Archive for the ‘economy’ Category


March 8, 2011 Leave a comment

It is not just the United States that is headed for an economic collapse.  The truth is that the entire world is heading for a massive economic meltdown and the people of earth need to be warned about the coming economic disaster that is going to sweep the globe.  The current world financial system is based on debt, and there are alarming signs that the gigantic global debt bubble is getting ready to burst.  In addition, global prices for the key resources that the major economies of the planet depend on are rising very rapidly.  Despite all of our advanced technology, the truth is that human civilization simply cannot function without oil and food.  But now the price of oil and the price of food are both increasing dramatically.  So how is the current global economy supposed to keep functioning properly if it soon costs much more to ship products between continents?  How are the billions of people that are just barely surviving today supposed to feed themselves if the price of food goes up another 30 or 40 percent?  For decades, most of the major economies around the globe have been able to take for granted that massive amounts of cheap oil and massive amounts of cheap food will always be there.  So what happens when that paradigm changes?
At last check, the price of U.S. crude was over 104 dollars a barrel and the price of Brent crude was over 115 dollars a barrel.  Many analysts fear that if the crisis in Libya escalates or if the chaos in the Middle East spreads that we could see the all-time record of 147 dollars a barrel broken by the end of the year.  That would be absolutely disastrous for the global economy.
But it isn’t just the chaos in the Middle East that is driving oil prices.  The truth is that oil prices have been moving upwards for months.  The recent revolutions in the Middle East have only accelerated the trend.
Let’s just hope that the “day of rage” being called for in Saudi Arabia later this month does not turn into a full-blown revolution like we have seen in other Middle Eastern countries.  The Saudis keep a pretty tight grip on their people, but at this point anything is possible.  A true revolution in Saudi Arabia would send oil prices into unprecedented territory very quickly.
But even without all of the trouble in the Middle East the world was already heading for an oil crunch.  The global demand for oil is rising at a very vigorous pace.  For example, last year Chinese demand for oil increased by almost 1 million barrels per day.  That is absolutely staggering.  The Chinese are now buying more new cars every year than Americans are, and so Chinese demand for oil is only going to continue to increase.
Much could be done to increase the global supply of oil, but so far our politicians and the major oil company executives are sitting on their hands.  They seem to like the increasing oil prices.
So for now it looks like oil prices will continue to rise and this is going to result in much higher prices at the gas pump.
Already, ABC News is reporting that regular unleaded gasoline is going for $5.29 a gallon at one gas station in Orlando, Florida.
The U.S. economy in particular is vulnerable to rising oil prices because our entire economic system is designed around cheap gasoline.  If the price of gas goes up to 5 or 6 dollars a gallon and it stays there it is going to have a catastrophic effect on the U.S. economy.
Just remember what happened back in 2008.  The price of oil hit an all-time high of $147 a barrel and then a few months later the entire financial system had a major meltdown.
Well, as the price of oil rises it is going to create a whole lot of imbalances in the global financial system once again.
This is definitely a situation that we should all be watching.
But it is not just the price of oil that could cause a global economic disaster.
The global price of food could potentially be even more concerning.  As you read this, there are about 3 billion people around the globe that live on the equivalent of 2 dollars a day or less.  Those people cannot afford for food prices to go up much.
But global food prices are rising.  According to the United Nations, the global price of food has risen for 8 consecutive months.  Last month, the global price of food set a brand new all-time record high.  Many are starting to fear that we could actually be in the early stages of a major global food crisis.
The price of just about every major agricultural commodity has been absolutely soaring during the past year….
*The price of corn has doubled over the last six months.
*The price of wheat has more than doubled over the past year.
*The price of soybeans is up about 50% since last June.
*The price of cotton has more than doubled over the past year.
*The commodity price of orange juice has doubled since 2009.
*The price of sugar is the highest it has been in 30 years.
Unfortunately, the production of food in most countries around the world is very highly dependent on oil, so as oil goes up in price this is going to make the food crisis even worse.
Hold on to your hats folks.
Also, as I have written about previously, the world is facing some very serious problems when it comes to water.  Due to the greed of the global elite, there is not nearly enough fresh water to go around.  The following are some very disturbing facts about the global water situation….
*Worldwide demand for fresh water tripled during the last century, and is now doubling every 21 years.
*According to USAID, one-third of all humans will face severe or chronic water shortages by the year 2025.
*Of the 60 million people added to the world’s cities every year, the vast majority of them live in impoverished slums and shanty-towns with no sanitation facilities whatsoever.
*It is estimated that 75 percent of India’s surface water is now contaminated by human and agricultural waste.
*Not only that, but according to a UN study on sanitation, far more people in India have access to a mobile phone than to a toilet.
*In northern China, the water table is dropping one meter per year due to overpumping.
These days, one of the trendy things to do is to call water “the oil of the 21st century”, but unfortunately that is not a completely inaccurate statement.  Fresh, clean water is something that we all need, but right now world supplies are getting tight.
Our politicians and the global elite could be doing something about this if they really wanted to, but right now they seem perfectly fine with what is happening.
On top of everything else, the sovereign debt crisis is worse than it has ever been before.
All of the major global central banks have been feverishly printing money in an attempt to “paper over” this crisis, but it is not going to work.
Most Americans don’t realize it, but right now the continent of Europe is a financial basket case.  Greece and Ireland would have imploded already if they had not been bailed out, and now Portugal is on the verge of collapse.  The interest rate on Portugal’s 10-year notes has now been above 7% for about 3 weeks, and most analysts believe that it is only a matter of time before they are forced to accept a bailout.
Sadly, if the entire global economy experiences a slowdown because of rising oil prices, we could see half a dozen European nations default on their debts if they are not bailed out.
For now the Germans seem fine with bailing out the weak sisters that are all around them, but that isn’t going to last forever.
A day or reckoning is coming for Europe, and when it arrives the reverberations are going to be felt all across the face of the earth.  The euro is on very shaky ground already, and whether or not it can survive the coming crisis is an open question.
Of course there are some very serious concerns about Asia as well.  The national debt of Japan is now well over 200% of GDP and nobody seems to have a solution for their problems.  Up to this point, Japan has been able to borrow massive amounts of money at extremely low interest rates from their own people, but that isn’t going to last forever either.
As I have written about so many times before, the biggest debt problem of all is the United States.  Barack Obama is projecting that the federal budget deficit for this fiscal year will be a new all-time record 1.65 trillion dollars.  It is expected that the total U.S. national debt will surpass the 15 trillion dollar mark by the end of the fiscal year.
Shouldn’t we have some sort of celebration when that happens?
15 trillion dollars is quite an achievement.
Most Americans cannot even conceive of a debt that large.  If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.
But the United States is not alone.  The truth is that wherever you look, there is a sea of red ink covering the planet.
The current global financial system is entirely based on debt.  If the total amount of debt does not continually expand, the system will crash.  If somehow a way was found to keep this system going perpetually (which is impossible), the size of global debt would keep on increasing infinitely.
Now the World Economic Forum says that we need to grow the total amount of debt by another 100 trillion dollars over the next ten years to “support” the anticipated amount of “economic growth” around the world that they expect to see.
The entire global financial system is a gigantic Ponzi scheme.  It is designed to keep everyone enslaved to perpetual debt.  If at some point the debt spiral gets interrupted in some significant way, we are going to witness an economic disaster that is going to make what happened in 2008 look like a Sunday picnic.
The more research that one does on the current global economic situation, the more clear it becomes that we are absolutely doomed.
So people of earth you had better get ready.
An economic disaster is coming


