…David Zervos, Jefferies:
Big spike in oil from a crisis in the mid east.
Jeffrey Saut, Raymond James:
The DC Beltway crowd and then crude oil . . .
David Kotok, Cumberland Advisors:
“The scenario that worries me is a geopolitical shock that spikes oil, and does so now, such as to remind people of what happened in 1973/1974, with the Yom Kipur war, when oil went from $3 to $12. I admit to being old enough to remember it. It did so at the same time [former Fed Chair] Arthur Burns was in a very expansive Fed policy mode. In 1973-1974, what the Fed did through monetary policy was to fuel the inflation that occurred in the late 70s and became virulent.”
“On the monetary policy side [today], the policy is geared to blunt the force of deflation. The position of the Fed is: We’ll deal with inflation later. And that’s fine… when there is no shock.”
“AIn a shock, when policy is very stretched, it means the system has no resilience.”
“It’s like jumping on a trampoline of cement.”
“My worry is, the Northern piece of Nigeria is embroiled in civil war with Islamic extremists.”
“Nigeria is the most important oil producer in the world.”
“Geopolitical risk in Nigeria rises every day”
‘Everyone is ignoring it.”
“I look at Nigeria, and I look at the risk of Islamic extremism in
threatening oil production.”
“My biggest fear is that we now get hit with an oil price shock… That takes Brent to $150-$160, and that takes gasoline hat to the High $4s or $5.00.
“That will come coincident with the expiration of the 2% payroll tax”
“And that plays a very important role here and is being ignored. And these idiots that we elect to represent us feel that it’s okay to let a 2% tax break expire… at the same time a consumer shock is
I was confident that the Fed had already begun printing. That seemed quite evident by the overall action in the commodity markets, the dollar, and the fact that stocks were unable to correct in the normal timing band for a daily cycle low. However, I didn’t really expect Ben would come out and publicly admit it. That one took me by surprise Thursday. I guess Bernanke wants to get full value for his attack on the dollar and make sure that markets are rising into the election.
At this point all the pieces are in place for the inflationary spike and currency crisis I’ve been predicting for 2014. We now have open-ended QE that is tied to economic output and unemployment. But since debasing currencies has historically never been the cure for the bursting of a credit bubble, all the Fed is going to produce is spiraling inflation. So as this progresses we are going to see the Fed printing faster and faster as the result they are looking for never materializes. This is what will ultimately drive the currency crisis at the dollar’s next three year cycle low in 2014.
At this point, watch the price of oil if you want to know when the next recession is going to begin. As I’ve pointed out many times in the past, recessions (well, at least since World War II) have all been preceded by a sharp spike in the price of energy.
Any move of 100% or more in a year or less, has historically been the straw that breaks the camel’s back. Modern economies cannot survive that kind of shock. It invariably triggers the collapse of…
As LEAP/E2020 anticipated since the end of 2011, the end of summer 2012 marks the beginning of the revival for Euroland with the emergence of a positive dynamic fed by two lasting phenomena: first, the progressive operational installation of the instruments bitterly discussed and decided upon during the last 18 months and, secondly, the visionary spark brought by the political changes of the last six months which have put Euroland’s medium to long term future back in the middle of the decision-making process. The Euro’s progress these past weeks offers a perfect illustration of the phenomenon (1). That being said, Europe will be in recession for the next six to twelve months. It just goes to show that the only good news that we announced in the June 2012 GEAB issue is far from being miraculous.
In a certain sense, it’s even the contrary, since henceforth it’s no longer possible to hide the global economy’s tragic state behind the pretext of the “Euro or Greek crisis”. The more Euroland advances constructively, the more the “Potemkinien” (2) character of the US, Chinese, Japanese and Brazilian… economies’ « health » will show itself. The tree will no longer hide the forest, namely that all the major global economies are entering recession or slowing growth simultaneously, leading the socio-economic and financial world into a black hole.
At the same time summer 2012 will have marked a major acceleration in world geopolitical dislocation with a Syrian conflict which becomes more dangerous for the Middle East and the world day by day (3), Israeli-Iranian tension which is ready to explode at any time, and widespread testing of declining US power – from the China Sea to Latin America via the whole Muslim world. The strategic-military world is heated white-hot as the massive resumption of arms sales worldwide illustrates for that matter, with the United States supplying 85% of the total (4).
Empire State Survey: New orders dropped to -5.5 and the shipments index fell six points to 4.1. Employment levels slipped a tad lower, but remained in positive territory. Sentiment for the next six months also trickled lower.
Is it just me, or are the signs of consumer collapse as clear as a Lowe’s parking lot on a Saturday afternoon? Sometimes I wonder if I’m just seeing the world through my pessimistic lens, skewing my point of view.
My daily commute through West Philadelphia is not very enlightening, as the squalor, filth, and lack of legal commerce remain consistent from year to year. This community is sustained by taxpayer-subsidized low income housing, taxpayer-subsidized food stamps, welfare payments, and illegal drug dealing. The dependency attitude, lifestyles of slothfulness, and total lack of commerce have remained constant for decades in West Philly.
It is on the weekends, cruising around a once thriving suburbia, where you perceive the persistent deterioration and decay of our debt-fixated consumer spending based society.
The last two weekends I’ve needed to travel the highways of Montgomery County, PA, going to a family party and purchasing a garbage disposal for my sink at my local Lowe’s store.
Montgomery County is the typical white upper middle class suburb, with tracts of McMansions dotting the landscape. The population of 800,000 is spread over a 500-square-mile area. Over 81% of the population is white, with the 9% black population confined to the urban enclaves of Norristown and Pottstown.
The median age is 38 and the median household income is $75,000, 50% above the national average. The employers are well diversified with an even distribution between education, health care, manufacturing, retail, professional services, finance, and real estate. The median home price is $300,000, also 50% above the national average. The county leans Democrat, with Obama winning 60% of the vote in 2008. The 300,000 households were occupied by college educated white collar professionals.
From a strictly demographic standpoint, Montgomery County appears to be a prosperous, flourishing community where the residents are living lives of relative affluence. But, if you look closer and connect the dots, you see fissures in this façade of affluence that spread more expansively by the day…
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