Daily Digest

Daily Digest - June 14

Monday, June 14, 2010, 10:59 AM
  • Two Decades Of Greed - The Unraveling
  • Philip Zimbardo on "The Secret Powers of Time" 
  • Japan Prime Minister Naoto Kan Warns Of Greek-Style Public Debt Problems
  • Russian Companies Facing Bankruptcy
  • Central Bank Introduces New Approach On Speculation
  • Seeking Clarity On Goldman's Ethics Waiver
  • Europe’s Banks Face Second Funding Squeeze on Sovereign Crisis
  • U.S. Discovers Vast Riches of Minerals in Afghanistan
  • U.S. "Discovers" Nearly $1 Trillion In Mineral Deposits In Afghanistan
  • The True Value Of Energy Is Net Energy
  • Sir David King: Oil Extraction A Threat To The Future
  • Drilling Rules Hit Alaska Pipeline
  • Belief Systems At Turning Point
  • BP Is Just A Symptom Of A Dangerous Addiction To Oil
  • Amish Farming Draws Rare Government Scrutiny

Economy

Two Decades Of Greed - The Unraveling (JimQ)

Michael Lewis was a 24 year old Generation X Ivy League graduate who ended up on Wall Street at the outset of the Unraveling. He was flabbergasted by how clueless youngsters could pretend to know what they were doing while taking home phenomenal amounts of money. He was sure it would end in short order. But he was wrong. It built to a decadent crescendo two decades later.

Philip Zimbardo on "The Secret Powers of Time" (Davos)

Where are we going?

!

Japan Prime Minister Naoto Kan Warns Of Greek-Style Public Debt Problems (pinecarr)

Naoto Kan says Japan's public debt is huge and calls for drastic fiscal reform.

Russian Companies Facing Bankruptcy (pinecarr)

Default risk occurs across all the sectors of the Russian economy and default risks are relatively high in Russia relative to other nations that we are watching. It’s naturally a natural resources economy so it’s vulnerable to oil prices – changes in oil prices.

Central Bank Introduces New Approach On Speculation (pinecarr)

Russia’s Central bank announced on Monday that starting from this month it is tying the Rouble exchange rate to the oil price, in a move which will make it more volatile but reduce speculation.

Seeking Clarity On Goldman's Ethics Waiver (pinecarr)

What confuses us is the placement at the very end of this document of the following section, Waivers of This Code, in which one reads: "From time to time, the firm may waive certain provisions of this Code." In other words, Goldman's activities comply fully with legality until such time that Goldman decides it is in the name of the greater good to "waive" this compliance.

Europe’s Banks Face Second Funding Squeeze on Sovereign Crisis (Nickbert)

Investors are shunning bank securities on concern Greek, Portuguese and Spanish bonds held by the lenders will plunge in value. Bank bond sales slowed in May to the lowest since Lehman Brothers Holdings Inc.’s failure in 2008 as the extra yield buyers demand to hold the securities over government debt soared to the highest this year. Firms are wary of lending to each other, depositing record funds with the European Central Bank.

Energy

U.S. Discovers Vast Riches of Minerals in Afghanistan (joemanc, Nickbert, VeganD, Douglas A.)

The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

U.S. "Discovers" Nearly $1 Trillion In Mineral Deposits In Afghanistan (Davos)

The article continues, "The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe."

Ah yes - "previously unknown." Yet the punchline of the piece : "The vast scale of Afghanistan’s mineral wealth was discovered by a small team of Pentagon officials and American geologists."

The True Value Of Energy Is Net Energy (pinecarr)

To reduce Odum’s assertion to a pithy phrase—it takes energy to get energy – and for the past 150 years society has accessed enormous quantities of energy in the form of fossil fuels at a very low cost.

Today, the circumstances are different, as nearly all of the easy-to-find and easy-to-produce oil wells have been found and produced. For example, Ghawar, the world’s biggest oil field, was discovered in 1948, and even with all of the advances in seismic technology over the past 60 years, nary an oil well of nearly the same magnitude has been found.”

