Outlook 2008, The Upcoming US Depression

[ElephantFlea]

Oil is also a major factor. If not THE major factor

A lightning fast lesson in the macroeconomics of boom to bust. Good on you Rob.

The American economy is totally based upon oil, and cheap oil at that. This will change, as the demand for oil worldwide continues; whilst the supply side of it fails to keep up. Peak oil has pretty well happened.

The American economy and public has to cut it's oil consumption drastically. It has no choice on this. Not from an environmental standpoint (which many feel is arguable), but from the international security perspective too.

The politicians that pretend this is not the case have extremely vested interests in the oil industry. They habitually hold the short term view, which is coincidentally not much more than the time to the next election. They will paint any picture of false hope in order to get elected. And every time the public find out about such lies, it is quickly forgotten. And yet somehow the public seem mesmerised by them. The power of the media I guess.

In case any of you readers doubt how important oil is to the current US economy setup, take a look at the how much the administration has spent attempting to control the middle east. Almost half a trillion dollars. To gain control of an area which does not have the most dangerous weapons or the most despotic political regimes. Unfortunately, it was not quite as easy as he hoped. He mortgaged the entire country to finance the adventure, and all he got was sand kicked in his face. Even now he's pretending that the "big surge" has finished the war. Nothing is further from the truth.

At the start of 2007, I publicly predicted we would have $80 oil, and got laughed down. As it happens I was being unduly conservative.

My prediction is that the current sub $100 oil price will seem very cheap before the decade is out. Perhaps as much as $500, but a lot of that might well come from the declining value of the dollar.

Is there a solution to this that will save the American economy? It's far too late for that. Get ready for a rough ride.

Flea

 

[Joh]

Rob Crespi

Great article -thank you Rob.

Scarry stuff--holding on to my pants.

Believe you are here for a week's R+R ---have a great week/swing from chandeliers---some great company and wine and meals (don't go back to that vegetarian place ha ha). Also have a HAPPY BIRTHDAY--i'll slurp a vino here on your behalf.

Regards Joh

 

[b.reed]

USA does not have a fixed exchange rate, however it has three of the other four factors for a currency crisis:

After reviewing the three generations of currency
crisis models, we conclude that four key
ingredients can trigger a crisis: a fixed exchange
rate, fiscal deficits and debt, the conduct of monetary
policy, and expectations of impending default.

Public perceptions rule the currency.
---

Uranium, awesome - great! Price is now at 90$/lb. There does seem to be a couple nutjobs posting comments though - sup with that?

 

[BlueMental]

Connected or Obsolete!

An employee of mine who received his wages every Thursday asked me for a loan on the Monday after the weekend. I told him I would loan him the money. ( R50 50 South African Rand ) but only once.

The following Friday he paid it back, and he again asked the following Monday. After refusing his second loan he was very upset. After I explained that if I were to continue doing the same each week, my R50 would only be in my pocket from Friday to Sunday. The other four days of the week it would be in his pocket. Which in effect meant that my money was by majority of days actually his since it spent more time in his pocket, which is why I preferred to let it remain in my pocket.

What he failed to realise was that if I DID loan him in increasing amounts that he would actually be at my beck and call. In essence he would be a self slaved person due to his own debt.

The ONLY way he would be able to free himself ( if the loan procedure were in practice ) would be to totally repay ALL his debt and thereafter to cease from incurring any further debt.

Perhaps he would have to attack his neighbour looking for WMD so he could loot their piggy banks stroke oil wells to pay off his loans.

Fortunately for him, I did not let him get into that situation buy withholding any further loans, so he stayed free from my clutches.

USA seems not so fortunate.


The bigger issue to ponder upon is this, once Gold soars through the roof ( supply and demand dictates it will ) and the wise ones have what is left of the available gold, there is no more West to go to.

Blue Mental

 

[superiorcp27]

Mr.Patrick Colturi

Hi my name is Patrick Colturi.
I live in Memphis Tn.
I work for my father who owns a warehouse downtown in Memphis.
We produce Dishwashing detergent, cosmetics, and work on houses.
I am very interested in the markets and have lost 12k in the currency markets, due to that mistake i am trying to recover from it.

 

[sethmagic]

thanks 4 info - good laugh

and very informative...

Uranium - thats a biggie... soon as Iraq step up production the oil problem is over, sure i agree that is definately the case. thats why i hold IQD as a long term investment that is looking better every day ( so long as US stay out of any more stupid wars!)
will defo start to research that for soon, uranium...


can some one pls tel me what GY is? is that GYD? im keen to short the hell out of any meltdown, especially those that represent corrupt and arrogant warmongering political regimes (hence i am betting against USD)

ill add to the picture my own opinion (cos i dont know big people like Rob surely does, so opinion it is, do your own DD) that since japan is underwriting the re-establishment of Iraqs economy and currency, the funds have already been wired according to my rumours... the Yen will increase in value markedly b4 after or during the IQD pegs to a basket of (not including dollar) strong currencies, i am expecting by March 08.... i think we will see big yen gains this year even.... equity slowdown = yen rise.... theres 2 reasons to buy Yen as a long term thing...

so thats my 2 cents worth... thanks rob, you help me with "big picture" now i will attempt to swing/day trade within it an build up my midget account!

