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Wednesday, January 6, 2016





Major Fluctuations in the World Financial Markets, Disturbing!
For some time now, I have been writing about the possibility of a major deflationary cycle spanning the world markets. Many of you have already predicted that possibility quite a long time ago. However, the recent Chinese devaluation in January of this year, on top of their other economic problems, has been quite disconcerting to me. I have repeatedly mentioned that President Xi Jipeng is not deliberately entering into an economic war with the highly pegged US Dollar. He has a real problem managing a system rife with corruption, false evaluations, and massive speculations. In part, I attribute these aberrations to the Chinese national character which, by nature, has been and will continue to be speculative because there may be no more possibility for real growth in the Chinese GDP.


Equally disturbing are the economic problems in Russia, Turkey, Ukraine; all related to the decreasing price of oil which I believe will remain low because of a massive glut in the world markets [including Brent, Sweet oil, et.al]. On top of these problems, we have the failing nation states of Venezuela, Argentina, Brazil, Bolivia , et. al. Interestingly enough, the American dollar keeps climbing higher and higher until we will not be able to export much of anything other than the over-valued, cash-strapped hi-tech companies which are valued in the billions while exhibiting negative cash flows. This bizarre phenomena will mandate a new type of math calculations which I have yet to comprehend.

Next we must consider the increase rate hike by the Feds which will choke off some of the necessary liquidity to sustain a minimal growth of at least 2 % per year. While the price of gas is dropping, the price of basic foods have increased somewhere around 6-10%. This means we will be able to drive more cheaply to a fast food restaurant and spend the difference we saved in gas on the increased price of the burger/fries and a coke.The USG optimistic statistics of increased employment is flawed because, as most of you know by now, it’s based on part-time jobs with minimum labor costs which will have to be subsidized by the feds, one way or another [EBT cards, Social Security, etc].

These aforementioned trends are the ones that appear somewhat apparent today. However, there are other hidden political/banking movements that are not so obvious. Switzerland, a wealthy country with possibly the highest currency value [the Swiss Franc], is now in a process of initiating a referendum that might change the banking system that we have been used to for the past 300 years. The Swiss want to eliminate the banks’ capacity to make money. They will force Swiss Banks to maintain currency reserves of 100% in order for them to be considered a ‘bank’. Loans, as we know them now, will be relegated to other sectors of the economy—private lenders—and the Central Banks, thereby, bypassing the need for local or regional banks. These new currencies will not be paper money any more but bitcoins of electronic transfers of binary numbers as in Pay-Pal or the Lending Club.

This all amounts to is a very great uncertainty as to which way our world finances will go. Wars can no longer pull out a country from a deflationary spiral as WWII did for the USA. Manufacturing will become a smaller segment of the world markets as people train for more hi-tech, process-oriented jobs.
We are in a time of major change. Adaptation and ingenuity will become paramount, if we are still able to maintain a wisp of hope.

As Charles Dickens wrote in the Tale of Two Cities:
“These were the best of times; and the worst of times.”
Let us approach this dichotomy with quiet resolve and pragmatism; and not bemoan our newly undefined fate.

https://stevepieczenik.com/stevepieczeniktalks2.html

13 comments:

  1. It's comforting to know experts like Yellen are piloting the Hindenberg through the current jetstream of global fiat.

    To all the passengers: GET YOUR PARACHUTE ON!

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    Replies
    1. I don't agree that the end of zero interest will cause a liquidity shortage. Any increased rates will still be very low. There is a problem with very low interest rates as it drives too much money into equities and other speculations and harms savings needed for retirements and pensions. We must have slightly higher interest rates for bond sellers to be able to sell bonds. Public and corporate borrowers need to be able to sell bonds at some kind of interest rate or no one will buy them. I can guarantee that rates will not be anything but low, because they must still remain low or the interest on the US debt would crush the budget. The colossal size of the Federal debt makes it impossible for the Fed to permit anything but low rates.

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  2. Incredible, 50 years after the Club of Rome report, there is a glut of minerals & oil. Oil is especially glutted. Maybe, that is not a bad thing.

    Peak Oil... Ha Ha Ha Ha.

    The World is awash with oil.

    And that most likely will continue for 30 years.

    Why?

    Oil is a product of geo-chemical and geo-physical processes, actually a mineralogical process, it is truly "rock oil", thus, it is over 10 times as plentiful as so-called "fossil fuel" theory suggests.

    There is no shortage, in a physical sense, of petroleum. Yes, some geological areas have more than others (Middle East), But there is oil the world over.

    Saudi Arabia watch out, the world does not need your Wahabism cult.

    Saudi Arabia has forfeited the "Mandate of Heaven" (if it ever had it) and the whorlwind is set to befall the corrupt Kingdom.

