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Daily Digest 8/25 - Why The Bear Of 2015 Is Different From 2008, How To Create A Slow Revolution

Tuesday, August 25, 2015, 9:21 AM

Economy

Why the Bear of 2015 Is Different from the Bear of 2008 (Aaron M.)

Then: Central banks had a relatively clean slate to work with. Interventions in the market and economy were limited to suppressing interest rates in the post-dot-com meltdown era.

Now: Central banks have never stopped intervening since 2008. The market is in effect a reflection of 6+ years of unprecedented central bank interventions. Rather than a clean slate, central banks face a global marketplace that is dominated by incentives to speculate with leveraged/borrowed money established by 6 years of central bank policies.

China’s Stock Market Meltdown Dragging Global Markets With It (Tom K.)

WTI dropped below $39 per barrel during midday trading, off 4 percent. Brent also dropped more than 4 percent, to just $43.43 per barrel. A sell off is occurring for the share prices of energy companies across the board. BP’s stock price was down 5 percent on Monday. ConocoPhillips, Statoil, and French oil giant Total saw their share price drop by a similar percentage.

Forget The Dips, Sell The Rips (Aaron M.)

But on Thursday and Friday last week, the casino gamblers got a rude awakening. Not only did they lose their lunch in a violent plunge during the last half-hour of trading two days in a row, but they also gave back another seven months of gains, as well as the crucial chart points that have kept the robo-machines aggressively buying the dips for the past six years.

Are Your Prepared for the Stock Market Meltdown? (Tiffany B.)

High levels of margin debt show that traders and investors are willing to make a leveraged bet, on the margin, to own shares of a company. The sustained rally the market has enjoyed up until this year has lured many investors into borrowing against their existing equity. But heavy borrowing sets up a dangerous scenario when the market comes tumbling back down to earth.

The Stock Market’s Panic Potential (Aaron M.)

Last week’s sudden “1-800-get-me-out” moment certainly wasn’t widely expected, not least because it was an options expiration week, and expiration weeks normally tend to follow certain patterns. Either there is little net volatility, or if the market has a weak close on Wednesday, it tends to rise on Thursday and Friday. This even happened in the October 2014 sell-off, which ended on a Wednesday in an expiration week (with the SPX gaining 80 points between the Wednesday intraday low and the Friday intraday high, rendering a great many puts, VIX calls, etc. that were bought earlier in the week worthless).

A Plan to End the State – How to Create a Slow Revolution (Steve R.)

The plan that libertarians usually put forward involves politics. Generally speaking, it a plan to get libertarian and/or anarchist candidates elected into public office. Unspoken, but implicit, in the plan, is that these candidates will probably have to disguise some of their more “radical” views. They will have to trick the general public, who might not agree with their ideas. Nevertheless, proponents of the plan assure us, that no matter what they say while campaigning, once the candidates gain office, they will work to pass pro-liberty legislation.

More than half of students chasing dying careers, report warns (Arthur Robey)

She says an alarming amount of university and TAFE students are studying in the wrong areas.

"Nearly 60 per cent [of students] at university and nearly 70 per cent at TAFE were studying jobs that will be automated," Ms Kenny said.

"So that's 44 per cent of jobs that will be automated in the next 10 years."

‘Tokyo could end up being surrounded by Detroits’: Near Japan’s biggest city, abandoned homes dot the hills (westcoastjan)

These ghost homes are the most visible sign of human retreat in a country where the population peaked a half-decade ago and is forecast to fall by a third over the next 50 years. The demographic pressure has weighed on the Japanese economy, as a smaller workforce struggles to support a growing proportion of the old, and has prompted intense debate over long-term proposals to boost immigration or encourage women to have more children.

Carbon credits undercut climate change actions says report (westcoastjan)

They looked at a random sample of 60 projects and found that 73% of the offsets generated didn't meet the key criteria of "additionality". This means that these projects would have happened anyway without any carbon credit finance.

Gold & Silver

Click to read the PM Daily Market Commentary: 8/24/15

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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saxplayer00o1's picture
saxplayer00o1
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CBO Cuts US 2015 GDP Forecast to 2% from 2.9%

CBO Cuts US 2015 GDP Forecast to 2% from 2.9%

Wall Street Journal-41 minutes ago
The latest CBO projection expects the U.S. will run a deficit of $426 billion, ... or 120%, but debt-service costs for the U.S. last year were around $20 billion below ...

