Important Breaking News for the Week of June 2
June 8
The U.S. Has No Remaining Grain Reserves (June 6 - Tri State Observer)
WASHINGTON - Larry Matlack, President of the American Agriculture Movement (AAM), has raised concerns over the issue of U.S. grain reserves after it was announced that the sale of 18.37 million bushels of wheat from USDA’s Commodity Credit Corporation (CCC) Bill Emerson Humanitarian Trust.
“According to the May 1, 2008 CCC inventory report there are only 24.1 million bushels of wheat in inventory, so after this sale there will be only 2.7 million bushels of wheat left the entire CCC inventory,” warned Matlack. “Our concern is not that we are using the remainder of our strategic grain reserves for humanitarian relief. AAM fully supports the action and all humanitarian food relief. Our concern is that the U.S. has nothing else in our emergency food pantry. There is no cheese, no butter, no dry milk powder, no grains or anything else left in reserve. The only thing left in the entire CCC inventory will be 2.7 million bushels of wheat which is about enough wheat to make ½ of a loaf of bread for each of the 300 million people in America.”
Oil Prices Raise Cost of Making Range of Goods (June 8 - NYT)
Surging oil prices are beginning to cut into the profits of a wide range of American businesses, pushing many to raise prices and maneuver aggressively to offset the rising cost of merchandise made from petroleum.
Airlines, package shippers and car owners are no longer the only ones being squeezed by the ever-mounting price of oil, which shot up almost $11 a barrel on Friday alone, to $138.54, a record.
Companies that make hard goods using raw materials derived from oil, like tires, toiletries, plastic packaging and computer screens, are watching their costs skyrocket, and they find themselves forced into unpleasant choices: Should they raise prices, shift to less costly procedures, cut workers, or all three?
Diesel thieves wreak havoc on California farmers (June 7 - CNN)
BAKERSFIELD, California (CNN) -- Standing in a field of organic tomatoes, farmer Pete Belluomini says the ground-cracking drought and unrelenting insects make it difficult enough to make a living on the land.
But they are the least of his concern these days as a new menace haunts farmers in Bakersfield, California: diesel thieves.
About 1 in 11 Mortgageholders Face Loan Problems (June 6 - NYT)
About 1 in 11 American mortgages were past due or in foreclosure at the end of March, according to a report released on Thursday, a figure that is rising fast as home prices fall and the job market weakens.
The first three months of 2008 marked the worst quarter for American homeowners in nearly three decades, according to the report, issued by the Mortgage Bankers Association. The rate of new foreclosures and past-due payments surged to their highest level since 1979, when the group first started collecting the data.
All told, about 8.8 percent of home loans were past due or in foreclosure, or about 4.8 million loans. That is up from 7.9 percent at the end of December. (About a third of American homeowners do not have mortgages.)
Record numbers using food stamps in Ohio, Michigan (June 6 - WSWS.org)
Nationally, the number of people using food stamps is due to reach 28 million by next year, tying a record for the program set in 1994. As one might expect, the number of people using food stamps in economically devastated Michigan and Ohio is particularly high; more than 1.25 million—a record number—of Michigan residents now receive food assistance, while the 1.1 million Ohio residents using food stamps represent a doubling of the number since 2001. The latter figure does not include the estimated 500,000 people who are eligible for food stamps but have not signed up.
High cost and demand for fertilizer scares farmers (June 4 - AP)
DAYTON, Ohio (AP) — Corn stalks normally dominate the fields of farmer Lyle McKanna. But this summer, leafy green soybean plants will swallow up more acreage than ever.
McKanna, who farms 800 acres near Lima, has replaced more than one-fourth of his corn crop with soybeans, which require far less fertilizer.
In part because of a global surge in demand, the price of fertilizer has skyrocketed 228 percent since 2000, forcing U.S. farmers to switch crops, cut back on fertilizer or search for manure as a substitute.
