Daily Digest

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Daily Digest 1/7 - Eurozone Economy Slows Further, Fracking's Future In Doubt

Wednesday, January 7, 2015, 10:46 AM

Economy

Fracking’s future is in doubt as oil price plummets

Fracking is an expensive business. Depending on site structure, companies need prices of between $60 and $100 per barrel of oil to break even. As prices drop to around $55 per barrel, investments in the sector look ever more vulnerable.

Fracking Triggered Scores of Small Ohio Earthquakes in 2014: Study

No earthquakes were ever recorded in this region of Ohio before fracking started, and the shaking stopped after the well was shut down, said lead study author Robert Skoumal, a graduate student in seismology at Miami University in Ohio. Skoumal and other Miami University researchers identified 77 earthquakes with magnitudes ranging from 1 to 3 that occurred from March 4 to 12.

How to avoid higher doctor fees in 2015

Whether you have company insurance, use the Affordable Health Care Exchange or are on Medicare, look for higher doctor and hospital costs in 2015.

Eurozone economy slows further

The eurozone economy has seen 18 months of continuous, albeit weak growth.

Markit said its latest PMI survey, which combines the results of individual surveys of the construction, services and manufacturing industries, suggested the eurozone economy grew by just 0.1% in the last three months of 2014.

European Bond Gains Send Yields to Record Amid Deflation Concern

Euro-area government bonds rose, pushing yields down to records across the region, amid speculation the risk of deflation will prompt the European Central Bank to introduce further stimulus, including sovereign bond-buying.
German 30-year (GDBR30) yields fell below 1.25 percent for the first time

U.K. corporate pension deficit nearly doubles in 2014; funding ratio drops to 85%

The aggregate deficit of the defined benefit plans of the U.K.’s largest 350 firms almost doubled over the year ended Dec. 31 to £107 billion ($162.2 billion), said a Mercer report.

Funded Status of U.S. Corporate Pensions Falls to 87.3 Percent, According to BNY Mellon ISSG

Public defined benefit plans, endowments and foundations also lost ground during the month, ISSG said.
For the typical corporate plan in December, assets decreased 0.4 percent as liabilities increased 2.5, according to the BNY Mellon Institutional Scorecard.

Dilemma over deductibles: Costs crippling middle class

It's a deep and common concern across the United States, where employer plans cover 60 percent of working-age Americans, or about 150 million people. Coverage long considered the gold standard of health insurance now often requires workers to pay so much out-of-pocket that many feel they must skip doctor visits, put off medical procedures, avoid filling prescriptions and ration pills — much as the uninsured have done.

For Some Russians, Mortgage Costs Soaring Due to Ruble Slide

That's because they are part of a minority of Russians who took out mortgages denominated in a foreign currency to take advantage of lower interest rates abroad. As Russia's currency collapsed in recent months, the cost of repaying those mortgages has gone through the roof.

Japan monetary base up 36.7% at Dec. end, tops BOJ goal amid easing

The monetary base posted a record high for the fifth straight month partly as a result of the central bank raising the pace of supplying funds after it decided to take additional stimulus steps in late October to enhance its efforts to meet its goal of lifting the inflation rate to 2 percent.

Gold & Silver

Click to read the PM Daily Market Commentary: 1/6/15

Provided daily by the Peak Prosperity Gold & Silver Group

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."

5 Comments

saxplayer00o1's picture
saxplayer00o1
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Time2help's picture
Time2help
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LesPhelps's picture
LesPhelps
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West Texas Fracking

Today, I drove from Ft Worth thru El Paso, right through Midland/Odessa and the Permian Basin oil play. 

Perhaps only people raised in Texas will find West Texas attractive, but I did, years ago.  I shouldn't have been, but I was blown away by the magnitude of the fracking industry I passed.  It wasn't only constant semis, carrying fracking supplies, but endless work trucks from pickup size on up.  Temporary RV parks have sprung up everywhere to house the RVs needed for the fracking work force.  I passed one rather run down utility quality travel trailer with a sign on it saying you can rent it for 400 per week.  There are oil wells everywhere, with power lines crisscrossing the plains.  Along the side of the road, an endless series of supply businesses have sprung up selling everything the industry might need.  The old oil wells have been scavenged for parts, with the useless stuff left in place.  All of the old tank farms still exist among the new tank farms.  Frankly, it's a mess.

I'm guessing, when the play is finished, all the businesses will move out and leave the buildings and infrastructure, power lines and wells in place for us to look at for the next 100 years.

Gas stations and restaurants are barely adequate to handle the new load.  Exit ramps occasionally have lines of cars and semis backed up waiting to go through the overpass stop light.

I can't imagine what the price tag would be to clean up the mess and put the land back the way it was, when the play is done, but I doubt that it is justified by the value of the oil extracted.

sand_puppy's picture
sand_puppy
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Helicopter Money Needed In Europe

to avert deflation.

As Time2Help just posted above, Der Spiegel, reports on the push for "Helicopter Mario" to mail checks to the homes of Europeans in hopes of stimulating spending.  This is almost exactly the scenario that I heard Chris predict at the Rowe Seminar 2.5 years ago.

It sounds at first like a crazy thought experiment: One morning, every resident of the euro zone comes home to find a check in their mailbox worth over €500 euros ($597) and possibly as much as €3,000. A gift, just like that, sent by the European Central Bank (ECB) in Frankfurt.

The scenario is less absurd than it may sound. Indeed, many serious academics and financial experts are demanding exactly that. They want ECB chief Mario Draghi to fire up the printing presses and hand out money directly to the people.

The logic behind the idea is that recipients of the money will head to the shops, helping to turn around a paralyzed economy in the common currency area. In response, companies would have to increase production and hire more workers, leading to both economic growth and a needed increase in prices because of the surge in demand.

ECB Has Lost Control

 

Currently, the inflation rate is barely above zero and fears of a horror deflation scenario of the kind seen during the Great Depression.

One thing, after all, is becoming increasingly clear: Draghi and his fellow central bank leaders have exhausted all traditional means for combating deflation.

And I must say, as a long time pp readers,  we know the reason that CB actions have not worked well:  Too Much Debt.  Consumers do not want additional loans.

The failure of these efforts can be easily explained. Thus far, central banks have primarily provided funding to financial institutions. The ECB provided banks with loans at low interest rates or purchased risky securities from them in the hope that they would in turn issue more loans to companies and consumers. The problem is that many households and firms are so far in debt already that they are eschewing any new credit, meaning the money isn't ultimately making its way to the real economy as hoped.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5695
too much debt

Wait, so the professional economists are just now coming to the conclusion that Chris came to on his own, and showed us all with a few modest charts seven years ago?

Geniuses.  They should get Faux Nobel Prizes for their fine work.  Debt actually matters.

Who knew?

Of course, free money won't solve the problem of too much debt.  If people spend that new money on stuff, they will still be in debt after the free money runs out.

Perhaps after another six years and eight money drops later, they'll come to the conclusion that maybe its time to address the overindebtedness issue, and a bunch more of them will receive Faux Nobel Prizes for their amazing work.

Geniuses.

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