Daily Digest

Daily Digest 9/30 - On California's Economy, A Concert Of The Middle East, Little Hope Seen For Quick Europe Fix

Friday, September 30, 2011, 10:50 AM
  • In European Crisis, Experts See Little Hope for a Quick Fix
  • California And Bust
  • A Concert Of The Middle East
  • Mainstream Media Stupidity On Gold
  • Aging Canada Will Boost Budget Pain, Watchdog Says
  • Japan FY 2012 Budget Requests to Hit Record Over 98 T. Yen
  • Is The Economic Crisis Still Making Americans Unhappy?
  • Outsize Severance Continues for Executives, Even After Failed Tenures

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Economy

In European Crisis, Experts See Little Hope for a Quick Fix (jdargis)

The latest rescue package for Europe gained approval from Germany on Thursday, after Chancellor Angela Merkel won a vote in Parliament, throwing the financial weight of the Continent’s biggest economy behind a new deal.

But a bailout doesn’t wipe out the huge debts that have taken years to accumulate — just as bailing out American banks in 2008 didn’t wipe out the huge amount of subprime debt that homeowners had borrowed but couldn’t repay.

The problem — too much debt and not enough growth to ease the burden — could take many years to resolve.

California And Bust (jdargis)

The smart money says the U.S. economy will splinter, with some states thriving, some states not, and all eyes are on California as the nightmare scenario. After a hair-raising visit with former governor Arnold Schwarzenegger, who explains why the Golden State has cratered, Michael Lewis goes where the buck literally stops—the local level, where the likes of San Jose mayor Chuck Reed and Vallejo fire chief Paige Meyer are trying to avert even worse catastrophes and rethink what it means to be a society.

A Concert Of The Middle East (jdargis)

A not inconsequential part of this story is that the order that is collapsing is in large part an American one, and that the one that is coming together will in all likelihood be less American. The question is not one of American eclipse — Washington will continue to be an important, if not the most important, player in the region. The question is how it might envision its new role in a region in flux.

Mainstream Media Stupidity On Gold (Phil H.)

Don't buy gold - it's not backed by anything.

Aging Canada Will Boost Budget Pain, Watchdog Says (Tom L.)

He says that to fill the gap between debt and gross domestic product (GDP) and to restore sustainability to the public finances, it would require policy actions worth 2.7 per cent of Canada's GDP. To do this, the government either has to raise taxes, reduce overall program spending, or deliver a combination of the two.

Page's estimate of the fiscal gap would mean $46 billion worth of fiscal action this fiscal year alone, and that amount could increase over time in accordance with GDP.

Japan FY 2012 Budget Requests to Hit Record Over 98 T. Yen (guardia)

Japan's general account budget requests for fiscal 2012 are estimated to total over 98 trillion yen, the largest request size ever, it was learned Thursday. [...] The reconstruction-related requests are expected to reach around 3.5 trillion yen, the sources said.

Is the economic crisis still making Americans unhappy? (jdargis)

In a new paper, Angus Deaton says maybe not so much. Happiness surveys show a big negative effect from the downturn in 2008, but most of it has since evaporated. You can conclude that a) things really are better, b) they are not focusing enough on the long-term unemployed, c) I shouldn’t trust happiness surveys, d) this explains why we are still headed off a cliff, or some combination of the above. For the pointer I thank Eric Barker.

Outsize Severance Continues for Executives, Even After Failed Tenures (jdargis)

At the end of August, Robert P. Kelly was handed severance worth $17.2 million in cash and stock when he was ousted as chief executive of Bank of New York Mellon after clashing with board members and senior managers. A few days later, Carol A. Bartz took home nearly $10 million from Yahoo after being fired from the troubled search giant.

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14 Comments

saxplayer00o1's picture
saxplayer00o1
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Arthur Robey's picture
Arthur Robey
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Gotta love Gold.

Gold not backed by anything.

I hadn't thought of that.

She is going to be pregnant soon.

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mono
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gold is´nt backed by anything

 splendid head, yet no brain.

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DRHolden
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Gold

All this time I thought gold was backed by greed and insecurity, that's why I have mine.  I guess I'd better sell it and buy US dollars...