Wholesalers and retailers are scrambling to find and buy fertilizer and juggle what supplies they have to meet customers' needs. Between 2001 and 2006, global demand jumped 14 percent, an amount equivalent to the entire U.S. market, according to The Fertilizer Institute, a Washington D.C.-based trade group.
"We're trying to get as much as we can and get it into storage," said Joe Dillier, plant, food, markets manager for The GROWMARK System, a farm cooperative based in Bloomington, Ill. "It's hard to buy as much as you want forward because everyone sees that this price is going to continue to go up."
The price increase means the cost of fertilizing an acre of average-yield U.S. corn rose from about $30 to $160.
June 7
Oil Prices Take a Nerve-Rattling Jump Past $138 (June 7 – NYT)
The rise in oil prices turned into a stampede on Friday with futures jumping a staggering $11 a barrel to set a record above $138 a barrel. The unprecedented surge came as the dollar fell sharply against the euro and a senior Israeli politician once again raised the possibility of an attack against Iran.
Job Losses and Surge in Oil Spread Gloom on Economy (June 7 – NYT)
The unemployment rate surged to 5.5 percent in May from 5 percent — the sharpest monthly spike in 22 years — as the economy lost 49,000 jobs, registering a fifth consecutive month of decline, the Labor Department reported Friday.
The weak jobs report, coupled with a staggering rise in the price of oil — up a record $10.75 a barrel to more than $138 — unleashed a feverish sell-off on Wall Street, sending the Dow Jones industrial average down nearly 400 points. The dollar plunged against several major currencies.
Companies at risk of downgrade hits record: S&P (June 6 – Reuters LONDON)
The number of companies around the world at risk of getting a credit downgrade climbed to a record in May amid the global credit squeeze, ratings agency Standard & Poor's said on Friday.
The number of entities at risk of downgrade rose to 738 in May, 25 more than in April, S&P said.
"A material slowdown in housing and consumer-related activity and protracted tightening of lending conditions have continued to dampen credit fundamentals," S&P said.
Banks Say Auction-Rate Investors Can't Have Money (June 6 – Bloomberg)
Franklin Biddar wants his money, and says Bank of America Corp. won't let him have it.
The 65-year-old real estate investor from Toms River, New Jersey, said he hasn't had access to cash the bank invested for him in auction-rate preferred shares ever since the market seized up in mid-February. Even when Biddar agreed to sell $100,000 worth of the securities to Fieldstone Capital Group, Charlotte, North Carolina-based Bank of America wouldn't release the bonds, saying the transaction wasn't in his interest, he said.
"I can't do anything," said Biddar, who was so eager to unlock his money that he was willing to accept 11 percent less than what he paid for the securities. "Bank of America got me into these securities that are supposed to be as safe as a money market, and now they won't get me out."
"By allowing customers to sell at a discount, the banks allow customers to establish damages," said Bryan Lantagne, the securities division director for Massachusetts Secretary of State William Galvin.
Lantagne is head of a task force for nine states looking at whether brokers misrepresented the debt as an alternative to money-market investments.
Like all finite resources, oil production will reach a peak and then decline. Disagreements are primarily about when the peak will be reached, how severe the decline will be and whether we can leave oil before it leaves us. Unfortunately, in each case, the news is not good.
A doomer's garden (June 3 – Energy Bulletin)
Now that oil is up over $130 a barrel and the subprime debacle is making everyone think that there may just be a Big Problem in the future, I would like to reopen the discussion on the menu du jour, post-Peak. Tractor trailers may not be able to bring in our Krispie Flakes and California oranges, and we may have to "make other arrangements," as James Howard Kunstler often says, to feed ourselves. I am worried with the frequency that I see “gardens” as a solution to a breakdown in the food supply, and I would like to disabuse the peaknik crowd of this dangerous illusion.
"If there’s a problem with the food supply, I'll just garden," you say! If the Peak comes and causes disruptions in the food supply, your Hubbert Victory garden will see you through the winter months. I’m sure most of us love to picture ourselves putting up forty quarts of tomatoes and salting beans for the winter in a large beige crock. With your green thumb and Mason jars you'll can enough to last until next year’s first corn comes in.
