Daily Digest

Daily Digest - October 1

Thursday, October 1, 2009, 11:00 AM
  • No Reform, Just A Cosmetic Patch For A Discredited, Flawed Regime
  • A Werewolf In Dollar's Clothing
  • World Bank Says, Don't Take Dollar's Place For Granted
  • Fed’s Alvarez Says Audits Could Lead to Higher Rates
  • Living, Dying By Currencies Is No Way To Succeed
  • Ron Paul on Fed Transparency
  • California Recycling Measure May Mean Higher Deposits And Better Returns
  • Season Of The Witch
  • In Pursuit Of The Impossible Recovery
  • Volcker Says China’s Rise Highlights Relative U.S. Decline< li>
  • FDIC Expected To Ask Banks To Prepay $36B In Fees
  • Is Gold A Reasonable Investment?
  • Banks Tapped To Bolster FDIC Resources
  • FDIC Facing Two Bad Options, and Seeking a Third Way
  • Two Beers With Steve - Free Banking With George Selgin
  • Massive Housing Overhang Will Swamp The Market
  • China Moves Into Reserve Position
  • Special Health Care for Congress: Lawmakers' Health Care Perks
  • The Peak Oil Downside Will Be Steeper Than The Upside
  • Energy Economics and Some Energy Myths About The 21st Century

Hello Readers,

I am pleased to introduce our very first issue of the Daily Digest: Readers’ Edition. It’s been a pleasure to see the fantastic response you have generated—and you can see the effects of this “information overload” in the length of this first version. Due to length considerations, we were not able to make all of your tips available in this first version, but we sincerely appreciate your suggestions and have made every attempt to publish a wide cross sample.

We were not able to publish items that had been previously published on the site. I look forward to seeing what future searches yield. Please keep sending your items to [email protected].

When you send your items, please include the direct link, the title of the post, a snippet or quotation from the article, and please mention whether you’d like your name or username associated with the post (or whether you’d like to remain anonymous).

Today’s Digest is a promising beginning, and we look forward to the ongoing success of this unique chorus of voices.

Best,

Chris Martenson


Economy 

No Reform, Just A Cosmetic Patch For A Discredited, Flawed Regime (David M.)

"The G20 has "taken bold and concerted action to forge a new framework for strong, sustainable and balanced growth".

Obama's oratory was typically impressive. The trouble is, it wasn't true. No specific rules on banks' capital reserves were announced at this summit. No leverage caps were agreed. Nothing "bold" was done to lessen systemic dangers or overhaul the global regulatory regime. Pittsburgh produced nothing more than the usual photo calls and drab theatre"

A Werewolf In Dollar's Clothing (David M.)

"And, at the end of the day, when dealing with the only force in the world more powerful than the vampire squid, the only weapons available are humor and truth. Expect much more of both in non-mainstream media outlets near you"

World Bank Says, Don't Take Dollar's Place For Granted  (Vinny A.)

World Bank President Robert Zoellick said the United States should not take the dollar's status as the world's key reserve currency for granted because other options are emerging.

Fed’s Alvarez Says Audits Could Lead to Higher Rates (Vinny A.)

Sept. 25 (Bloomberg) -- Federal Reserve General Counsel Scott Alvarez said audits of monetary policy by the U.S. Congress could lead to higher interest rates and reduced confidence in central bank policy.

Congressional audits of monetary policy could “cause the markets and the public to lose confidence in the independence of the judgments of the Federal Reserve,” Alvarez told the House Financial Services Committee today in response to a question from Representative Dennis Moore, a Kansas Democrat. Alvarez said in his prepared remarks the audits would probably “chill” the central bank’s discussions on interest rates.


Living, Dying By Currencies Is No Way To Succeed (Vinny A.)

Less than two weeks into the job, Hirohisa Fujii is annoying corporate Japan. It’s a good thing.

 

Japan’s new finance minister doesn’t support a weak yen. In the currency world, with its winks, nods and secret handshakes, that’s tantamount to appropriating former U.S. Treasury Secretary Robert Rubin’s strong-dollar policy. Fuji’s view is the right one for Japan’s future.

