Archive - Feb 2011

The last time the oil price lost touch with gravity, which it threatens to again with the price of Brent crude now well north of $100 a barrel, it helped tip the world economy into the deepest recession since the 1930s. Is history about to repeat itself?

In continuing our interactive maps visualizing assorted episodes of violence around the world, tonight's edition focuses on that executed by Gaddafi loyalists against protesters over the past week. We will spare readers some of the more violent pictures we have seen of the resulting carnage as they truly are gruesome.

And just in case the stock market needed a little more risk off impetus...

Chaos ...

Just because it is appropriate that the two guys who came up with the "Crash JPM, Buy Silver" meme should get some exposure tonight. In this edition of Press TV's On the Edge with Max Keiser, Max, as usual, highlights the bad conditions the US economy is in. He says the fall of the dollar is imminent and ties the latest events in the Middle East to the US economic policies. His guest, Zero Hedge regular Michael Krieger, believes that the unrest will spill over to the US as the world economy is "co-centric." He further elaborates on the competition between the US and the giant China which is taking over the rest of the world and is expected to turn the next superpower. Enjoy the show.

When we talk about “solvent” Europe we’re largely talking about Germany which is currently in the process of seven state elections. If the first, in Hamburg, is anything to go by, the German people are sick of both the bailouts and the European Union and want to ditch the Euro entirely. Merkel now has a choice, stick with the Euro and commit political suicide or ditch the Euro/ demand the less solvent members leave.

There was a time, long ago, when the dollar was a flight to safety instrument. Those days are gone. DXY barely budging as the overnight session begins, while silver has already put $34 in the dust. Last: $34.26 and parabolic.

Last Friday we reported that the soon to be quite pervasive spectacle of running to the bank only to find there is no money available, had spread to Korea. At that time only two banks were involved, although we speculated that "while the bank run at Busan was driven by capital inadequacy it may promptly spread to the entire banking system." Less than 3 days later, it has done just that. China Post reports that: "South Korea suspended operations at
four more savings banks on Saturday after runs developed as customers
rushed to get at their money despite official assurances the financial
sector was secure." Gee whiz, looks like last week's promises that everything was contained were, gasp, lies? " The Financial Services Commission (FSC) said Saturday it was suspending three affiliates of Busan Savings Bank — Jungang Busan Savings Bank, Busan II Savings Bank and Jeonju Savings Bank — as well as Bohae Bank for six months each. “Considering recent waves of deposit withdrawals, available liquidity, remaining deposits and capacity to borrow, the FSC concluded that they might face a situation where they are unable to pay customers,” the FSC said." And in an almost verbatim transposition of our own Telepromptermarionette-in-Chief's admonition in March 2009 that "profit and earnings" ratios were now cheap or some other such garbage, the head of the Financial Services Commission Kim Seok-dong (not related to Bang Dae-Ho) "vowed to make a personal deposit of 20 million won ($17,864) in Woolee
to convince depositors that the bank was financially sound." And if that doesn't work Korea can always rent Brian Sack out for a few days each week: truth be told, the US can easily cut down on the amount of weekly POMOs now that WTI is about to pass $100 (and Brent $110).

Caterpillar is only as good as the dollar.

Libya is in the same predicament, as is Sudan, Algeria, Nigeria, Angola... What happens when people are starving while they see their leaders living lives of luxury? They get pissed! They demand CHANGE.

Come on down to Banzai7 Burbank Studios and don't forget to bring the gold bars...

According to Al Arabiya, Libya's Muammar Gaddafi will deliver an address on TV imminently. Hopefully it will be better received than Mubarak's last speech.

As Zero Hedge advised in early January when the severity of the Maghreb revolution was made all too clear to anyone not willing to stick their head in the CNBC sand, oil could well be the buy of a lifetime ahead of a downward spiral of unprecedented geopolitical proportions. Sure enough, today alone, WTI (April) has surged from $90 yesterday to over $98 in electronic trading (see below). Either this is some computer gone haywire in the closed session, or when America wakes up tomorrow we may be on the verge of another flash crash. As for Brent, it passed $108.50. As a reminder, and people forget this all too readily, each dollar jump in crude wipes out $100 billion in US GDP. That means that at face value, today's move in the commodity complex, may have taken out as much as 5% of annualized GDP when fully processed through the economy!

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 21/02/11

Thousands of protesters gathered outside government headquarters this week, ultimately seizing the legislature building on Friday and Saturday. Estimates ran as high as 68,000 people crammed into the main square. Sunday marked the sixth day of protests organized by labor unions and university students. Protesters shouted angrily and signs denouncing the regime were evident everywhere. On Saturday, a smaller pro-government group invaded the square, but thanks to the action of the state police, the two groups were kept apart and no violence resulted. The protesters had high praise for the police.