Sir David King: Oil Extraction A Threat To The Future (pinecarr)

Future oil extraction could create new environmental, social and technological challenges, says the UK's former chief scientist.

Drilling Rules Hit Alaska Pipeline (Nickbert)

Volumes may fall low enough to halt operations by the middle of the next decade without an expensive modification of the pipeline to handle less oil. At a reduced flow, oil in the pipeline can freeze or form into a waxy buildup, raising the risk of interruptions and spills. Offshore oil production could help refill the pipeline just when the flow from the North Slope is projected to reach critical lows.

Belief Systems At Turning Point (pinecarr)

It seems to me with the BP Horizon Blowout, we may be hitting a turning point in belief systems, in more than one way. Can businesses really be expected to regulate themselves, with minimal oversight? Can technology solve our all our problems? If there are technological solutions, can they be expected immediately? Can we really depend on the oil supply that everyone has told us is here?

BP Is Just A Symptom Of A Dangerous Addiction To Oil (pinecarr)

We have entered the era of Extreme Oil. Deepwater does not tell us much about the sins of British oil companies versus American ones. It tells us a great deal about the huge costs, human, financial and environmental, of being hooked on oil.

Environment

Amish Farming Draws Rare Government Scrutiny (lastboyscout)

Runoff from manure and synthetic fertilizers has polluted the Chesapeake Bay for years, reducing oxygen rates, killing fish and creating a dead zone that has persisted since the 1970s despite off-and-on cleanup efforts. But of the dozens of counties that contribute to the deadly runoff of nitrogen and phosphorus, Lancaster ranks at the top.

Please send article submissions to: [email protected]

18 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - June 14

"June 14 (Bloomberg) -- The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.

Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.

“It is the mother of all bailouts,” said Edward Pinto, a former chief credit officer at Fannie Mae, who is now a consultant to the mortgage-finance industry.

Fannie, based in Washington, and Freddie in McLean, Virginia, own or guarantee 53 percent of the nation’s $10.7 trillion in residential mortgages, according to a June 10 Federal Reserve report. Millions of bad loans issued during the housing bubble remain on their books, and delinquencies continue to rise. How deep in the hole Fannie and Freddie go depends on unemployment, interest rates and other drivers of home prices, according to the companies and economists who study them."

"President Obama urged reluctant lawmakers Saturday to quickly approve nearly $50 billion in emergency aid to state and local governments, saying the money is needed to avoid "massive layoffs of teachers, police and firefighters" and to support the still-fragile economic recovery.

In a letter to congressional leaders, Obama defended last year's huge economic stimulus package, saying it helped break the economy's free fall, but argued that more spending is urgent and unavoidable. "We must take these emergency measures," he wrote in an appeal aimed primarily at members of his own party. "

...................2A) Economy in US Slows as States Lose Federal Stimulus Funds

"June 14 (Bloomberg) -- Spending cuts by state and local governments from New York to California may act as a drag on the economy into 2011, only the second time in more than a half century that such reductions have restricted growth for three consecutive years.

States face a cumulative budget gap of $127.4 billion as 46 prepare for the start of their fiscal year on July 1, according to a report this month by the National Governors Association and the National Association of State Budget Officers. They will have to fill that hole largely on their own, as aid from the federal government under programs including President Barack Obama’s $787 billion stimulus package starts to wind down.

State and local cutbacks may trim growth by about a quarter percentage point in 2010 and 2011 after shaving it by 0.02 point in 2010, said Mark Zandi, chief economist at Moody’s Analytics Inc. He also sees the governments lopping payrolls by 200,000 during the next year after reducing them by 190,000 in the 12 months through May."

...................2B) Obama's State Aid Proposal in Doubt

"BP shares dived again Monday in London trading after a group of U.S. senators asked the company to set up a $20 billion escrow fund to cover costs of the oil leak in the Gulf of Mexico."

"Respected oil industry analyst Matt Simmons told Fortune Magazine last week that a BP bankruptcy filing was likely within a month. "They're going to run out of cash from lawsuits, cleanup and other expenses," he said.

