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How to Build and Plant Large Hugelkultur Berms

Energy Bulletin - 26 June 2015 - 11:26pm

You can plant just about anything in your hugel beds and they will do well, but there are certain plants that tend to do very well in a hugel bed.

Categories: Peak oil news

The Anthropocene Debate: Why is Such a Useful Concept Starting to Fall Apart?

Energy Bulletin - 26 June 2015 - 11:09pm

The point is not that the Anthropocene should be abandoned—clearly it’s had its uses. But should it be a call-to-action for climate researchers and activists alike? 

Categories: Peak oil news

Energy Crunch - six months to go

Energy Bulletin - 26 June 2015 - 10:48pm

With fewer than six months to go until the UN climate summit in Paris, it’s worth asking: what’s been achieved in this very significant year for action on climate change? Recent news has certainly been positive, and from unusual suspects.

Categories: Peak oil news

Resilience Roundup - June 26

Energy Bulletin - 26 June 2015 - 10:39pm

Earth is on brink of a sixth mass extinction, scientists say, and it’s humans’ fault, Dutch government ordered to cut carbon emissions in landmark ruling, Europe’s energy revolution marches on: one-third of power supply now renewable, The Men Who’re Stealing The Sun , Why wind and solar power are such a challenge for energy grids, North Dakota's oil production has peaked: Kemp, Judge blocks onset of new fracking rules on federal public land, A big new study looks at federal energy-efficiency efforts — and the results are grim, 100% renewable energy – Embracing the “exponential growth of solutions”, New report estimates enough natural gas is leaking to negate climate benefits, Climate Catastrophe Predicted by U.S. as Obama Urges UN Action, Global Warming Is Now a "Medical Emergency" That Could Wipe Out 50 Years of Global Health Gains, Infographic: What Do Your Country's Emissions Look Like?, Why are bees hurting? A lineup of suspects, Oslo creates world's first 'highway' to protect endangered bees, A fairer way to fly, Does Cleveland Know the Secret to Building Wealth Without Gentrification?, Local Food and the CASTE Paradigm

Categories: Peak oil news

EPA's New Fracking Study: A Close Look at the Numbers Buried in the Fine Print

Energy Bulletin - 26 June 2015 - 10:36pm

EPA’s draft assessment made one thing clear: fracking has repeatedly contaminated drinking water supplies (a fact that the industry has long aggressively denied).

Categories: Peak oil news

Transition Cobham's Community Garden Crowdfunder campaign

Transition Culture - 26 June 2015 - 9:59pm

Stéphanie Jacometti of Transition Cobham tells the story of their recent successful crowdfunding appeal:   

Transition Cobham started in January 2013 after Stéphanie went to the Transition conference in 2012 and wondered why no one had set up an initiative in Cobham. After spending time with Transition Town Kingston, she convened the very first meeting on a snowy evening in January.  During our second meeting as a Transition Initiative we held a World Café to share ideas under different themes. One of those themed tables collected ideas relating to growing food. 

Fast forward two years and we’ve raised £2711 in 28 days from 41 backers for the Cobham Community Garden fence through crowdfunding!  One of the amazing things about Transition is unlocking people’s willingness to help. The community garden group has been working on this project for two years and has visited three local community gardens in that time. We visited Grace + Flavour in Horsley, a community garden within a walled garden. Then Leatherhead Community Garden, who used many raised beds and had chickens. Finally we visited the Pixham Potager in Dorking with its many sheds and greenhouses. 

We wrote a short article about the Cobham Community Garden for the Crowdfunder website which was featured in Transition Network January 2014 Round-up.  Finally in June we filmed our video for the campaign on the site of the garden (see below). One of our members is married to a talented musician and he very kindly composed music for the video.

  

The next step was launching the campaign and that involved Twitter, Facebook, local newspapers and local radio stations. We even spoke to one of the judges of The Allotment Challenge and he gave us advice on how to transform the site from a grassy field into a community garden.  The support we received was overwhelming and heart-warming. We managed to hit our target of £2500 five days before the end of the campaign and ended up raising £2711. 

As part of crowdfunding, backers pledge for a reward and receive that reward after the target has been met. So far we have knitted two hats, given three hand and three foot massages, worked for an hour in a backer’s garden and will soon name a shed after a tortoise called Brutus. 

You can find out more about Transition Cobham at our website www.transitioncobham.org.uk and you can follow us on Twitter @TTCobham.

Categories: TT news

National Walking Summit Make Strides Toward Healthier Future For All

Energy Bulletin - 26 June 2015 - 9:35pm

Walking is moving fast these days.

Categories: Peak oil news

End times for climate denial - 26 June

Energy Bulletin - 26 June 2015 - 4:18pm

 Hard times for climate change deniers (roundup)

Categories: Peak oil news

When Paradigms Shift

The Daily Reckoning - 26 June 2015 - 9:40am

This post When Paradigms Shift appeared first on Daily Reckoning.

We kicked off today’s email edition of The Daily Reckoning with a philosophical insight: All paradigm shifts are met with opposition and end with something getting destroyed.

Innovations that define the future are greeted with resistance. Dying political institutions and economic models are greeted with protest.

The ugly side of innovation.

Case in point: French taxi drivers flipping and torching UberPoP vehicles.

According to CNN’s French affiliate BFMTV, nearly 3,000 taxi drivers were protesting the online car service this morning. Tires were set on fire, cars were overturned and Uber drivers gave their fares baseball bats to defend themselves.

The cabbies’ beef? Uber is cutting in on their government-protected business by offering French citizens cheaper rides and even jobs. Shame on them.

“We’re talking about a small minority,” commented an Uber spokesperson, referring to the luddites, “totally reluctant to [accept] any sort of change.”

“Paris has about as many taxicabs as it did five or 10 years after the end of the World War II,” Blake Masters, co-author of Zero to One, related to us on Tuesday. “And the city’s grown considerably since then. They’ve got this guild system and the taxicab lobbying association or industry group, and it’s apparently incredibly powerful there.”

Indeed. The most recent data showed French output grew last quarter, if just barely. Under the current, sans-Uber model, however, the number of French unemployed is up 80% since 2008.

“That’s the classic trade-off,” added Masters. Let Uber operate freely and the everyday Frenchman would benefit, but those 3,000 cab drivers would lose the buffer to their business.

“I think it’s inevitable that as things change, there are some painful disruptions. The key is that you can modulate some of this pain through the political process and through democratic governance. But the question we always have to ask is: Has that gone too far, and do interest groups and broken politics freeze advancement?

“I think they have,” concluded Masters. Which brings us 1,792 miles due southeast, to what France may look like sooner than you’d expect…

The dying paradigm, in one act of vandalism.