This is a nice fantasy, but I would ask the more serious to do a simple survey. Each of us likely has a friend who has a fairly large garden. Ask him or her what percentage of their family’s yearly food intake comes from the garden – I would be astounded if any say more than two percent. Annual gardening, like agriculture, takes an enormous input of energy for the return you get, and that is assuming you are good at it.
Really, Really Bad News About Oil (June 3 – Seeking Alpha)
Some years ago I wrote a paper called ‘A ‘New’ World Oil Market’ (2004), which I presented at a conference somewhere. The intention of that paper was to argue that the world oil market was in the process of a rapid transition, and the combination of resource scarcity and accelerating demand (relative to supply) would cause a fundamental shift in the market.
I said in that paper essentially what I am going to say here, only at that time I couldn’t prove a few of the things that needed proving. All that has changed: it changed when the price of oil reached $100/b and continued to rise, because with that price and the present movements of global oil supply and demand, proofs are no longer necessary. This time the wolf is here!
Gearing now for peak oil shock (June 3 - The Dominion Post, NZ)
A movement that 'stops the 'overwhelm'; the feeling 'but what can I do'?
It's an opportunity for people to come from an individual standpoint and make a difference." That's how Normandale resident Juanita McKenzie describes Transition Towns. It's a model in which community-based initiatives facilitate transition from a globalised, oil-dependent society to a resilient, re-localised society that can thrive in a world where there is less abundant cheap oil.
June 4
Newfound savings penchant could retard growth (June 4 – Reuters WASHINGTON)
U.S. consumers are socking more money into savings, as fears of a weakening economy may be making them reluctant to spend their tax rebate checks, according to analysts who say that may mean the economy faces a prolonged period of slower growth.
In fact, consumers have been slowly rebuilding savings since hitting a low point in November 2007, when they drew down savings in order to keep spending. Since November's negative 0.1 percent savings rate, it has slowly climbed to reach 0.7 percent of disposable income in April.
The headline needs to be tightened up. Savings WILL retard growth.
Of course, you know I think this is a good thing. It is well past time for us to live within our collective means, and a climbing savings rate is a piece of evidence that we might have begun to do just that.
Now, 0.7% is certainly nothing to write home about, and this data is heavily skewed by the fact that the income gains are nearly all accumulating to the very wealthiest of folks who probably couldn’t spend all of their income if they tried, but this is still a good bit of news that bears tracking over time.
Derivatives Traders Signal Bank Woes Likely to Worsen (June 4 - Bloomberg)
Interest-rate derivatives traders are betting banks' difficulties obtaining cash to fund holdings and shore up balance sheets will worsen.
The difference, or spread, between the three-month dollar London interbank offered rate and the overnight index swap rate on contracts beginning in three months and trading now in the forwards market is greater than spreads on those starting this month, according to data tracked by Credit Suisse Holdings Inc.
"The movement in the forward Libor-OIS spreads is telling you that the market is concerned that things can get even worse before they get better," said Carl Lantz, an interest-rate strategist in New York at Credit Suisse, one of the 20 primary dealers of U.S. government securities that trade with the Federal Reserve. "Until all banks' balance sheets are cleaned up and they've re-capitalized, there is going to be funding pressure."
This data goes along with Professor Sudaca’s article from yesterday. Here we have the inside money betting that the bottom is still out there in front of us somewhere.
U.S. MBA's Mortgage Applications Index Fell 15.3% Last Week (June 4 - Bloomberg)
Mortgage applications in the U.S. last week dropped to the lowest level in six years, reflecting less refinancing as interest rates jumped.
The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan fell 15 percent to 502.3, the lowest level since April 2002, from 593.3 the prior week. The group's purchase index decreased 5.4 percent and its refinancing gauge dropped 26 percent
The housing market faces decreasing demand as prospective buyers wait for prices to stop falling and additional foreclosures force lenders to tighten rules for mortgage applicants. The real-estate slump will probably weaken the economy for the rest of 2008.
