Daily Digest

Daily Digest - November 12

Thursday, November 12, 2009, 11:51 AM
  • Governments Blowing a New Bubble?
  • Ultimate Conditions For Recovery
  • Peak Gold Could Be A Lot Of Hype, But Who Wants To Take That Chance?
  • The Parable Of The Stone And The Balloon: What Happens When The Tether Breaks
  • 10 States Face Looming Budget Disasters
  • FED Faces Biggest Blow To Authority
  • SEC Starting To Target High-Frequency Trading
  • Senators Propose Bill To Apply Gambling Laws To Derivatives
  • US May Wind Up In A 'Lost Decade' Like Japan
  • Dollar's Trouble, Oil's Bubble
  • Stimulus Job Boost "Wildly Exaggerated"
  • Recession Sparks Global Shoplifting Spree
  • Record Number Of Pets Being Abandoned
  • The Greatest Trade Ever
  • US Pressures IEA to Underplay Proximity of Peak Oil Shortages
  • Two Beers With Steve Podcast - Peak Oil 
  • Oil! - Discussion with Peter Maass and Ed Burtynsky
  • The future of oil 
  • Who Needs The Grid?
  • Setting Sail Into Space-Propelled By Sunshine
  • The Fight Over The Future Of Food
  • Saving Seafood From Extinction

Economy

Governments Blowing a New Bubble? (kelvinator)

The biggest intermediate-term risk for risk assets is not that the big-V doesn’t unfold, but that it does, inciting the Fed to bring the extended period of a near-zero policy rate to a close. But again, you retort, doesn’t that imply that in the absence of the big-V, risk asset prices could levitate into bubble valuation space? Yes, it does mean that. And that is a very, very uncomfortable proposition for those grounded in fundamental analysis, as I am.

Ultimate Conditions For Recovery (pinecarr)

Four immediate conditions can be stated unequivocally as urgent requirements for any economic recovery. All other talk is pure distraction. We are nowhere near any of them in actual occurrence. These are critical characteristics of the Intensive Care Ward. 

Peak Gold Could Be A Lot Of Hype, But Who Wants To Take That Chance? (Claire H., M.W., pinecarr)

Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world's top producer Barrick Gold.

The Parable Of The Stone And The Balloon: What Happens When The Tether Breaks? (Claire H.)

China sent its clearest signal yet that it was ready to allow yuan appreciation after an 18-month hiatus, saying on Wednesday it would consider major currencies, not just the dollar, in guiding the exchange rate.

10 States Face Looming Budget Disasters (M.W.)

The analysis, ''Beyond California: States in Fiscal Peril,'' urged lawmakers and governors i to take quick action to head off a wider catastrophe. The 10 states account for more than one-third of the nation's population and economic output.

FED Faces Biggest Blow To Authority (M.W.)

The financial-regulation overhaul proposed yesterday by Senator Christopher Dodd would strip the Fed of its role as a bank supervisor and give Congress a greater voice in naming the officials who set interest rates.

SEC Starting To Target High-Frequency Trading (M.W.)

Upwards of 70 percent of all equity-trading volume in the U.S. is done by high-frequency traders. The issue's gaining steam in Congress, where a few members have been prodding the SEC to take action.

Senators Propose Bill To Apply Gambling Laws To Derivatives (M.W.)

In describing the complex and little-understood world of derivatives trading as "a sophisticated form of gambling," three U.S. Senators proposed legislation that would enable state gambling regulators and attorneys general to examine the practice.Their bill specifically removes a nine-year-old directive that preempted state law from applying to derivatives contracts.

US May Wind Up In A 'Lost Decade' Like Japan (M.W.)

Heavy government stimulus spending and near-zero interest rates did little to end a ''lost decade'' of stagnation and mushrooming debt in Japan. Some economists and lawmakers say the U.S. may wind up following the same trajectory.

Dollar's Trouble, Oil's Bubble (M.W.)

The weakness in the U.S. dollar risks inflating a bubble in the oil market, which could threaten consumer spending and potentially cause a double dip recession.

Stimulus Job Boost "Wildly Exaggerated" (M.W.)

