Daily Digest

Daily Digest - January 18

Monday, January 18, 2010, 11:57 AM
  • Goldman Sachs Bankers Set for 81% Rise in Bonuses
  • Eastern European Immigration has Hit Low-Paid Britons
  • Chinese Super Rich Eye London Homes
  • Australian Inflation Creeps Up to 9-Month High
  • China's Round-the-Clock Auto Factories Still Cannot Meet Demand
  • Nowhere to Go Economically but Up?
  • China Markets Set for New Phase in 2010
  • Debt and Deleveraging: the Global Credit Crisis and its Economic Consequences
  • The Debt Bomb Facing The World
  • Financial Crisis Inquiry Commission Turns Up the Heat
  • Timothy Geithner, I Call Your Bluff

Economy

Goldman Sachs Bankers Set for 81% Rise in Bonuses (pinecarr)

Goldman Sachs bankers are forecast to enjoy an 81% rise in their pay and bonuses for 2009, even though the bank may be forced to respond to political pressure by reducing the amount of money it sets aside for employee payouts in the fourth quarter of the year.

Eastern European Immigration has Hit Low-Paid Britons (joemanc)

An "unprecedented" influx of some 1.5 million eastern European workers into the UK over the past six years is likely to have had a negative impact on the wages of the lowest-paid British workers, according to a major report ordered by the Equality and Human Rights Commission (EHRC). While the report, written by the Migration Policy Institute, claims the contribution of the new migrants to the UK's economy is "probably small but positive", it concludes that there is evidence that "the recent migration may have reduced wages slightly at the ­bottom end of the labour market, especially for certain groups of vulnerable workers". It also claims there is a risk that the recent influx "could contribute to a 'low-skill equilibrium' in some economically depressed local areas".

Chinese Super Rich Eye London Homes (joemanc)

The Chinese are on their way. A Hong Kong billionaire has followed the waves of Russian oligarchs, Indians and Arab entrepreneurs by snapping up one of London’s most expensive homes. Joseph Lau, who has a £2.5 billion fortune, has spent £33m on a six-floor mansion in Eaton Square, Belgravia. The white stucco house has its own cinema, a swimming pool, gym and servant quarters. Lau, who is the chairman of Chinese Estates Holdings, a property development company, may be at the head of a line of other Chinese super-rich buying in London’s most exclusive areas. Although his mansion was bought by an offshore company, it is intended for his personal use.

Australian Inflation Creeps Up to 9-Month High (joemanc)

Inflation ticked up in December, stoking expectations of another rate rise when the Reserve Bank meets next month, according to a private survey. The TD Securities-Melbourne Institute inflation gauge rose by 0.3 per cent last month, equalling the 0.3 per cent increase in November. December's increase was triggered by seasonal price increases for holiday travel and accommodation, petrol and fruit. December's annual rate rose to 2.6 per cent - the highest in nine months.

China's Round-the-Clock Auto Factories Still Cannot Meet Demand (joemanc)

Nissan Motor Co.’s factory in central China is making cars almost 24 hours a day, yet Pan Xiaowei still waited three months for her new Tiida compact to arrive at the dealership. “It wasn’t like this a couple of years ago,” said Pan, 34, whose husband runs a property development company in Shandong province. “We used to buy and get a car straight away, and now you have to pre-order and wait.”

Nowhere to Go Economically but Up? (Brian C.)

Most of the economic data this week came from the manufacturing sector. In summary, the good news is that the bottoming process may be or is close to being complete – the bad news is that this sector is not growing yet.

China Markets Set for New Phase in 2010 (pinecarr)

China began the year with a strong signal that it is serious about its goal of turning Shanghai into a leading finance hub by 2020, approving a raft of measures that give investors more sophisticated investment options.

Debt and Deleveraging: the Global Credit Crisis and its Economic Consequences (Brian C.)

The recent bursting of the great global credit bubble not only led to the first worldwide recession since the 1930s but also left an enormous burden of debt that now weighs on the prospects for recovery. Today, government and business leaders are facing the twin questions of how to prevent similar crises in the future and how to guide their economies through the looming and lengthy process of debt reduction, or deleveraging.

The Debt Bomb Facing The World (Brian C.)

If policymakers focused their attention in 2009 on dragging the global economy out of recession, this year looks likely to center on reining in the massive piles of government debt built up by big bailout packages. Failing to wrestle down the fiscal debt monster could stall the nascent worldwide economic recovery.

