Archive for the ‘Economy’ Category
Monty Guild on Inflation
Source: Monty Guild and Tony Danaher | Guild Investment Management
Food inflation as we have mentioned is here to stay. Corn prices may be peaking as the Mississippi river crests, but we see higher prices for other substitutable grains. A decline in food prices could happen temporarily in the autumn if the U.S. Government and others end set their aside programs and other countries start to develop underdeveloped farmland. This will not lead to a large increase in food production worldwide initially but in the long term production will rise.
The problem is that consumption is also rising at a rapid rate. While worldwide production will not go up by a huge amount, the main effect will be psychological. As people come to the conclusion that supplies may increase, speculators will exit positions. Over the longer term, global food stocks will be rebuilt as they are way too low. This rebuilding of inventories will keep prices firm.
As we have mentioned in the past, global food inventories have fallen in 7 of the last 8 years. These inventories must be rebuilt for many years before prices can really start to fall. The fact is, global food prices are lower in inflation adjusted dollars than they were decades ago. Even in the most optimistic case, inflation adjusted corn, wheat, soybeans, and other foods must rise for years to come just to get back to their inflation adjusted prices of 50 years ago.
An aside…developed country consumers spend less of their budget on food compared to consumers in other countries. We believe that this will change. Consumers in developed countries will be spending more of their total income on food as well. Read the rest of this entry »
One Quadrillion Dollars: Waiting to Destroy What’s Left
The situation was already out of control to begin with. Now it is SEVERELY spiraling out of control. Whenever the counter-parties of these transactions fails to pay, it means the FED has to print up more money to bail them out. If they aren’t bailed out, then the whole charade crumbles to the ground, taking the rest of us with it as the economy swirls down the toilet bowl.
This is a situation that has no reasonable solution except, imo, to scale down these derivative positions. They are going to have to be made illegal, but the people that have them already have to be grandfathered in so that the system doesn’t collapse.
Total Notional Value Of Derivatives Outstanding Surpasses One Quadrillion
Dear CIGAs,
The notional value of all outstanding derivatives now totals approximately $1.144 QUADRILLION.
This appears to be Bank of International Settlement Spin to announce the largest gain in derivatives outstanding since they started to report. As of the last report it appeared that both listed and OTC derivatives was under $600 trillion. Now listed credit derivatives alone stood at $548 Trillion. The OTC derivatives are shown as $596 billion notional value, as of December 2007. One can only imagine what number they are at now.
Well we hit a QUADRILLION. We have more than $1000 trillion dollars in all derivatives outstanding. That is simply NUTS because notional value becomes real value when either counterparty to the OTC derivative goes bankrupt. $548 trillion plus $596 trillion means $1.144 quadrillion. Read the rest of this entry »
The End of the British Imperial “Free Trade” System
I had once thought it unstoppable, that the system of so-called “free trade” could be halted. This system is the same one that brought you NAFTA, which has virtually destroyed the economy of North America.
If nations can keep their own economies strong, not completely dependent on pillaging and slave labor, then there is not much that the globalists can do to enslave the people and subjugate the nation-states.
The globalists profit most by flooding a nation’s economy with cheap goods; causing the local infrastructure to deteriorate. If this process can be stopped then the globalists are going to lose their power.
“British Imperial Free Trade Doctrine” At a Dead End
The bad news from Rome, is that the FAO conference did not decide on any truly effective remedy for the worldwide hunger catastrophe. The good news, is that the “free traders” were likewise unable to put through their plans, and that the WTO’s Doha Round will, in all likelihood, end in failure. A commentary by Helga Zepp-LaRouche.
“British Imperial Free Trade Doctrine” At a Dead End And Now, for a New, Just World Economic Order!
by Helga Zepp-LaRouche | LaRouchePAC.com
Certainly the bad news from the FAO conference in Rome, is that the measures agreed upon fall far short of what will be necessary to solve the world hunger crisis. The final communique promised a mere $8 billion, without even specifying how it is to be spent. But despite this, the conference’s outcome can be termed a partial victory for the cause of humanity, because the champions of the “British Imperial free trade doctrine,” as Friedrich List once described them, have suffered a decisive defeat.
The so-called developed countries should nevertheless be ashamed that the dividing line between those states whose leaders spoke in favor of food security and protectionist trade measures, and the the partisans of unfettered free trade, ran more or less precisely between the G7 nations on the one side, and the underdeveloped nations on the other. And so, it’s hardly surprising that among the developing countries, the view was widespread, that the G7 is pursuing a neo-colonial policy, and is unwilling to help the world’s poor countries–a view which was already anticipated back in April by FAO Director Diouf. (At least the German delegation, as the conference was winding up, evinced “respect” for the positions of Argentina, Venezuela, and a few other countries.) Read the rest of this entry »
Prosperity according to Reuven Brenner
Management professor Reuven Brenner bristles at superficial thinking and the ill-founded myths it tends to perpetuate. He rails against the type of academics who propagate them with meaningless jargon under the guise of science. How, he wonders, can some social scientists possibly believe what they do is scientific?
“It’s a function of them having nothing to say,” he shrugs during a conversation in his Bronfman Building office. Obscure, pompous language uttered by those with a claim to expertise is quickly mistaken for science by those without the understanding to issue an authoritative challenge. The true challenge for the academic is to make an argument clearly, without resort to obscurity.