Federal money that recipients already receive annually - subsidies for affordable housing, for example - was reclassified this year as stimulus spending, and the existing jobs already supported by those programs were credited to stimulus spending. Some of these recipients said they did not even know the money they were getting was classified as stimulus funds until September, when federal officials told them they had to file reports.“There were no jobs created. It was just shuffling around of the funds."

Recession Sparks Global Shoplifting Spree (M.W.)

A growing number of new shoplifters are outwardly reputable, middle-class people who are walking off with French cheeses, quality meats, cosmetics, mobile phones, clothing and other goodies that they feel they need to maintain a quality of life they can no longer afford.

Record Number Of Pets Being Abandoned (M.W.)

The ASPCA estimates up to 2 million pets have been abandoned since the recession began. At pet food banks, people who used to be donors now show up asking if they can get a bag of dog food .Rescues rely on adoptions, donations, grants and volunteers, while shelters depend on city or county budgets to pay employees and operate their facilities. Every year, between 3 million and 4 million animals that end up in shelters are euthanized.

The Greatest Trade Ever (M.W.)

In a span of just three years, hedge-fund manager John Paulson went from practically unknown to practically unparalleled. After a series of smart bets against the housing market made Paulson's hedge fund billions of dollars—including days where it made more than $1 billion—he earned a place alongside George Soros and Warren Buffett as an oracle of investing.

Energy

US Pressures IEA to Underplay Proximity of Peak Oil Shortages (kelvinator)

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying."

Two Beers With Steve Podcast - Peak Oil (Steve P.)

Oil! - Discussion with Peter Maass and Ed Burtynsky (jeaninedargis)

Three-hour radio show, discussion is about 2 hours in. Playlist features photos from Ed Burtynski's latest photo project, Oil. Peter Maass' latest book is Crude World: The Violent Twilight of Oil.

The future of oil (Ben J., CM)

Whatever the facts, the end of the first decade of the twenty-first century is likely to be seen by future historians as the beginning of the final chapter of a unique, unrepeatable period in human development.

Environment

Who Needs The Grid? (M.W.)

Fuel cells—which facilitate a chemical reaction between oxygen and hydrogen or hydrocarbon fuel without burning anything—have been used aboard NASA vehicles and Navy submarines for years. The biggest challenge in adapting them for commercial use was making the technology reliable and affordable. A new fuel-cell technology promises to revolutionize access to cheap, clean energy.

Setting Sail Into Space-Propelled By Sunshine (M.W.)

About a year from now, a box about the size of a loaf of bread will pop out of a rocket some 500 miles above the Earth. There in the vacuum it will unfurl four triangular sails as shiny as moonlight and only barely more substantial. Then it will slowly rise on a sunbeam and move across the stars. Over the next three years, the Planetary Society will build and fly a series of solar-sail spacecraft dubbed LightSails, first in orbit around the Earth and eventually into deeper space.

The Fight Over The Future Of Food (M.W.)

At first glance, Giuseppe Oglio's farm near Milan looks like it's suffering from neglect.Oglio, eschews modern farming techniques in favor of a natural approach. It is not just ecological, he says, but profitable, and he believes his system can be replicated in starving regions of the globe.5,000 miles away, in Missouri, scientists at Monsanto also want to feed the world, only their tools are laser beams and petri dishes.The Italian farmer and the U.S. multinational represent the two extremes in an increasingly acrimonious debate over the future of food.

Saving Seafood From Extinction (M.W.)

Decades of overfishing have left many fish stocks in precarious state. Once-abundant North Atlantic fish like cod, haddock, and flounder are at only a fraction of their historic levels. The problems are not unique to the Northeast. At least forty other marine fish stocks around the country are either overfished or subject to overfishing.

21 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - November 12

"The 10 most troubled states are: Arizona, California, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin."

"In a separate study released Wednesday, the Center on Budget and Policy Priorities found that states will likely have to make steep cuts in their fiscal 2011 budgets, which start next July 1 in most states. That's because the critical federal stimulus dollars will run out by the end of 2010.

These cuts could take nearly a percentage point off the national gross domestic product and cost the nation 900,000 jobs, the study found."

(More details on each state in the link above, but little mention of the unfunded pensions)

"SINGAPORE (Dow Jones)--The U.S. reiterated its support for a strong dollar Thursday, but its Pacific Rim trading partners remained skeptical, calling on Washington to stabilize its sliding currency.

