Daily Digest

Daily Digest - July 10

Friday, July 10, 2009, 11:00 AM
  • Wall Street Journal Article Quotes Dr. Chris Martenson (Repost)
  • Dr. Chris Martenson on the July 9 Cover of Boulder Weekly
  • More on Unemployment: The "Exhaustion Rate" Underestimates the Issue (Chart on page)
  • Exhaustion Rate Enron Style (Chart)
  • 10 charts
  • Q2 Earnings (Chart)
  • Contraction is not an Improvement (Chart)
  • Dollar's future in US hands (H/T Cat)
  • Government Fraud: Pensions (H/T Nichoman)
  • Catching The Gold Bug (H/T CM)
  • Historic Revenue Drops: Worse in History, including Great Depression (From theComingDepressionBlogspot)
  • Tony Crescenzi (Video, Keynotes: Employment and Greenshoots, and Inventory Rebound)
  • Two Interesting Videos, Hugh Hendry (Contrarian Investor)
  • China and the USD (Video)

Economy

Wall Street Journal Article Quotes Dr. Chris Martenson (Repost)

“Owning bullion,” says gold investor Chris Martenson, 46, a scientist from Montague, Mass., “is buying insurance against the unknown.”

...

The truest gold buffs, though, want nothing to do with ETFs or mining stocks. Mr. Martenson, who runs an investing Web site, dismisses them as creatures beholden to untrustworthy managements and financiers. “I’ve lost faith in how Wall Street does business,” says Mr. Martenson, who keeps more than half his portfolio in bullion.

Dr. Chris Martenson on the July 9 Cover of Boulder Weekly

A Crisis Wasted: Scientist and economist Chris Martenson offers a crash course explaining
what we should be learning from our current global situation
by Erica Grossman

Chris Martenson is a man who wears many hats. Having completed both a PhD and a post-doctoral program in Neurotoxicology at Duke University, he uses his science background to inform his decisions about energy use and the environment. With his MBA in finance from Cornell, he is considered an expert in matters economic. Martenson has worked in corporate finance and strategic consultation and made a living as the executive of a Fortune 300 company and the vice president of a Fortune 50 company. But Martenson doesn’t live the kind of lifestyle you might expect from a high-powered financier/scientist. He and his family have downsized their home, rather than climb up the social ladder. They dig their gardens instead of sending someone out to the grocery store. And all because of one of Martenson’s predictions: The world in 20 years will look drastically different than the world we know today.

[Please click for more]

 

More on Unemployment: The "Exhaustion Rate" Underestimates the Issue (Chart on page)

There is some confusion out there as to what exactly the "exhaustion rate" is (I had been confused myself). The following definition has been commonly used by many blogs and media pundits alike:

The United States Department of Labor publishes statistics on the "exhaustion rate" - this is a measure of the number of people who have used up their benefits, and will no longer be receiving unemployment checks.
This definition had been correct. And if this were still true, the chart below would show just how large a crisis we were in with those that are no longer able to receive unemployment at almost 50% of their "unemployment" class.

Unfortunately, this equation misses a large change in the U.S. unemployment legislature which results in the figure actually being even worse.

Again, the definition HAD been true. The reason why it is HAD, rather than HAS is that the calculation for the exhaustion rate has not changed, even though benefits have been extended not once, but twice over the past year (first from 6 months to 9 months in July and then to 12 months in November).

Why is this important? Because the Department of Labor never changed their calculation. The calculation is as follows:
The 12 Month Average of those Receiving their Final Payment divided by...
The 12 Month Average of those Receiving their 1st Payment, with a 6 Month Lag

Exhaustion Rate Enron Style (Chart)

10 charts

Q2 Earnings (Chart)

Contraction is not an Improvement (Chart)

Dollar's future in US hands (H/T Cat)

The issue is not whether Asian central banks will continue to have confidence in the dollar, but why Asian central banks should see their mandate as supporting the continuous expansion of the dollar economy through dollar hegemony at the expense of their own non-dollar economies. Why should Asian economies send real wealth in the form of goods to the US for foreign paper of declining value instead of selling their goods in their own economy?