“The lively artworks underscore the growing anxiety and fear among Greeks over the fallout from the bailout negotiations,” reports RT from Exarcheia, a neighborhood in Athens. “On Wednesday, [prime minister] Alexis Tsipras said the international creditors hadn’t accepted the new Greek proposals. Fears are now mounting of a Greek default.”

“The effects of the harsh budget cuts on the population,” the report continues, referring to so-called austerity programs, “have spurred an outcry on the walls of Athens.” Since 2008, Greek unemployment has spiked 225% — 25% of which RT pins on the austerity conditions levied on Greece by the International Monetary Fund, the European Union and the European Central Bank.

Meanwhile here’s Greece’s Tsipras, Italy’s prime minister Matteo Ricci and Germany’s chancellor Angela Merkel this morning at the Eurogroup meeting:

They look very concerned…

Bad models perpetuate themselves because of nostalgia and special interests, Jim Rickards has oft reminded us. Fortunately, the old models are eventually replaced, but it takes time. According to Jim, you can expect Greece’s eurozone drama to “unfold the same way it has for the last five years.” Think of it as Europe’s version of Congress’ never-ending debt ceiling debate.

Jim goes into detail about how “Grexit” is unlikely using a game theoretic model right here. Simply click the link to read more.

Regards,

Peter Coyne
for The Daily Reckoning

P.S. Be sure to sign up for The Daily Reckoning — a free and entertaining look at the world of finance and politics. The articles you find here on our website are only a snippet of what you receive in The Daily Reckoning email edition. Click here now to sign up for FREE to see what you’re missing.

The post When Paradigms Shift appeared first on Daily Reckoning.

Categories: Economics

Here’s How the Fed Could Bailout Europe If Greece Defaults

The Daily Reckoning - 26 June 2015 - 9:20am

This post Here’s How the Fed Could Bailout Europe If Greece Defaults appeared first on Daily Reckoning.

The Greek crisis is dominating headlines this week, and promises to be the most important economic and financial topic of conversation through the weekend and into Monday. Neither the Greek government nor the European Central Bank (ECB) seem to be prepared to give an inch, and there’s every indication that things could come to head next week. If Greece does default, and if there is a resulting crisis in European markets, will the Federal Reserve get involved? To quote Sarah Palin, “You betcha!” How would the Fed do this? Read on to find out.

Although the euro is the dominant currency in Europe, a lot of debt in Europe is still denominated in dollars. The dollar being the world’s reserve currency and dollar markets being incredibly liquid, it just makes sense for a lot of companies to do business in dollars. But when a crisis hits and those businesses need dollars, they have to get a hold of dollars somehow. Banks in Europe have a limited supply, and once those dollars are gone, there is no dollar-printing central bank in Europe that can step in. Enter the Federal Reserve.

The Fed sets up liquidity swap lines with the ECB. These swap lines were, for many years, not highly publicized, and not even broken out as a separate category on the Fed’s balance sheet. That is, until the financial crisis hit and the swap lines rose to close to $600 billion. Even since the financial crisis they remain open, are periodically renewed, and occasionally still used, without much publicity.

A swap line is an agreement between the Fed and a foreign central bank to swap currency. For instance, the Fed creates new dollars, the ECB creates new euros, and they agree to exchange them. For the period of the swap, the Fed holds those newly-created euros as an asset, and the ECB loans those dollars out to firms that need dollars to make dollar-denominated payments.

Presumably those firms are only in need of short-term dollar financing, and can pay those loans back. When the swap unwinds, the ECB then sends those dollars back to the Fed, the Fed returns the euros to the ECB, and the swap lines are drawn back down to zero. Sounds nice and easy, until there’s a problem.

Of course, there are many problems with swap lines. The inflationary effects of creating that new money and loaning it temporarily, the deflationary effects as it gets sucked back out of the system, and of course the fact that the central bank is picking winners and losers by determining which companies get to borrow those dollars. And those are just the problems when it is individual companies that are in danger of failing. Now we have an entire nation (Greece) that is in danger of failure, a nation that is in a currency union with all the other Eurozone countries. So what happens when (or if?) Greece implodes?

This drama has been going on for months, so maybe the big players have already minimized their exposure to Greece. Fed Chairman Janet Yellen seemed to downplay the importance of Greece when she was asked about it at her press conference on Wednesday. But what if this is a bigger problem than anyone realizes?

I still remember getting called to a staff briefing in mid-2007, almost exactly eight years ago now, where committee staff on the House Financial Services Committee informed us that a little-known unit of Bear Stearns had gotten itself into a little bit of difficulty.

Nobody seemed to think it was a terribly important issue, but they were going to monitor things. Little did we know that that incident was the harbinger of the financial crisis. Over the next year things went from bad, to worse, to catastrophic. It started small, but snowballed tremendously.

Now back to the swap lines. If you want to get a sense of the Fed’s involvement in Europe, watch the swap lines. Swap line data is published every Thursday afternoon on the Fed’s balance sheet, the H.4.1 release. If you look at the St. Louis Fed’s charts and data on swap lines, you’ll see the huge amount of swaps during the financial crisis, and then a smaller but still significant increase in swap lines during the first iteration of the Greek financial crisis back in 2012.

While swaps have been relatively non-existent this year, there was a small blip back in April, likely Greek-related, and more importantly, another blip this week. While the amount, $114 million, is a drop in the bucket compared to what it has been in the past, this number needs to be watched. It could very well be an indicator of the Fed getting involved in Europe again. And if the doomsday scenario ends up taking place next week, expect that $114 million figure to skyrocket.

The Fed seems to want the conversation to revolve around a possible upcoming interest rate hike, so it’s been relatively silent on the topic of Greece and its involvement in bailing out Europe. But even if the Fed doesn’t say anything about Greece, its money-printing to pump up the swap lines will do plenty of talking.

Regards,

Paul-Martin Foss
for The Daily Reckoning

This post was originally published at the Carl Menger Center for the Study of Money and Banking.

The post Here’s How the Fed Could Bailout Europe If Greece Defaults appeared first on Daily Reckoning.

Categories: Economics

Greek Crisis: How Long Before a Fed Bailout?

The Daily Reckoning - 26 June 2015 - 9:12am

This post Greek Crisis: How Long Before a Fed Bailout? appeared first on Daily Reckoning.

As the Greeks and the European bureaucrats and bankers continue wrestle over who is going to pay an unpayable debt, we wonder just how long before the US Federal Reserve is called to put the US on the hook. After all, the Fed pumped trillions into Europe after the 2008 crisis. The dollar must be kept the world’s reserve currency at all costs, which partly explains US militaristic foreign policy.

The Greece crisis and more today on the Liberty Report:

Regards,

Ron Paul
for The Daily Reckoning

This Liberty Report was first published on the Institute for Peace and Prosperity’s website.

