NightBlogger

Are we witnessing a stock market crash?
Jim Rogers: “Yes, you can call it what you will, it’s very clearly a crash. Things are caving in; it’s really a liquidation. People are selling everything where no matter what the fundamentals, no matter what the underlining values, they gotta sell. It’s forced liquidation. We’ve had this before in history. We’re having it again.”

Peter Schiff
More than just a mere liquidity or credit crisis, the current financial storm represents the death throes of the old global economic order, and perhaps the birth pains of a new one. The sun is setting on the borrow and spend culture that has all but defined us for a generation. Our long ride on the global gravy train is finally coming to an end, and once it does nothing will be the same. The sooner we come to grips with this the better.

Despite the myriad of proposals that are coming from Washington and other world capitals, we must understand that this crisis cannot be cured by governments. In the United States, credit is gone because savings are gone. Our shallow pool of savings has been depleted through bad loans, and we can no longer entice foreigners into lending us their available savings. Given that we are already too loaded up on existing debt they we cannot realistically repay, who can blame them for not wanting to lend us more?

As a result, the free market is trying to put an end to our spending spree. Without savings or home equity to fall back on, Americans struggling with rising prices are finally being forced to curtail their spending. This has terrified our leaders and is causing them to dismantle the remaining structure of our free enterprise-based economic system.

The intention of all these daily federal interventions is to keep the credit spigots open so Americans can go even deeper into debt to buy more stuff they can’t actually afford. This should be clear enough to anyone who listens to what our leaders are actually saying. When speaking about the need for an even larger fiscal stimulus package, Barney Frank, chairman of the House Financial Services Committee, said, “We have to prop up consumption.” He has it backwards. The government has been propping up consumption for far too long, and the best thing they can do now is remove the props so spending can be replaced by savings.

The sad reality is that we borrowed and spent our way into this crisis, and we are not going to borrow and spend our way out of it. Legitimate credit can only be supplied if there are genuine savings to finance it. Savings can’t be magically concocted into existence by a printing press, but can only be created by consumers who spend less than they earn. Efforts to fool the market will not work and will ultimately lead to a monetary disaster and runaway inflation.

Were the government to allow market forces to work, Americans would now have to pay cash for their consumption. That would mean no instant credit for new cars, plasma TVs, appliances, consumer electronics, clothing, furniture, etc. Unless buyers actually had the cash in their checking accounts these purchases would have to be deferred. From an economic perspective this is precisely what the doctor ordered. But for an economy based 72 percent on consumer spending, the medicine will go down hard.

Ultimately, a serious reduction in consumer and mortgage credit, combined with an increase in personal savings, would again provide a pool of needed capital for businesses to produce products and provide employment opportunities. However, the danger is that this potential credit could be completely crowded out by massive borrowing by the Federal Government. In addition, prices for such things as houses and college tuition will fall sharply, as the credit artificially propping them up disappears. People would still be able to buy houses and send their kids to college only they would pay much lower prices when they do.

However, if the government keeps creating inflation to artificially sustain consumer borrowing and spending, there will be no savings left to fund anything and prices will be so high that despite massive consumer spending there will be few goods that Americans could actually afford to buy.

For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my new book “Crash Proof: How to Profit from the Coming Economic Collapse.”

Learcapital.com
Markets around the world have been in serious decline most of this year. In fact the Financial Times reported in its weekend issue that on a global scale the markets are now down the most in 26 years! Inflation rates are on the rise everywhere, including China. But China can’t engage a tight monetary policy to fight inflation, because that would likely lead to a flight of hot money out of the dollar and other weaker currencies, thus leading to a strong Chinese currency which would hurt their huge exports. It could also lead to a crash of the dollar. If/when that happens, there would be a hellish gnashing of teeth heard around the globe, as wealth held in the form of dollars will be quickly vaporized.

The Chinese and other countries know the day of dollar doom is coming which is why the dollar is continuing to come under pressure. Americans for the most part are not yet aware of the dollar’s fate and how that is going to devastate their standard of living. But there is a growing sense among foreigners that they don’t want to get paid or hold dollars lest they be holding them when the plunge in the dollar’s exchange rate leads toward zero value for the Greenback. None of the major exporting nations want the dollar to crash just yet. They want more time to trade out of dollars and into something of value if they can before the final day of reckoning hits America and its fraudulent currency. More

In a study of 162 countries, the Washington, D.C.-based IMF said surging global oil and food prices are causing the most pain in poor countries that rely on imports. With food taking up more than half of household spending in emerging and developing economies, the IMF warned that the share of undernourished could rise rapidly to above 40% of the total of their populations. “Some countries really are at a tipping point,” said IMF Managing Director Dominique Strauss-Kahn in a statement. “If food prices rise further and oil prices stay the same, some governments will no longer be able to feed their people and at the same time maintain stability in their economies,” he said. More

Leap2020
the LEAP/E2020 team has decided to launch an alert on the July-December 2008 period. Indeed, our team is now convinced that this period will consist for the whole world in a major plunge into the heart of the phase of impact of the global systemic crisis. The upcoming six months are in fact the core of the unfolding crisis. The troubles met in the past six months were mere harbingers.

