Daily Digest

Daily Digest - June 24

Thursday, June 24, 2010, 9:49 AM
  • Using Icebergs to Mask a Cooling Economy
  • Think the Gulf Spill Is Bad? Wait Until the Next Disaster
  • New Treasury Bond Contract Bets on Deflation, Not Inflation
  • Maywood (California) To Lay Off All City Employees, Dismantle Police Department
  • Deutsche Bank: U.S. Financial Conditions Just Collapsed Back To Crisis Levels
  • Erst Group - In Gold We Trust 
  • Too Small To Matter
  • Poll Finds Deep Concern About Energy and Economy
  • BP Is Pursuing Alaska Drilling That Some Call Risky
  • Crops Damaged Along Mississippi River
  • Gulf Oil Mess, Day 65: Obama refuses to answer Florida Senator LeMieux’s request for skimmers
  • CCC Commodity Inventory
  • Methane In Gulf 'Astonishingly High': U.S. Scientist

Economy

Using Icebergs to Mask a Cooling Economy (Davos)

Midtown architectural firm thinks they have a “cool” new way to disguise the hundreds of stalled construction projects throughout New York City – icebergs. Huge structures of plastic and steel to be built on top of construction projects that have stopped because of the economic downturn.

Think the Gulf Spill Is Bad? Wait Until the Next Disaster (SolidSwede, tomadkins)

On June 17, the UK’s Daily Mail ran a headline screaming, “Bullied Into a £13 Cave-In." Brits are angry with Obama for pressuring BP to suspend dividend payments and set aside $20 billion for the clean up. Obama’s strong-arm position has affected British pensioners, who own 40% of BP, as well as American pension funds that own 39%. In other words, the economic damage of BP goes far beyond the Gulf. The damage is spreading to pensions, pensioners, and portfolios all around the world.

New Treasury Bond Contract Bets on Deflation, Not Inflation (SolidSwede)

While volume remains comparatively low, investors have been turning to the Ultra increasingly as deflation, not inflation, has become a bigger worry for the economy.

Maywood (California) To Lay Off All City Employees, Dismantle Police Department (Jamie D.)

"We will become 100% a contracted city," said Angela Spaccia, Maywood's interim city manager.

Deutsche Bank: U.S. Financial Conditions Just Collapsed Back To Crisis Levels (r.fuhrmann)

The index is built from an array of financial indicators such as U.S. treasury yields, the volatility index (VIX), the stock market, Broker-Dealer leverage, among others. It's a bit of a black box, but it's calculation is giving a similar reading to what we saw during the worst of the financial crisis.

Erst Group - In Gold We Trust (Davos)

Special Report from the Erst Group about the gold bull market.

Energy

Too Small To Matter (JimQ)

The industry insists that fracking is safe and does not contaminate drinking water. Why would they need an exemption from the Safe Water Drinking Act if their process doesn’t contaminate drinking water? Did the American public benefit from this loophole? The loophole benefitted Halliburton and the massive gas corporations. This jump started a phenomenal boom in 37 states. My state of PA sits on top of the Marcellus Shale formation. Northern and Western PA are undergoing a drilling boom.

Poll Finds Deep Concern About Energy and Economy (jdargis)

By a large margin, the public over all said more regulation of offshore drilling to protect the environment was needed, but respondents were also more likely to attribute the BP accident to a failure of the federal government to enforce existing rules than to a lack of adequate regulation.

BP Is Pursuing Alaska Drilling That Some Call Risky (jdargis)

But BP’s project, called Liberty, has been exempted as regulators have granted it status as an “onshore” project even though it is about three miles off the coast in the Beaufort Sea. The reason: it sits on an artificial island — a 31-acre pile of gravel in about 22 feet of water — built by BP.

Environment

Crops Damaged Along Mississippi River (Jamie D.)

Ed. Note: Though the title of this video accuses BP dispersants as the cause of this problem, the video itself makes no such claim, and a Youtube commenter from the video's page states that it's most likely a result of the Millington Chemical Leak on May 25.