 

Taiwan to tap $15.3 billion stocks stabilisation fund

Economic Times-4 hours ago
TAIPEI: Taiwan on Tuesday gave the green light for a $15.3 billion fund to stabilise its troubled stock market, after fears of a slowdown in China sent shares ...
 

California officials eyeing stock market plunge, hope it won't last

Los Angeles Times-14 hours ago
One-tenth of the current budget's $115 billion in general fund revenue is expected to come from capital gains — compared with 2.7% in 2009, during the depth of ...

State retirement systems present 2016 budget needs to lawmakers

State-Journal.com-2 hours ago
From the $1.457 billion, Kentucky's general fund would be on the hook for $990.3 million, Driskell said. For KTRS, an additional $487.4 million is needed in fiscal ...

Real estate stocks hit by 'bubble' concerns

Financial Times-21 hours ago
Commercial and residential property prices “are in bubble territory again”, having been inflated by “loose money, low inflation and lots of cheap credit”, said ...

Mexican Economic Growth Forecast is Adjusted After Peso Hits ...

The Yucatan Times-20 hours ago
The Mexican Treasury and Public Finance Secretariat (SHCP) is lowering its economic growth forecast for 2015 to between 2 percent and 2.8 percent. The new ...

Swedbank cuts Estonia's economic growth estimate to 1.9%

Baltic Business News-8 hours ago
The bank said in its Economic Outlook that Estonia's economic growth is to slow ... Swedbank is expecting economic growth to still total 2.8 percent in 2016 as ...

Survey: Weak economic growth seen for 10 states' rural areas

Sheridan County Journal Star-20 hours ago
OMAHA, Neb. (AP) - A new survey suggests that the economic outlook for 10 Midwest and Plains states is weaker than in previous months. The Rural Mainstreet ...

South Africa's Economic Woes Worsen as GDP Contracts 1.3%

Bloomberg-4 hours ago
“There are, unfortunately, very few factors telling us that economic growth and activity can pick up, especially in the context of the weak international economy, ...

Devaluation fever spreads to Pakistan with rupee hitting 17-month low

The Straits Times-5 hours ago
South Africa's rand tumbled to a record lo on Monday as concern mounted that economic growth is slowing in China, its top export destination. The slump in ...

China, Japan and Europe Are Flashing Economic Warning Signs

New York Times-17 hours ago
Even before the recent plunge in commodity and stock markets, the world economy was weak. But recent data from China, Europe, Japan and other countries ...

Russia Faces Reality With Prediction of Deeper Economic Slump

Bloomberg - ‎2 hours ago‎
While insisting the worst of its recession was over, it cut its economic forecasts for this year and next amid the renewed plunge in energy prices and persistent sanctions over Ukraine. Economists said the revisions fell short of their estimates ...

French Economy Minister sees very weak China growth in next half ...

TODAYonline-5 hours ago
BERLIN - Recent ructions in China are likely to slow growth in the country ... Macron said he expected the economic problems in China to push up the value of ...
 

UPDATE 1-Thai 2015 auto sales to miss target, business mood glum ...

Reuters-7 hours ago
Flagging economic growth, fewer bank loans hurt consumption (Adds detail, ... to the weak economy, the Federation of Thai Industries (FTI) said on Tuesday.

Foreign automakers brace for China slowdown

WDSU New Orleans-3 hours ago
Weak sales reflected the slowdown in economic growth, according to Barclays ... supporting economic stabilization or recovery," they wrote in a research note.

Oil Plunge Causes Junk-Debt Bloodbath as Credit-Line Cuts Loom

Bloomberg-22 minutes ago
Unlike earlier this year, when drillers in need of fresh capital found debt investors ... About $7 billion of junk bonds issued by oil and gas producers in the first ...
 

Not Even World's Highest Rates Keep Foreigners in Brazil Bonds

Bloomberg-2 hours ago
The total share of Brazilian local public debt held by foreigners has decreased ... Foreign holdings were down to 484 billion reais ($136 billion) in July, from 494 ...
 

Public debt reaches US$ 700 billion

Brazil-Arab News Agency (ANBA)-22 hours ago
São Paulo – The Brazilian Federal Public Debt increased 0.78% in July over June of this year and reached R$ 2.603 trillion (US$ 734 billion), according to the ...

