Daily Digest

Daily Digest - October 23

Friday, October 23, 2009, 9:50 AM
  • Two Beers With Steve: Peak Oil
  • Rally fuelled by cheap money brings a sense of foreboding
  • JP Morgan the new Lehman Brothers
  • Greater Depression for U.S. Rebuts 'Recovery' Talk
  • America the Banana Republic
  • Are the Fed, the Congress and the Primary Dealers an Alliance of Convenience?
  • The Beginning of a Currency Crisis?
  • Dollar decline draws international protest
  • After The Great Collapse: The new role of the EU

Economy

Two Beers With Steve: Peak Oil (Steve P.)

Rally fuelled by cheap money brings a sense of foreboding (SolidSwede)

Earlier this month, I received a sobering e-mail from a senior, recently-retired banker. This particular man, a veteran of the credit world, had just chatted with ex-colleagues who are still in the markets – and was feeling deeply shocked... "Oh, I am sure the banks’ public relations people will talk about the subdued atmosphere in banking, but don’t you believe it,”...noting that when money is virtually free – or, at least, at 0.5 per cent – traders feel stupid if they don’t leverage up.

JP Morgan the new Lehman Brothers (M.W.)

How JP Morgan Really made the $3.6 Billion in Q3 Profits You might as well label JP Morgan the new Lehman Brothers. They are simply using hot and easy money to double down in the Wall Street casino on the taxpayer dime.

Greater Depression for U.S. Rebuts 'Recovery' Talk (M.W.)

In the fantasy-world of U.S. economic propaganda, we are supposed to believe that nationally the U.S. economy can be improving, while state-by-state the economy continues plummeting downward. The only difference between the U.S.'s “national economy” and the “state-by-state economy” is that the federal government has incorporated far more statistical contrivances to distort the numbers. It is a matter of simple arithmetic that the U.S. economy cannot recover.

America the Banana Republic (M.W.)

The ongoing financial meltdown is just the latest example of a disturbing trend that threatens to put the Land of the Free and Home of the Brave on a par with Zimbabwe, Venezuela, and Equatorial Guinea ...the actual situation as what it is: “socialism for the rich and free enterprise for the rest.” ...a collusion between the overweening state and certain favored monopolistic concerns, whereby the profits can be privatized and the debts conveniently socialized, but another term for the same system would be “banana republic.”

Are the Fed, the Congress and the Primary Dealers an Alliance of Convenience? (M.W.)

Remarks by IRA co-founder Christopher Whalen from the October 9, 2009 conference held at AEI that will be published as part of the "No Way Out: Government Response to the Financial Crisis" series organized by Vince Reinhart, Resident Scholar of American Enterprise Institute.

The Beginning of a Currency Crisis? (M.W.)

The dollar’s decline may be entering a whole new phase that's increasingly less of a gentle glide and more of a potential crashette. ... what we're watching isn't a “weak dollar trade” anymore... This is the beginning of a currency crisis, and the dollar is at the center of the storm.

Dollar decline draws international protest (M.W.)

When measured against a basket of currencies from the U.S.'s trading partners, the dollar is now only around 7% above its lowest point since 1971...

After The Great Collapse: The new role of the EU (Claire H.)

According to LEAP/E2020, in 2010, the European Union, having four strategic core requirements, will be compelled to take a number of urgent decisions in a context of a fast collapse of the Western camp that could be summed up as the US Dollar’s fate.

24 Comments

joemanc's picture
joemanc
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Google Searchers obsessed with Dollar Collapse
Quote:

 

If you believe in the wisdom of crowds, then rising google searches for 'dollar collapse' are a bad sign.

While Google data is choppy, search queries have basically doubled since the start of 2008.

http://www.businessinsider.com/chart-of-the-day-gold-and-dollar-collapse-2009-10?utm_source=Triggermail&utm_medium=email&utm_campaign=Clusterstock%20Chart%20of%20the%20Day%2C%20Wednesday%2C%2010%2F21%2F09

Jasenica's picture
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Re: Google Searchers obsessed with Dollar Collapse

Has anybody on this site lost their job or knows anybody in their immediate group of family or friends who are have lost their jobs?

People think I am crazy when I tell them that we are on the cusp of the 2nd Great Depression. Am I alone?

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Re: Daily Digest - October 23

"Illinois faces a huge unfunded pension liability of at least $55 billion even after the state sold $10 billion of taxable pension bonds in 2003 to ease that liability."