Finance ministers from the Asia-Pacific Economic Cooperation forum congratulated themselves for aggressive stimulus measures that have brought the global economy back from the abyss and vowed to keep the emphasis on ensuring a durable recovery."

(The link above is giving some problems, so try this if it doesn't work)

"A multi-currency system could emerge with time even if there were few precedents and the most likely contenders were the euro in the first instance and later on the yen and yuan, the paper says.

"Such a system would impose policy discipline on reserve issuers, as concerns about the value of one currency could lead to a shift towards the others," it says.

"The 'exorbitant privilege' currently enjoyed by the United States would be spread across a few more countries' currency areas," it says."

"The People’s Bank of China said foreign exchange policy would take into account “capital flows and major currency movements”, a pointed reference to the large speculative inflows of capital that China is receiving and US dollar weakness."

""The company attributed its net profit to the reduction of operational expenses and to the appreciation of the local currency versus the U.S. dollar, which reduced its debt-service costs.

TAM's operational expenses totaled BRL2.3 billion in the third quarter, down from BRL2.72 billion in the year-ago period.

In the third quarter, the company posted a finance gain of BRL406.3 million, reversing from an expense of BRL1.16 billion.

As the larger part of TAM's debt is denominated in U.S. dollars, when the local currency appreciates, it sees a gain in its debt service costs. The company ended the third quarter with a total debt of BRL6.79 billion, with 83% denominated in dollars.

So far this year, the Brazilian real appreciated by around 35% against the dollar.""

.....5A) Pertamina Eyes $1.1b Bond Sale in April

"PT Pertamina plans to issue $1 billion in dollar-denominated debt and Rp 1 trillion ($106 million) in rupiah bonds in April"

....5B) Kazakhstan and Russia

"Kazakhstan, which last issued a bond aimed at international investors in 2000, plans to issue about $500m in dollar-denominated securities early next year."

"Russia has signalled it plans to raise up to $18bn in dollar denominated securities in the first quarter of next year."

(See "Russia Prepares To Short $18 Billion USD")

.....5C) Petroleos de Venezuela

"The comments come after officials last month said President Hugo Chavez had approved such a sale by CVG, which unleashed talk that a possible dollar-denominated bond sale would be forthcoming.

Another government-run entity, oil firm Petroleos de Venezuela, or PdVSA, just completed its own dollar-denominated debt sale, successfully placing more than $3 billion with investors."

"Nov. 12 (Bloomberg) -- Mortgage applications to purchase homes in the U.S. plunged last week to the lowest level in almost nine years as Americans waited for the outcome of deliberations to extend a government tax credit."

"But the thirst for oil will balloon in Asia—and in India and China in particular—where demand is predicted to rise by as much as 400% compared with 2008."

"WASHINGTON -- The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: the $700 billion financial rescue.

The administration wants to keep some of the unspent funds available for emergencies, but is considering setting aside a chunk for debt reduction, according to people familiar with the matter."

.......8A) Government Poised To Bail Itself Out (Blog Posted by Jon Shazar)

"The federal government may be the next too-big-to-fail institution to accept federal bailout money.

The Obama administration, struggling to keep the federal budget deficit from spiraling out of control, could accept up to $210 billion in TARP funds in a bid to cut its debt."Surprised

"Nov. 12 (Bloomberg) -- U.S. lenders will prepay three years of premiums to replenish the government’s deposit insurance fund drained by the fastest pace of bank failures in 17 years, the Federal Deposit Insurance Corp. decided today."

"The FDIC had set aside $32 billion for 2009 failures expected through June 30, and estimates bank failures through 2013 will cost $100 billion.

The FDIC is required to rebuild the fund, used to pay depositors as much as $250,000 per account in a failure, when the balance divided by insured deposits falls below 1.15 percent. The ratio as of June 30 was 0.22 percent."

"The reserve fund, which holds excess cash beyond what the agency needs to cover future losses on its outstanding loans, had an estimated value of $3.6 billion as of Sept. 30, an sharp drop from the $15.82 billion that last year's audit projected it would have by this time.

The $3.6 billion value represents 0.53 percent of the mortgages insured by FHA, well below the 2 percent ratio required by law and the 3 percent ratio maintained by the fund at the same time last year."