Brazil Posts Current-Account Deficit of $6.2 Billion for July

Nasdaq-52 minutes ago
BRASILIA--Brazil'sBrazil posted a current-account deficit of $6.2 billion in July, up from $2.5 billion in June. July's deficit left the country with a 12-month deficit of ...

Brazil Consumer Confidence Hits All-time Low in August

Nasdaq-3 hours ago
SAO PAULO--Consumer confidence in Brazil declined in August, to the lowest level ever, as the country's sluggish economy shows no signs of recovery. Brazil's ...

San Bernardino moves to outsource fire, raise parcel tax

San Bernardino County Sun-7 hours ago
... for a post-bankruptcy plan that included outsourcing and new revenues that the ... Creditors would then have free rein on the debts that now only Chapter 9 ...

Greek pension funds resort to loans

Kathimerini-8 hours ago
Compared to June 2014, when the state insurance funds recorded a surplus of 407 million euros, a deficit of 1.4 billion euros has appeared within the space of ...

Finnish exports to Russia down more than 35 percent

YLE News-2 hours ago
Finland currently has a trade deficit with Russia, one that has shrunk in recent years. In 2014 the deficit stood at four billion euros; so far this year, Finland has ...
 
Obamacare Cadillac tax's secret threat
Highly Cited-CNBC-1 hour ago

If NJ stands still, it will be run over by cost of its current pension crisis ...

NJ.com-17 hours ago
The state's current position, however, is untenable: It faces an $82 billion pension deficit which, in the absence of funding increases beyond the realm of reason, ...

No one's smiling about Chicago's 'amusement tax'

Chicago Tribune-17 hours ago
Chicago residents who subscribe to streaming services like Netflix, Hulu and ... the tax has ignited, considering the city's proposed 2015 budget was $7.3 billion.

Major changes coming to Illinois childcare eligibility

WGN-TV-13 hours ago
... of a 40-hour-a-week minimum wage worker in Chicago are $1,600 dollars. ... a bipartisan committee had to determine if this kind of “budget management” in ...

Emanuel sets three public meetings to talk Chicago budget gap

Chicago Tribune-21 hours ago
Mayor Rahm Emanuel's administration expects a budget shortfall of at least $754 ... for another significant property tax increase to keep Chicago Public Schools ...

Comptroller: Illinois facing 'severe cash shortage'

Chicago Sun-Times-14 hours ago
Citing a recent legislative analysis, Carter said the state is on pace to run a deficit of $5 billion. He said the office is prioritizing payments for nonprofits.

Comptroller: No money to pay providers despite court order

Chicago Tribune-31 minutes ago
Bruce Rauner and lawmakers are deadlocked on a budget. Munger's spokesman Rich Carter told The Chicago Sun-Times (http://bit.ly/1V76hWj ) there's a cash ...

 

Arthur Robey's picture
Arthur Robey
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LENR patent - how to read patents

So in looking at patents, I try to figure out if the patent is narrow, or broad.  Here's what this patent says is the minimum configuration for the invention:

  • it heats a tank of fluid
  • it has a fuel wafer, which contains mixture of lithium, lithium aluminum hydride, and a catalyst from "column 10"
  • it controls the reaction by varying voltage
  • it monitors the reaction through a temperature sensor

Just as thought experiment, let's say you wanted to get around this patent.  What would you have to do?  You would have to eliminate or change one of the elements listed above.  For instance, you could eliminate lithium, or change it to another element, and your copycat invention would no longer infringe.

Since I'm not up on LENR-space, I don't know if that's a crucial bit or not.

To see what the "minimum protected configuration" of any given patent is, just read claim #1.  That's the broadest claim, and states what the most basic configuration is that is protected by this patent.  All the rest of the words in the patent can be ignored, unless they are used to define terms found in claim 1.

