Daily Digest

Daily Digest - April 5

Monday, April 5, 2010, 9:47 AM
  • What Do the New Unemployment Numbers Mean?
  • Geithner Delays Currency Report, Urges Flexible Yuan for China
  • It's the Battery, Stupid!
  • Of Biofuels, Land Grabs and Food Prices

Economy

What Do the New Unemployment Numbers Mean? (mhoop)

Indeed, Goldman Sachs attributes the job gain as "due mainly if not entirely to census hiring and weather rebound", finds "little underlying improvement", and says that "productivity gains have diminished sharply".

Geithner Delays Currency Report, Urges Flexible Yuan for China (mhoop)

Geithner in a statement yesterday urged China to move toward a more flexible currency and said a series of meetings over the next three months will be “critical” to bringing policy changes that lead to a stronger, “more balanced” global economy. The delay comes as Chinese President Hu Jintao is scheduled to visit Washington for a nuclear summit April 12-13.

Energy

It's the Battery, Stupid! (jdargis)

Those of us who love smooth, silent, energy-efficient volt-powered vehicles would love to see them capture a major share of new-car sales ASAP. Only one thing stands in the way: the battery.

Of Biofuels, Land Grabs and Food Prices (jdargis)

“Land is quickly becoming the new gold and right now the rush is on,” Fatou Mbaye, a biofuels officer for ActionAid in Senegal, said in a statement issued by the group. “Poor communities are being pushed off their land to meet the demand for biofuels in Europe,” said Ms. Mbaye.

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5 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4066
Re: Daily Digest - April 5

"Lost amid last month's passage of the new health care law, the Congressional Budget Office issued a report showing that within this decade, President Obama's own budget sends the U.S. government to a potential tipping point where the debt reaches 90 percent of gross domestic product.

Economists Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University have recently shown that a 90 percent debt-to-GDP ratio usually touches off a crisis."

"In my judgment, a crisis could occur next week or 10 years from now," said Rudolph Penner, an Urban Institute economist who co-chaired a huge budget report sponsored by the National Academy of Sciences and the National Academy of Public Administration. "I don't really think we can go much beyond 10 years."

"Rising rates typically benefit the dollar as they make US assets more attractive. Indeed, the dollar-yen pair hit a seven-month high last week as yields rose again.

But perception is key here. The economy is still fragile, and the federal government is set to borrow $1.6 trillion this year.

Another jump in yields could turn toxic for the greenback, especially if it coincides with a rise in the price of US credit default swaps, which would suggest a growing discontent with the US fiscal situation.

“If higher yields become more squarely perceived as driven by a broader credit issue, it becomes US dollar negative,” said Alan Ruskin, head of currency strategy at RBS Global Banking & Markets, in Stamford, Connecticut.

“We are not there yet, but we could flip relatively quickly.”

Heightened worries about US sovereign credit risk could hit dollar assets across the board.

Last May, US equities, Treasuries and the greenback sold off simultaneously after a cut to the UK’s credit rating outlook sparked speculation the United States may face the same predicament.

The heavy flow of new government debt supply is starting to weigh on bond prices.

This was particularly evident in the interest rate swaps market where US debt, for the first time ever, briefly traded at a discount to private-sector credit.

This had spurred chatter that the US government is perceived as riskier than banks."

"Police forces are paying out more than £2bn a year in pensions - more than a fifth of the Home Office's budget for forces in England and Wales, the figures showed.

The average of retirement for an officer completing full service has fallen to 51 while life expectancy rates are increasing.

This means many former officers will receive pensions for longer than they actually worked.

The Lib Dems, who got the figure from a Freedom of Information request to the country's police forces, claimed this shows that Britain's public sector pensions costs are unsustainable.

Last year police forces paid out almost £2.1 billion, an increase of 54 per cent on the £1.4 billion paid in 2005.

Lord Oakeshott, the Liberal Democrat Treasury spokesman, said: "Police officers now retire on average at 51, at a time when it can be expected that men will live for another 34 years and women for 37.

"Meanwhile the basic state pension age is having to rise to 68. No country can pay pensions for longer than people work, let along Britain with its deep financial deficit.""

....................3A) Pensions for police swallow 20% of total force budget (UK)

"Battered by the Great Recession, the Bay Area won't fully recover the jobs it has lost until 2015, according to a forecast prepared for the Mercury News and its sister papers, leaving tens of thousands of workers struggling to find permanent employment.

Such a prolonged slump will take a heavy toll on the region, keeping home sales depressed, squeezing Bay Area retailers and leaving the overall economy jittery for years.

"It does have the potential to be the most durable period of unemployment since World War II," said Jon Haveman, a founding principal of Beacon Economics, the San Rafael-based firm that prepared the forecast.

And the social costs have civic leaders and others concerned, as the ranks of the unemployed put a strain on tight budgets for job retraining, social services and other safety net programs when the state and cities are already in a financial bind.

