Civilization’s Foundation Eroding

Civilization’s Foundation Eroding – The thin layer of topsoil that covers the planet’s land surface is the foundation of civilization. This soil, typically 6 inches or so deep, was formed over long stretches of geological time as new soil formation exceeded the natural rate of erosion. But sometime within the last century, as human and livestock populations expanded, soil erosion began to exceed new soil formation over large areas.  This is not new. In 1938, Walter Lowdermilk, a senior official in the Soil Conservation Service of the U.S. Department of Agriculture, traveled abroad to look at lands that had been cultivated for thousands of years, seeking to learn how these older civilizations had coped with soil erosion. He found that some had managed their land well, maintaining its fertility over long stretches of history, and were thriving. Others had failed to do so and left only remnants of their illustrious pasts.
Medicaid enrollment spikes to 48M in weak economy. — More people signed up for Medicaid last year than at any time since the program’s inception, as the recession wiped out jobs and workplace health coverage. A report released Thursday by the nonprofit Kaiser Family Foundation found that enrollment in the low-income medical insurance program jumped to more than 48 million. With the economy barely improving, states are forecasting a 6 percent increase in the rolls next year, meaning another strain on their cash-depleted budgets. Nearly 6 million people have signed up for Medicaid since the start of the recession in December 2007, according to Kaiser. Starting in the fall of 2008, the federal government provided more than $100 billion in additional Medicaid funding to the states to help cover growing numbers of people in need. The last of that money will run out in June of next year, and states are still likely to be strapped."
War veterans’ care to cost $1.3 trillion – The expense of caring for veterans of the Iraq and Afghanistan wars is an unfunded budget liability for U.S. taxpayers that in years to come will rival the cost of entitlement programs such as Social Security and Medicare, lawmakers will be told Thursday. The House Veterans’ Affairs Committee will hear new estimates of the cost of lifetime medical care and benefits for returning troops disabled by their service — a total of more than $1.3 trillion. "It’s somewhere between Medicare and Social Security in terms of its potential impact" on the budget, said Rep. Bob Filner, California Democrat and committee chairman. "This is another entitlement that we have committed ourselves to that is going to break the bank unless we deal with these issues as soon as possible,"
Nearly one in four second-quarter home sales a foreclosure – Nearly one in every four U.S. homes sold in the second quarter was a deeply discounted foreclosed house, putting the market on pace to work through distressed properties in about three years, RealtyTrac said. Banks stepped up foreclosures through the summer and will take over a record 1.2 million homes this year, up from around 1 million last year and about 100,000 in 2005 before the housing bust, according to a forecast from the real estate data company. Foreclosed homes accounted for 24 percent of all second-quarter sales, at an average price discount of more than 26 percent compared with homes not in the foreclosure process.

Postal Service hitting billions in losses, hoping for rate hike – Americans can still send and receive mail, but the U.S. Postal Service may not have much left in the bank after this week, as it’s set to announce billions of dollars in losses as early as Thursday.  It’s also waiting for postal regulators to announce Thursday whether they approve of a proposed 5.6 percent postage-rate increase, to start in January. The proposed increase faces stiff resistance from business groups and lawmakers, who say that the USPS should instead make deeper spending cuts to meet its financial obligations.  GOP opposition kept Congress from permitting the Postal Service to postpone paying $5.5 billion required by law to pre-fund retiree health benefits. A temporary spending measure to fund most federal programs through early December didn’t mention the Postal Service; it passed the Senate on Wednesday and is expected to clear the House on Thursday.

Senate Passes $1.25 Trillion Bill To Fund Federal Government Through Dec. 3 – The U.S. Senate on Wednesday voted to ensure there is funding in place to keep the federal government running until after the mid-term elections, allowing lawmakers to leave town to hit the campaign trail. The roughly $1.25 trillion measure will fund the various departments and agencies of the federal government until Dec. 3, by which time lawmakers will have had to reach a longer term funding solution.The measure was necessary because Congress failed to approve any of the 12 bills required to be passed each year to fund the federal government’s operations.