Without dollar hegemony, Asian economies can finance their own economic development with sovereign credit in their own currencies and not be addicted to export for fiat dollars that repeatedly lose purchasing power because of US monetary and fiscal indiscipline. As for Americans, is it a good deal to exchange your job for lower prices at Wal-Mart? (See Follies of fiddling with the yuan, Asia Times Online, October 23, 2003, for a detailed analysis of the relationship of the Chinese currency to the dollar.)

Government Fraud: Pensions (H/T Nichoman)

This morning I had seen a third "notice" that there are widespread "critical shortfalls" in Union Pension Funds.

I put up a short video on the topic and am now getting emails telling me that this is more widespread than has been reported - additional funds have been sending these deficiency notices out.

And in that article I called for general strikes organized by the unions of this nation - what's left of them anyway.

Historic Revenue Drops: Worse in History, including Great Depression (From theComingDepressionBlogspot)

California: $53.7 billion shortfall or 58 percent of its budget

Arizona: $4 billion shortfall or 41 percent of its budget

Nevada: $1.2 billion or 38 percent of its budget

Illinois: $9.2 billion or 33 percent of its budget

New York: $17.9 billion or 32 percent of its budget

Alaska: $1.35 billion shortfall or 30 percent of its budget

New Jersey: $8.8 billion or 30 percent of its budget

Oregon: $4.2 billion or 29 percent of its budget

Vermont: $278 million or 25 percent of its budget

Washington: $3.6 billion or 23 percent of its budget

Connecticut: $4.1 billion or 23 percent of its budget

 Tony Crescenzi (Video, Keynotes: Employment and Greenshoots, and Inventory Rebound)

 Two Interesting Videos, Hugh Hendry (Contrarian Investor)

China and the USD (Video)

16 Comments

dcm's picture
dcm
Status: Silver Member (Offline)
Joined: Apr 14 2009
Posts: 216
Re: Can I borrow those X-Ray glasses

"Lasting worldwide recovery "is still a ways off," President Barack Obama declared Friday, but he also said at the conclusion of a global summit that a disastrous economic collapse apparently has been averted."  - CNBC 

 

...and why did you use the word "apparently?"

 

dcm's picture
dcm
Status: Silver Member (Offline)
Joined: Apr 14 2009
Posts: 216
Re: New Series

CNBC is launching a series on "The Business of Porn"

at least their finally labelling their coverage correctly 

RedShift's picture
RedShift
Status: Bronze Member (Offline)
Joined: Sep 6 2008
Posts: 25
A True American Patriot With News and Investment Advice

Semper Fi!

 

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
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Posts: 2606
Re: Can I borrow those X-Ray glasses
dcm wrote:

"Lasting worldwide recovery "is still a ways off," President Barack Obama declared Friday, but he also said at the conclusion of a global summit that a disastrous economic collapse apparently has been averted."  - CNBC 

...and why did you use the word "apparently?"

dcm -

Just finished reading through an article on Obama's proclamation and am trying to figure where in the cycle it should go.  Take a look at the following threads.  (Some info duplicated)  Where would you put this most recent 'astute' observation (tongue planted firmly in cheek). 

I'd put it somewhere between comment 15-18.

http://www.peakprosperity.com/blog/pompous-prognosticators/7975

http://www.peakprosperity.com/blog/daily-digest-may-14/18747 (Post #4)

http://www.peakprosperity.com/blog/their-own-words/18959

Ready's picture
Ready
Status: Platinum Member (Offline)
Joined: Dec 30 2008
Posts: 917
Re: Can I borrow those X-Ray glasses
Dogs_In_A_Pile wrote:

I'd put it somewhere between comment 15-18.

 

Naw, we're still only at 11, we have a long way to go!