Gulf Oil Mess, Day 65: Obama Refuses To Answer Florida Senator LeMieux’s Request For Skimmers (vilanodavis)

Twenty is the number of verified oil skimmers off the coast of Florida. As of June 22, the State of Florida has independently hired five additional skimmers due to federal inaction, bringing the new total for oil skimmers off the coast of Florida to twenty-five.

CCC Commodity Inventory (Jamie D.)

Government still hasn’t begun to replenish actual reserves of food. This is mandated, funded, and empty.

Methane In Gulf 'Astonishingly High': U.S. Scientist (r.fuhrmann)

As much as 1 million times the normal level of methane gas has been found in some regions near the Gulf of Mexico oil spill, enough to potentially deplete oxygen and create a dead zone, U.S. scientists said on Tuesday.

Please send article submissions to: [email protected]

11 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - June 24

"The cost of insuring Greek sovereign debt against default rose further to hit a record high early Thursday, according to data provider CMA DataVision.

Greece's five-year sovereign credit default swaps were quoted at 972 basis points shortly before 0850 GMT, compared with 934 basis points Wednesday afternoon. "

"The pressure on Greek bonds also continued Thursday, with the spread between the 10-year bond and the benchmark German bund widening to 804 basis points shortly before 0845 GMT from 783 basis points Wednesday."

.............................1A) Christodoulou Says Loans Helps Greece Avoid Default

"BEIJING — Local governments in China are at risk of defaulting on loan repayments, state media said Thursday, following a state-sanctioned lending binge in 2009 aimed at boosting economic growth.

The warning from the director of the National Audit Office highlights growing concerns among senior leaders over excessive borrowing by local governments to fund infrastructure and other projects.

Some authorities have taken on more debt than they will be able to cover with their earnings, chief auditor Liu Jiayi was quoted by the China Daily as saying.

The ratio of debt to annual fiscal revenues exceeded 100 percent in seven provinces, 10 cities and 14 counties, with the highest level reaching 365 percent, the Global Times said without naming the areas"

......................2A) China Bank Debt Repackaging Raises Risk of Crisis, Fitch Says

"June 24 (Bloomberg) -- Hungary had to cut the amount of debt it sold for the second consecutive auction of 12-month Treasury bills, as investors’ bids barely surpassed the offer.

The state debt management agency sold 40 billion forint ($175 million) of bills, rather than the 50 billion forint planned, according to the agency’s Bloomberg page."

"FRANKFURT, June 24 (Reuters) - Key euro-priced bank-to-bank lending rates hit their highest levels in eight months on Thursday, as the region's debt crisis continued to hit confidence and money markets prepare for a 442 billion euro payback deadline."

"SALT LAKE CITY — Utah's Unemployment Trust Fund is down almost $500 million from two years ago, and legislators learned Wednesday that the fund may go broke as early as the fall of 2011 if the state continues to pay out more than it collects.

The fund became insolvent in 1982 and 1983, when the state had to borrow federal money to fund unemployment claims. The unemployment funds in 35 other states are now insolvent, and those states are relying on interest-free federal loans to pay benefits."

"A state House bill designed to ease the burden of school district contributions to the underfunded Pennsylvania Public School Employees Retirement System may help keep district costs down this year, but the price to taxpayers would be an additional $21.5 billion in the long run.

That's the conclusion of an analysis by the Public Employee Retirement Commission of the effects of House Bill 2497."

"Under the proposed legislation, that debt would be amortized over 30 years.

The bottom line for taxpayers is that the payment still would come due -- but perhaps a bit later than originally expected.

School officials throughout the region are warning of the steep real estate tax hikes and program cuts that will be needed to fund their increased contributions.

Some districts already have approved 2010-11 budgets that include tax hikes to pay for the cost of the coming year's anticipated 72 percent increase in contributions, which was set to climb from 4.78 percent of total payroll in 2009-10 to 8.22 percent in 2010-11.