Budget Could Be Worse Next Year – They know the budget picture looks even worse next year. "We’ll be facing for the following year, a budget deficit of about $1.5 billion," Bauer says. Bauer tells us the state’s lifeline this year was stimulus money. Michigan received about $ 1 billion in federal grants — more than $350 million of that went to Medicaid, another $300 million supported schools. "Every school district in this state needs to realize that this is one-time money," says Sen. Majority Leader Mike Bishop. They can’t rely on it in the future."

S&P: $460B Shadow Inventory Will Take 41 Months to Clear – It’s no secret that the volume of distressed residential properties is weighing heavy on U.S. housing markets and is prolonging any meaningful recovery. Of even greater concern is the industry’s growing backlog of homes thatneed to be liquidated and resold but have yet to make their way to the market – that menacing shadow inventory that threatens to asphyxiate appreciation of home values and drive the industry to a new low in this down cycle. Standard & Poor’s (S&P) defines this shadow inventory as outstanding properties whose borrowers are, or recently were 90 days or more delinquent on their mortgage payments; properties currently or recently in foreclosure; or properties that are real estate owned (REO). The credit ratings agency has just released a new report in which it estimates that the principal balance of these distressed homes now stands at about $460 billion. S&P says this hidden supply represents nearly one-third of the non-agency residential mortgage-backed securities (RMBS) market currently outstanding.

Japan may ease policy after tankan: report — The Bank of Japan is even more likely to ease monetary policy at next week’s board meeting, following the release of a September tankan survey showing concern among businesses about the country’s economic outlook, according to a report published Thursday. The Nikkei business daily reported that the central bank could "boost its ceiling for the fixed-rate funds it loans to financial institutions from the current level of 30 trillion yen." Further easing of monetary policy has been called for to help stop the yen from strengthening sharply against the U.S. dollar
On the Folly of Pricing off of Sovereigns – It is common practice in the fixed income world to price debt to a sovereign benchmark.  Perhaps it is just habit, but when a country like Japan is yielding .97% for a 10 year bond (and .5% for a 7 year bond) when it is as indebted as it is something is not right.  Japan pays  about 40% of its revenues as interest expense each year even with these low yields.  To make matters even more absurd, the country has recently been active in the open market trying to WEAKEN it’s currency!!!  So for a foreign investor the BOJ is actively trying to weaken how much you will get paid back over time while you are getting compensated for that risk and default risk with very measly yields.  If yields in Japan were to come up to current U.S. levels for whatever reason then 100% of Japan’s revenues would be consumed by interest alone (forget principal repayment).

Capital Controls Eyed As Global Currency Wars Escalate – Stimulus leaking out of the West’s stagnant economies is flooding into emerging markets, playing havoc with their currencies and economies. Brazil, Mexico, Peru, Colombia, Korea, Taiwan, South Africa, Russia and even Poland are either intervening directly in the exchange markets to prevent their currencies rising too far, or examining what options they have to stem disruptive inflows.  Peter Attard Montalto from Nomura said quantitative easing by the US Federal Reserve and other central banks is incubating serious conflict. "It is forcing money into emerging market bond funds, and to a lesser extent equity funds. There has truly been a wall of money entering many countries," he said.

Global Debt And Parallel Universe – They approach with comments like, "I know the economy is bad I don’t need you to remind me every day."  But in my opinion to see this crisis as merely a "bad economy" is to miss the bigger picture.  We live in an economic world that is completely detached from reality.  If the figures that were recently posted on CNBC are accurate and there is really $188 trillion in global outstanding debt then there is really no doubt.  $188 trillion works out to be just under $28,000 in debt for every human being on the planet (using more recent figures for world population).  This includes the 2 billion or so in India and China that make less than $1000 a year as well as the 700 million or so in Africa that often are so impoverished as to be on the brink of starvation.  This also includes all of the children and the elderly and the decrepit of all countries including the developed world.  They all have $28,000 in debt hanging over them (figuratively, when aggregated), accruing interest.  The debt will never be repaid and we may be near a breaking point where worldwide interest expense sufficiently saps any productivity growth from the economy.  

