Daily Digest

Daily Digest 9/21 - The Wealth Gap, The Last Price Standing Of "True Money", China As Energy Superpower

Tuesday, September 21, 2010, 9:59 AM
  • American Businesses and Consumers are NOT Deleveraging ... They Are Going On One Last Binge
  • Price Of Health Reform: Insurers Ask Higher Rates Than Expected
  • Mind The (Wealth) Gap
  • America: Love It Or (If You're Rich Enough) Leave It?
  • Eric King Interviews Eric Sprott, Art Cashin
  • The IMF Itself Has Become The Problem As Europe's Woes Return
  • Some in China Ready To Drop U.S. Holdings And Pour Money Into Nation
  • Bill Buckler Discusses The Last Price Standing Of "True Money", Answers The Only Question Relevant To Gold Bugs
  • Japan Not Told Of Chinese Decision To Cut Ties
  • EU-China relations: EU strategy towards China
  • UK Treasury Minister To Lead Debt Delegation To Mideast
  • Those Who Don't Build Must Burn
  • China: Energy Superpower
  • Chinese Vice Premier Calls For Promotion Of Peaceful Use Of Nuclear Power
  • China's Power Generation Capacity Leaps Above 900 Million Kilowatts
  • Higher Interest Rates Needed To Contain Mining Boom, Says Glenn Stevens
  • An Inconvenient Truth about OPEC

Crash Course DVDThe Crash Course DVD: in-depth analysis on peak oil, debt, demographics, only $24.99 in our store (NTSC or PAL)


American Businesses and Consumers are NOT Deleveraging ... They Are Going On One Last Binge (DavidC)

Okay, so 6 million American homeowners are not being super frugal about either paying their mortgages or saving the money for another investment. But surely the hundreds of millions of other Americans are reducing debt and deleveraging, right?

In fact, as the Wall Street Journal notes today, the overwhelming majority of debt reduction by consumers is not due to voluntary debt reduction, but due to defaulting on their debts and having them involuntarily written down by the banks...

Price Of Health Reform: Insurers Ask Higher Rates Than Expected (joemanc)

Connecticut regulators in recent days approved increases of more than 20 percent on some health plans starting Oct. 1, including a series of rates requested by Anthem Blue Cross & Blue Shield, by far the largest health insurer in the state. The immediate changes mostly affect new customers buying health insurance on the individual market, not those who are in group plans through employers, or existing members of individual-market plans. The higher prices, however, are a glimpse of what may be in store later this year when insurers propose new rates for 2011.

Mind The (Wealth) Gap (Ilene)

The Census Bureau found that the fraction of Americans living in poverty rose sharply to 14.3% in 2009, up from 13.2% previously. This is the highest level since 1994. In total, 43.6 million Americans were living in poverty last year. Even the median family is getting the shaft in America with 2010 inflation-adjusted salaries barely keeping pace with 1980 inflation-adjusted salaries - making 3 full decades without improvement for the average American family. According to the WSJ, the bottom 40% (120M people) have dropped from having 14.5% of the nation’s income in 1980 to having 12% in 2010, a 30-year decline of 17.3% while the top 5% (15M people) gained 31%, with their share of the Nation’s wealth rising from 17.5% to 21.7% of all income.

America: Love It Or (If You're Rich Enough) Leave It? (Don B.)

Where could an American tax refugee go? As a starting point, check out the World Bank's handy list of the top marginal tax rates in more than 100 countries. For details on individual countries, taxrates.cc has a very comprehensive listing.

FYI, Russia wants just 13% of your income if you become a resident. Bulgaria will take a mere 10%. Canada's highest federal tax rate is 29%, but provincial taxes can push the top marginal rate to 48.25%.

Eric King Interviews Eric Sprott, Art Cashin (pinecarr)

A couple of insightful interviews, brought to you by King World News.

The IMF Itself Has Become The Problem As Europe's Woes Return (pinecarr)

Portugal was a net foreign creditor in the mid-1990s. EMU has turned it into a net foreign debtor to the tune of 109pc of GDP. That is what happens when you cut interest rates suddenly from 16pc to 3pc.

The IMF itself has become the problem, operating as an arm of EU ideology... It offers no remedy since it acquiesces in the EU's ban on debt-restructuring.

    Crash Course DVDThe Crash Course DVD: in-depth analysis on peak oil, debt, demographics, only $24.99 in our store (NTSC or PAL)

Bill Buckler Discusses The Last Price Standing Of "True Money", Answers The Only Question Relevant To Gold Bugs (pinecarr)

Bill Buckler, publisher of The Privateer Report, has released one of the most scathing critiques of paper money we have read to date: "Before it can be exchanged, wealth must be created. Wealth cannot be created out of thin air.

Some in China ready to drop U.S. holdings and pour money into nation (Don B.)

This debtor-lender relationship between America and China is a "financial balance of terror," as White House adviser Lawrence Summers once put it. If China sold its dollar holdings, U.S. borrowing needs are so great that the sale could cause a spike in interest rates and push America back into recession.

