The Grains market went ballistic today. The USDA slashed end of year inventory (the food supply's margin of error) to the lowest level in 16 years (in the end, my bet is it will the lowest level, EVER).
To you doomers:
No, this does not mean food shortages (at least not right away, and not here in the U.S. I would not want to be living in a Pakistan, Sudan, or Egypt...). It does mean that the 2011 crop has ZERO margin for error. If the U.S. experiences some kind of extreme weather phenomenon in the Corn producing regions next year... there will STILL not be a food shortage (well, unless we have weather on par with 1936... then we would be in some deep doodoo). There WILL BE a gasoline shortage, though. The U.S. consumes over 42% of its corn crop to produce ethanol - so the slack would have to come from there... and, given that ethanol provides roughly 10% of the U.S. consumption of gasoline BY VOLUME... something would have to give... but I do need to noodle this some more...
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The Fed and U.S. Treasury seem hell bent on bringing the US$ to its knees. I am not sure what they have in mind and what they hope the outcome is... but it is a fascinating time to be alive... and at this moment they are "in for a penny, in for a pound"... today's unemployment number was horrific, and the data upcoming for at least a couple of quarters are going to be ugly - so the equity market bid up prices in anticipation of QE2. The market must have missed class the day they covered the "Broken Window Fallacy" in Eco 101.
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Bank of America halted foreclosure sales in all 50 states today. The other big banks are not far behind. What a windfall for the irresponsible! And what a disaster for the modest, frugal, rational folks that kept their debt levels in order. Politicians are tripping all over each other trying to enact some kind of moratorium... be careful what you ask for, you might just get it. Any foreclosure moratorium would drop the housing market and economy to its knees... and they might not be able to get the whole debt slave thing going again, or at least for quite some time.
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Bubble, Bubble Toil and Trouble
"There you go again!" - Ronald Reagan
"It's a story about us spending money we don't have on things we don't need to create impressions that won't last on people we don't care about." - Tim Jackson (he should have added: "but who we would like to have sex with).
Well, the Fed did it again.
In an effort to re-blow the housing bubble they blew bubbles elsewhere - primarily in precious metals.
In an effort to help exports they have killed the US$, leaving Oil in the mid $80's... and Oil is problem NUMERO UNO for our trade deficit. In other words, "let's help our exporters by increasing our foreign debt for Oil" - this is not a strategy that any rational person would pursue.
It is simply not possible to know what the hell you are doing in a world in which the rule makers change the rules day to day and week to week. IF, and its a BIIIIIIGGGGGG "IF", you could forecast the policy response with ANY accuracy you MIGHT make heads or tails out of this... but considering the FEd DOES KNOW what the policy response is going to be.... and considering how badly they have f*&^#!ed everything up... you get the idea.
Oil in the mid $80's is very near to dragging the economy back to the abyss. Oil over $100 would shoot the economy in the head... and then drag the economy back to the abyss. Either way, you end up in the abyss.
Here's another thought.... Oil in the mid $80's with 10% unemployment? With REAL unemployment closer to 20%? I would not have thought possible.
It just gets weirder and weirder.
"It's a story about us spending money we don't have on things we don't need to create impressions that won't last on people we don't care about." - Tim Jackson (he should have added: "but who we would like to have sex with).
Well, the Fed did it again.
In an effort to re-blow the housing bubble they blew bubbles elsewhere - primarily in precious metals.
In an effort to help exports they have killed the US$, leaving Oil in the mid $80's... and Oil is problem NUMERO UNO for our trade deficit. In other words, "let's help our exporters by increasing our foreign debt for Oil" - this is not a strategy that any rational person would pursue.
It is simply not possible to know what the hell you are doing in a world in which the rule makers change the rules day to day and week to week. IF, and its a BIIIIIIGGGGGG "IF", you could forecast the policy response with ANY accuracy you MIGHT make heads or tails out of this... but considering the FEd DOES KNOW what the policy response is going to be.... and considering how badly they have f*&^#!ed everything up... you get the idea.
Oil in the mid $80's is very near to dragging the economy back to the abyss. Oil over $100 would shoot the economy in the head... and then drag the economy back to the abyss. Either way, you end up in the abyss.
Here's another thought.... Oil in the mid $80's with 10% unemployment? With REAL unemployment closer to 20%? I would not have thought possible.
It just gets weirder and weirder.
Currencies at War
The major currencies appear to be at War. There are no rules, and no way to predict what the various Central Banks might do... and they appear to be doing them every day.
The stealth rally in Oil might be here for a while...
The stealth rally in Oil might be here for a while...
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