Some observations

Some observations

At the same time as the stock markets are hitting fresh multi year highs, foodstamp Recipients in America have also hit a new record Of 43.6 Million. Up 14.5% in a year.

Oil hit a 28 month high of 92 dollars yesterday.

13 Comments

  1. Nikita 7 years ago

    Guys,

    Hate to disagree, however my beliefs are 180 degrees away from that ……… Commoditiy prices are being driven today by large demand from developing countries today in Asia, ……… nothing else it is quite simple. Today Russia is the worlds largest producer of oil and no longer Saudi ……….. also reason for the large demand for commodoties is from China continuing to use a mercantilist policy for last 10 years ……….. that has completely screwed up our ideas of Free Trade and WTO which the Chineese outwitted by pegging Renimbi to USD. Only place being stoked for inflation is China .,…….. and it is a real risk. Bernake has got it right and is using money supply to start putting fear in chineese in relation to their pegging of currency to USD as it is causing the value of Chineese bought US govt debt to be put at risk.. …….. Europeans especially Merkel and Sarkozy are nothing but wellfrogs and cannot see this, Sarkozy is nothing but a seeker of publicity for political gain and Merkel is a sadistic aspirator to be a mini Cathering the Great, previous great German leaders have voiced publicily negative opinon on her leadeship skills and lack of vision …….. it was Merkel and Sarkozy that Kalaboshed the G20 meeting in Korea and prevented US from taking a strong stance against Chineese pegging of currencies that has put Europe and US in this terrible quagmire. ……… we need more Bernakes with the vision and understanding that underlies all of this ………… on Tunisia and Egypt it is simple ……….. people seeking righteous democracy …….. China could do with lots of that too ……….

  2. Author
    admin 7 years ago

    Hi Nikita, thanks for your reply. Disagreement is healthy and truth is a slippery fish. I would say your beliefs are more like parallel or extensions of what I wrote rather than opposite. It’s not just Pizza or Pasta being eaten, but some of both, plus many other dishes. For sure emerging markets are driving commodity price rises (too) for example Egypt making the move from net oil exporter to net importer. In regards to Bernanke getting it right, I wouldn’t claim to be a judge capable of delivering a 100% correct verdict, however it is quite clear all this money printing has not improved the employment picture, but instead has increased the gap between rich and poor. All fiat currencies eventually collapse and Bernanke is certainly not making that process any slower. As for democracy through the ability to vote in various different parties, I think that the idea this will create any fundamental change is somewhat of an illusion usually. The Hegelian dialectic. The politicians have their masters too, and unfortunately, they are not those who voted them in.

  3. Author
    admin 7 years ago

    This article also seems to back up my observation about the effect of all of this money created by Bernanake:

    Should we consider the injection of more than a third of a trillion dollars and a stock market that is up by 20% to be a coincidence? No, not in the least.

    Unfortunately for the rest of the world it’s not simply the stock market that is the lucky beneficiary of all this Fed largess. Thin-air money, once released into the wild, tends to have a mind of its own.

    Commodities are now setting new records almost daily.

    This is serious business, folks. The future is not going to arrive ‘someday.’ For the billions of people who spend a huge portion of their income on food and fuel, it has already arrived.

    Looking at the above chart of the past 12 months, what we see is that everything, from metals to stocks to bonds to grains to energy, has experienced profound price increases. That pretty much covers everything you need to live on and the bulk of the paper universe. Such a chart is a historical rarity for any one country, yet it currently happens to apply to the entire world.

    http://www.zerohedge.com/article/chris-martenson-answers-how-long-party-stocks-can-last

