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Daily Digest - Mar 28

Saturday, March 28, 2009, 6:51 AM
  • Jim Rogers: Facts on Geithner
  • Inside California's Tent Cities (Slide-show)
  • Geithner Plan II
  • Bill Moyers: William Greider (Video, Hat Tip SteveS)
  • Fiasco (Audio) (H/T CB)
  • Week #13, Bank Failure #21?
  • Falling Oil Supply Risks a Price Rise
  • Frontline: $10 Trillion and Counting (Video)
  • U.S. Public Debt 12.7 trillion
  • Wave Goodbye to the Bankrupt Joneses: Deconstructing the American Dream. The Shifting Financial and Societal Goals of a Country Mired in Debt (Many, many charts on page)
  • Southpark
  • BBC Host and HuffPo Blogger Warns of U.S. Military Action if China Pushes for Global Currency
  • Disney U.S. parks cutting jobs, seeking efficiencies (H/T Christopher Peters)
  • TARP Money Goes To Politicians...
  • Vehicle Sales (Chart)
  • Solutions That Aren't the Answer
  • Anything But a Garden Variety Downturn

 

Economy

Jim Rogers: Facts on Geithner 

Inside California's Tent Cities (Slide-show)

Geithner Plan II

Fiasco (Audio) (H/T CB) 

Week #13, Bank Failure #21?

Bill Moyers: William Greider (Video, Hat Tip SteveS)

Falling Oil Supply Risks a Price Rise

LONDON -- The slowdown in investment in oil and gas production could lop off nearly eight million barrels a day of future oil supply growth, setting the stage for another big crude price surge in years to come, according to a new study.

The global credit crisis and falling oil prices have squeezed oil companies' finances and forced many to cut capital spending and postpone projects. That could have big implications for supply when the global recession ends and demand for energy recovers, the report by Cambridge Energy Research Associates says.

Associated Press
An oil platform seen at Maracaibo lake in Cabimas, Venezuela, in a 2005 photo.
CERA projected last summer, before the economic crisis set in, that world oil production capacity would rise to 109 million barrels a day by 2014 from the current 94.5 million barrels a day. It now says 7.6 million barrels a day -- or slightly more than half of that increase -- is "at risk" due to project deferrals or cancellations.

The report says that reduction in capacity is a "potentially powerful and long-lasting aftershock" following the oil-price slide of 2008, when within a few months crude fell from a record high of $147 a barrel. Crude-oil futures rose $1.57, or 3%, to settle at $54.34 a barrel Thursday.

"A price collapse of this magnitude really registers on the Richter scale, and its impact on levels of future investment will be felt for years," CERA Chairman Daniel Yergin said in an interview.

The report comes amid ample evidence companies are scaling back on investment in costly projects that require a high oil price to be profitable, such as the oil sands of Canada or the ultra-deep waters off west Africa.

Middle East oil producers, hit by falling export revenue, have reined in spending plans. The Organization of Petroleum Exporting Countries says as many as 35 new projects in OPEC countries could now be delayed past 2013. Most Western oil companies say they are sticking to their investment plans but are slowing down some developments.

The slowdown is troubling the International Energy Agency, the Paris-based adviser to oil-consuming countries, which also has trimmed its forecast for supply growth. The agency's deputy executive director, Richard Jones, told a conference in London this week that more than two million barrels a day of expected new oil production capacity looks likely to have been deferred for now.

"Unless sufficient companies have the will and financial ability to invest through the downcycle, there is a real risk that supply growth may lag the eventual rebound of demand, leading to substantial price increases -- possibly as early as this year," he said.

CERA said it expects many new projects in Angola, Nigeria, the Gulf of Mexico, deepwater off Brazil, Canada's oil sands and Venezuela's hard-to-extract heavy oil to be postponed or canceled.

Frontline: $10 Trillion and Counting (Video)

Financial and Societal Goals of a Country Mired in Debt (Many, many charts on page)

The American dream signifies many things to many people. The dream has evolved over time. If we are to look at history and our fascination of the Western, the dream once meant the freedom to be a rugged individualistic in a country that had no boundary.

You were on your own with the frontier. Yet that dream ended once the country was connected from coast to coast and with the Great Depression, many in society actually felt that some compact between citizen and the government would be helpful especially in distressing times. We oscillate as a society from moments where we desire zero government involvement to moments where the government seems to be the last resort. With our current economic crisis, many Americans are rethinking the makeup of the dream.