Japan Not Told Of Chinese Decision To Cut Ties (pinecarr)

Tokyo calls for calm as spat deepens over Chinese trawlerman arrested after collision with Japanese coastguard vessel.

UK Treasury Minister To Lead Debt Delegation To Mideast (pinecarr)

A high ranking British minister is to lead a delegation to the Middle East to meet investors, government officials and sovereign wealth funds, in a bid to sell more UK debt, it was reported on Sunday. Clip 2: It is rare for such a high profile British minister to be part of the delegation, but Lord Sassoon said the aim is to convince Gulf investors that the UK debt situation is different from that facing Greece and it is a safe market to continue investing in.

EU - China relations: EU Strategy Towards China (pinecarr)

We do know how the EU High Representative for Foreign & Security Policy/Commission Vice President (HR), Cathy Ashton, sees China, following her recent, very successful visit to Shanghai, Beijing and Guizhou, and her long discussions with State Councillor Dai Bingguo, and meetings with Premier Wen Jiabao and Foreign Minister Yang Jiechi. The HR is convinced that there are few more vital EU tasks than to decide the right strategy and set the right direction for the EU’s strategic partnership with China.

Those Who Don't Build Must Burn (JimQ)

When Ray Bradbury wrote his novel in the basement of the UCLA library on a pay per hour typewriter, television was in its infancy. In 1945 there were only 10,000 television sets in all of America. By 1950, there were 6 million sets. The US population was 150 million living in 43 million households. Only 9% of these households had a TV. There was one TV for every 25 people. Americans read books and newspapers to be aware of their world. Today, there are 335 million television sets in the country. The US population is 310 million living in 115 million households. There is a TV in 99% of these households, with an average of 3 TVs per household. Your reality is whatever the corporate media decides is your reality.


China: Energy Superpower (pinecarr)

Because energy is tied to so many aspects of the global economy and because doubts are growing about the future availability of oil and other vital fuels, the decisions China makes regarding its energy portfolio will have far-reaching consequences. As the leading player in the global energy market, China will significantly determine not only the prices we will be paying for critical fuels but also the type of energy systems we will come to rely on.

Chinese Vice Premier Calls For Promotion Of Peaceful Use Of Nuclear Power (pinecarr)

Chinese Vice Premier Zhang Dejiang said Sunday China should vigorously promote the peaceful use of nuclear energy and strengthen its self-innovation to ensure the sound, fast and safe development of China's nuclear industry.

China's Power Generation Capacity Leaps Above 900 Million Kilowatts (pinecarr)

China's installed power generation capacity has exceeded 900 million kilowatts Monday after a reactor with the second phase of Ling'ao Nuclear Power Plant began operation in Guangdong Province, chief of the country's top economic planner said.

Higher Interest Rates Needed To Contain Mining Boom, Says Glenn Stevens (pinecarr)

Higher interest rates will probably be needed to cool the effects of Australia's biggest mining and energy boom since the 19th century. Such a strategic policy direction would come into play as the boom overwhelmed Australia’s strengthening economy.

An Inconvenient Truth about OPEC (Jason G.)

In forecasts that carry forward to the 2030’s, the three organizations share the view that world energy demand will increase, that developing countries will account for most of the increase, and that fossil fuel will remain dominant. They also agree that dependence on oil from OPEC members will increase as non-OPEC oil resources dwindle and become more expensive to extract. But a major flaw in modeling world oil markets makes these forecasts as unrealistic as a projection that humans will land on Mars tomorrow.

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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Re: Daily Digest 9/21 - The Wealth Gap, The Last Price ...

"FRANKFURT—The European Central Bank has increased its purchases of government bonds amid rising concerns in financial markets about the ability of Greece, Ireland and Portugal to repay their debts."

"Although the ECB has spent more than €61 billion ($79.58 billion) since May on government bonds, borrowing costs haven't declined for struggling countries on Europe's fringe. Yield spreads between government debt in Greece, Ireland and Portugal and their safer German equivalents are hitting or approaching record highs, making it harder for the countries to finance mountingdebts.

The ECB said it spent €323 million on government bonds last week, up from €237 million the previous week and its highest level since mid-August. The bank doesn't offer breakdowns of its purchases by country or maturity."

"Ireland sold 1 billion euros of 2018 securities at a yield of 6.023 percent, up from 5.088 percent in June, the National Treasury Management Agency in Dublin said. It sold 500 million euros of 2014 debt at an average yield of 4.767 percent, compared with 3.627 percent at an Aug. 17 auction."

"Britain last month posted a record budget deficit for August as interest payments on index-linked gilts shot up because of higher inflation than a year ago, official data showed on Tuesday.

The Office for Nationals Statistics said public sector net borrowing came in at 15.302 billion pounds, well above analysts' forecasts for a reading of 12.5 billion and some 1.8 billion pounds up on the year."