"One really smart thing that Obama did was about three weeks ago he forced BP CEO Tony Hayward to put in writing that BP would pay for every dollar of the cleanup. But there isn't enough money in the world to clean up the Gulf of Mexico. Once BP realizes the extent of this, my guess is that they'll panic and go into Chapter 11." "

"June 14 (Bloomberg) -- Appreciation of China’s currency won’t resolve the Sino-U.S. trade imbalance or the consumer debt, low savings rate and unemployment in the world’s largest economy, Qin Gang, spokesman for the Chinese foreign ministry said today."

"China hopes that U.S. politicians will “seriously consider” how to solve the structural problems in their economy and not blame others, Qin said today. The U.S. should not politicize the yuan or use it as an excuse for protectionism, he said in a statement in response to a question about the U.S. lawmakers’ proposal."

"The exchange rate isn’t the main reason for the U.S. trade shortfall with China, Qin said, adding that the gap is due to the division of labor brought about by globalization. Washington’s restrictions on technology exports to Beijing are also an important reason for the imbalance, he said."

"Euro-zone banks hold almost two-thirds of exposure to riskiest regions"

"LONDON (MarketWatch) -- French and German banks remain the most exposed to Europe's riskiest economies, holding nearly $958 billion of debt from Spain, Portugal, Greece and Ireland, according to the latest figures from the Bank for International Settlements.

The total for France and Germany represents 61% of the $1.58 trillion exposure held by banks in the euro zone at the end of 2009 the BIS data released late Sunday showed. In turn, the euro-zone banks accounted for almost two-thirds of the total worldwide exposure of internationally active banks to those four countries.

Of the combined exposure of French and German banks, around $174 billion was sovereign debt, while the remainder was owed by individuals and companies, the BIS said. "

  • Other headlines and news stories:

 

India's Inflation Unexpectedly Accelerates to 10.16%

India May Put Off Debt Auctions on Cash Shortages

BOE's Dale Says the Financial Crisis Has Entered 'New Phase'

UK's budget office cuts outlook as austerity looms

Soaring public sector pensions bill threatens attempts to cut deficit (UK)

Europe's Banks Face Second Funding Squeeze on Sovereign Crisis

Italy's debt reaches 1.812 trillion euro (Record)

Goldwind Shelves $1.2 Billion Hong Kong Share Sale

New York State Prepares for Government Shutdown, Just in Case

Companies Face Downgrades as Refinancing Soars: Canada Credit

Gulf Companies Face 'Wall' of Debt Due in 2012, Moody's Says

The hospitals in Greece run out of medical supplies because of debts

Local Government Bankruptcies May Become Reality (Michigan)

No cost-of-living increase for state retirees in July (Maryland...while health care costs rise)

Pension Cuts Face Test in Colorado, Minnesota

EU again denies rescue plan for Spanish economy

Investors Ignore Red Flags in Muni Market 

As Pennsylvania well permits boom, neighbors' fears deepen (For natural gas)

Emergency Bans on Naked CDS Trades Considered by EU

rhare's picture
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Re: Daily Digest - June 14
Quote:

The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

Does anyone else reading this think it reads just like all the "We have a 100 years of oil" left type stories.  While I see lots of people discussing how this was just coincidentally being discovered now, I'm more interested in the hype about how big it is.  We have quotes like the following: "vast mineral wealth", "stunning potential", "hugely significant", "Saudi Arabia of lithium", ""massive opportunity".  So lets say it's $1T and takes 20 years to mine thats only $50B/year.  While a lot compared to the Afghan GDP, it's still small potatos compared to world consumption.  Just like the "vast reserve" of oil in the gulf that is only 1 day of world consumption.

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Amish Farming

On another thread it was suggested that the Amish might be vulnerable to attacks in a SHTF scenario. This created quite a stir. I would just like to reassure everyone that the S has HTF literally, and the Feds are planning to take them out before the roving gangs of Mad Max marauders get to them. 

Is this a great country or what?