  4. Nikita 7 years ago

    Guys,

    Hate to disagree, however my beliefs are 180 degrees away from that ……… Commoditiy prices are being driven today by large demand from developing countries today in Asia, ……… nothing else it is that simple. Today Russia is the worlds largest producer of oil and no longer Saudi ……, reason for the large demand for commodoties is from China continuing to use a mercantilist policy for last 10 years ………. that has completely screwed up our ideas of Free Trade and WTO which the Chineese outwitted by pegging Renimbi to USD. Only place being stoked for inflation is China .,…….. and it is a real risk. Bernake has got it right and is using increased money supply to start putting fear in chineese in relation to their pegging of currency to USD as it is causing the value of Chineese bought US govt debt to be put at risk.. …….. Europeans especially Merkel and Sarkozy are nothing but wellfrogs and cannot see this, Sarkozy is nothing but a seeker of publicity for political gain and Merkel is a sadistic aspirator to be a mini Catherine the Great, previous great German leaders have voiced publicly negative opinon on her pathetic leadership skills and lack of vision ……. it was Merkel and Sarkozy alone that Kalaboshed the G20 meeting in Korea and prevented US from taking a strong stance against Chineese pegging of currency that has put Europe and US in this terrible quagmire. ……… we need more Bernakes with the vision and understanding that underlies all of this ………… on Tunisia and Egypt it is simple ………, people seeking righteous democracy …….. China could do with lots of that too ……….

  5. Nikita 7 years ago

    Hello Admin,

    Well said, my apologies for accidentally sending comment twice, typed the comment whilst in a hurry ….. n agree our thoughts are not opposites, rather view’s from different angle.

    Lived and worked in places like Indonesia and Kazakhstan, the change in consumption there over last 20 years was enormous, likewise in China & Brazil ……… this is having a profound effect on demand for commodities, ….. also world bank currently est 8.5% GDP growth in countries in Sub Saharan Africa in 2011, …. its a rapidly changing world out there with a massive transfer of wealth from western / developed countries to newly emerging economies such as India, China, Indonesia with very large populations …..

    My greatest concern is the excessive greed of the unregulated derivatives market which right now Bank of intl settlements estimates at a stratospheric USD43trillion ……… Warren Buffet simply calls it a financial time bomb, Soros describes it as the sword of damocles …. lets hope it never ignites and govts regulate this pit of greed before it can hurt innocent people.

    Thx for a brilliant blog, with great photography & bike designs, ……. apologies for my overly passionate feelings on world geopolitical issues …….. just feel we need to reduce greed and protect the planet for all our children to live happily without risking war.

  6. Author
    admin 7 years ago

    Sounds like you got a really interesting history man. Thanks for taking the time to write. Passion combined with solid reasoning goes someway to keeping the world honest.
    Piers

  7. Nikita 7 years ago

    Optimism, Energy, & Laughter — without complacency, & with good Government

    …………… Is the Cure ……………………

    Hello Piers & Admin,

    Yep, worked and lived in some interesting parts of the world, mostly with Mining, Oil & Gas,……… studied Intl Fin in Holland, and further studies at IMD, & learnt much more from individuals eye met on travels.

    An article from Paul Krugman http://krugman.blogs.nytimes.com/2011/02/05/soaring-food-prices/ ……….. shows linkage between high food prices and recent abnormal weather in former USSR, …… plus drought in northern China has further increased their import of foods.

    High price for metals and oil is due to demand from newly emerging economies of India, Brazil, China, and Indonesia …….. Gold is overvalued today due to derivative plays by speculators, one of whom is Soros.

    Natural Gas reduced due to US companies finding ways to hydro fracture shale deposits to recover natural gas in large shale deposits in US and countries such as Poland, plus a significant increase in Coal seam gas recovery in places like Qld Australia. This is good as it’s a relatively clean source of energy, with low impact on environment during extraction.

    32.4% NASDAQ, 20% S&P500, 18% DJIA is high for last 12 mths, but these markets produced a poor rate of growth when averaged over last 10years …… pension funds have to find somewhere to try to generate returns.

    AUD & CHF …… and also SGD ……. were safe havens compared to USD & EURO with their relatively stagnating economies, plus increased risk of sovereign bond markets in Europe and US caused a flight of capital that is over valuing some markets such as Australia and Brazil.

    If you get time to research Ben Bernanke, you will find he believes like Joseph Stiglitz that we need a new metric to steer our countries development …………… one that is linked to employment, quality of life, and economic growth too………… ………….. but not merely GDP growth. Sarkozy is now beginning to realise this.

    US needs a democratic government akin to what Bill Clinton led to bring America out doldrums currently held back by narrow minded Republicans, ……….. Obama’s a fine orator, but compromises too much, and light on implementation.

