Register for Free
Post comments, receive updates via email, gain access to exclusive content, and more.
Spam Safe!
Email
- Blame Games
- Fed Would Act if Needed, Chairman Says
- Big Questions Need Answering After Stress Tests
- LBMA Closes Off Public Access To Key Bullion Bank Trading Data
- The Death of Paper Money
- Budget Forecasts Hold Fast
- Goldman Threatened With Audit
- Deflation Defies Expectations — and Solutions
Economy
Blame Games (jdargis)
If businesses aren’t hiring or investing, in other words, it’s because they don’t need to: they have enough workers and factories to meet the demand for their products. And there are few signs that this is going to change any time soon: consumer demand remains weak, economic indicators—inflation rates, consumer confidence, the stock market, bond rates—aren’t forecasting a quick return to boom times, and, just last week, the Fed chairman, Ben Bernanke, told Congress that the state of the U.S. economy was “unusually uncertain.”
Fed Would Act if Needed, Chairman Says (jdargis)
The chairman, Ben S. Bernanke, who had described the nation’s economic outlook as “unusually uncertain” in presenting the Fed’s semiannual monetary policy report to Congress on Wednesday, was somewhat more explicit about his thinking in the second day of testimony.
Big Questions Need Answering After Stress Tests (SolidSwede)
"No stress tests could, in principle, achieve that result," Lewis said. "Such tests only take account of what the erstwhile US Defense Secretary, Mr. Rumsfeld, used to call the 'known unknowns.' What usually causes damage, however, are the 'unknown unknowns,'" Lewis said.
LBMA Closes Off Public Access To Key Bullion Bank Trading Data (pinecarr)
Is something (abnormally) fishy in the state of precious metals manipulation? GATA's Adrian Douglas (recently famous for facilitating the emergence of whistleblower Andrew Maguire) seems to think so, after his observation that the LBMA has decided to block "access to statistics relating to the trading activities of its member bullion banks. This information has been available to the public since 1997 but as of this week it is available only to LBMA members."
The Death of Paper Money (pinecarr)
As it happens, another book from the 1970s entitled "When Money Dies: the Nightmare of The Weimar Hyper-Inflation" has just been reprinted. Written by former Tory MEP Adam Fergusson -- endorsed by Warren Buffett as a must-read -- it is a vivid account drawn from the diaries of those who lived through the turmoil in Germany, Austria, and Hungary as the empires were broken up.
Budget Forecasts Hold Fast (pinecarr)
Treasury and Finance officials have adjusted the budget surplus upward but otherwise kept their predictions unchanged in their pre-election update.
They now expect a budget surplus of $3.5 billion in 2012-13, slightly larger than the $3.1 billion announced by Treasurer Wayne Swan in his economic update on July 14.
Goldman Threatened With Audit (pinecarr)
Goldman Sachs is facing a threat by the Financial Crisis Inquiry Commission to bring in outside accountants to comb through the bank’s systems for data on its derivatives business, the panel’s chairman has said.
The commission will not back down from demands for information Goldman’s executives have maintained they do not track, Phil Angelides told the Financial Times.”
Deflation Defies Expectations — and Solutions (Rector)
Deflation is usually associated with a Great Depression-like drop in demand. Consumer prices, incomes and asset prices fall. Interest rates go to zero, as low as they can go. As prices and incomes fall, the cost to borrowers of servicing debt does not, sucking life out of the economy and pushing prices down further. A bad situation, in short, gets worse.
Article suggestions for the Daily Digest can be sent to dd@chrismartenson.com. 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."
- DailyDigest's blog
- Login or register to post comments
- 3972 reads
Print
Comments
"Pennsylvania school districts got some breathing room in their budgets on Friday by having their contribution rate to employees' pension system cut by a third.
The Public School Employees' Retirement System voted 12-2 to cut the employers' contribution rate that taxpayers pay to 5.64 percent of payroll, which will lower this year's cost by $349 million."
"While taxpayers will pay less, the pension system's liabilities still have to be paid. Rep. Glen Grell, R-Hampden Twp., one of the two pension board members casting "no" votes, said the lower payments into the system will force PSERS to liquidate $400 million in current investments to pay current benefits.
