Daily Digest

Daily Digest - June 14

Sunday, June 14, 2009, 9:54 AM
  • Financial Sense News hour 3, June 6 (Repost, Audio)
  • Predictions of $250 a barrel on fears for oil reserves, hopes of economic recovery and hedging against weak dollar
  • The Economic Recovery Decoy: Bank Refuge and Auto and Home Sales Plummet. Two Largest Purchases for Americans still Treading Water. Number of Renters Increases by 748,000 in one Quarter.
  • A housing recovery? Not even close.
  • An urgent Message from Jim Sinclair. Re: GOLD and SILVER
  • Keep in mind that whenever we’re talking “bonds” or “Treasuries,” what we’re really talking about, of course, is DEBT
  •  California [World's 8th Largest Economy] Controller Releases May Cash Flow Figures…“Fifty days from a meltdown of State government.”
  • Z.1 Flow of Funds: Total Debt Still Growing
  • Foreclosures Up 18% (Chart)
  • I/O Mortgages Hit Commercial Real Estate
  • * * * * ABBY NORMAL (Repost)

Economy

Financial Sense News hour 3, June 6 (Repost)

  • ****6:04 Minsky, Bubbles, 5 Steps of: 1.) A Displacing Event 2.) Credit Creation/Fuel/Expanding Money Supply 3.) Captivates Investors Euphoric State 4.)  Critical Stage, Financial Distress 5.) Revulsion
  • 9:00 copper and oil, India and China
  • 11:30 Insolvency, 100 trillion
  • 15:00 60% tax or 10% per year inflation needed to balance budget
  • 23:00 School kids laugh at Geithner
  • 30:00 (Can't read notes)
  • 31:00 USD falling
  • 33:00 Geithner Image
  • 34:00 Kid for an auto Czar
  • 37:00 Unfunded liabilities
  • 41:00 Oil
  • 48:00 Electricity
  • 52:00 Demand
  • 56:00 A or B, EV's or War for oil
  • 1:01 Reverse Globalization
  • Part 2 of 3rd Hour: 2:00 How Ben How?
  • 4:30 Inflation
  • 6:30 (Can't read notes)
  • 14:00 Second wave up

This was a good listen, I'd make it a point to catch it.

* * * * ABBY NORMAL (Repost)

The pundits on CNBC who appear every morning proclaim that things are returning to normal. It amazes me that such supposedly intelligent people have no idea what normal means. Since 80% of the people interviewed on CNBC manage other people’s money, I’m guessing they are just trying to stay in business by lying to the average investor. If they were honest, they would say they have no idea what the future holds. If they were outspokenly honest, they would say that a Frankenstein’s Monster is loose in the countryside and will wreak havoc on the American economy for years.

Predictions of $250 a barrel on fears for oil reserves, hopes of economic recovery and hedging against weak dollar

Despite the 2008 rise in coal consumption, the BP data showed growth in the use of the fuel continued to decline compared with 2007 when it rose 5% and five years ago when it went up by 8%.

But the coal figures will alarm environmentalists and increase the calls for companies and governments to speed up trials on "clean coal" technology and the use of carbon capture and storage.

China has promised to increase its use of renewables: Zhang Xiaoqiang, vice-chairman of the China's national development and reform commission, says the country may produce as much as 20% of its energy from wind and solar by 2020.

The Economic Recovery Decoy: Bank Refuge and Auto and Home Sales Plummet. Two Largest Purchases for Americans still Treading Water. Number of Renters Increases by 748,000 in one Quarter.

When I hear about the banks and Wall Street returning TARP money to the government I can’t help to think of a successful Trojan Horse hitting our economy from within.  The initial rush to back an unprecedented bailout for the sake of the economy actually turned out to be a strategic looting of the American taxpayer.  The exercise of AIG being used as a conduit to funnel billions of dollars to firms such as Goldman Sachs was merely a diversion on the breaking backs of the American people.  And to what end?

Do we measure success by having 26,000,000 unemployed and underemployed Americans who are now destined to take jobs making half of what they once did?

When we hear the deep pain of our average citizens, they are told with a round about manner that there is no more money.  We are broke.  This is true.  Yet over and over banks and Wall Street get hand out after hand out and policy that is conducive to their well being.  Not from a current savings account since there is none to be found but from future generations and the sustainability of our country.  The public was mislead to believe that Wall Street survival in its current form was the only way to assure the prosperity of America.  This has turned out to be a ruse of historical proportions.  If we even think about the two biggest purchases Americans make, that of the automobile and home they are no where near their historical peaks:

A housing recovery? Not even close

Zillow.com said that overall, the number of borrowers who are underwater climbed to 20.4 million at the end of the first quarter from 16.3 million at the end of the fourth quarter. The latest figure represents 21.9% of all homeowners, according to Zillow, up from 17.6% in the fourth quarter and 14.3% in the third quarter. There are 75 million homes in the United States. One third of homeowners have no mortgage, so that means that 41% of all homeowners with a mortgage are underwater. With prices destined for another 10% to 20% drop, the number of underwater borrowers will reach 25 million.

An urgent Message from Jim Sinclair. Re: GOLD and SILVER

You know that information that comes to me has been reliable. You also know that the entire purpose of all of working here at JSMineset has been to get you through this safely. You also know that if we had not been here hundreds of thousands of people now holding gold would not be.

