Daily Digest

Daily Digest - December 27

Sunday, December 27, 2009, 11:45 AM
  • Interview With J.S. Kim
  • How The Noughties Were A Hinge Of History
  • All Just A Giant Ponzi Scheme
  • Why Interest Rates Will Rise For A Generation
  • Savvy Bond Man Bets On Rising Inflation
  • Hyperinflation Watch
  • At Tiny Rates, Saving Money Costs Investors
  • The Most-Overlooked Tax Deductions
  • Converting An IRA Into A Roth? How's Your Crystal Ball? 
  • As Slump Hits Home, Cities Downsize Their Ambitions
  • The Best Jobs In America 
  • A Jobless Decade Looms
  • Size Of Derivatives Bubble Equals $190k Per Person Worldwide
  • How China May Buy More Gold Than America Owns
  • VAT Rise Will Mean Months Of Stagflation For UK 
  • Worldwide Chocolate Sales Defy Recession

Economy

Interview With J.S. Kim (pinecarr)

I really don’t subscribe to conspiracy theories. Rather the system enables the bankers to do what they do. The banking industry and the media take the tactic of calling people who believe that cycles of boom and bust are intentional, “conspiracy theorists.” It’s the simplest way for the bankers to keep their power by calling everyone that exposes their immorality and greed as crazy conspiracy loonies. As Simon Johnson said in his article, “The Quiet Coup” (The Atlantic, May 2009), the bankers have taken over all major world governments so the public never receives the truth. Instead, we have to look for it.

How The Noughties Were A Hinge Of History (M.W.)

The only truly global power was in rapid relative decline. Not long before, it had won a pyrrhic victory in a costly colonial war. New great powers were on the rise. An arms race was under way, as was competition for markets and resources in undeveloped areas of the world. Yet people still believed in the durability of the free trade and free capital flows that had nurtured prosperity and, many believed, had also underpinned peace.

All Just A Giant Ponzi Scheme (M.W.)

The US increased the public debt by trillions. So who bought all the new Treasuries? We must admit we were surprised to discover that, according to the latest Treasury Bulletin, "Households" bought 35 times more government debt than they did in 2008. Given the financial condition of the average household, and with unemployment and foreclosures skyrocketing, who could afford to increase treasury investments to such a large degree?

Why Interest Rates Will Rise For A Generation (M.W.)

Now the gargantuan trade surpluses are shrinking and the torrent of dollars has diminished. But once the US is no longer running a huge trade deficit, all those exporter nations will no longer have hundreds of billions of dollars floating around, looking for a home in Treasury bonds.

Savvy Bond Man Bets On Rising Inflation (M.W.)

Bill Tedford says inflation already is evident in the CPI and will lurch higher in 2010 and 2011. He has begun encouraging clients to invest more money in timber, oil and gas, agricultural commodities and industrial and precious metals—historically good places to be amid rising inflation. "The alarming part is the possibility that inflation could explode beyond the numbers we're looking at."

Hyperinflation Watch (M.W.)

The following chart illustrates that the difference between the US government’s monthly receipts and expenditures remains at record highs in November.

At Tiny Rates, Saving Money Costs Investors (M.W.)

Experts say risk-averse investors are effectively financing a second bailout of financial institutions, many of which have also raised fees and interest rates on credit cards. What the average citizen doesn’t explicitly understand is that a significant part of the government’s plan to repair the financial system and the economy is to pay savers nothing and allow damaged financial institutions to earn a nice, guaranteed spread.

The Most-Overlooked Tax Deductions (M.W.)

Millions of taxpayers overpay their taxes every year by overlooking just one of the money-savers listed here. Cut your tax bill to the bone by claiming all the breaks you deserve – including some you may have forgotten or never even knew about.

Converting An IRA Into A Roth? How's Your Crystal Ball? (M.W.)

You’ll be hearing a lot about Roth Individual Retirement Accounts — but not as much as you should about a long-term threat that hangs over them.

