Daily Digest

Daily Digest 9/21 - Chinese Rare Earth Reserves Down, World Oil Use Predicted To Rise 27% By 2035, IMF Cuts Canadian Outlook

Wednesday, September 21, 2011, 9:43 AM
  • German, Italian Credit Swaps Hit Records as Debt Crisis Deepens
  • IMF sees Greek debt hitting 189% of GDP next year
  • Italian Consumer Groups to Sue S&P After Italian Downgrade
  • Berlusconi hits back in outrage at credit downgrade
  • Europe’s struggle to survive: A devastating human toll
  • IMF Cuts Italy’s Growth Forecasts, Says Won’t Zero Deficit
  • Couples 'cutting back wedding budgets'
  • Chinese rare earth reserves down by 37pct
  • 50% Toll Hike Takes Effect On NJ-NY Crossings
  • IMF Says ECB Should Cut Interest Rates If Debt Tensions Persist
  • Las Vegas commercial real estate defaults accumulate
  • San Diego Unified Board Hears Update On Budget Shortfall
  • World oil use seen up 27% by 2035
  • Global energy use to jump 53%
  • ConAgra 1Q Profit Falls on Higher Costs
  • Behind the poverty numbers: real lives, real pain
  • Homeless students on the rise in Amarillo
  • IMF cuts Canada's economic outlook
  • U.S. Offers Cash to States Rejecting Insurer Premium Increases
  • Average Canadian tuition rose by eight per cent in two years: StatsCan
  • UH holding hearing on tuition hike Tuesday
  • Food pantries in greater Portland struggle to keep up with demand
  • More Working Folks Showing Up at Food Pantries
  • Canada Fin Min Calls On Europe To Secure Bank Capital Levels

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

Economy

German, Italian Credit Swaps Hit Records as Debt Crisis Deepens

The cost of insuring against a default on German and Italian government debt jumped to records as Italy's downgrade signaled Europe's debt crisis is spreading.Credit-default swaps protecting Germany's bonds rose 4.5 basis points to 94.5 as of 10 a.m. in London, while contracts tied to Italy jumped 22 basis points to 510 basis points, according to CMA.Standard & Poor's cut Italy's rating, saying that weakening growth, a "fragile" government and rising borrowing costs would make it difficult to reduce Europe's second-biggest debt load. The European Central Bank was said to have bought Italian bonds today as part of efforts to contain the crisis that has already led to Greece, Ireland and Portugal being rescued.

IMF sees Greek debt hitting 189% of GDP next year

Greece's debt will surge to 189.1 percent of gross domestic product next year, the International Monetary Fund said Tuesday, far higher than its June projection of 172 percent.

Italian Consumer Groups to Sue S&P After Italian Downgrade

Two Italian consumer groups said they will sue Standard & Poor’s after it lowered the nation’s creditworthiness, the latest challenge to the rating companies amid a mounting public backlash.

S&P cut Italy’s credit rating last night to A from A+, with a negative outlook, on concern that weakening economic growth and a “fragile” government mean that the nation won’t be able to reduce the euro-region’s second-largest debt burden.

Berlusconi hits back in outrage at credit downgrade

The S&P statement is a negative comment on the government headed by Silvio Berlusconi, who is struggling to fight off new sex and blackmail scandals and whose popularity rating has dropped to an all-time low. Business daily Il Sole 24 Ore published a scathing editorial saying the government was “incapable of governing” and pointing to “the high price of decadence.”

The newspaper also reported that the government was preparing to revise down its economic growth estimates for 2011 and 2012 which could require further austerity.

Europe’s struggle to survive: A devastating human toll

Greece is hobbled by a jobless rate of about 16 per cent, Spain by about 20 per cent. According to reports last week, some drugs, including those used to fight cancer, have been withheld from some Greek hospitals that are late in their payments.

IMF Cuts Italy’s Growth Forecasts, Says Won’t Zero Deficit

The International Monetary Fund cut its forecast for Italian growth this year and next, saying the government will also miss its balanced budget goal in 2013.

Italy’s economy will grow 0.6 percent in 2011 and 0.3 percent in 2012, down from 1 percent and 1.3 percent forecast respectively in June, the Washington-based lender said in a report today.

Couples 'cutting back wedding budgets' (UK)

Figures published earlier this month by CompareWeddingInsurance.org.uk support his suggestion, as the data showed the average amount spent on a wedding this year is £15,500, down from £20,000 in 2008.

The research indicated couples are using the internet to find best prices, while guest numbers have been reduced and luxury extras are no longer being purchased.

Chinese rare earth reserves down by 37pct

It is reported that reserves of rare earth minerals in China, the world largest producer and exporter fell by 37% during the 11th Five-Year Plan period.

China produced 118,900 tonnes of rare earth products in 2010 while Inner Mongolia Baotou Steel Rare Earth Group Hi-Tech accounted for more than 60% of the global rare earth market.