The component of the American dream regarding homeownership didn't become a cornerstone until the end of the Great Depression. There was a long period from 1900 to 1940 where only 45 percent of households owned their home. This number had increased to 55 percent in 1950 and by 1960, it was at 62 percent. We finally brought the peak to a crescendo in the 2000s flirting with a 70 percent homeownership rate:

Southpark

BBC Host and HuffPo Blogger Warns of U.S. Military Action if China Pushes for Global Currency

It's has been in the news a lot lately, and the prospects of a global currency have Max Keiser, Huffington Post blogger and host of BBC World's "The Oracle," giving dire warnings of the consequences if China or other countries were to make a push for it.

Keiser appeared on Aljazeera English's March 27 "Inside Story" to discuss the possibilities of a global currency. Host Darren Jordon asked Keiser about the pitfalls of converting to a global currency and Keiser used it as an opportunity to launch into an anti-American diatribe.

"Well, the pitfalls are for the U.S.," Keiser said. "The U.S. has what [former French President Charles] de Gaulle called an extraordinary privilege - they can write checks that they never have to cash. They just print new dollars. This has been going on since Bretton Woods at the end of World War II."

Keiser insisted it was the United States that had a lot to lose and that China, a big player in the global economy, would be reluctant to push for a stronger currency than the U.S. dollar for fear of retribution.

"So, America has everything to lose and they're going to resist the new global currency every way that they possibly can," Keiser said. "China would obviously love to be able to do their business in currencies outside of the U.S. dollar. But look what happened in the Mideast."

The Huffington Post blogger pointed to the invasion of Iraq and America's strong warning to Iran over its nuclear activity.

"Look what happen to Saddam Hussein when he tried to start to trade oil in Euros," Keiser said. "He was bombed and then assassinated by the U.S. Look what happened in Iran when they started talking about trading oil and gas in Euros. Suddenly America is saber-rattling in Iran."

So in Keiser's view, the Chinese won't jump onboard the global currency bandwagon out of fear of the U.S. military.

"So any country looks at those examples and they say, ‘You know if we get out of the U.S. dollar, does this mean that U.S. Marines are going to show up in our backdoor and start to cause mischief?'" Keiser said. "That's a legitimate concern these countries have."

But even the Aljazeera host was skeptical the United States would launch a military response if China made a push toward a global currency.

"OK, well, I'm not so sure the American Marines would turn up on the streets of Beijing, Max," Jordon said.

This is type of insight that might normally be expected from the Aljazeera, the Huffington Post or even the BBC. However, the editor-in-chief of the Huffington Post Arianna Huffington is slated to appear as a guest host on the more mainstream CNBC "Squawk Box" on March 31.

Rep. Michele Bachmann, R-Minn., has introduced legislation that would prevent the introduction of a multi-national currency into the American economy on March 25.

Disney U.S. parks cutting jobs, seeking efficiencies (H/T Christopher Peters)

LOS ANGELES (Reuters) - The Walt Disney Co has cut an undisclosed number of workers at its domestic parks this month in a previously announced plan to consolidate behind-the-scenes operations for Walt Disney World in Florida and Disneyland in California, a spokesman said.

Local media in Florida, tipped off by laid-off workers, have reported cuts as deep as 450 jobs at the two locations.

Disney World spokesman Michael Griffin would not confirm the number but said the cuts may continue as the company searches for efficiencies in the two parks' operations.

"These changes are essential to maintaining our leadership position in family tourism and reflect today's economic realities," Griffin said. "As acknowledged previously, these actions will unfortunately result in the elimination of positions."

In February, Disney's theme park business, anchored by the two domestic resorts, reported a 24 percent drop in quarterly operating income and a 4 percent decline in revenue for the company's first fiscal quarter, due in part to slowing consumer spending.

A couple of weeks later, Disney said it would streamline the parks' services that are not consumer-facing. It said the new structure would require an undisclosed number of job cuts.

Earlier this month, Disney Chief Executive Robert Iger told investors that domestic park attendance was holding "even" in the current quarter but deep ticket discounts designed to drive attendance were cutting into per capita spending.

Disney shares were down 2.6 percent at $18.55 in afternoon trade on the New York Stock Exchange.



TARP Money Goes To Politicians...

You thought TARP money going to AIG bonuses and to Goldman was bad, wait until you hear how it also made it into the hands of politicians, some of who are on the House Banking Panel.

Of course it came indirectly as a contribution, but that's how it always comes these days.

This is exactly what I've been talking about when I say that the root cause of ALL the financial problems lies in the central banker and corporate influence over politics. Separate Corporation from State, and most of the fiscal suicide and big government problems go away.