As Slump Hits Home, Cities Downsize Their Ambitions (M.W.)

The specter of lean budgets for years ahead has some of the nation's 89,000 local governments rethinking what services to provide and how to pay for them. This means higher taxes and fewer services. These cuts matter greatly to the economy at large.. Local government spending accounts for 8.8% of the nation's total output. More Americans work for cities, counties and school boards than in all of manufacturing.

The Best Jobs In America (M.W.)

Great pay and superior growth prospects. Work that's meaningful. Those are some of the qualities we looked for when selecting America's best jobs.

A Jobless Decade Looms (M.W.)

At best, it could take until the middle of the decade for the nation to generate enough jobs to drive down the unemployment rate and keep it there. The country faces a new era of chronically high unemployment, and it's possible jobs won't return to pre-recession levels at any point over the next 10 years.

Size Of Derivatives Bubble Equals $190k Per Person Worldwide (M.W.)

Derivatives are unravelling at a fast rate with the start of the "Great Unwind" of the global credit markets. When derivatives unravel significantly, the entire world economy is at peril, given the relatively smaller scale of the world economy by comparison. The derivatives market collapse could make the housing and stock market collapses look incidental.

How China May Buy More Gold Than America Owns (M.W.)

“We recommend that China’s gold reserve should reach 6000 tons in 3-5 years, and probably reach as high as 10,000 tons in 8-10 years,” according to the head of the supervisory committee at the state-owned Assets Supervision and Administration Commission.

VAT Rise Will Mean Months Of Stagflation For UK (M.W.)

Inflation will rise significantly above the Bank of England's 2pc target and consumer spending will drop by 0.7pc in the opening months of next year, in the first taste for British households of the period of austerity that is an inevitable consequence as the Government puts its books in order in the coming years, according to theCentre for Economics and Business Research.

Worldwide Chocolate Sales Defy Recession (M.W.)

It's clear that despite economic trouble this year, the world's chocolate lovers didn't deviate from their favorite treat. Chocolate is a small, affordable indulgence for shoppers who are cutting back on spending elsewhere. Even in countries not known for chocolate consumption, sales are on the rise.

14 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - December 27

China may surpass Germany as world's biggest exporter

"Despite the sluggish demand from overseas, China will probably surpass Germany as the world's largest exporter in 2009, said the Ministry of Commerce."

 

 

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Davos
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Re: Daily Digest - December 27

A good article by John Williams, he has been making the rounds with this...

ShadowStats.com founder John Williams explains the risk of hyperinflation

Do you believe everything the government tells you? Economist and statistician John Williams sure doesn't. Williams, who has consulted for individuals and Fortune 500 companies, now uncovers the truth behind the U.S. government's economic numbers on his Web site at ShadowStats.com. Williams says, over the last several decades, the feds have been infusing their data with optimistic biases to make the economy seem far rosier than it really is. His site reruns the numbers using the original methodology. What he found was not good.

 

 

 

Maymin: So we are technically bankrupt?

 

Williams: Yes, and when countries are in that state, what they usually do is rev up the printing presses and print the money they need to meet their obligations. And that creates inflation, hyperinflation, and makes the currency worthless.

 

 

 

Obama says America will go bankrupt if Congress doesn't pass the health care bill.

 

Well, it's going to go bankrupt if they do pass the health care bill, too, but at least he's thinking about it. He talks about it publicly, which is one thing prior administrations refused to do. Give him credit for that. But what he's setting up with this health care system will just accelerate the process.

 

 

 

Where are we right now?

 

In terms of the GDP, we are about halfway to depression level. If you look at retail sales, industrial production, we are already well into depressionary. If you look at things such as the housing industry, the new orders for durable goods we are in Great Depression territory. If we have hyperinflation, which I see coming not too far down the road, that would be so disruptive to our system that it would result in the cessation of many levels of normal economic commerce, and that would throw us into a great depression, and one worse than was seen in the 1930s.

