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Daily Digest 7/21 - Rooftop Turbine Could Make Wind Farms A Reality, TX Groundwater In Danger

Saturday, July 21, 2012, 11:36 AM


2 Signs Showing The Next Recession In The U.S. Is Underway (David B.)

#1 U.S. retail sales have declined for three months in a row, and that is a very bad sign. Retail sales in America have fallen three months in a row only 27 times since 1947. In 25 of those instances, the U.S. economy was either “in a recession or within three months of a recession.”

Mainstream Media's Demise as a Check on Corruption: Tom Cruise and Katie Holmes' Divorce Crushes LIBOR Scandal Coverage (Jaime)

It is disheartening to have front row seats to the real-time rewriting of history. But that is what our media is engaged in right now - diminishing the importance of systemic issues of corruption, in favor of fluff, gossip, and a never-ending parade of stupid pet tricks. There are exceptions, but the trend is unmistakably to inanity, compromised storytelling masquerading as journalism, and outright fantasy. The ultimate victims of this trend: justice, free markets, and democracy.

London Trader - The LBMA Gold Price Fixing Scheme Is Over (Thomas C.)

“This tells me there is something major that is happening behind the scenes. It tells me that the LBMA’s price fixing scheme is coming to an end. You have these naked short positions, that are incomprehensible to most people, in both gold and silver...

I Admit It, I Was Wrong About Regulation (Arthur Robey)

But since the regulations were there to protect the firm's clients (and Russ was there too, to protect his clients and his business), and the necessary deposits that should have been there to readily count as part of examinations into the firm's capital, and stupid stuff like that, weren't there... well, Russ did the only thing he could. He fooled those stupid, onerous regulators by lying to them and saying he had money in drawer number two. In fact, he actually took monies from drawer number one (that one was marked "client money") to put into drawer number two.

Of course, the regulators - being as adept as they usually are - didn't really look into drawer number two. Russ actually fabricated a daisy chain mailing scheme to send them a note that said, don't look in drawer number two, let this note to you idiots be all the proof that you need that what I say is in drawer number two is really in drawer number two.

That Sinking Feeling About Groundwater In Texas (Jeff B.)

Farmers in the District draw from the Ogallala Aquifer, a vast underground water reserve that supplies portions of eight states and waters 27 percent of the nation’s irrigated cropland. Since much of the aquifer gets little recharge from rainfall today, rising rates of pumping have led to steady depletion. According to the U.S. Geological Survey, a volume of groundwater equivalent to two-thirds of the water held in Lake Erie has been depleted from the Ogallala since 1940.

Tiny Rooftop Turbine Could Make Urban Wind Farms A Reality (safewrite)

"The traditional wind farm models are just not effective and are certainly not suitable for urban environments." Dr Scott Elliott, CEO of McCamley UK Ltd said in a press statement, "This leaves a huge gap in the market where businesses, residential blocks and other organisations could be benefiting from clean energy. We believe that this design has the potential to be the new face of wind energy and is completely scalable, from 12kW designs to larger megawatt designs."

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."


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Six Spanish Regions May Seek Bailout After Valencia, Pais Says

"The Balearic Islands and Catalonia are among six Spanish regions that may ask for aid from the central government after Valencia sought a bailout, El Pais reported.

Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to tap the recently created emergency-loan fund that Valencia said it would use yesterday, the newspaper said, without citing anyone.

Spain created the 18 billion-euro ($23 billion) bailout mechanism last week to help cash-strapped regions even as its own access to financial markets narrows. "

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Why Is The Fed Not Printing Like Crazy? - Aziz

Sounds plausible.



One thing that the anti-Fed side of the economics blogosphere seems to not fully appreciate is the depth of disappointment with Ben Bernanke from the pro-Fed side. For every anti-Fed post bemoaning Bernanke’s money printing, there is a pro-Fed post bemoaning Bernanke for not printing enough. Bernanke, it seems, is tied to everybody’s whipping post.

And in fairness to the pro-Fed side, the data shows that the Fed is not printing anywhere near as much as its own self-imposed interpretation of its mandate demands. (Of course, I fundamentally disagree that price stability should be interpreted as consistent inflation, but that is an argument for another day).