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DRHolden
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“It’s Going to Get a Lot Worse”: ECRI’s Achuthan Says New Recess

Weakness in leading economic indicators has become so pervasive the Economic Cycle Research Institute now predicts a new recession is unavoidable.

"The vicious cycle is starting where lower sales, lower production, lower employment and lower income [leads] back to lower sales," co-founder Lakshman Achuthan declares in the accompanying video.

http://finance.yahoo.com/blogs/daily-ticker/going-lot-worse-ecri-achutha...

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brjohnson789
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California and bust

Thanks jdargis, that was a great read.  And scary, since I live in Chicago.  I hate to think about how much more our services are going to be cut. 

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heffe
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Negative Energy Pricing

This is a great find, again showing how monetary economics can be backwards to our goals.

http://www.bloomberg.com/news/2011-09-29/utilities-giving-away-power-as-wind-sun-flood-european-grid.html

Basically, utility companies are giving away energy as the renewable sources provide 'TOO MUCH SURPLUS' energy!

As renewable energy provides abundance, our pricing mechanisms and the whole idea of 'selling' energy will gradually become obsolete. It would be like trying to charge someone to breath air; its so abundant it makes no sense. Unfotunately, scarcity is a requirement for monetary economics so an 'artificially created scarcity' will be created to ensure that companies extracting energy have reason to exist.

I've heard that more energy hits our planet from the sun in one day, then the entire population uses in one year. I know this is spread out over large areas, and not all of that electromagnetic radiation is possible to extract, but it shows if we focus on the right path, we can acheive ridiculous amounts of energy.

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Damnthematrix
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Greece Runs Out Of Ink

Greece Runs Out Of Ink, Can't Print Tax Forms
Submitted by Tyler Durden on 09/28/2011 07:37 -0400
http://www.zerohedge.com/news/greece-runs-out-ink-cant-print-tax-forms
Greece Hyperinflation

If you thought that last night's news that Greece had been consulting (and paying) the far more "stable" Irish Central Bank on how to, oh, avoid bankruptcy, this may jus top it. In an FT article describing the new set of austerity measures most of which are very loud threats that Greece will very soon (really) take austerity seriously (they promise), we stumble across the following gem: "The conservative opposition New Democracy party said a shortage of ink had prevented the computerised tax centre at the finance ministry from sending out claims to taxpayers over the last 10 days. There was no response from the finance ministry to the claim."...

So.... let's get this straight. If austerity does not force all the tax collectors to be on permanent strike which it appears it will, than the sharp ink shortage will surely destroy any attempts to generate state revenue through tax collections. And there is more bad news: when Greece goes back to its prior currency, the drachma, or the obolus, or goats, or whatever, there will be no ink to print it. And since Greece will enter hyperinflation shortly following its evolutionary transition from disorganized banana republic to organized hyperinflationary implosion, this may be a concern.

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Damnthematrix
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Germany will leave the euro

http://www.citywire.co.uk/global/germany-will-leave-the-euro-says-leading-commentator/a528716?ref=citywire-global-latest-news-list

 

Germany will leave the euro, says leading commentator

by Atholl Simpson on Sep 30, 2011 at 14:28
 

The Eurozone crisis will end up with Germany quitting the common currency says economic commentator Philippa Malmgren of Principalis.

"My view is that it is Germany that will have to pull out of the euro," said Malmgren, speaking at Threadneedle Investments' European conference in London on Thursday. "The decision has already been made by the government that leaving the euro is a possibility."

"I think they have already got the printing machines going and are bringing out the old deutschmarks they have left over from when the euro was introduced."

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Johnny Oxygen
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Damnthematrix
Damnthematrix wrote:

http://www.citywire.co.uk/global/germany-will-leave-the-euro-says-leading-commentator/a528716?ref=citywire-global-latest-news-list

 

Germany will leave the euro, says leading commentator

by Atholl Simpson on Sep 30, 2011 at 14:28
 

The Eurozone crisis will end up with Germany quitting the common currency says economic commentator Philippa Malmgren of Principalis.