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
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Posts: 2606
Re: Daily Digest - July 10

The following extracted from:  http://www.msnbc.msn.com/id/31842856/ns/world_news-europe

President Barack Obama said Friday the world apparently has averted economic collapse but a "full recovery is still a ways off."

Obama, speaking at the end of the Group of Eight summit of major economic powers shortly before meeting with Pope Benedict XVI, said world leaders had taken significant measures to address economic, environmental and global security issues.



"Reckless actions by a few have fueled a recession that spans the globe," Obama said of the meltdown that began in the United States with a tumble in housing prices and drastic slowing of business lending. The downturn now threatens superpowers and emerging nations alike.

Okay, I'd feel better if reckless actions by a few more would stop pouring gasoline on the fire that is the recession/depression.  Or should we go with "repression"?

coyote-smiles's picture
coyote-smiles
Status: Member (Offline)
Joined: Apr 24 2008
Posts: 11
Re: Daily Digest - July 10

How do you all think the new increase in minimum wage will affect things? 

Setting ourselves up for the inflation that's soon to hit us, are we?

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - July 10

 = USD which results in "Hyperinflation"

gregoro's picture
gregoro
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Joined: Oct 6 2008
Posts: 15
Re: Daily Digest - July 10

For the first time, the California State University will accept no new students for its spring semester, CSU announced Thursday.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/09/MNJS18LRG1.DTL

I live in a CSU town.  This community relies on students for rental income, mom & dads $, and salaries for professors.  Lots of professors have already been laid off....and more layoffs are coming if there are fewer students.  Not good. 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - July 10

Retail Desperation

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - July 10

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1028
Re: Daily Digest - July 10

The article in the Boulder Weekly pretty well summarizes CM's message, which I am trying to pass on.

DavidC's picture
DavidC
Status: Silver Member (Offline)
Joined: Sep 29 2008
Posts: 243
Re: Daily Digest - July 10

Hmm,

Geithner's lack of a response seems to indicate the implied response.

DavidC

ernie's picture
ernie
Status: Bronze Member (Offline)
Joined: Feb 18 2009
Posts: 39
Re: Daily Digest - July 10

"It is our contention that it was a global fiat currency glut, not a savings glut, at the heart of the financial crisis, which will have profound implications for the global economy— because we have come to the conclusion that despite the rhetoric all fiat currencies today are but derivatives of the US dollar, which means one way or the other it will not be allowed to fail or be discontinued from use as the world’s reserve currency."

 

http://www.financialsense.com/fsu/editorials/karn/2009/0708.html

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - July 10

 http://www.youtube.com/watch?v=zpbW64vRrMc&feature=player_embedded

The derivatives table is in trillions of dollars, not billions.

The derivative shadow eclipses the total world's global economies. Minsky wrote what happens to Ponzi credit, of which the reserve dollar is tied implicitly to.

For Ponzi units, the cash flows from operations are not sufficient to fulfill either the repayment of principal or the interest due on outstanding debts by their cash flows from operations. Such units can sell assets or borrow. Borrowing to pay interest or selling assets to pay interest (and even dividends) on common stock lowers the equity of a unit, even as it increases liabilities and the prior commitment of future incomes.…

...

 Furthermore, if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values.”

Possibility of a dollar crisis pegged at 75% (First video)

mono's picture
mono
Status: Martenson Brigade Member (Offline)
Joined: Nov 13 2008
Posts: 70
Re: Daily Digest - July 10

 It´s amazing to see how much contempt Geithner has for Congress. He must feel very secure and probably this it how it works. First the banking lobbyies (which Geithner as a GS alumn is part of) approach members of Congress/Senate and offer nice little arrangements. Once that´s done, they can walk right over them, knowing, stained Congressmen are the ones that have to be scared, not them.

One should´nt be fooled by apparent " complexity", if you lay it down open on the table, it all boils down to 1+1=2, unless someones cheating!

 I´m gonna go down to the coffeebar and order a double Depresso, after seeing this.

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