........10A) For other headlines on the FHA  reserves please click here)

"Commercial real estate -- including shopping centers, office buildings and industrial property -- will hit a low point in 2010 not seen since the Great Depression, according to a national survey of real estate executives.

Values and rents will plunge, and vacancies and defaults will soar across all types of commercial property before the market rebounds slowly, according to the survey and forecast compiled by the Urban Land Institute and PricewaterhouseCoopers LLC.

"2010 looks like an unavoidable bloodbath for a multitude of borrowers, investors and lenders," the report said. "The shake-out period may extend several years as even some conservative owners with well-underwritten loans from the early 2000s see their equity destroyed.""

"“A crisis of unprecedented proportions is approaching” in the U.S. commercial real-estate market, according to Randall Zisler, chief executive officer of Zisler Capital Partners LLC."

"Property prices have fallen by 30 percent to 50 percent from their peaks, Zisler estimated yesterday in a report. The plunge has wiped out the equity in most real-estate deals that relied on debt financing since 2005, he wrote.

Zisler, whose firm focuses on real-estate investment, estimated that building owners will default on $500 billion to $750 billion of mortgage debt. This equals as much as 54 percent of the $1.4 trillion in loans that will come due in four years, by his count.

“Much of the debt is likely worth about 50 percent of par, or less,” the report said. Many banks will end up insolvent as they reduce the value of their holdings, he wrote, adding that regional and community lenders are especially vulnerable."

"Nov. 12 (Bloomberg) -- U.S. states, which are closing $250 billion of budget deficits, will be forced to grapple with diminished revenue until at least 2012, a survey of fiscal officials found.

The only thing that kept states from “draconian” spending cuts has been $135 billion of funding under President Barack Obama’s economic stimulus package, according to a report from the National Governors Associations and the National Association of State Budget Officers. Revenue fell 7.5 percent in fiscal 2009, forcing states to close budget gaps of $72.7 billion.

“These are the worst numbers we’ve ever seen,” said Scott Pattison, executive director of the budget directors group, in a news release. “States have been forced to lay off and furlough employees, raise taxes, drain rainy day funds and sharply cut state spending.”"

"Of AOL's roughly 6,000 employees, layoff estimates range between 1,000 and as many as 2,000."

"NY Governor David Paterson announced to a hastily assembled joint session of legislators that the state will be bankrupt in a month’s time unless lawmakers immediately strive to close an ever widening budget gap."

(Note: I have not seen Patterson say the word "bankruptcy". His term was "running out of money")

...15A) A Little more info

"The state has about $3 billion of available funds compared with $7.6 billion a year ago, he said. In December, it faces payments of $2.5 billion for property tax rebates, $1.6 billion in aid to school districts, $800 million to transportation authorities and $1 billion to local governments and organizations that provide services."

 

"An initiative filed last week would cut pensions for new state and local government hires, but allow local voters to lift the cap."

"“The current system could result in billions of dollars in new taxes to meet the retirement obligations for public employees,” says the initiative. “Many local governments may be threatened with bankruptcy if no change is made.”

The issue of whether the current level of public pension benefits are “sustainable” has been growing, fueled by an historic stock market crash last fall that is expected to force increases in annual government pension payments to replenish retirement funds."

"In the heyday of bond insurance, seven firms carried the top credit rating of triple-A, and half of new municipal bonds carried insurance.

Now, barely 10% of new muni bonds have insurance. Only one firm, Assured Guaranty, is writing new business, and it bought a competitor. None have retained triple-A ratings; indeed, all but Assured have junk ratings.

Their downfall came after the top insurers branched out to guarantee complex mortgage securities. When the housing market tanked, insurers saw their losses grow, their ratings fall and their clients flee.

In some cases recently, muni bonds have actually suffered because they did have insurance from Ambac or its large rival, MBIA. That may intensify should there be a bankruptcy filing or restructuring, some muni bond investors say, particularly if the bond carrying the insurance is of weak credit quality to start.

"There may be further distress felt by the owners of those securities" who want to unload them, said Chris Ryon, co-portfolio manager at Thornburg Investment Management.

Still, the muni bond market has largely taken its losses. Indeed, it's already withstood the turmoil seen with the weakest of the insurers.

