Oil and other commodity prices have recently been dropping. Is this good news, or bad? Many people have the impression that falling oil prices mean that the cost of production is falling, and thus that the feared "peak oil" is far in the distance. This is not the correct interpretation, especially when many types of commodities are decreasing in price at the same time. We would argue that falling commodity prices are bad news. It likely means that the debt bubble which has been holding up the world economy for a very long time – since World War II, at least – is failing to expand sufficiently. If the debt bubble collapses, we will be in huge difficulty.
As always, the bottom line is about leverage and bargaining power. It is here that, miraculously, things once again devolve back to, drumroll, oil, and the fact that an independent Scotland would keep 90% of the oil revenues! As we showed several days ago, Scotland's oil may be the single biggest wildcard in the entire Independence movement. It is this oil that as SocGen's Albert Edwards shows earlier this morning, is what gives Scotland all the leverage.
Plus: Exclusive Interview with FBI Whistleblower
In this first of a series of London interviews that Lars Schall conducted for Matterhorn Asset Management this summer, Lars met up with the Telegraph's Ambrose Evans-Pritchard to discuss geopolitical tensions in the world, China's challenges, threats to the global economy and the expectations for gold.
Governments from Around the World – Including Western, Islamic, Asian and African Nations – ADMIT They Use False Flag TerrorSubmitted by George Washington on 07/08/2014 11:12 -0400
If We Don't Learn Our History, We're Doomed to ... "KaBoom!"
This past week has been all about "anticipation." The markets made little headway during the first half of the week as traders waited in an almost breathless anticipation of the announcement from the European Central Bank. When the news was finally received, investors were initially disappointed but David Tepper stepped into the fray with his ever bullish optimism. The more we read, the clearer it becomes that the world's Central Banks have become caught in a "liquidity trap" which is entirely based on circular logic... Central banks must create asset bubbles in the hopes of stimulating economic activity. When the bubble eventually pops the economic activity evaporates which requires the creation of another asset bubble.
A leaked recording by the vice-chairman of Vanke Group (China’s biggest property developer), confirms, as The Telegraph's Amrbose Evans-Protchard reports, what the bears have been saying for months, 'it is a dangerous bubble, and already deflating'. Mao Daqing's words, translated, are ominous: "In 1990, Tokyo’s total land value accounts for 63.3% of US GDP, while Hong Kong reached 66.3% in 1997. Now, the total land value in Beijing is 61.6% of US GDP, a dangerous level... China has reached its capacity limit for new construction of residential projects... and I don’t see any possibility for a rise in home prices." The simple chart below highlights all one needs to know - inventory is exploding - and as Mao concludes: "housing production per 1000 people reached 35; even when the housing market is hot, no country has a figure of greater than 14 - this should cause alarm."
New figures show China's credit bubble continues to grow. President Xi Jinping hasn't done nearly enough to arrest the bubble and needs to act fast.
If you have been waiting for the "global economic crisis" to begin, just open up your eyes and look around. I know that most Americans tend to ignore what happens in the rest of the world because they consider it to be "irrelevant" to their daily lives, but the truth is that the massive economic problems that are currently sweeping across Europe, Asia and South America are going to be affecting all of us here in the U.S. very soon. Sadly, most of the big news organizations in this country seem to be more concerned about the fate of Justin Bieber's wax statue in Times Square than about the horrible financial nightmare that is gripping emerging markets all over the planet. After a brief period of relative calm, we are beginning to see signs of global financial instability that are unlike anything that we have witnessed since the financial crisis of 2008. As you will see below, the problems are not just isolated to a few countries. This is truly a global phenomenon.
It's not all ponies and unicorns in Davos today. Paul Singer's dismal views on financial fragility were followed up by a panel, as The Telegraph's Ambrose Evans-Pritchard reports, that poured cold water on the claims that the European crisis is over. Harvard professor Kenneth Rogoff said the launch of the euro had been a "giant historic mistake, done to soon" but EMU leaders are still refusing to take the necessary steps, and is squandering the "scarce resource" of its youth, badly needed to fortify an aging society as the demographic crunch sets in. But it is ex-Buba head Axel Weber that unleashed the ugly truth: "Markets are currently disregarding risks, particularly in the periphery...Europe is under threat. I am still really concerned."
Unstable eurozone states are particularly vulnerable to default because they no longer have their own sovereign currencies, putting them in a similar position as emerging countries that borrowed in U.S. dollars in the 1980s and 1990s.
All of the Chairs of the 9/11 Commission and the Congressional Investigation Into 9/11 Say It’s “Implausible” that the 9/11 Hijackers Acted Without GOVERNMENT Backing
Governments ADMIT They Carry Out False Flag Terror
Bonus: Did the Saudi Intelligence Chief and Other High-Ranking Officials Trade on Inside Information Regarding 9/11?
Stunning Facts that Your History, Economics and Business Teachers Never Learned ...