America, wake up!!! Those are your tax dollars, which are the fruit of your labor!

Follow the Bailout Cash

By Michael Isikoff and Dina Fine Maron NEWSWEEK

There was plenty of outrage on Capitol Hill last week over the executive bonuses paid out by AIG after getting federal bailout money. But another money trail could make voters just as angry: the campaign dollars to members of Congress from banks and firms that have received billions via the Troubled Asset Relief Program.

A NEWSWEEK review of recent filings with the Federal Election Commission found that the political action committees of five big TARP recipients doled out $85,300 to members in the first two months of this year-with most of the cash going to those who serves on committees who oversee the TARP program. Among them: Bank of America (which got $15 billion in bailout money) sent out $24,500 in the first two months of 2009, including $1,500 to House Majority Leader Steny Hoyer and another $15,000 to members of the House and Senate banking panels. Citigroup ($25 billion) dished out $29,620, including $2,500 to House GOPWhip Eric Cantor, who also got $10,000 from UBS which, while not a TARP recipient, got $5 billion in bailout funds as an AIG "counterparty."

"This certainly appears to be a case of TARP funds being recycled into campaign contributions," says Brett Kappel, a D.C. lawyer who tracks donations. (A spokesman for Cantor did not respond to requests for comment. A spokeswoman for Hoyer said it's his "policy to accept legal contributions.")

The cash flow is already causing angst inside the Beltway. "The last thing I want to do is wake up one morning and see our PAC check being burned on C-Span," said one bank lobbyist, who asked not to be identified because of the issue's sensitivity. House Speaker Nancy Pelosi and House Financial Services chair Rep. Barney Frank both said recently they won't take donations from TARP recipients. But House Democratic fundraisers have quietly passed the word that the party's campaign committee will resume accepting them-down the road, though; not right now. Said one fundraiser, who also requested anonymity, "These are treacherous waters."

Vehicle Sales (Chart)

Solutions That Aren't the Answer

One argument that some have made in response to my less-than-optimistic outlook is that humans are creative and resourceful. In principle, I can't disagree. But not all of the "solutions" that people come up with when they are faced with serious challenges are for the greater good; they can also have negative consequences for others. In fact, while certain remedies can address the more pressing concerns, they may do little to eliminate the root causes of a problem. In my view, the following two reports detail ad hoc "solutions" that haven't really solved anything.

From "Cities Deal With a Surge in Shantytowns" (New York Times):

Anything But a Garden Variety Downturn

Research Recap, an online service "designed to showcase compelling industry, economic, academic, market, investment and credit research," has highlighted an interesting report from a technology and market research firm that lends further weight to the notion that what we are experiencing right now is anything but a garden variety downturn, in a post entitled "More U.S. Consumers Delaying Medical Care in Recession."

Forrester Research takes a look at the longer term implications of U.S. consumers delaying medical care in the current economic recession.

Healthcare is often considered a "recession-proof " industry because, regardless of the state of the economy, people get sick and therefore need healthcare products and services. However, Forrester found that:

Delaying care is on the rise. In 2006, approximately one in five US households reported having put off or avoided treatment due to cost concerns. By 2008, that figure was up to almost one in four.
The uninsured are the most likely to delay care. Non-elderly (younger than 65) uninsured consumers are the most likely to put off or forgo treatment for cost reasons.
Seniors increasingly delay care. The percentage of elderly consumers (65 and older) covered by government and/or commercial insurance who delayed care increased by 67% from 2006 to 2008.
While delaying care saves money in the short term, it often costs huge sums in the long run. Why? Because conditions that go untreated can lead to major complications requiring more involved treatment.

As a result, Forrester predicts that "Value-Based Insurance Design" will proliferate. VBID plans build incentives and condition-based cost controls into plans by tying varying deductibles to preventive care or reducing copays based on the severity of the member's condition. In addition, hospitals and other institutions will get more involved in community care.

For details see: Consumers Delay Healthcare Due To Economic Woes.

 

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18 Comments

Davos's picture
Davos
Status: Diamond Member (Offline)
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Posts: 3620
Re: Daily Digest - Mar 28

Long on pitchforks & torches... 

pitchforks.jpg

 

27311685.JPG

Gosh, I just watched the Rogers video. I don't understand why he comes back. How Alexis finds her way to work each day is well beyond me. Wow. Right up there with Cramer.

Tim_3425532's picture
Tim_3425532
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Posts: 6
Re: Daily Digest - Mar 28

Is there a second part to that Jim Rogers video?