"A special commission is meeting this fall to look at this issue because it's estimated that Vermont has a one billion dollar unfunded liability in its retirement programs for state employees and teachers.

Here's the problem - 25% of all state workers and teachers will be eligible for retirement in the next 5 years but the Retirement Funds have lost a significant amount of their value during the recession."

"Oct. 23 (Bloomberg) -- Freddie Mac, the mortgage-finance company under government control, said defaults among its loans again set a record last month, while its portfolio of residential assets grew at an annualized rate of 7.3 percent."

"In unusually pessimistic comments for a senior political figure, Senator Joyce said the US Government was running such large deficits and building up so much debt that it was in a similar position to Iceland or Germany before World War II.

In a Senate estimates hearing on Wednesday night, he asked Treasury secretary Ken Henry what would be the implications of an American debt default for the Australian economy."

"The California state budget crisis is so severe that campuses in the California State University system are canceling midweek classes to give faculty a three-day furlough, the Los Angeles Times reports. At Cal State Fullerton, one student said that “On Monday, the chemistry teacher told us that we're going to have to learn a whole chapter on our own" because of the furlough. "I could tell he felt bad. He felt frustrated."

The University of California, meanwhile, is dealing with its own budget woes. Even after cutting staff and raising student fees, the university system faces a $550 million budget deficit."

"More deals followed as Jefferson County sold and refinanced additional bonds to repair and expand its sewer system, enough to reap Blount Parrish $7.1 million for its advice and ex­pertise on organizing and selling public debt securities that wound up being bought by investors. That debt has now ballooned to $3.9 bil­lion, is in default, and has Jefferson County teetering on what would be the larg­est municipal bankruptcy in U.S. history"

"PHOENIX — Legislative budget analysts raised their estimate of Arizona's midyear budget shortfall to nearly $2 billion, up from approximately $1.5 billion. The growing shortfall, roughly a fifth of the budget, prompted calls to cut spending, increase taxes and raid voter-mandated programs."

"As each week passes without the promised cuts, the county's deficit grows by another $4 million, according to Mayor Carlos Alvarez."

  • 10) Rising Debts in Europe Won’t Trigger Downgrades, Moody’s Says

"European governments spent billions of euros to fight the region’s worst recession since World War II. As a result, the commission forecasts that euro-area debt will rise to 77.7 percent this year from 69.3 percent, and that it would advance to 83.8 percent in 2010."

"The ruling is another blow to a property that already has seen much of its value evaporate during the downturn in the U.S. commercial real estate market.

"I think everyone's wiped out," Dan Fasulo, managing director of real estate research firm Real Capital Analytics, said of the non-senior investors in the 2006 sale."

''

"Others who contributed $1.65 billion in equity -- the riskiest piece of any investment -- include $500 million from the California Public Employees' Retirement System, known as Calpers; $100 million from the California State Teachers' Retirement System, known as Calstrs; and $100 million from the Government of Singapore Investment Corp (GIC)."

"In these economic times, the landlord would much rather lease long-term to a government agency and be guaranteed their rent, especially with a walk-away clause, rather than leave commercial real estate empty," White said. "I really don't see that being an issue."

rowmat's picture
rowmat
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Re: Google Searchers obsessed with Dollar Collapse
Jasenica wrote:

Has anybody on this site lost their job or knows anybody in their immediate group of family or friends who are have lost their jobs?

People think I am crazy when I tell them that we are on the cusp of the 2nd Great Depression. Am I alone?

Only people who believe in the depression lose their jobs.

Most people are living on Kool Aid bought on credit at 28% interest.

Remember they have seen the Dow break through 10,000, they get their financial advice from CNBC's Fast Money, their news from Fox and believe Obama is the new messiah.

Of course the dollar is being secretly sabotaged by Iran and Osama Bin Laden who is manipulating the dollar via a camel dung powered IPhone by bouncing the signal off one of Mahmoud Ahmadinejad's gold teeth from a cave in Afghanistan 

Once the U.S and Israel take out Iran the dollar will instantly recoup its losses, the U.S. unemployment rate will go from 20% to 0% overnight and every U.S. citizen who has been affected by the GFC will win $10,000,000.00 in a lottery they never even entered, blow it all on plasma TV's, SUV's and burgers which will bring America out of the recession and everyone will live happily ever after. - THE END!!

