Daily Digest

Daily Digest - September 1

Tuesday, September 1, 2009, 9:53 AM
  • How American Health Care Killed My Father (H/T C Peters, MD)
  • China “Serious About Plan To Internationalise” Yuan
  • (CM, China Motors) GM to form China venture, Invest $293 Million
  • An Ill Wind Blows From Japan (H/T Doug)
  • ICN News (Video)
  • Bank Leverage: Forever Blowing Bubbles Part Two (Video on page)
  • The (Intentionally) Misleading Mainstream Media
  • U.S. created 2 MILLION jobs in August, claim “experts”
  • The Metastasis of Moral Hazard and its Effect on Gold
  • Commercial Real Estate Lurks as Next Potential Mortgage Crisis
  • From Barry Ritholtz's site, Creative Accounting Accidently Included on NZX Statement

Economy

How American Health Care Killed My Father (H/T C Peters, MD)

Almost two years ago, my father was killed by a hospital-borne infection in the intensive-care unit of a well-regarded nonprofit hospital in New York City. Dad had just turned 83, and he had a variety of the ailments common to men of his age. But he was still working on the day he walked into the hospital with pneumonia. Within 36 hours, he had developed sepsis. Over the next five weeks in the ICU, a wave of secondary infections, also acquired in the hospital, overwhelmed his defenses. My dad became a statistic—merely one of the roughly 100,000 Americans whose deaths are caused or influenced by infections picked up in hospitals. One hundred thousand deaths: more than double the number of people killed in car crashes, five times the number killed in homicides, 20 times the total number of our armed forces killed in Iraq and Afghanistan. Another victim in a building American tragedy.

China “Serious About Plan To Internationalise” Yuan

Chinese vice-premier Wang Qishan has been appointed to lead a taskforce to make the renminbi the currency of choice for trade settlements, especially with regional trading partners. HSBC economist Qu Hongbin believes this latest salvo in China’s intensifying efforts to ditch the dollar demonstrates the Chinese are moving sooner than most expect to internationalise their domestic currency.

Hu Xiaolian, vice-governor of the People’s Bank of China, is being enlisted to head the research division of the taskforce. Officials from six other central departments have also been drafted to the taskforce.

(China Motors) GM to form China Venture, Invest $293 Million

The 50-50 joint venture, based in the northeast China city of Changchun in Jilin province, will make light-duty trucks and vans, GM said in a statement.

An Ill Wind Blows From Japan (H/T Doug)

The DPJ has audacious goals in terms of social spending. One way to meet them could be to sell some or part of their US Treasury holdings to raise cash (oops!), which would have dramatic and immediate impact in our Treasury market. It could also do interesting things to the Yen/Dollar balance, but between that and trying to sell huge quantities of additional debt into the Japanese market, I suspect the former, rather than the latter, would be the wiser policy - for them.

More ominously a link-up between the Yen and Yuan, unthinkable with the former government, now looks possible. Create a basket-of-currency settlement system over in Asia with the Yen and Yuan as the core elements and the US immediately loses control of the game we've been trying to run with the banksters and fraud-laced credit games in the United States.

That which cannot continue forever won't, and I suspect we're about to get a lesson in reality from our friends over in Japan and China - a lesson we may not like at all.

Time is drawing short for The US to clear The Bezzle on a voluntary basis, lest we be forced to as a consequence of US Debt rejection by the Asian nations that have, thus far, enabled us to continue this charade.

ICN News (Video)

.

Bank Leverage: Forever Blowing Bubbles Part Two (Video on page)

Hence the phrase “liquidity is seeking return,” which Stephen Roach first used a few months ago.

From an Austrian School economics perspective, this is what would commonly be known as malinvestment. The excess liquidity being pumped into the system by the world’s central banks is inflation, pure and simple. This inflation is now manifest in the extraordinary rise of asset prices, particularly assets of lower quality and higher risk. However, eventually the fundamentals will re-assert themselves once the malinvestment is discovered. Let’s hope the economy is on sounder footing when this occurs.

One last thought: this policy response does seem very much like the 2001-2003 deflation-fighting campaign by the Federal Reserve which brought us the housing bubble – only on a grander scale. Are we forever blowing bubbles?

