It’s a wide, wonderful, Keynesian world! A pernicious cycle of collapsing commodities, corporate defaults, and currency wars loom over the global economy. Can anything stop it from unravelling?
It’s a wide, wonderful, Keynesian world! A pernicious cycle of collapsing commodities, corporate defaults, and currency wars loom over the global economy. Can anything stop it from unravelling?
Whatever happened to Jeff Rubin of $150 oil fame?
Although a 75pc oil price collapse should represent an unmitigated positive for the world’s fuel thirsty consumers, the sheer scale of the price rout is already imperiling the finances of producer nations from Nigeria to Azerbaijan, and is now threatening to unleash a wave of bankruptcies across corporate America.
Gee, what goes around, comes around…part of doing business is generating goodwill with your customer. You know, to help you through the bad times. In large part missing in ‘corporate America’ these days.
Not skinning the customer for every ‘world price’ nickel would have gone a long way to to mitigating their current problems. They wanted ‘world price’, now they have it…they voluntarily did it to themselves.
“Can anything stop it from unravelling?” NO!!!!! And it’s not a “coming recession”, it’s a “coming depression”.
As world markets hang on the price of oil it strikes me as irrelevant. In my life I have lived through a few recessions and believe that classic refrain ‘this time it is different’!
IMHO the key drivers today are demographics, technology and global debt caused through quantitative easing or the printing of money. Demographics effect demand, technology is effecting revenue by job displacement and debt is slowly destroying the ability to react to the first two drivers. Progressives and so called conservative governments are in a political catch 22. Debt is destroying their countries but cutting back likely means their defeat and quite possibly a depression. The $19 trillion debt of the USA is a drop in the bucket compared to entitlement obligations which will not be met and to the amount of global debt the strangles growth.
My conclusion to all of this is that change will not happen until the value of currency can be re-established and that is not likely to happen without a global collapse not seen since the ’30’s. The impact will likely be much harsher than the ’30’s as the world was far more agrarian. Today’s societies are far more specialized the skills more segmented. People will likely find that their means of earning a living will disappear for years, likely decades.
Negative interest rates are the last attempt by governments to force capital into markets. They are sacrificing savers in last gasp effort to save a system that is in collapse.
What will trigger the final downfall? Ironically it might be the election of a GOP president. The USA has very predictably become very protectionist in difficult economic times. The USA has the greatest capacity to chart a independent path but I doubt they are saved by it.
Observers on this site predictably condemn the progressives such as Turdeau and the Dippers but IMHO give the conservative movement a pass. The conservative movement in NA has failed to communicate an alternative path that might led to salvation. People have to hear why it is important and why a fiscally conservative alternative is a must and not a option. Harper had 10 years and failed to do this. What the country opted for was a intellectual lightweight who will likely cost Canada her legacy in the world and possibly her independence.
CT. I’m not sure we’re headed for a 30s event, and feel technology is a net gainer in our societies which has forestalled what should have been large inflation given, as you stated, the use of QE and government debt. Having said that, high levels of debt are normal in an low interest rate environment. The problem is QE and fiscal policy have not helped demand as statists believe they should, and they have both run the full gamut. Statist policies, more akin the drug addict behaviour than sound management, have become dependent on the high revenues of boom economies, and have allowed themselves, and by extension us, to become the real casualties of low oil, since cheap energy is supposed to be a good thing for economies and presaged the 20 year boom we’ve just experienced. The statist refrain of more more more, assured there is at least one more “rich” person to soak, never receiving higher revenues from high tax rates, so passing the pain on to the poorest, who’ve already been lambasted by carbon taxes and skyrocketing electricity costs. Much like climate change, statists have convinced society to suspend their disbelief when being presented with a contradictory narrative, that humans have any effect on climate and that government can, in any meaningful way, create jobs or wealth. A cursory look at the our economy and where we’re heading, Greece, gives a more complete picture:
http://www.heritage.org/index/country/canada
http://www.heritage.org/index/country/greece
I am a believer in a $20 – 30 US per barrel import duty on oil into the NAFTA area. Let the Arabs and communists fight the price into the basement.
Japan is also a good example, as they have been trying forms of QE since about 2001, and prior to that thought it was a bad policy.
For those of us who like to go short, let me paraphrase some earlier comments.
Go short world economies, politicians and policies. Go long hope and time.
what a stupid graphic.
Im trying to read what it says and flip flip flip a perfect storm flip flip china flip flip US flip flip perfect storm flip markets flip perfect storm flip flip oil prices flip flip perfect storm flip.
hello, dear web designer, you got a point to make, leave it on the godd**mn screen long enough to read.
anyways, I HOPE we get a real nice deep lasting world recession because then bye bye inflation. and lots of real cheap toys showing up at the pawn shop.
Trade requires trust.
How is trust doing?
Where is any mans word considered his bond?
What is an honest politician?
Newsman?
Banker?
Ethical Lawyer?
How does the population reward proven liars and thieves?
Rubin is one of those “experts” who always seems to be wrong about everything.
He was oft quoted with his failed predictions, while a CIBC “economist”.
Like AL Gore, when Rubin predicts something, the opposite is the REAL TRUTH
Funny thing …
” The world economy is throwing up reasons to worry, as the globe’s largest emerging markets have shown signs of deterioration over the last six months …”
Yeah … “Emerging Markets” … is really a euphemism for Communist/Socialist economies aka BRIC, etc. China’s blended Communist economy is crap. Brazil’s blended Socialist economy is in the shi**er. Russia’s Totalitarian Black Market economy is barely propped-up by collapsing oil prices. And India exports cheap labor across the globe that weakens consumer spending everywhere. All the “magic” of the emerging “blended” Socialist economies were built on the same vow of mutual poverty as the Cuban economy. The ONLY success of any emerging economy is tied to Freedom, and Free Market Capitalism. The more these governments have interfered with the natural state of human economics … the faster they have deteriorated. And not to be left out … the Fed has created a credit bubble that they are sure to intentionally pop with the election of a Republican president. All of these “emerging markets” are destined to follow Venezuela over the cliff, unless they abandon the Socialism that represses their people.
Big deal and nothing new. Where there’s crisis there’s opportunity. The weak and easily mislead are always the biggest losers and that’s no different this time. Personally I’m keeping lots of cash on hand for those pawn shop prizes and investment bargains.
I wonder if the end game for OPEC is to come in and pick up these assets at pennies on the dollar after the bankruptcies, and they keep the oil in the ground de Beers style?
I wonder if the end game for OPEC is to come in and pick up these assets at pennies on the dollar after the bankruptcies…
They probably will if you let them…no national borders, ya know. Eleven million illegal Mexicans can’t be wrong…
HOW LONG … has that 11 million number been used as the estimate of illegal Mexican, Chinese, Hindu, etc. squatters living in the US ? Long-enough for the number to be legitimately DOUBLED. And then if you want to count the anchor babies along with them … it gets REALLY UGLY.
real cheap toys showing up at the pawn shop.
=
Already showing up..
I enjoy an inexpensive watch collection.
Looking in the 10 dollar bin at my local thrift store, found a $400 dollar Swiss made Chronograph watch from an estate sale.
Opened up the case and cleaned the mechanical pieces, some were jewels and it’s not an imitation.
Beautiful and Cheap, my kind of recession..
“Can anything stop it from unravelling?”
Yes. Free market capitalism.
“Can anything stop it from unravelling?”
Yes, the Invisible Hand
“Can anything stop it from unravelling?”
Yes, a return to honest money.