Daily Digest

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Daily Digest 7/27 - The Outlaw Ocean, Why Bigger Is No Longer Better In Energy

Monday, July 27, 2015, 11:24 AM


Varoufakis reveals cloak and dagger 'Plan B' for Greece, awaits treason charges (locksmithuk)

Mr Varoufakis recruited a technology specialist from Columbia University to help handle the logistics. Faced with a wall of obstacles, the expert broke into the software systems of the tax office - then under the control of the EU-IMF 'Troika' - in order to obtain the reserve accounts and file numbers of every taxpayer. "We decided to hack into my ministry’s own software programme," he said.

Raoul Pal: GroupThink Is Almost Ubiquitous (& The 1 Chart That Matters) (Cornelius999)

My overarching belief is that this is the most “pure macro” environment we have been in for over a decade, probably since the Asian Crisis in the late 1990s, and I just don’t think people understand what is going on.

My entire thesis rests neatly on the US Dollar. Nothing else matters and if my view is wrong on that, then it is likely wrong on many things. What is really weird to me is that most people agree with my views on the dollar but don’t have the trade on, and were less versed on the macro knock-on effects of a strong dollar. Groupthink has tended to isolate particular parts of the US or global economy and ignore the bigger picture.

Memorize This, Earn A Dollar (Aaron M.)

Importantly, actual breakdowns in market internals have been followed by market losses, on average, even since 2009 (as we saw in the near-20% plunge of 2011). In mid-2014, we imposed the requirement that market internals or credit spreads must actually deteriorate as a precondition to establishing a hard-defensive market outlook. That adaptation brings our present methods back in line with the central considerations that were responsible for our success prior to 2009.

After Arab Spring, journalism briefly flowered and then withered (jdargis)

On Feb. 14, 2011, the full force of the Arab Spring reached this tiny Persian Gulf island nation of 1.4 million in an area the size of Austin and home to the U.S. Navy’s 5th Fleet. The revolution had begun in Tunisia several months earlier and spread eastward through 12 countries, forcing out several authoritarian regimes and shaking the confidence of those that held on.

‘Sea Slaves’: The Human Misery That Feeds Pets And Livestock (jdargis)

The misery endured by Mr. Long, who was eventually rescued by an aid group, is not uncommon in the maritime world. Labor abuse at sea can be so severe that the boys and men who are its victims might as well be captives from a bygone era. In interviews, those who fled recounted horrific violence: the sick cast overboard, the defiant beheaded, the insubordinate sealed for days below deck in a dark, fetid fishing hold.

Chinese Shares Tumble Again (jdargis)

Worried about the fallout, the government moved aggressively to prop up stocks with a spate of measures. Authorities suspended initial public offerings, introduced a $120 billion market stabilization fund backed by the central bank, and encouraged executives to buy company shares.

Why Bigger Is No Longer Better In Energy (Tom K.)

More good news from the PV front reaffirms that financing is not a problem. On July 14, Deutsche Bank put out a report stating, “YieldCo vehicles [are] publicly traded companies created for the purpose of owning operating assets that will predictably produce cash flow. This predictable cash flow primarily comes from long-term contracts. Not all income investors are aware of this asset class, but according to [analyst Vishal] Shah, ‘The YieldCo phenomenon is global, growth rates are likely to be much faster than MLPs and size of the market is likely to be much larger than the oil and gas sector’."

Benefits Of Rotational Grazing (Wyatt B.)

There are several benefits of rotational grazing. Farmers are able to cut down on operating expenses when they utilize rotational grazing, because they reduce their labor required, equipment used, and stored feed expenses. The farmer uses all of the pasture for rotational grazing, which provides nutrition for the animals reducing stored feed needs and cuts down on the use of equipment and labor for mowing and maintaining the pasture. Animals and consumers also benefit, because there is a decrease in parasites in pastures that are rotationally grazed and overall the farmer produces higher quality products from the consumer.

Gold & Silver

Click to read the PM Daily Market Commentary: 7/24/15

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."


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Study: global population growth compared to energy use

As global population grew from about 500 million in 1560 to more than 7 billion, energy usage outpaced population growth. This in effect increased the world's carrying capacity and allowed population to grow exponentially. Since 1963, however, the ratio between energy increases and population growth has narrowed. This change could restrict future population growth


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Hard times have fallen on my hero...

Paul Krugman Declares Personal Bankruptcy (Daily Currant)

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Puerto Rico Lacks Cash for Aug. Bond Payment, Official Says

"Puerto Rico currently lacks the funds needed to make a payment due next month on bonds sold by its Public Finance Corp., a government official said.

Victor Suarez, the chief of staff for Governor Alejandro Garcia Padilla, told reporters Monday in San Juan that whether the payment is made will depend on if the commonwealth has cash available. He didn’t say whether the island will be able to do so."

"China’s troubled debt market is a growing threat to global supply chains, according to a new report from the Chartered Institute of Procurement and Supply.

Companies doing in business in China could see suppliers fall into disarray overnight if the People’s Bank of China moves to rein in the debt market, either through monetary policy or by allowing more borrowers to default, said John Glen, a CIPS economist. "

"But the budget impasse is hitting a growing number of people, as social service agencies don't get promised payments, programs are reduced or eliminated and some agencies close their doors. The agencies estimate tens of thousands — most of them low-income working parents, seniors, people with disabilities and immigrants — have become the collateral damage in an ideological battle between the newly elected governor and Democrats that could go on for months."

"Three public workers' pension funds are suing New Jersey for billions in damages, claiming the state government breached contracts when it contributed less than planned."