The (Intentionally) Misleading Mainstream Media

The government still faces potentially huge long-term losses from its bailouts of the insurance giant American International Group, the mortgage finance companies Fannie Mae and Freddie Mac, and the automakers General Motors and Chrysler. The Treasury Department could also take a hit from its guarantees on billions of dollars of toxic mortgages.

No really? Fannie and Freddie are a potential five trillion dollar bomb that the government has refused to take on its balance sheet for fear it may detonate on the US credit rating (yes, the rating of the NATION, not of a company.) This fear is not unfounded; with some 13% of all mortgages currently "non-performing" (either in default or foreclosure), a record, and a "cure rate" down from the 40% range to 6% for prime mortgages, there is every reason to believe that many of these losses will become realized.

“The taxpayers want their money back and they want the government out of our banking system,” Representative Jeb Hensarling, a Texas Republican and a member of the Congressional Oversight Panel examining the relief program, said in an interview.

The taxpayers aren't going to get their money back, and the government has done exactly nothing to force the disclosure of losses that are currently being hidden by accounting games and even outright fraud. Indeed, if anything, the government has encouraged and made possible even more games.

U.S. Created 2 MILLION Jobs in August, Claim “Experts”

Bear in mind that the same “experts” who are trying to get us to believe their obviously fraudulent numbers have already told Americans to expect a “job-less recovery”. In other words, we are supposed to believe that during this collapse the U.S. economy is creating twice as many jobs as during a normal downturn, but once the “recovery” starts, the economy will then produce far fewer jobs.

This is obviously utter nonsense.

The Metastasis of Moral Hazard and its Effect on Gold

Denial is a psychotropic, mind-altering drug that by comparison makes crack cocaine look like health food, and addiction to it shuts down the brain. America’s denial about its out-of-control spending, non-repayable debt, financial sector fraud and deceit, decadent political institutions, epic dereliction of leadership duty, fiscal and monetary immorality, and disastrously dishonest system of cronyism is leading the nation into an economic nuclear winter of desolation and chaos. Aside from Ron Paul, there is not one politician telling the people the truth about their oncoming debt enslavement and impoverishment; nor is there even one sign of constructive fiscal change on the horizon. Our visionless, gutless and greed-stricken leaders have transformed the United States into a cowardly new world.

Commercial Real Estate Lurks as Next Potential Mortgage Crisis

Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy

From Barry Ritholtz's site, Creative Accounting Accidently Included on NZX Statement

16 Comments

vinnya's picture
vinnya
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Re: Daily Digest - September 1

Any feed back on Igor Panarin

 

cipher's picture
cipher
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Re: Daily Digest - September 1

Does this mean that Chinese will be able the flip the story, if they can manage to convince other countries accept their currency for trade (which doesn't seem to be very difficult!) then US would be forced to make changes to its dollar value as comparison to Yuan?

 

sensei's picture
sensei
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Re: Daily Digest - September 1
vinnya wrote:

Any feed back on Igor Panarin

 

I see the secession of segments of the US as a possibility, but his assertion that these areas will be controlled by foreign countries isn't all that plausible without an overtly empirical war by Russia or China. 

 

 I think we are nearing that turning point where either government becomes less centralized (secession and/or reigning in of the federal government) or more centralized (North American Union /  UN taxing power etc...)  My hope is for the decentralization of power, but I really don't know which way the wind is going to blow.  In any case, our current federal system is unsustainable and I believe major change is inevitable within our lifetimes.

 

mono's picture
mono
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Re: Daily Digest - September 1

U.S. Created 2 MILLION Jobs in August, Claim “Experts”

If the world should blow itself up, the last audible voice would be that of an expert saying it can´t be done.

Peter Ustinov

 

I happily share Peter Ustinov`s view about those "experts" .

mono

Subprime JD's picture
Subprime JD
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Re: Daily Digest - September 1

No decentralization of power any time soon. More power in the fands of a few, as the rich get richer and the middle class gets wiped out. Welcome to the new feudal age!

Davos's picture
Davos
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Re: Daily Digest - September 1

And so it begins...preamble must be by a MachineHead relative (It is writeen that well!)

Check out this frightening post by bear's bear Tim Knight. He could well be right in his conclusions. Where I would take issue with him however is in his last word, 'jerks'. In its place I would insert 'hubris laden, power drunk bureaucrats who think they can micromanage every aspect of this once supposedly free market system for the good of the entire union of card carrying comrades'. In other words, jerks. Okay, I take no issue with him.

