Daily Digest

Daily Digest 7/21 - What Money Can Buy, Wage Slaves In The Warehouse, How To Tell If Housing Has Bottomed Out

Thursday, July 21, 2011, 9:42 AM
  • Fears about debt send gold price to record
  • What Money Can Buy 
  • The Eurozone's Last Stand
  • A Visit To The Warehouse Of Soul-Crushing Sadness
  • Wage Slaves In The Warehouse
  • You Want to Fix the U.S. Economy? Here's a Start
  • Has Housing Bottomed? Here's How To Tell
  • Making the U.S. Dollar Safer: Return On Your Money
  • Slouching Toward Default, on Both Sides of the Atlantic
  • Oil from giant spill reaches Chinese coast: Xinhua
  • It's Time To Kick Farmers Off The Federal Dole

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


Fears about debt send gold price to record (dons)

I wish this was all about the man on the street, pension funds, but it's not," Nadler said. "It's the type of player that tends to get up at the very next opportunity to find something hot elsewhere. Will all this end in tears?" Quite likely yes, because I see that the demise of the European Union and the United States as a debt entity is really not in the cards.

What Money Can Buy (Ilene)

As F. Scott Fitzgerald once said: "The rich are different than you and me - they have more money." As Bill Domhoff pointed out this weekend, when we talk about the rich, we don't mean the top 1% - people who "only" make $1.6M a year or more. Sure those of us in that group may have a "get out of jail free" card for when we speed and we may get our buildings approved quicker than most and we may get a local ordinance passed here or there but, when you move up to the top 0.1% ($36M or higher per year income) or the top 0.01% ($450M or higher annual income), where Mr. Murdoch lives - not only do you get both national and international laws rewritten to suit your needs (like taking over 100% of the UKs satellite broadcasts), but the other laws don't even apply to you.

The Eurozone's Last Stand (Alfredo E.)

By 2012, Greek public debt will be above 160% of GDP and rising. Alternatives to a debt restructuring are fast disappearing. A full-blown official bailout of Greece’s public sector (by the International Monetary Fund, the European Central Bank, and the European Financial Stability Facility) would be the mother of all moral-hazard plays: extremely expensive and politically near-impossible, owing to resistance from core eurozone voters – starting with the Germans.

A Visit To The Warehouse Of Soul-Crushing Sadness (jdargis)

"No, they said he's been doing it all week. He's a bigger dude, so they think he's doing it"—the breakroom and the bathroom are in the heavily air conditioned part of the warehouse where the guys in the suits have offices—"because it's too hot for him on the floor." Susie called him and fired him for "excessive" breaks, though she pointed out to me that she didn't actually have to give him a reason.

Wage Slaves In The Warehouse (Alfredo E.)

"How much do these people make?"

About $9 an hour. When I said that wasn't very much—when I worked at the moving-company warehouse starting in 1998, I made $10 an hour—she replied, "For them it is. They have no jobs." Also, it's 50 cents an hour more than the people on the previous shift make. In a state with 8.6 percent unemployment, fierce competition for limited job openings, and a minimum wage of $7.25, you could do a lot worse.

You Want to Fix the U.S. Economy? Here's a Start (Alfredo E.)

Any mortgage, loan or note which was fraudulently originated, packaged and sold, including the misrepresentation of risk, the manipulation of risk ratings, fraudulent documentation by any party, etc., will be discharged as uncollectable and the full value wiped off the books and title records without recourse by any of the parties.

If a bank fraudulently originated a mortgage and the buyer misrepresented material facts on the mortgage documents, then both parties lose all claim to the note and the underlying asset, the house, which reverts to the FDIC for liquidation, with the proceeds going towards creditors' claims against the bank.

Has Housing Bottomed? Here's How To Tell (Mike K.)

People gave up on stocks. I call this loss of faith "when belief in the system fades:" note how household participation in stocks topped out in 1969, three years after the peak in the market. Participants clung to their belief in stocks for about four years after 1969, at which point participation cratered as they finally abandoned their faith in a "permanent Bull market."

Household participation fell by two-thirds and remained low for years.

Making the U.S. Dollar Safer: Return ON Your Money (Joe P.)

Today’s debate may be focused on whether the debt ceiling will be raised, but it’s tomorrow’s debate that really concerns us. Last week, Standard & Poors made it clear that raising the debt ceiling would be one thing, but in order to withhold a downgrade to the U.S. credit rating, the U.S. must show that it is not “maxed out.” In other words, show that it would be able to manage another crisis, or a potential war. What would be the implications of a credit downgrade? And what policies would need to be engaged in, in order to avert a downgrade and strengthen the U.S. dollar over the long-term?