LOL

V

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Re: Daily Digest - June 14
rhare wrote:
Quote:

The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

Does anyone else reading this think it reads just like all the "We have a 100 years of oil" left type stories.  While I see lots of people discussing how this was just coincidentally being discovered now, I'm more interested in the hype about how big it is.  We have quotes like the following: "vast mineral wealth", "stunning potential", "hugely significant", "Saudi Arabia of lithium", ""massive opportunity".  So lets say it's $1T and takes 20 years to mine thats only $50B/year.  While a lot compared to the Afghan GDP, it's still small potatos compared to world consumption.  Just like the "vast reserve" of oil in the gulf that is only 1 day of world consumption.

Time...Scale...and Cost...no mention at all, nor how do you even get that stuff out of there during an active war?

What I'd like to know is what the heck U.S. Geologists were doing there? This is a country that's been at war for what, 30 years, and we got geologists in there looking for minerals during an active war? You'd think, maybe after the country was stabilized, whenever that may be, that's when you can have geologists look around? Maybe I'm reading too much into it.

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Johnny Oxygen
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Re: Daily Digest - June 14
joemanc wrote:
rhare wrote:
Quote:

The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

Does anyone else reading this think it reads just like all the "We have a 100 years of oil" left type stories.  While I see lots of people discussing how this was just coincidentally being discovered now, I'm more interested in the hype about how big it is.  We have quotes like the following: "vast mineral wealth", "stunning potential", "hugely significant", "Saudi Arabia of lithium", ""massive opportunity".  So lets say it's $1T and takes 20 years to mine thats only $50B/year.  While a lot compared to the Afghan GDP, it's still small potatos compared to world consumption.  Just like the "vast reserve" of oil in the gulf that is only 1 day of world consumption.

Time...Scale...and Cost...no mention at all, nor how do you even get that stuff out of there during an active war?

What I'd like to know is what the heck U.S. Geologists were doing there? This is a country that's been at war for what, 30 years, and we got geologists in there looking for minerals during an active war? You'd think, maybe after the country was stabilized, whenever that may be, that's when you can have geologists look around? Maybe I'm reading too much into it.

It means the US and/or others are getting ready to make a move in Afghanistan. Remember, first the 'hook' then the 'move'.

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Re: Amish Farming
V wrote:

On another thread it was suggested that the Amish might be vulnerable to attacks in a SHTF scenario. This created quite a stir. I would just like to reassure everyone that the S has HTF literally, and the Feds are planning to take them out before the roving gangs of Mad Max marauders get to them. 

Is this a great country or what?

LOL

V

What would be great is if the Amish had nuclear weapons made from timber framing and old home recipies. Those aren't grain silos man!

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V
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Re: Amish Farming

JO

When I was a kid we  would go on road trips and I would see all these silos and would say " There is a missile silo" My family would laugh. 

Who is laughing anymore. In the fifties I spent a lot of class time under my desk

V

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Re: Daily Digest - June 14

re: Amish Farming Draws Rare Government Scrutiny; just great, the government is cracking down on cow manure polluting the ocean...

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Re: Daily Digest - June 14

What I'd like to know is what the heck U.S. Geologists were doing there? This is a country that's been at war for what, 30 years, and we got geologists in there looking for minerals during an active war? You'd think, maybe after the country was stabilized, whenever that may be, that's when you can have geologists look around? Maybe I'm reading too much into it.

I read that they were using maps the Russians had made during their occupation. The maps had been hidden away all this time by the Afhgans.

 

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Re: Daily Digest - June 14
SteveS wrote:

What I'd like to know is what the heck U.S. Geologists were doing there? This is a country that's been at war for what, 30 years, and we got geologists in there looking for minerals during an active war? You'd think, maybe after the country was stabilized, whenever that may be, that's when you can have geologists look around? Maybe I'm reading too much into it.

I read that they were using maps the Russians had made during their occupation. The maps had been hidden away all this time by the Afhgans.