From the time employment peaked in early 2008, to the end of 2009, the Bay Area's core counties — including Alameda, Contra Costa, Marin, San Francisco, San Mateo and Santa Clara — have lost 251,000 jobs out of a work force of nearly 3 million people."

"NEW YORK (Reuters) - The U.S. office vacancy rate in the first quarter reached its highest level in 16 years, but the decline in rents eased and crept closer to stabilization, according to a report by real estate research firm Reis Inc.

The U.S. office vacancy rate rose to 17.2 percent, a level unseen since 1994, as the market lost about 11.6 million net square feet of occupied space during the first quarter, according to the report released on Monday. The U.S. vacancy rate inched up 0.2 percentage points from a quarter earlier and was 2 percent higher than a year ago."

"In the 2010-11 fiscal year, employer contributions are expected to go from 4.78 percent to 8.22 percent. That goes up to 10.59 percent in the following fiscal year, and then comes the gut-punch of 29.22 percent in 2012-13.

And it doesn’t stop there. Supposing a constant 8 percent return on investments, the employer contribution requirement is projected to peak at 33.6 percent in 2015, remain above 30 percent until 2020, and stay well above 20 percent until 2033.

According to Garnet Valley School District Business Manager Tom Delaney, the normal, budget-to-budget net tax increase requiring additional millage for the district usually ranges from $1.8 million to $2 million.

In fiscal year 2012-13, the budget-to-budget net tax increase would be more than double that, he said, representing a 176 percent increase and nearly $3.7 million in new costs.

“That would equate to the entire increase that a school district budget might have for all line items, so certainly that is a concern,” said Garnet Valley Superintendent Mike Christian. “I don’t think it’s something that any district can handle and I think that’s part of the reason there’s so much discussion right now, so hopefully the Legislature and the governor will implement some changes that will help ease this burden.”"

"LISBON (Reuters) - The sort of debt problems seen in Greece are likely to spread further in the euro zone and Portugal could be the next victim, Greek Deputy Prime Minister Theodoros Pangalos was on Monday quoted as saying.

Portuguese newspaper Jornal de Negocios also quoted Pangalos, who earlier this year accused Germany of not properly compensating Greece for World War Two occupation, as saying Germany's hard line in talks with Greece was based on a "moral, racial approach" and the idea that Greeks don't work enough.

In an interview with conducted last Tuesday, Pangalos said Portugal should not remain neutral on the issue of European Union help for troubled members after leaders agreed on a financial safety net for Greece on March 25.

"You are the next victims ... I hope it doesn't happen and the solidarity prevails and we find an exit from this escalation (of borrowing costs). But if this does not happen, the next probable victim will be Portugal," he said. Asked whether he thought the crisis will spread in the euro zone, Pangalos said: "Yes, certainly.""

 

 

Bond Buyers Demand Record Downgrade Protection: Credit Markets

Oil Surges to Highest Level in 17 Months on U.S. Jobs Report

plato1965's picture
plato1965
Status: Platinum Member (Offline)
Joined: Feb 18 2009
Posts: 615
Re: Daily Digest - April 5

 

 Probably the most 3E aware article I've read in in any newspaper... from yesterdays Independent...

 http://www.independent.co.uk/news/business/news/uk-treasury-lukewarm-on-plan-for-iceland-to-pay-debt-in-energy-1935130.html

 It's an interesting story in it's own right, (energy flow for debt), some of the throwaway lines from the Dutch investor blew me away.. 

"A massive energy transition investment wave can help prevent a collapse from peak oil, and this can also help save the financial system."

  and...

 "Renewable energy facilities are the new and better gold,"

 

Erik T.'s picture
Erik T.
Status: Diamond Member (Offline)
Joined: Aug 5 2008
Posts: 1234
Excellent ZH piece on extend & pretend

I submitted this for tomorrow's digest but here's a preview. Excellent piece.

http://www.zerohedge.com/article/guest-post-extend-and-pretend-where-are...

Erik

 

joemanc's picture
joemanc
Status: Martenson Brigade Member (Offline)
Joined: Aug 16 2008
Posts: 834
Glenn Stevens for Fed. Reserve Chair!

Australia’s Stevens Raises Key Interest Rate to 4.25%

 

Do you think we'd ever hear a quote like this from Greenspan or Bernanke?

Quote:

 

‘Too High’

Stevens said last week that Australian house prices are “getting too high,” signaling he wants to minimize the danger of a housing boom and bust in the aftermath of the U.S. example.

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=avGEyILkIV1g&pos=5

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Glenn Stevens for Fed. Reserve Chair!
joemanc wrote:

Australia’s Stevens Raises Key Interest Rate to 4.25%

 

Do you think we'd ever hear a quote like this from Greenspan or Bernanke?

Quote:

 

‘Too High’

Stevens said last week that Australian house prices are “getting too high,” signaling he wants to minimize the danger of a housing boom and bust in the aftermath of the U.S. example.

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=avGEyILkIV1g&pos=5

They are in a mess. Don't raise rates and money will flow out, raise rates and debt service will be an impossibility. 

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