Daily Digest

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Daily Digest 4/9 - Costs Of Easy Fed Now And Later, A Megacity Runs Dry

Thursday, April 9, 2015, 10:07 AM


The Burden Of Denial (cmartenson)

It occurred to me the other day that quite a few of the odder features of contemporary American culture make perfect sense if you assume that everybody knows exactly what’s wrong and what’s coming as our society rushes, pedal to the metal, toward its face-first collision with the brick wall of the future. It’s not that they don’t get it; they get it all too clearly, and they just wish that those of us on the fringes would quit reminding them of the imminent impact, so they can spend whatever time they’ve got left in as close to a state of blissful indifference as they can possibly manage.

We’re Going to Step On a Mine before End of 2015-James Turk (pinecarr)

On the Greek debt crisis, Turk contends, “There is no way Greece is going to repay the $350 billion in debt it owes. It just doesn’t have the financial capacity or the ability to do that. So, all the ECB, EU and the IMF are trying to is “extend and pretend.” If you keep the ball in the air, then people will think that it will be solved eventually. They all play a game, but the reality is the ball eventually crashes to the ground simply because of mathematics. It’s not just Greece. There are countries all around the world, including the United States, that have such a huge debt burden that these debts are never going to be repaid. The U.S. debt is $18 trillion. The only reason why it hasn’t hit the wall is because interest rates are near zero.”

Michael Lewis: 'I knew Flash Boys would be a bombshell' (RZ)

Katsuyama set up IEX, the Investors Exchange, as a market free from scalpers. While he had alerted many big investors about his concerns, he had not spoken to the media about his findings. “They were afraid that if there was a huge controversy, it would hurt their business as opposed to just quietly informing investors how badly they were getting screwed,” Lewis said. Instead they decided to work with the author of Moneyball and Liar’s Poker to tell their story. They didn’t escape controversy.

Disruptive Stock Watcher Chris Berry Cautions Investors About the Real Potential of Deflation (Kevin J.)

Right now, the scales still appear to be tipped toward deflation, but that's not uniform across the globe. It still appears that disinflation is the predominant force: There is evidence of economic growth, but productivity is stagnating and living standards are moderating as we haven't seen the "escape velocity" growth necessary to start a new economic cycle. The excess supply in many commodities like iron ore is referred to as "good" deflation. However, savings rates are up and consumer demand is lagging. This is "bad" deflation. According to economist Gary Shilling, both of these are happening today. It appears that economic liftoff has been postponed. The secular stagnation thesis put forth by Larry Summers looks increasingly valid.

How Chicago has used financial engineering to paper over its massive budget gap (djc)

Chicago’s property tax revenues do not go into its general operating fund. These revenues go into a Property Tax Fund, which is used to make debt service payments on the city’s general obligation bonds; make required employee pension contributions; and (to a minor extent) fund the library system. The fund also includes tax increment financing revenues that flow to projects in designated TIF districts.

Obama Adviser During Recession Is Given New Challenge: Climate Change (jdargis)

Last week Mr. Deese unveiled the heart of Mr. Obama’s agenda: a blueprint for cutting greenhouse gas pollution in the United States up to 28 percent over the next decade. The proposal, which is centered on Environmental Protection Agency regulations meant to drastically reduce planet-warming carbon dioxide emissions from the nation’s cars and coal-fired power plants, is the White House’s formal submission to the United Nations ahead of a global warming summit meeting in Paris in December.

Dire costs of easy Fed now and later: Jim Grant (Herman J.)

"If companies can’t fail that means somebody else can’t start. You’re looking at a petrified forest rather than dynamic capitalism."

Top 12 Media Myths On Oil Prices (Evan K.)

Given how central oil prices are to the global economy, the media can be forgiven for misconstruing certain realities about the oil sector and specifically U.S. shale.

Saudi 'to borrow to finance soaring deficit', says report (DennisC)

Jadwa said the government is highly expected to return to the debt market for the first time in around 15 years despite its massive reserves.

"The government is now expected to issue debt as part of its deficit financing strategy," it said.

Saudi Arabia crude output at record high in March (Michael W.)

"In terms of petroleum, I expect that prices will improve in the near future, that the Kingdom's production will continue at approximately 10 million barrels per day," Mr. Naimi said in a speech at an energy event in Riyadh.

Saudi Arabia is willing to participate in restoring market stability and steering prices back up, but it can only do so with participation from major oil-producing countries inside and outside OPEC, he said.

A Megacity Runs Dry (cmartenson)

Imagine a megacity like São Paulo as schools are forced to close, hospitals run out of resources, diseases spread, businesses shut down, the economy nose dives. Imagine the riots, the looting … what the police force, infamously known as one of the most violent in the world, will do as this dystopian scenario engulfs us. One of the great modern, rising capital cities of the world suddenly falls apart.

We brought this on ourselves. We buried our rivers under concrete, we polluted the reservoirs, chopped down trees, erased the local biome to grow sugar cane, soy and corn to fuel our vehicles, feed our appetites, our extravagant lifestyles.

Fukushima disaster radiation detected off Canada's coast (RZ)

The Woods Hole Oceanographic Institution said its conclusions were drawn from research it collected from community groups and a network of local academics and aquariums to collect water samples and fund radiation testing.

Last November, Woods Hole reported detectable radiation from Fukushima about 100 miles (161 km) off the coast of northern California, but no radiation has yet been detected any closer to US shores.

Gold & Silver

Click to read the PM Daily Market Commentary: 4/8/15

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."


saxplayer00o1's picture
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4263
saxplayer00o1's picture
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4263
S&P warns of Chicago rating downgrade without pension fix

"A multiple-notch downgrade is possible if the city fails to come up with structural solutions to address its budget deficit and pension problem, according to S&P."

'Chicago ended 2013 with an unfunded pension liability of $19.2 billion in the four funds, leaving them only 37 percent funded, well below the 80 percent level considered healthy. The city has also projected that its $300 million structural budget deficit would approach $1 billion next year with the pension payment increase."

pinecarr's picture
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Joined: Apr 13 2008
Posts: 2263
Eye-opening story on Sao Paulo, Brazil

Chris, thanks for the article on Sao Paulo's drought and power outages.  Even with all we discuss here, it is still eye-opening (shocking) to read about a big city like this getting rocked by the consequences of poor long-term choices regarding the 3Es.  -Like watching what's going on with California's drought now.  It makes the message of the Crash Course come to life in a most disconcerting way; it's no longer just an abstract concept.


pinecarr's picture
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2263
No black swan but...

does an ultra-rare black flamingo count?


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