"My view is that it is Germany that will have to pull out of the euro," said Malmgren, speaking at Threadneedle Investments' European conference in London on Thursday. "The decision has already been made by the government that leaving the euro is a possibility."

"I think they have already got the printing machines going and are bringing out the old deutschmarks they have left over from when the euro was introduced."

 

I'll add Karl Denninger's take to this:

Germany To Leave The Euro?

http://market-ticker.org/akcs-www?post=195126

I don't usually write on rumors, but this one simply will not go away.

Germany is rumored to have ordered printing plates to resume printing Marks, and is intending to walk.  This does make sense, although the Germans would have to find a way to shield their banks from the impact of a massive shift off the Euro and into the Mark by Germans, which would spike the Mark higher and positively trash the Euro's value.

The usual answer to "why they won't" is that the Mark would become ridiculously strong and that would kill Germany's export industry, which being goods based (rather than the faux "export industry" that is often mostly services) would get plastered.  The core of most commentators' thesis is that this fact would preclude Germany from doing it.

But here's the problem - playing the bailout game is a tax exactly identical to the impact of that stronger currency, and the bailout game costs you the decision-making power you retain when you are the one in control of your own destiny.

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guardia
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Re: In European Crisis, Experts See Little Hope for a Quick Fix

 

[quote=In European Crisis, Experts See Little Hope for a Quick Fix]

This article has been revised to reflect the following correction:

Correction: September 29, 2011

An earlier version of this article used an incorrect unit in converting Europe's 440 billion euro bailout fund to dollars. It is $600 billion, not $600 million.

Ouch, and the editor did not notice earlier? After all, what's the difference among friends between a million and a billion, or a trillion dollars for that matter, hey?

Samuel

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Damnthematrix
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Denmark introduces food fat tax

Denmark introduces food fat tax

http://www.abc.net.au/news/2011-10-02/denmark-introduces-food-fat-tax/32...

Denmark has become the first country in the world to introduce a fat tax - a surcharge on foods that are high in saturated fat.

Butter, milk, cheese, pizza, meat, oil and processed food will all be taxed if they contain more than 2.3 per cent saturated fat.

Butter, for example, will cost around $1.50 more per kilo.

The tax was designed to limit the population's intake of fatty foods.

Consumers have been hoarding to beat the price rise.

"It has been a chaotic week with a lot of empty shelves. People have been filling their freezers," Christian Jensen of an independent local Copenhagen supermarket said.

Damnthematrix's picture
Damnthematrix
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Plutonium found near Japan nuke plant

Plutonium found near Japan nuke plant
North Asia correspondent Mark Willacy

http://www.abc.net.au/news/2011-10-02/plutonium-found-near-fukushima-pla...

The Japanese government says it has detected plutonium outside the crippled Fukushima nuclear plant for the first time.

One type of plutonium found - plutonium-239 - has a half-life of 24,000 years.

Japan's science ministry says small traces of plutonium were detected in samples taken from six communities, ranging from a few kilometres to up to 45 kilometres from the Fukushima plant.

All locations are north-west of the facility and the plutonium is believed to have been blown there after the March disaster.

An expert has told Japan's NHK network that if ingested or inhaled, plutonium can remain in the body for a long time and cause cancer.

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guardia
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Re: Denmark introduces food fat tax
Damnthematrix wrote:

Denmark introduces food fat tax

http://www.abc.net.au/news/2011-10-02/denmark-introduces-food-fat-tax/32...

Denmark has become the first country in the world to introduce a fat tax - a surcharge on foods that are high in saturated fat.

Butter, milk, cheese, pizza, meat, oil and processed food will all be taxed if they contain more than 2.3 per cent saturated fat.

Butter, for example, will cost around $1.50 more per kilo.

The tax was designed to limit the population's intake of fatty foods.

Consumers have been hoarding to beat the price rise.

"It has been a chaotic week with a lot of empty shelves. People have been filling their freezers," Christian Jensen of an independent local Copenhagen supermarket said.

But no sugar tax? And I thought Denmark was a decent country... Coke, soda, and candies are better for health than butter and cheese, who knew?

Samuel

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