One insurer, Syncora, restructured contracts with its counterparties after the New York State Insurance Department ordered it to suspend all payment of claims to meet capital requirements. Two others, FGIC and CIFG, are violating regulatory capital requirements, according to a recent report from CreditSights, but have managed to avoid being seized by regulators."

"As demand grows to attend California State University, campuses will slash enrollment by about 40,000 students -- closing the door to some freshmen and transferring community college students next fall, Chancellor Charles B. Reed said Tuesday.

Reed said CSU campuses must limit enrollment to deal with a projected $564 million budget deficit.

New cutbacks will be on top of cost-saving measures implemented this year involving enrollment reduction of nearly 10,000 students, staff furloughs, and higher student tuition and fees."

"Nov. 12 (Bloomberg) -- U.S. foreclosure filings surpassed 300,000 for an eighth straight month as unemployment made it tougher for homeowners to pay their bills, RealtyTrac Inc. said."

"Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.

"There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London."

"HELENA, Mont. — Higher returns alone likely aren't enough to save Montana's beleaguered pension system, the state's investment director said.

Board of Investments executive director Carroll South said the pensions would need to earn a return that is far above historical levels to fully recover losses. Pension investments lost nearly 21 percent of their value last year.

In order to simply meet their ongoing obligations, the system needs to earn about 8 percent on investments. Returns far higher than that would be needed to recover from the historically large losses of the past year.

For instance, the teachers' pension system would need to earn nearly 12 percent on investments over the next 10 years to recover and meet ongoing obligations"

"PROVIDENCE — Many city and town pension plans in Rhode Island are falling further behind on their promises to retirees and in some cases are teetering on the brink of insolvency, the state’s auditor general has told Senate lawmakers."

"WASHINGTON (MarketWatch) -- The United States federal government ran a deficit of $176 billion in October, the first month of the 2010 fiscal year, the Treasury Department reported Thursday. Receipts were $135 billion, the Treasury said, while outlays were $311 billion. The deficit was a little higher than a congressional estimate of $175 billion and marked the 13th consecutive monthly budget shortfall. A year ago in October the deficit was $156 billion."

 

..........Don't we just love our green shoots today? Don't we also love the way they keep sugar coating the news headlines like the jobless claims? Like usual:

Here's the way bad economic  news is twisted to look like.......ahhhhhhhhhh

The headlines may make the economy look friendly, but it's not.

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alcatwize
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Re: Daily Digest - November 12

Obama's pay czar concerned firms could lose talent

Treasury pay czar 'very concerned' pay rules could cause bailed-out firms to lose talent

I see this as a good thing.  Maybe these people can actually do something production with their lives.  Read more...

Excerpt from Jeremy Grantham:

Yes, of course every country needs a basic financial system to function effectively with letters of credit, deposits, and check writing facilities, etc. But as you move beyond that it is worth remembering that every valued job created by financial complexity is paid for by the rest of the real economy, and talent is displaced from real production, as symbolized by all of the nuclear physicists on prop trading desks. Viewed from the perspective of the long-term well-being of the whole economy, the drastic expansion of the U.S. financial system as a percentage of total GDP in the last 20 years has been a drain on the health and cost structure of the balance of the real economy. To illustrate this point, in 1965 the financial sector of the economy took up 3% of the GDP pie. The 1960s were probably the high water mark (or one of them) of America’s capitalism. They clearly had adequate financial tools. Innovation could obviously have occurred continuously in all aspects of finance, without necessarily moving its share of the economy materially over 3%. Yet by 2007 the share had risen to 7.5% of GDP!

The financial world was reaching into the GDP pie and taking an unnecessary extra 4%. Every year! This extra rent is enough to lower the savings and investment potential of the rest of the economy. And it shows. As mentioned earlier, the growth rate of the GDP had been 3.5% a year for a hundred years. It had proven to be remarkably robust. Even the Great Depression bounced off it, and soon GDP growth was back on the original trend as if the Depression had never occurred. But after 1965, the growth of the non-financial slice, formerly 3.4%, slowed to 3.2%. After 1982 it dropped to 3.1% and after 2000 fell to well under 3%, all measured to the end of 2007, before the recent troubles. These are big declines. It is as if a runner has a growing and already heavy blood sucker on him that is, not surprisingly, slowing him down. In the short term, I realize that job creation in the financialindustry looked like a growth driver, as did the surge in financial profits (which we now realize were ludicrously overstated). But in the long term, like a sugar high, thisstimulus was temporary and unhealthy.

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Johnny Oxygen
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Question on "China Signals That It May Allow..."

China sent its clearest signal yet that it was ready to allow yuan appreciation after an 18-month hiatus, saying on Wednesday it would consider major currencies, not just the dollar, in guiding the exchange rate.

 

In its third-quarter monetary policy report, the People's Bank of China departed from well-worn language on keeping the yuan "basically stable at a reasonable and balanced level." It hinted instead at a shift from an effective dollar peg that has been in place since the middle of last year.

I have a lizard brain. This is an economics question. Can someone help me understand this? How does China allow its currency to appreciate or depriciate? I don't understand the how and why of this.

I'm assuming this has something to do with Clintons visit a few months ago where we begged the Chinese to buy more of our debt. Presumably they told us to stop printing money and devaluing their investment. So this must be their response. The plan to dump the dollar openly.

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Re: Question on "China Signals That It May Allow..."

You see when you have control over the imperialists, you can set the price of your money.

Think Bretton Woods

 

Well what we have now, isn't bretton woods, it's floating exchange rates.  Except for some....who peg their currency to the dollar.

 

So in a sense we have a weird floating and fixed exchange rate system.,..which in of itself is partially a catalyst for this problem. 

 

There is immense pressure on China to revalue it's currency.  It can once again 'state' what it is worth.  OR it can let the market forces move it.  Market forces would immediately revalue the YUAN to be much more valuable.

 

See everyone talks about free markets, when the markets have been one big rig job for many decades.  The entire CHINA movement basically happened because it refused to revalue it's currency, and keep it's exports cheap.  So we'd outsource our jobs there.  So we'd buy their goods there.  Over a generation, of such balantant manipulation, the large trade imbalance could be wiped away if China revalues it's currency to what it's really worth....more along the line of 2:1 not 6:1.

Of course, we can't do that, since we've outsourced everything.  Again, that cheap 19.99 china good would cost you 60 bucks the next day after revaluing or restocking.

Great for business, bad for every American who buys chinese goods.  Until we can start to produce them....5-10 years?

Of course this is omitting anything about future scarcity.

We have to bite the bullet someday

 

This is more about allowing the YUAN to appreciate to cover its losses from a declining dollar.

 

I.E. If the dollar value goes down, China loses the value of its reserve and loan holdings

BUT, if they quit pegging their currency to the dollar, they can make alot of that up by their currency being revalued much higher after a dollar drop.

 

This isn't good, but if everything collapses, as I think it probably can, at any time no less,  it's better than losing your holdings, and still pegging your currency to a worthless dollar.

 

It's a little like saying...instead of losing 90-100 percent if everything goes down, we'll let the YUAN float then, and only lose like 60 percent of our wealth, but be on top and have the ability to create the most wealth going forward.

 

 

 

 

 

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Johnny Oxygen
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Socialism

This was posted on Jim Sinclairs site today.

 

This Professor is a Genius – The Future of the West

clip_image001

An economics professor at a local college made a statement that he had never failed a single student before, but had failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on the present administration’s plan".

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy.

As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.

Could not be any simpler than that.

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Re: Question on "China Signals That It May Allow..."

Thanks jmc8888.

While that makes the motive a little clearer I stil don't understand the economic mechanism/s that allow you to appreciate or depreciate a currency.

You are absolutely right about the free market being rigged. There was a post on this site about that very topic, "There is no such thing as a free market - and there never will be!"  by switters, and it got little to no attention which I felt was quite surprising.

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Re:The Greatest Trade Ever

The name sounded familar, so I read the article; yup, he's the guy Puplava (on FSN) keeps mentioning that is investing heavily in gold now.

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Johnny Oxygen
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Tail wagging the dog.

OK...now this is so blatantly crazy that someone has to call them on this.

 

White House Aims to Cut Deficit With TARP Cash

NOVEMBER 12, 2009
By DEBORAH SOLOMON and JONATHAN WEISMAN

WASHINGTON — The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: the $700 billion financial rescue.