So yes... you are alone!

Cease being a tinfoil-hat wearing doomsdayist and get with the program!! Cool

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Re: Daily Digest - October 23

two broken links above...

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Johnny Oxygen
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Re: Google Searchers obsessed with Dollar Collapse

Nope Jasenica you are not crazy.

It could be argued, and has, that we are already in a depression.

I am seeing more and more application come across my desk for people who are very much overqualified for the position.

When I talk to the people I work with it is clear that most of them are relying more and more on their credit cards to float from one month to the next. I think the reason you don't hear more people talk about this is because there is some percieved shame at falling behind or having your standard of living drop substantially. Most people don't like to admit to it even if it's not their fault.

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Re: Google Searchers obsessed with Dollar Collapse

Hello Jasenica, I lost my job in February.  I worked for a relatively large, privately owned self storage company, which as an industry has traditionally been known to be recession resistant, if not recession proof.  I'd been with them for 7+ years, and in all my time there the only reason people were let go was for stealing from the company.  Well, that all changed last winter.  A week before me they let an employee who worked in the home office go, then I was canned, and three weeks after that my boss was let go.  Keeping in mind there were maybe 30 employees total from the owner down to the maintenance guys, they let go 10% of their workforce in the space of a month.  In the summer they let go a woman who worked in the home office, and who had been with the company literally since day one, about 20 years.  I just heard that the guy who took over the site where I worked was fired a week or two ago.  I guess it's easier to blame the employees for poor performancethan to face economic reality.  Now, for a company this size, these employees had to be replaced, and they were, with younger kids freash out of college mostly.  I'm sure they are making at least $5/hour less than those whom they replaced. 

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Re: Google Searchers obsessed with Dollar Collapse

"Has anybody on this site lost their job or knows anybody in their immediate group of family or friends who are have lost their jobs?"

I am a solo law praticioner and am more and more grateful every day...that I have no employees. I have watched a number of paralegals and attorneys in my building get laid off or have their hours cut. I have watched attorney practices shrink. I know folks in big firms that have had to let go every single one of their first year hires. I started practice in 91 which was one of the worst first year years in years...but that was nothing like today. One of my favorite (and brightest) attorneys in the office practices construction litigation and we joke that right now he has lots of work...because no one is paying anyone...but soon it will all dry up cause nothing is being built...and nothing's on the horizon. There's very little to bid on and none of the contractors can get loans.

luckily(?) I practice criminal law which is actually growing for two reasons. The government is leaning heavier on people and actually charging more petty things. The criminal fines for even the most minor offenses are skyrocketing as well so are all the court filing fees and misc. The crimes are refocusing as well. I am seeing more and more desparate acts of theft by elderly people trying to survive...or pay medical bills.  I prosecuted for ten years before setting up a private practice and never saw this kind of desperation by individuals without a criminal record.  It's heartbreaking. I am still married into the other side and we have both seen an increase in domestic violence inthe "good neighborhoods" as the financial house of cards start to fall along with the patience and self control.   And I live in the puget sound which has so far weathered this economic nightmare a little better than some.

Newton Heath's picture
Newton Heath
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Re: Google Searchers obsessed with Dollar Collapse

Jasenica, all big corporate responses to external circumstances take time.

http://www.chinafinancialdaily.com/financial/news/2009/09/05/11743/shell...

Shell laying off many worldwide. Rumours 20%+ and this has started in earnest.

Not sure what this means to the search for solutions to our energy challenge.

Newton Heath's picture
Newton Heath
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Re: Daily Digest - October 23

Saxplayer, love your work and your witty 1 liner wrap-ups.

Keep it coming.

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saxplayer00o1
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Re: Daily Digest - October 23

(Continued from above..my edit time ran out. Thanks for the comment on page 1, Newton Heath)

"Oct. 23 (Bloomberg) -- Pension funds will increase gold holdings to acquire “financial insurance,” pushing prices higher as currencies drop, according to Shayne McGuire, director of global research at the Teacher Retirement System of Texas."

  • 14) Blogger asks who will be buying the debt after seeing next week's $121 billion auctions

(First here's the link to the $121 billion in new debt being auctioned next week and the end to the Fed's buying

 of long term treasuries)

"As the government continues to sell US Treasuries we have to ask the question who is going to purchase all of these bonds. Over the last few months the Federal Reserve Bank has been gobbling up these treasuries but that is going to change at the end of October. Ben Bernanke and the Federal Reserve Bank announced that they are going to stop buying treasuries by the end of the month.

