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    Daily Digest 12/12 – Why OPEC Will Win, Pentagon Preparing For Mass Civil Breakdown

    by DailyDigest

    Friday, December 12, 2014, 4:03 PM


$550 Billion Energy Junk Bond Bubble Busts; “Whac-A-Mole” Distortions in Multiple Markets (adam)

The Fed is responsible of course, by holding interest rates at record lows, stimulating all sorts of speculative investments. But it’s exceptionally rare to see anyone in mainstream media point the finger in the right direction. Today I have a notable and welcome exception.

Kudos to Bloomberg writers Christine Idzelis and Craig Torres for placing blame precisely where it belongs in their report Fed Bubble Bursts in $550 Billion of Energy Debt.

What Do They Know? CME Implements Gold, Precious Metals Circuit Breakers Up To $400 Wide (Time2Help)

At the commencement of each trading day, new Rule 589 will require the Exchanges to determine initial price fluctuation limits as levels above or below the previous day’s settlement price for lead-month primary futures contracts. There are three primary COMEX metals futures contracts and two primary NYMEX metals futures contracts. These contracts have the largest and most liquid metals central limit order books on CME Globex or are considered separate and distinct stand-alone products on an outright basis. The lead-month contract, as determined by the Exchanges, will typically be a primary contract’s most actively traded futures contract month.

What’s in the spending bill? We skim it so you don’t have to (jdargis)

The bill would dramatically expand the amount of money that wealthy political donors could inject into the national parties, drastically undercutting the 2002 landmark McCain-Feingold campaign finance overhaul. Bottom line: A donor who gave the maximum $32,400 this year to the Democratic National Committee or Republican National Committee would be able to donate another $291,600 on top of that to the party’s additional arms — a total of $324,000, ten times the current limit.

Cromnipass: US Government Secures Funding Through September 2015 After Passage Of Spending Bill (pinecarr)

And with that, Wall Street wins again because with the swap pushout rule, a few hundred trillion in derivatives will get taxpayer backing.

Pentagon preparing for mass civil breakdown (jdargis)

Among the projects awarded for the period 2014-2017 is a Cornell University-led study managed by the US Air Force Office of Scientific Research which aims to develop an empirical model “of the dynamics of social movement mobilisation and contagions.” The project will determine “the critical mass (tipping point)” of social contagians by studying their “digital traces” in the cases of “the 2011 Egyptian revolution, the 2011 Russian Duma elections, the 2012 Nigerian fuel subsidy crisis and the 2013 Gazi park protests in Turkey.”

New Leak Reveals Luxembourg Tax Deals for Disney, Koch Brothers Empire (jdargis)

Other companies appearing in the newest leaked files include Hong Kong-based conglomerate Hutchison Whampoa, private equity firm Warburg Pincus, and Internet phone giant Skype. One of the Skype files relates to a restructuring in which Internet mega-marketer eBay sold a controlling stake in Skype to private investors. Skype, based in Luxembourg, is now a division of Microsoft.

“Microsoft adheres carefully to the laws and regulations of every country in which we operate,” the company said in an emailed statement.

Falling oil threatens Canada’s bulletproof banking system (Mike K.)

“In this context, the risk to Canadian banks doesn’t stem necessarily from a narrow view of loans to oil companies, but more from a broad macro risk perspective. As employment in the oil industry declines, a negative income and wealth shock to many households will take place, impacting a variety of loans (credit card, mortgage) on Canadian bank balance sheets.”

Oil Wars: Why OPEC Will Win (Mike K.)

Keeping these results in mind we will now move on to the OPEC countries. They have two different production costs. One is the cash production cost, which is usually much lower than the cash production cost in US shale plays. The other is the “budget breakeven” cost, which is the oil price needed to cover production costs plus social spending and which is usually considerably higher than the cash production cost in US shale plays. Figure 2, which superimposes the approximate 95% range of US shale play production costs (from Figure 1) on 2012 OPEC production and budget breakeven costs, summarizes the situation.

How The U.S. Could Beat OPEC But Won’t (Mike K.)

The easiest way to achieve the floor price, of course, would be to slap a sliding tariff on imported oil. The formula for such a tariff would be simple: The floor price minus the price of imported oil unless the price of imported oil equals or exceeds the floor price, in which case, the tariff would be zero. Imposing a tariff that keeps U.S. oil prices above, say, $100 per barrel would only return the domestic price of gasoline and other refined products to their level of just six months ago. Presumably, that wouldn’t be much of a shock to consumers.

Understanding intestinal microbiota to regain balance in the gut (Arthur Robey)

Donors need to meet stringent requirements, including not having school-aged children, not traveling internationally, and not having taken any antibiotics for at least one year; the sample is screened for HIV/AIDS, hepatitis, STDs, parasites, and more. Patients are offered the option of having a family member screened for donor eligibility, but few have requested this after the standardized donor program was started.

Pathology residents Ryan McCormick and Drew Davis are two of Emory’s donors.

Growing concern over methane from ocean floor (thetallestmanonearth)

In a paper to appear in the publication Geophysical Research Letters, University of Washington oceanographers Evan Solomon, Susan Hautala, Paul Johnson and others are trying to measure just how much methane is emitting off the ocean floor just off the coast of Washington state. Their estimate is that just one year of methane is comparable to the amount of natural gas emitted during the 2010 Deepwater Horizon well blowout in 2010, also known as the BP oil spill.

Gold & Silver

Click to read the PM Daily Market Commentary: 12/11/14

Provided daily by the Peak Prosperity Gold & Silver Group

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