Daily Digest

Daily Digest 7/8 - Roadmap To Debunk The Dollar, Federal Debt Ceiling Countdown, Bill Gates On Energy Crisis

Friday, July 8, 2011, 9:58 AM
  • Obama to Push for Wider Deal With G.O.P. on Deficit Cuts
  • The Federal Debt: Countdown
  • Politics of Default: Roadmap to Debunk the Dollar
  • Brzezinski: Middle Class Unrest To Hit U.S.
  • Race to Debase - Middle 2011
  • Fewer Americans File for Bankruptcy
  • Bill Gates On The World Energy Crisis
  • Phoenix Dusts Off After Giant Sandstorm Whips Through

Our 'What Should I Do?' guide has steps to cook, see & stay warm in times of power outage


Obama to Push for Wider Deal With G.O.P. on Deficit Cuts (jdargis)

The president’s renewed efforts follow what knowledgeable officials said was an overture from Mr. Boehner, who met secretly with Mr. Obama last weekend, to consider as much as $1 trillion in unspecified new revenues as part of an overhaul of tax laws in exchange for an agreement that made substantial spending cuts, including in such social programs as Medicare and Medicaid and Social Security — programs that had been off the table.

The Federal Debt: Countdown (jdargis)

Taxes are the sticky wicket. While both sides agree that the ceiling should be raised in conjunction with new deficit-reduction measures, they have fallen out over whether to use increased revenues to close part of the gap. The blame for this impasse falls mostly on Republicans. Eric Cantor, the leader of the Republican majority in the House of Representatives and the chief Republican negotiator in talks chaired by Vice-President Joe Biden, greeted a recent proposal to pair $2 trillion in spending cuts with $400 billion in new revenues by walking out on June 23rd.

Politics of Default: Roadmap to Debunk the Dollar (Joe P.)

If one thing has been working in Europe, it’s the “dialogue” between the bond market and policy makers. Not too long ago, the types of reforms being implemented now would have been unthinkable. What’s more, in many cases, reform is being implemented by weak or minority governments. Reforms may not be implemented at the speed or as thoroughly as promised; as long as the bond market keeps up the pressure, however, an incentive is provided to continue to engage in reform, which makes it each individual country’s responsibility to sort out its problems, and thus influence the speed at which their cost of borrowing is reduced.

Brzezinski: Middle Class Unrest To Hit U.S. (June C.)

“I don’t want to be a prophet of doom — and I don’t think we are approaching doom — but I think we’re going to slide into intensified social conflicts, social hostility, some forms of radicalism, there is just going to be a sense that this is not a just society,” Brzezinski said, adding that civil unrest would begin when the lower middle class becomes severely affected by the economic fallout and rising unemployment.

Race to Debase - Middle 2011 (Adam)

Take a moment to examine how gold and silver have performed against their fiat currency competition through the first half of 2011.

Gold has appreciated an average of over 3.4% versus over 70 fiat currencies though middle 2011.

Fewer Americans File for Bankruptcy (jdargis)

Though economic factors like foreclosures and unemployment play a role in bankruptcy, over the long run, the filing rate tends to be more closely tethered to the amount of outstanding consumer debt.


Bill Gates On The World Energy Crisis (Jason C.)

Chris Anderson: How has Fukushima changed your perspective on nuclear power?

Bill Gates: What happened in Japan is terrible, and there are many reasons it should have been avoided. It’s a 1960s plant design, generation two, put into service in the early 1970s. Emergency planning and execution were quite weak. The environmental and human damage is clearly very negative, but if you compare that to the number of people that coal or natural gas have killed per kilowatt-hour generated, it’s way, way less. The nuclear industry has this amazing record, even equipment from generations one and two. But nuclear mishaps tend to come in these big events—Chernobyl, Three Mile Island, and now Fukushima—so it’s more visible. Coal and natural gas have much lower capital costs, and they tend to kill only a few at a time, which is highly preferred by politicians.


Phoenix Dusts Off After Giant Sandstorm Whips Through (jdargis)

“The magnitude of this event was really exceptional,” said Ken Waters, a warning coordination meteorologist with the National Weather Service in Phoenix. “People who have lived in Arizona for 30, 35 years say this is the biggest one they’ve seen.”

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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Euro crisis spreads; Another reason to avoid Detroit



"Italian bonds slid for a fifth straight day, pushing yields to a nine-year high, as contagion from Greece’s fiscal crisis intensified in the region’s biggest government-debt market.

Spanish, Irish and Greek bonds also fell. The additional yield investors demand to hold 10-year Italian securities instead of German bunds widened to a euro-era record as data showed the Mediterranean nation’s industrial production dropped. German bunds extended their weekly advance after Moody’s Investors Service downgraded Portugal’s credit to junk on July 5, stoking demand for the safest assets.

“If you are talking about a default in Greece where contagion spreads through Ireland, Portugal and Spain, then Italy is the next stop,” said Charles Diebel, head of market strategy at Lloyds Bank Corporate Markets in London. “Italy has an awful lot of debt.”