 

 

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ERODSTA
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Scientific American’s Climate Lies

From The Viscount Monckton of Brenchley

In December 2009, Scientific American, once a respected popular-science journal and now a pulp science-fiction picture comic, viciously attacked US Senator James Inhofe because he had proclaimed 2009 to be the Year of the Skeptic. By skepticism, he meant “standing up and exposing the science, the costs and the hysteria behind global warming alarmism”.

http://sppiblog.org/news/scientific-american%E2%80%99s-climate-lies

 

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Re: Daily Digest - December 27

http://www.businessspectator.com.au/bs.nsf/Article/UPDATE-1-JAL-bankruptcy-proposed-as-option-to-bank-Z62VV?OpenDocument&src=tnb

JAL bankruptcy proposed as option to banks: sources

28 Dec 2009

TOKYO - Bankruptcy has been proposed by a state-backed fund as an option in the restructuring of Japan Airlines Corp, two sources familiar with the matter said.

The state-backed Enterprise Turnaround Initiative Corp of Japan (ETIC) has been holding talks with creditor banks on how to revive JAL, and is expected to make a final decision on whether to support the struggling carrier next month.

In those talks the ETIC has discussed using a Chapter 11-style bankruptcy procedure as part of a potential revival plan, but has not yet ruled out an out-of-court restructuring in coordination with main creditors, the two sources said.

The sources spoke on condition of anonymity given the sensitivity of the matter.

No one at ETIC or JAL was immediately available for comment.

Shares of JAL were unchanged at ¥97. The benchmark Nikkei average was up 0.7 per cent.

JAL's stock has lost more than half its value this year amid growing worries that it could face bankruptcy.

Its main creditors, which include the state-owned Development Bank of Japan and the country's top three lenders, remain keen to keep the carrier out of bankruptcy court, banking sources have said.

JAL, weighed down by $US15 billion ($A17 billion) in debt and struggling to cut a ¥331 billion ($A4.1 billion) pension shortfall, applied for a bailout from the ETIC in October.

At the same time JAL is being courted by American Airlines and Delta Air Lines. The US carriers have made rival offers of financial aid, eyeing a greater foothold in Japan and access to JAL's network to the rest of Asia.

JAL says it will make a decision on which overseas partner it will choose by early January.

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Re: Daily Digest - December 27

"...But he doesn't expect commercial real estate will return to anything approaching normal until 2014.

The outlook has dimmed considerably since early 2008, when the recession hadn't hit Seattle hard yet. Many insisted then that Seattle's real-estate market would piggyback on a strong local economy and escape the downturn relatively unscathed.

"About a year and a half ago, we thought we were different," DeLisle told one recent forum. "Nobody is really different."  "

http://seattletimes.nwsource.com/html/realestate/2010611206_commercialre...

 

guardia's picture
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Re: Daily Digest - December 27
Damnthematrix wrote:

JAL bankruptcy proposed as option to banks: sources

Japanese have a truly strange mentality... 75% of retirees have actually agreed to have their pensions cut by 30%. The company could have simply said "sorry, no more cash", but no, they have to coerce the victims into willing acceptance. Weird.. I am not sure I will ever fully grasp how that works, but I'm always keeping my mind open for the (more and more improbable) pearl...

Samuel

guardia's picture
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Re: Scientific American’s Climate Lies
ERODSTA wrote:

From The Viscount Monckton of Brenchley

In December 2009, Scientific American, once a respected popular-science journal and now a pulp science-fiction picture comic, viciously attacked US Senator James Inhofe because he had proclaimed 2009 to be the Year of the Skeptic. By skepticism, he meant “standing up and exposing the science, the costs and the hysteria behind global warming alarmism”.

This article is very hard to follow.

Here's my advice: The harder something is to read, the higher the probability that it makes no sense at all.

