Daily Digest

Daily Digest 9/23 - About That Hyperinflation Call, How Much "Capital" Really Exists, Peak Oil - Now Or Later?

Friday, September 23, 2011, 10:48 AM
  • Jobs Deficit Fuels US Action on China Yuan
  • IEO 2011: A Misleadingly Optimistic Energy Forecast by the EIA
  • Bizarro World Inflation; About that 2011 Hyperinflation Call...
  • High Frequency Trading is an Arms War!
  • So How Much "Capital" Really Exists?
  • Billboard Signals of Collapse
  • Flight To Safety, Liquidations Resume On Fresh European Stability Concerns
  • There Will Be Oil
  • Peak Oil - Now Or Later?
  • UK Monthly Oil Production

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

Economy

Jobs Deficit Fuels US Action on China Yuan (Johnny Oxygen)

A group of 51 business and farm groups, including the U.S. Chamber of Commerce and the Business Roundtable of corporate chief executives, warned lawmakers on Wednesday of the possible adverse effects of passing a bill.

Legislation that would increase tariffs on imports from China is unlikely to create any incentive for China to move expeditiously to modify its exchange policies," the groups said. "Rather, it would likely have the opposite effect and result in retaliation against U.S. exports into China — currently the fastest-growing market for U.S. exports."

IEO 2011: A Misleadingly Optimistic Energy Forecast by the EIA (woodman)

We live in a finite world. While it is true that huge resources of oil, natural gas, and coal are still theoretically available, we are starting to reach practical limits regarding extraction at prices that do not lead to economic contraction.

Bizarro World Inflation; About that 2011 Hyperinflation Call ... (adam)

It's not that I am in love with the dollar. Indeed I am not. I like gold. Historically, gold does well in periods of deflation and periods of credit stress. I also point out that gold fell from $850 to $250 from 1980 to 2000 with inflation every step of the way. Gold is decidedly not a hedge against inflation in any practical sense.

High Frequency Trading is an Arms War! (art)

The firms that control this lucrative industry range from private, closely held firms such as Chicago's GETCO, to major Wall Street banks like Goldman Sachs (NYSE: GS) and secretive hedge funds such as Renaissance Technologies. While the rewards can be huge, it is an ever evolving game where speed is everything. If firms aren't constantly upgrading their technology, along with their algorithmic strategies, they will soon become someone else's lunch.

So How Much "Capital" Really Exists? (June C.)

You want to know where panic comes from in the markets? It comes from this sort of crap, where one day we're told everyone has plenty of capital, where we're told that Bank of America and Morgan Stanley are "fine" along with all the banks in Europe and then we get an announcement that basically says oops, we lied, we'll recapitalize the banks.

You can't have this both ways.

Either there is enough capital or there is not.

Either the banks are financially sound or they are not.

Billboard Signals of Collapse (pinecarr)

The billboard messages are dire, ugly, dreadful, dangerous, and full of destruction, typical of systemic failure. Too bad the Keynesian textbooks do not have a chapter on banking system insolvency, or one quarter of the households living in negative equity, or central bank toxic paper pits, or global currency war, or confiscation of tyrant accounts. The ineffective monetary & fiscal policy has ushered in the nightmarish systemic failure. That is what is occurring.

Flight To Safety, Liquidations Resume On Fresh European Stability Concerns (pinecarr)

Yesterday's last minute short covering rally has been all but eliminated and then some, on fresh European concerns following a Deutsche Bank report that the agreed writedown of 21% from the July 21 second Greek bailout agreement could be executed, and that instead an orderly default with an up to 50% haircut is being considered. Generally, broad concerns that Greece can and will go bankrupt any minute once again dominate and have undone any favorable market sentiment from yesterday's G20, also known as the Full Tilt Ponzi Group, announcement, which was also followed up by an ECB statement that the central bank would do everything to prevent further contagion. Judging by the risk waterfall this morning, and the liquidations in gold, virtually nobody believes anything coming out of any European institution. Alas, this is what two years of relentless accrued lying will do to your reputation.

