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    Daily Digest 3/25 – Another Year Of Living Dangerously, Euro Collapse ‘Not Unthinkable’, The Next Leg Down In House Prices

    by DailyDigest

    Friday, March 25, 2011, 2:41 PM

  • Global Economy: Another Year Of Living Dangerously
  • Euro’s Collapse Is Not Unthinkable: Warren Buffet
  • Surf Warning: Tsunami To Lift Gold
  • Gold Prices Rise After The Nuclear Crisis Of Japan
  • Gold Futures Soon Will Set New Record Highs, Fund Manager Says
  • Automakers Still Reeling From Japan Quake
  • America’s Property Market: On A Losing Streak
  • Phase Shift: The Next Leg Down in House Prices
  • A Nation Of Dropouts Shakes Europe
  • Britain’s £200bn Time Bomb Of Debt Interest
  • IMF Prepares For “Threat To International Monetary System” 
  • Prepare For Lengthy Power Shortage
  • Sharjah Ruler Demands Action To Prevent Summer Power Cuts
  • Japan Nuclear Plans Derailed, Fossil Fuel Use To Stay High For Years
  • Japan Steps Up Nuclear Plant Precautions; Kan Apologizes

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Economy

Global Economy: Another Year Of Living Dangerously (jdargis)

This was supposed to be a stress-free year for the global economy. By January the financial crisis had faded and Europe’s sovereign-debt crisis seemed less acute. America’s economy was resurgent. Investors piled into equities and sold some of the government bonds they’d bought for troubled times. If there was a worry, it was that emerging economies would grow too quickly, inflating commodity prices.

Euro’s Collapse Is Not Unthinkable: Warren Buffett (Dana T.)

“You can’t have three or four or five countries that are in effect free-riding on the other countries. That won’t work over time-they have to get their fiscal houses in reasonable harmony,” he said.

The widely-watched investor spoke as yields on Portuguese bonds soared to new highs and markets remained alert for a potential European Union bailout of the troubled nation. Late Wednesday, Portugal’s prime minister stepped down after the country’s parliament rejected a fiscal austerity plan proposed by his government.

Surf Warning: Tsunami To Lift Gold (Claire H.)

The news stories out of Japan focus 98% on their Fukushima nuclear complex, with hardly a peep about the long list of other economic and financial effects. This article will focus on what they leave out, dutifully reporting amidst the purposeful new vacuum in a grand distraction.

Gold Prices Rise After The Nuclear Crisis Of Japan (Alfredo E.)

Not only because of Japan’s nuclear crisis, the price of gold have been rising for quite some time now. Spot gold traded for $1374.43 an ounce in the first part of February, thus representing a 1% gain from that of the previous week’s level. Moreover, gold has also been outperforming silver for some time now.

Other than this, the World Gold Council also believes that China’s demand for investment in gold may even rise between 40% and 50% in this year (2011) itself. With the inflation in Asia and the other parts of Europe still running quite high, investors are more likely to continue viewing gold as the most attractive asset.

Gold Futures Soon Will Set New Record Highs, Fund Manager Says (Alfredo E.)

Intensifying demand from Middle Eastern, Japanese and Chinese investors is likely to push gold futures beyond record prices set earlier this month as central banks will complement circumstances by fomenting hyper-inflation, the large fund’s manager said.

Automakers Still Reeling From Japan Quake (Alfredo E.)

Toyota says it will probably idle a truck plant in Texas because it can’t get enough parts, according to Reuters. “It is likely that we will see some nonproduction days coming,” a spokesman said. “At this point, we are still not sure of when those might hit or, if they do it, what the duration may be.”

America’s Property Market: On A Losing Streak (jdargis)

The signs of the crash are everywhere in Las Vegas. The city’s outer suburbs are eerily quiet, thanks to the preponderance of unsold and foreclosed homes. There are few lights in any windows, and few cars on the roads. Banners and boards advertising hugely discounted housing flap and rattle mournfully in the desert wind. In North Las Vegas every second house on some streets carries a “For Rent” sign, offering rates of as little as $150 a month. One or two houses on each street have been boarded up and abandoned. Even on the city’s famous “strip” of cavernous casinos and high-rise hotels, the razzle-dazzle is marred by the grey concrete hulks of abandoned building projects.

Phase Shift: The Next Leg Down in House Prices (pinecarr)

Sales of new homes tumbled 16.9% in February from the prior month to a seasonally adjusted annual rate of 250,000, the lowest level since the series began in 1963.

The median price for a new home sold in February fell 13.9% from the prior month to $202,100, the lowest since December 2003.

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A Nation Of Dropouts Shakes Europe (Phil)

Ms. Fernandes lives in a poor suburb near the airport. She doesn’t work. Employers, she says, “are asking for higher education.” Even cleaning jobs are hard to find.

Portugal is the poorest country in Western Europe. It is also the least educated, and that has emerged as a painful liability in its gathering economic crisis.

Britain’s £200bn Time Bomb Of Debt Interest (pinecarr)

One of the biggest shockers from the detail of Thursday’s OBR assessment is the escalating amount of money going straight down the drain of debt servicing costs. As public debt rises, these payments rise from £30.9bn last year to £66.8bn in 2015/16, or from 4.6pc to 8.8pc of all government spending.

Worse, these numbers are an understatement of the true position.

IMF Prepares For “Threat To International Monetary System” (pinecarr)

As if the IMF’s trillions in open lending facilities (many of which have recently been adjusted to uncapped) were not enough, we now learn that the world lender of last resort (which in theory is the Fed, but apparently Bernanke has been getting a little shy lately so is offsetting his direct lending directives to secondary organizations like the IMF, leaving the Fed with only USD liquidity swaps) is about to activate a “Special Funding Pool” – Dow Jones explains: “The International Monetary Fund is expected to soon activate a special funding pool that will boost the fund’s ability to prevent or resolve economic crises, two people familiar with the situation said Thursday. One of the people said the activation of the funding–which can only be made by a special request from the IMF managing director to the board–was in anticipation of an expected wave of new IMF programs, including the possible expansion of the Greek bailout package.”

Energy

Prepare For Lengthy Power Shortage (guardia)

Planned blackouts in areas supplied with power from TEPCO began March 14. There was great confusion at first, partly due to inadequate explanations by TEPCO. Ten days have passed since then and problems remain, but the situation is stabilizing.

TEPCO plans to conclude its planned power outages by the end of April, when supply is expected to meet demand. But a worrisome situation is expected in summer.

Sharjah Ruler Demands Action To Prevent Summer Power Cuts (pinecarr)

The ruler of Sharjah has met with power chiefs in a bid to ensure the power cuts suffered by thousands in the emirate last summer are not repeated this year.

Japan Nuclear Plans Derailed, Fossil Fuel Use To Stay High For Years (guardia, login required)

With radioactivity above permissible levels in some areas outside the 20-kilometer evacuation zone around Tokyo Electric Power Co.’s (9501.TO) earthquake-hit Fukushima Daiichi nuclear complex, and the nation gripped by fears of contamination including in tap water in Tokyo, several reactor restarts and new building projects have already been pushed back.

Environment

Japan Steps Up Nuclear Plant Precautions; Kan Apologizes (guardia)

People living within 12 miles of the plant have been evacuated, yet those living between 12 and 18 miles of the facility have been told it is safe to remain as long as they stay indoors. But two weeks after a massive earthquake and tsunami struck the country and hobbled the plant, causing radiation to leak, the situation has yet to be resolved.

“It has become increasingly difficult for goods to arrive, and life has become harder,” Chief Cabinet Secretary Yukio Edano said at a news conference.

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