The post Greek Crisis: How Long Before a Fed Bailout? appeared first on Daily Reckoning.

Categories: Economics

There Will Be No “Grexit”

The Daily Reckoning - 26 June 2015 - 8:18am

This post There Will Be No “Grexit” appeared first on Daily Reckoning.

Greece’s headline drama will unfold the same way it has for the last five years. There will be a lot of turmoil. I’m not saying there aren’t problems in Greece; there are big problems there. But what I’ve said all along going back to 2010 is that Greece isn’t leaving the euro; there will be no Grexit.

Nobody’s going to get kicked out or quit.

Now that doesn’t mean everything’s fine in Greece. They could have bail-ins, nationalizations, bond defaults and a lot of economic disruption around the country. None of that is the same as Greece leaving the euro, however. I’m confident in my assessment because this isn’t solely an economic issue; it’s also political.

I’ve often referred to Europe today as the Fourth Reich. Go back to 1991; Margaret Thatcher was opposed to German reunification because she said every time the Germans get back together they take over Europe. They’re doing it again today, except economically and politically.

There’s a political will to keep Greece in the euro. If you look at Greek polls the Greek people overwhelmingly favor the euro. They don’t like the austerity that goes with it, but they favor the euro.

Germany wants Greece in the euro, too. The political will is there and they will stay — everything else is just a detail.

But before we get too far, a little background might be helpful to you. As I say, this issue is political, economic and theatrical at times with a lot of moving parts.

Greece is part of the European Union (EU), obviously. But the EU is a larger economic group. Within the EU you have what’s called the “eurozone.” Those are 19 countries that issue the euro and use the euro as their currency and Greece is one of them.

Today, Greece is in an awful debt crisis. A few years ago there was even a partial default where they restructured some bonds.

Since then, they’ve been getting bailouts from something called the “Institutions.” Interestingly, it used to be called the “Troika,” but I think the Greeks were a little bit offended by that, so the Germans changed the name.

But the Troika or Institutions are three entities: The European Central Bank, the European Union itself operating through special purpose entities, and the International Monetary Fund (IMF). These are the three places that Greece has received its bailout money from.

As always there’s what the Institutions call “conditionalities.” For example, they might tell Greece, “OK. We’ll give you the money you need. But you have to agree to certain conditions. And if you don’t abide by the conditions, we won’t give you the money.”

It’s a forcing mechanism to get Greece to change its political and economic arrangements. That’s been going on for a few years.

The money’s also disbursed in tranches meaning they’ll give Greece some of the money but not all of it. The Institutions will check the conditions set before releasing subsequent tranches. That’s the basic background for where we are now.

Today, Greece’s Syriza party — a more socialist, left-leaning party — has said to the Institutions “We’re not going to agree to the conditions anymore. They’re too harsh. We’re cutting pensions. We’re cutting government spending. We’re running a primary surplus. Unemployment is over 25 percent. We’re not getting the growth that was promised. This whole thing doesn’t work. So we want to, in effect, tear up the deal and start over. We’re not saying we won’t do a deal, but we’re saying we want new terms and conditions.”

Syriza was elected on that platform and, of course, Greece is a democracy. They have to respect the will of their voters.

That’s why we have today’s train wreck.

On the one hand, the EU and the so-called Institutions — the old Troika — are insisting that they will not give Greece any more money unless they meet certain conditions.

Meanwhile, Greece is saying, “We’d like some more money, thank you very much. But we’re not going to meet the conditions. We want a new deal.” All the while, the clock is ticking and Greece has major bond payments and interest payments due. This is why analysts are talking about Greece exiting the euro — the “Grexit.”

There’s no precedent for such a course. No member of the eurozone has ever quit or been forced out. The expectation then is that Greece would go back to the drachma. The drachma was their old currency before they joined the euro.

Of course, when a country has its own currency, it can print as much as they want. So the theory goes, they could exit the euro, go back to the drachma, their central bank could print drachma and pay their bills. But of course they would default on all the euro-denominated debt.

Let me spend a minute on what I call the game theoretic approach. It will show why this scenario is unlikely.

Europe would like to tell Greece to just put up or shut up. And Greece would like to tell Europe that they’re not going to put up with any more austerity.

But what you have to do is you have to think two or three moves ahead.

You have to say, “What would that actually mean? How will that actually play out? If one side acts that way, what does it mean for their constituency? Or other people — will the rest of the European Union or, for that matter, Austrian, Dutch, or German citizens be on the receiving end of any bad consequences?”

Some analysts claim “Greece leaving the euro is no big deal.” I couldn’t disagree more. Think of such a situation three steps ahead from the Institutions’ perspective.

It is true that Greece is not a big part of the world economy. It is true that if Greece’s GDP disappeared, that, by itself, it wouldn’t make that large of an impact on the world. But that’s not the danger. The danger is contagion. The danger is that dominos that start falling.

Going back to 2007, 2008, I remember when JPMorgan rescued Bear Stearns in March 2008. Everyone said, “The crisis is over.” Then Fannie and Freddie were rescued in July of 2008, and everybody said, “The crisis is over.”

And I kept looking at the situation and saying, “This crisis is not over. These are dominoes that are falling. Each one’s hitting the next one and taking the crisis further. We don’t have resolution.”

As I expected, Lehman Brothers was next, and then AIG behind that. Then we saw how bad things got between October of 2008 and the stock market bottom in March 2009 when investors lost 30 to 50 percent of their net worth on that market decline. Not just stocks, but real estate and other assets across the board.

So I see these dominos falling if Greece goes. It’s not about Greece — it’s about Spain, Italy, Portugal, Ireland. It’s about the whole eurozone. It’s about confidence.

That doesn’t mean that if Greece quits the euro, that the next day Italy says, “Oh, we’re quitting too.” I’m not saying that. What I’m saying is that markets will do the job for them.

You don’t need Italy and Spain and Portugal to quit. You just need investors to say, “Well, wait a second. Nobody thought Greece would quit. But they did. And now nobody thought these bonds would default, but they did. So maybe these other things can happen too.”

As investor, if an event happens once, you’re going to give it a different probability in the future and dump other countries’ bonds. That’s going to raise interest costs. That’s going to make those countries’ deficits worse. And it feeds on itself.

People would lose confidence in the euro itself. That’s would raise costs. That’s the danger. It’s the contagion and what happens in investors’ minds.

Europe’s leaders understand that. That’s the motivation for both sides to come to the table.

Why is Greece making such a big deal out of this?

Well, one of the things they’re saying is: “This austerity is causing us to cut pensions. We have Greek workers who had worked for 20 or 30 years. And, as part of the conditionality of the European loans,” which I explained above, “we’re required to cut those pension benefits. And we don’t like hurting the pensioners. That’s not fair.”