Bank of England’s Adam Posen Calls For More Quantitative Easing – The Bank of England should restart the printing presses and pump more money into the economy to prevent a "lost decade" of low growth and high unemployment, one of its senior policymakers Adam Posen has said.  Mr Posen, an external member of the Bank’s nine-strong Monetary Policy Committee, has called for a second round of quantitative easing (QE), on top of the £200bn already injected into the economy, to stave off the threat of a period of deflation to rival Japan and the Great Depression.  His downbeat comments in a speech to the Hull and Humber Chamber of Commerce, Industry and Shipping came despite confirmation from the Office for National Statistics that the economy grew at 1.2pc for the three months to June, its fastest pace in nine years, and strong high street sales. The CBI distributive trades survey for September showed the balance of retailers reporting an increase in sales had climbed to a six-year high at plus 49pc.

French Public Sector Debt Grows To 82.9% Of GDP At End 2Q –France’s public-sector debt grew sharply by the end of the second quarter to EUR1.592 trillion, representing 82.9% of gross domestic product, as lingering economic stimulus spending from the recent global recession and expenditures for social programs, especially due to high unemployment, swelled government expenditure. The closely watched debt-to-GDP ratio was bigger than the 80.4% at the end of the first quarter and substantially above the 74.2% at the end of last year’s second quarter. But that increase had generally been expected. The government Wednesday published its draft 2011 budget, which sharply narrows the public-sector budget deficit, but leaves debt-to-GDP ratio around current levels. The debt data were published under the so-called Maastricht guidelines regulating debt in the European single currency zone. The Maastricht rules call for euro-zone members to keep their public debt at 60% of GDP or less. However, most euro-zone countries are well beyond that level due to heavy stimulus spending during the recession

Moody’s cuts Spain debt rating to Aa1 — Moody’s Investors Service became Thursday the last of the three big ratings agencies to downgrade Spanish sovereign debt, cutting the rating to Aa1 from Aaa, with a stable outlook. Moody’s cited weak growth prospects, a “considerable deterioration” in government finances and worsening debt affordability as key reasons for the downgrade. The move, though widely expected, comes a day after the first general strike for the country since 2002, with thousands of protestors taking to the streets across the country to protest austerity measures.

Irish Bank Funding Boosts Budget Deficit To 32% GDP – Ireland’s financial crisis loomed large again Thursday as the government said additional costs of propping up the country’s banks could stretch its government budget deficit to nearly a third of the country’s total economy — a record for any eurozone member. The Central Bank of Ireland announced early Thursday that the state-owned Anglo Irish Bank Corp., Ireland’s most troubled financial institution, will need total capital of EUR29.3 billion and then an additional EUR5 billion in a "stress scenario." The central bank also said Allied Irish Banks PLC (AIB) will need an additional EUR3 billion by year-end. It was originally charged with raising EUR7.4 billion in capital by the end of 2010. Lenihan said the state will become the majority shareholder in the bank

Technology The Showcase As Energy Remains The Cornerstone The pavilion is a showcase for the latest and safest nuclear technologies, hi-tech solutions for the 2014 Sochi Olympic Games and Dmitry Medvedev’s pet project – the innovation center Skolkovo, which is open to hi-tech companies all over the world including China. Trade between Russia and China is heavily weighted towards energy. The world most populous and fastest growing country is hungry for power, and Russia has plenty of it. But the point of contact lies not only in oil and gas. Chinese companies are investing in manufacturing in Russia, such as Thunder Sky Corporation joining with Rusnano to build a half billion dollar plant in Novosibirsk to produce batteries for electric cars and buses.

 Study: Global Warming, Energy & Food Shortages, Recession To Cause ‘Industrial’ Failure In 10 Years – The study, A User’s Guide to the Crisis of Civilization: And How to Save It, predicts that converging crises may trigger resource short-falls leading to political and economic failure in the West, while accelerating international conflict including ‘intercommunal’ warfare in less developed countries.  Authored by international security analyst Dr. Nafeez Mosaddeq Ahmed – Executive Director of the IPRD and Associate Tutor at the University of Sussex School of Global Studies – the study is the first systematic review of data, evidence and theory across physical and social sciences, including academic research and industry reports, assessing the connections between different global crises including the danger of violent conflict. Former UK Environment Minister (1997-2003) Rt. Hon. Michael Meacher MP described the study as “the first book to systematically explore their interconnections… within a single comprehensive narrative… a very worthwhile read for policymakers everywhere.”
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