Energy

There Will Be Oil (ScubaRoo)

The date of the predicted peak has moved over the years. It was once supposed to arrive by Thanksgiving 2005. Then the "unbridgeable supply demand gap" was expected "after 2007." Then it was to arrive in 2011. Now "there is a significant risk of a peak before 2020."

Peak Oil - Now Or Later? (ScubaRoo)

In a recent article called There Will Be Oil in the WSJ, Daniel Yergin once again attempts to debunk the concept of peak oil and sees global production capacity growing to 110 mmbpd by 2030, followed by slow decline. In this short report I will take a quick look at his key arguments in an effort to bring further convergence between the peak oil and business-as-usual camps.

UK Monthly Oil Production (ScubaRoo)

This data has been provided by the Production Operators to DECC using the UK PPRS "Petroleum Production Reporting System". Please note that while every care is taken to ensure that this information is correct, DECC does not guarantee its accuracy. Anyone relying on the information does so at their own risk

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."

10 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4145
Massive bank capital gap looms in Europe

 

"Europe's banks face a capital hole of at least 200 billion euros ($404 billion) if Greece forces them to slash the value of its debt and other troubled euro-zone countries like Italy and Ireland follow suit.

Talk that Europe needs to shore up its banks -- if necessary with capital from taxpayers' pockets -- is gathering steam as talk of a possible Greek default gains pace. That in turn is increasing speculation that banks will have to write down debt from governments right across the region."

"A government shutdown looms in just a week as the Democratic-led Senate prepares to reject a House-passed funding bill on Friday.

In an after-midnight vote, the House approved a bill to fund the government through Nov. 18, after Republican leaders convinced conservatives to vote for the spending measure they’d previously rejected.

Democrats said it doesn’t have enough disaster relief aid as the bill passed on a 219-203 vote. "
 

 

Other news, headlines and opinion:

  1. Greek minister says 50% haircut possible: reports
  2. ECB Ready to Act Next Month If Outlook Worsens
  3. Moody's hits Greece, Slovenia with downgrades
  4. Moody's Downgrades 8 Greek Banks
  5. $2 billion hole will mean ‘brutal’ decisions for special session (Washington)
  6. Moody's downgrades Portugal's Madeira Islands
  7. The Dutch Central Bank (DNB) is seriously considering the possibility that Greece will default on its debts
  8. ECB’s Knot No Longer Excludes Greek Default, Dagblad Reports
  9. Levy's budget could lay off more than 700 (NY)
  10. Sovereign, Bank Bond Risk Rise to Records, Default Swaps Show (Europe)
  11. More Floridians seeking disability insurance as economy sours
  12. UK Insurers Wary Over Investment Exposure To Euro-Zone Crisis
  13. Global Stocks Drop 20% Into Bear Market as Debt Crisis Outweighs Profits
  14. G20 fail to ease tensions in markets
  15. Money Market Funds Cut European Bank Debt to Lowest Since 2006, Fitch Says
  16. Muni-Bonds’ $230 Billion Tax Savings Make Exemption Supercommittee Target
  17. Korean Won Jumps Most in Four Months as Authorities Decide on Intervention
  18. China’s Property-Market Squeeze Is Nearing a ‘Tipping Point,’ Nomura Says
  19. Greenspan: Greece Could Default In Coming Weeks Without Tranche

 

 

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Share This Must-Watch Video Short

A must-watch video you can quickly and easily share with unconverted frrends and family. A little simplistic in explanation, but still gets the major point across in a few short minutes.

Poet

dps's picture
dps
Status: Martenson Brigade Member (Offline)
Joined: Jun 27 2008
Posts: 442
Share This Must-Watch Video Short

nice catch, Poet.  ... dons

heffe's picture
heffe
Status: Bronze Member (Offline)
Joined: Dec 26 2009
Posts: 95
Deficits, hyperinflation and peak oil.