Going back to game theory, assume Greece quits the euro. The country defaults on its debts. That means they go back to the drachma. What happens then?

Hyperinflation.

Nobody in the world wants drachma so their foreign direct investment’s going to dry up too. They’re not going to be able to finance anything. They will be able to print money. That’s all they’ll be able to do. That means hyperinflation, which destroys Greek pensions.

So, when the Greek government says they’ll play hardball with Europe to preserve Greek pensions, remember their alternative is: go back to the drachma and destroy the pensions anyway.

Greece wants to play hardball, but it knows if it leaves the euro it’s a disaster. Europe knows it will also be a disaster if the kick Greece out of the euro. It’s not that Europe cares about Greece or vice versa, but that they each care about themselves. That’s what drives a negotiation forward.

In a game theoretic space, this is what’s called a two party prisoner’s dilemma. A prisoner’s dilemma is a game theory approach where you have two people under interrogation.

If you rat out the other guy, you win. But if he rats you out, he wins. And if you both rat each other out, you both lose. But if you both keep your mouth shut, you both win. The caveat is, you don’t know what the other guy’s doing.

So, in a prisoner’s dilemma, you have to not only think about what you want to do, but about what is the other player is going to do. The way out of the dilemma is to assume that everybody’s rational.

Both sides respectively understand that a Grexit will cost them. It will cost them more if this doesn’t work out than if they go forward.

This will get resolved, in my view. But six months from now or a year from now, we could be at it again. I could be writing to you about the same dynamics at work. Any resolution is just buying time in hopes the economy grows. That’s a separate, bigger-term, structural issue that’s not going away.

But, in the short run, I do expect Greece and Europe to reach an agreement.

I imagine they’re meeting behind closed doors in non-public ways right now. That’s opposed to posing for the cameras and walking into a meeting and throwing up your hands and throwing up your hands, all of which is perfectly normal negotiating posturing, if I may say so.

Probably a core group that would involve Germany, the Netherlands, the ECB, and Greece, and probably someone from the IMF — a small group of five or six people meeting, who knows?

You know, at a restaurant or some out of the way place with no press involved, no posturing, and a bunch of lawyers waiting outside the room, wordsmithing, trying to come up with the right presentation. That’s where we are right now. There will be no Grexit.

Regards,

Jim Rickards
for The Daily Reckoning

P.S. If you haven’t heard, I’ve just released a new book called The Big Drop. It wasn’t a book I was intending to write. But it warns of a few critical dangers that every American should begin preparing for right now. Here’s the catch — this book is not available for sale. Not anywhere in the world. Not online through Amazon. And not in any brick-and-mortar bookstore. Instead, I’m on a nationwide campaign to spread the book far and wide… for FREE.

Because every American deserves to know the truth about the imminent dangers facing their wealth. That’s why I’ve gone ahead and reserved a free copy of my new book in your name. It’s on hold, waiting for your response. I just need your permission (and a valid U.S. postal address) to drop it in the mail. Click here to fill out your address and contact info. If you accept the terms, the book will arrive at your doorstep in the next few weeks.

The post There Will Be No “Grexit” appeared first on Daily Reckoning.

Categories: Economics

Greece: Planning A Bank Holiday

The Daily Reckoning - 26 June 2015 - 6:39am

This post Greece: Planning A Bank Holiday appeared first on Daily Reckoning.

Following a Greek government default, and possibly before then, Greek banks would likely be both insolvent and unable to make payments to creditors. What should a government do?

A bank becomes “insolvent” when the value of its assets is less than its total liabilities. In time, the bank also becomes “illiquid” – unable to borrow money, and thus make payments – because people don’t like to lend to insolvent entities.

Greek banks have been getting by because they have been able to borrow from the European Central Bank, but this may come to an end soon, perhaps in a matter of days.

There are two basic ways to deal with this: one is to increase assets, possibly through a government investment. This is called a “recapitalization,” and when the government is involved, a “bail-out.”

Obviously, this takes money — €48 trillion in the case of Greece’s prior government “bail-out” — and often the terms of the investment are so poor that it amounts to a gift to the bankers and their creditors.

The other way is to decrease liabilities, which obviously means some pain for the bank’s creditors, including depositors. But, once this accounting adjustment is done – it amounts to a revision of ledgers, and could conceivably be accomplished in a day or two – then the bank can reopen for business, in good financial health.

This process is sometimes known as a “bank holiday,” a euphemistic term which shows that, when the financial system is temporarily shut down, there isn’t much to do except spend the day at the park.

A man puts his wallet in his pocket after withdrawing euro notes from a bank machine in Athens, Thursday, June 25, 2015. The ECB approved a request from Athens to increase the amount of emergency liquidity Greek lenders can tap from the country’s central bank. Worried Greeks have been withdrawing their money from their country’s banks, fearing the imposition of restrictions on banking transactions. An estimated more than 4 billion euros ($4.5 billion) left Greek banks last week. (AP Photo/Daniel Ochoa de Olza)

Bank insolvency and reorganization – a subset of bankruptcy – is one of those things, like sovereign default itself, which is treated as something conceivable, like a catastrophic earthquake in Los Angeles, but which never actually happens.

This is wholly incorrect.

The Federal Deposit Insurance Corporation, which oversees this process in the U.S., lists 513 failed banks since the start of 2008.

In the case of these U.S. banks, typically the insured depositors are made whole; uninsured depositors and other creditors take a partial or complete loss; and the assets, liabilities and operations of the banks are sold to some larger bank.

The bank quickly reopens, typically under the name of the acquiring bank, but the branches are the same. People with deposits at the bank at the time of its failure then have deposits at the acquiring bank. The process typically costs the FDIC nothing, as insured deposits are well under the value of remaining assets.

Ultimately, it amounts to an adjustment of ledgers. (I discussed these topics in greater detail in a series of items in 2008-2011. Also, a whole chapter is devoted to these topics in my book Gold: the Monetary Polaris.)

One of the largest banks to undergo this FDIC resolution process was Washington Mutual, which was closed by the Office of Thrift Supervision in September 2008.

At the end of 2007, the bank had assets of $328 billion, deposit liabilities of $188 billion, 2,239 retail branches, and 43,198 employees. The bank was quickly sold to JP Morgan Chase; former Washington Mutual branches reopened with Chase signage, and former Washington Mutual customers became Chase customers.

As of March 2014, the entire Greek banking system had roughly€319 billion of assets among 19 Greek institutions, with 93% of this held by the top four banks. Including also branches of foreign banks, there were 2,688 branches and 45,654 employees.

In other words, the entirety of the Greek banking system is roughly equivalent in size to one Washington Mutual – to say nothing of the other 512 banks the FDIC has reorganized in recent years.