 

Maybe but you can track mineral deposits by satelite now so it doesn't seem to hold water that its 'a new dicovery'

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Johnny Oxygen
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Re: Daily Digest - June 14

Just released:

http://www.thedailybeast.com/cheat-sheet/item/us-didnt-just-discover-afghan-minerals/curious-timing/?om_rid=DT6vbd&om_mid=_BMFoPAB8Ld7U9h&

U.S. Didn't Just 'Discover' Afghan Minerals

The New York Times report of $1 trillion in mineral reserves beneath Afghanistan may not be the surprise it seems: Blake Hounshell at Foreign Policy writes, “I'm (a) skeptical of that $1 trillion figure; (b) skeptical of the timing of this story, given the bad news cycle, and (c) skeptical that Afghanistan can really figure out a way to develop these resources in a useful way.” The findings that the story is based on information that has been available online since 2007 and the $1 trillion figure is a guess that isn’t mentioned in any of the military’s earlier reports.

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Re: Daily Digest - June 14
Johnny Oxygen wrote:
SteveS wrote:

What I'd like to know is what the heck U.S. Geologists were doing there? This is a country that's been at war for what, 30 years, and we got geologists in there looking for minerals during an active war? You'd think, maybe after the country was stabilized, whenever that may be, that's when you can have geologists look around? Maybe I'm reading too much into it.

I read that they were using maps the Russians had made during their occupation. The maps had been hidden away all this time by the Afhgans.

 

Maybe but you can track mineral deposits by satelite now so it doesn't seem to hold water that its 'a new dicovery'

The first US survey (aerial) was done in 2004 by the military with the help of geologists and using the russian maps. This was followed by a more through aerial survey in 2006 (also run by the Pentagon) followed by some ground truthing. This is old news repackaged for current consumption.

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Re: Daily Digest - June 14

"Japan's new prime minister, Naoto Kan, today warned that the country risked being sucked into a Greek-style debt crisis unless it quickly reined in its massive public debt."

Does that mean the Japanese Diet is going on a diet?   Wink

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Re: Daily Digest - June 14

 

This link about the situation in Greek hospitals offers a little more information than the other:

Hospitals short of vital supplies

"The revelations a few days ago that the Evangelismos Hospital in central Athens was in no position to carry out heart operations due to a lack of vital supplies appears to be just the tip of the iceberg. Shortages of orthopedic equipment and filters for life-support machines were also reported.

"But other hospitals are also declaring a scarcity of supplies. The Sismanogleio Hospital in northern Athens said that it does not have test tubes to carry out blood tests and it has run out of film for its X-ray machines.

"At the Sotiria Hospital, doctors are unable to carry out tests for hepatitis, HIV and tuberculosis. At the Ippocrateio Hospital in Thessaloniki, shortages mean that blood tests cannot be conducted. Hospitals on Naxos and in Sparta have encountered similar problems."

http://www.ekathimerini.com/4dcgi/_w_articles_politics_0_11/06/2010_117606

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Re: Daily Digest - June 14

http://www.smh.com.au/business/world-business/act-two-of-crisis-begins-soros-20100611-y188.html#poll

'Act two' of crisis begins: Soros

June 11, 2010 - 9:42AM

Billionaire investor George Soros says ''we have just entered Act II'' of the crisis as Europe’s fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession.

''The collapse of the financial system as we know it is real, and the crisis is far from over,'' Mr Soros said at a conference in Vienna. ''Indeed, we have just entered Act II of the drama.''

Click here for the full speech

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Re: Daily Digest - June 14
BP's Statistical Review of World Energy 2010 is now downloadable from :

Highlights

Oil

Global oil consumption declined by 1.2 million b/d or 1.7%, the largest decline since 1982

Natural gas

World natural gas consumption fell by 2.1%, the largest decline on record

Coal

Global coal consumption was flat in 2009, the weakest annual change since 1999

Primary energy

World primary energy consumption fell by 1.1% in 2009, the first decline since 1982
Primary energy
=====================================================

http://www.peakoil.org.au/charts/world.oil-prod.BP.2009.gif

 

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Re: Daily Digest - June 14
> Obama : "What we can predict is that the availability of fossil fuel is going to be diminishing;
that it's going to get more expensive to recover".
 
Er, what ? Is that a public admission of Peak Oil by the POTUS ?
We have heard the "more expensive" bit before,
but I don't think we've been told about "availability diminishing" since
when the Alaska oil bonanza had produced the second US oil production peak
but was clearly not enough for sustained growth.
 
 

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