Daily Digest

Daily Digest 8/16 - China Is Now Second-Largest Economy, Euro's Ordeal By Fire, Battle Over Coal In Mining Country

Monday, August 16, 2010, 9:40 AM
  • Rates Fall as Market Fears Economic Weakness
  • Bullion As Investment
  • China Passes Japan as Second-Largest Economy
  • Investors Pull Back From Risk Assets After Japan Data
  • Wall Street's Big Win
  • Ireland Can Withstand The Euro's Ordeal By Fire, But Can Southern Europe?
  • Willem Buiter's Game Theoretical Explanation Of The Interaction Between Central Banks And Treasuries
  • A Battle in Mining Country Pits Coal Against Wind
  • Artificial Meat? Food For Thought By 2050

Crash Course DVDThe Crash Course DVD, featuring live intros and outros by Chris (NTSC or PAL)


Rates Fall as Market Fears Economic Weakness (jdargis)

As Labor Day approaches, interest rates have collapsed, plunging along with economic optimism. That turn of events, which has shocked savers and stunned investors, appears to indicate that financial markets’ worries are turning in a very different direction from those of many governments.

Bullion As Investment (Doug)

I'm influenced by the superb research into commodities markets which was undertaken by Chris Martenson, and reflected in his ground-breaking presentation: The Crash Course. Martenson constructs many eloquent and powerful arguments that "peak supply" is a concept which is applicable (to greater or lesser degrees) to many of our most "precious" non-renewable resources. I encourage all doubters to take the time to view this presentation -- with the expectation that there will be far fewer doubters once they view Martenson's analysis.

China Passes Japan as Second-Largest Economy (jdargis)

Experts say unseating Japan — and in recent years passing Germany, France and Great Britain — underscores China’s growing clout and bolsters forecasts that China will pass the United States as the world’s biggest economy as early as 2030. America’s gross domestic product was about $14 trillion in 2009.

Investors Pull Back From Risk Assets After Japan Data (jdargis)

Asian shares touched three-month lows, though they regained ground towards the end of the session as Chinese shares rose, with China’s GDP now having surpassed Japan’s to make it the world’s second-largest economy.

But figures in the eurozone showed that energy and commodities were propping up inflation. Overall prices rose 1.7 per cent since last July, but core consumer prices fell 0.5 per cent in the past month – suggesting still-sluggish activity in many sectors – while the rising headline may push the European Central Bank to tighten policy, threatening the recovery.

Wall Street's Big Win (pinecarr)

Dodd-Frank was neither an FDR-style, paradigm-shifting reform, nor a historic assault on free enterprise. What it was, ultimately, was a cop-out, a Band-Aid on a severed artery. If it marks the end of anything at all, it represents the end of the best opportunity we had to do something real about the criminal hijacking of America's financial-services industry. During the yearlong legislative battle that forged this bill, Congress took a long, hard look at the shape of the modern American economy – and then decided that it didn't have the stones to wipe out our country's one ­dependably thriving profit center: theft.

Ireland Can Withstand The Euro's Ordeal By Fire, But Can Southern Europe?

Unlike other GIIPS (Greece, Italy, Portugal, and Spain), Ireland has an open economy geared to global trade. It has at least a sporting chance of clawing its way out of a horrendous eurozone trap.

Willem Buiter's Game Theoretical Explanation Of The Interaction Between Central Banks And Treasuries (jdargis)

Buiter summarizes the problem as follows: "As long as neither the monetary authority nor the fiscal authority gives in, the deficit is financed by public debt issuance. With the public-debt to GDP ratio rising without bound, an eventual catastrophe occurs: the sovereign defaults and banks holding large amounts of sovereign debt may collapse, triggering a financial crisis and a deep slump. Following default, the fiscal authority loses access to the government debt markets, at least for a while. The resulting need to instantaneously balance the government’s primary budget means sharp public spending cuts and tax increases. This would be the "collision" outcome."


A Battle in Mining Country Pits Coal Against Wind (jdargis)

For many renewable-energy advocates outside the region, the struggle at Coal River Mountain has become emblematic of an effort across the country to find alternatives to fossil fuels. They have lent money, expertise and high-profile celebrities like Daryl Hannah and James Hansen, the NASA climate scientist, to help residents advance their case for wind power and to make it a test case for others pursuing similar projects nationwide.