As is the case in many kinds of bankruptcy, there is, alas, great potential for criminality in these matters. This criminal element has already been codified in the “bail-in” legislation passed in most developed countries worldwide, including Greece.

The “bail-in” legislation bypasses already-existing bankruptcy court processes – in other words, the systems formerly in place, flawed as they may be, to prevent widespread looting of the un-rich, un-powerful, and un-connected.

Most overtly, recent “bail-in” guidelines agreed to at the G20 meeting last November specifically make derivatives liabilities senior to uninsured deposits. It is practically a guarantee that noninsured depositors in large, derivatives-issuing banks will get screwed. It would also be Armageddon for money-market funds, which today are mostly conduits for junior bank financing.

However, as ugly as that is, it might not be such a problem with smaller banks such as those in Greece, which typically do not have major derivatives involvement.

(The G20 agreement also makes “liabilities that the bank has by virtue of holding client assets” junior to “any liability, so far as it is secured,” which seems ripe for abuse.)

It would be good if the Greek government brushed up a bit on what all of this means, before being led to slaughter by seemingly-helpful foreign advisors.

Greek banks need to go through their restructuring process.

This will mean losses for some bank creditors, although they may get equity in a debt/equity swap, thus becoming shareholders in the new, healthy bank. The banks themselves do not need to be merged, sold or liquidated, but can continue much as they are, keeping the assets (loans) that they already have.

They should be able to reopen in as little as a few days, emerging from the process as clean, healthy banks – perhaps among the healthiest in Europe. There should be no cost to the government.

Governments do not need to fear this, or, for that matter, abandon it to the guidance of foreign entities that do not have the best interests of Greeks at heart.

Instead, governments should guide the process towards its best possible outcome: a tolerably fair distribution among creditors of the losses that already exist, prevention of further criminal asset-grabbing or liabilities-dumping, and a quick return to banking system normalcy.

It is a lot to ask a government to manage both a sovereign default and a banking system reorganization, all the while keeping an eye on popular support and amicable foreign relations. But, sometimes it needs to be done. All the alternatives are worse. So, do it.

Regards,

Nathan Lewis
for The Daily Reckoning

This article originally appeared on Forbes.

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The post Greece: Planning A Bank Holiday appeared first on Daily Reckoning.

Categories: Economics

Collapse, Part 4: Loss of Faith in Public Institutions

The Daily Reckoning - 26 June 2015 - 4:21am

This post Collapse, Part 4: Loss of Faith in Public Institutions appeared first on Daily Reckoning.

Though we may think of collapse in terms of ATMs not working and rampaging mobs, collapse actually starts with the intangible loss of faith in public institutions: elected officials, law enforcement, the justice system and the agencies of financial regulation (anti-trust, etc.).

Unsurprisingly to those who discern the structural rot of the status quo, Americans No Longer Believe In Their Institutions:

“Americans’ confidence in most major U.S. institutions remains below the historical average for each one,” a Gallup spokesman said in a news release. All in all, it’s a picture of a nation discouraged about its present and worried about its future, and highly doubtful that its institutions can pull America out of its trough.

Only 8% have confidence in Congress, the lowest of all institutions rated.

No wonder, given the Congressional credo that “we have to pass this bill to find out what’s in it”The latest monstrosity that is cloaked in secrecy and mumbo-jumbo is the Trans-Pacific Partnership (TPP), which Ellen Brown rightly describes as Straight out of Alice in Wonderland:

The terms of the TPP and the TiSA are so secret that drafts of the negotiations are to remain classified for four years or five years, respectively, after the deals have been passed into law. How can laws be enforced against people and governments who are not allowed to know what was negotiated?

If the Trans-Pacific Partnership is so good for the average American, then why not let us read it and be persuaded by the document itself?

Instead, the vast machinery of the American central state is devoted to maintaining the secrecy of the bill and crushing all opposition with threats that are no longer even veiled.

One of the 39 senators who voted against the TPP, Jeff Sessions, concluded “They Won The Vote, But Lost The Trust Of The American People”

Americans increasingly believe that their country isn’t serving its own citizens. They need look no further than a bipartisan vote of Congress that will transfer congressional power to the Executive Branch and, in turn, to a transnational Pacific Union and the global interests who will help write its rules.

The same routine plays out over and again. We are told a massive bill must be passed, all the business lobbyists and leaders tell how grand it will be, but that it must be rushed through before the voters spoil the plan. As with Obamacare, the politicians meet with the consultants to craft the talking points—not based on what the bill actually does, but what they hope people will believe it does.

And when ordinary Americans who never asked for the plan, who don’t want the plan, who want no part of the plan, resist, they are scorned, mocked, and heaped with condescension.

Washington broke arms and heads to get that 60th vote–not one to spare–to impose on the American people a plan which imperils their jobs, wages, and control over their own affairs. It is remarkable that so much energy has been expended on advancing the things Americans oppose, and preventing the things Americans want.

No wonder Americans have lost faith in their institutions: those institutions are now devoted to serving their own vested interests or the interests of private financial Elites.

This same loss of trust is underway in Europe.

The entire Greek debt issue could have been resolved with fewer losses and much less suffering if Greece had defaulted on the private bank debt in 2010.

But with the complicity of the public institutions that were supposed to serve the citizens’ interests, private banks quickly shifted the vast majority of the Greek debt to the taxpayers: If Greece Defaults, Europe’s Taxpayers Lose.

 

Here is the debt in 2009–mostly private:

Here is the debt in 2015–almost all public debt on the backs of taxpayers:

When institutions serve the interests of the few at the expense of the many, democracy is just a label slapped on financial totalitarianism. In case you missed it, here is Smith’s Neofeudalism Principle #1:

If the citizenry cannot replace a dysfunctional government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.

Regards,

Charles Hugh Smith
for The Daily Reckoning

P.S. Ever since my first summer job decades ago, I’ve been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.

And like most of you, the way I’ve moved toward my goal has always hinged not just on having a job but a career.

You don’t have to be a financial blogger to know that “having a job” and “having a career” do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept “getting a job” has changed so radically that jobs–getting and keeping them, and the perceived lack of them–is the number one financial topic among friends, family and for that matter, complete strangers.

So I sat down and wrote this book: Get a Job, Build a Real Career and Defy a Bewildering Economy.

It details everything I’ve verified about employment and the economy, and lays out an action plan to get you employed.

I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read.

The post Collapse, Part 4: Loss of Faith in Public Institutions appeared first on Daily Reckoning.

Categories: Economics

The Market Ticker - Big Surprise (NOT!)

The Market Ticker - 26 June 2015 - 4:18am

The USSC's Obamacare decision was handed up today and it was not a big surprise that they once again tortured the English language (never mind the rules of statutory construction) to allow "subsidies" to be granted to those states without the required state-run health exchange.

