Daily Digest

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Daily Digest 1/30 - Economy Slowed in 4th Quarter, The Activity Gap

Friday, January 30, 2015, 11:51 AM

Economy

U.S. Economy Slowed in 4th Quarter, but Consumer Spending Boomed (jdargis)

Since the beginning of December, gas prices have fallen by roughly 50 cents a gallon across the country to just over $2 a gallon. Although energy prices had been edging lower since the summer, the steepening drop is already translating into more optimism amid consumers, and further savings are expected.

And with nearly 70 percent of gross domestic product coming from consumer spending, robust economic activity by individual Americans should more than make up for a more cautious stance on the part of companies over the coming year, experts said.

U.S. Economy Expanded Less Than Forecast in Fourth Quarter (jdargis)

Another report showed American consumer confidence reached an 11-year high in January as a strengthening labor market and plunging gas prices kept households looking on the bright side. The University of Michigan final consumer sentiment index rose to 98.1, the highest since January 2004, from 93.6 in December.

GDP estimates in the Bloomberg survey of economists for fourth-quarter GDP, the value of all goods and services produced, ranged from 1.8 percent to 3.6 percent. The GDP estimate is the first of three for the quarter, with the other releases scheduled for February and March when more information becomes available.

Jim Rogers: Advice on investing and how to become successful (Herman J.)

If you really have good judgment and if you are curious and can think independently, then chances are you’ll do well in the investment world,” says Rogers. However, he believes times have changed and people in the financial sector now have the wind in their faces rather than at their backs. “It’s not going to be as easy in the next decade as it was in the past two or three decades.” As with everything in life – including investing – Jim says passion is the key to ultimate success and happiness.

Rand Paul's Crazy Dream of a Libertarian-Democratic Alliance on Civil Rights Is Actually Happening (jdargis)

As 2014 dragged on, the violent news cycles gave Paul new chances to find a libertarian-liberal consensus. He took those chances. After the shootings of black teens by police officers, Paul wrote that it was “impossible for African-Americans not to feel like their government is particularly targeting them.” He’d introduced some bills to rectify that. The Democratic Senate had slept on them. So here he was, in 2015, starting what most people see as a nascent presidential campaign with an effort to erase harsh laws—to the joy of Democrats who have no power to pass any bills on their own.

The Activity Gap (jdargis)

Though their names are pseudonyms, Ethan and Nicole are real people who were interviewed as part of a national study recently featured in Voices in Urban Education, a publication out of Brown University’s Annenberg Institute for School Reform. The objective of the study was to examine trends in extracurricular participation among kids in the U.S. from the 1970s until today through long-term data and conversations with 120 young adults across the country.

Wind power auction draws limited interest (jdargis)

Putting towering wind turbines further offshore may help the companies avoid the kind of intense opposition endured by the Cape Wind project, located in Nantucket Sound within eyesight of some of the priciest ocean-front properties in New England.

In addition, offshore winds blow harder and more steadily, allowing each turbine to generate more electricity. But building far from the coast increases the cost of construction and makes it more difficult to connect the turbines to the power grid.

Can Saudi Arabia Diversify Away From Oil? (Evan K.)

The Saudi government hopes new special economic zones can spur foreign investment and lessen the Kingdom’s reliance on oil. Regulatory reforms are needed, however, to convince foreign firms that Saudi Arabia has more to offer than just cheap energy.

Just off the coast of the Red Sea, about 60 miles north of Jeddah, a massive construction project diverts the eye from an otherwise barren Saudi Arabian landscape. Shiny, modern towers glimmer under the Gulf sun, casting a brief shadow over the empty shipping port and arched gates that boast large billboards of King Abdullah. The project, known as King Abdullah Economic City (KAEC), named after the late king, is one of five planned special economic zones that Saudi Arabia hopes will bring diversity to the Kingdom’s industrial landscape. Scattered along the Red Sea and throughout the Saudi Arabian heartland, each economic city will focus investment in a different industry intended to wean the country off its most precious resource: oil.

Oklahoma worries over swarm of earthquakes and connection to oil industry (jdargis)

Scientists implicated the oil and gas industry — in particular, the deep wastewater disposal wells that have been linked to a dramatic increase in seismic activity across the central United States. But in a state founded on oil wealth, officials have been reluctant to crack down on an industry that accounts for a third of the economy and one in five jobs.