The administration wants to keep some of the unspent funds available for emergencies, but is considering setting aside a chunk for debt reduction, according to people familiar with the matter. It is also expected to lower the projected long-term cost of the program — the amount it expects to lose — to as little as $200 billion from $341 billion estimated in August.

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Re: Daily Digest - November 12

http://www.nytimes.com/aponline/2009/11/11/business/AP-US-State-Budgets.html?_r=1

quotes of note:

The report by the Pew Center on the States found that Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin are also at grave risk, although Wisconsin officials disputed the findings. Double-digit budget gaps, rising unemployment, high foreclosure rates and built-in budget constraints are the key reasons.

...

The analysis, ''Beyond California: States in Fiscal Peril,'' urged lawmakers and governors in those states to take quick action to head off a wider catastrophe. The 10 states account for more than one-third of the nation's population and economic output, according to the report.

,,,

The Pew report was based on data available as of July 31 and scored all 50 states based on revenue changes, unemployment, foreclosures and budget requirements. It also gave them grades. California and Rhode Island scored worst with D-pluses, then New Jersey and Illinois with C-minuses.

...

end quotes

What do you suppose happens to a federal government in which it's states are declaring bankruptcy?

Hugs to all ... dons

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Re: Daily Digest - November 12

Saxplayer, great job of exposing the real face of the news!  Now of you'all don't mind, I think I'll just curl up in a fetal position...:)

While it's certainly not fun trying to face the truth, I still can't help but feel sorry for the people still wearing their blinders.  When reality hits the folks still in denial, it is going to be one very rude, abrupt awakening!

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The_Black_Death
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Re: Socialism
Johnny Oxygen wrote:

This was posted on Jim Sinclairs site today.

 

This Professor is a Genius – The Future of the West

clip_image001

An economics professor at a local college made a statement that he had never failed a single student before, but had failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on the present administration’s plan".

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy.

As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.

Could not be any simpler than that.

 

Brilliant.

 

And I'm not even one of these hardcore Austrians, but that was a brilliant experiment.

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Re: Daily Digest - November 12

"An 11 percent gain in the Brazilian currency, the real (BRBY), during the quarter helped Brasil Foods slash the cost of servicing its dollar-denominated debt, said Financial Director Leopoldo Saboya."

......1A) Ainsworth Lumber  makes $47.8 million foreign exchange gain on its long-term U.S. dollar-denominated debt

.......1B) Brazil Petrobras

"On the financial side, analysts said that higher dollar-denominated debt levels will soften the impact of the stronger real currency. The real gained about 10% against the U.S. dollar in the third quarter.

While the stronger real helps the company's dollar-denominated financing costs, it also undercuts its overseas-based assets. The noncash foreign-exchange loss will likely come in at about BRL1.0 billion in the quarter, analysts said."

"Nov. 12 (Bloomberg) -- China’s surging asset prices, a dollar “crisis” and oil prices above $100 a barrel are among the “tail risks” that investors face in 2010, said Bank of America Corp.’s chief global equity strategist Michael Hartnett."

"A weaker dollar and quickening U.S. inflation could push oil prices “well above” $100 a barrel, Hartnett said. Investors should hedge against inflation by buying gold, commodities and emerging-market equities and currencies, he said."

"Hanson said the borrowing could occur early in the year if a revenue slide persists; money coming into the state's general fund is $223 million below expectations since February. A comprehensive economic report is due Dec. 2, and Hanson said he wants to settle on a borrowing approach before lawmakers return for their 2010 session in early February"

"About 500 nursing assistants and clerical workers represented by the Service Employees International Union are facing possible layoffs, pay cuts or job reassignments after a vote by the Board of Supervisors fell short of protecting the union's workers.

Unless Mayor Newsom intervenes, budget cuts aimed at the union's workers could begin as early as next week.

The anticipated cuts could come as San Francisco officials express concerns about declining property tax and payroll tax collections."

""Experts say California's combined deficit for the two years will top $15 billion and may swell well beyond that depending on how the state's revenues fare."

"For July through September we're roughly $1 billion below projection," said H.D. Palmer, Schwarzenegger's spokesman on budget matters at the state's Department of Finance."