Mr Xu Xu chairman of the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters, attributed the sharp fall in China rare earth reserves to the global reliance on China as a source of low cost rare earth imports. (Sourced from yicai.com)

50% Toll Hike Takes Effect On NJ-NY Crossings

The next time you drive to New York City, make sure you bring a few extra bucks. It now costs $12 to drive over the George Washington Bridge, Goethals Bridge, Bayonne Bridge and Outerbridge Crossing or through the Holland or Lincoln tunnels.

The $4 toll increase is needed to raise money to pay to rebuild the World Trade Center site in Manhattan. In addition to managing bridges and tunnels, the Port Authority of New York and New Jersey also owns the land that was occupied by the office complex destroyed in the Sept. 11, 2001 terrorist attacks.

IMF Says ECB Should Cut Interest Rates If Debt Tensions Persist

The European Central Bank should cut interest rates if the sovereign debt crisis continues to hurt euro-area growth, the International Monetary Fund said.

“Given declining inflation pressure and heightened financial and sovereign tensions, the ECB should lower its policy rate if downside risks to growth and inflation persist,” the Washington-based fund said in its World Economic Outlook today. The IMF cut its euro-area growth forecasts to 1.6 percent from 2 percent for 2011 and to 1.1 percent from 1.7 percent for 2012.

Las Vegas commercial real estate defaults accumulate

As the Las Vegas-area commercial real estate market continues to struggle, lenders and distressed-debt investors are proceeding full speed ahead with new lawsuits as they try to foreclose on properties, collect past-due balances or enforce personal guarantees.

There’s so much excess office space in the Las Vegas area that the office vacancy rate hit an all-time high of 24.8 percent in the second quarter, up from 24.1 percent in the first quarter, Applied Analysis reported.

San Diego Unified Board Hears Update On Budget Shortfall

The San Diego Unified School District already faces a $46 million deficit in its general fund for the current fiscal year and a projected shortfall of at least $57 million for 2012-13, according to a report scheduled to be presented to the Board of Education today.....The report, available on the SDUSD's website at sandi.net, notes that its figures only apply if the state is able to uphold its funding commitments to K-12 school districts instead of forcing them to make mid-year spending reductions.If the worst-case scenario plays out, the projected shortfall for the 2012-13 academic year could climb as high as $115 million, according to the report.

World oil use seen up 27% by 2035

World oil demand is expected to climb to 112.2 million barrels per day in 2035, the US Energy Information Administration said in its annual international energy outlook. That would be up 27 percent from 88.20 million bpd in 2011 and is an increase of 1.4 percent over last year’s EIA forecast.

“Most of the growth in liquids use is in the transportation sector, where, in the absence of significant technological advances, liquids continue to provide much of the energy consumed,” the EIA said.

Global energy use to jump 53%

Global energy use is expected to jump 53% by 2035, largely driven by strong demand from places like India and China, according to a report Monday.

Combined, developing nations currently use slightly more energy than those in the developed world, according to the U.S. government's Energy Information Administration. By 2035, they are expected to use double.

ConAgra 1Q Profit Falls on Higher Costs

The maker of foods such as Slim Jim, Chef Boyardee and Healthy Choice said Tuesday that it is dealing with "severe" cost inflation. The company backed its full-year earnings forecast, but said it expects those costs to grow during the year and it will continue to increase its prices.

It's tough news for shoppers, whose budgets are already strained, as it appears food makers are likely to continue to raise prices as they have for the past year or more.

Behind the poverty numbers: real lives, real pain

At a food pantry in a Chicago suburb, a 38-year-old mother of two breaks into tears. She and her husband have been out of work for nearly two years. Their house and car are gone. So is their foothold in the middle class and, at times, their self-esteem. "It's like there is no way out," says Kris Fallon.

She is trapped like so many others, destitute in the midst of America's abundance. Last week, the Census Bureau released new figures showing that nearly one in six Americans lives in poverty - a record 46.2 million people. The poverty rate, pegged at 15.1 percent, is the highest of any major industrialized nation, and many experts believe it could get worse before it abates.

Homeless students on the rise in Amarillo

According to the Guyon Saunders Resource Center, homeless students in Amarillo ISD have jumped to just over 1700 this year, up from just under 1400 last year. Major Tim Grider with The Salvation Army says he's seeing more families visit his shelter because many single parents have lost their jobs.

Grider explains, "This certainly is not surprising to hear that the number of kids identified as homeless in our school systems is up. There have been times we've had 55 kids. Our highest at one time because of our bedding situation is 70." Homeless shelters this month have been near capacity. Grider says just yesterday The Salvation Army on South Tyler Street was completely full.

IMF cuts Canada's economic outlook

Canada’s jobless rate will tick higher this year and next as the global economy enters a “dangerous new phase,” the International Monetary Fund said Tuesday as it chopped its forecast for the country. The IMF now sees Canada’s economy growing 2.1 per cent this year and just 1.9 per cent next year – much weaker than its April forecast of 2.8 per cent and 2.6 per cent, growth respectively.