Gold & Silver

Click to read the PM Daily Market Commentary: 1/29/15

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."

7 Comments

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
How we got here.

In order to understand the present you have to study the past.

I offer you this version of history for your consideration.

 

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Online)
Joined: Jul 30 2009
Posts: 4164
Thetallestmanonearth's picture
Thetallestmanonearth
Status: Gold Member (Offline)
Joined: Feb 28 2013
Posts: 324
Long video Arthur, but I'm

Long video Arthur, but I'm giving it a go.  Thanks for sharing!

Brian

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Online)
Joined: Jul 30 2009
Posts: 4164
Greece says will not cooperate with "troika" or seek aid extensi

Greece says will not cooperate with "troika" or seek aid extension

=====================================

Greece's Varoufakis: 'No debt talks with EU-IMF troika'

"He said he would he seek "maximum co-operation" with Greece's international creditors, but that he would not work through the troika, which he called "a committee built on rotten foundations"."

==============================================

Greece’s finance minister vows to shun officials from ‘troika’

Yanis Varoufakis says new government will refuse to engage with auditors from the EU, the European Central Bank and the International Monetary Fund
Yanis Varoufakis
thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1628
Command and Control Futility Principle

http://straightlinelogic.com/2015/01/29/crisis-progress-report-by-robert-gore/

Governments and central banks can control one or more, but not all variables in a multi-variable system.

The above is American writer Robert Gore’s Command and Control Futility Principle, the chief implication of which is that regardless of what variable or variables a government or its central bank attempts to control, all variables cannot be controlled exactly, at the same time. A corollary of this principle: due to the impossibility of controlling all variables, they will usually lose control of even the variable or variables they have attempted to control. The more they try to control, the less they will ultimately end up controlling.

The principle is playing out; the inability to control all variables is becoming increasingly evident. Total global debt has reached a saturation point, it no longer produces positive economic returns and economies are weakening under the burden of debt service. The reduction in demand and price deflation has hit heavily indebted commodity producers, who must continue to produce as long as their revenues cover cash costs. Commodity prices have crashed although the world economy is saturated with central bank created liquidity.

The Swiss National Bank was trying to keep its currency undervalued by pegging it to the euro. However, that obligated it to buy vast amounts of euros with newly created Swiss francs, and with the European Central Bank actively promoting further euro depreciation through its quantitative easing program, the Swiss bank was looking at potential losses on its euro position that would have wiped out its capital. So it dropped the peg, imposing sometimes ruinous losses on speculators (and mortgagors and their creditors in several Eastern European countries), who had borrowed Swiss francs believing they would never be revalued (the Swiss franc’s value increasing against other currencies). The revaluation will also hurt Swiss exporters. The Swiss controlled their currency’s price against the euro, but could not control the amount of euros on its balance sheet, and its inability to control the latter led to its loss of control of the former.

The governments of the European Union and their central banks have become the Greeks’ primary creditors. Although the stated terms of the debt they hold are controlled by contractual agreement, they cannot control the willingness of the Greeks to repay it, or the value financial markets may assign to it. The recent Greek election signals the average Greek’s unwillingness to continue abiding by the terms of agreements with the IMF, the ECB, and the EU. That unwillingness almost certainly means that there will be a loss on that debt. The recent fall in Greek debt prices indicates that financial markets are anticipating that outcome. Creditors will not exercise control over the apportionment of losses on debt whose terms they thought they controlled.

Regardless of the outcome of negotiations and the ultimate resolution of the Greek debt problem, it is yet another sign of governments’ and central banks’ inability to control all variables. Per the corollary of the Command and Control Futility Principle, the variables they have been unable to control are undermining their ability to control the variables they have heretofore sought to control (e.g. stock prices and performance of their economies). Or to put it in the vernacular acronym: we are reaching the point where TSHTF.

DennisC's picture
DennisC
Status: Gold Member (Offline)
Joined: Mar 19 2011
Posts: 320
Es tut mir leid!

Re: Swiss francs "...believing they would never be revalued".  We're sorry, we changed our mind.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
A Job for the Paranoid.

Another Martyr Varufakis? Kiddie Porn on his computer in 3,2,1.

Bullet in the head- entering and exiting the same hole?

How do I love you? Let me count the ways.

Advice to a hero- surround yourself with the paranoid. They too have their place in the world.

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