Daily Digest

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Daily Digest 5/6 - CA Drought Killing Trees, Junk Bonds Are The New Haven Assets

Wednesday, May 6, 2015, 9:34 AM

Economy

ECB's balance sheet rises to 2.372 trln euros in week to May 1

The combined balance sheet of the European Central Bank and the euro zone's 19 national central banks billion euros rose 11.8 billion euros ($13.2 billion) to 2.372 trillion euros in the week to May 1, the ECB said on Tuesday.

Liquidity drought could spark market bloodbath, warns IIF

Evaporating liquidity and higher US interest rates will cause huge market swings with potentially catastrophic consequences, Institute of International Finance warns

India’s Debt Pileup Complicates Growth Plans

Debt levels have risen across Asia in the past five years and are now higher than they were before the Asian financial crisis in 1997. The borrowing has taken different forms in different countries. In China, giant state-owned companies borrowed the most, in Thailand and Malaysia, consumers took on debt, while in Japan, the government boosted its world-leading borrowing.

Junk Bonds Are The New Haven Assets

With government securities in Germany to Japan and Ireland yielding less than nothing, money is pouring into exchange-traded funds that buy speculative-grade debt, traditionally the riskiest of fixed-income assets. The pace is staggering.

First-quarter GDP was likely negative, economists say

Estimates varied but economist forecasts for the first quarter ranged from zero to negative 0.4%.

Teens Say California Drought Makes Tap Water Taste Funky

Normally our tap water comes from the bottom of our reservoir. Clean, fresh, cold water — which is a key element for salmon to spawn. With water so limited, the water district decided it needed to preserve that cold water for the salmon.

California Drought Killed 12 Million Forest Trees Since Last Year

An estimated 12 million trees across California’s forestlands have died over the past year because of extreme drought conditions, according to an aerial survey conducted April 8-17 by the U.S. Forest Service.

Central Bankers Reconsider Inflation Targets They Can’t Hit

Rather than lowering their sights to make things easier, the misses are fanning calls for targets to be increased from the 2 percent most aim for to perhaps as high as 4 percent.

Australia’s central bank cuts key rate to record low of 2%

Australia’s central bank today (May 5) cut interest rates for the second time this year, seeking to buttress the economy against sliding mining investment while heading off a harmful increase in the local currency.

Gold & Silver

Click to read the PM Daily Market Commentary: 5/2/15

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."

8 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
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Posts: 4066
Mark Cochrane's picture
Mark Cochrane
Status: Diamond Member (Offline)
Joined: May 24 2011
Posts: 1216
They say this as if it were a good thing?

Reading the arguments for why we should be shooting for 4% inflation instead of 2% I am simply flabbergasted by the tunnel vision of central bankers and economists in general (with few exceptions).

http://www.bloomberg.com/news/articles/2015-05-05/central-bankers-reconsider-inflation-targets-they-can-t-hit

More inflation would help erode debt burdens and aid labor markets. Employers find it hard to cut wages even in downturns, forcing them to pare jobs instead, yet faster inflation would erode real inflation-adjusted wages, allowing companies to keeping employment higher.

Eroding debt burdens of people mean nothing if you are also eroding their salaries so that they cannot cover their fixed costs. Debt payments become discretionary when compared to food and emergency medical bills. This is simply a recipe for more defaults that the banks can write off as being of lower value. Discretionary expenditures are already dropping because everyone, outside of the 1%, is receiving salaries that are worth less year after year already. They are effectively saying that the pie is not shrinking fast enough for the majority to keep the minority as comfortable as they'd like with their growing shares.

Economists keep thinking that through mathematical masturbation of the numbers (hedonics anyone?) that they will devise the secret sauce to make the unworkable work. The real world doesn't care about how many shell games are played on central banker's spreadsheets. Everywhere else this is called cooking the books and it never does anything but favor the few at the expense of the many. The idea here being that, If people think they are getting richer, while they are actually starving, they will surely be happy... Great logic.

Mark

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3125
old game

This is an old game, and one which has worked for them for a long time.  I've always been mystified how the general public tolerates any inflation when they should know it just erodes their spending power.  But. 2-3% inflation has been the Fed's stated goal since I can remember, and I'm pretty old.  But, if they keep it in that range the public really does not complain in significant numbers.  Perhaps indexing has something to do with that.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
An awful emptyness

Here I sit in my motel room having fled the economic mayhem that will be the West Australian  economy with the collapse of the Commodity market. (Iron ore, copper, nickel etc) As a Diest, I take little credit for proactivity. The author of the game shows me the experiences that I must be exposed to. 

Normally I have no TV, but I sampled what the herd is subject to this morning. No wonder they are confused.  When you know what to look for the common meme is subject to a saturation bombing of distraction.

It did not take me long to turn the infernal racket off.

I look forward to another wonderful day on my bike as I cover the last leg to my yacht. The Nullabor is an awful emptiness. I loved it. It has been a great trip.

Time2help's picture
Time2help
Status: Diamond Member (Offline)
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Posts: 2768
An awfuller emptiness

(Edit: And how the hell does the S&P fall 1% every day but never goes below 2000?)

robie robinson's picture
robie robinson
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Joined: Aug 25 2009
Posts: 1148
Oliveoilguy's picture
Oliveoilguy
Status: Platinum Member (Offline)
Joined: Jun 29 2012
Posts: 578
Small town incentives

Reading this great article brings back a recurring thought of mine that might go a long way toward solving a myriad of problems in our society. How about incentivizing folks to live in the country and small towns? City crowding is part of the problem. How disabling it must be to grow up on concrete and never experience nature. Instead of giving Billions of dollars to the Baltimore school district (3rd highest funded in the nation), create rural towns with some kind of clean industry (solar panels?), some agricultural link, and subsidize housing etc. Allow some forward thinking poor families to escape from urban hell. Give kids a chance to grow up in the country and experience nature first hand.

In general I'm against government handouts, but if we are going to do it, lets put the money into something that might actually help people and create a larger benefit to society. 

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1982
they are mostly the opposite pans

All of the planning I have seen has been to crowd more people into the cities where they have "walkability" to stores and jobs. Notable exception: Sweden has planning where you have cluster zoning inside wide open spaces, with hydroelectric mass transit between living areas. I been there, seen it, and my Swedish niece has a degree in urban planning. Innovative stuff.

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