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    Daily Digest 1/15 – Unprecedented Buying of Silver, Banks Loosen Purse Strings, Yuan Won’t Ease Inflation

    by DailyDigest

    Saturday, January 15, 2011, 4:00 PM

  • How to Fix Mortgage Mess in Three Steps: Laurence Kotlikoff
  • US Mint Reports Unprecedented Buying Spree Of Physical Silver
  • Copper Deficit May be 600,000 Tons, JPMorgan Says
  • Banks Loosen Purse Strings
  • China Lawmaker Says Yuan Appreciation Won’t Help Ease Inflation
  • Progress on Overhaul of Corporate-Tax Rules
  • Norway’s $186 Billion Gas Loss to Cement Russian Grip on Supply

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Economy

How to Fix Mortgage Mess in Three Steps: Laurence Kotlikoff (solidswede)



Much of these toxic assets, as well as many of Fannie and Freddie’s prime mortgages, aren’t performing or will likely default. Nationwide, 8 million mortgages — or one in 10 — are under water, with the property’s value at least 25 percent below what’s owed. The Federal Housing Financing Agency puts Fannie and Freddie’s losses at about $300 billion. But industry experts, like, Janet Tavakoli, suggest the real number is closer to $700 billion. And if home prices fall another 20 percent to return to their long-term trend, the tab might climb to $1 trillion.

US Mint Reports Unprecedented Buying Spree Of Physical Silver (suzie)



Three days ago we noted that in just the first week of January, the US Mint had sold 2,221,000 ounces of silver “a number which if run-rated would be an absolutely all time monthly record,” A quick glance at the tally today, shows that something very scary is going on. In the subsequent three days, the number has surged by 50% and has hit 3,407,000 ounces of silver! In just the first 12 days of the month we have already surpassed the total monthly sales of 9 separate months of 2010.

Copper Deficit May be 600,000 Tons, JPMorgan Says (solidswede)



Copper for delivery in three months in London advanced to a record of $9,754 a metric ton on Jan. 4 after rising 30 percent last year as the improving global economy and rising investment demand for commodities prompted buying. The International Copper Study Group is expecting a 435,000-ton global deficit in the refined metal this year.

Banks Loosen Purse Strings



Consumers were more willing to pull out their plastic. Credit-card usage was up 10% year-over-year. The bank issued 3.4 million new credit cards in the fourth quarter, up 4% from the same period a year earlier. “We see the consumer is getting stronger,” said J.P. Morgan Chairman James Dimon. He added that many Americans are still saving and paying down their debts, which he said will make them better borrowers.

China Lawmaker Says Yuan Appreciation Won’t Help Ease Inflation



Earlier this week, U.S. Treasury Secretary Timothy Geithner said the U.S. wanted yuan appreciation to move “more rapidly,” and tried a new argument. He discussed the larger change in the “real exchange rate”–that is, the exchange rate adjusted to account for the difference between China’s inflation, which now tops 5%, and the U.S. inflation rate of about 1%. By that lens, China’s real exchange rate is moving at an annual clip approaching 10%.

Progress on Overhaul of Corporate-Tax Rules



Some business executives at the meeting suggested a more lenient standard that could add somewhat to future budget deficits, but also would allow them to keep some existing tax breaks, according to industry officials with knowledge of the situation. A spokesman for Johnson & Johnson said company officials “welcome the opportunity to work with the administration and Congress to achieve corporate tax reform in a fiscally responsible manner that promotes economic growth and employment opportunities in the U.S.”

Norway’s $186 Billion Gas Loss to Cement Russian Grip on Supply (solidswede)



Europe’s second-largest supplier yesterday cut its estimate for gas yet to be discovered by 31 percent, or 570 billion cubic meters. That’s equal to more than five years of production at current rates and would be valued at about $186 billion based on today’s prices at the U.K’s trading hub. “This will rack up the pressure on the European Union to develop and secure access to reliable energy,” Thina Saltvedt, an analyst at Nordea Markets in Oslo, said by e-mail. “The EU will be forced to increase imports from the Middle East and Africa to compensate for and reduce Russia’s domination.”

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