Daily Digest

Daily Digest 8/11 - Budget Battles Ahead, Fed Balks At More Stimulus Spending, Why Gold Is Ready To Launch

Thursday, August 11, 2011, 9:44 AM
  • Budget Battles Ahead
  • The Best Looking Horse In The Glue Factory
  • Eric Sprott Interview with James Turk
  • A New Strategy for Economic Growth
  • A Divided Fed Balks At More Stimulus Spending
  • London's Burning Dial 999. Or, Just Buy the Farm.
  • Ronald Stoeferle of Austria’s Erste Group on Why Gold Is Ready To Launch Into Orbit
  • Return of the Bear; De-mystifying Interest Rate Policy; Do Central Bankers Lead or Follow the Market?
  • Ron Paul: This Is Probably A Bigger Problem Than The World Has EVER Faced Before!
  • German Nuclear Shutdown Forces E.ON To Cut 11,000 Staff
  • China to outstrip US by 2016 – IMF
  • Investors See Potential In Buying Farmland

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Economy

Budget Battles Ahead (Joe P.)

Why did we go to the budget brink? Democrats assert, correctly, that Tea Party Republicans held the country hostage over the debt ceiling. However, as I noted in my previous commentary, it might be equally argued that President Obama was holding the country hostage over his demand that taxes be increased as part of the deal. Republicans and Democrats have competing views and each party is willing to go to the brink if it believes that it can prevail by bringing popular support to bear.

The Best Looking Horse In The Glue Factory (JimQ)

After listening to the shills, shysters, propagandists, and paid representatives of the vested interests over the last few days, Mr. Walker’s response to someone pointing out Europe and other countries were in worse shape than the U.S. came to mind:

“What good does it do to be the best-looking horse in the glue factory?”

Eric Sprott Interview with James Turk (Adam)

They talk about the dynamics of the gold market and how it has entered the second phase of its bull market. They look at ETF, central bank and coin demand. They also look at the huge paper-to-physical mismatch. Eric calculates that only 0.75% of financial assets are currently in gold.

They discuss the importance of owning physical, not paper gold, and keeping it yourself or with a trustworthy company that gives you direct access to it. They talk about GATA and the significance of the work they do. They also talk about Sprott PHYS and PSLV and how they allow holders the option to redeem their physical metal, unlike most other ETFs.

A New Strategy for Economic Growth (Alec M.)

Inducing consumers to do today what they would otherwise do tomorrow is hardly a grand strategy. Hundreds of billions in "stimulus" spending has stimulated little but more debt. Forty-eight months have passed since the onset of the financial crisis, 26 months since the recession technically ended. Yet job creation remains remarkably weak, and markets deeply uneasy.

We can't go on like this.

A Divided Fed Balks At More Stimulus Spending (Lisa B.)

The Fed moved further into uncharted waters Tuesday, saying short-term interest rates will probably remain near zero for two more years, but the disagreement among its members suggests it will not wade deeper, as investors had hoped.

London's Burning Dial 999. Or, Just Buy the Farm. (Lisa B.)

There has now (as would be expected after a $300 bungee jump in five weeks) been a virtual epidemic of $2K and $2.5K gold predictions; complete with shrinking timeframes for those achievements to occur. As in: perhaps this very year. Formerly vilified “evil manipulator” entities (JP Morgan) are now being given exalted, near-saintly status as their latest crystal-ball gazing happen to coincide with the crowd that desperately seeks and exhibits positive confirmation biases. Others still, match the $2K gold calls with their own; the 20K Dow calls. Read all about it. Extra, extra!

Ronald Stoeferle of Austria’s Erste Group on Why Gold Is Ready To Launch Into Orbit (Adam)

Jim Puplava welcomes to Financial Sense Newshour analyst Ronald Stoeferle of the Erste Group in Austria to discuss a return to sound money and gold price targets of $2300, $5000 and $10,000 per oz.

Return of the Bear; De-mystifying Interest Rate Policy; Do Central Bankers Lead or Follow the Market? (Adam)

The bear market is back says Australian economist Steve Keen. I agree. Moreover, the recent action, including the rally, offers sufficient evidence. The biggest percentage gains in history have all been in bear market rallies.

Ron Paul: This Is Probably A Bigger Problem Than The World Has EVER Faced Before! (pinecarr)

CNBC News Video Clip “Rep. Paul: We’re Dealing With End Of Dollar Reserve Standard”

German Nuclear Shutdown Forces E.ON To Cut 11,000 Staff (pinecarr)

Christian Schulz, senior European economist at Berenberg Bank, said estimates suggested the nuclear shutdown would increase Germany's energy bill by a fifth, which will hit the country especially hard since its economy relies heavily on its energy-intensive manufacturing industry to propel growth.

China to outstrip US by 2016 – IMF (pinecarr)

Many analysts are predicting a power shift in the financial arena quite soon, since according to International Monetary Fund projections, China could leapfrog the United States to become the world's largest economy by 2016. Many have thought this likely for quite a while, and the latest news regarding the US debt-ceiling debate and the US’s credit rating being downgraded is leading even more people to believe that this is going to happen even sooner than expected.

Investors see potential in buying farmland (Michael W.)

A new breed of gentleman farmer is shaking up the American heartland. Rich investors with no ties to farming, no dirt under their nails, are confident enough to wager big on a patch of earth — betting that it’s a smart investment because food will only get more expensive worldwide.

They’re buying wheat fields in Kansas, rows of Iowa corn and acres of soybeans in Indiana. And though farmers still fill most of the seats at auctions, the newcomers are growing in number and variety — a Seattle computer executive, a Kansas City lawyer, a publishing executive from Chicago, a Boston money manager.

