Daily Digest

Daily Digest - June 21

Monday, June 21, 2010, 9:54 AM
  • Global Markets Fear U.S. Treasuries Sell-Off As China Ends Currency Freeze
  • Saudi Gold Reserves Over Twice Previous Estimate
  • Gold At New Record High After Saudi Reserves Double
  • Gold Bubble? What Bubble?
  • China Turns Tables on AAA Debt Time-Bomb Nations: William Pesek
  • G-20 Split And Out Of Order
  • Razing the City to Save the City
  • ‘Worst ever’ market hits O.C. landlords
  • Kunstler: Mismanaging Contraction
  • Russia Cuts Gas Deliveries to Belarus
  • How The World Nuked Itself Over 2,000 Times
  • How Much Further Must Logistics Firms Go To Protect The Environment?

Economy

Global Markets Fear U.S. Treasuries Sell-Off As China Ends Currency Freeze (pinecarr)

Global markets are braced for a possible sell-off in US Treasury bonds after China said over the weekend that it will allow the yuan exchange rate to adjust against the dollar, ending a two-year currency freeze that has led to trade clashes with Washington and Brussels.

Gold At New Record High After Saudi Reserves Double (SolidSwede)

The weakness of the dollar following China’s decision to make the yuan more flexible, gave bullion further momentum, analysts said. A stronger yuan makes the cost of gold for Chinese buyer cheaper, potentially increasing demand. China is the world’s second largest gold consumer, after India. It is also the largest producer.

Saudi Gold Reserves Over Twice Previous Estimate (cmartenson)

A June report by the World Gold Council, an industry group that tracks gold bullion holdings by nations the world over, showed the Saudi Arabian Monetary Agency's gold reserve figure climbed to 322.9 tons compared to 143 tons reported in March.

Gold Bubble? What Bubble? (pinecarr)

We continue to hear pundits describe gold as a bubble. Certainly it will turn into a bubble before this is all over but we are hardly in the bubble stage yet.

China Turns Tables on AAA Debt Time-Bomb Nations: William Pesek (Davos)

Timothy Geithner and his team at the U.S. Treasury should keep on ice the champagne they’re tempted to open. Now it’s time to start getting their own imbalances in order. The debt explosion of the past two years isn’t just unsustainable, it’s a growing threat to global stability.

G-20 Split And Out Of Order (cmartenson)

Ahead of the Toronto Group of 20 (G-20) Summit on June 26 and 27, tensions are running high. Earlier in June, the G-20 was split apart during its ministerial meetings in South Korea; most of its members could no longer afford the monumental fiscal deficits called for in the 2009 London and Pittsburgh summits, while the United States preached for continued fiscal stimuli.

Razing the City to Save the City (jdargis)

“There’s nothing you can do with a lot of the buildings now but do away with them,” said Mae Reeder, a homeowner of 35 years on the southeast side, where her bungalow is surrounded by blocks that are being reclaimed by nature, complete with pheasants nesting in vacant spaces where people once lived.

The residential vacancy rate in Detroit is 27.8 percent. This is up from the 10.3 percent rate found in 2000 by the United States census.

‘Worst Ever’ Market Hits O.C. Landlords (cmartenson)

“Contrary to popular belief, we don’t make money with 90% occupancy,” he says of current historically high counts of empty units across the county that run roughly at 10 percent vacancy.

Kunstler: Mismanaging Contraction (cmartenson)

There will be no "recovery" to "growth" - especially by means of pumping more oil into the system. There is no techno-miracle alt-fuel panoply waiting in the wings to take over from oil. And there is no research-and-development program that will make it happen, no matter how many acronym-studded incantations we drone out.

Energy

Russia Cuts Gas Deliveries to Belarus (jdargis)

Russian President Dmitri A. Medvedev on Monday ordered Gazprom to cut deliveries of natural gas deliveries to Belarus over unpaid debts, a step which could jeopardize supplies to Poland and other European countries.

At a morning meeting with Mr. Medvedev, Aleksei Miller, the chief executive of Gazprom, said Belarus was willing to pay its debts through barter, and Mr. Medvedev tartly refused such an arrangement, saying, “Gazprom cannot accept payment for debt in pies, butter, cheese or other means of payment.”