But the real fear for district officials was the looming spike in the 2012-13 school year under the current law, which would raise district contributions to 29.22 percent of payroll.

If the bill, sponsored by Rep. Dwight Evans, D-Philadelphia, is approved in the Senate, it could roll back districts' contributions for 2010-11 to 5.64 percent, but gradually increase them until 2014-15 when they would hit 21.20 percent."

"NEW YORK, June 23 (Reuters) - New Jersey's pension funds have about $67 billion of assets but their unfunded liability is almost three times higher, at close to $174 billion, a report said on Wednesday.

New Jersey's official estimate for its unfunded liability is $44.7 billion. But that figure is low because it is based on an overly generous annual return of 8.25 percent, according to the report by the Mercatus Center at George Mason University in Arlington, Virginia.

A lower annual return assumption of 3.5 percent -- as common in the private sector -- pushes the liability to nearly $174 billion, said the report, published on: http://mercatus.org/sites/default/files/publication/WP1031-%20NJ%20Pensi.... "

...............................7A) N.J. top court upholds lower court's ruling saying state not mandated to pay full teacher pensions

"Analysis

The largest multi-employer plan is the Teamsters' sponsored Central States Pension Fund (CSPF). According to currently available information at the end of 2009 the CSPF had $19.6 billion in assets which may cover only 55% of its vested benefit obligation leaving an unfunded vested benefit obligation of at least 45%. "

"Congressional concern over the unfunded liabilities of the PBGC was the principal motivation for the PPA. The PBGC is significantly under funded. According to its 2009 Annual Report, it currently has $68.7 billion in assets and $89.8 billion in liabilities. Furthermore it estimates its exposure to “reasonably possible terminations” is another $168 billion."

"America's debt bomb is ticking and is likely to detonate in five years or less, says Michael Pento, senior market strategist at Delta Global Advisors.

"It could be much sooner when we hit the debt wall," Pento says. "My opinion doesn't matter: Math tells me we're in a serious problem."

The math Pento refers to is the Treasury Department's recent estimate that total

U.S. debt will top $13.6 trillion this year and rise to 102% of GDP by 2015. Moreover, the publicly traded debt (debt excluding intra-governmental obligations) will rise to $14 trillion by 2015, up from "just" $7.5 trillion in 2009.

At $14 trillion, the interest payments on the public debt will total about $1 trillion in 2015, he continues; even assuming solid growth and low inflation, that would equal about 30% of total government revenue. "What do you think that does to our bond market?," Pento wonders. "It leads to a dollar crisis and a bond market crisis. That's why gold refuses to go down. ""

"The supply of homes measured in month’s supply has begun rising sharply again. Take a look at the home vacancy rate which continues to climb unabated:"

"Despite U.S. appeals to refrain from removing stimulus measures too quickly, country after country is rushing to slash spending and raise taxes to avoid suffering the same fate as Greece, which found itself on the brink of bankruptcy last month."

"The new Conservative government of British Prime Minister David Cameron announced an emergency budget Tuesday that includes the toughest cuts in public spending in decades and an array of tax increases. Britain's budget cuts and tax increases followed similar deficit-cutting plans announced in recent days by Germany, France and Japan.

Those cuts have raised worries in the United States that the world could be in danger of making the same mistakes leaders made back in the 1930s, when they withdrew government support too soon and prolonged the Great Depression.

Treasury Secretary Timothy Geithner and Lawrence Summers, head of the president's National Economic Council, emphasized Wednesday that "without growth now, deficits will rise further and undermine future growth."

But other countries have been urging greater fiscal discipline, saying a possible market meltdown -- if the Greek debt crisis spreads -- presents a bigger threat to the global economy at the moment."