Slouching Toward Default, on Both Sides of the Atlantic (Phil H.)

There are just two small problems with this. The first is that the credit ratings agencies have announced that they will view any voluntary restructuring as a default--as they should, because voluntary or not, Greece would still be arranging to pay less than they owe. And the second is that, as Peel points out, the European Central Bank has announced that it cannot accept defaulted securities as collateral. So getting a voluntary deal just means that other Euro-members are going to have to bail out the Greek banking system, which will no longer be able to use its sizable collection of Greek government bonds to tap the ECB. I assume that Merkel understands this . . . but I can't really see much foundation for my assumption.


Oil from giant spill reaches Chinese coast: Xinhua (pinecarr)

Oil from a huge spill off the Chinese coast has been found washed up on the shore in two separate areas, state media reported on Wednesday.

A 300-metre "belt" of oil was found on a bathing beach in the port of Jingtang in the northern province of Hebei, the official Xinhua news agency reported.

Oil particles measuring between one and three centimetres (0.5 to 1.2 inches) across were also found on a four-kilometre stretch of beach in the northeastern province of Liaoning, Xinhua said.

It's Time To Kick Farmers Off The Federal Dole (Phil H.)

Government subsidies obviously aren’t necessary for food production: people have fed themselves and traded their surpluses for thousands of years. The system doesn’t help consumers. Reducing supplies and imposing price floors obviously are bad deals for the hungry. Paying off farmers might lower some prices, but steals back through taxes any benefits received by consumers. Agricultural subsidies are designed by farmers for farmers.

But which farmers? Not the idyllic family farmer. The majority of payments go to farms with average annual revenue exceeding $200,000 and net worth around $2 million.

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."


saxplayer00o1's picture
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U.S. Consumers Relying on Credit for Basic Necessities


"Spain paid euro-era record high rates to sell two long-term bonds on Thursday before European leaders meet to try and put a line under a debt crisis that threatens to tear into the bloc's larger periphery countries."

"The average yield on the ten-year bond was 5.896 percent, up from 5.395 percent at the last sale on May 19. The yield was 6.191 percent on the 15-year issue, up from 6.027 percent at the last auction on June 16. Both were the highest levels for those maturities at auctions since 1997, before the creation of the euro.

Analysts warn that such rates will not be sustainable for Spain over a long period, and one said if the rate on the 10-year bond went much higher it would spell trouble.

"If it gets closer to 7 percent things can turn very ugly," said a director at a major bank with links to the Treasury."

"Progress remains elusive as official Washington grapples day after day for a way out of a debt dilemma that has the government sliding toward a first-ever default on its financial obligations.

President Barack Obama met with House Speaker John Boehner, R-Ohio, at the White House for 90 minutes on Wednesday, but neither side would comment afterward."

"Consumers in the U.S. are increasingly using credit cards to pay for basic necessities as income gains fail to keep pace with rising food and fuel prices.

The dollar volume of purchases charged grew 10.7 percent in June from a year ago, while the number of transactions rose 6.8 percent, according to First Data Corp.’s SpendTrend report issued this month. The difference probably represents the increasing cost of gasoline, said Silvio Tavares, senior vice president at First Data, the largest credit card processor.

“Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” said Tavares, who’s based in Atlanta. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.” "

  • Other news, headlines and opinion:

Greece Agreement Will Probably Lead To Selective Default - French Source

New Greek Bailout Can't Rule Out Default: Juncker

EU May Consider Greek Guarantee to Offset ECB Default Angst

Japan plans additional $165 bln for reconstruction - source

U.K. June Budget Deficit Higher Than Economists Forecast

SNAP Faces $20 Billion Cut

Global slowdown signs strengthen, debt crisis weighs

Providence Tax Increase a Crushing Blow to City Homeowners

U.S. jobless claims rise 10,000 to 418,000

Inflation Tough to Digest for Asia as Food Costs Soar From Pork to Onions

China’s Manufacturing May Contract for First Time in a Year, PMI Signals

Deficit Compromise Opens the Door for Huge Cutbacks in Mortgage Deduction

Mortgage Delinquency Rate Climbs, Foreclosure Numbers Head Higher

Role reversal: Latin America taunts US on debt woes

S&P: At Least 50% Chance US Rating Downgraded Within 3 Months

DurangoKid's picture
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Paying interest and fees for necessities?

This is downright scary. One can decide whether or not to buy a flat screened TV, but hunger is not discretionary. This will create yet another debt bubble that can never be repaid.

