Daily Digest

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Daily Digest 2/15 - Market Turmoil Forces Central Banks Into Reverse, Ecological Eating

Monday, February 15, 2016, 10:15 AM


Major central banks tear up interest rate plans as market turmoil forces them into reverse (richcabot)

There were no expectations at the beginning of the year that the European Central Bank would cut interest rates. But now traders believe it will actually reduce its rates, which are already below zero, a further three times. Cuts are also expected from Japan and Canada.

Don’t use this crisis to ban cash and banknotes (richcabot)

The old, pre-crisis view was that this was tantamount to insanity: there was a “zero bound to interest rates” which meant that they could never enter negative territory. The reason? People would simply not put up with them, and would pull their cash out of banks and hold notes and coins, which of course pay zero interest rates (and therefore come with an opportunity cost when rates are high but start to look attractive when interest rates fall below zero). In extremis, there would even be a run on bank accounts.

Beware Economists Bearing Multiple Reasons (Capt DC)

​Not only do people use multiple reasons for doing something to convince themselves, but also to convince others. Recently Bloomberg borrowed my work (without citing) to discuss the Crypto-E-dollar. My piece was a warning, but Bloomberg portrayed the E Dollar as a viable solution strictly for economic reasons. Today they ran a new story on banning high denomination cash to aid law enforcement. They cited a paper done by a Harvard economist, Peter Sands, entitled Making it Harder for the Bad Guys: The Case for Eliminating High Denomination Notes. Here is an abstract of the paper.

This Time Is Different! (Aaron M.)

Specifically, numerous people seem to think it is still 2008. Wish that it were so – we’d be eight years younger. It all started on 24 August 2015, when two publications apparently discovered independently of each other that is was no longer 2008 and decided that this information should be urgently imparted to the rest of humanity. It all started with marketplace.org admonishing its readers to engage in mnemonic exercises so as not to forget...

Four Legal Questions the Fed Would Face If it Decided to Go Negative (richcabot)

The so-called dual mandate in the Federal Reserve Act is generally seen as granting the Fed broad authority to do what it sees necessary to obtain those goals. In central banking, this is known as “instrument independence.” Congress sets the goals, but the Fed is free to determine where to put rates in order to meet the goals. There are limits to this independence, however. For example, the Fed cannot buy stocks (unlike the Bank of Japan, which can) even if it believes doing so would boost employment.

A Bubble Induced Economy & The Wage Gap (Josh O.)

The chart below shows that wages, adjusted for inflation, have been steadily declining for decades. This illustrates the systemic problem we have as a nation. Wages have increased and decreased along with the vagaries of economic cycles, but they have steadily made lower highs and lower lows. Instead of responding with traditional methods of lower taxation to compete in the global marketplace, the government has chosen to keep taxation high relative to other countries, even while other countries lowered taxation. That made the wage disparity problem, and U.S. economic competitiveness, worse.

Stagnating Italy poses new headache for stuttering eurozone (richcabot)

Despite falling oil prices and stimulative monetary policy, Italian GDP ground to a halt at just 0.1pc in the last quarter of 2015, falling below analyst expectations of a 0.3pc expansion. It means the Italian economy grew by just 0.6pc last year having barely emerged from its worst slump since the Second World War in 2014.

Keiser: Deutsche Bank ‘technically insolvent’, running a ‘ponzi scheme’ (richcabot)

Deutsche Bank shares are down 40 percent since the beginning of the year, falling below their price at the time of the 2008 financial crisis. The bank suffered record losses of €6.8 billion in 2015.

With a balance sheet now eclipsing JP Morgan’s, Keiser warned that the bank will sooner or later have to admit to insolvency and say “we need either a huge bailout or we gotta close up shop.”

Ecological Eating (Aaron M.)

I’m tired of urban folks looking into a camera and saying they can’t find an alternative to the supermarket. I’m tired of fast food outfits saying they can’t find enough ecological food. I recently fielded a set of questions from a representative for four nearby universities who wanted to buy non-industrial food but said it could never be produced in enough quantity. Suddenly these big buyers have a caveat for their student agitators: “we can’t find enough.”