If the Fed is going to stop buying treasuries this means that the foreign investors are going to have to step up. China and Japan are the biggest investors in US Treasuries but are they going to pony up the extra money that the Fed has been sinking into treasuries?"

"NEW YORK (Reuters) - Oil prices may surge to $100 a barrel sometime in the next two quarters as the U.S. dollar weakens against the euro, Deutsche Bank (DBKGn.DE)(DB.N) energy economist Adam Sieminski said Friday.

"We think the dollar could weaken further to $1.60 against the euro and it implies pushing oil prices to that threatening triple-digit level," Sieminski told Reuters."

"LAGOS, Nigeria, Oct. 23 (UPI) -- China has intensified its campaign to scoop up Africa's massive mineral resources, particularly oil, and Nigeria, a key supplier to the United States, is one of Beijing's main targets.

Major oil leases long held by U.S. and European oil companies such as Chevron and Royal Dutch Shell are up for grabs, and China's state-run oil corporations are putting up billions of dollars to take them over.

According to Forbes.com, the Chinese move "has huge ramifications for natural resource prices, not the least of which will be the cost of imported oil to the United States, and ultimately the stock market and economy.""

"Reporting from Beijing - A Chinese company's gambit to drill for oil in U.S. territory demonstrates China's determination to lock up the raw materials it needs to sustain its rapid growth, wherever those resources lie.

The state-owned China National Offshore Oil Corp., or CNOOC, reportedly is negotiating the purchase of leases owned by the Norwegian StatoilHydro in U.S. waters in the Gulf of Mexico, the source of about a quarter of U.S. crude oil production."

 

......Not much we can do about it, but the Chinese are eating our lunch

CrimsonAvenger's picture
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Re: Google Searchers obsessed with Dollar Collapse

I'm self-employed, and let my sole employee go last December. Not even thinking about hiring anyone else despite a full workload - if need be, I'll outsource some on a freelance basis, but no permanent commitments.

And you're not alone in feeling unheard. My wife refuses to even discuss the matter, preferring to believe instead that last fall was a bump on our linear path to a bright future. I think a lot of this relates to her not wanting to think about our kids having less opportunity and prosperity than did our generation, and I can sympathize with that. It's a helpless feeling. But it's ultimately harmful to ignore reality, and the best thing we can do for our kids is to structure our lives in a way that will give them security now and the knowledge and resources to succeed in the future.

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Re: Google Searchers obsessed with Dollar Collapse
Jasenica wrote:

Has anybody on this site lost their job or knows anybody in their immediate group of family or friends who are have lost their jobs?

People think I am crazy when I tell them that we are on the cusp of the 2nd Great Depression. Am I alone?

We have a wide range of clients from all sorts of wealth levels to all walks of life and a good variety of businesses. The ONLY ones who have an increase in traffic and I'm not sure the income is up with that traffic are the churches we service. Last time I saw this was right after 9/11.

Every business we service is on the ropes. Some weeks are good for them some aren't.

Many of our clients have lost their jobs, many more expect to go from part time to unemployed, most of these were full time workers and are now working 2 or 3 days per week. Even nurses are having their positions changed as wards close.

The retired folks we have are fearful of "inflation" and taking another hit to their pension and or 401k.

My wife sent the first business to collections after about 10 years of doing this. The funny thing was the business had us bill them for the work and materials and they collected our money from their client, then stuck us with a check that bounced. The owner of the business is likely going to have his house foreclosed, the government took his vehicles.

Other companies that have been around for 20 years closed up.

We are by UVA which, last I heard supports 6 out of 10. My neighbor is a car salesman - says nothing is moving since cash for clunkers. Another is a 777 captain and says the airlines are taking it on the nose. I think the only guy on the block doing really well is the financial planner. We have realtor's who are clients, they are awash in homes.

I don't think anyone I run into thinks the economy is doing well or likely to get better. Even the Obama supporters are tossing in the towel.

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Re: Google Searchers obsessed with Dollar Collapse
CrimsonAvenger wrote:

I'm self-employed, and let my sole employee go last December. Not even thinking about hiring anyone else despite a full workload - if need be, I'll outsource some on a freelance basis, but no permanent commitments.