"We continue to view the residential real-estate crash as the most important factor underlying current recessionary conditions in the U.S.," said Maury Harris, chief economist at UBS Securities LLC in Stamford, Connecticut, in an e-mail note to clients. "Home prices are falling at a faster rate, a signal of worsening supply/demand imbalance."
The mortgage application data just continues to sink into the mire, signaling that the worst of the housing crisis is not yet past.
As you know, I am projecting a bottom sometime around 2011 or 2012, unless other factors combine to drag that out further. The bit that jumped out at me about this was the massive 26% drop in refinancing applications.
That means the housing ATM is over, and I honestly don’t know where the several hundred billion dollars of lost borrowing is going to be made up.
Commercial/Multifamily Originations Fall to Four Year Low (June 3)
The truth about mortgage commercial and multifamily loan originations came to a crawl during the first quarter of 2008, falling to their lowest point since 2004, according to the Mortgage Bankers Association’s (MBA) latest survey of Mortgage Bankers Originations.
First quarter loan originations were 57 percent lower than the first quarter of 2007, driven by a decrease in lending activity among all property types and investor groups.
The overall decrease included a 75 percent plunge in loans for office properties, a 60 percent fall in loans for hotel properties, a 53 percent slide in retail property loans, a 37 percent slip in industrial property loans, and a 27 percent decline in multifamily loans.
Among investors, conduits for CMBS plummeted 96 percent compared to the same period a year ago, while loans for commercial bank portfolios fell 28 percent and loans for life insurance companies slipped 25 percent.
And you thought the private residential lending data (above) was bad?
Check out the utterly staggering drops in commercial lending. This is nothing short of a disaster for the conduits which took a 96% hit. Wow.
June 3
US staring at double-dip recession as calls for higher interest rates grow (June 2 – UK Telegraph)
By slashing interest rates in the face of rising price pressures, has the world's most important central bank sowed the seeds of a new inflationary era? It's an alarming idea, but one gaining currency all the time.
In real terms, American borrowing costs are firmly in negative territory. No wonder the markets are wondering if Ben Bernanke, Fed chairman, has made a grave error.
A growing band of analysts has been arguing the Fed should have handled the credit crisis in the same way as the European Central Bank - injecting liquidity into gummed up money markets, rather than lowering rates. Last week, such criticism got much louder.
The US is now suffering from the aftershock of the irresponsible policies of Alan Greenspan. By keeping rates too low for too long following the terrorist attacks of 2001 and the dotcom crash, Bernanke's iconic predecessor may have pleased his political masters, but he also pumped up America's gigantic real estate bubble.
Again, a very realistic assessment of the impact of too-low interest rates on asset bubbles and inflation. Only in America do central bankers and columnists seem to be baffled by the connection between ‘free lunch policies’ and downstream ill effects.
Lehman May Need to Raise Capital as Analysts See Loss (June 3 – Bloomberg)
The fourth-biggest U.S. securities firm probably will post a second-quarter loss of 50 cents to 75 cents a share, according to analysts at Oppenheimer & Co. and Bank of America Corp. New York-based Lehman holds ``very large, illiquid'' assets and ``we can't rule out equity issuance'' to replenish the balance sheet, analysts at Merrill Lynch & Co. said in a report yesterday.
Lehman may seek as much as $4 billion by selling common stock, the Wall Street Journal reported today, citing unidentified people with knowledge of the matter. The company has raised $6 billion since February amid asset writedowns and losses from the collapse of the U.S. subprime mortgage market. Lehman dropped 48 percent in New York trading this year, the worst performance on the 11-company Amex Securities Broker/Dealer Index.
"This is adding to the perception that there's a need for more write-offs and capital raisings," said Greg Bundy, executive chairman of merger advisory firm InterFinancial Ltd. in Sydney and a former head of Merrill's Australian unit.