    Optimism, Energy, and Laughter ……………… really is the cure,
    Especially as mentioned by David Tang at http://news.bbc.co.uk/2/hi/7785564.stm

    David Tang’s concern about derivatives, an unregulated market Warren Buffet described as a time bomb, we need to regulate these ASAP !!!

    For the “Great Game” we need improved global laws to diminish risk of a China – US conflict …………….. see Prof Jean-Pierre Lehmann article at http://www.imd.org/research/challenges/TC002-11.cfm . Google his Jan 2011 trip report to Davos for insight on current global issues ………..

    Interesting booklet available from Vontobel bank in Switzerland called “Oil & Opium” …….. relates to “Silk Road” and “Great Game” ……… and continuing strategic importance of central Asia ……… especially Kazakhstan ……….

    Also “The Stans” special edition from National Geographic magazine.

    OK time to quit the seriousness …… FYI ………. eye adore KTM motorcycles, they keep my overly active mind a little sane,….. & never fail to put a wicked grin on my face each time eye ride them  …………. Cheers,

  8. Author
    admin 7 years ago

    What KTM do you have?

    Interesting article here about corn prices increasing Ninefold Compared To Official Projections:

    http://www.zerohedge.com/article/corn-prices-soar-chinese-imports-increase-ninefold-compared-official-projections

  9. Nikita 7 years ago

    Aha KTMs,

    Have an old LC4- 640 Supermotard Prestige eye will never sell, with a set of enduro wheels brakes n tyres used to quick chg from road to off road use on the Steppe in Kazakhstan and at a magic place called Ili river from Kapshagai Hydro powerstation downstream, and also in Tien Shan mountains around Almatinski lake, ,,,,,, fabulous terrain for offroad riding and jaw dropping scenery.

    Also ride 950adventurer and 990SMT in Ireland, The SMT after eye dialled in suspension, fitted Diablo Rosso Corsa tyres, added a custom fuel & ignition map we developed on dyno and took ECU-lambda sensor out of closed loop mode ….. then bottom end perf is much sharper and it really is an awesome bike on irelands bumpy and sharp cornered roads …. only better bike for those roads is the new SMT with latest bosch 9+ abs circuits.

    KTM have do a superb job out of matching geometry to suspension damping characteristics & damping capability it makes such a heck of a difference and enables us to use all that power more often but more importantly in a controlled and safe way ……. hats off to KTM everytime and build quality in terms of durability is excellent ……. eye want a bike to ride and ride hard when eye want to …. not to polish and look at only :-) ………

    An old Yamaha TZ road racing slogan from 70’s comes to mind on ability of SMT …… go in deeper and come out harder ……… :-)

    Paul Krugman has an article today on involvement of speculators in physical commodities market at http://krugman.blogs.nytimes.com/2011/02/07/signatures-of-speculation/ ….

    …. cheers, Nikita

  10. Nikita 7 years ago

    Hello Admin,

    Looks like spirit of your blog on commodities price increase is also on the minds of prominent economists………..

    Paul Krugman,…. just released another article, the third in as many days about this topic!……… this time stating we are in a global food crisis linked to climate change and our failure to act on greenhouse gases is likely to lead to more disruption politically and economically ……. at … http://www.nytimes.com/2011/02/07/opinion/07krugman.html?_r=1&ref=globalhome

    Cheers

  11. Author
    admin 7 years ago

    Great bikes man! I need one for myself this summer.

    I prefer David rosenberg to Krugman, Or Zero hedge to everyone pretty much:
    So Ben Bernanke focuses on equity valuations and yet there is a wide array of other “asset classes” that have been affected by the Fed’s massive liquidity infusion. Just as equity wealth has an indirect impact on spending, higher commodity prices squeeze margins for many producers and pinch real purchasing power for those households who are not owners of equity but have to fill their kids’ tummies nonetheless and find a way to get to work if they live more than a mile away. Looking at what food and energy has done since August; it would seem a little circumspect to be fingering Asian demand as the primary reason for the latest leg in the explosive commodity price rally.