I think Anton Scalia said it best in his dissent, to which I would like to add:

Even less defensible, if possible, is the Court’s claim that its interpretive approach is justified because this Act “does not reflect the type of care and deliberation that one might expect of such significant legislation.” Ante, at 14–15. It is not our place to judge the quality of the care and deliberation that went into this or any other law. A law enacted by voice vote.......

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Categories: Economics

How Yuan Reserve Currency Status Could Affect Gold

The Daily Reckoning - 26 June 2015 - 3:47am

This post How Yuan Reserve Currency Status Could Affect Gold appeared first on Daily Reckoning.

It was great to see Kitco’s Daniella Camobone in New York yesterday. Here’s our new interview on gold, China, Greece, the International Monetary Fund and more:

Watch the clip below, from Kitco News:

Regards,

Jim Rickards
for The Daily Reckoning

P.S. If you haven’t heard, I’ve just released a new book called The Big Drop. It wasn’t a book I was intending to write. But it warns of a few critical dangers that every American should begin preparing for right now. Here’s the catch — this book is not available for sale. Not anywhere in the world. Not online through Amazon. And not in any brick-and-mortar bookstore. Instead, I’m on a nationwide campaign to spread the book far and wide… for FREE. Because every American deserves to know the truth about the imminent dangers facing their wealth. That’s why I’ve gone ahead and reserved a free copy of my new book in your name. It’s on hold, waiting for your response. I just need your permission (and a valid U.S. postal address) to drop it in the mail. Click here to fill out your address and contact info. If you accept the terms, the book will arrive at your doorstep in the next few weeks.

The post How Yuan Reserve Currency Status Could Affect Gold appeared first on Daily Reckoning.

Categories: Economics

China’s Gold Hoard Will Slay the Mighty Dollar — Here’s Why…

The Daily Reckoning - 26 June 2015 - 3:28am

This post China’s Gold Hoard Will Slay the Mighty Dollar — Here’s Why… appeared first on Daily Reckoning.

Tiger Woods in his prime wasn’t close to being invincible. He was invincible.

From the time Tiger Woods burst onto the golf scene by dominating the 1997 Masters until he won the 2008 U.S. Open on a broken leg, he played golf at a level that we may never see from anyone again.

I had a front-row seat to that 2008 U.S. Open victory. I was underneath the grandstand, peering through legs trying to get a look at Tiger on Sunday as he nailed yet another epic clutch putt to force a playoff that he would ultimately win.

The crowd reaction was so loud I thought that the grandstand was coming down on top of me.

If you had told me on that Sunday that the 2008 U.S. Open would be the last major Tiger would win, I would have laughed at you. Now, with his game in complete disarray and a body that is constantly broken, I think that it probably was his last hurrah.

Tiger Woods in 2008 reminds me of the U.S. dollar today…

With European and Japanese central banks doing everything possible (and then some) to weaken their respective currencies and the U.S. Fed actually discussing rate hikes, it seems impossible to imagine the U.S. dollar being anything but strong. Seemingly invincible.

But just as Tiger had issues already going on behind the scenes in 2008 with his swing and personal life, so too are cards being played that will ultimately weaken the U.S. dollar.

Today, we’ll take a look at China’s ambition to uproot the global currency market. Let’s start by talking gold…

Nobody Knows Just How Much Gold China Actually Now Controls

It is amazing what you can find out today on the Internet.

I use it to fix my car. There are wonderful instructional videos on YouTube available for free.

I use it to diagnose what is wrong with myself and family members. Don’t get me started on the dangers of using the Internet for medical purposes versus simply taking the word of a doctor.

And I can use it to find virtually every single piece of financial data that I ever want.

There is one thing that I can’t find on the Internet, no matter how much time I spend searching.

How much gold China has in its reserves.

I can’t do that because China hasn’t released an updated gold reserve figure since 2009.

In 2009, the People’s Bank of China announced that it had significantly increased its holdings of gold from its last update, in 2003. In 2003, the gold in reserve stood at 600 tonnes. In 2009, it jumped 76%, bringing the total to 1,054.1 tonnes.

Despite the big increase, China, as of that 2009 update, had only a fraction of the gold reserves of the United States. China also had less gold than Germany, the IMF, Italy and France.

The next update from the People’s Bank is widely anticipated to significantly change that — and all signs point to the announcement coming sometime this year.

A report from Bloomberg Intelligence suggests that as of today, China’s reserves exceed 3,510 tonnes, which is three times the figure reported in 2009. That would give China the second largest gold reserve, next to the United States.

There’s reason to believe, however, that China could have even more gold than Bloomberg suggests.

Why Is China Stockpiling So Much Gold?

It isn’t hard to see why China would be interested in buying gold. The country has an almost-hard-to-comprehend $4 trillion sitting in its foreign currency reserves. Having all of those assets tied up in paper currencies has to be an uneasy feeling with central banks everywhere doing their very best to devalue those currencies.

What I find shocking is how much gold China could stockpile if it were really intent on doing so. The value of China’s gold reserves as of the 2009 update is only 1% of the value of its foreign currency reserves.

China could triple its gold reserves and hardly make a dent in its foreign currency reserves. The only real governor of the rate that China could stockpile gold is having to be careful not to disrupt the gold market.

With all of that cash just sitting there waiting to have its value eroded by global easy-money policy, it is no wonder China is interested in owning hard assets.

There is another reason for its growing gold hoard. China is on record calling for a new currency to replace the U.S. dollar as the global standard.

If China is looking to throw its hat into the ring with an alternative reserve currency, it is clearly a good idea to have assets other than currencies on its balance sheet. Building up a big store of value in the form of a gold reserve of global scale is an obvious move.

Now, what happens to the U.S. dollar if China does succeed in creating a gold-backed currency that gains acceptance as the global reserve currency?

Well, let’s think about that for a minute.

Globally, central banks hold far more in U.S. dollars and dollar-dominated investments than all other currencies combined. The International Monetary Fund believes that 63% of central bank reserves are held in American dollars.

They do this because U.S. dollar reserves stabilize the value of their own currencies.

But what if we soon see another option on the market? Namely, a gold-backed yuan? If all of a sudden there is a better option, there will be a huge decrease in demand for the greenback from these central banks, which will then release dollars by the bucket load into the market.

We could be looking at a systematic reset of the world’s currency regime. A simple announcement out of China or the IMF could put huge pressure on the value of the dollar, leading toward a permanent reduction in demand for greenbacks.

The Mystery May Be Revealed in the Coming Months

China has no set schedule for updating the market on the level of its gold reserves. However, there is reason to think we may get to see what is behind the curtain this year.

Bloomberg also suggested that China is soon going to want to disclose its gold holdings in an effort to have the yuan join the IMF’s currency basket, called the special drawing right. Current membership privileges to the SDR belong to only the dollar, euro, yen and British pound.