Environment

How The World Nuked Itself Over 2,000 Times (Davos)

Who needs a wartime nuclear exchange when you have peaceful countries nuking the gamma rays out of their own sovereign territories - now that the environmental theme is rather popular, the following video by Isao Hashimoto shows all the nuclear "tests" conducted by the world in the period between 1945 and 1998. Based on public data, the world's peaceful countries have already nuked themselves at least 2,054 times, with the US nuking the state of Nevada and its immediate neighbors about one thousand times.

How Much Further Must Logistics Firms Go To Protect The Environment? (cmartenson)

Last month's conference in International Sustainable Logistics at the University of Huddersfield heard some passionate and positive presentations from leading logistics providers and customers, including Wincanton, Asda and DHL Supply Chain.

Every speaker was in agreement that over the next 20 years oil prices would continue to climb, with increasing fuel demand from Asia and the passing of peak oil production putting ever more pressure on prices.

Please send article submissions to: [email protected]

8 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4065
Re: Daily Digest - June 21

"HARRISBURG, PA. -- This city has a $68 million bill coming due before year's end, an impossible sum that is larger than its annual budget. It's a predicament caused by extravagant borrowing and spending, and now there are only unpleasant fixes: steep tax increases, severe layoffs and crippling service cuts, even bankruptcy.

It's a story that could be repeated across the country as cities and towns deal with the lingering consequences of the economic downturn and mounting debt.

The obligations of state and local governments have doubled in the past decade, to $2.4 trillion, according to a recent Federal Reserve report, a figure that excludes more than $1 trillion in unfunded pension and retiree health-care liabilities.

Generally, economists are not alarmed by increasing government debt during recessions because it stokes much-needed economic activity. But this time, concerns are deepening that the debt burden is too large for some municipalities to handle, forcing them into draconian service cuts or large tax increases, both of which would be a drag on the sputtering recovery. Beyond Harrisburg, other cities might have to default on their loans because most states are too strapped to bail them out."

"ON THE GULF OF MEXICO -- BP said Monday it has now spent $2 billion responding to the massive oil spill in the Gulf of Mexico.

And with no end yet in sight, that number is expected to keep rising. "

"The money is needed for repairs to CTA, Metra and Pace's infrastructure, according to the RTA. That includes trains, buses, rail bridges, rails, stations and other facilities.

Of that $24 billion, $13 billion is for backlogged improvements, which means vehicles and structures that are already beyond their useful life, according to RTA spokeswoman Diane Palmer. Old equipment means operating expenses that could go into improving service is instead going into repairs.

Gov. Quinn signed legislation last year giving $2.7 billion in capital expenses over five years to the RTA. But the money hasn't come yet, because the state hasn't figured out how to raise it."

"Transit agencies across the country are having trouble getting capital funding. The Federal Transit Administration has found that transit agencies face a $78 billion backlog deferred projects."

"ROCHELLE — Even after massive cuts this spring, the Rochelle Elementary School District has concerns about the future of its education fund because of the state’s financial crisis.

Currently, District 231 is owed $1.097 million by the state. That figure is expected to rise each month as Illinois falls deeper and deeper into debt.

“Nobody has ever seen anything like this. It’s really unprecedented,” District 231 Superintendent Todd Prusator said. “The state is going to start on a $13 billion deficit and they don’t have revenue to match. It doesn’t look like there’s anything on the horizon to rectify it.”"

"Spain has one of the world's most-troubled housing markets, yet some buyers are suddenly able to get mortgages with 100% financing, and developers are building new homes on empty lots despite a huge glut.

The reason: Spain's banks took possession of a large inventory of homes, buildings and land two years ago, forgiving the debt in hopes of heading off defaults. The plan was to resell the properties when the market bounced back and evade the worst impact of the looming housing crisis.

But Spain's housing market has only gotten worse, and now the bill is coming due as the banks labor under the weight of an estimated €59.7 billion ($73.8 billion) in real-estate assets on their books. Under pressure to make further markdowns on the assets by their main regulator, the Bank of Spain, many banks are now scrambling to unload the properties as quickly as possible.

In some cases, that means offering deals to consumers that are suspiciously like those that got the global housing market in trouble in the first place. The tactics include not just 100% loans, but also low initial teaser rates for buyers or initial payment deferrals for as long as three years. "

"SAN FRANCISCO—A looming budget deficit means residents and visitors in San Francisco may pay more for some city services.