"Portugal’s budget gap widened in the first eight months of the year, indicating the government may struggle to rein in the euro-region’s fourth-largest deficit as its borrowing costs surged to a record.

The central government’s shortfall rose to 9.19 billion euros ($12 billion) from 8.74 billion euros a year earlier, the Finance Ministry said late yesterday. Tax revenue rose 3.3 percent, more than budgeted, and spending increased 2.7 percent, in line with budget estimates, the ministry said.

Portugal’s borrowing costs rose to a euro-era record yesterday, on concerns over the government’s ability to rein in the region’s fourth-largest budget deficit while avoiding a return to recession. While the extra yield investors demand to hold Portuguese debt rather than German equivalents eased to 388 basis points today, that’s still close to the level Greek bonds were trading at in April when the European Union offered the country emergency loans to avoid default."

"EDUCATION: District has three weeks to close $1.1 billion gap."

"Just a week into the new school year, Los Angeles Unified officials are already mired in budget woes and have just three weeks to figure out how to erase the $1.1 billion deficit projected over the next three years.

Thousands of employee layoffs, program cuts and larger class sizes are being discussed as the school district lays out a plan for closing a $446 million gap in 2011-12 and a $700 million hole in 2012-13.

"We are already in a situation where we are down hundreds of employees and have a shortened school year ... It is a very problematic way to run the nation's second-largest school district," Deputy Superintendent John Deasy said. "

  • Other news, headlines and opinion:

 US Loses No. 1 to Brazil-China-India Market in Investor Poll

Medicaid will cost NY state $63.5 billion in 2014

Spain Sells Maximum Amount at Auction as Borrowing Costs Rise

IMF and EU postpone stress tests in Greece to allow more time to prepare

Colorado state budget gap could reach $257M

State's Medicaid numbers hit record (Pennsylvania)

AP Investigation: CalPERS Bumped Pay as Fund Dived

Russia to fire 100000 bureaucrats in next three years

University of California 40-Year Debt Reflects State Budget Woes

Pensions still dream of 8% returns

State pension costs to soar by 2012 (UK)

Bulls Go to Extremes: Don't Buy the "Breakout", Sell It, Prechter Says (Tech Ticker video)

Bob Prechter: My Charts Say DOW May Plummet To 2,000 (Tech Ticker video.....also sees gold going lower though)

Weekly Insider Buying and Selling by S&P 500 Companies

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Re: Daily Digest 9/21 - The Wealth Gap, The Last Price ...

QE II coming...go Gold!


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Re: Daily Digest 9/21 - The Wealth Gap, The Last Price ...
idoctor wrote:

QE II coming...go Gold!


Looks like they are sending Uncle Buck to the firing squad. 

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UK Minister Leading Debt Delegation? American President Soon...


Re: UK Treasury Minister To Lead Debt Delegation To Mideast?

I bet in a few years, the U.K. Prime Minister himself will have to lead the delegation. And so will an American President herself!


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Re: Daily Digest 9/21 - The Wealth Gap, The Last Price ...

Aussie $ above 95 US cents on Fed meeting

By finance reporter Lexi Metherell


The Australian dollar has reached a fresh 26-month high, after a meeting of the US Federal Reserve fuelled expectations it is poised to inject more money into the US economy.

As widely expected, the Fed did not take any action overnight, but observers say it has opened the door to another round of buying billions of dollars of bonds to boost the money supply.

It indicated it is concerned that inflation is too low, in a statement saying it is "prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate."

The Economist's chief economics editor, Zanny Minton Beddoes, has told Radio National Breakfast the Fed has room to do more.

"They will do more because the US economy has slowed a lot over the summer, there's not much sign of any reacceleration, and there's likely to be quite a lot of fiscal tightening next year," she said.

"So I think it's a question now of when, not if."

As investors sold off the US dollar, the Australian dollar rose to 95.64 US cents, its highest level since July 2008.

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Albert Edwards Latest

via zerohedge


The recent intervention by the BOJ has quickly become the most contentious decision in global economic circles, with many wondering now that the world economy is off on a course of radical currency devaluation, who will be next, and how far will this game continue? If Albert Edwards, whose latest piece rhetorically asks (and answers) "what do devaluation, high unemployment, inequality and food prices spell?  C-H-A-O-S" is correct, this could be the beginning of a rapid descent in which central banks around the world are all forced to use the nuclear option: ceaseless FX devaluation, but one coupled with an endless increase in the money supply a process which can only have one outcome - that predicted recently by Eric Sprott when he said that "we are now paying for the funeral of Keynesian theory." However, the biggest threat is that this most recent invocation of the nuclear option is coming at a time when the world is least prepared to handle it - social imbalances are at unprecedented levels, and if, as many predict, the price of key food products is about to surge (courtesy precisely of these failed central bank policies) to a point where the great unwashed end up on the wrong side of hungry, from there, to armed conflict, the line is very, very thin.

Edwards looks first at the immediate reasons that prompted Shirakawa to do what he did.

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