Samuel

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The.Techno.Luddite
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"Leftist" debris

Some interesting stuff, but also a vastly simplified and partisan view of reality.  Detroit exploded also in large part because of "rightest" policy's of outsourcing our industrial base, consolidating monetary control, no strong trade tax/policy controls, and etc.  We can thank Grandpa Caligula (Reagan) and his ilk for much of that.

To blame it all on "leftists" is to be a whiney pointer of fingers . . . "Its all THEIR fault"!

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jpitre
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Re: "Leftist" debris

Techno has it about right in my opinion. A partisan approach does not supply answers, only conflict. Our economic and political system has been usurped by big business including the big banks and Wall Street. If there is a place to put blame it is in the system that we have collectively concocted around the speculation driven greed/devil-take-the-hindmost world that we have become. Put all of the Reagan/Bush or Obama/Clintons in place that you want and nothing will be fixed until we all adopt a different mindset that builds on true productive effort accomplished by cooperative people with a common vision.

For  a start we have to get rid of the Fed, undo incentives/shut down the sections of our economy that encourage speculation and creation of phantom wealth, seriously get on a  solution track to supply our energy needs, focus on what we must have as a society to maintain our health and environment as well as re-think our approach to food production & consumption. That's just for starters ...... we have along way to go

To conclude that the Detroit mess is a result of "socialism" almost completely misses the mark because the causes are far more complex than that. I see us unable to deal with Peak Oil and global warming for many of the same reasons Detroit collapsed -- and, if we don't look out and get on track about what is going wrong, we may well see much more "Detroit " blight in all of our back yards.

About time to re-boot, and it looks like that will happen whether we like it or not. Question - are we ready?

Jim

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Re: Daily Digest - December 27 - Whom to Blame for Detroit?

I think blaming the leftist politicians and the UAW for the demise of Detroit  is an example of very biased reporting IMHO.  The incompentency of auto industry executives, especially GM was mind boggling.   There are plenty of blame to go around.  Yes, I agree we should have let GM go bankrupt so that more competent people with a viable busness model could emerge.   When you govern a country, it is not that straight forward to decide to let system fail and absorb multiple massive shocks through the system vs. to prop up system  to blunt shocks to people's livelihood.  Personally, I think Obama walked into a burning house.  Yes, I don't like seeing people in this country having moved toward  more entitlement, but what about  the business environment the conservative politicians created which have enabled the financial industry to pull off the bigger robbery and a ponzi scheme?  I think our systems have stopped working for several decades now unfortunately.

presentmoment

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presidentbyamendment
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Re: Daily Digest - December 27

GM etc. have treated their market position like a royal entitlement for as long as this 53-year-old can remember.

They use the government to define safe cars to their liking, kill nickel-metal-hydride batteries, etc. etc.

All the hype about economies of scale is B.S.

We live in a much more competetive world.

We've been in a looter economy since Reagan.

Unions priced themselves out of the market. See also: bricklayers.

 

SO, several factors.

 

presidentbyamendment.com

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ERODSTA
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Re: Scientific American’s Climate Lies
guardia wrote:
ERODSTA wrote:

From The Viscount Monckton of Brenchley

In December 2009, Scientific American, once a respected popular-science journal and now a pulp science-fiction picture comic, viciously attacked US Senator James Inhofe because he had proclaimed 2009 to be the Year of the Skeptic. By skepticism, he meant “standing up and exposing the science, the costs and the hysteria behind global warming alarmism”.

This article is very hard to follow.

Here's my advice: The harder something is to read, the higher the probability that it makes no sense at all.

Samuel

I believe the article was aimed at a scientific readership

guardia's picture
guardia
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Re: Scientific American’s Climate Lies
ERODSTA wrote:

I believe the article was aimed at a scientific readership

Look, maybe Scientific American isn't scientific, I don't know, I don't read that magazine. But the blog post your refer to is not any better. It refers to that magazine as "Science Fiction American", "Unscientific American", "Politicized American" ... That's name-calling.

Please, refrain from posting such incendiary material again, thank you

Samuel

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