My wife & I own our own biz (Pilates studios, 2 locations) and have 2 instructors that teach at 1 of our locations.  Due to a heinously slow Summer, we came within a week or two of letting them go -- "If biz doesn't pick up by 10/1..." -- but things have picked up pretty well in the last couple weeks.  

We've resisted such a move out of loyalty, but if we have to we have to.  But only as a matter of sheer survival as opposed to propping up some artificially-determined margin of profit.

Viva -- Sager

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Re: Daily Digest - October 23

Ditto Newton's comments, thanks Saxman! 

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jeaninedargis
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Re: Daily Digest - October 23

bad links fixed!

 

-jeanine

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Damnthematrix
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Re: Google Searchers obsessed with Dollar Collapse

"I think a lot of this relates to her not wanting to think about our kids having less opportunity and prosperity than did our generation"

This is all in the mind you know.....  One door shuts, another opens.  The future is full of NEW opportunities, change may look challenging, but it's often a good thing.  I wouldn't go back to my old lifestyle if you PAID me!

Mike

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JAG
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Re: Google Searchers obsessed with Dollar Collapse

Great find Joe, Thanks.... (PS: I'm not a big believer in the "wisdom" of crowds)

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Daily Digest - October 23

This is a nice short read.

 

Curtain Call for Inflationary Run

http://news.goldseek.com/GoldSeek/1256316120.php

horstfam's picture
horstfam
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Re: Six more banks closed- now over 100 for 2009

Here's the link for the list:

http://www.fdic.gov/bank/individual/failed/banklist.html

Iris's picture
Iris
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Re: Google Searchers obsessed with Dollar Collapse

I have observed employers across a whole spectrum of industries reducing hours and laying off workers.  This practice seems to be even more prevalent now than it was a few months ago.

Headless's picture
Headless
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Re: Daily Digest - October 23

It takes just one... to spoil the bunch; thanks for being the "one" Sax...

We're spoiled, as you've eloquently--and forebodingly--taken over where Davos left off; with just a bit more of a "list" that  more accurately (IMO) reflects where Das (American) Boat is a head'n.

As Chris recently said: Prepare! I say this with the perspective of someone who has taught children (of all ages) on four of the seven continents: American students have zero intellectual collateral in the global economy. We're fu*&ing stupid in context and don't have anything of value to offer the rest of the world. Period. Matter of time; we no longer matter.

 

nickbert's picture
nickbert
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Re: Daily Digest - October 23

Jasenica,

I came pretty close to losing my job a few months ago... some unforeseen cuts ended up having to be made and one position in the small team I just transferred to this spring (partly for greater job security, ironically enough!) was cut.  I was fortunate that one of my team had made the decision to retire early now, otherwise being the new guy I would have been
SOL and looking for a job.  The prevailing opinion is they can't possibly cut our team any further and I'm safe from further cuts, but I'm not taking anything for granted.  Other companies in the area are cutting even more.  Supposedly next year no cuts are planned, but that assumes no surprises.  Considering the times we live in, "assuming no surprises" doesn't fill me with the warm fuzzies.

- Nickbert

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rvwainscott
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Re: Daily Digest - October 23 - Lost Job

Greetings,

My wife and I both had to close our businesses last year and then move out of our home.  We lived in Phoenix, AZ and, as you can well imagine, things really took a turn for the worse last year.

I owned a commercial recording studio.  I was in my 9th year of business and had just finished a major upgrade to the facility when the credit crunch 100% shut me down.  I watched $40,000 in business vanish in September alone.  By the end of march I had closed my facility and was preparing for bankruptcy.  Industries that require you to be cutting edge have pretty high overhead costs and I knew it was silly to attempt to weather things out.

My wife sold high end designer furniture and had her own business as an interior designer.  I do not even need to tell you what happened to her last year.

We moved to California and we now live on a sailboat.  We work when we can but we've had to cut our expenses down quite a bit.  We're on this boat because it is quite self sufficient and all we need is some wind to push us around.

BTW, I stumbled on this site in the summer of '08.  I thought the crash course was put together really well so contacted my Martenson and volunteered to remaster and enhance the audio that is in the crash course.  Would love to have him redo it with myself as engineer.  The crash course will sound like a cross between the Movie Guy Voice and Charleton Heston reading the Bible.

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