Artificial Meat? Food For Thought By 2050 (joemanc)

Several studies suggest farmers will be up against environmental limits by 2050, as industry and consumers compete for water. One group of US scientists suggests that feeding the 3 billion extra people could require twice as much water by then. This, says Professor Kenneth Strzepek of the University of Colorado, could mean an 18% reduction in worldwide water availability for food growing by 2050.

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
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4282
Re: Daily Digest 8/16 - China Is Now Second-Largest ...


"WASHINGTON (MarketWatch) -- Home-builder confidence slumped in August to a 17-month low, according to a report released Monday, in another indicator of a tentative housing market.

The National Association of Home Builders/Wells Fargo Housing Market Index fell by one point to 13, its worst reading since March 2009. Economists polled by MarketWatch had anticipated a rise to 15.

To put in perspective, any reading over 50 indicates that more builders view conditions as good than poor. There hasn't been a reading over 50 since April 2006."

"LANSING — Michigan faces an estimated $140 million interest bill next year stemming from its federal unemployment borrowing, and that could mean additional taxes starting in January for thousands of employers.

A state solvency tax, assessed on “negative balance” employers whose employee-benefit claims exceed the unemployment taxes they paid, is slated to return in January to repay interest on the $3.8 billion the state has borrowed from the U.S. Department of Labor to help pay benefits.

The federal stimulus law included a temporary interest waiver for Michigan and other states borrowing money, but that reprieve ends at year's end and states must start paying interest in 2011 unless Congress extends the waiver.

State and business officials hope that extension will occur.
Given the uncertainty, the Michigan Unemployment Insurance Agency is getting the word out to employers that the state solvency tax of up to $67.50 per employee could be heading their way."

"An obscure financing wing of Bergen County government that has been implicated in a mortgage-fraud case has accumulated a debt of about $450 million — a 45-fold increase from its debt 10 years ago.
More than $300 million of that debt is guaranteed by the county, which means taxpayers would be on the hook in the event of defaults."

"Nebraska likely will have to come up with more than $100 million in the next two-year budget for two of the state's retirement plans.

The retirement funding problem accounts for about 15 percent of the more than $751 million budget hole facing state senators and the governor.

This will be the second stage of an effort to make sure the state's three defined benefit plans -- for teachers, troopers and judges -- make up losses from the 2008 stock market crash."

"SANTA CRUZ -- Santa Cruz Metropolitan Transit District bus drivers were some of the highest-paid employees in the entire district last year, with some earning overtime wages that nearly doubled their paychecks.

A look at salaries for 2008 and 2009 show that after district Manager Les White, district counsel Margaret Gallagher and Operations Manager Ciro Aguirre, one bus driver who worked significant overtime was the fourth highest paid of 330 employees.

White earned $169,937 as his annual salary for 2009. The highest-paid bus driver earned $114,771 in the same year, $61,910 of that in regular pay and $52,860 in overtime. Overtime pay is typically 1.5 times a worker's hourly rate. The district's fiscal year 2010 budget was $40.9 million."

"Medicare Part B does not face insolvency because it is funded by a combination of general tax revenues and beneficiary premiums. Expenditures on outpatient care grew at an average annual rate of 8.3% during the past five years, exceeding gross domestic product growth by 4.2 percentage points annually, on average.

Projected annual spending growth for Part B is estimated to average only 5.3% during the next five years, about the same as the GDP growth rate, the report said. But this assumes deep physician pay cuts will take effect. Unless Congress steps in, physician rates are scheduled to decline 23% on Dec. 1, an additional 6.5% in January 2011 and 2.9% in 2012.

"The projected future growth rate reflects unrealistic reductions in physician payments required by the current law," the trustees wrote. "Legislative changes to the current statute regarding physician payments are nearly certain and could increase the projected Part B growth rates to about 8% through 2014."

The American Medical Association warned that the health of the Medicare program depends on Congress taking action to ensure adequate patient access to care.