Great video Poet, Im going to post it on facebook in hopes that some will watch it......sadly too few of my friends care or think theres anything they can do to mediate the situation. Which is true, as in my case I just started learning about all of our economic predicaments a few years ago. At my age, combined with my air-headed parents (whom I love, but they dont have a clue), Im screwed.  $20,000 in college bills, another $10,000 in hospital bills, unemployed with weekly job searches and little income for the last year, I dont have any means of escape with the current situation.  All my peers are even worse as they havent 'prepared' in any way, nor do they think there's a problem to worry about. They happily work their service industry jobs, scraping by month by month, Im worried what a default or hyperinflation would do to their lives or the hundreds of millions of others in similar situations.

Regarding the articles on peak oil, I found this website www.worldmeters.org which calculates several data points on various issues like deforestation, co2 emissions, and oil consumption. According to the numbers there, we have 15,000 days of oil left (41 years), based on current rates. If we include economic growth in China creating a huge influx of gasoline consumption, along with population growth, its likely to be 20-30 years. But as we all know economic contraction occurs long before the end of oil.

Now with those articles on hyperinflation, Ive seen so many articles detailing why hyperinflation should have occured, but it hasn't. Is this the deflationary contraction of the high unemployment/debts counter-acting the inflationary aspects of quantitative easing? Eventually one is going to win out, and we all assume that Bernanke will lower rates allowing easier access to credit, but is this going to produce hyperinflation?  Im starting to see this deflationary spiral like a black hole, and no matter how much money we throw at it, hyperinflation cannot occur. Its more like a prolonged death via life-support. Then again, there are so many variables that continually change everyday that no one can predict much.

Tommygun's picture
Tommygun
Status: Bronze Member (Offline)
Joined: Apr 21 2009
Posts: 65
Re: Gold in a bubble? No...

I found this short 12 minute video to be informative and it might be worthwhile to view regarding  the future market potential of gold in light of the recent market volitility and reconsolidation. I think it is  realistic and it reflects a level headed view from investors who are not gold bugs .

http://www.morningstar.com/Cover/videoCenter.aspx?id=395308

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Heffe, Just Do It
heffe wrote:

Im screwed.  $20,000 in college bills, another $10,000 in hospital bills, unemployed with weekly job searches and little income for the last year, I dont have any means of escape with the current situation.  All my peers are even worse as they havent 'prepared' in any way, nor do they think there's a problem to worry about. They happily work their service industry jobs, scraping by month by month, Im worried what a default or hyperinflation would do to their lives or the hundreds of millions of others in similar situations.

I would say, even if you have no money to invest or buy the latest Expensive Survival Gear 2000X Gold Edition...

1. Start a garden - even if it's in your parents' back yard or a relative's yard. Learn to grow things like tomatoes, long beans, cucumbers, squash, etc. Grow heirloom plants and learn to save the seeds. My wife and I had a huge learning curve just this year on gardening our tiny community garden plot. I learned a lot of lessons that will make next year a more productive and correctly focused effort likely to triple or quadruple our current yield on the same plot of land.

2. If you don't know how already, learn to cook with solar (even with a cardboard box lined with aluminum foil and water in a mason jar), cook with a grill, cook with propane or on a campfire, etc. As part of that, practice firebuilding with tinder, sticks, flints, lighters, etc. Learn some basic first aid, CPR, etc. Buy a second-hand tent, a sleeping bag you can store somewhere, some rain gear and boots. If you have a friend with guns, learn to shoot, maybe even learn to hunt. Learn to fish and cook fish. Learn about edible plants, medicinal herbs, mushrooms and berries you can either forage for or grow.

3. Find like-minded to talk with and prepare with. We don't have enough Chris Martenson folks in my area - I've only met one and she's not in the community as much anymore. But there may be other, more established groups, like Transition Towns:
http://transitionus.org/transition-towns

There's lots of positive things you can do, rugged self-reliant skills you can practice, and like-minded people with can-do-spirit that you can meet  - more than enough to keep you too busy to waste time reading negative, pessimistic economic news articles late into the night on the Internet all by your lonesome.

