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    Daily Digest – Jun 17

    by Davos

    Wednesday, June 17, 2009, 3:14 PM

  • Southern Europe
  • Housing Starts Soar, Surge in Home Construction (Yeah, See Chart)
  • And here’s Cramer’s Housing Call (H/T JoeManC)
  • Introduction to “Broke: The New American Film" (Video, Repost)
  • Global Oil Reserves Fell in 2008 on Russia, Norway, Says BP (Crash Course Vidoe Featured in Article)
  • Uhhhhh…. Ben? (Blatantly Unlawful Acts?, H/T Patrick)
  • Listen up Greenshoot tokers
  • Numbers racket: Why the economy is worse than we know (From 2008)
  • Limits to inflating away debt and political commitments to future public spending (H/T Suzie)
  • Rural Mich. counties turn failing roads to gravel (H/T DamnTheMatrix)
  • Proof: Silver is MONEY
  • Sunday Funnies (Please don’t watch Denny’s (Last video) if you don’t like strong language)
  • Gold to Go, (H/T Fujisan)

Economy

Southern Europe 

Ladies and Gentlemen, Hugh is describing a return to something like the global crunch conditions of September and October, with the epicenter moving from New York to Barcelona.

If he is right and Latvia becomes the trigger event for a cascade that swamps not just Baltic backwaters but Greece and Spain…Iceland’s GDP was $12bn. Latvia’s GDP is around $36bn. Greek GDP is $350bn. Spanish GDP is $1.4tn. That is a completely different ballgame, and the global exposure to problems of this scale is likely to be made blindingly obvious from the get-go.

And of course any threat of a run on national-level "massive external financing requirements" leads one’s thoughts directly to the United States, which remains as ever extremely reliant on foreign-sourced funding for its banking system.

Housing Starts Soar, Surge in Home Construction (Yeah, See Chart)

And here’s Cramer’s Housing Call (H/T JoeManC)

Introduction to “Broke: The New American Film" (Video, Repost) 

Global Oil Reserves Fell in 2008 on Russia, Norway, Says BP (Crash Course Video Featured in Article)

Don’t forget Peak Oil.

Take the Crash Course.

Uhhhhh…. Ben? (Blatantly Unlawful Acts?, H/T Patrick)

Props to Zerohedge for having the #### to run this unconfirmed:

Which is why we were greatly troubled when we learned recently on good authority that Federal representatives may have opened multiple undisclosed-type accounts with none other than State Street Global Advisors over the past few months. All of these accounts are allegedly handled by one single trader, who is cocooned and isolated from interaction with other partners.

Zero Hedge can, as of yet, not vouch for this being 100% factual and is asking readers who may have additional knowledge of the situtation to please come forward and share their views ([email protected]). If, indeed, the Federal Reserve or other derivatives of the administration, are now directly involved in trading, managing repo terms, stock lending, collateral distribution and other liquidity-crucial aspects of what was once an efficient market, then indeed this rally could be written off not merely as the biggest short covering rally of all time, but one that has been explicitly orchestrated by those who should be most impartial to an efficiently working market.

Uh, there’s a bit more than just "writing off this rally" there.

If this is true and especially if The Fed is involved, there is a major problem with the law.

See, The Federal Reserve is explicitly not permitted to buy anything that doesn’t have the full faith and credit of The US Federal Government behind it. It is that fact (found in Sections 13 and 14 of The Act) that has led me to repeatedly rant about The Fed’s purchase of Fannie and Freddie paper – distinctly outrageous acts, given the plain language of the law. (Note that purchase of Ginnie Mae securities, which are fully guaranteed with full faith and credit, would be fine. Note also that Ginnie Mae didn’t get in trouble fiscally either. Hmmmm….)