"This report is just the latest warning bell for members of Congress who know the Medicare physician payment system is broken," said AMA Immediate Past President J. James Rohack, MD. "Congress can shore up physicians' confidence in Medicare and help preserve seniors' health care by abandoning the practice of passing stopgap measures that ultimately make the problem worse.""

"HOUSTON, Aug. 16 /PRNewswire/ -- Foreclosure-Support.com, a market-leading source of foreclosed home listings and foreclosure market analysis, reported today that bank repossessions during the second quarter of 2010 topped out at 269,962 properties, the highest ever quarterly total since the foreclosure crisis began. The figure was up 5% from the previous quarter, and 38% from the second quarter of 2009.

Foreclosure-Support.com business analyst John Clark was careful to point out the difference between bank repossessions and new foreclosures when assessing the statistics.

"Bank repos occur after a home has been in foreclosure for some time," Clark remarked. "After the homeowner's allotted time to pay off the debt runs out, the banks start repossessing."

Bank repossessions are considered the final stage of foreclosure. Due to foreclosure moratoriums and loan refinancing and modification programs, many foreclosure properties avoided repossession for longer than usual. Now that those periods have largely expired and more foreclosures are still coming on to the market, banks repossessions are occurring in great volume."

"Aug. 16 (Bloomberg) -- The back-to-school shopping season is off to a slow start as retailers and consumers wait to see who will blink first.

Americans are looking for more discounts, and retailers are trying to hold out in an effort to protect profit margins, said Craig Johnson, president of the New Canaan, Connecticut-based consulting firm Customer Growth Partners. Department stores J.C. Penney Co. and Kohl’s Corp. lowered their profit forecasts last week.

“No one buys on the first markdown,” said Johnson. “Only chumps pay full price. We haven’t seen the desperation fire sales yet.”

As a result, the back-to-school shopping marathon, the second-largest shopping season in the U.S. after the end- of-year holidays, could be pushed deep into September, said Eric Beder, an analyst at New York-based Brean Murray Carret & Co.

Retailers ordered more merchandise when the U.S. economy was rebounding earlier this year, he said. Now they will have to clear out their summer stock. The question is when to cut prices and by how much, he said."


  •  Other news and headlines:


Islamic gold dinar move sparks debate about legitimacy of dollar

Another Threat to Economy: Boomers Cutting Back

Number of payday loans quadruples (UK)

Ireland sovereign default insurance cost rises

Bond Risk in Japan, Australia Rises, Credit-Default Swaps Show

106 ex-S.J. employees get more than $100K per year in pension earnings

 Will California Repudiate Its Debt?

More and more teachers, police, and firefighters are retiring in the wake of governor's cost saving plans (New Jersey)

Foreclosures, short sales make up 60% of Reno-Sparks market

Las Vegas home values keep going down (75% "underwater")

Wal-Mart Quietly Raises Prices (From 8/10)

rjs's picture
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Re: Daily Digest 8/16 - China Is Now Second-Largest ...

re China being #2 isnt news; here’s from the CIAs world factbook:

Rank country GDP (purchasing power parity) Date of Information

1 European Union $ 14,510,000,000,000 2009 est.

2 United States $ 14,260,000,000,000 2009 est.

3 China $ 8,789,000,000,000 2009 est.

4 Japan $ 4,137,000,000,000 2009 est.

5 India $ 3,560,000,000,000 2009 est.


djhester1940's picture
Status: Bronze Member (Offline)
Joined: Sep 22 2008
Posts: 35
Re: Daily Digest 8/16 - China Is Now Second-Largest ...

I hear a great deal about home forclosures but I am curious about other types of repossessions such as autos, boats, etc. Does anyone keep track of these asset classes? If so, where can we get the data? I would really like to know how many of cash-for-clunker cars have been repossessed?



dickey45's picture
Status: Bronze Member (Offline)
Joined: Oct 12 2008
Posts: 77
Re: Daily Digest 8/16 - China Is Now Second-Largest ...

Banks may have out cuted themselves.

Homeowners' Rebellion: Recent Rulings Could Shield 62 Million Homes From Foreclosure

Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut breaks the chain of title, voiding foreclosure. The logical result could be 62 million homes that are foreclosure proof.

Every now and again the little guy wins.

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