Poet

heffe's picture
heffe
Status: Bronze Member (Offline)
Joined: Dec 26 2009
Posts: 95
Thanks Poet
Poet wrote:

1. Start a garden - even if it's in your parents' back yard or a relative's yard. Learn to grow things like tomatoes, long beans, cucumbers, squash, etc. Grow heirloom plants and learn to save the seeds. My wife and I had a huge learning curve just this year on gardening our tiny community garden plot. I learned a lot of lessons that will make next year a more productive and correctly focused effort likely to triple or quadruple our current yield on the same plot of land.

2. If you don't know how already, learn to cook with solar (even with a cardboard box lined with aluminum foil and water in a mason jar), cook with a grill, cook with propane or on a campfire, etc. As part of that, practice firebuilding with tinder, sticks, flints, lighters, etc. Learn some basic first aid, CPR, etc. Buy a second-hand tent, a sleeping bag you can store somewhere, some rain gear and boots. If you have a friend with guns, learn to shoot, maybe even learn to hunt. Learn to fish and cook fish.

3. Find like-minded to talk with and prepare with. We don't have enough Chris Martenson folks in my area - I've only met one and she's not in the community as much anymore. But there may be other, more established groups, like Transition Towns:
http://transitionus.org/transition-towns

 

Thanks Poet, my situation may seem dire and I am concerned, but I have prepared and feel ready for whatever happens.  I guess my biggest concern is with everyone else.

1) I live in a triplex, with no available land space, and the closest family living in Southern California. We moved up here in better economic times, I began school, and my family left to find work. Now Im stuck as I can't move without money to do so. Ive experienced farming in Middle School and have grown plenty, but again my issue is space. I am becoming friends with the local produce stand however, that'll be a great start.

2) No need to worry about survival, I live next the Cascade MTN ranges and wilderness survival has been a hobby since high school. Cooking shouldn't be a problem with the wood around here, I have a Dutch oven along with camp gear. I have lots of stocked beans, rice, Quinoa, Cornmeal, flour, sugar, salt, baking power/soda and 1st aid gear. We have glacier water in constant supply with a river, and plenty of fishing or hunting activities. However, the issue is all the other people in my city of 80,000. If we are all foraging and living off our rations, I cant imagine everyone else in my town being complacent as I eat my rice and beans. And if everyone is hunting for food, the geese, deer and rabbit populations would be erradicated within the months. Im really not sure if economic collapse would get to that point either.

3) The biggest key, like minded folk. Im trying, my town seems to be mostly college folk trying to party, rich folk trying to be rich, and rednecks trying to pollute the forests, so very few want to learn about the 3 E's.  That produce stand I mentioned should be a great relationship, my hopes is to work with them next spring.

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Tommygun wrote: I found this
Tommygun wrote:

I found this short 12 minute video to be informative and it might be worthwhile to view regarding  the future market potential of gold in light of the recent market volitility and reconsolidation. I think it is  realistic and it reflects a level headed view from investors who are not gold bugs .

http://www.morningstar.com/Cover/videoCenter.aspx?id=395308

Great Video Tommy. Thanks

Jallan84's picture
Jallan84
Status: Member (Offline)
Joined: Mar 14 2010
Posts: 2
Mea Culpa

 Is it time for a mea culpa from Chris for his "Commodities Look Set to Rocket Higher" article?  He pretty much called the top +/- a few days.

http://www.zerohedge.com/news/guest-post-commodities-look-set-rocket-higher

Jallan84's picture
Jallan84
Status: Member (Offline)
Joined: Mar 14 2010
Posts: 2
Mea Culpa

 Is it time for a mea culpa from Chris for his "Commodities Look Set to Rocket Higher" article?  He pretty much called the top +/- a few days.

http://www.zerohedge.com/news/guest-post-commodities-look-set-rocket-higher

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