    Here we are, with 91% of all equity holdings in the United States held by the top 20% income group in the country. The top 1% own 38% of all the equity valuation. The lower 80% of the income strata own the asset class that the Fed wants so desperately to reflate (and with unmitigated success to be sure!). That same 80% are now being crushed by the indirect impacts of monetary policy — the ones that Bernanke dismisses — and are also ones that are seeing their cash flow drained by the surging gas and grocery bill. Geez — real wages deflated 0.5% in November, by 0.1% in December, and by what looks like at least 0.3% in January. The last time real work-based income fell three months in a row was when the economy was plumbing the recession’s depths from April to June of 2009.

  12. Nikita 7 years ago

    Oh Oh,……..

    You sure got a bee in your bonnet for Ben Bernake …

    What drove food based commodity prices in last 12months was mainly drought ………. however apparently cotton has been affected by speculators ……..

    metals and oil mostly from the rapid development of emerging economies, except gold being driven out of inflationary fear and speculators who apparently are also playing with copper inventories.

    Gas went down because of new recovery technology, and currency movements were flight of capital to safer higher returning economies.

    Before knocking Bernake too much, we need to research his background and better understant what he is trying to achieve …….. as chairman of the federal reserve he is limited on what he can do …….. but his goal for sure is to increase employment, and not stock indices ……..

    Chk out Joseph Stiglitz book on new metric needed instead of GDP growth ……. Krugman, Stiglitz, Nourbini, Ken Rogoff, …. and Bernake are really clear on what needs to be done to improve employment, which has been limited by Republicans political opposition, and by Merkel with her wellfrog narrow mind not to support US to get China to unpeg Renimbi, that is crucial ……. take a look at Prof Dambisa Moyo of Oxford materials on dangers of mercantilism to our world today.

    Largest equity holdings are through a quagmire of hedge funds, pension and trust funds …….. plus far more money moves through Chicago mercantile exchange every day than NYSE & NASDAQ combined …….. as derivative trades…….

    This year largest volume shipping port moved from Singapore to Shanghai, largest bank in the world has recently changed to national bank of China …….. there are huge changes in development and demographics / consumption rapidly occuring in Eastern Asia …… Highest standard of education in world for 15year olds changed this year to Shanghai, greatest volume of millionaires per capita is not in middle east ……. its Singapore ……… largest gold ore body ever found is on Irian Jaya in Indonesia and in same deposit being mined at same time is so much copper that deposit alone is now the second largest copper producer in the world …….. largest oil reservoir to found in the world in last 25 years since Prudhoe Bay in Alaska is Karachaganak in NE Caspian Sea near Atyrau in Kazakhstan ……. largest oil producer is no longer Saudi Arabia its the Siberian oil fields in Eastern Russia….

    You mention real wage deflation in US, …..it is far more severe in Ireland at present, …… for deflation look at Japan over last 20 years a very painful sideways market. We may not like it but we are not experiencing a huge transfer of wealth from developed countries to East Asian countries, with our free trade agreements it is putting us at risk of high unemployment for long perids in our developed countries, something eye feel is truly detrimental to a country and its people.

    It is truly terrible to see normal and less fortunate people experiencing such hardships …… my thoughts …. are that the US Bernake & Obama ……. and also Jean-Pierre Lehman can see that the imbalances in world trade caused mainly by Chinas mercantilist policy thru pegging Renimbi and the extreme greed of Hedge funds and un regulated derivative markets are causing huge financial distortions that are damaging some economies and normal peoples lives …….this is wrong and we need to find a balance somewhere ………

    Perhaps that will involve protectionism again, increased regulation for sure, and home protection of markets like the Dutch & French with Airbus etc do …… dutch are largest exporter of potatoes in the world ….. and good on them :-)

    Am not some US fanatic, eye feel that what George Bush done in Iraq and Afghanistan was terribly terribly wrong, …….. likewise the Gorilla that headed up Lehmans and started the credit default swap market that destroyed Lehmans and Bernie Madoff is nothing less than disgusting, …….

    However there are some very wise & globally considerate people in US too, such as Warren Buffet who has committed 95% of his self made worth to charity when he dies and so far donated over $40billion to charity …… and lives very modestly …

    Cheers,

  13. Nikita 7 years ago

    ……….. apologies for typo in above comment………………… correction as follows..

    We may not like it but we are…. “now” …. experiencing a huge transfer of wealth from developed countries to East Asian countries

    Thank you

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