reports, "Federal Reserve auctions of mortgage securities that the central bank assumed in the rescue of American International Group Inc. are fueling a selloff in credit markets as Wall Street rushes to hedge against losses on stockpiled debt." Sure enough, someone focusing on the equity market may be completely oblivious to the devastation that has been unleashed on HY and IG traders: "Declines in credit-default swaps indexes used to protect against losses on subprime housing debt and commercial mortgages accelerated this month, reaching almost 20 percent in the past five weeks as the cost of the insurance climbs, according to Markit Group Ltd. The plunge this week started infecting everything from junk bonds to the debt of financial companies." And while as Bloomberg points out that there is a confluence of technical and fundamental factors affecting credit sentiment,  "You almost have a perfect storm of events,” said Shah of AllianceBernstein. “You have both the fundamental justifications for the market going lower and you have the technicals being created by Maiden Lane” there is a far scarier implication. If dealers and funds are unable to handle a mere $31 billion MBS portfolio disposition, and its weekly sale (think of its as a reverse repo) is starting to cause massive ripples in the bond market, just what will happen when dealers are forced to hold back the tens of billions in weekly bond auctions they freely flip back to the Fed now. In other words, is the credit market on the verge of a oversaturation implosion (hence the title)?

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" Is Credit On The Verge Of

I don't completely understand it, but it hints that the market for (appettiie for) bonds is drying up.  I think this is what Chris has been saying, for quiet some time, would happen.

hugs ... dons

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Thanks Dons!  That's the

Thanks Dons!  That's the impression I got too.  Still wondering how "serious" a signal this may be...

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