Mayor Gavin Newsom has included more than a dozen new or higher fees in his proposed $6.5 billion budget plan that includes charging pet owners $25 to euthanize their cat or dog and increasing fees for street artist permits and food-permits for caterers.

City supervisors are due to debate some of the fees this week.

"Nobody wants to do this, but it's one of the options we're relying on more," said the mayor's budget director, Greg Wagner.

San Francisco is facing a $483 million budget deficit heading into the new fiscal year beginning July 1. Unlike new taxes, fees do not require approval from voters.

Among the proposals to close the budget gap is charging drivers for crash scene clean-up. An at-fault driver could face a charge from the Fire Department for $498 to pick up broken glass and spilled gasoline.

The Fire Department is also proposing to charge more for an ambulance ride and basic life support services. If the Board of Supervisors approves that plan, costs for those services would increase from $184 to $1,642. The charge for treatment at the scene of an accident would go up to $365, from $15."

"WASHINGTON — The number of doctors refusing new Medicare patients because of low government payment rates is setting a new high, just six months before millions of Baby Boomers begin enrolling in the government health care program.

Recent surveys by national and state medical societies have found more doctors limiting Medicare patients, partly because Congress has failed to stop an automatic 21% cut in payments that doctors already regard as too low. The cut went into effect Friday, even as the Senate approved a six-month reprieve. The House has approved a different bill."

"The US remained the world’s biggest manufacturing nation by output last year, but is poised to relinquish this slot in 2011 to China – thus ending a 110-year run as the number one country in factory production.

The figures are revealed in a league table being published on Monday by IHS Global Insight, a US-based economics consultancy."

"Homebuyer traffic nationwide tumbled in May, according to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions. Most of the decline was attributable to first-time homebuyers who sharply reduced their home shopping last month.

The survey’s first-time homebuyer traffic index, which measures home shopping activity on a scale of 1 to 100, registered an anemic 35.1 in May. This was down from an index of 63.5 in April. Since September 2009, the index had never been below 50, which represents a flat, or neutral, condition in home purchase activity.

“The decline of first-time homebuyer traffic is undoubtedly related to the expiration of the federal homebuyer tax credit,” stated Thomas Popik, research director for Campbell Surveys. “Homebuyers had until April 30 to sign a purchase and sale agreement and receive the credit. Once we entered the month of May, the government stimulus disappeared.”"

  • Other news and headlines:

California government workers have built up $2.75 billion in paid time off

China Backs Obama With Debt Holdings to $900 Billion

State falls short on Medicaid payments (Colorado)

Ireland plea to EU on bank guarantees

UK's High Speed One to go under the hammer

Britain gears up for drastic emergency budget Tuesday

State budget panel with $8 billion problem to solve will start meeting June 29 (Ohio..."$8 billion hole expected in the 2012-13 state budget")

Rules encourage Ohio school employees to 'double dip'

In New Hampshire, a budget gap that never goes away

Greece warns debt restructuring would be 'catastrophic'

Good News: National Flood Program $19B in Debt

NY government on verge of shutting down

California may put electronic ads on license plates

Cheap, illegal roadside signs grow like weeds in a recession

Bond Risk Falls to 6-Week Low in Europe as China Ends Yuan Peg

Some Banks Face Increased Funding Pressures: ECB's Noyer

Calexico could declare state of fiscal emergency

Budget Crisis Leaves Los Angeles' $74 Million Jail Empty

NH For Sale: State To Look At Selling Assets

Middle Class--Not the Rich or the Poor--Pay Majority of Federal Taxes, Says CBO Data

Gold at new record high after Saudi reserves double

BP crisis could squeeze pension funds

New Orleans strip club Mimosa Dancing Girls files oil spill compensation claim

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Re: Daily Digest - June 21

Kudos to our Daily Digest poster and to saxplayer00o1. Thank you for your everyday hard work and diligence.

Here's another article - I don't think I saw this in the recent Daily Digests or related comments:

Congress Wants To Bail Out Union Pensions
http://www.humanevents.com/article.php?id=37491

"A new bill introduced by Democratic Sen. Bob Casey of Pennsylvania would set up a taxpayer bailout of underfunded, multiemployer union pension plans."