LINK

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - September 1

Interesting comments  from a deputy governor of the Bank of Japan:

"The world, he said, will not return to what it once was."

 

Finally, "don't assume" markets will return to where they were before the crisis, Nishimura said.

The "normalcy to which we are returning" is one in which rebuilding and restructuring are still underway, Nishimura said. The state of financial markets before the crisis "has been shown to be unsustainable," he said.

Ending his speech with what he described as something of an enigma for the audience, Nishimura said "we cannot undo what we have done."

"Most financial markets and economies have changed in an irreversible way," Nishimura said. "Now we have to be flexible enough to adapt to this new reality."

http://tinyurl.com/m6o5yy

 

Here's a little more info on what Japan is looking at in their domestic economy. Notice that their pensions

are coming up short (like they are here):

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6123107/Bond-vigilantes-fret-over-Japan.html

 

timG's picture
timG
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Re: Daily Digest - September 1

Does anyone out there think that our current civilaztion, as a whole planet, is in any way civilized, good, sustainable or justifiable?

I don't.

What do you think?

Davos's picture
Davos
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Re: Daily Digest - September 1
timG wrote:

Does anyone out there think that our current civilaztion, as a whole planet, is in any way civilized, good, sustainable or justifiable?

I don't.

What do you think?

+1

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
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Re: Daily Digest - September 1

Sorry about two consecutive posts.

 

Unemployment benefits running out and trust funds running dry:

http://www.bradenton.com/business/story/1672089.html

 

This one says that there are six job seekers for every job available. Interesting stories in there too

http://www.mcclatchydc.com/economy/story/74727.html

 

More info on commercial real estate defaults:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a9FRZ6ipJB8Y

 

Somebody said there are "green shoots" somewhere?

timG's picture
timG
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Re: Daily Digest - September 1

'civilaztion' should be CIVILIZATION! Sorry!

Davos's picture
Davos
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Re: Daily Digest - September 1
timG wrote:

'civilaztion' should be CIVILIZATION! Sorry!

Everyone else will see that but: Like I'd know the the difference Wink

Woodman's picture
Woodman
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Re: Daily Digest - September 1

 

Podcast interview of Ron Paul, on his bill to audit Federal Reserve and other stuff:

http://www.bloomberg.com/tvradio/podcast/cat_economics.html

 

Quercus bicolor's picture
Quercus bicolor
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Posts: 470
Re: Daily Digest - September 1
Davos wrote:

The Metastasis of Moral Hazard and its Effect on Gold

Denial is a psychotropic, mind-altering drug that by comparison makes crack cocaine look like health food, and addiction to it shuts down the brain. America’s denial about its out-of-control spending, non-repayable debt, financial sector fraud and deceit, decadent political institutions, epic dereliction of leadership duty, fiscal and monetary immorality, and disastrously dishonest system of cronyism is leading the nation into an economic nuclear winter of desolation and chaos.

Stewart Dougherty gives a very convincing argument that we've gone way too far down the path of unleashing moral hazard and the wave of waste, malinvestment and outright theft and fraud that it enables.  He concludes with an argument that gold is the only investment that is free of the huge risks brought on by all of this craziness.  In many ways, he's right.  But the argument is a bit myopic.  It stays boxed inside the box of traditional asset classes - stocks, bonds, cash, commodities and precious metals.  Gold certainly will help if everything comes  crashing down under the weight of all of this destructive and destabilizing craziness.  But so will self-reliance, community, a well-stocked storehouse, and the ability to be comfortable with and accepting of whatever comes to be - whether it is thriving in a simpler world or experiencing tremendous hardship and tragedy.

I think most of us here know that already.  But I also think we've all seen how easy it is to get caught up in too narrow a view of what it means to be prepared for an unknown future.

Steve

idoctor's picture
idoctor
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Posts: 1731
Re: Daily Digest - September 1

Roubini: China Won't Drive World Out Of Recession

http://www.cnbc.com/id/32642401

PS.  BURP.......still trying to digest my Mac..Geeeeeee this morning LOL!

Jeff Borsuk's picture
Jeff Borsuk
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Posts: 150
Re: Daily Digest - September 1

classic!

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