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Gold - Debt ceiling inceases

One side i am content that my investment in 10 kgs gold has been successfull since 2005. (same counts for my sliver maple leafs)  but with growing kids i am more and more worried. Doing business is getting hard. To get the business is hard to get paid even harder but the mentality has also changed. there is no partnership any longer. only claims and counter claims. We really have to change something.

Somehow i hope there will be a proper crisis and that all these BIG Businesses will collapse and we can start with small businesses in partner ship without all this nonsence safety/security/cover-my-ass mentality.

I am affreight that crisis will end in war.


SagerXX's picture
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So, the EU is going to do some QE of their own...

...it seems: http://www.zerohedge.com/article/cdo-heart-eurozone-just-became-europes-.... Now, as soon as we handle that tiresome debt ceiling thingy here in the US, we should have smooth economic sailing for, oh, six to eight whole weeks! I find the level of denial stupefying...

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Text of euro-zone deal to help Greece



"2. We agree to support a new programme for Greece and, together with the IMF and the voluntary contribution of the private sector, to fully cover the financing gap. The total official financing will amount to an estimated 109 billion euro. This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece. We call on the IMF to continue to contribute to the financing of the new Greek programme. We intend to use the EFSF as the financing vehicle for the next disbursement. We will monitor very closely the strict implementation of the programme based on the regular assessment by the Commission in liaison with the ECB and the IMF. "


"European Union members on Thursday reiterated their support for Greece and agreed to provide $109 billion euros ($156.7 billion) in official support and another 50 billion euros from the private sector, the European Council said in a statement. The public statement of support follows a summit of European leaders to contain the debt crisis from spreading further. The heads of state, including France's Nicolas Sarkozy and Germany's Angela Merkel, also agreed to extend the maturity of future loans for Greece to a maximum 30 years from the current 7.5 years while funds will be provided at about 3.5%. Member nations will also work closely to come up with concrete proposals by October "to improve working methods and enhance crisis management in the euro area," the statement said."

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Posts: 3998
The Water Market Will Soon Eclipse Oil

Citi economist Willem Buiter tells clients to invest in the water industry which will soon become hotter than oil (via FT Alphaville):

I expect to see in the near future a massive expansion of investment in the water sector, including the production of fresh, clean water from other sources (desalination, purification), storage, shipping and transportation of water. I expect to see pipeline networks that will exceed the capacity of those for oil and gas today.

I see fleets of water tankers (single-hulled!) and storage facilities that will dwarf those we currently have for oil, natural gas and LNG. I see new canal systems dug for water transportation, similar in ambition and scale to those currently in progress in China, linking the Yangtze River in the South to the Yellow River in the arid north.

I also hope and expect that these new canal ventures will be designed and implemented with a greater awareness of the environmental and social impact of such mega-projects. India will have to engage in investment on a scale comparable to that seen today in China to produce clean water in the best locations and transport it to where the household, industrial and agricultural users are.

Water as an Asset Class

I expect to see a globally integrated market for fresh water within 25 to 30 years. Once the spot markets for water are integrated, futures markets and other derivative water-based financial instruments — puts, calls, swaps — both
exchange-traded and OTC will follow. There will be different grades and types of fresh water, just the way we have light sweet and heavy sour crude oil today. Water as an asset class will, in my view, become eventually the single most
important physical-commodity based asset class, dwarfing oil, copper, agricultural commodities and precious metals.

See maps of the coming water crisis >

Read more:

Poet's picture
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Fed Planning For Potential Default

"I love the smell of napalm in the morning..."

Fed Planning For Potential Default
"The Federal Reserve is actively preparing for the possibility that the United States could default as a deadline for raising the government's $14.3 trillion borrowing limit looms, a top Fed policymaker said on Wednesday."


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Arthur Robey
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Where is a natural born Colonial to go?


Dawn explores Vesa. Why? Scientific curiosity, naturally. And? Vesa has just the right gravity to be exploitable. Strong enough so machines and humans don't drift away annoyingly, but weak enough so that material can be plundered effortlessly.And Vesa is big. What is it made of?

Get your mind out of the well!. The material will not be braught back to Earth but used at L4 and 5 (http://www.astronomycast.com/physics/ep-76-lagrange-points/)

Whoever controlls L4 and L5 will be the gatekeepers to the cosmos, The stakes are that high.


A Chinese submersible conducted the country's deepest manned dive ever Thursday in the latest milestone for China's deep-sea ambitions as it seeks to exploit the vast resources of the ocean floor.


We have only one workable response to environmental resource depletion and that is to move on. We had better do it, as we have no proven alternative other than mass death.


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