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Jim H
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Aziz makes some good points...

Like Doug, I found the referenced Aziz piece thought provoking... but my question is this;  How does the FED continue to control interest rates on the long maturity end once twist is done?  The longer end dictates the mortgage rates...  and the very low rates have, while not stimulating anything I would call a recovery..certainly stabilized the real estate markets to some degree, along with the banks that own the underlying paper.  Twist can't go on forever... eventually the FED runs out of shorter term paper on their balance sheet.. nothing left to flip into the, "flight to safety" market.  Can the interest rate swaps that Jim Willie speaks of help keep rates down?  I don't understand that mechanism well enough to comment,, but I don't think that can work in perpetuity either.  My contention is that the FED will, by year end 2012, need to announce another program aimed at the long end/mortgage securities in order to keep the lid on these interest rates.  If the FED put is not in place... who in their right mind will loan the US money for 30 years at record low interest rates that one could argue (John Williams of Shadowstats) are at negative real yield?           

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Arthur Robey
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Lauren Lister & Prof. Carleta Perez

Professor Corleta Perez agrees with Prof. Steve Keen. The money should be given to the people.

She also argues that we are in a cycle. The next phase is where people are driven down. This process will take 30 years. Eventually the unstoppable anger of the people overcomes the immovable obstacle of big business and there is a radical policy change from Government.

She also talks of an innovation as part of the cycle. No prizes for guessing what.

Two charming women.

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Arthur Robey
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Thanks Thomas C.

Thanks Thomas C. You hit the jackpot there. Something written in a style that I could understand.


Chinese et al are offloading funny money, buying tangibles. Funny money banks had to offload gold and silver in a rush to cover their ass liabilities. This selloff caused the recent weakening of Gold and silver.

Gold gets up-graded to a tier1 asset removing all risk.(Becomes money again). But (Roll drums) there is no gold in vault to back paper promises. Oops!

I see gold to silver ratio is still 50:1. Why?

Question. Does this sound like a beat-up? Someone talking their book? I think not, but then I am gullible.

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steve from virginia
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Central banks 'printing money'


They don't ... they can't. If they did they would die (along with the rest of the credit system). Central banks are collateral- or balance sheet constrained.


'Printing money' = creating funds in excess of what currently exists = making unsecured loans = increasing leverage.


Commercial banks and credit functionaries in the private sector 'print money' (credit). Inflation comes from the private sector. (Hyper-inflation is something completely different, a currency arbitrage.)


The central bank is like a pawnshop, it can make a loan but only if the borrower hands over the Rolex watch. The pawnshop will offer $500 for the $5,000 watch but never $50,000. It has no capital and cannot survive if the borrower does not repay. Instead, assets and liabilities (at face price) always balance. The central bank does not require capital (and generally does not carry any, central banks do not 'turn a profit' or retain earnings).


If the central bank is tempted to act there are two conditions: a) money-good assets are mispriced by a market that is temporarily flooded by too many assets for sale, OR. b) The central bank's clients are  insolvent because have made improper unsecured loans/have over-leveraged themselves.


With a) the central bank provides credit against good collateral that the market cannot provide. (Bagehot)


With b) the debt must be repudiated ('restructured'). There is no other way: if private sector cannot/will not provide credit to itself on an ongoing basis one banker certainly cannot do so. The gigantic credit system will crush the puny bank with its limitless demand.


Central bank leveraging would put it into the identical financial state as its bankrupt clients, it would cease to be a central bank! It would become insolvent, itself: there would then be no lender of last resort. The perception of no lender of last resort would result in bank runs by depositors.


That there are bank runs now in Europe, China and elsewhere indicate that central banks are already perceived to have made- or are making unsecured loans (see, ESM 'banking license'). There are no lenders of last resort.


This is why central bankers tremble, they have no other choice. Behind the lenders of last resort there is the abyss.


 - good collateral is already committed or closely held.

 - remaining collateral is worthless and good collateral becomes bad by knock-on and margnal effects.

 - Perception of system insolvency with central banks as no-different from commercial banks.

 - Central banks recycle rather than create new: balance sheets expand as private sector sheets contract the same amount: see Japan and 20 years of monetary 'easing'.


thanks, steve

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