The yield on 10-year Italian bonds rose 10 basis points to 5.27 percent as of 10:06 a.m. in London, up from 4.87 percent a week ago."

.................1A) Irish 10-year bonds jump to 13.4%

"The cost of insuring against default on Portuguese and Irish government debt rose to records, leading a gauge of the region’s sovereign risk to an all-time high, according to traders of credit-default swaps.

Contracts on Portugal climbed 9.5 basis points to 987.5, signaling a 57 percent probability of default within five years, according to CMA prices at 10 a.m. in London. Swaps on Ireland jumped 28 basis points to 883 and the Markit iTraxx SovX Western Europe Index of swaps on 15 governments increased 4 to 250.

Swaps on Italy increased 8.5 basis points to 226, the highest level since Jan. 12, while Spain rose 2.5 to 305 and Belgium was up 4.5 at 165.5. Greece fell from a record, declining 34 basis points to 2,116. "

"Mary Kay Coyne has just filed what she says is her 1,862nd job application since being thrown out of work three years ago.

She is one of millions of Americans whose unemployment benefits have expired -- after 99 weeks in many states -- as the United States suffers its highest level of long-term unemployment since 1948.

Coyne had to move in with a friend after benefit payments ran out last year. Now she gets by on Medicaid -- U.S. health insurance for the poor -- and food stamps, contributing what little she can to her friend's household costs."

"In 2010, an estimated 3.9 million unemployed Americans exhausted unemployment benefits, according to the National Employment Law Project, an advocacy group that campaigns for lower-wage workers.

More than 14 percent of the U.S. unemployed have been out of a job for 99 weeks, or longer."

"Eurogroup chairman Jean-Claude Juncker said on Thursday he was in favour of having a European credit rating agency and that it was not right to downgrade countries like Portugal just as they were implementing reforms.

Juncker, joining the ranks of policymakers who have criticised rating agencies, said they would lose relevance if they continued to act like they have been.

European politicians accused credit rating agencies on Wednesday of anti-European bias after Moody's downgrade of Portugal's debt to "junk" cast new doubt on EU efforts to rescue distressed euro zone states without debt restructuring."

"A few hours before Detroit begins ticketing cars after extending its parking enforcement period, the city's thousands of meters may leave motorists confused or even angry.

Although parking enforcers plan to issue tickets until 10 p.m. Tuesdays through Saturdays, beginning tonight, some parking meters still assure motorists that enforcement ends at 6 p.m. while others say it ends at 4 p.m.

Calls to the Municipal Parking Department have gone unanswered. Mayor Dave Bing's Office said it's checking into the issue.

The new extended enforcement period is part of a plan to raise an additional $10 million from drivers to help offset the city's $155-million deficit.

The city last Friday ended an amnesty program that allowed those with tickets to pay 50% of the fees."

  • Other news, Headlines and opinion:

Inflation change could cut into Social Security

High bond yields threaten borrowing plan - source (India)

Fed balance sheet grows to another record size

Minnesota loses its pristine debt rating

Minnesota Shutdown May Cost State Economy $23 Million Weekly

Shuttle program end may cost Florida 9,000 jobs

Arizona Medicaid cuts take effect Friday

Exclusive: EU states ready to rescue bank test failures

Jobless rate rises to 9.2% as U.S. economy adds only 18,000 jobs

Analysis: Dismal jobs numbers give off recession whiff

Japan May Be Nuclear Free by May as Tests Delay Restarts

Poor Countries Seen Likely to Be ‘Hammered’ by Food Costs, Water Shortages

New Billion Dollar Emergency Loan Program Hopes to Stave Off Foreclosures

Greek Debt Woes Scuttle New Loans as Costs Jump to Highest Level for Year

US debt deal not imminent, Boehner says


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The Economist - just a bit of bias showing..

[quote=The Federal Debt: Countdown]

Taxes are the sticky wicket. While both sides agree that the ceiling should be raised in conjunction with new deficit-reduction measures, they have fallen out over whether to use increased revenues to close part of the gap. The blame for this impasse falls mostly on Republicans.

The more articles I read the more divisive and leftist I'm discovering "The Economist" seems.  I love how they present the argument as only two sides, I'm certain their are some members of Congress (Ron Paul, Rand Paul, others?) who don't believe the ceiling should be raised at all!   Then they nicely point out it's the Republicans fault!

My credit card is maxed out, quick I need another, but I promise I'll work more and only spend 50% more per year than I make now.  - ARGGGGGG.... Yell

Edited to add this video about that "$2T spending cut".

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Posts: 106
Cheap food


1.  http://www.thestreet.com/story/11012915/1/cellulose-wood-pulp-never-tasted-so-good.html


"As commodity prices continue to rally and the cost of imported materials impacts earnings, we expect to see increasing use of surrogate products within food items. Cellulose is certainly in higher demand and we expect this to continue," Michael A. Yoshikami, chief investment strategist at YCMNet Advisors, told TheStreet.