Latin American Doctors Suggest Monsanto-Linked Larvicide Cause of Microcephaly, Not Zika Virus (richcabot)

“Malformations detected in thousands of children from pregnant women living in areas where the Brazilian state added pyriproxyfen to drinking water is not a coincidence, even though the Ministry of Health places a direct blame on Zika virus for this damage, while trying to ignore its responsibility and ruling out the hypothesis of direct and cumulative chemical damage caused by years of endocrine and immunological disruption of the a acted population,” PCST said.

Gold & Silver

Click to read the PM Daily Market Commentary: 2/12/16

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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Repost Of Today's News

Emerging Stocks Rebound on Stimulus Bets as Currencies Advance

Bloomberg-9 hours ago
China's 10-year sovereign debt rose, pushing the yield down five basis points to 2.85 percent. The rate on India's notes advanced two basis points to 7.75 ...

Korea Rate-Cut Bets Revived as Market Rout Spurs Global Easing

Bloomberg-22 hours ago
The yield on three-year sovereign debt dropped below the Bank of Korea's record-low policy rate of 1.5 percent and interest-rate forwards fell after a report ...

Indonesia export, import slump deepens; central bank may cut rates

Reuters-8 hours ago

Exports plunged 20.72 percent in January to $10.50 billion, the weakest shipment ... A Reuters p

Economists Raise Brazil Inflation Outlook 2016, Cut GDP View, Survey Shows

Nasdaq - ‎3 hours ago‎
SÃO PAULO--Economists raised their inflation outlook for Brazil for this year, despite the continued expected deterioration of country's economy, as the monetary authority is expected to keep its benchmark interest rate unchanged. Brazil's official ...

China's Bad Loans Rise to Highest in a Decade as Economy Slows

Bloomberg - ‎42 minutes ago‎
Concern over borrowers' ability to service debt has weighed on Chinese lenders, with shares of the nation's four largest banks trading at valuations at least 35 percent below a gauge of their emerging-nation peers. China's ... Should the Chinese ...

Japan's economy contracts in fourth quarter

BBC News-7 hours ago
Japan's economy contracted in the final three months of 2015, adding to a string of setbacks for the government's economic reform policy. Between October and ...

Chinese premier says economy faces great challenges, new ...

Reuters UK-46 minutes ago
BEIJING China's economy faces great challenges and new uncertainties brought about by the global economic environment and various countries' ailing stock ...

Singapore New Home Sales Post Worst Start to Year Since 2009

Bloomberg-9 hours ago
They have included a cap on debt repayment costs at 60 percent of a borrower's ... Valuations in the $5.3 trillion market, already inflated by a record-breaking ...

Storm clouds gather on Italy's budget horizon

Reuters-1 hour ago
Having delayed promised debt reductions for four years now, Rome would have to ... he will have to find cuts of more than 15 billion euros ($17 billion) in 2017.

Louisiana governor says state's finances in dire situation

Reuters - ‎Feb 11, 2016‎
Edwards on Thursday juxtaposed Louisiana's finances when Jindal took office in 2008 - when the state enjoyed a $1 billion surplus - to today, when the state is facing a looming $2 billion projected deficit. The budget problems in Louisiana, a big oil ...

Louisiana Faces Worst Fiscal Crisis in 30 Years

EdCentral - ‎8 hours ago‎
Edwards does want to increase income taxes in order to plug the nearly $2 billion deficit the state must plug for next year. As of now, the Edwards administration hopes to achieve many or all of these changes in the next three weeks. However, the ...

Only the Fed can save stocks now: Deutsche Bank

CNBC-1 hour ago
A "full default cycle" in the U.S. would trigger a further 20 percent downside European ... He believes that this rising cost of debt for corporates would reduce their ...


pinecarr's picture
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re Monsato-based larvicide article

Wow, interesting article richcabot.  Like a freakin' horror film in real life. I can't help but wonder if Monsato will ever be held accountable, if this is proven true?