    ReplyDelete
    Replies
    1. "Oil the world over?"

      I don't think so.

      The only change in the last few years is that the price was high enough [due to shortage] for producers to justify going after the known, very expensive, deposits in tar sands and shale.

      These tar sands and shale deposits are nothing new. We've known they were there for a long time. The only difference is that briefly the price got high enough for people to go after them because they are expensive to exploit.

      The low price of late is also nothing new. Oil production and price has always gone up and down and low prices caused low production which led inevitably to higher prices and then the higher prices caused a bunch of people to dive in and they all caused a new glut. This is the way it always is with oil, or construction for that matter.

      As for the "abioltic" oil theory it doesn't make any difference if the oil came from fossiles as coal does or if it's derived from graphite deep within the earth as diamonds are... The only question is where is it located and what's the supply and what does it take to get it out.

      What's nuts is that the radical environmentalists are now crying "leave it in the ground!" as they push for more policy such as Obama's closing of the pipeline deal recently so that everyone will pay 10 dollars a gallon for fuel and force them to ride bicycles.

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    2. CIA, Yes, shale & tar sands have been known about a long time; technological advance has made it's production economical at higher prices than today's market.

      Thus, the drastic decline in new shale drilling projects.

      But large oil deposits, principally offshore, but also on land, are being found all over the world. As an example, one under the Golan Heights is thought to be huge. There are new discoveries being made all over the world.

      China's building of artificial islands in the South China Sea is principally about the oil & natural gas thought to be under the sea bed.

      India is thought to have significant oil & gas in offshore deposits.

      The list of areas that have oil & natural gas is lengthy.

      For many years, now, so-called "Peak oil" has been in the news. And traders have sought to take advantage of that meme to cash in.

      But the physical reality of surface (tank farms)& sea (oil tankers sitting at anchor full of oil) storage capacity reaching its limit, thus nowhere to store purchased oil, with potential additional supplies from Iran and OPEC pumping at a high production rate even amid low prices has glutted the market.

      The fact that petroleum, "rock oil", is abiotic and the knowledge of that genesis is known by industry insiders, if not the general public, has an impact on prices.

      There is no physical shortage of oil & natural gas within the next couple of decades has an impact on long-term prices of that commodity.

      There is no "cornering the market" on petroleum possible in a world awash in oil, both in the ground and in at-capacity storage sites.

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    3. Correction MIT - Prudhoe Bay and the entire North Slope region has been documented to posses 200 yrs of planetary reserves. Some might argue it's being held in trust, others have stated it won't be tapped until our friends in the deserts have tapped out.

      Yes, the world is awash in Earl!

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  3. A- nice to have you back, as always, thanks for insightful comment.

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    1. Dr.P I wish to apologize for my dismissal of your recommendation of the film "Sicario." I relied on my impressions of what it might be like given it's marketing and I was completely wrong in my assumptions. I saw the film and it's quite good. It's a powerful and accurate story on many levels. Furthermore it's brilliantly directed. It's a rare find.

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  4. Dr P. Oil has nothing to do with the economies of turkey and Ukraine. Turkey is the OIL IMPORTER thus benefits from low oil while Ukraine is just failed state with the crooks on the top and benefits only while whining about spooky Russia from which it is saving the world. Yes Russia is suffering but again the population got used to hardships like in 1990. I think oil will spend some time in mid 20 usd. There is good thing about this- the bastards like Saudi Arabia and other Islamic terrorists will start to suck and lower the support of Isis and other Islamic scum.

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  5. "bizarre phenomena will mandate a new type of math calculations"

    Unprecedented debt, unprecedented wealth
    and unprecedented low money velocity.
    ( few crumbs falling off the table )

    ( where is the missing Asian ( 9/11 ) Gold? )
    Karen Hudes and Ben Fulford
    http://www.wanttoknow.info/911/black_eagle_trust_fund

    The Rally that you do not sell.
    https://www.youtube.com/watch?feature=player_detailpage&v=u7tTdO6oxUA#t=1338

    --------------------------------------------

    Money is given to the extremely wealthy,
    the poor are burdened with increasing debt.

    The future is a "Slow Burn"? UFO economy
    https://www.youtube.com/watch?feature=player_detailpage&v=VM-NEcWhj4c#t=75
    Catherine Austin Fitts

    Corruption allows the extremely rich to increase wealth. Their supporters are given insider opportunities ( somehow politicians become wealthy through stock market insider trading? )

    ( 2 sets of books concept by Ben Fulford )

    For the corrupt group on top, the economy does
    well, at the expense of those in perpetual debt.

    . .. ... ....




    ReplyDelete
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