The pension system is financed by the taxpayer contributions, investment earnings and mandatory payroll contributions for employees. The employees' contribution this year is expected to total $992 million.
Despite what seems would be welcome news, Harrisburg School District Business Administrator Jeff Bader said the move might buy districts temporary relief but exacerbates a much larger pension funding problem that looms starting in 2012, when taxpayers' contribution rates are anticipated to spike.
"We are actually going to be funding less of the retirement system as a result of the rollback, so it buys one year but mortgages the future years," Bader said."
..........................1A) Mary Young: Pension crisis case of deja vu
"In case you've forgotten, the Pennsylvania School Employees Retirement System deficit is $15.7 billion. The State Employees Retirement System deficit is $5.3 billion.
That's right. We're talking $21 billion.
Dreyfuss said that when someone retires, the money needed to pay the retiree should be in the pension plan. It's not.
The state House of Representatives has proposed solving the crisis by stretching out repayment of the deficits over 30 years.
The proposal, HB 2497, passed the House last month in a 192-6 vote. (Rep. Sam Rohrer, a Robeson Township Republican, was one of the six.) It's now before the Senate Finance Committee."
"Frustrated by Albany's backlog of unpaid bills, cash-strapped local governments around New York are threatening to suspend their Medicaid payments to the state.
Last week, an upstate county announced that it was freezing Medicaid payments to Albany. The move, which was closely watched by other county leaders, may be the start of a broader revolt, as the consequences of the state's chronic cash shortage trickle down to the local level.
On Tuesday, county officials across the state are planning to hold a meeting to discuss whether to stage a more widespread protest that could potentially deprive Albany of millions of dollars in Medicaid reimbursement from other county governments owed money by the state.
While tensions between Albany and local governments are a regular occurrence, budgetary pressures have rarely led to such extreme measures.
Facing a $9 billion deficit and operating for most of the year without a budget, the Paterson administration has delayed billions of dollars in school aid, suspended contracts and taken other severe steps to keep enough cash flowing.
The fiscal turmoil has complicated the budgets of local governments, which have to worry about balancing their own books and maintaining their credit ratings, while delivering social welfare services and other programs mandated by the state."
"The recent layoff of 80 police officers in Oakland could be the harbinger of things to come as government officials find that public employee pension deals made when the stock market was booming are helping bust their budgets today.
"It's regrettable, but we had no choice," said City Council President Jane Brunner of the layoffs that were Oakland's response to a growing public pension crisis.
Forced to make a $30.5 million budget cut - Brunner said that's more than the city's discretionary spending - Oakland had asked police officers to pay 9 percent of their salaries toward their pensions and accept a later retirement age for new hires."
Oakland not alone
"This is not unique to Oakland," said Ron Cottingham, president of the Police Officers Research Association of California. "Stockton is having this happen. So is Sacramento."
"David Crane, Gov. Arnold Schwarzenegger's special adviser for jobs and economic development, called the pension crisis "the largest single financial issue facing state and local governments."
The problem traces its roots to the dot-com boom of the late 1990s.
Back then, soaring stock prices swelled the value of pension funds to the point where many state and local agencies were able to reduce or eliminate their annual benefit payments - using Wall Street gains to offer public employees a perk that appeared to have little or no cost to taxpayers.
"Everybody was raising benefits without thinking of the long term," said Kil Huh, director of research for the Pew Center on the States, which recently surveyed this nationwide problem.
California started down the path of more generous public employee pensions in 1999 when state lawmakers passed SB400.
The law permitted state public safety officials to retire earlier and at higher pay than was previously the case. Comparable benefits soon spread to local police officers and firefighters and eventually became the norm for most public employees.
But when stocks crashed during the current recession, so did the portfolios of the California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement System, largest of the state's pension repositories."
"The leader of the U.S. House of Representatives doesn’t want to trim Social Security benefits to ease the federal deficit.
House Speaker Nancy Pelosi (D-Calif.) said at a conference in Las Vegas that she has no interest in raising the retirement age to decrease the cost of Social Security to the federal budget.
