2009

From Minyanville:

Op-Ed: Will Troubles Abroad Stop a Countertrend Rally?

… The window for a rally … is between now (March 18, 2009) and June. …

However … the effects of the crisis which began in the US, will be felt in most foreign nations by April-May 2009 (and the full effects) by the fourth quarter of 2009. …

Circumstances in Europe (EZU), Latin America (ILF) and China (FXI) are much worse than …market participants realize. … Negative data from these countries (will) start to hit the wires over the next weeks and months (and) will therefore become the primary driver of developments in financial markets. …

The inflection point in the European crisis will come in the summer … .

Second, with respect to Latin America, many US analysts have been predicting the region would be able to withstand the global downturn well. (But) exports are getting decimated in volume and destroyed in price. Foreign-investment inflows and remittances have collapsed. Finally, the corporate sector in Latin America is facing a debt rollover crisis of historic proportions in 2009. …

Finally, there\’s China. Current consensus has Chinese GDP growth decelerating to a level of between +8% at the high end and +5% on the low end. (But) electricity generation statistics are consistent with an economy

that is contracting. Exports are being devastated. Foreign-investment flows have reversed. Most importantly, unemployment is exploding … .

The effects of accelerating unemployment in the export manufacturing sector and reverse migration into the countryside on the internal Chinese economy are profound (and won\’t) be observed in the data until July-August, when the second-quarter statistics are released. By that time, the market will probably realize that the Chinese economy is headed for a contraction – a scenario which virtually nobody is currently predicting … .

And from

How big a deal is the loss of the dollar\’s reserve status?

Sunday, March 22, 2009

by Eric deCarbonnel

5) Countries around the world will be hurt badly by the dollar’s decline. These countries include:

A) Nations which are heavily dependent on US exports: Japan, Mexico, etc…
B) Nations with large dollar reserves: Japan, China, Gulf oil states, etc…
C) Nations which receive large amount of US foreign aid: Israel, Egypt, etc…
D) Nations which rely on remittances from citizens working in the US: Mexico, India, etc…
E) Nations which use dollars as their official currency: Liberia, Panama, etc…
F) Nations which have large amounts of dollars in circulation: Central and South America (especially Argentina), Eastern Europe, etc…

6) Some nations will see benefits from the dollar’s decline. These countries include:

A) Nations with large gold reserves: EU zone, Switzerland, etc…
B) Nations which owe dollar denominated debt will see that debt wiped out: Iceland, African nations, etc…
C) Nations who stable currencies: EU zone, Switzerland, China, etc…

The international monetary system’s breakdown is underway

(Click the title for the full article from The Coming Economic Depression blog)
Friday, April 17, 2009

In this issue of the GEAB (N°34), our team describes the “tunnels and galleries” Beijing has secretively begun to dig in the global financial and economic system in order to escape the « dollar trap » by the end of summer 2009, … a US default which can no longer be concealed. … The same trend can be observed at every level of the country’s public organisation: federal state, federated states (12), counties, towns (13), everywhere tax revenues are vanishing, suffocating the whole country with spiraling debts that no one can control anymore (not even Washington). …

At some point, it is in the interests of new players to simply wait for the current system to break down in order to build a new one, rather than strive to reform it, and suffer a long period of uncertainty. … Once the US has defaulted on its debt, it will be time for the « everyman for himself » rule to prevail in the international system, in line with the final statement of the London G20 Summit which reads as a « chronicle of a geopolitical dislocation », as explained by LEAP/E2020 in this issue of the Global Europe Anticipation Bulletin. …

“With regard to US Treasuries, China has largely stopped buying them (and when buying) only then purchasing short term (three month) Treasuries!” … It appears that … China will (dispose of their) nearly 600 billion worth of USD-denominated assets, and it will have failed (purchase more) Ben Bernanke will be compelled to print Dollars in a (vain) effort to prevent his country from defaulting on its debt.

As we get closer to the breakdown of the international monetary system …, we believe that there is now a major risk that owners of paper gold will end up losing all their investment when sellers recognize that they cannot honour their contracts because they are unable to supply the physical gold they contracted to. …

The second phase of China’s “Great Escape” out of the Dollar will then begin, depending on the behavior of the other key players. Either the Yuan takes its place as international reserve currency along with the Euro, Yen, Ruble, Real, or a process creating a new international reserve currency based on a basket of these currencies will begin. The Dollar will then be out of the race and the G20 reduced to a G18 (without the United States and the United Kingdom, but with Japan no longer able to escape the Chinese sphere of influence). Otherwise, the process of global geopolitical dislocation, described in GEAB N°32, will be underway, based on economic blocks, each of them trading in their own specific reserve currency.”

Here is a thread on this post from The Coming Economic Depression blog.

Units of Measure – Get a sense of proportion here.

Commercial Real Estate

Investors, their Picks and Targets

2 Responses to 2009

  1. The Coming Depression Site is a copycat of this one:www.thecomingdepression.blogspot.com

  2. icliks says:

    The “Coming Depression” link you refer to is changed to “Coming Depression 2” and a new link to your blogspot is added as “Coming Depression.”

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