Vanityfox451's picture
Vanityfox451
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Posts: 1636
Re: Daily Digest - Mar 28

Daniel Hannan grilling Gordon Brown

Best,

Paul

Vanityfox451's picture
Vanityfox451
Status: Diamond Member (Offline)
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Posts: 1636
Re: Daily Digest - Mar 28

Fox News to me is like scratching my nails down a blackboard!! However, can anyone clarify this for me :-

 Congresswoman Bachmann Moves To Block One World Currency

Best,

Paul

 

FireJack's picture
FireJack
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Posts: 156
Re: Daily Digest - Mar 28

Is there really enouph money to pay off all these "toxic assets?"  Isn't the fed  just going to find itself taking on bigger and bigger loans until it's forced to stop?

 Right now it appears that once the U.S. government drowns in all this debt its going to have to cut loose all these "to big to fail"  banks etc who will then collapse making the situation much worse. 

 

Dollar, Yen Gain as Euro, Pound Weaken on Deepening Recession

 Things are slowly falling apart everywhere. I'm guessing it will come soon when the fed is forced to stop taking these debts and within weeks everything will fall apart as all these big firms collapse. 

 

 

Denny Johnson's picture
Denny Johnson
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Posts: 348
Re: Daily Digest - Mar 28
Tim_54321 wrote:

Is there a second part to that Jim Rogers video?

http://www.allthingsjimrogers.com/2009/03/27/jim-rogers-on-fox-business-...

MarkM's picture
MarkM
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Posts: 849
Re: Daily Digest - Mar 28

 

Paul, 

Congresswoman Bachmann is in trouble for this:

However, Geithner also says this:

http://www.politico.com/blogs/bensmith/0309/Geithner_open_to_China_proposal.html

He speaks from both sides of his mouth, as usual.  Apparently, Bachmann has taken quite a bit if heat since the exchange. 

Stephen Lark's picture
Stephen Lark
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Posts: 44
Re: Daily Digest - Mar 28

This one's a cracker:
Max Keiser Bankers are Financial Terrorist worse than Bin Laden pt 1/2


Max Keiser Bankers are Financial Terrorist worse than Bin Laden pt 2/2

Tim_3425532's picture
Tim_3425532
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Posts: 6
Re: Daily Digest - Mar 28
Denny Johnson wrote:
Tim_54321 wrote:

Is there a second part to that Jim Rogers video?

http://www.allthingsjimrogers.com/2009/03/27/jim-rogers-on-fox-business-...

 

Thanks Denny

FireJack's picture
FireJack
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Posts: 156
Re: Daily Digest - Mar 28

I don't see how how china could possible come out the other end of this ahead. Most of their income has been from exports that doesn't exist anymore. If the U.S. and Europe collapse can china really have a growing GDP?

I'm guessing that Rogers is like most economist in that he thinks resources and energy will never be a problem.

Goal Digger's picture
Goal Digger
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Posts: 39
Re: Daily Digest - Mar 28

Love Rogers.  Alexis on the otherhand?  She's not nearly good looking enough to keep her job.  Her questions are not really questions. 

 Wonder what would happen to the markets and the American psyche if all financial news programs were banned from the airwaves?!?!  Perhaps a bit more sanity?

CB's picture
CB
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Posts: 365
Re: Daily Digest - Mar 28

China is actively seeking and developing markets all over the world - and trying to assure access to resources. They have a different political and social structure than the US or Europe - one that has some advantages in the current situation. Hard to say if thay will come out "ahead" in the current crisis, but they will give it their best shot.

Damnthematrix's picture
Damnthematrix
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Posts: 3998
Re: Daily Digest - Mar 28

World at the crossroads ahead of G20: Soros

Billionaire financier George Soros says this week's G20 summit in London will be a crossroads for the world economy.

Mr Soros is seen as someone who can predict the big trends in the global financial markets.

A man who puts his money where his mouth is, he is also said to have
accurately predicted and profited from the Asian financial crisis in
1997.

Now the billionaire financier and philanthropist has described the
G20 meeting to be held in London this Thursday as a make-or-break event
if a global depression is to be avoided.

Mr Soros said the summit would have to produce concrete measures to help less well-off countries.

The 78-year-old Hungarian said that the boom on the financial
markets over the past 25 years has been an aberration which could not
be returned to and that the entire financial system has to be
reconstructed from its foundations.

- BBC

Davos's picture
Davos
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Posts: 3620
Re: Daily Digest - Mar 28

IMNSHO:

"Buy or get out." 