“To change Social Security in order to balance the budget, they aren’t the same thing in my view,” the California Democrat told the Netroots Nation conference in Las Vegas, according to CBS News. “When you talk about reducing the deficit and Social Security, you’re talking about apples and oranges.”
Changing the benefits paid by the Social Security Administration could significantly affect the financial planning for millions of boomers and older Americans who count on Social Security payments as part of their financial plan. This year marks the first year in which Social Security payments have exceeded the money taken in from younger workers."
"Chinese banks are facing serious default risks on more than Rmb1,550bn ($228bn) in loans they have lent to local governments across the country, according to senior Chinese officials.
In a preliminary self-assessment carried out at the request of China’s banking regulator, the country’s commercial banks have identified about one-fifth of the Rmb7,700bn lent to local government financing vehicles, which are mostly used to fund regional infrastructure projects."
....................5A) CBRC: 23% Of Local Govt. Loans At Risk (China) and China's bad debt risks mount after stimulus splurge"The federal budget deficit, which hit a record $1.4 trillion last year, will exceed that figure this year and again in 2011, the White House predicted Friday"
"(Reuters) - Sales of new U.S. single-family homes rebounded strongly in June from the prior month's record low, government data showed on Monday, driving the number of houses on the market to their lowest level in nearly 42 years.
The Commerce Department said sales jumped 23.6 percent to a 330,000 unit annual rate from a downwardly revised 267,000 units in May. The sales pace last month was still the second lowest since records started in 1963. "
- Other news and headlines:
Global Economy Slowing to 3.25% From 4.7% Recent AverageEx-CIA chief: Strike on Iran seems more likely now
The Death of Paper Money (By Ambrose Evans-Pritchard)...(also posted above in the DD by Pinecarr)
CEBS Says German Banks Hid Debt Details: FT
Bank Stress Tests Aren't `Rigorous Enough,' Oppenheimer's Bernstein Says
South Korea Frontloads 61% Of Controllable Budget In 1st Half
Bulgaria On EU Excessive Deficit Watch
Geithner Says U.S. Employers `Very Cautious,' Job Growth Not Fast Enough
Moody's, S&P threaten Hungary with rating downgrade
India May Raise Rates as Higher Prices Spark Protests
State Receivership to Save California Public Pensions?: Full Disclosure Network® Report
County's poured drink tax ruined businesses, bar owners say (Allegheny County)
Cost of bank bailout may push borrowing to above 20% of GDP this year (Ireland)
Amid Strikes, IMF Inspects Greek Finances
New Jersey still underfunding its pension system
Jury Volunteer Stirs Up a Pension Fund Tempest (SF)
Repairs tab may top $32B (Hawaii)
Many Bay Area homeowners in real estate limbo (California)
Empty accounts cloud public pension system (China)
Hi all,
After reading about Peak Oil and the alternatives (wind, solar power) I'm wondering, is it really impossible to replace oil with electricity generated by wind farms and solar panels? Yes, I agree, there will be some difficult years ahead (5? 10?), but is it that difficult to switch to electricity?
Bogdan.
The 'death of paper money' concerns me. I am unwilling to spend big at the moment because I fear deflation. But if we have a Weimar Republic style economy ahead of us, my money will become worthless. What does one do???
Hi all,
After reading about Peak Oil and the alternatives (wind, solar power) I'm wondering, is it really impossible to replace oil with electricity generated by wind farms and solar panels? Yes, I agree, there will be some difficult years ahead (5? 10?), but is it that difficult to switch to electricity?
Bogdan.
Account deactivated per user's request.
Bogdan
The short answer is no. The long answer is no.
Damnthematrix has posted numerous times abut the fact that we are at peak everything. Which means there are not enough resources to construct the wind farms necessary to meet present electrical needs let alone projecting those needs out for any length of time. As a matter of fact just two days ago he emailed me a feew facts and figures on the subject.
There is a thread about the stages of awareness one of which is bargaining. This is the stage that people think wind and solar will save us are at.
We have lived a privileged life that would have been the envy of kings a hundred years ago. It is time to bid it a fond farewell and learn to live better with less.