"In 1998, the multiemployer plans overall got to one worker for every retiree," Brett McMahon of the Associated Builders and Contractors (ABC), a national trade association, told HUMAN EVENTS. "They're much worse now. The Teamsters in particular right now are about four retirees for every worker. The coal miners are about 12 retirees to every worker. When you hit one to one it is impossible - actually even earlier than that - it's impossible to recover."

"If a union knows that if they drive a company into bankruptcy, which they clearly have a talent for doing, they can still say to those union members that taxpayers will cover your full retirement bill, removing further incentives for a union to work productively with an employer,” McMahon said."

The total cost isn't mentioned, but on another site, I saw it listed as something around $165 billion.

Disclaimer: This link is to an article on a conservative site. I am not advocating a particular (conservative or liberal) viewpoint - in fact, I hate most politicians of both sides and I hate those who criticize (often falsely or one-sidedly) one side without mentioning the other.

Poet

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Re: Daily Digest - June 21

 

Re: Calexico could declare state of fiscal emergency
http://www.kswt.com/Global/story.asp?S=12680253

Calexico is in rural Imperial County, California. The county unemployment rate is around 27%, highest in the state.

I think this follows the theory that problems appear at the fringes. The big cities with their billion-dollar deficits still have a modicum of jobs, taxpayers, affluent, etc.

Poet

jhart5's picture
jhart5
Status: Bronze Member (Offline)
Joined: Jul 25 2009
Posts: 89
Re: Daily Digest - June 21

The Khavari Economic Plan

Noted economist Farid Khavari, a Democratic candidate for Florida governor, has gained national acclaim since announcing last July his plan to create a state-owned bank in Florida. Following Khavari’s move, gubernatorial candidates in Oregon and Illinois have made state-owned banks part of their policies and other states are looking closely at the idea of state-owned banks. The Virginia legislature has a pending resolution to establish a committee to consider a proposed state bank.

While other states seem to focus on interest savings for state and local governments, they are vague about benefits for ordinary citizens. In contrast, Khavari’s approach is to dedicate the bank to the service of all Floridians, while the state will win both in interest cost reductions and in profit from the proposed bank.

http://www.khavariforgovernor.com/about/

presentmoment's picture
presentmoment
Status: Bronze Member (Offline)
Joined: Sep 22 2008
Posts: 57
Re: Daily Digest - June 21

Jhart5,

Thanks for your post.  Khavari's idea for a stat- owned bank seems to be one of the best and effective ideas I've ever read to bypass this corrupted banking system we have now. 

I attended Slow Money National gathering and one of a discussion panel mentioned that once a large system is corrupted, it can't fix itself.  What we need to do is to create safe spaces for new systems to emerge.  I think our current financial and banking systems are incapable of reforming itself no matter what kind of regulations the Congress pass. They will always find loop-holes and create new ways to transfer wealth from producing sector of economy to themselves.  I hope this movement will spread to many other states quickly.  I will write to candidates for Governor in my state and ask for this.

presentmoment

presentmoment's picture
presentmoment
Status: Bronze Member (Offline)
Joined: Sep 22 2008
Posts: 57
Re: Daily Digest - June 21

Jhart5,

Thanks for your post.  Khavari's idea for a stat- owned bank seems to be one of the best and effective ideas I've ever read to bypass this corrupted banking system we have now. 

I attended Slow Money National gathering and one of a discussion panel mentioned that once a large system is corrupted, it can't fix itself.  What we need to do is to create safe spaces for new systems to emerge.  I think our current financial and banking systems are incapable of reforming itself no matter what kind of regulations the Congress pass. They will always find loop-holes and create new ways to transfer wealth from producing sector of economy to themselves.  I hope this movement will spread to many other states quickly.  I will write to candidates for Governor in my state and ask for this.

presentmoment

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Re: Daily Digest - June 21

 

Presentmoment:

State-owned banks can do some good when it comes to lending within the state, such as with the Bank of North Dakota:
http://en.wikipedia.org/wiki/Bank_of_North_Dakota

However, I'm also a little leery of the idea of a state that owns its own bank, and thus also falling into backstopping loans that may go bad. Then again, looking at what our government has done with backstopping Fannie and Freddie and the FDIC, as well as bailing out private institutions, we certainly cannot clear moral hazard even then. So I guess it's just another garlic by another name.

Poet

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments