Daily Digest

Daily Digest - June 8

Tuesday, June 8, 2010, 9:50 AM
  • Testy Tuesday - Gentle Ben vs. Reality
  • Tax Hikes and the 2011 Economic Collapse
  • CNBC Squawk Box Europe interview with Egon von Greyerz
  • Goldman Deserves Regulatory Probe in Bloomberg Poll
  • Paul Krugman's Magic Keynesian Mirror
  • Bank of America Says Europe Power Demand to Recover to 2008 Levels by 2012
  • Fracking, Oil Sands, and Deep-Water Drilling
  • 1 Worker Dead in Natural Gas Line Blast in Texas
  • Rethinking Our Oil-Drenched Lifestyles
  • Green-Energy Blues
  • Oily Tide Erases Cleanup Work
  • In Alabama, a Home-Grown Bid to Beat Back Oil


Testy Tuesday - Gentle Ben vs. Reality (Ilene)

Bernanke didn’t offer new clues about when the Fed would reverse course and start to tighten credit. However, he did say the Fed won’t be able to wait until the jobs market is fully healed before it pushed rates up. Observing the economy, Bernanke said the news so far is "pretty good." Both consumers and companies are spending sufficiently to keep the recovery moving forward. The private sector, he said, is "picking up the baton" as government stimulus, which mainly powered the recovery in its earliest stage, starts to fade.

Tax Hikes and the 2011 Economic Collapse (Livsez)

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

CNBC Squawk Box Europe interview with Egon von Greyerz (Livsez)

The “real move” in gold is to come, predicted Egon von Gruyerz, founder of GoldSwitzerland.com, Monday. He sees the inflation-adjusted price of gold rising to $7,000 an ounce in the future on inflation and tells CNBC it could go higher if the world encounters hyperinflation. “Gold is at this point not a bubble,” he added.

Goldman Deserves Regulatory Probe in Bloomberg Poll (jdargis)

“This disaster didn’t occur by mistake,” said respondent Dane Fulmer, who has traded fixed-income financial instruments for 39 years and runs Dane Fulmer Investments in Fort Smith, Arkansas. “If it was an honest mistake, then it far, far surpasses what the law would consider negligent.”

Paul Krugman's Magic Keynesian Mirror (cmartenson)

It will always be too early for you. There is no recovery nor will there ever be a recovery until there is genuine demand for goods and services at prices set by the free market not the government.

Bank of America Says Europe Power Demand to Recover to 2008 Levels by 2012 (cmartenson)

Bank of America Corp.’s Merrill Lynch unit said European electricity demand will gain to pre-recession 2008 levels by 2012 as industrial energy consumption recovers.

The lowest point in European power demand was reached in the second quarter of last year, Merrill analysts in London including Eric Lopez said today in an e-mailed report.


Fracking, Oil Sands, and Deep-Water Drilling (jdargis)

We've entered an age in which the production of energy, especially from fossil fuels, demands ever-more-expensive environmental trade-offs. We've entered what Michael Klare, professor at Hampshire College, calls the era of "extreme energy."

1 Worker Dead in Natural Gas Line Blast in Texas (jdargis)

The worker had been riding a truck drilling holes for utility poles when the line suddenly exploded, and other workers lost sight of him in the intense smoke, said Roger Harmon, Johnson County's top elected official.

Rethinking Our Oil-Drenched Lifestyles (cmartenson)

Even as a thought experiment, refuted by some scientists and futurists and optimists, “peak oil’’ is an opportunity to think past the relative placebo of renewable grocery bags and remember that our oil dependence wasn’t preordained. Early plastics were made from coal resin, says Brian Black, professor of history and environmental studies at Penn State Altoona. Petroleum just made them more malleable and cost-effective.

Green-Energy Blues (jdargis)

The economic downturn is clearly partly to blame for the decline in shares of renewable-energy companies. The industry is still policy-driven rather than market-driven, and the recession has increasingly called into question whether governments will be able to afford the sort of environmental policies they have been promising (including in their fiscal-stimulus programmes).


Oily Tide Erases Cleanup Work (cmartenson)

The latest government projections show oil spreading farther to the east and west of the sunken Deepwater Horizon rig. Oil is coming on shore to the west of the Mississippi River delta near Cocodrie and is washing up on beaches in the Florida Panhandle.

In Alabama, a Home-Grown Bid to Beat Back Oil (jdargis)

Mr. Hinton’s solution was simple: run a wall of barges across the mouth of Weeks Bay to block the current, then run five layers of boom behind it — two to block the oil, and three strands of absorbent boom to soak up any oil that got through the containment layers.

Please send article submissions to: [email protected]


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Re: Daily Digest - June 8

"June 7 (Bloomberg) -- The premium investors receive for holding Spain’s debt compared with Germany’s has risen to near a level that may trigger another flight to quality, according to Citigroup Inc.

The difference in yield between the nations’ 10-year securities widened today to 2.04 percentage points, a level not seen since before the introduction of the euro in 1999. A close this week of 1.98 percentage points will signal renewed sovereign-debt concern in Europe, according to Tom Fitzpatrick, an analyst in New York at Citigroup, one of the 18 primary dealers required to bid at Treasury auctions."

.....................1A) Bank Risk Nears Record High on Spain's $60 Billion Capital Call

"June 8 (Bloomberg) -- Bank credit-default swaps surged near to a record on concern Spanish lenders will have to raise $60 billion to shore up capital as lawmakers struggle to finance a swollen budget deficit.

The Markit iTraxx Financial Index of swaps on 25 European banks and insurers climbed 10 basis points to 204, approaching the all-time high of 210 basis points set in March 2009, JPMorgan Chase & Co. prices show."

........................1B) Spain's public sector on strike

"June 8 (Bloomberg) -- Britain is facing a fiscal challenge and needs to accelerate plans to reduce its budget deficit, Fitch Ratings said. The pound extended declines.

“The scale of the U.K.’s fiscal challenge is formidable and warrants a strong medium-term consolidation strategy, including a faster pace of deficit reduction than set out in the April 2010 budget,” Fitch analysts including Brian Coulton in London wrote in a report today.

Interest payments on U.K. debt, rated AAA at Fitch, may reach a “staggering” 70 billion pounds ($101 billion) in five years, from 31 billion pounds in the past fiscal year, Prime Minister David Cameron said yesterday. Standard & Poor’s, which also gives Britain the top credit grade, has a “negative” outlook amid concern about the deficit.

The pound slid 0.5 percent to $1.4396 as of 10:16 a.m. in London, pushing its decline this year to 11 percent."

"Greece is "basically socializing the problem and dragging everyone else down with them," he said, adding that Greece could restructure by the end of the year.

But ultimately, Peters said, Spain is what matters. He also said he is concerned about France.

Spain "has been the linchpin," he said. Greece and Portugal "don't matter as much in the scheme of things. Spain does."

Peters said his ultimate concern is that the European crisis could spread to Britain and possibly the United States.

"Really, what I worry about most is the sovereign debt crisis becoming a rolling crisis and hitting the shores of the UK and the United States," he said."

"Rio Tinto Ltd (RIO.AX) (RIO.L) and BHP Billiton Ltd (BLT.L) (BHP.AX) have notified Japan's steelmakers that they want to raise iron ore prices by 22-23 percent in July-September from the previous quarter, a source said, sending shares of Japanese mills to lows for the year.

Such a price rise to about $147 (101.27 pounds) a tonne -- roughly in line with the recent spot market trend -- would be a further blow to Japanese mills, whose shares are reeling amid worries about the global economy and the outlook for demand as well as weaker steel prices in Asia, their biggest export market."

"A sale of one-year sovereign debt by Romania failed on Monday as investors spooked by a possible fiscal crisis in neighbouring Hungary and worries over domestic reforms sought yields the government was unwilling to pay.

The setback marked the third time in a month that the finance ministry has rejected all bids in a bond tender, indicating increasing doubts about Romania's efforts to cut public spending and ensure flows IMF-led aid to kick-start its economy.

Romania rejected all bids in the tender, which was for 1.2 billion lei ($340 million) of 364-day treasury bills. An analyst said the market might have been looking for yields of around 7 percent.

Alexandru-Chidesciuc of ING Bank in Bucharest. "The market has become worried about every country in central and eastern Europe after their statements." "

"Delayed or half-hearted budget cuts by vulnerable eurozone countries such as Greece could trigger a further loss of market confidence in the region and a new slide in the 16-nation currency, the International Monetary Fund warned Monday."

"June 8 (Bloomberg) -- U.S. banks are fighting to preserve the use of securities that help them appear better capitalized, even as their investments in each others’ notes perpetuate what one regulator calls a “downward spiral” of losses."

"For some businesses, Illinois' budget crisis is a disaster. For others, it's an opportunity.

A Georgia company entering the debt brokering business is hoping to profit from the state of Illinois' failure to pay its bills for months at a time by arranging for struggling vendors to sell their overdue paper at a discount.

Sellers would get most of the money owed to them now. The buyers would collect the full amount from the state later. And the company, Alpharetta Industries, would take a cut as the middleman.

Already, the Georgia-based company has a few takers among the thousands of organizations in Illinois trying to stay afloat during the crisis.

"At the end of the day it was better to have some money than no money," said Na-Tae Thompson, whose nonprofit True Star Foundation is waiting on $75,000 from the state that hasn't arrived."

"WASHINGTON – Gov. Chris Gregoire warned Monday that unless Congress acts quickly to provide $23 billion in additional Medicaid funding, the state may have to lay off up to 12,000 workers.

In a letter to the state’s congressional delegation, Gregoire said the state was counting on the $480 million it expected to receive from the federal government through the Federal Medical Assistance Percentage program. Absent the federal funding, the governor said, she would be forced to call a special session of the Legislature.

If the Legislature acted quickly to fill the budget deficit, the state might have to cut 6,000 jobs. If the Legislature waited until January when it regularly meets, the state might have to cut 12,000 workers, Gregoire said."

"BERLIN - Chancellor Angela Merkel yesterday unveiled a major austerity package aimed at finding savings of more than 85 billion ($144 billion) by 2014, but it was immediately criticised by the opposition and trade unions, which pledged that they would unite to fight cutbacks they claimed would undermine the country's social welfare system."

"June 8 (Bloomberg) -- Arizona, which sold state prisons and offices to raise cash six months ago, plans to borrow $300 million by marketing its Supreme Court building and about a dozen more properties through leaseback bonds starting today.

Investors will hold ownership of the court building in Phoenix, the fifth-largest U.S. city, and the Arizona Schools for the Deaf and the Blind in Tucson for as much as 20 years, with the securities maturing serially from 2012 through 2029, according to offering documents. Lease payments will back the debt, known as certificates of participation.

Arizona, whose foreclosure rate last year was ranked second-highest after Nevada by RealtyTrac Inc., will use the sale to pay for three months of school aid. The state raised $709 million for education payments when it sold and then leased back nine properties to investors in January."

"June 8 (Bloomberg) -- Nations have reached a “Keynesian endpoint” as exhausted balance sheets leave policy makers with few options to bolster economic growth, according to Anthony Crescenzi, an investor at Pacific Investment Management Co., the world’s largest bond-fund manager.

“Time, devaluations, and debt restructurings might be the only way out for many nations,” Crescenzi wrote in an e-mailed note titled “Keynesian Endpoint” that referenced the Great Depression era economist John Maynard Keynes. Debt-fueled spending programs aimed at combating the global financial crisis of 2008 are among policy tools now “being seen as a magic elixir that has morphed into poison.”

A debt crisis that began in Greece is threatening to slow global economic growth, pushing the euro down 17 percent this year as governments across Europe cut spending. Spain lost its AAA credit grade at Fitch Ratings, and Moody’s Investors Service said the U.S.’s top ranking will come under pressure unless the government reduces budget deficits."

"Chicago Teachers Union officials vowed to file suit today, charging that plans to raise city class sizes to 35 are unsafe and violate the municipal code.

"You're looking at a very dangerous situation,'' CTU President Marilyn Stewart said at a news conference Monday.

"We're asking the Board [of Education] to prove that you can do this without violating the law.''

The suit -- which may be the first of its kind -- will hinge on a municipal code requirement that classrooms contain 20 square feet of floor space per person.

That means a room of 35 students and one teacher must be at least 720 square feet. Even more space would be required if parent volunteers, special education aides or anyone else entered the room at any time, CTU attorney Jennifer Poltrock said."


  • Other headlines and news stories:

German Bund Yield Reaches Record Low Amid European Debt Concern

Euro-Area Fund Created to Combat Debt Crisis

Accidents bring calls to suspend shale drilling

Japan Bank Lending in Biggest Annual Fall in 5 Years

Asian Single-Currency Plan Must Go on Despite Euro, ADB Says

Hungary is likely to take months to regain the trust of financial markets and Hungary sells 3-mth T-bills; yield inches up to 5.26 pct

Counting on Medicaid, States Face Shortfalls and Reid signals Senate may restore Medicaid relief

Europe's Flight to Quality Is Leaving France Behind

Italy is the biggest threat to the euro, says Cowley

Pensions suffer £41.5bn shortfall (UK)

Grand Jury: Retirement could bankrupt Mendocino County (California)

Broward School District Pink Slips 1300 Employees (Florida)

Distressed Commercial Properties to Rise Fastest in US and Ireland, Finds RICS

COBRA Subsidy Ends As 1.2 Million May Lose Health Insurance

With Drilling Stopped, La. Workers Fear Job Losses

It's been rough lately for city golf courses (Stockton...People not showing up to play golf anymore)

Baltimore proposes pension reforms; unions against (Deficit would go from $121 million to $185 million without reform)

18 DPS schools off closure list, but 32 others will be shuttered (Detroit) and 32 Detroit schools expected to close this year

Westmoreland's program to stem homelessness running short (Pennsylvania)

Fairfax faces $2 billion transportation funding hole

Budget cutbacks in Britain, Europe spell more trouble for U.S. economy

Treasuries Snap Two-Day Advance Before $70 Billion of Sales

Markets About to Turn Nasty, Buy Barbed Wire: Advisor (CNBC)

Hotel California's $36000-per-household bill (For underfunded pensions)

Gold hits record highs as risk aversion resurfaces

Interest rates to stay low for "some time": Fed's Evans

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World Oceans Day June 8

June 8 is World Oceans Day:



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Re: Daily Digest - June 8






May 21, 2010 – CollapseNet ™, a long-anticipated new effort from internationally-recognized author, lecturer and activist Michael C. Ruppert, will officially launch on Tuesday June 8, 2010. The site will be a first-of-its-kind effort to promote the rapid and focused sharing of information between millions around the world who are preparing for the collapse of human industrial civilization – The Lifeboat Movement.

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Stan Robertson
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Re: Daily Digest - June 8

The public misunderstands the actual hazards associated with production of oil and gas. Concern over fracking is almost entirely misplaced. This process of injecting mostly water under high pressure to create fractures through which oil or gas can flow has been in use since the 1950s. Without this and other formation stimulation techniques, hydrocarbon production in the U.S. would likely be reduced by 90%. Southern and southwestern states have had adequate regulations in place to protect fresh water sources for many, many years. Production casing is cemented in place and sealed before the frac process even begins in formations that are typically many thousands of feet below the surface. If state regulations adequately address the disposal of any recovered fluids, there should be no problems.

The public also misunderstands the real risks associated with blowouts. Although they often result from human error or equipment failures, they most often occur when there are high pressure condtions in the oil and gas formations. What is considered to be normal pressure in formations does not exceed the pressure that a water column would produce at the bottom at the same depth. Over pressured formations can exceed normal pressures by as much as 250%. A normal pressured reservoir offshore would be unlikely to blow out simply because a leak at somewhere above the formation would let water flow in rather than letting hydrocarbons out. The reverse is true in highly over pressured formations, such as in BP's blowout well in the Gulf of Mexico. The greater the over pressure, the higher the risks.

Serious blowouts of over pressured (usually gas) wells on land occur every few years. The environmental damage that either onshore gas or oil blowouts cause can be serious, but is localized. Gas well blowouts offshore are harder to combat, but are not huge polluters. We are learning the hard way that oil blowouts offshore are disastrous.

Since the primary hazard is overpressure for both gas and oil formations, and we know that we have not been able to avoid gas well blowouts on land, it follows that an offshore blowout was inevitable with overpressured offshore oil zones. Drilling overpressured oil zones offshore in deep water should never have been permitted.

The most productive parts of the recently exploited shale gas basins seem to be in moderately overpressured areas. With thoughtful regulations these can and should be exploited. Natural gas is a reasonably clean, relatively cheap fuel. Development of the Marcellus shale of the northeast would be a welcome source of both clean energy and jobs.


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Re: Daily Digest - June 8

I highly recommend going to http://www.collapsenet.com recommended above. One interesting feature is the plan to identify members, their location by zip code only, who may have relevant skills during the projected collapse of civilization. 

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Re: Daily Digest - June 8


I like that feature also.  Unfortunately there doesn't seem to be anyone within a couple hundred miles of me.  As more people become members, perhaps the map will fill in.


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Re: Daily Digest - June 8

I can't get any of the collapse links to work.  Did the collapse happen without me Smile

But opening a new browser and manually typing it in does work.

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Re: Daily Digest - June 8

Here's some investment advice from a cartoonist.....

The Dilbert Portfolio: Buy the Companies You Hate


When companies make money, we assume they are well-managed. That perception is reinforced by the CEOs of those companies who are happy to tell you all the clever things they did to make it happen.

The problem with relying on this source of information is that CEOs are highly skilled in a special form of lying called leadership. Leadership involves convincing employees and investors that the CEO has something called a vision, a type of optimistic hallucination that can come true only in an environment in which the CEO is massively overcompensated and the employees have learned to be less selfish.


- Nick

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Re: Daily Digest - June 8

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Re: Daily Digest - June 8

File under environment:


Charcoal Ain't Gonna Cool the Planet (Duh)!

by Rachel Smolker

It's downright amazing what people are willing to put their faith in when confronted with a crisis. With ever more dire impacts from a cooking planet, the "biochar worshippers" are doing their best to sell the idea that we can cure just about everything -- from global warming to soil infertility, agrichemical runoff, even dirty toilets -- by doing a little more cooking. Just cook up some trees, agricultural "wastes and residues" -- maybe a few hundred thousand acres of industrial tree monocultures (why not?) and then bury the resulting charcoal in soils to "sequester" it.  This, they refer to as "a powerful tool to fight global warming." (Footnote: If you think referring to them as "worshippers" is overstepping, see below)

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