"LONDON — When Eastwind Maritime, a medium-size carrier company, went bankrupt this summer, few banks in the United States took notice.

But in Europe, where banks hold over $350 billion of increasingly dubious shipping industry loans, the inability of Eastwind, which is based in New York,to handle its debt of more than $300 million set off an anxiety attack on lending desks across the Continent."

"But I have to tell you, it's pretty grim right now," says Mayor Jerry Sanders.

The city is looking to make cuts this year to ease the cost and the pain of waiting till 2011. The Mayor says at least 800 city jobs that are vacant right now will be cut. He says public safety will be impacted by even more cuts.

"They are 55% of the budget, so you can't get there from here if you're not including cuts in fire and police," says Sanders."

 

 

 .......First in line for those police layoffs

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Re: Daily Digest - November 12

Great reads SaxPlayer. Looks like we are knocking on Depression's door and that it is also about to become public/mainstream knowledge. Can't wait to see how the cheerleaders are going to lipstick this pig.

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Re: Daily Digest - November 12

The article on Food was very good. I'd also recommend watching the documentary 'The World According to Monsanto'. I found it very disturbing.

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Re: Daily Digest - November 12

. Looks like we are knocking on Depression's door and that it is also about to become public/mainstream knowledge. Can't wait to see how the cheerleaders are going to lipstick this pig.

 

Thanks.

Until I started posting here I had been sending  this out as an email (since around the beginning of the year). The headlines have never looked anything like this before. A lot of this has happened in the last two weeks. I agree with Gerald Celente in that this isn't a recovery. It's a cover up.

Compared to this economy a pig with that lipstick is starting to look like quite the hottie.

 

 

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Re: Daily Digest - November 12
saxplayer00o1 wrote:

. Looks like we are knocking on Depression's door and that it is also about to become public/mainstream knowledge. Can't wait to see how the cheerleaders are going to lipstick this pig.

 

Thanks.

Until I started posting here I had been sending  this out as an email (since around the beginning of the year). The headlines

have never looked anything like this before. A lot of this has happened in the last two weeks. I agree with Gerald Celente in that this isn't a

recovery. It's a cover up.

Compared to this economy a pig with that lipstick is starting to look like quite the hottie.

 

 

Yup, the pulse is getting weaker and weaker. Funny, I did a lot of reading on GDI, there is a familiarity now. I respect Celente, I still have a tiny bit of hope that someone comes out with an invention that would revolutionize energy - but I don't see that and if it happes it will likely only contribute to resource depletion. Take care.

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Re: Socialism
Johnny Oxygen wrote:

All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.

Or "Humans never grow up"?

Kind of sad that we have to portray a whole society as bikering kids to get anything done...

 

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Re: Daily Digest - November 12

Under the United States Code, municipalities can declare bankruptcy however states and the federal government can not.   In a bankruptcy, finances and all assets are turned over to a court to restructure its finances.  States can not turn over a whole state to a court and no state has zero income at any time.  The federal government can not turn over the whole country to a court.   A state and the federal government must reorganize its spending and debt on its own.  This may include defaulting on debt.

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Davos
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Re: Daily Digest - November 12
batkinso wrote:

This may include defaulting on debt.

How about: This will include defaulting on debt.

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Re: Daily Digest - November 12

Another Lincoln red pill,

http://www.24hgold.com/english/news-gold-silver-when-dictatorship-came-t...

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Re: Daily Digest - November 12

From the "Daily Paul"

http://www.dailypaul.com/

I hear this question often after someone has watched the Crash Course,

"Note what Dr. Paul says about mid--way through his remarks, about how people are always telling him, "Yes, I understand and agree - now what do I do? People want to be told exactly what to do." His response:

"I can't tell anybody what to do."

He says it with the disdain of a man who's been asked the question a million times and yet the people still don't understand the answer.

It is called FREEDOM. No one is telling you what to do, not even our hero, who seems to have all the answers. What he understands is that his answers are his own, and he takes action based upon them. But each and every one of us must choose for ourselves - what we believe and what we will do.

Freedom. It is both exhilarating and terrifying. When you understand this, you understand why so many people prefer to remain willfully ignorant, allowing others to make their decisions for them.

(This is why the world is so screwed up)

Thank you again, Dr. Paul."

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