Ron Paul on Fed Transparency (Vinny A.)

California recycling measure may mean higher deposits and better returns  (Livio S.)

Officeholders have yet to repay $451 million they've taken from the recycling fund since 2002 to cover the state's bills, siphoning away $100 million this year alone. Recycling and deposit redemptions, meanwhile, have risen amid the recession and the fund is now facing bankruptcy.

 

The Season of the Witch - Kunstler (C. Watcher)

The showmen over at the Financial Sense website, have put on an excellent month-long series of interviews and debate podcasts between leading inflationistas and deflationistas....

 

....Personally, I am not at all sure that the Peak Oil story, or its associated general resource scarcity story, will shed a whole lot of light on the question of inflation-or-deflation.  I say this because I think it is a short way down the road of depletion-and-scarcity before the major complex systems we depend on for daily life become so unstable that general socio-economic collapse ensues.  After all, capital finance is only one of these many complex systems -- some other biggies being food production, trade and manufacture, transportation, electric power  distribution, infrastructure maintenance, the military, and governance.  Inflation-or-deflation will only be symptomatic of larger failures and instabilities in these systems necessary for modern, civilized life.

 

In Pursuit Of The Impossible Recovery (Simon P.)

According to LEAP/E2020, the chart above tells about facts that cannot be ignored: the global economic, financial and monetary system is drifting at an increasing rate, its weakness is reaching unequalled lows in modern history, and the slightest shock (financial, geopolitical or even natural) can now break it apart (17). The States’ breathtaking plunge into bottomless public debt (18) (governments feel that, without the support of public money, world economies would soon resume their collapse) is creating a literally explosive situation, conveying massive tax increase in Japan, Europe, the US… If there is any recovery in sight, it is that of tax.

Volcker Says China’s Rise Highlights Relative U.S. Decline (Vinny A.)

Former Federal Reserve chairman Paul Volcker said the rise of China and other emerging economies has underscored a decline in the comparative economic and intellectual leadership of the U.S. “I don’t know how we accommodate ourselves to it,” Volcker, an economic adviser to President Barack Obama said in an interview with PBS’s Charlie Rose taped yesterday in New York. “You cannot be dependent upon these countries for three to four trillion dollars of your debt and think that they’re going to be passive observers of whatever you do.”

FDIC Expected To Ask Banks To Prepay $36B In Fees (Vinny A.)

Looking to shore up the diminishing fund that insures bank deposits, the FDIC may take the unprecedented step of requiring banks to prepay three years' worth of premiums: about $36 billion.

The insurance fund has been sapped by billions from a rash of bank failures that began in mid-2008. The board of the Federal Deposit Insurance Corp. likely will call for "prepaid" bank insurance premiums at its public meeting Tuesday to discuss the issue, three industry executives and a government official said. The banking industry prefers that option over a special emergency fee — which would be the second this year.

Is Gold A Reasonable Investment?  (Jeff G.)

Banks Tapped to Bolster FDIC Resources (C. Watcher)

The Board of Directors of the Federal Deposit Insurance Corporation today adopted a Notice of Proposed Rulemaking (NPR) that would require insured institutions to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012.

The FDIC estimates that the total prepaid assessments collected would be approximately $45 billion. The FDIC Board also voted to adopt a uniform three-basis point increase in assessment rates effective on January 1, 2011, and extend the restoration period from seven to eight years.

FDIC Facing Two Bad Options, and Seeking a Third Way (C. Watcher)

Before a speech on Sept. 18, just two options were publicly discussed, both likely to draw heavy fire. Several prominent lawmakers urged Bair to avoid charging another special assessment by borrowing from the Treasury, but media outlets have played up that idea as another government bailout and raised questions about the security of deposit insurance as a result. Bair, however, said the agency was willing to consider obscure options, including prepayment of premiums and issuing debt to banks.

Two Beers With Steve - Free Bannking With George Selgin  (Steve Patterson, Two Beers With Steve)

Massive Housing Overhang Will Swamp The Market (Anton95)

China moves into reserve position (Cat233)

The tectonic plates of the global financial system have shifted. The post-colonial order created at Bretton Woods irreparably cracked, together with Wall Street, in September 2008. Time has come to replace it.