July 23, 2010 Leave a comment
Wall Street tumbles on Fed chief’s comments about the ”unusually uncertain” economy.
Bobbi Rebell reports.

Επίσης η πλήρης συζήτηση για την πορεία της Αμερικανικής οικονομίας (2 ωρες και 35 λεπτά) εδω

Federal Reserve Board Chairman Ben Bernanke delivered his semi-annual report on monetary policy this week before the Senate Banking Committee on Wednesday followed by the House Financial Services Committee on Thursday. Bernanke told the committee that the U.S. economy is “unusually uncertain,” but was unlikely to go through another recession in the near future. He also said he expects unemployment levels to remain high at least through 2012.



June 17, 2010 Leave a comment

reposted αναδημοσίευση απο Jesse’s Café Américain μπλόγκ σε μόνιμη RSS σύνδεση βλ. ΣΥΝΔΕΣΜΟΥΣ-ΛΙΝΚΣ

“Economics: a social process in which one group of economists argues that all the other groups of economists are incompenent buffoons. They are often successful in this endeavor, thereby persuading large groups of ordinary people to adopt public policies that are afterwards considered to be outrageous acts of folly. This clears the way for a different group of economists to do the same thing all over again, based on a fresh set of improbable assumptions.”

US Dollar: The Mother of All Bubbles

A bubble is a significant increase in valuation supported by a set of artificial, inexplicable, and otherwise unsustainable conditions. The ‘increase in valuation’ can be nominal as in a price that goes ‘higher’ without a corresponding increase in value, or a decline in the value underlying the asset while the price remains nominally the same. (note 1)