Lehman is still right at the top of my “next to go bankrupt” list.
Aluminum Traders Expect Output Costs to Rise Until 2013 on Oil (June 3 - Bloomberg)
Record energy prices and power failures from China to South Africa are leading to mounting concerns that aluminum supplies will be curtailed within five years as production costs increase, futures prices show.
"Higher energy costs will lead to high prices for aluminum,'' said Eugen Weinberg, a commodity analyst at Commerzbank AG in Frankfurt. ``Investors will be much better off buying longer-dated prices."
Energy accounts for about 40 percent of the cost of aluminum smelting, compared with 30 percent last year, according to Barclays Capital.
Aluminum demand is expanding 6 percent annually, so delays increase concern about supply through 2010, Barclays said. Six new smelters need to be built each year to meet demand, based on the average plant being able to produce 500,000 tons annually, London-based analyst Gayle Berry said by phone May 30.
Demand for aluminum is increasing 6% annually? If that pace keeps up for a little less than 12 years, demand will have doubled. Said another way, over the next 12 years, projections call for more aluminum to be produced and consumed than in the entire history of mankind up to this point.
Somehow I seriously doubt that Peak Oil will accommodate this level of growth in supply. And the price hikes we are seeing could also be a reflection that others feel the same way.
Credit Hurricane To Make Landfall (June 2 – Minyanville)
My belief is that at some point in the next six to twelve months, the financing window will shut, and shut hard. When these companies can no longer fund themselves, it could be curtains for many of them, and there will likely be many forced marriages.
When one thinks about it, the JPM/Bear deal was a shotgun marriage with the Fed and Treasury Department acting as matchmakers. This is how many of the brightest folks I know feel the next wave will look like—the Fed will simply try to retard the speed of the crisis by innovatively creating new financing facilities and have more "good bank/bad bank" marriages. In truth, I really don’t know of many banks that are truly "good" in the pure sense of the word, so you may say they may be "not-so-great/bad bank" marriages with a shotgun at the altar.
Another great article by ‘Professor’ Sudaca over at Minyanville. While he happens to run a sizeable fund with a lot of money in it, and I don’t, we share the same views on the macro trends that are buffeting our banking system.
In brief, it ain’t over.
June 2
Wall Street Decides to Close Its Ears and Hum (June 2 – Hussman Funds)
The implications of this go far beyond whether or not the prices of financial stocks have "discounted" the lower potential earnings. See, this isn't just a problem of whether the stock prices of financial companies are right. The larger issue is what happens on the real side of the economy, in terms of spending and lending and economic activity.
It would be naïve to accept that the amount of writeoffs taken to-date is anything close to what will be required – they are not even keeping pace with the accelerating pace of non-current loans. Financial companies should, and most probably will, get to the task of preserving capital, cutting dividends further, and raising new funds in the not-distant future. The markets probably will not like this, because it will be an admission that credit conditions are still deteriorating.
For anybody analyzing the current credit crisis, and John Hussman is one of the very best and brightest, it is a complete mystery how some can hold the view that the “worst is behind us” or that “it’s over.”
The data clearly shows that the pace of the write-offs is not even remotely keeping close with the accelerating pace of non-current loans, let alone a fair accounting of the actual market value of all the Level 3 assets that have been quietly secreted away on many a balance sheet. Here’s the bottom line: It is not over.
Not even close.
We have many rounds of discovery between here and the bottom.
Such is the nature of a bursting global credit bubble.
Monster: Worrisome Falloff In May Job Listings (June 2 – Barrons)
The number of job listings on employment Web site Monster Worldwide (MNST) fell dramatically in May compared with a year earlier, according to Deutsche Bank analyst Jeetil Patel. Patel says that U.S. job postings are down 18% on a year-over-year basis for the quarter to date, with a 21% drop in May. That’s worse than the 8% slide in April.
