Oil, Gold And Now Stocks?


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    DPC Government Street, Mobile, Alabama 1906 Is the Plunge Protection Team really buying oil now? That would be so funny. Out of the blue, up almost 5%
    [See the full post at: Oil, Gold And Now Stocks?]

    Golden Oxen

    While strictly not a measure of valuations the graph of the record amount of margin debt is most troubling. This is usually gambling, not investing money, and is hardly an indicator of subdued speculation.


    So, how many have left the labor force, and how many have been down shifted in their earnings just since 2008? What if we measure back to 2000 for those same losses, what is the shrinkage, the deflation that is in play. We pretend the GDP has grown in the face of manufacturing jobs morphing into lawn care, auto spas, dog groomers and life coaches. Control frauds have replaced paid for homes, and pensions and 401k accounts with SSN disability and SNAP. The american dream in progress.


    Phoenix Capital has been dead wrong in probably every prediction they’ve made every month for the last few years. Why? Because the central banks buy all this stuff to bring it wherever they want. None of the previous bubbles provide a reference to compare today’s since that never used to happen.

    Seriously, if I had done the complete opposite of what Phoenix Capital had said to do, I’d be a rich man today.

    Golden Oxen

    “Every normal man must be tempted at times to spit upon his hands, hoist the black flag and begin slitting throats.” – H. L. Mencken


    @Mark: It’s exactly because of the unprecedented nature of this central bank behavior that we can predict that it can’t go on forever. It has all been a bag of tricks ever since late 2008, and such blatant manipulations can only go on for so long. That said, I’m pretty amazed the Masters of the Universe have been able to keep juggling all those running chainsaws as effectively as they have been for going on six years now.

    Let us also not forget that all those TBTF Banks are all nice and set up for going even bigger boomsies than they were six years ago.


    “Is the Plunge Protection Team really buying oil now? That would be so funny. Out of the blue, up almost 5%? Or was it the Chinese doing some heavy lifting stockpiling for their fading industrial base? Let’s get to business.”

    The Chinese have a “fading” industrial base?! The most spectacular industrial development story of all time, over decades, and they are “fading”?! Are we living on the same planet?


    Hey Alan, long time.

    Big things fade too. Or as the French say: Un éléphant se trompe énormement.


    Alan, China’s industrial “miracle” could only have happened as a result of the west’s de-industrialization. And there seems to be lots of evidence that they are in a huge bubble of their own. Recently they lowered rates. Don’t forget, the stronger the growth, the faster it will hit limits.


    “How is this possible? ‘The sharp drop in oil prices will help boost consumer spending’? I don’t understand that: Dudley is talking about money that would otherwise also have been spent, only on gas. There is no additional money, so where’s the boost?”

    This remark by Dudley must involve the idea that money spent on gasoline produces low spending multipliers because it is effectively spent out of domestic circulation, whereas said money spent on other things produces higher multipliers because it remains in circulation at higher velocity, or produces credit multipliers if saved, but generally promoting higher productive employment when not spent on gas.
    The logic seems fallacious, but could be conditionally true, depending on where and how the gas money normally ends up. Do gasoline supply chain companies pay much in taxes or wages domestically? If so, much of said money would be spent right back into circulation anyway. But if not, there may be a pathway for said gas money to effectively escape domestic circulation in an unproductive fashion. This pathway would then supposedly be narrowed by a gasoline price plunge.

    The shale boom situation should derail the argument, providing that the employment and taxable income lost because of the booms sudden reversal would outweigh possible employment gains elsewhere by higher multipliers in discretionary spending.
    Do multipliers actually exist in reality, as functions of monetary velocity and viscosity?

    Gravity is the thrice-greatest algorithm.


    Not to worry, the Fed can guarantee plenty of money to keep the system liquid,,,just not it’s purchasing power.


    Mark BC: “China’s industrial “miracle” could only have happened as a result of the west’s de-industrialization.”

    Irrelevant. Regardless of the cause, China has undergone a spectacular industrialization, combined with massive urbanization, massive improvement in living standards across almost the entire population, dramatically reduced illiteracy, fertility collapse, etc. (all of the foregoing being related).

    Mark: “And there seems to be lots of evidence that they are in a huge bubble of their own.”

    Some evidence, yes. They’ll undoubtedly contract somewhat (correct some of the internal imbalances) and, ongoing, be unable to sustain double-digit growth rates as they had in the past. That’s just part of the process; nothing to get in a twist about. The important thing is that they have made gigantic productive investments that will pay off for over a century, or longer. Their debt problems are different from ours, since they’ve spent their money on industry, infrastructure and the like — the basis for wealth generation — while we have pissed-away our money on worthless crap. The issue is not debt; it is debt in relation to the ability to generate wealth, so as to service or pay off the debt. On that point they are far ahead of us, and gaining almost by the month.

    As for “big things fading” (ilargi): there’s zero evidence that China is now fading, or that it is in any danger whatsoever of becoming weaker as a regional and indeed global force in any foreseeable future. To the contrary: there’s every indication that China is coming into its own as a great world power — having just this year (for example) surpassed the U.S. in GDP (PPP basis). There’s a blizzard of evidence, in contrast, that the West, and the U.S. in particular, is on the verge of fading. All of the fundamentals are in place for a sharp downward turn in the fortunes of the Western powers in general and especially the U.S., with simultaneous rise of the East or Eurasia. Whether or not that materializes remains to be seen, but it is a more than fair bet.

    Though not “fading” in the slightest right now, demographics does allow a rough guess about China’s fate in the latter half of this century: population stabilization and likely decline, combined with a rapidly aging population, will render China less of a dynamic economic power and world player. In other words, China will rise and fall (or come in for a long slow landing) at some point, probably starting in 50 years or so. This is not surprising. Other areas such as India, and then Africa, will by then be on growth trajectories similar to China’s of the last few decades — i.e. dramatic growth and development. After that, who the heck knows? That’s far too distant to even guess. Perhaps the battered old U S of A will be ready for a comeback by then… 😉


    Let he who has ears to hear….

    EURASIAN ECONOMIC BOOM AND GEOPOLITICS: China’s Land Bridge to Europe: The China-Turkey High Speed Railway

    EURASIAN ECONOMIC BOOM AND GEOPOLITICS: China’s Land Bridge to Europe: The China-Turkey High Speed Railway
    By F. William Engdahl
    Global Research, April 27, 2012
    The prospect of an unparalleled Eurasian economic boom lasting into the next Century and beyond is at hand. The first steps binding the vast economic space are being constructed with a number of little-publicized rail links connecting China, Russia, Kazakhstan and parts of Western Europe. It is becoming clear to more people in Europe, Africa, the Middle East and Eurasia including China and Russia that their natural tendency to build these markets faces only one major obstacle: NATO and the US Pentagon’s Full Spectrum Dominance obsession. Rail infrastructure is a major key to building vast new economic markets across Eurasia.

    [go to the link for exciting details, map]


    Signs of the times:

    High-speed rail, kilometers:

    China, year 2000: 0
    China, end 2013: 11,085
    China, end 2020: 25,000 (est)

    U.S.A., year 2000: 0
    U.S.A., end 2013: 0 *
    U.S.A., end 2029: 600? **

    * U.S. has a few hundred miles of slightly-upgraded old-style track, sometimes described as “high speed”, but nothing high speed in the modern (China) sense.

    ** If the California Bay-to-LA line is built (problematic; supposedly by 2029 if it happens). Other than that, nothing clearly on the docket.

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