So please pay attention to the following.

Keep in mind that whenever we’re talking “bonds” or “Treasuries,” what we’re really talking about, of course, is DEBT

This week alone the Fed had to convince “investors” to buy up $150 billion worth of OUR debt! That has now created a Historic CRASH of the bond market with TLT, the 20 year bond fund, losing almost 30% of its value. The ten year rose to 4% and that will take 30 year mortgages well over 6%. While that may not sound like much compared to historic rates, and it’s not, because we are so saturated with debt and have financed a huge portion of our debt with short term financing, resetting to higher rates will be very painful indeed. The more debt in the system, the more painful rising rates will be.

Today at 1:00 Eastern the 30 year bond auction will take place. Yesterday’s 10 year auction didn’t go so well. So, while the greenshoot crowd is pointing out what amounts to nothing I can see, we have crashing bond markets which are a HUGE, GIGANTIC WEED in our economic garden! Here’s a daily chart of the 10 year futures on the left, and long bond on the right since Christmas:

 California [World's 8th Largest Economy] Controller Releases May Cash Flow Figures…“Fifty days from a meltdown of State government.”

"Without immediate solutions from the Governor and Legislature, we are less than 50 days away from a meltdown of State government. This presents a terrible threat to California’s economy and to the State’s delivery of basic public services,” said Chiang. “A truly balanced budget is the only responsible way out of the worst cash crisis since the Great depression.”

Personal income taxes were $475 million below (-23.0%) estimates in the May Revision. Corporate taxes were down $84.4 million (-25.8%), and sales taxes fell by $109 million (-3.3%).

Z.1 Flow of Funds: Total Debt Still Growing

The Fed published the Z.1 Flow of Funds at noon.

The key takeaway: Total debt continues to grow, albeit more slowly.

Since Q3 ‘08 households have cut their debt (slightly), but the federal government is borrowing so rapidly, overall debt continues to expand.

Foreclosures Up 18% (Chart)

I/O Mortgages Hit Commercial Real Estate

“The worst is yet to come. Typically there’s a lag between when the economy softens and when the defaults actually occur.”

-Steven Kandarian, MetLife Inc. Chief Investment Officer

Ahhhhh, its nice to see that sophisticated professionals make the same mistakes that Mom & Pop did during the credit bubble: Interest-Only Mortgages:

6 Comments

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - June 14

Peter Schiff on the Commodities Watch Radio

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 5.

Top Ten Countries with which the U.S. has a Trade Deficit

For the month of April 2009

                                                   Year To Date
                                   Deficit in       Deficit in
                                    Millions         Millions
Country Name                       of U.S. $        of U.S. $

China                             -16,753.76       -67,137.50
Mexico                             -4,117.02       -13,805.52
Japan                              -3,217.88       -12,332.19
Federal Republic of Germany        -2,223.70        -7,934.91
Ireland                            -2,115.16        -7,283.52
Russia                             -1,219.35        -3,713.10
Canada                             -1,216.12        -6,353.87
Korea, South                         -986.91        -4,983.78
Taiwan                               -985.23        -4,315.18
Italy                                -982.52        -4,461.45


 

http://www.moneyweek.com/news-and-charts/economics/the-uk-trade-deficit---does-it-matter.aspx

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - June 14

EJ McMahon on Fox Business with Stuart Varney

Classic Glen Beck.

Christine Lagarde, France's Minister for Economy, on sustainable recovery from the crisis

Peruvian counterfeiters thrive in economic crisis - 13 Jun 09

 

fujisan's picture
fujisan
Status: Gold Member (Offline)
Joined: Nov 5 2008
Posts: 296
Re: Daily Digest - June 14

CFR - Quarterly Update: The Recession in Historical Context (pdf)

How does the current economic and financial downturn match up to past contractions? This chart book provides a series of answers, plotting current indicators (in red) against the average of all post–World War II recessions (blue). To facilitate comparison, the data are centered on the beginning of the recession (marked by “0”). The dotted lines represent the most severe and the mildest experiences in past cycles. Because the current downturn is frequently compared to the Great Depression, the appendix plots the current recession against the 1930s.

...

Many interesting charts. Must see IMHO

switters's picture
switters
Status: Platinum Member (Offline)
Joined: Jul 19 2008
Posts: 744
Re: Daily Digest - June 14

Oops. Posted by mistake.  Carry on!

CB's picture
CB
Status: Gold Member (Offline)
Joined: Mar 18 2008
Posts: 365
Re: Daily Digest - June 14

Very interesting charts Fujisan. My take is that the current situation is severe and has no analog. It is different than the GD - and there is only one such example in the 20th century, so past as a guide to the future is not a given. The oil/energy situation is entirely different. It would be nice to see those type of graphics with a more international focus - not sure if historical data exists to do meaningful comparisons though...

fujisan's picture
fujisan
Status: Gold Member (Offline)
Joined: Nov 5 2008
Posts: 296
Re: Daily Digest - June 14

TG-172: Treasury International Capital (TIC) Data for April

9:00am USD Net Long-term TIC Flows (Apr)  11.2B 58.1B 55.4B (revised from 55.8B)

9:00am USD Total Net TIC Flows (Apr) -$53.2B . $25.0B (revised from 23.2B)


 Uh, Uh, funding problem confirmed...

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