(More)

Listen up Greenshoot tokers

How’s that for fundamental analysis? Did I mention the mathematically impossible numbers of DEBT? LOL, let’s look at the charts and focus on the volume…

Numbers racket: Why the economy is worse than we know (From 2008)

Almost four decades have passed since the United States scrapped its last currency ties to precious metals. Our copper and nickel coinage still retains some metallic value, but not nearly enough for the purpose of currency tampering—the historic temptation of inflation-plagued or otherwise wayward governments, including, at times, our own. Instead, since the 1960s, Washington has been forced to gull its citizens and creditors by debasing official statistics: the vital instruments with which the vigor and muscle of the American economy are measured. The effect, over the past twenty-five years, has been to create a false sense of economic achievement and rectitude, allowing us to maintain artificially low interest rates, massive government borrowing, and a dangerous reliance on mortgage and financial debt even as real economic growth has been slower than claimed. If Washington’s harping on weapons of mass destruction was essential to buoy public support for the invasion of Iraq, the use of deceptive statistics has played its own vital role in convincing many Americans that the U.S. economy is stronger, fairer, more productive, more dominant, and richer with opportunity than it actually is.

The corruption has tainted the very measures that most shape public perception of the economy—the monthly Consumer Price Index (CPI), which serves as the chief bellwether of inflation; the quarterly Gross Domestic Product (GDP), which tracks the U.S. economy’s overall growth; and the monthly unemployment figure, which for the general public is perhaps the most vivid indicator of economic health or infirmity. Not only do governments, businesses, and individuals use these yardsticks in their decision-making but minor revisions in the data can mean major changes in household circumstances—inflation measurements help determine interest rates, federal interest payments on the national debt, and cost-of-living increases for wages, pensions, and Social Security benefits. And, of course, our statistics have political consequences too. An administration is helped when it can mouth banalities about price levels being “anchored” as food and energy costs begin to soar.

The truth, though it would not exactly set Americans free, would at least open a window to wider economic and political understanding. Readers should ask themselves how much angrier the electorate might be if the media, over the past five years, had been citing 8 percent unemployment (instead of 5 percent), 5 percent inflation (instead of 2 percent), and average annual growth in the 1 percent range (instead of the 3–4 percent range). We might ponder as well who profits from a low-growth U.S. economy hidden under statistical camouflage. Might it be Washington politicos and affluent elites, anxious to mislead voters, coddle the financial markets, and tamp down expensive cost-of-living increases for wages and pensions?

(More)

Limits to inflating away debt and political commitments to future public spending (H/T Suzie)

In response to my previous blog, “The fiscal black hole in the US”, ‘Peter’ makes the comment that much of the unfunded ‘liabilities’ under social security and Medicare are index-linked and cannot be inflated away. This is an important point. Inflation reduces the real value of nominal liabilities. If these nominal liabilities are interest-bearing, and have fixed market-determined interest rates that mas or menos reflect the rate of inflation expected at the date of issuance of these liabilities over the maturity of the liability, then only actual inflation higher than the inflation expected at the time of issuance actually reduces the real value servicing that liability. If longer-maturity nominal debt instruments are floating rate securities, whose variable interest rate is linked to some short-term nominal rate benchmark, it becomes very difficult to inflate the real burden of that liability away.

Rural Mich. counties turn failing roads to gravel (H/T DamnTheMatrix)

LANSING, Mich. (AP) – Some Michigan counties have turned a few once-paved rural roads back to gravel to save money.

More than 20 of the state’s 83 counties have reverted deteriorating paved roads to gravel in the last few years, according to the County Road Association of Michigan. The counties are struggling with their budgets because tax revenues have declined in the lingering recession.

Montcalm County converted nearly 10 miles of primary road to gravel this spring.

The county estimates it takes about $10,000 to grind up a mile of pavement and put down gravel. It takes more than $100,000 to repave a mile of road.

Reverting to gravel has happened in a few other states but it is most typical in Michigan. At least 50 miles have been reverted in the state in the past three years.

Proof: Silver is MONEY (Video)

Sunday Funnies (Please don’t watch Denny’s (Last video) if you don’t like strong language)

Gold to Go, (H/T Fujisan)

GOLD To Go! Unser Automat ist in der Standardversion mit Goldbarren von 1 Gramm befüllt. Alternativ können auch Größen von 5 und 10 Gramm, sowie Goldmünzen bezogen werden.

Zum aktuellen Tagespreis, auch realtime möglich, bekommt der Kunde bereits ab 31 Euro (Tagespreis 28.05.2009) ein Goldstück von 1 Gramm, incl. einer Geschenkbox.

Ca. 20 % billiger als ein vergleichbarer Einkauf bei einer deutschen Bank am Schalter. Und die Geschenkbox ist gratis.

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