  • Other news and headlines:

Oil Rain: BP's black gold lands on Louisiana (Video)

Yuan can become alternative reserve currency to US dollar-ADB

Singapore inflation climbs to 14-month high

Interactive: Sovereign debt levels by country (Graphs debt and debt as a percentage of GDP)

Europe's emergency loan vehicle hits Slovak snag

SAfrica national debt to keep growing until 2015-finmin

N Korea seeks $75 trillion in compensation

Peso Slumps as Deficit May Crimp Demand for Philippine Assets

Iceland Creditor Risk Grows as Banks Face Losses on $28 Billion in Loans

Mortgage Bond Prices Rise to 'Insane' Records: Credit Markets

Cuban payments crisis goes on, businesses in limbo

Germany fires pre-G20 broadside at US criticism  ("Governments should not become addicted to borrowing as a quick fix to stimulate demand,")

Schwarzenegger: Workers are facing minimum wage (If no budget is passed)

U.K. pension age rising to 66 sooner than expected

Running Low on Stimulus Cash, Local Towns Look for Relief (Pennsylvania)...(Link may not work..still on Google news though)

Alcentra Says Most Managers in $100 Billion CLO Market May Fail

State agencies must cut 9% of budgets, governor orders (Oregon)

NY leaders turn to taxes, fees to balance budget

UK is 'Going Down' on Osborne Cuts, Weinberg Says: Tom Keene

As hurricane season begins, flood insurance gets harder to find

Rutland treasurer details problems with city pension fund

City pension levy zooms to $16 million  (Evanston,Illinois)

France strike over pension age reform

Venezuela to nationalize U.S. firm's oil rigs

Doug's picture
Doug
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Re: Daily Digest - June 24

I live on top of the same Marcellus Shale formation as the author of the "fracking" article.  There are gas wells all over the place that have been there for many years, but within the last year or so they are sinking a lot  more of them.  I don't have any idea how to tell if they are using fracking on those wells.  The nearest new one is a few hundred yards away from my house and well.  Does anyone know of an obvious way to tell if they are using fracking?

Doug

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Re: Daily Digest - June 24

 Is there any good news anywhere ?  A glimmer of hope maybe ?

  FM

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Re: Daily Digest - June 24
Full Moon wrote:

 Is there any good news anywhere ?  A glimmer of hope maybe ?

  FM

Every storm cloud has a silver lining. The bigger the cloud, the more silver. Or Silver and Gold. If prepared the bad will be turned into good. I'm also certain that we will stop listening to morons like Bernanke and Geithener

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Re: Daily Digest - June 24

tie in to this: Think the Gulf Spill Is Bad? Wait Until the Next Disaster

Guest Post: A Bankrupt BP - Worse For The Financial World Than Lehman Brothers - ZH - People are seriously underestimating how much liquidity in the global financial world is dependent on a solvent BP. BP extends credit – through trading and finance. They extend the amounts, quality and duration of credit a bank could only dream of. The Gold community should think about the financial muscle behind a company with 100+ years of proven oil and gas reserves. Think about that in comparison with what a bank, with few tangible assets, (truly, not allegedly) possesses (no wonder they all started trading for a living!). Then think about what happens if BP goes under. This is no bank. With proven reserves and wells in the ground, equity in fields all over the planet, in terms of credit quality and credit provision – nothing can match an oil major. God only knows how many assets around the planet are dependent on credit and finance extended from BP. It is likely to dwarf any banking entity in multiples.  And at the heart of it all are those dreadful OTC derivatives again!

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Re: Daily Digest - June 24

 

V's picture
V
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Re: Daily Digest - June 24

100+ Years of proven oil and gas reserves??????????

DOCUMENTATION PLEASE

V

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Re: Daily Digest - June 24

 

Regarding the following:
America's Ticking Debt Bomb: Like Greece, "Only Worse," Pento Says

http://finance.yahoo.com/tech-ticker/america%27s-ticking-debt-bomb-like-greece-%22only-worse%22-pento-says-508278.html

"Despite U.S. appeals to refrain from removing stimulus measures too quickly, country after country is rushing to slash spending and raise taxes to avoid suffering the same fate as Greece, which found itself on the brink of bankruptcy last month."