In the next semester indeed, all the components of the crisis (financial, monetary, economic, strategic, social, political… ones) will converge at the height of their intensity (1). Avoiding to repeat a description of the various sequences already anticipated in the previous editions of the GEAB, our researchers have decided to describe the trends that will be at work in the world’s main regions in the next six months. Therefore they analyse eight fundamental processes that will mark the next semester and affect decisively the years 2009-2010, i.e.:

1. A Dollar in distress (EUR 1 = USD 1.75 at the end of 2008): Panic-fear of a US currency and economy collapse eats into the American collective psyche

2. Global financial system: An impossible requirement – placing Washington under international trusteeship – provokes the system’s break

3. European Union: The periphery sinks into the recession, the Eurozone only slows down

4. Asia: The « double whammy » inflation/export-collapse

5. Latin America: Difficulties increase but growth remains steady in most parts of the region, Mexico and Argentina in crisis

6. Arab world: Pro-Western regimes go adrift / 60 percent risk of socio-political explosion on Egypt-Morocco axis

7. Iran: 70 percent probability of an attack by October 2008 confirmed

8. Banks/Speculative bubbles: When bubbles collide

In parallel, LEAP/E2020 presents five strategic advices for the intention of central banks, governments and regulatory authorities, aimed at reducing and channelling the very bad consequences of the phase of impact of the crisis. More

In other words, despite Japan’s energy chief’s urging OPEC to boost oil production, they plan to do nothing for another three months while oil prices soar.

AOMORI, Japan (AP) — Japan’s energy chief launched a meeting of ministers from the world’s top industrialized nations Sunday by warning that soaring oil prices could trigger a global recession if they’re not checked. Oil prices made their biggest single-day surge on Friday, soaring $11 to $138.54 on the New York Mercantile Exchange, an 8 percent increase.

Five top energy consumers - the United States, China, Japan, South Korea and India - urged oil producers on Saturday to boost output to meet growing demand, while pledging to develop clean energy alternatives and increase efficiency. The current president of the Organization of Petroleum Exporting Countries, Chakib Khelil, has said that the cartel will make no new decision on production levels until its Sept. 9 meeting in Vienna. More

TODAY the World Health Organization took a strong stance to protect 1.8 billion young people by urging governments to outright ban all tobacco advertising, promotion and sponsorship. The call to action comes on the eve of World No Tobacco Day (on May 31st). This year’s campaign focuses on the multi-billion dollar efforts of tobacco companies to attract young people to its addictive products through sophisticated marketing.

“The tobacco industry employs predatory marketing strategies to get young people hooked to their addictive drug,” said Dr Douglas Bettcher, Director of WHO’s Tobacco Free Initiative. “But comprehensive advertising bans do work, reducing tobacco consumption by up to 16% in countries that have already taken this legislative step.”

More

Sanjay Jha
Soaring food prices are going to stay for long time and UN’s Food & Agriculture Organisation ( FAO) have warned that bad weather could increase the problem…as demand from developing countries and production costs rise, says the UN’s Food & Agriculture Organisation (FAO). It warned that the current spike in global food prices was higher than previous records, partly because bad weather had ruined crops.

Although high prices will ease off, other factors, such as rising biofuel demand, will keep future costs high. The FAO said speculators were also to blame for volatile commodity markets. The FAO’s annual Outlook report predicted beef and pork prices might be 20% higher by 2017, wheat could be up to 60% more expensive and the cost of vegetable oils might rise by 80%. More

Photo Paul Keller

Bob Unruh
WorldNetDaily
‘Mr. Gore’s movie has claims no informed expert endorses’
More than 31,000 scientists across the U.S. – including more than 9,000 Ph.D.s in fields such as atmospheric science, climatology, Earth science, environment and dozens of other specialties – have signed a petition rejecting “global warming,” the assumption that the human production of greenhouse gases is damaging Earth’s climate.

“There is no convincing scientific evidence that human release of carbon dioxide, methane, or other greenhouse gases is causing or will, in the foreseeable future, cause catastrophic heating of the Earth’s atmosphere and disruption of the Earth’s climate,” the petition states. “Moreover, there is substantial scientific evidence that increases in atmospheric carbon dioxide produce many beneficial effects upon the natural plant and animal environments of the Earth.” Read more

Photo by luismi1985

“Desperate for quick returns, dealers are taking trillions of dollars out of equities and mortgage bonds and ploughing them into food and raw materials. It’s called the ‘commodities super-cycle’ on Wall Street, and it is likely to cause starvation on an epic scale.”

Under conditions of growing debt defaults arising from the US subprime crisis, speculators and hedge fund groups have increasingly switched their investments from high-risk “bundled” securities into so-called “stores of value,” which include gold and oil at one end of the spectrum and “soft commodities” such as corn, cocoa and cattle at the other.
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Photo courtesy of dirty bodega
Patricia Hill

The upswing in prices has been exaggerated by the massive influx of investors and speculators seeking to profit from rising prices for corn, wheat, oil, gold and other commodities. Big Wall Street firms and hedge funds have taken huge positions in futures markets that once were dominated by relatively small operators such as farmers and grain-elevator owners. Small investors, who see fast-rising commodities as good hedges against inflation and a falling dollar, also are getting a piece of the action by investing in index funds that are tied to commodity prices.
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pic courtesy of Mostafa

At the epicenter of the storm is the Philippines, the world’s largest importer of rice. The country is paying exorbitant prices for whatever rice it can get its hands on, driving up prices around the world to double last year’s. At the center of the storm lies a simple question: Why can’t the Philippines, and other countries in Asia, produce enough rice to feed themselves?
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Photo is a prop and courtesy of Frank H

Think Global, the Norwegian company making an all-electric town car, has reiterated that it will begin to bring its cars to the U.S. in 2009, and it’s providing some more details. The company makes the Think City, a modified version of an all-electric car originally developed by Ford. It can go 65 miles per hour at top speed and 110 miles on a single charge. Thus, it’s not for freeway jockeys–instead, it’s targeted at those living in urban cores who take relatively short jaunts and can charge the car up a night.
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