"CEO says China is really slowing down, as is Brazil

* CEO says growth in China has slowed down to single digits from strong double-digit growth in prior years "


The IMF’s latest healthcheck on the eurozone found it was “susceptible to negative shocks” as growth continues to falter and monetary policymakers run out of ways to help. It called for an urgent “collective push” from the currency union to speed up reforms or else risk years of lost growth.



Bad loans


Repost of headlines from last night and this morning:


  1. China June industrial profits fall 0.3 percent year on year
  2. Slowed growth for China's software and IT industry in H1
  3. Japan’s Economy Shrank Last Quarter, Top Forecaster Says
  4. China's economy is getting sick. Will it infect America?
  5. Bank of Japan deputy governor Hiroshi Nakaso warns of impact on exports from China slowdown
  6. Oil Heading for Fall as Diesel’s Engine Sputters (China)

"But there is also a credibility gap. Many prices are going up now simply because Brazilians expect them to. The inflation rate has exceeded the target for years, leading workers to demand raises and merchants to raise prices in a vicious circle that fuels more inflation."



  1. China stocks drop 8.5% in massive rout
  2. China Stocks Plunge in Largest Selloff Since 2007
  3. Sensex Dives 500 points On China Stock Crash, Weak Domestic Corporate Earnings (India)
  4. Japan stocks hit by Wall Street drop, concerns about global slowdown
  5. Investors Flee Russia as Morgan Stanley Sees Chill Lasting
  6. China state-owned margin lender returns market-steadying funds early
  7. French farmers block access from Germany and Spain over falling food prices
  8. Venezuelan Currency Chaos Costs Coca-Cola Bottler 95% of Revenue
  9. High costs plague some state-run health insurance markets
  10. Hong Kong Exports Fall For Second Month, More Than Forecast
  11. China’s asset bubbles and slowdown put banks at risk: Moody’s

More headlines:

  1. Fitch: US Public Pension Contributions May Rise as Returns Lag
  2. CalPERS looks to lower return expectations

"China only the latest to try to prop up a collapsing bubble, says Stephen Roach"


Even more headlines:

  1. S&P 500 Propped Up by Just 2 Sectors Shows Bull Market Aging
  2. Downgrade fear as Brazil faces possible budget deficit
  3. Can All Chinese Debt Be Rated Top Quality? (Around 97% of yuan-denominated bonds hold top ratings at home)
  4. 4 options loom as Wayne County weighs financial crisis
  5. Nearly three dozen local governments seek property tax increases (Utah)
  6. Problems pile up for Greek boat-builders as taxes bite
  7. Bursting Shanghai stock bubble resembles Nasdaq fall in 2000
  8. Puerto Rico tourism industry lags rivals, offers little relief from debt crisis


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Margin debt on the Chinese stock market is $1.2 Trillion

"Western banks say they are coming under heavy pressure from Chinese officials to refrain from negative comments. They are effectively gagged if they wish to do business in China.

“Large parts of the market are closed, and those stocks that are still trading are selling off regardless of support measures. Clearly something very serious is happening,” said one economist.

The long-standing assumption that the Chinese authorities know what they are doing has been shattered.

The government’s heavy-handed measures include a ban on short sales and on new share issues, as well as pressure on the 300 largest companies to buy back their own stock, and forced purchases of stocks by brokerage houses.

Many investors are effectively trapped with margin debt used to buy the stocks. These liabilities cannot be covered without selling the stocks. The longer the market remains partially frozen, the more likely it will lead to extreme stress.

David Cui, from Bank of America, said $1.2 trillion of stock holdings are being carried on margin debt. This is 34pc of the free float of the Shanghai and Shenzhen stock markets. “When the market ultimately settles at a level that can be sustained on fundamental reasons, we expect that the financial system may wobble, due to high contagion risk,” he said."

Overall household debts were found to have grown to £104billion, with one in five homes describing money owed as a heavy burden, showed the ONS data.

The country's lowest earners are struggling the most, with these families five times more likely to say financial commitments are a heavy burden than the highest earners.

"Pension burdens increased for 31 of the 50 largest local governments in fiscal year 2013, said a new report from Moody's Investors Service.
The report said the fiscal year 2013 median adjusted net pension liabilities increased to 204% of operating revenue from 175% the prior fiscal year. Still, pension costs and liability burdens vary widely among the 50 largest local governments; for 14, pension and actuarial costs amount to less than 5% of revenue.

As a percentage of operating revenue, Chicago remained at the top with adjusted net pension liabilities at 703%, followed by Dallas at 506%; Houston, 458%; Los Angeles, 410%; and Jacksonville, Fla., 403%. Among those with the lowest percentages are Washington, D.C., with 24%, followed by Cypress-Fairbanks (Texas) Independent School District at 25%, and Mecklenburg County, N.C., 29%."

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Another ratings agency downgrades CPS' debt to junk status

""Most options for relief are dependent on actions by the state, which is plagued by political disagreements and its own challenged financial position. Most proposed solutions to the pension problem, Fitch said, "face steep hurdles."

The district has acknowledged that without state help, it will have to resort to "unsustainable borrowing and additional cuts" midway through the coming school year."

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And the rout continues



Chinese stocks extended the biggest one-day loss since 2007 as concern grew unprecedented government intervention will fail to shore up equities.

The Shanghai Composite Index slid 3.1 percent to 3,610.87 at 9:49 a.m. local time, led by technology and industrial companies. More than 30 stocks dropped for every one that climbed in the gauge.

It's down another 1 1/2% since this was written.



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Thailand braces for lower growth in 2015

"Thailand's finance ministry cut its 2015 growth estimate for the third time this year, citing continued pressure from the global economic slowdown."

"The move underscores the emphasis the BOJ puts on the psychological effect of its massive money-printing program, which aims to banish public perceptions that falling prices will persist so that households and companies will start spending."

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