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."

8 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4060
Saudi urged to cut investment in US

"Saudi Arabia should cut its investment in US bonds to protect its overseas assets following the credit downgrade of the United States given the Gulf Kingdom’s heavy reliance on the US market, the country’s largest bank said on Thursday. Besides the impact of the downgrade on Saudi foreign assets, the problem could also have indirect effects on Saudi Arabia by depressing oil prices and the value of the US dollar, to which the Saudi currency, the riyal, is pegged, National Commercial Bank (NCB) said in a study sent to Emirates 24/7. Citing its own sources, NCB said it believes US treasuries constitute the majority of Saudi Arabia’s net foreign assets of nearly $492 billion."

"China should urgently assess risks from being the main foreign investor in U.S. debt and diversify its foreign-currency reserves more quickly, the Financial News reported today, citing Xia Bin, a central bank adviser. "

"The U.S. Treasury Department said Wednesday the budget deficit through July has reached $1.099 trillion, $70 billion less than the same time last year."

"The federal deficit of the United States recorded 1.1 trillion dollars in the first ten months of fiscal year 2010-2011, indicating it the third consecutive year that the U.S. fiscal imbalance topped 1-trillion- dollar mark, reported the Treasury Department on Wednesday."

"Several economists have cut their second-quarter GDP view after the release of the June trade deficit data showing an unexpected widening of the gap. Government statisticians routinely estimate the final month's trade balance in their initial estimate of quarterly GDP growth. Last month, they had assumed about a $1 billion narrowing in the June trade gap in their estimate that the economy grew at a 1.3% rate in the second quarter. However, the June trade deficit widened by $2.3 billion. Troy David, economist at Barclays Capital, said the firm has lowered its second quarter GDP estimate to 0.6%"

  • Other news, headlines and opinion:

 

msnrochny's picture
msnrochny
Status: Bronze Member (Offline)
Joined: Nov 4 2010
Posts: 57
New York Times - Jeremy Grantham Article

A really well done article about a very smart man that covers peak oil, peak resources, population growth, the rise in price of commodities, the behavior of humans, where it is all headed, and how to invest and prepare.  Definitley a good read.

http://www.nytimes.com/2011/08/14/magazine/can-jeremy-grantham-profit-from-ecological-mayhem.html?_r=1&hp

Mike

bound2chng's picture
bound2chng
Status: Member (Offline)
Joined: Feb 4 2010
Posts: 5
Jeremy Grantham Article

 

The Article from April " Time to wake up: Days of abundant resources and falling prices are over foreverthat is referenced in the NY Times article can be found on The Oli Drum link below.

 

http://www.theoildrum.com/node/7853

 

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
this is a day old...
Just How Much Money Can the Government Make By Borrowing? - The 5 year TIPS rate crossed –1% today. That means the government can make more money borrowing than the average person can by saving.
 
 
JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Great Grantham Piece
msnrochny wrote:

A really well done article about a very smart man that covers peak oil, peak resources, population growth, the rise in price of commodities, the behavior of humans, where it is all headed, and how to invest and prepare.  Definitley a good read.

http://www.nytimes.com/2011/08/14/magazine/can-jeremy-grantham-profit-from-ecological-mayhem.html?_r=1&hp

Mike

Excellent piece, Mike. Thanks for sharing that little nugget. 

Best...Jeff

Travlin's picture
Travlin
Status: Diamond Member (Offline)
Joined: Apr 15 2010
Posts: 1322
Trrrific article
bound2chng wrote:

 

The Article from April " Time to wake up: Days of abundant resources and falling prices are over foreverthat is referenced in the NY Times article can be found on The Oli Drum link below.

 

http://www.theoildrum.com/node/7853

 

Bound2chng

That is a terrific article, and strongly supports what Chris says.  Thanks for the link.

Travlin 

Ready's picture
Ready
Status: Platinum Member (Offline)
Joined: Dec 30 2008
Posts: 917
License to drive a tractor?

So, in another attempt to force little farmers out and food inc. in, feds are looking at making it a requirement for a person driving a tractor to have a CDL (commercial drivers license).

 

http://www.gazettevirginian.com/index.php/news/34-news/3739-proposed-rule-on-farms-called-absurd

 

Quote:

A new rule being proposed by the federal Department of Transportation would require farmers to get commercial drivers licenses.

The Federal Motor Carrier Safety Administration, which is a part of DOT, wants to adopt standards that would reclassify all farm vehicles and implements as Commercial Motor Vehicles, officials said. Likewise, the proposal, if adopted, would require all farmers and everyone on the farm who operates any of the equipment to obtain a CDL, they added.

The proposed rule change would mean that anyone who drives a tractor or operates any piece of motorized farming equipment would be required to pass the same tests and complete the same detailed forms and logs required of semi-tractor trailer drivers.

Drivers would keep logs of information including hours worked and miles traveled. Vehicles would be required to display DOT numbers. A CDL in Virginia costs $64 for eight years, or $8 per year, not including the cost of an instructional class and the written test.

If the DOT reclassifies farm vehicles and implements as commercial vehicles, the federal government will have regulatory control over the nation’s farm workers, estimated at over 800,000, by requiring them to have commercial drivers licenses.

dcm's picture
dcm
Status: Silver Member (Offline)
Joined: Apr 14 2009
Posts: 205
Cancerous growth

would love to see Jeb Bush and Eric Sprott in a debate over "growth". That snappy WSJ article proves Eric's point in an instant. Saying it does not make it true. 

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