If China’s gold reserve is revealed this year and the size of the addition surprises to the upside, it is going to be a major shot across the bow of the U.S. dollar.

In fact, it might be a lot more than that. It may be a direct hit.

Keep looking through the windshield,

Jody Chudley
for The Daily Reckoning

P.S. Ever wonder how you can make a lot of money from oil without owning a well? Or whether or not you should buy gold and silver? Or is fracking just a flash in the pan? Get insight, insider scoops and actionable investment tips twice a week with Daily Resource Hunter? Just click here for a FREE subscription!

The post China’s Gold Hoard Will Slay the Mighty Dollar — Here’s Why… appeared first on Daily Reckoning.

Categories: Economics

Greece Cries “Foul!”

The Daily Reckoning - 26 June 2015 - 2:48am

This post Greece Cries “Foul!” appeared first on Daily Reckoning.

Today’s Pfennig for your thoughts…

Good day, and a Tub Thumpin’ Thursday to you!

The only thing really going on different today than yesterday is that the Eurogroup/Greece Summit lasted about 7 hours, and brought about no new agreement.

So once again, the markets’ thoughts that a deal would be done by the end of the week, has brought us to the end of such week without an agreement. I know, I know, we still have tomorrow, and these guys should be working overtime into the weekend. But, it doesn’t look like “a done deal” as we were told yesterday.

The euro doesn’t seem to mind too much, it’s still weak, but not getting sold like funnel cakes at a State Fair, even with reports from the Syriza party (the “no austerity for Greece party” ) that the creditors’ proposals amount to “blackmail” Greece is becoming the boy who cried “foul”.

Well, what in the hell do you expect them to do with your financing needs, Greece?

You stepped into the debt hole big time, then were given loans, with spending cut measures, that you ignored for the most part, and now you expect white glove treatment when you come back for more loans?

If it were me. I would make you come with your begging cup and plead tender mercies! Good thing you’re not dealing with King Chuck! HA!

Over in Switzerland, one of our fave central bankers (NOT!) the Swiss National Bank (SNB) President, Jordan, was not happy with the franc’s stronger moves lately, and decided to scare the bejeebers out of the markets by saying that “the franc is considerably overvalued, and that the SNB stood ready to intervene in the markets”.

Here’s a fun fact for you, just to show you how strong the franc has gotten vs. the euro. Remember that ill-fated floor that the SNB installed on the euro/franc cross at 1.20?

Guess where the cross is today. As the Jeopardy Final Answer song plays. Well, let’s see how much you wagered. And your answer is. 1.15. No, I’m sorry, the answer is: What is 1.05?   That’s right. 1.05!   The franc vs. the dollar is OK, but not as strong as the cross to the euro is.

Well, did you see the 3rd revision of 1st QTR GDP yesterday? Oh, the rate hike campers were coming out of the wall boards again to dance in the street.

The last revision has 1st QTR GDP at -0.7%, but this revision took it to -0.2%… I wonder what happened to make GDP look so much better?

You don’t think that. nah, that wouldn’t happen in the U.S.! We don’t need no hedonic adjustments, or book cooking to show how strong our economy is!

OK. Are you chuckling along with me there?

Apparently, the upward revision was brought about by stronger “consumption”. I doubt that really happened. But it’s a good excuse. Think about it, retail sales hasn’t been good and strong for a month of Sundays, so where’s the “consumption” happening?

I always liked the story that the big boss, Frank Trotter, told an audience in Bermuda a few years ago. He was on a panel, and all the guys on the panel except Frank, were touting “consumption” as leading the U.S. out of the doldrums (this was like 2010?).

Then Frank said, “You know, I was walking through one of the old cemeteries here, and I noticed a reoccurring reason for death — ‘consumption,’ so maybe it’s not such a good thing to have.” Frank has a good sense of humor, folks, sometimes you have be on his intellectual plane to “get it” but that was funny!

But getting back to the 1st QTR GDP revision. Quite a few economists are saying that this uptick points to a rebound in the 2nd QTR to around 3.8% GDP.

What, what?

How does that reconcile with the Fed Atlanta, reporting that the 2nd QTR would be very weak?  Explain that one to me and then we can go on…

Speaking of the revision in 1st QTR GDP, Zerohedge.com wrote the following:

Fifteen minutes after GDP data was released — showing Q1 was indeed as weak as expected and inventories suggesting Q2 will be just as weak — someone decided it was an appropriate time to dump over half a billion dollars of notional gold on the futures market.

Oh brother! When will this all stop?

Ever hear of a well-respected investment analyst named Bill Holter?

My friend Dave Janda, sent me a note from Bill Holter, and I took this out of the note, because it plays nicely in the sandbox with what I was just talking about. Here’s Bill Holter:

Over the last few years, “theory after theory” has become fact after FACT after FACT!  There can no longer be any question, conspiracy to delude and defraud has run rampant and is a day to day operation in the Western world.

Alrighty then, let’s get back to some different things to talk about.

The Aussie dollar (A$) and New Zealand dollar/kiwi, are both stronger this morning. No big shakes, but stronger nonetheless. I was reading some research that one of our dealer friends sent over and it talked about NAIRU, and that caught my eye, because I did a class on NAIRU last week.

Remember what it stands for?  Non-Accelerating Inflation Rate of Unemployment. So, at what level of unemployment does inflation begin to take off?

You may recall me talking about how the Fed doesn’t really advertise what their NAIRU is, but given that unemployment according to the BLS –so take it for how many grains of salt you wish– is 5.4%, and we sure haven’t seen inflation taking off for higher ground yet, according the PCE (personal consumption expenditures), which is the Fed’s preferred measure of consumer inflation.

So I guessed that the Fed’s NAIRU is probably around 5%.

Well then this research by the dealer talks about how the Fed has steadily lowered its estimate of NAIRU since late 2012, and any further downward revisions would likely signal a desire to stay more accommodative than the dealer currently projects.

Here’s the dealer talking about this whole thing:

In a recent speech, Fed Governor Lael Brainard argued for a lower long-run unemployment rate. Her comments were later echoed in remarks by Governor Daniel Tarullo.

In support of her argument, Governor Brainard cited a recent FEDS Note that argues a decline in worker bargaining power has led firms to be more aggressive in hiring, leading to lower long-run unemployment.

So, all in all, it appears that maybe more and more people see what I’ve seen all along, and that is that interest rates aren’t going anywhere for a while.

And in a very large roundabout that’s what has the currencies A$ and Kiwi, on the rise this morning, for their positive interest rate differentials to the dollar, euro, yen and pound will remain, pointing investors toward these currencies for that positive differential.

