Daily briefing for Wednesday, January 12, 2011

Daily briefing for Wednesday, January 12, 2011

Here is a quick snapshot of some key overnight news, views, and data.

Prices too high?
Unleaded petrol is almost $2 per litre at the pump. That is 'caused' by rising crude prices, and high taxes. But our analysis shows that oil company margins are at the top of their normal range as well. Expect prices to go through the $2 barrier soon.

Prices going higher
Rising food prices are a problem around the world, and the G-20 is worried about the impacts. More countries are taking local action. India is worried about the price of onions. In China, the commerce minister has said this government will boost imports of agriculture products of which China is short and boost state reserves of products, including sugar and meat. He seems more worried about supply than price, with a beggar-thy-neighbor policy - but it could be good for New Zealand producers.

A tough budget for tough times
California has a new governor who is about to takle their budget problems head-on with spending cuts and tax boosts, Greek-style. He faces formidible challenges convincing enough people. Arnie couldn't do it, but maybe he softened them up for Jerry.

Wonder 
"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it."
Albert Einstein

more below ...

     8 am       ---   52 week  --  
    Today   yesterday   high low  
     --------    --------   --------- ---------   
FX rates NZ$1=US$ 0.7590   0.7627   0.7964 0.6584  
  NZ$1=AU$ 0.7693   0.7674   0.8212 0.7408  
                 
Gold in US$ 1,374   1,372   1,421 1,058  
  in NZ$ 1,810   1,799   1,877 1,507  
                 
Copper in US$ 9,450   9,373   9,754 6,091  
  in NZ$ 12,451   12,289   12,811 8,951  
                 
Crude oil in US$/bl 91.04   88.24   91.45 70.15  
  in NZ$ 119.95   117.00   121.36 101.30  
                 
US Treasuries 30 yr bond 4.47%   4.48%   4.78% 3.61%  
                 
Dow DJIA 30 11,694   11,635   11,729 9,614  
                 

Subsidies in the firing line
The new US Republican Congress is getting down to cutting spending. Farm subsidies are on the agenda.

'Utter carelessness'
US courts are ruling against the way big banks have handled themselves in the foreclosure (= mortgagee sale) processes. The rulings are so definitive, it is affecting the stock prices of most banks, wiping away billions of shareholder value.

Big earners
Being a regulator can be very profitable. The US Fed has just returned a US$78 billion dividend to the US Treasury for 2010 - way higher than the US$47 billion dividend it made in 2009. These margins are in addition to the US$25 billion in profits the US Treasury itself made with its bailout activity. But they are small returns compared with the US$14 trillion in debt built up over the generations since 1950 - and most of it since 1990.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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19 Comments

Einstein on bees and our future.

 http://www.snopes.com/quotes/einstein/bees.asp

 http://www.rense.com/general76/gent.htm

Gummy - and others - the good news the RWC begins in October 2011 and Labour and National are equal bad as ACT the Greens and other BS.

 

To be or not to bee........!

you mean - to bee or not to be !

What was the question?

Can a bee be said to be an entire bee when half the bee is missing , due to an ancient injury ?

Earache.... stop singing. nnnoooo ABCD EFG

Half a bee , philosophically

Must , ipso facto , half not bee

But half the bee has got to be

Vis a vis , its entity , d'you see

So how did the hunt for Spanish treasure ships go Gummy?

I got as far as Helen's Store , and as it was hot , called in for a refreshing ale ............ Some of the guys joined me ............ More ale ............ One was having a birthday ( 53 , bloody BB ! )............ cheers ........... one brought in a pot of homemade beef casserole , and that was brilliant , hot but ............ more ale ............ One guy was having his 26'th wedding anniversary , so we had to buy a round , to help him get over that ............... then we ........... then .......... I recall that the earth started to go rubbery and squidgey .............. and as it was dark , we gave up the hunt for ............. ahhhhhh ? ......... more beer !

"beef casserole" woof woof.....

Hot Dog !

Excellent piece on the renewed deflation of the US housing bubble and on how (yet again) economists are missing the bleeding obvious (that this will badly damage the US 'recovery').

http://www.guardian.co.uk/commentisfree/cifamerica/2011/jan/03/useconomy...

Stockman explained that before 1980, it took about $1.50 of new borrowing -- public or private -- to generate $1 of GDP growth. By the mid-1990s, it was $2.50 or $3 of borrowing for a $1 of GDP growth. By 2007, before the big collapse and meltdown finally came, $7 of public and private debt was added to the national balance sheet in order to get $1 of GDP growth.

"When you get to the point of $7 of borrowing to get $1 of income, you're obviously on an unsustainable path and pretty close to hitting the wall, which more or less we have," he said.

http://www.rawstory.com/rs/2011/01/america-has-reached-the-point-of-no-return-reagan-budget-director-warns/

http://www.reuters.com/article/idUSTRE7096FE20110111

Thanks for the link AndrewJ. You might like to read  "The marginal productivity of debt"

http://www.financialsensearchive.com/editorials/fekete/2009/0330.html

 

 

Thanks KD,  I will leave you with this

http://www.oftwominds.com/blog.html

Cheers AJ, C H Smith - always one of the first sites of the day for me. 

Or, in Wolly's case it's:

"to struggle to pee or not to pee; that is the question"

Watch your p's and q's Rob!

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