Economists like Paul Krugman don't realize that spending massive amounts of stimulus money is like doubling down the next deal after a badly played hand. Sure you might recoup your loses. But generally, you don't because the House always wins - and this isn't betting on black in Roulette, this is poker played by multiple other players.

And you can't keep doubling down each time you play a bad hand and lose, because while there's a chance it might get better, there's an even bigger chance each play that you end up without enough money to double down with the next time. A country can go bankrupt, experience inflation, or no creditor will lend except at suicidal interest rates. That's what these governments are realizing and want to avoid. That's what the our government isn't realizing.

Poet

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britinbe
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Re: Daily Digest - June 24
V wrote:

100+ Years of proven oil and gas reserves??????????

DOCUMENTATION PLEASE

V

.....at 1903 rate of consumption

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barrt
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Re: Daily Digest - June 24

Major US financial reform agreed

http://news.bbc.co.uk/2/hi/business/10411858.stm

"We worry about big money," said Democrat Barney Frank, who headed the negotiations.

"I worry about big money having a corrupting influence, but it is reassuring to know that when public opinion gets engaged, it will win."

 

Im suprised that nobody here has mentioned this!

 

 

barrt's picture
barrt
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Re: Daily Digest - June 24

 

Lord Rothschild fund joins World Gold Council to put £12.5m into BullionVault

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7842235/...

Tim Levene of Augmentum Capital, a fund backed by Lord Rothschild's RIT Capital Partners, said the investment was not a bet on the gold price but on "the future growth of the BullionVault platform", which stores physical gold for private clients in London, New York and Zurich. RIT currently has 9pc of its assets in physical gold.

 

and this from and email Paul Tustain sent to Bullionvault customers in response to the above news;

 

We are delighted to welcome the World Gold Council and Augmentum
Capital, which is backed by Rothschild Investment Trust, as minority
investors in BullionVault.

The outlook for long-term growth in physical gold demand is
considerable. BullionVault now has two additional and knowledgeable
investors to help us progress the safe and profitable expansion of
our service.

** The World Gold Council (WGC) **
The WGC is a true global force in gold. Founded 23 years ago,
its mandate is to promote the marketing of physical bullion. It
is owned by 15 of the world's largest gold mines, who between them
are responsible for about 60% of world gold-mining output.

For many years the WGC has also been the main producer of gold-market
research, data and analysis. It brings a significant amount of
marketing clout to BullionVault. You can visit the WGC's website
here:
http://www.gold.org/

** Augmentum Capital (AC) **
Augmentum is one of Jacob, Lord Rothschild's investment vehicles. He
is, as you may know, one of London's pre-eminent financiers of
the last 30 years, controlling Rothschild Investment Trust Capital
Management. It has £1.6 billion ($2.4bn) under management, and has
set up AC with a specific focus on technology businesses like ours.

Run by Tim Levene - who led the Asian and European development of
peer-to-peer betting exchange Betfair - AC has just one client,
which is Rothschild Investment Trust. The Rothschild family name
has of course long been associated with gold, going back to the
Napoleonic era.

The World Gold Council and Augmentum Capital are, quite simply,
the most suitable investors BullionVault could wish for.

** BullionVault's Management **
As equal parties in this new investment, worth £12.5 million
($18.5m), both Tim Levene of AC and Marcus Grubb, Managing
Director of Investment at the WGC, are joining me on the Board
at BullionVault.

** How Will This Investment Affect You? **
This is not an exit, either for myself or indeed for any
existing shareholder. I remain the Chief Executive and the
major shareholder. Together with everyone here at BullionVault,
I continue to be dedicated to providing you with secure, low-cost
and transparent access to physical gold & silver bullion.

This investment by the World Gold Council and Augmentum will in due
course enhance the BullionVault service, providing greater depth to
the BullionVault market and a broader choice of trading currencies
and vaulting locations.

Kind regards,

Paul Tustain
Founder & CEO, BullionVault

 

Any other Bullionvault.com customers here? what do you think of this news? The plot thickens huh?

 

 

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