What the Deflationists are Missing (Brian C.)

The dollar is being led to the altar as a sacrificial lamb to political expediency.

Financial Crisis Inquiry Commission Turns Up the Heat (Ben Johnson)

Two days of Financial Crisis Inquiry Commission hearings have me rattled about how little has changed about our financial system and how much is still at risk. They also have me wondering this: where the hell are the media?   ...    Yesterday, day two of the hearings, maybe a dozen reporters attended, fewer than were at for the press conference afterward. What did they miss?  For starters, FDIC Chairman Sheila Bair testified that the credit-default swaps (CDS) market still poses a systemic threat and that even she can't access CDS information to accurately assess financial institutions' exposure. 

Timothy Geithner, I Call Your Bluff (Ben Johnson)

As Representative Darrell Issa explained in his letter to the Fed, at the heart of this dispute is my assertion that Treasury Secretary Timothy Geithner, in his former role as President of the FRBNY, paid 100 cents on the dollar to settle AIG's credit default swap contracts, and he wildly overpaid. Other bond insurers including Ambac, MBIA, and FGIC have settled similar contracts for as little as ten cents on the dollar.


10 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - January 18

"Some creditors to Dubai World, which is currently restructuring $22 billion of debt, are seeking to offload loans to reduce their exposure to the conglomerate, the Financial Times reported."

"Economic historian Peter Bernholz has identified that inflation starts to take on hyperinflationary characteristics some time after the deficits of a country as a share of government expenditure rise above a third and stay there for several years.

According to Bernholz, the great hyperinflations of France, Germany, Poland, Brazil, and Bolivia all occurred after deficits reached that magic percentage or higher (In Bolivia, it reached 91%). The United States crossed over the Bernholz line last year."

"A Greek default would be bigger than the ones of Argentina and Russia and risk a "vicious circle" of contagion in Europe, according to Jim Reid of Deutsche Bank, Bloomberg reports.

The news agency says Greece has double the debt that Russia and Argentina had combined when they defaulted in 1998 and 2001, since it has 254 billion euro of debt outstanding, compared with the 51 billion euro Russia defaulted on and the 57.2 billion euro on which Argentina missed payments.

 "The numbers involved are far greater than the Russian and Argentine defaults," said Jim Reid, head of fundamental strategy at Deutsche Bank in London. If Greece΄s position continues to deteriorate, Europe is "risking a vicious circle similar to what we saw in finance prior to the banking bail- outs," he said, according to Bloomberg."

"Iceland’s credit risk may rise “considerably” as the island faces the threat of a shelved emergency bailout and a government collapse, Standard & Poor’s said.

“The risk is there that the program will fall apart and with that, the downside risks would increase very considerably,” Moritz Kraemer, S&P’s managing director for Europe, the Middle East and Africa, said in a Jan. 15 telephone interview. If the outlook for the bailout program doesn’t improve, “it’s quite possible” the government will collapse. "

  • ............5A)

Google news search (on the above news)

rjs's picture
rjs
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Re: Daily Digest - January 18

http://www.simoleonsense.com/jeremey-grantham/ (series of videos on exponential growth)

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idoctor
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Re: Daily Digest - January 18

US Troops Boost Haiti Aid Security as Looters Swarm

http://www.cnbc.com/id/34922161

FireJack's picture
FireJack
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Re: Daily Digest - January 18

Here is a youtube post about the population growth:

 

"Extrapolating like this is just ridiculous.
If you were in New York in 1900 and worried about what problems people might have in 2000, what would they worry about? Probably: Where would people get enough horses? And what would they do about all the horseshit?

But a solution came along, one which they could not have imagined back then. That's why these wild extrapolations are just meaningless."

"more people means more chances and prosperity. Every person that competes in the market per definition enhances the prosperity of the rest of society. population control is the worst we possibly could do."

"Yes, and falling population growth, as opposed to "overpopulation" is a real problem with serious dangers. Grow or die."

What do you say to that? In fact looking through the general comments of typical youtube stupidity I can't believe the things people come up with. IT's no wonder any attempt to do something about the problems we are facing have completely failed when 99% of the population think magic solutions will come along and make everything okay.

 

From the right column I think nature will pick in order of most deaths:

Famine, Disease, War. If you look at the past war never really killed nearly as many people as famine or disease.