 

[vio333]

Human limitations and predictions about recession

Making predictions for the years to come is a very pleasant occupation for most of us. Some are clever , some are more informed but the big picture is that we are all humans.We all are severely limited no matter how big is our IQ.
Moreover , even if statistics (and history) are good at some point , you can't depend on them for predicting the lottery outcome.
And in essence all our world is a lottery we are not controlling.....
Predictions in any time (present or history ) are only a substitute for the lack of control.

So maybe a recession will come ....maybe not .Mybe USA will fall like Roman Empire , maybe not .
The big picture is so big that we can't see it...

 

[cpartners]

Thanks

That is well thought of In fact USA need to look into the important issues affecting the economy not just talking about it.
Thanks again
Cpartners

 

[zackart]

Bad administration, the USA will overcome it

Rob's atricule was interesting but I think the USA will of course,overcome their problems. I'm not American but Canadian. I've been around a few years and yes can see a little into the future just by having lived in the past. I know a few things about the USA. Everyone knows that almost everything the modern world enjoys today came out of where? The USA of course: everything from electricity, cars, planes, phones,lights, refrigeration, the majority of medicine and cures, computers and cell phones, T.V.,and on and on and on. Yes, the financial problems started with deficit spending in the early 1970"s. Canada was involved in doing deficit spending too. The idea was, inflation was high so why not spend for infastructure and pay it off with devalued dollars. It was a good idea at the time. In the early 80's the canadian government started to be concerned since inflation was not 10% a year anymore, so Canada started paying off the debt and now enjoys a surplus. It took a decade or so.The USA continued with deficit spending and now has to pay up. It will be hard since it takes good government and elected politicians who do what the people want and start paying down the debt. Amercian is the most creative populos in the world, nobody can deny that since they have created so much. Once the american people get behind paying down the deficit they will figure a way to do it fast and without hurting their children much. The quotes about a North american currecy involving Canada, USA, and Mexico are the likely way the USA will get out of the deficit quickly. It would likely become the most valuable currency in the world very quickly.Canada has more oil now than the middle east and more natural resourses than most of the rest of the world combined. The USA also now has enough new oil slade in Colorado to last 200 years for America alone, and it is on tract to start extracting it in a year or so. If you have not checked that out and bought some of the stock of the 3 companies involved you should check it out because you are likely missing out on 2 or 3 thousand percent profits in just a couple years ahead. This will ensure billions and billions of dollars each year staying in the USA and not going to the middle east, and may be another way of paying down the deficit fast. These are just two ideas I can immediately see and I am not even Amercian. All I am saying is that, yes the USA must start badgering their politicians right away to get the deficit in order; and I think they will now since the USD is in trouble. It's not the end of the world though and the creative ideas to get balanced are out there. I think we will start seeing them manifest as soon as the US gets rid of their current administration.Think of this> 2015, the USA, Mexico, Canada have a new currency, the NAD "North American Dollar" value by 2017 will be at least twice the GBP and 4 times the EUR. North America has enough raw oil supply for 500 years likely 5000 years as fuel cells are running all the cars and raw oil is only partly used to enhance bio-home heating oil by 2017. This is the likely scenario, it just takes the American people to open their eyes and start getting their politicians in order. As for France, nice scenery, good wine, but I would not bet that the world's next great invention that changes everyone's life for the better comes out of France. As for Gold, A few years ago we could not make gems. Now we can make sapphires, Rubies and even Diamonds that even the best gemologists in the world can't tell are man made or natural. I would not want to hold too much gold when it comes out that we have been able to make it but the info was kept from the public and gold is really worth $25./ounce. Yes, North America doesn't manufacture too much anymore but we produce ideas and information and more people are employed as a result of it. About 5% unemployment in the USA and 5.5% in Canada. It was much more years ago when we just manufactured. We produce the concepts and give other countries the benefit of manufacturing. We double all known knowledge in just over 2 years. 99% of the knowledge comes out of north America.Thats double all the knowledge in the history of the world in 2 years, every 2 years . Better world all around. If we hadn't created the info society and shared the manufacturing most of the rest of the world would be still living in dark huts. Think about it! Get a grip Especially you Amercians and don't be put off by negative crap. We can get out of any problem fast, we just have to acknowledge it. The problem is everyone is living so good that we have not had time to think about it. All we have to do is put heads together and get the politicans in line.

 

[awsl]

GY -> Pound Yen

and very informative...

can some one pls tel me what GY is? is that GYD? im keen to short the hell out of any meltdown, especially those that represent corrupt and arrogant warmongering political regimes (hence i am betting against USD)

account!

Dude, GY refers to Pound/Yen currency pair, when there is a meltdown it moves 600-1000pips per day, look forward to short the hack of it.