Special Health Care for Congress: Lawmakers' Health Care Perks (Cat233)

This fall while members of Congress toil in the U.S. Capitol, working to decide how or even whether to reform the country's health care system, one floor below them an elaborate Navy medical clinic -- described by those who have seen it as something akin to a modern community hospital -- will be standing by, on-call and ready to provide Congress with some of the country's best and most efficient government-run health care.

Formally called the Office of the Attending Physician, the clinic -- and at least six satellite offices -- bills its mission as one of emergency preparedness and public health. Each day, it stands ready to handle medical emergencies, biological attacks and the occasional fainting tourist visiting Capitol Hill.

Energy

The Peak Oil Downside Will Be Steeper Than The Upside  (David M.)

Those readers who have some passing familiarity with the concept of peak oil have no doubt seen a picture of the traditional statistical distribution known as a “bell shaped curve.” These bell shaped curves make sense to people, because in a world with finite resources, what goes up, must come down. These symmetrical bell shaped curves are however lulling us into an attitude of complacency, leading us to believe that we have decades to move off of oil. This is just not so, and this article discusses five serious reasons why this erroneous perception needs to promptly be abandoned.

Energy Economics and Some Energy Myths About The 21st Century (Chris Martenson)

One person who has not been able to discard bad ideas, at least about energy, is Mr Leopardo Maugeri,  a director or former director of ENI - perhaps the most important corporation in Italy - and who may still be enjoying the hospitality of some faculty at the Massachusetts Institute of Technology, which is the most celebrated engineering school in the United States.  Writing in Scientific American (2009), Signor Maugeri has  fashioned  still another fairy-tale about the lovely abundance of oil, and the unsoundness of wasting precious time and  vitality  contemplating what he thinks of as a hypothetical  peaking of the global oil production. In thinking about his foolishness, I hope that everyone who takes this presentation seriously will take careful note of the following.

Output in the U.S. peaked at the end of l970 at a value of about 9.5 mb/d - which is approximately the present output of Saudi Arabia and Russia, the largest producers of oil in the world. When that peaking took place there was still an enormous amount of oil onshore or directly offshore the United States. Production then dropped to 7.5 mb/d, but when the giant Prudhoe Bay field in Alaska came on line, the total output in the U.S. turned up. Unfortunately however, the previous peak was never attained. Instead, total U.S. production stopped short of that peak and once again began to decline. Today U.S. output is approximately 5.5 mb/d, and there is only one way for it to go, which is down.

Now take a good look at the production curves for the 300 largest oil fields in the world. Following that, after satisfying yourself that a large majority of these fields have unambiguously turned down (i.e. peaked), ask yourself how is it possible, in these circumstances, for anyone to sincerely believe that a global peak will not take place. Since we are talking about myths, please note the word "sincerely". What it means is that there are people who know better than I do that a global peak will arrive, but have excellent reasons - of a career and financial nature - for claiming the opposite.

11 Comments

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - October 1

WOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I am impressed, and in awe.

Awesome!!!!!!!!!!!!!!!!!!!!!!!

crash_watcher's picture
crash_watcher
Status: Silver Member (Offline)
Joined: Aug 12 2008
Posts: 146
Re: Daily Digest - October 1

jeaninedargis: Many thanks for assembling this!

I like the idea of having subcategories of the 3E's. 

Notable by its absence, are posts concerning the third E--environment. 

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4149
Re: Daily Digest - October 1

1) 30% of financial executives see the U.S. dollar losing its reserve currency status in the next five years

2) Jim Rogers: "The true inflation rate in America? It's certainly at least 6 or 7 percent

3) Moody’s Says U.S., U.K. Ratings May Be ‘Vulnerable’

Oct. 1 (Bloomberg) -- The U.S. and U.K.’s ratings “could become vulnerable” after 2012 unless growth there “rebounds as expected” and the countries’ governments cut spending, Moody’s Investors Service said.