The U.S. data cupboard has two of my favorite prints today, personal income and spending. Personal spending for May is expected to outpace income once again, which I will point out over and over again, is not the ideal situation, although the Keynesians will jump with joy seeing “spending” going good.

We’ll also see the aforementioned PCE  for May. And the usual Weekly Initial Jobless Claims, which continue to bounce around 275,000 each week.

Well, gold is flat this morning, but just kind of has the look about it, that it could head South at any moment, like when NY Traders arrive at their desks.

I cracked up yesterday at a press conference regarding the repatriation of gold by Texas from NY Banks.  You may recall me telling you that Texas announced that they were building a depository for their gold, which brings about a ton of questions as to why and what they will do with it, but that’s for another day.

Well, the press conference had the Texas Gov. proclaiming that Texas had $1 billion worth of gold, and the assistant to the Gov. gets up and says something like: “That’s right, we have $1 billion worth of gold, tell me of another state that has $1 billion worth of gold,” and then someone informed him that the Texas gold was really worth $340 million (still a lot, but not $1 billion) and the assistant, is shocked, and says, “Well that’s still more than any other state!”

For What It’s Worth.  I’m sure you’ve all heard by now that the new $10 bill will remove Alexander Hamilton, the first U.S. Treasury Sec., and replace him with a woman.  I don’t really care who’s dead mug is on my Federal Reserve notes, but a twist on this story came to me and I thought you would like to hear about it. The whole report can be found here: http://www.nysun.com/editorials/the-bernanke-ten-spot/89200/

But for those of who just want the broad strokes, this is about former Fed Chair, Ben Bernanke, who now tells us he was a fan of Alexander Hamilton, but the folks who wrote the story believe that Bernanke must be thinking of someone else, for Bernanke did whatever he could to unravel what Alexander Hamilton tried to preach to his followers.

Here are a couple of snippets:

Mr. Bernanke qualifies America’s first treasury secretary as ‘among the greatest of our founders for his contributions to achieving American independence and creating the Constitution alone. In addition to those accomplishments, however, Hamilton was without doubt the best and most foresighted economic policymaker in U.S. history.’ So Mr. Bernanke is opposing the demotion of Hamilton from his featured spot on the ten-dollar bill.

The irony of this is that while chairing the Federal Reserve, Mr. Bernanke traduced every principle Hamilton held dear, particularly the idea of sound money defined by Congress. It was Hamilton who wrote the first law Congress passed under the authority the Constitution grants it to coin money and regulate the value there of, and of foreign coin, and to fix the standard of weights and measures. That piece of legislation, the Coinage Act of 1792, is the final fruit of what Hamilton envisaged in respect of money and the purest record of how he thought about the dollar.

That is the law that established the United States Mint, enacted that the money of account of America would be expressed in dollars, and defined the dollar as having the value of ‘a Spanish milled dollar’ as it was then current and ‘contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver.’ The law recognized gold as specie in coins at a value of about 15 times that of silver, and for debasing coins of either specie established the penalty of death.

Chuck again. Crazy stuff, eh?  Sort of like, for the years that Big Al Greenspan was Fed chairman and he never supported gold. But before he was Fed Chair, he was a disciple of Ayn Rand, probably the first “Gold Bug”  and then after his years in the Fed were over, he went back to being a supporter of gold.

Thank you for reading the Pfennig, and I hope you have a Tub Thumpin’ Thursday!

Chuck Butler
for The Daily Reckoning

P.S. The Daily Pfennig is first published everyday, right here.

Editor’s Note: Be sure to sign up for The Daily Reckoning — a free and entertaining look at the world of finance and politics. The articles you find here on our website are only a snippet of what you receive in The Daily Reckoning email edition. Click here now to sign up for FREE to see what you’re missing.

The post Greece Cries “Foul!” appeared first on Daily Reckoning.

Categories: Economics

Solar Just Crossed a Major Threshold – Get in While There’s Still Time

The Daily Reckoning - 26 June 2015 - 2:31am

This post Solar Just Crossed a Major Threshold – Get in While There’s Still Time appeared first on Daily Reckoning.

Welcome to the 1 percent!

No, not you silly. I’m talking about solar.

Solar has finally taken its first step toward becoming a legitimate energy player. As of right now, solar provides 1% of the world’s electricity. And today you’ve got a chance at some red hot gains off a short-term solar play as solar use expands by the day…

Yes, solar has entered the 1%. It took 40 years to get there, according to Ramez Naam’s blog. But it won’t take another 40 years for solar to get to 2%…

Using independent industry projections, “it will take 3 more years to get the second 1%,” Naam explains. “Then less than 2 years to get the third 1%. And by 2020, solar will be providing almost 4% of global electricity.”

That might not sound like a lot, but it is. That represents massive growth from today’s numbers.

No way around it, solar is becoming a force to be reckoned with. It’s not about whacky environmental types anymore. And it’s no longer a foolhardy speculation on Wall Street. Solar firms are growing faster and faster. And investors with the foresight to grab onto this trend (and hold on tight) could mint a fortune.

Just look at how quickly it’s grown over the past five years…

“Over the past few years, many graphs have been worth thousands of words on the rise of solar power,” write the folks over at Treehugger. “It’s almost impossible to overstate how important the revolution that is happening right now is, and like most transitions, most people will only realize what’s going on after it’s mostly over.”

Sure, those hippies are writing about alternative energy. But what do you expect? They’re hippies. Most folks still don’t believe solar will ever amount to anything more than a drop in the energy bucket. But the projections we’re reading today say otherwise. And once the herd catches on, the big money will have already been made.

Earlier this month I tipped you off to a resurging Guggenheim Solar ETF (NYSE:TAN). We’re no stranger to trading this solar ETF here at Rude HQ. And since you had the opportunity to hop back in, it’s quietly traded sideways. This trade continues to hold well above its $40 bounce zone, and I’d expect it to move higher sooner rather than later…

The solar trade is about to speed up. Get ready to make hay while the sun shines.

Regards,

Greg Guenthner

for The Daily Reckoning

P.S. The future’s bright for solar. If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE

The post Solar Just Crossed a Major Threshold – Get in While There’s Still Time appeared first on Daily Reckoning.

Categories: Economics

The Market Ticker - You're Gonna Be Dead / Broke

The Market Ticker - 26 June 2015 - 1:50am

I want to put forward a little quiz for everyone -- it's called "What is sustainable?"

What is the sustainable rate of growth in medical cost compared against personal income?

What is the sustainable rate of growth of college cost compared against the salaries earned by each respective degree?

What is the sustainable rate of growth of home prices compared against household income?

What is the sustainable rate of government cost growth compared against the growth in income of persons?

What is the sustainable rate of growth of credit compared against the growth in incomes?

I'll answer all of the above for you: zero.

Further, it.......

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Categories: Economics
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