U.S. Offers Cash to States Rejecting Insurer Premium Increases

The U.S. is offering $600,000 to states that make it harder for health insurers to raise premiums, federal regulators said.

Twenty states won U.S. Department of Health and Human Services “performance awards” for policies that let their insurance regulators reject premium increase requests, said Steve Larsen, director of the agency’s Center for Consumer Information and Insurance Oversight.

Average Canadian tuition rose by eight per cent in two years: StatsCan

As universities try to balance their budgets in the face of a sluggish economy, Canadian university students have seen their tuition go up by eight per cent in the last two years. A four per cent increase for the 2010–11 year was followed by another 4.3 per cent hike this year, according to recent Statistics Canada study

UH holding hearing on tuition hike Tuesday (Hawaii)

The public will have another chance to voice their concerns about a tuition hike at the University of Hawaii.

The school is holding another hearing at its West Oahu campus at 1 p.m. Tuesday. Currently, undergraduates at UH Manoa pay $4,200 per semester. By the fall of 2016, that number could increase to $5,688 per semester, which is more than $1,500 that what students pay now.

Food pantries in greater Portland struggle to keep up with demand

"It's a serious, serious problem," Wayside Food Rescue Program coordinator Don Morrison said in Portland.

Morrison said that while the 52 pantries his group supplies food to have seen dramatic increases in demand for their services, corporate donations from grocery stores, food processors and other sources have declined.

"Pantries are telling me they run out of food and there are still 10 families waiting," Morrison said. In Falmouth, one of the four volunteer food pantry coordinators, Nancy Lightbody, said there is frequently a line of people waiting when she opens the pantry's door.

More Working Folks Showing Up at Food Pantries

A small crowd waited in line Monday morning outside a South Florida food pantry in an effort to put food on their tables during tough economic times. It was a slow day for Food of Life Ministries, which helps 5,000 people every month. The organization started helping six homeless people living in the woods two years ago, but demand exploded amid the economic downturn, said the founder and leader of the ministry, Wayne Oxford.

"We try to help everyone that comes here, but it's not just the homeless anymore," Oxford said. "So we've seen change from homeless to everyday working folks coming in here."

Canada Fin Min Calls On Europe To Secure Bank Capital Levels

Canadian Finance Minister Jim Flaherty said Tuesday that European policymakers have to ensure the continent's banks are properly capitalized in face of acute sovereign debt woes. Meanwhile, he hinted Europe's backstop of sovereign debt may not be big enough, and is likely to be a topic of "intense" discussion when Group of 20 policymakers gather in Washington this week for the fall meeting of the International Monetary Fund.

"There is increased risk the longer this matter is delayed," he told reporters. "The eurozone has not yet brought this to a conclusion, and this can potentially affect the European banks, of course. That's why it is important to ensure the banks are adequately capitalized."

He noted eurozone policymakers have established one bailout fund, the European Financial Stability Fund, or EFSF, to backstop some of the troubled periphery countries. "It is questionable whether it is large enough and that is something I am sure we will talk about in Washington."

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."

4 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
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Nate's picture
Nate
Status: Platinum Member (Offline)
Joined: May 5 2009
Posts: 573
Unless I'm mistaken,

Unless I'm mistaken, saxplayer00o1 has set (another) record for daily posts!  Many thanks!!

Nate

Damnthematrix's picture
Damnthematrix
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BofA, Wells Fargo Downgraded

BofA, Wells Fargo Downgraded by Moody’s

BofA Credit Downgraded by Moody’s on Waning U.S. Support

Guy Calaf/Bloomberg

Bank of America Corp. signage is displayed at a branch in Times Square, New York.

Bank of America Corp. signage is displayed at a branch in Times Square, New York. Photographer: Guy Calaf/Bloomberg

Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) had long-term credit ratings downgraded by Moody’s Investors Service, which said U.S. support has become less likely if lenders get into financial trouble.

Citigroup Inc. (C)’s short-term rating also was cut by Moody’s, which said today “there is an increased possibility that the government might allow a large financial institution to fail, taking the view that contagion could be limited.” Citigroup’s stand-alone credit has improved, Moody’s said in a statement, leading the service to confirm the bank’s long-term rating.

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1028
  This article explains why

 

This article explains why the author thinks the EIA forcasts in the Daily Digest links above are too optimistic:

IEO 2011: A Misleadingly Optimistic Energy Forecast by the EIA

 http://www.financialsense.com/contributors/gail-tverberg/2011/09/21/ieo-2011-a-misleadingly-optimistic-energy-forecast-by-the-eia

There is widespread misunderstanding of our fossil fuel problems. The belief is that the fuels will somehow “run out.” In fact, the issue is that they will become too expensive to afford, or, if you think in terms of “peak oilers,” the Energy Return on Energy Investment (EROEI) will drop too low. High energy prices will likely lead to reduced energy consumption, which in turn will lead to recession, reduced economic growth, and eventually lower energy prices (as we saw in late 2008). At these lower prices, the high cost (low EROEI) resources will no longer be profitable to extract, and the extraction of these high cost resources will disappear.

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