 

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Doug
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I have a question

This AM I was listening to one of the financial networks (I know, I know, I should find a better way to waste my time) when one of the talking heads distinguished this little turmoil from 2000 and 2008 in that there are no bubbles this time.  My mind immediately went to what many consider the debt bubble.  My question is whether debt can be consider a bubble.  It isn't an asset, except I suppose for banks, and it is all paper.  Of course default can result in loss of assets, but it isn't clear to me how debt fits the definition of a bubble.

https://en.wikipedia.org/wiki/Economic_bubble

Quote:

An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania or a balloon) is trade in an asset at a price or price range that strongly deviates from the corresponding asset's intrinsic value.[1][2][3] It could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future.[4]

Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or abubble burst. Both the boom and the burst phases of the bubble are examples of a positive feedback mechanism, in contrast to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone.

While some economists deny that bubbles occur,[5][page needed] the cause of bubbles remains disputed by those who are convinced that asset prices often deviate strongly from intrinsic values. Many explanations have been suggested, and research has recently shown that bubbles may appear even without uncertainty,[6] speculation,[7] or bounded rationality.[8] In such cases, the bubbles may be argued to be rational, where investors at every point fully compensated for the possibility that the bubble might collapse by higher returns. These approaches require that the timing of the bubble collapse can only be forecast probabilistically and the bubble process is often modelled using a Markov switching model.[9][10] It has also been suggested that bubbles might ultimately be caused by processes of price coordination[11] or emerging social norms.[8]

 

IOW, I think the definition requires an asset and prices for that asset.  In the case of debt, I suppose the price is interest and it has been at zero for a long time.  That can hardly be considered inflated by any measure.  So, you economic bright lights out there, how do you see this question?

 

Doug

Mark Cochrane's picture
Mark Cochrane
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'Real' Problems in Brazil?

I'm trying to figure out why the Brazilian Real is tanking today, worse than yesterday. It's not like anything is going well for the Brazilian economy these days (below) but I don't see anything driving todays march to currency oblivion.

Brazil's Economy Is Now A Job Destruction Machine

saxplayer00o1's picture
saxplayer00o1
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Bridgewater’s Ray Dalio sees Fed launching quantitative-easing m

Bridgewater’s Ray Dalio sees Fed launching quantitative-easing measures

 

 

From 2011. Will they ever listen?

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KugsCheese
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Deflation in asset prices

Deflation in asset prices like commodities...we wouldn't want consumers to pay less for gas and products and producers to lessen input costs.  No, we want to protect the gamblers with their leverage up the wazoo.

HughK's picture
HughK
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Posts: 760
Advice for millenials: The next 30 yrs will be like the last 30.

This outstanding piece by CNBC is a great reminder to all the millennials out there that this is an awesome opportunity to get into the stock market, a veritable "clearance sale."  I wish that I had been given such nifty advice when I was in my twenties.

Millennials may benefit most from the selloff

But advisors caution millennials that avoiding equities could be riskier than staying on the sidelines, since stocks tend to generate higher returns over time than more conservative investments. (Despite the recent volatility, the Dow is still up more than 1,100 percent over the last 30 years.) In fact, this could be a prime time for young investors to jump into the stock market.

"It's a good buying opportunity," said Victoria Fillet, certified financial planner and founder of Blueprint Financial Planning in Hoboken, New Jersey. "We've been waiting for a correction, and when you get a quick and intense market correction it is much healthier than a slow grind down."

It's like a clearance sale.

That's especially good news for millennials. While a dip this low tends to scare people, buying when stock prices fall means you get more bang for your buck. It's as simple as it sounds: When a stock's price is down, the same amount of money allows you to buy more shares. "You're buying whatever you're buying at a better price today than what it was last week," said Kevin Gahagan, principal and senior advisor at Mosaic Financial Partners in San Francisco.

The only thing I would add is that it's important to buy stocks on margin, in order to lever oneself as much as possible for the inevitable 1000% gains sure to be realized in the next thirty years, which will be a spitting image of the last thirty...(or was that a mirror image?)

After all, why pay down students debts (or simply pay rent) today, when you can reap the rewards of the markets tomorrow?  Netflix, for example, might be an even better investment than that $200,000 B.A. degree in sociology or German literature.

Arthur Robey's picture
Arthur Robey
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The King is Dead.

All hail the King.

Arthur Robey's picture
Arthur Robey
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Posts: 3936
And it's gone.

Well that went away quickly.  Absolutely nothing that I could find in The ABC about the crash. 

What we have instead are headlines about sex and some old ugly evil agent advocating that someone else go and do the right thing and kill somebody far away.

Excellent idea Bob Carr. Off you go. 

http://www.abc.net.au/

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