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Too Many... Convenient Beliefs

Here's a good Bill Bonner article on ZH: http://www.zerohedge.com/news/2016-02-15/too-many-convenient-beliefs

...Total losses from debt defaults could be four times U.S. losses in the 2008 crisis. And that is just the beginning. Next week, we’ll explain why… and why Trump and Sanders are getting so much of the millennial vote. In the meantime, here’s an essay from the archives…

Convenient Beliefs

[Ed. note: Originally published August 2, 2005]

People come to believe whatever they need to believe when they need to believe it. Recent studies of voting patterns confirm the obvious. Zombies vote for higher taxes. Cronies vote for lower taxes. All believe they are voting for matters of principle.

Alan Greenspan believed strongly in gold – until he became a central banker.  Then he believed he could do a better job than gold. Or at least he pretended to.  It was a job requirement.  A priest who didn’t believe in the resurrection would be useless. So would a plumber who didn’t believe in using a wrench.


Things Alan Greenspan said before he became master of the fiat mint…

Uncletommy's picture
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An old tune resung. . . how many times!

Cash under the mattress is looking a little bit more in vogue now. Real estate, commodities, equities, bonds, oil , gold are losing their sheen. Old Frank's words are relevant, but somewhat un-reassuring is today's economic environment. "Unhappy Days are here again" may be become #1 on the top ten. 


Time2help's picture
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Posts: 2903

Just received my new fangled micro-chipped debit card from the ol' bank. Along with a little note saying that my "old school" regular card was being deactivated for "my safety". Called 'em up and asked if they wouldn't mind if I just used the old one..."no Sir, that card is too dangerous. Terrists and criminals might take advantage and whatnot". 

A little while later I was fixin' up some fine bacon...like to put it in the ol' microwave for a few minutes before ploppin' it on the griddle. Helps even out the cookin'. Wouldn't you know it, I mixed up that thar plate of bacon for that new fangled debit card.

Whooo-wee!! Does that make a flare when it pops. 

Oh well, guess I'll just have to use cash and buy online and whatnot.

Careful out thar with yer bacon!

Michael_Rudmin's picture
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While you're at it, could you fry me up a stack of 20s?

Yeah, I know that it's only so that the ATMs can count the 20s, but Andrew Jackson is a Terminator cyborg.  Stick a stack of 20s in their with the morning cup of coffee, and you'll find that terminator eye go kaplooie. 

On the other hand, you may be poisoning yourself with heavy metals that you shouldn't.

I'd just say cut the card in half, and tell them to revoke it, if it's important to you.

Regarding ourselves, I specifically asked for no "wave" chip, but I'm fine with the "insert" chip.


Time2help's picture
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Looks like ol' Andrew has a bit of a black eye...musta been them sneaky terrists!

pinecarr's picture
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German 'bail-in' plan for gov't bonds risks blowing up the Euro

From Ambrose Evans-Pritchard at the Telegraph, @ http://www.telegraph.co.uk/finance/economics/12158626/German-bail-in-plan-for-government-bonds-risks-blowing-up-the-euro.html

A new German plan to impose "haircuts" on holders of eurozone sovereign debt risks igniting an unstoppable European bond crisis and could force Italy and Spain to restore their own currencies, a top adviser to the German government has warned.

“It is the fastest way to break up the eurozone,” said Professor Peter Bofinger, one of the five "Wise Men" on the German Council of Economic Advisers.

"A speculative attack could come very fast. If I were a politician in Italy and I was confronted by this sort of insolvency risk I would want to go back to my own currency as fast as possible, going bankrupt,” he told The Telegraph.


Doug's picture
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where to invade next

Must see.

Spoiler alert, there is very little about actually invading anywhere.

Edwardelinski's picture
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Posts: 341
Thanx pinecarr

All the Emperors have no clothes.The unintended consequences of this is staggering.

Arthur Robey's picture
Arthur Robey
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Russian ingenuity

In the absence of money one is compelled to think.

The Russians have found that a simple nickel metal halide battery is a very good approximation of Rossi's secret formula. 

S. Grey has got interesting results using remarkably medieval equipment. 



Arthur Robey's picture
Arthur Robey
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Zika: the essence of the hoax: analysis  Feb15byJon Rappoport

It's all about the money. 



Via Redice radio


The second hour gets down and dirty.

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Arthur Robey
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