2.  http://bittman.blogs.nytimes.com/2011/07/06/chinas-bizarre-food-safety-scene-and-our-own/


Almost all of the attention we’ve paid to food safety in recent weeks has been fixed on the deadly E. coli outbreak in Germany. And justifiably so. But if you happen to have taken a peek at China in the last few months you would have seen an eye-popping string of food safety oddities culminating in the state-sponsored suppression of journalists.

As I mentioned in my column today there was the famous village wedding at which more than half of the 500 guests were hospitalized after eating pork contaminated with Clenbuterol, a drug that accelerates fat burning and muscle growth. (It makes pigs grow faster and leaner, and when consumed in excess by humans can cause nausea, convulsions, dizziness, vomiting and heart palpitations.) Clenbuterol was banned from pig feed in the 1990s, but is still used under the name “lean pork powder.”

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Chain CPI - Another Nail In the Coffin Of Standard Of Living

Frequently Asked Questions about the Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
"Traditionally, the CPI was considered an upper bound on a cost-of-living index in that the CPI did not reflect the changes in consumption patterns that consumers make in response to changes in relative prices.

"Since January 1999, a geometric mean formula has been used to calculate most basic indexes within the CPI; this formula allows for a modest amount of substitution within item categories as relative price changes.

"The geometric mean formula, though, does not account for consumer substitution taking place between CPI item categories. For example, pork and beef are two separate CPI item categories. If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef. The C-CPI-U is designed to account for this type of consumer substitution between CPI item categories. In this example, the C-CPI-U would rise, but not by as much as an index that was based on fixed purchase patterns."

As I understand it, with basic substitution, if the price of T-bone steak went up, people would buy a cheaper cut, like "London broil". Rather than sticking to the cost of living rising, the government wants to measure the cost of making-do.

This chaining seems to go further. If beef becomes too expensive, people might switch to pork. It seems the government wants to capture that purchase - meaning it no longer cares about the cost of maintaining one's standard of living, but rather, it is looking to measure how people try to adapt and survive on their limited incomes.



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Chain CPI - Another Nail In the Coffin Of Standard Of Living

Just another scam job, Poet!   Soon, those who switch from hamburg to cat food will show no inflationary tendencies at all if the cost of a 6 ounce can of 9Lives doesn't increase in price.

Essentially, the Government doesn't want to pay Social Security retirees any more COLA's, but, as usual, they don't have the nerve to simply repeal the 1973 COLA suppliment because it would cause too much of a public uproar.  This is strickly a matter of watching cowards at play, that's all.

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I knew it.......

Haven't I been saying it for years now...  Debts will one day be cancelled?  Started already.....


"It was just a matter of time before wholesale debt-forgiveness became the primary source of wealth in the US.

The time is now. The NYT reports that "big banks are going to borrowers who are not even in default and cutting their debt or easing the mortgage terms, sometimes with no questions asked.

Two of the nation's biggest lenders, JPMorgan Chase and Bank of America, are quietly modifying loans for tens of thousands of borrowers who have not asked for help but whom the banks deem to be at special risk."


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Posts: 3998
powerdown in Pakistan

Karachi is facing 10 hours of power outages a day, severely damaging industrial
output and undermining economic growth. The shortages of electricity and gas
have forced hundreds of units to shut down in the textile district of

A 40% cut in generation late last month forced the Pakistan Electric Power Company to carry out eight to 10 hours of load-shedding in urban areas and 12 to 14 hours in rural areas.

The government last week acknowledged that power cuts would continue for AT LEAST ANOTHER SEVEN YEARS.

Completion of a gas pipeline from Iran would help to generate around 5,000 MW of electricity, which is equivalent to the present peak shortage of power in the country. But while an export contract was signed between the two countries last
year to supply Pakistan with natural gas from 2014, the United States is opposed to the plan.


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Phoenix Dusts Off After Giant Sandstorm Whips Through

storm by daniel_bryant, on Flickr

photo by Daniel Bryant all rights reserved

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Dust Bowl

I remember as a young boy in Minnesota seeing a dust storm sweep across the Twin Cities. It had to be in the 1950's, looked the same - amazing!!! 

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Posts: 1469
Token Cuts

I thought it was $4T in cuts over 10 years?  Now $2T?   They are out of touch and dumb.   The budget forecast uses GDP growth of 4% yearly and that is not going to happen; they cannot even predict short-term so 10 years out, is this a joke?   So we are in the hole right there most likely on the marginal cuts.   Now let's assume interest rates go back to recent historic norms (don't we wish); the marginal increase in debt service is about $4T over 10 years.   Then there is the the unfunded liabilities that are around $62T in Present Dollars.   Seeing the pointlessness of these "token spending cuts", where is the US going to get $62T in nominal dollars today?  Or even tomorrow?

Regarding the Economist, it is a Keynesian rag.   Sometimes the articles are good othertimes frustrating. 

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r wrote:photo by Daniel
r wrote:

storm by daniel_bryant, on Flickrphoto by Daniel Bryant all rights reserved

"So, we finally, really did it!"



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