V
Bogdan
I second what V said, but would add that we don't really know how fast things will fall apart. And, obviously, the more we prepare, the less wrenching the transition will be. The one constant I keep in mind is, as CM says, the next 20 years will be very different than the last 20 years. Further, as someone else has said, I suspect that things will change slowly, then all at once. We don't know when the 'all at once' will happen, so preparation is vital.
Of course, we could all be wrong and things might just go on more or less like what we're used to, but the chances of that happening are vanishingly small. Being ready as far in advance as possible is why I'm a member of this site. I think our "faithful scout" Chris gives me the best chance of seeing changes coming down the road.
Most definitely. The transition away from oil may be the greatest challenge humanity has ever faced. (at least for those of us in the so-called developed world) The bushmen of the Kalahari and the Yamamato may not notice, but we will.
Doug
but is it that difficult to switch to electricity?
IMHO- no, if we put our minds together....but that is a mighty big IF. Unless there was some singular catastrophic event that literally put the end of oil in sight, there will still be some bozo yelling "drill baby drill" right to the last drop. Cuba had such an event with the fall of the USSR, coupled with trade embargos, and for once, people worked together, and became stronger and leaner as a result (though I'm sure it wasn't easy).
The end of motorized personal transportation is going to be the hardest transition, I think. Not that it's so necessary, but that there isn't a lot of transitional choices- yes there are hybrids, but even with mass production, I think it will still be expensive. Until we get the proper infrastructures prepped, many jobs, deliveries, products, etc will grind to a halt.
Hi all,
After reading about Peak Oil and the alternatives (wind, solar power) I'm wondering, is it really impossible to replace oil with electricity generated by wind farms and solar panels? Yes, I agree, there will be some difficult years ahead (5? 10?), but is it that difficult to switch to electricity?
Bogdan.
Follow this link: http://lifeaftertheoilcrash.net/
Trust in God but row for shore.
Hi all,
After reading about Peak Oil and the alternatives (wind, solar power) I'm wondering, is it really impossible to replace oil with electricity generated by wind farms and solar panels? Yes, I agree, there will be some difficult years ahead (5? 10?), but is it that difficult to switch to electricity?
Bogdan.
This is my layman's answer (I'm just a reader of news, not an expert) but there are some interesting possibilities that got me thinking...
Declining/slowly disappearing/so-long-as-there-are-major-spare-parts: Wind farms and solar panels can generate electricity, but the problem is transfer to storage for use at a later time - when there is no wind or at night or in a vehicle. Storage usually means batteries - chemicals and minerals (like rare earth elements) that are expensive, require factory infrastructure, often must be imported, and will get used up over time and present a hazardous materials disposal issue. Large scale wind-, solar-, and hydro-electric require infrastructure, would not be as oil-dependent, but in a civilizational decline may after some time run down.
More renewable/sustainable/personal means include: using wind power to compress air in tanks - either portable or in underground concrete bunkers. Compressed air can run small vehicles and can power machinery including kitchen gadgets like blenders, washing machines, sewing machines power tools (the Amish do that). You can use windmills to draw water from wells, Persian windcatchers for cooling (ancient technology), passive solar (Morse/Trombe walls for heat, water or stone heat sinks, solar water heating, solar/ammonia refrigeration), ice blocks saved during winter, packed with sawdust and straw in an ice house that will last through summer, methane from manure/composting for gas/heat, etc.
Poet
http://blogs.ft.com/martin-wolf-exchange...
The political genius of supply-side economics
July 25, 2010 4:18p
The future of fiscal policy was intensely debated in the FT last week. In this Exchange, I want to examine what is going on in the US and, in particular, what is going on inside the Republican party. This matters for the US and, because the US remains the world’s most important economy, it also matters greatly for the world.
My reading of contemporary Republican thinking is that there is no chance of any attempt to arrest adverse long-term fiscal trends should they return to power. Moreover, since the Republicans have no interest in doing anything sensible, the Democrats will gain nothing from trying to do much either. That is the lesson Democrats have to draw from the Clinton era’s successful frugality, which merely gave George W. Bush the opportunity to make massive (irresponsible and unsustainable) tax cuts. In practice, then, nothing will be done.