The holder of the Repap Chair of Business for the past decade at McGill, Brenner has just published The Financial Century: From Turmoils to Triumphs (Stoddart), a jargon-free volume with much to say about how societies can achieve prosperity and some barbed observations about how governments often get in the way.
Prosperity, he writes, is a consequence of “matching talent with capital, and holding both sides accountable.” Open, democratized financial markets and access to capital promise the most benefits to the most people. Private, as opposed to public, institutions have the most incentive to distribute capital wisely and prudently. Government, he writes, “can make many more and greater mistakes, and they can also fail to correct them.” Read the rest of this entry »
The Role of Gold in the Future of the Global Economy
The bear market in the U.S. Dollar is obviously accelerating with each passing day, prices are moving up across the board as the freshly created money increasingly pours into the market for hard assets such as commodities.
Indeed, at the extreme end of possibilities, most of today’s prognosticators believe in one of two potential outcomes:
- The dollar collapses into complete oblivion, the United States dis-integrates, anarchy takes hold and society as we know it ceases, bringing about a dark age of chaos and upheaval.
- Everything stays about the same, the markets recover in the near future, the economy begins recovery by 2009, and people continue to go further and further into debt; all remains well in the Goldilocks economy, where consequences never befall those who are irresponsible.
My research into these matters indicates that neither of these scenarios are likely, though it wouldn’t hurt to be prepared, at all times, for the first scenario, in case the system does end up coming apart.
During the course of my studies I have come across a brilliant solution, which, after another 30% slide in the dollar, the U.S. Dollar resumes its role as the reserve currency for the planet Earth, but with a modernized and revitalized Gold Certificate Ratio to regulate it, instead of edict-driven interest rate fluctuations. Read the rest of this entry »
Capital Flows Data Shows Large Net Outflow Of Foreign Capital
Dan Norcini | Jim Sinclair’s Mine Set
The US Treasury Department today released its monthly International Capital Flows data for the month of March 2008. Among the main highlights was a significant NET OUTFLOW of foreign capital of some $48.2 billion compared to a revised INFLOW of $48.9 billion in February. That is nearly a $100 billion swing in one month’s time and illustrates how severe the distress in the US financial system was which forced the hand of the Fed to bail out Bear Stearns at the expense of polluting their balance sheet. Wouldn’t you have loved to have been a fly on the wall in those hidden offices where the various machinations took place as the monetary authorities and their pals in the investment banks plotted and schemed to come up with a way to avert the consequences of their reckless greed and idiocy when it comes to the derivative daisy chain mess they concocted?
That net outflow occurred when short term securities were included in the numbers. When those were stripped out, the data showed a large NET INFLOW of $80.42 billion.
Using the short term measurement, the flows were insufficient to fund the trade deficit for that same month which was at $58.2 billion. That is a shortfall of $106.4 billion. Employing only the long term dated securities, flows were more than sufficient to fund the gap. Read the rest of this entry »
May cause insomnia
Alan Kohler | Business Spectator
I don’t know whether to lie awake at night worrying about over-the-counter (OTC) derivatives or not, so I lie awake at night worrying about whether to lie awake and worry.
I should just buy a worry default swap and go back to sleep. But what happens if the counter party can’t pay? Who IS the counter party? And how many trillions of worry default swaps are out there, ready to collapse like an Egyptian block of flats and turn my dreams to nightmares?
The Bank of International Settlements says there are $US681 trillion worth of over-the-counter derivatives in the world, which sounds like rather a lot. Is that more than there are stars in the sky and grains of sand on the beach?
In any case, what does it mean? Should I worry about that number, or is it like saying there were 59.6 billion cappuccinos produced in the world last year. Is that concerning or not?
Last month the Financial Stability Forum (FSF), which was set up in 1999 as an inter-government body to promote international financial stability, solemnly presented a paper to the G7 in which it recommended, among other things, reform of the OTC markets. Read the rest of this entry »
Problems with the Economy
“There’s an unceasing wind that blows through this night
And there’s dust in my eyes, that blinds my sight
And silence that speaks so much louder than words,
Of promises broken”~Pink Floyd
I hear a number of theories, regarding the future of our economy. On one side, we have the people who wear the rose colored glasses and live in a one season world. On the other side, we have the people who believe that society, as we know it, will break down completely; that it will be absolute chaos and anarchy.
I can’t say for sure that we won’t have a complete breakdown, but I do know that anyone who says the worst is over, or near over, has got their head way up their ass.
My research into the actual cause of the problems, indicates that the banks are holding about 20 trillion dollars worth of worthless debt-related derivative instruments. This was done, basically, in order for borrowers to get loans without having the collateral to back it up.
Once this practice took hold, huge amounts of debt were created, which lead to the housing bubble of the early 21st century. This debt is not likely to ever be repaid, as there is no practical way to come up with the 20 trillion dollars that would be necessary to unwind these positions. Read the rest of this entry »
U.S. Commercial Debt Meltdown
Now the credit derivative implosion problem has worked its way into the commercial paper market which since last week has declined by $90 billion. The word is that the commercial paper market for all purposes is closed down, yet Professor Bernanke sleeps on. No one can say with a straight face that a shut down commercial paper market will fail to shut down the US Economy. It will.
The Dow was down 300 points until rumors of a secret meeting being held at the Fed made their rounds. When that one ran out of steam the next rumor was a major injection of cash was going to be made into Bear Stearns. That has to give you an idea what people think about Bear Stearns’s financial condition and therefore most other major investment banking firms with prime names. Read the rest of this entry »
-
Visitor Stats