True bubbles almost always involve some element of secrecy, a cover up, and some dispensation from common knowledge and experience. There are almost always dissenters, voices of warning, that are ignored and even ostracized. “It’s different this time…” without there being an identifiable difference, only the self referential rationale.
Stocks are not a bubble because they are going higher and the market is infallible. Housing cannot be a bubble because the housing market is so geographically diverse. You get the point. Not all things that increase in price are a bubble, but this does not mean that bubbles cannot be identified. They can, but when they serve some greater end, the voice of dissent are overwhelmed. Almost all bubbles involve control frauds and the corruption of the media, the analysts, and the regulators, to some degree, through benefits and intimidation.
When the artificial conditions are removed the valuation of the bubble ‘reverts to the mean, ‘ a more normal valuation based on the fundamentals, unadjusted and undistorted supply and demand. An asset bubble often involves a fraudulent design taking advantage of and even perpetuating a corresponding foolishness. In other words, the fraud is father to the folly.
The duration of a bubble does not make it valid or ‘the new normal.’ Like most chronic conditions it just means that the adjustment will be all the more difficult.
The US dollar as the world’s reserve currency, and the unusual period of US prosperity, is a non-historical artifact of the post World War II era that will not continue indefinitely. When the reversion to the mean occurs, it is likely that the dollar will have to be reissued as ‘the new dollar’ similarly to the rouble in the post-Soviet adjustment.
This is my fundamental currency thesis that I have been following since 1997, and it appears to be valid so far. I do not see the resolution in hyperinflation per se, but I do think the new dollar will have a value of about 10% of the current dollar. In other words, they will knock a zero off the current dollar on surrender for new dollars. For example, if you have $100,000 in savings, and it will afterwards be worth 10,000 in new dollars.
Eliminating 90% of its foreign debt obligations will certainly help to repair the US Balance Sheet. It is possible that this is accomplished in inflation, rather than a more formal evaluation, and over a long period of time, say twenty years or so.
If this seems impossible to you, then you are not aware perhaps that the same thing was accomplished from 1933 to 2000, or 67 years, and should avoid looking at the last chart. The Fed was merely squandering the nation’s wealth, without the advantages of modern financial engineering and deregulation. The next leg down will probably be about three times more efficient, under the leadership of Zimbabwe Ben.

Chart from the latest ScotiaCapital FX Presentation

“Facts do not cease to exist because they are ignored.”
Aldous Huxley

Wouldn’t it be convenient for the oligarchs if their think tanks could somehow concoct a story, some plausible sounding theory, to persuade a portion of the world’s population to hold dollars, expecting them to GAIN in value, even in the face of significant defaults and credit failures and a deteriorating return in GDP growth per marginal dollar debt? Or even better, getting them to remain fully invested in a series of artificially contrived dollar denominated financial assets that could be selectively ‘pulled down’ while keeping the overall scheme intact and running. Bernays would be proud.
But the trick is to convince the non-sleepwalking portion of the public to ignore the signs of a failing economy and an approaching currency collapse. This is the sort of black is white brainwashing exercise that occupied quite a few of the whiz kids for the latter part of the twentieth century.
It might take a lot of work, and some high level financial engineering, raw determination to play the long game, public relations professionals engaging invoking slogans and prejudices, and a suite of new financial instruments that would have to be protected even when it was suspected they were fraudulent, but it would be a useful tool for the Übermenschen to have in their toolbox. Nothing works better than to convince a free people to willingly enslave themselves.
Advice for far too many economic forecasters and precious metals analysts.

You know who you are.

Stay thirsty, my friends.

Note 1: The latter case is the most difficult phenomenon to understand, but is behind much of the financial crisis which we are experiencing today. Inflation can occur even if money supply is flat and declining, because it is the level of demand for the money that could be dropping even while supply is constant. A example of this would be Europe in the aftermath of the Black Death, in which case the ‘wealth’ remained constant but the number of people demanding it were reduced dramatically and precipitously. If the value, the productivity of a country is all that stands behind a fiat currency, if that productive capability is in decline, to be replaced by ‘service,’ then in fact an inflation can occur even while the nominal money supply is flat or decreasing. One has to consider what is ‘backing’ the money from an external perspective.
It might be easier to understand if you imagine that a country is on a gold standard, with a constant money supply, but covertly gives away all of its gold. That country will experience a significant inflation which will come upon it seemingly overnight once the confidence, the backing, in the currency is dissipated.
This argues strongly against the monetarists who are pure relativists. Their relativism lead inevitably to central planning and a command economy, ideally a one world government. The need for great and greater control is necessary of the continuation of their fraud. This is why Wall Street banks always seem to be entranced with fascism, or more properly, statism, and why the robber barons chose to build slums rather than vibrant cities. And why the Chinese government fears to stimulate domestic prosperity under market discipline. Its a matter of control. Their end is not an increase in general prosperity, but rather the maintenance and increase of the power of the few over the many, relatively speaking as a close ended system. Your weakness increases my strength.

I will leave the discussion of value for another time, but let it suffice to say that it involves the determination of efficient markets. An efficient market is one that is free of fraud, all information being available to all participants at the same time, with full transparency. Any limitation or even worse, monopolization of information detracts from market efficiency. Transactions are relatively frictionless, and there are strict limits on the use of size and leverage to distort the determination of value. Obviously there are no perfectly efficient markets in this world, but it is useful to have a measure to understand how imperfect that are, and whether a rule or a change makes them better or worse.