4) (South Africa) "the central bank said it boosted dollar purchases to weaken the exchange rate."

5) Russia 

""The dominance of the dollar as the world reserve currency is starting to decline and gold will be its natural descendant," said the Polymetal chief executive.

"Over three to five years, I believe both gold and silver will show very significant price increases. I wouldn't rule out doubling the prices in three years.""

 6) Phoenix

"Late Payments Rise

As tenants abandon space, landlords are struggling to meet their obligations. Commercial properties with mortgage payments 60 days late or more rose to 8.5 percent as of August in the Phoenix, up from 1.6 percent in March, data compiled by Bloomberg show."

 7) Now IMF says we should get used to a "Jobless Recovery"

8) Alabama Gov. Bob Riley predicts severe economic development consequences if Jefferson County files for bankruptcy protection.

9) Oregon governments, schools face big increase in pension costs

"That means payroll rates to fund pensions will go from an average of 4.7 percent of payroll to 13.1 percent."

10) When all else fails...raise taxes (Google news search)

11) Bernanke: A new super-currency would weaken the dollar

WASHINGTON (MarketWatch) - Russia and China are advocating the creation of a new super currency, which Fed Chairman Ben Bernanke said Thursday would weaken the dollar if it were to be established.

"It would weaken the dollar, and we would have to watch for any inflationary consequences of that," Bernanke said during the question and answer segment of a House Financial Services Committee hearing. "I don't see that as a risk as long as we as a country take efforts to manage our risk and keep inflation low."

kemosavvy's picture
kemosavvy
Status: Martenson Brigade Member (Offline)
Joined: Oct 13 2008
Posts: 254
Re: Daily Digest - October 1

Great Job, I'll set aside 4 hours for the DD today... if I could only make 'free time' like the Fed makes 'free money'.

Anywho, I'm having an open invitation this sunday at 9PM EST for anyone who wants to be a part of Two Beers With Steve. This session won't be taped but I want to give anyone who is intetersted a chance to talk with others from the site.

I figure our topic will be 'Taking Action'.

PM me if you are interested and I'll give you further details

okubow's picture
okubow
Status: Bronze Member (Offline)
Joined: Aug 16 2009
Posts: 67
Re: Daily Digest - October 1
crash_watcher wrote:

jeaninedargis: Many thanks for assembling this!

I like the idea of having subcategories of the 3E's. 

Notable by its absence, are posts concerning the third E--environment. 

I second all of the above. Thanks for a great post and let's hear more about energy and the environment! Dziękuję (Thank you).

Orion

bikemonkey's picture
bikemonkey
Status: Bronze Member (Offline)
Joined: May 17 2008
Posts: 45
Re: Daily Digest - October 1

Quite the community we have become here. 

My congratulations to you Chris, and to the CM community. 

pwanex's picture
pwanex
Status: Member (Offline)
Joined: Sep 14 2008
Posts: 8
Re: Daily Digest - October 1

Detroit: To broke to bury their dead.

http://money.cnn.com/2009/10/01/news/economy/_morgue/index.htm

tommyguy's picture
tommyguy
Status: Bronze Member (Offline)
Joined: Sep 30 2008
Posts: 31
IceViking's picture
IceViking
Status: Member (Offline)
Joined: Sep 26 2009
Posts: 15
Re: Daily Digest - October 1

some funny but enligthning things about HFT from Jim Stewart

 

http://www.ritholtz.com/blog/2009/10/cash-cow-high-frequency-trading/

fujisan's picture
fujisan
Status: Gold Member (Offline)
Joined: Nov 5 2008
Posts: 296
Re: Daily Digest - October 1

Bodies pile up in Detroit morgue; poor can't afford burial - Oct. 1, 2009

Money to bury Detroit's poor has dried up, forcing struggling families to abandon their loved ones in the morgue freezer.

...

Jeff Borsuk's picture
Jeff Borsuk
Status: Silver Member (Offline)
Joined: Jul 25 2008
Posts: 150
Re: Daily Digest - October 1

Good stuff, saxplayer00o1!

thanks

Comment viewing options

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