Discalimer: I haven't read enough on China to say for certain if they can pull this off or not without falling into social unrest. What I read indicates what CB said. They are securing large amounts of natural resources and forming new trading blocks. They are the worlds creditor, and their populous is staggering.

Truly staggering. They have as many people at the genious level as we have people in total. 

While our momos are tossing our kid's, and thier kids tax money down the throats of dead banks, supposedly under the auspices that they will loan money to people who are maxed out on credit, China, is on the other hand, using their money in a way that will help them in the very near term.

To China, we are like a barely tolerable date who now doesn't really do anything for them anymore. "Buy or get out" How hard they drop us is I think the 2 trillion dollar question.

Take care 

hughacland's picture
hughacland
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Re: Daily Digest - Mar 28

Hello everyone,

This is my first post on Chris Martenson.com. I have been a huge fan for a long time, decided to subscribe and show my support for his/your work. I am British, so looking at the situation in the US with trepidation. What goes on the West side of the pond will happen on our side too. The British government has lost the plot - if indeed they ever had it. No body, but no body, over here is saying what people like Chris Martenson, Ron Paul, Peter Schiff etc are saying in the US. We have NO voice here in Britain. The entire mainstream political and media elite are all delusional. They actual want, and expect that we can return to 'growth'. We need more debt-fuelled 'growth' like a hole in the head. What we need - and why CM's crash course is so resonant - is sustainable living, not paying the Chinese to make crap for us which we don't need.

I am 33 years old, well educated and I run my own small software company. I have never - NEVER - been more pessimistic about the way the western world is going. What I am witnessing in England is a wholesale denial of the trouble we are in. Our politicians, of all parties, are so blinkered from reality it scares the living daylights out of me. We have bailed out Royal Bank of Scotland, and similar to the AIG fiasco the out-going (sacked) CEO is to retain his £700,000 per year pension even though it was on his watch that the bank was ruined. There is no justice in that. People are absolutely livid, and normally we British are a failry dosile lot. What we have now in the US and UK is not true free market economics. What we have is politicians saving their buddies and their own careers by using our money! The British government could easily have said that it would guarentee every penny of RBS depositors' money for a fraction of the price of the bailouts. It could and should have then let the bank go bust. 

But I digress, it is great to be a part of a virtual community like this. If any good comes out of this mess, it will be that we once and for all consign the notion of 'Wall Street' to the dustbin of history. No one needs investment banks. They are self-serving. We need a gold standard, sound money, small local partner-owned banks (partners would risk their own capital and so would never lend unsuitably) and above all we need a political revolution to restore small governments all over the world. The absolutely last thing we need is a global currency with global government. Less globalization, not more.

Good to be here! Please keep up the good work.

Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
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Posts: 348
Re: Daily Digest - Mar 28
FireJack wrote:

I'm guessing that Rogers is like most economist in that he thinks resources and energy will never be a problem.

Not sure what you mean, seems that commodities are about the only place he's invested.

cybernytrix's picture
cybernytrix
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Posts: 18
Re: Daily Digest - Mar 28

The video after Jim Rogers' is from Salman "Sal" Khan. He founded the Khan Academy, which puts up really easy to understand videos of complex topics. there are more than a dozzen videos like this about banking. He has done an amazing amount of work helping to drive the cause of education. His web site:

http://www.khanacademy.org/index.html

 

 

maveri's picture
maveri
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Posts: 159
Re: Daily Digest - Mar 28
hughacland wrote:

Hello everyone,

This is my first post on Chris Martenson.com. I have been a huge fan for a long time, decided to subscribe and show my support for his/your work. I am British, so looking at the situation in the US with trepidation. What goes on the West side of the pond will happen on our side too. The British government has lost the plot - if indeed they ever had it. No body, but no body, over here is saying what people like Chris Martenson, Ron Paul, Peter Schiff etc are saying in the US. We have NO voice here in Britain.

...

Good to be here! Please keep up the good work.

Welcome aboard :-)

I'm living in Australia myself and while Australia may have some advantages in terms of federal debt levels we here have issues with personal debt levelsand property prices. The UK has seen property price contraction far more so than here. Our government is proping up the first home buyers and creating a bubble in that area -non-second home buyers are staying out of the market in droves but the government has been throwing so much money at first home buyers, the house sales figures don't look overlyas bad.

We seem to be lagging the rest of the world in terms of economic downturn - well, that's if you believe the government figures that is.

We live in interesting times indeed.

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