 

 

idoctor's picture
idoctor
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Re: Daily Digest - January 18

"Extrapolating like this is just ridiculous.
If you were in New York in 1900 and worried about what problems people might have in 2000, what would they worry about? Probably: Where would people get enough horses? And what would they do about all the horseshit?

That is funny. Look at what grows in a Petri dish....that kind of says it all. The game changer would be to advance beyond our planet before we overwhelm it. Don't think we will make it is my guess as religious hang-ups & Political correctness strangle much of our potential.

FireJack's picture
FireJack
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Re: Daily Digest - January 18

The problem is he compares overpopulation with how were they going to deal with horse manuer. Well they solved it with cars, so obviously another solution will come to solve overpopulation of resource depletion just like that. Its so logical.

idoctor's picture
idoctor
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Re: Daily Digest - January 18

Rather long but entertaining.

Damnthematrix's picture
Damnthematrix
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Re: Daily Digest - January 18
Oil Shortages to Reappear in 2011, Goldman Sachs Says

By Grant Smith

Jan. 18 (Bloomberg) -- Goldman Sachs Group Inc. said that shortages will reappear in the crude oil market as supply fails to keep pace with a recovery in demand.

Global oil consumption will return to levels seen before the financial crisis by the third quarter of this year, Goldman analyst Jeffrey Currie said in a presentation in London today. At the same time, projects to bring new oil to consumers are still lagging as a result of the credit crunch, he said.

“By 2011, the market is back to capacity constraints,” Currie said in slides shown with the presentation. “The financial crisis created a collapse in company returns which has significantly interrupted the investment phase.”

Crude oil futures traded around $78 a barrel in New York today, having recovered 78 percent last year with the passing of the biggest economic shock since World War II.

Investment into new oil capacity is being held up because “political impediments on the flow of capital are still very large,” Currie said at the conference.

Foreign companies have difficulties exploring for oil in Saudi Arabia and Iran, the holders of the two largest reserves, because of the state’s control of production in the former and economic sanctions against the latter.

“It’s as good as it’s going to get right now in terms of supply growth,” Currie said.

Last month Goldman predicted that crude would average $90 a barrel in 2010 and $110 per barrel in 2011. That makes Goldman’s outlook for this year joint-highest among 38 analyst estimates compiled by Bloomberg.

To contact the reporters on this story: Grant Smith in London at [email protected]

guardia's picture
guardia
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Re: Daily Digest - January 18

Wow, it almost sounds like the guys at Goldman Sachs know what they are doing... We are totally screwed :(

Samuel

Damnthematrix's picture
Damnthematrix
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Re: Daily Digest - January 18

http://www.msnbc.msn.com/id/34845102/ns/us_news-environment/

Town welcomed drilling, now fears pollution

Texas to soon release test results over cancer-causing benzene

Jan. 13, 2010

DISH, Texas - Like thousands of other Texans living atop one of the country's most productive natural gas fields, folks in this tiny town were giddy when drillers started offering up the fat checks.

The mayor likened it to the Gold Rush, and many of the 200 residents of a town that once sold its name to a satellite television company were hoping to be next in a long line of landowners to strike it rich by drilling into the Texas earth.

Many in the town on the rural plains of Fort Worth didn't even bother to ask whether the drilling might sour the air above the gas-rich rock formation called the Barnett Shale. "Nobody even thought about that kind of stuff," Mayor Calvin Tillman said.

By the time state regulators started testing the air around Dish, there were 15 wells inside the town limits and more than 12,000 spread across the massive shale. Results of those tests, released late last year, found elevated levels of the cancer-causing chemical benzene near Dish, spooking residents who now fear that what once looked like found money could end up harming their health.

"I had friends of mine that got filthy rich off oil and gas companies drilling out here," said Rebecca McKamie, who wonders whether pollution is the cause of serious health problems in her family and deaths of her farm animals. "I'm not against the oil and gas industry. I'm against being poisoned."

This month, the Texas Commission on Environmental Quality is planning to release an analysis of more extensive air-quality tests above the 5,000-square-mile shale, which runs beneath Dallas, Fort Worth and about 20 counties. The agency's focusing on benzene, which can escape through equipment leaks or accidental emissions.

People are regularly exposed to small doses of benzene by industrial pollutants, cigarette smoke, gasoline fumes and vehicle emissions. But long-term exposure can cause leukemia, and the results of the testing could lead the state to take severe actions, including issuing fines or placing new, restrictive rules on drillers.

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