There are two main sources for job postings. Once upon a time, there were only newspaper classifieds and these were tracked as a leading indicator of which way the job market might be headed. If the number of classified job offer postings went up, that was a sign that the job market was gaining ground.
Now there are also online postings, and Monster.com is the biggest of them all. The trend there is troubling, to say the least.
An 8% /yr slide in April has morphed into a stunning 21% decline in May.
Unemployment is a balance between those losing and those gaining jobs. Since there seem to be fewer jobs to gain, it is easy to predict that unemployment will tick up from here.
U.S. Economy: Manufacturing Shrank Less Than Forecast in May (June 2 – Bloomberg)
Manufacturing in the U.S. shrank less than forecast in May, further evidence that international demand for American-made goods is keeping factories busy amid the domestic economic slump.
The Institute for Supply Management said its factory index rose to 49.6 from 48.6 in April; 50 is the dividing line between contraction and expansion. Production expanded for the first time in three months while a measure of prices climbed to the highest level since 2004, the group also reported.
Here’s a positive sign. Manufacturing is still contracting, but not by all that much. The main reason for this is that the weak dollar is providing a boost to exports. Also, the world economy is still in positive territory for the year.
Heating oil sticker shock to hit New England (June 1 – AP)
Retail heating oil prices have risen to more than $4.50 a gallon, nearly double what they were last year at this time. Some oil dealers have delayed rolling out their payment plans for next winter as the world oil markets continue their wild ride.
Consumers — already on edge with rising gasoline and food prices — will probably be outraged when they calculate their oil bills for next winter, said Jamie Py, president of the Maine Oil Dealers Association.
My house in New England is heated with oil, so these articles catch my eye. The fact that oil prices are nearly double what they were last year is going to create a world of difficulty for the poorer members of our region.
I sincerely hope that oil prices come down before heating season, but if I were an elected official I’d be planning for a very difficult heating season.
Perhaps this year Massachusetts will not be quite so hostile to Venezuela’s offer of providing low-cost subsistence fuel for low-income families?
Opec piles on the pain (June 2 – Asia Online)
Oil experts say that demand is increasing so fast in key Asian economies that supply simply can't keep pace. "If China were to use the same amount of oil per person as Europeans, it would require an additional 36 million barrels per day, about the same as the oil production of four Saudi Arabia's," John Westwood, chairman of energy analyst Douglas-Westwood told delegates recently at the All Energy Conference in Aberdeen, Scotland.
The "peak oil scenario" is approaching far more quickly than anybody expected, he said. And a number of key experts now believe that the world will never exceed its current level of production as new fields fail to compensate for declining ones.
"Underlining this view are recently published statistics that suggest oil production from ten out of the top 13 international oil companies, including BP, Chevron, Total and Shell may has already passed its peak," he said. And whereas oil majors controlled about 80% of the world's oil reserves in 1970, the same percentage now lies in the hands of national oil companies. "In our view," Westwood concluded, "conventional energy supplies cannot meet demand and unless properly managed this could severely impact world economic growth."
Are you listening? Now it is even common for Peak Oil to be considered both real and “approaching far more quickly than anyone expected” at mainstream energy industry conferences.
If you have been kinda, sorta, maybe planning on someday making real energy improvement changes to your house and/or lifestyle, I would kindly suggest that you take this far more seriously and begin taking steps today.
Once the Peak Oil concept goes past the tipping point in the public consciousness, I would predict that the waiting period for certain pieces of energy-related technology will be measured in years.
Shell CEO, like OPEC, sees no oil shortages now (June 2 – Forbes, KUALA LUMPUR)
Chief Executive Jeroen van der Veer said on Monday he did not see any shortage of physical oil supplies, echoing the view of many OPEC ministers who say the world market is well-supplied.
Oil prices have risen more than fourfold since 2004 and gained about a third this year, partly on increased fears among investors that producers will struggle to produce enough oil to meet demand in a decade's time.
"There are no physical shortages in the world. We don't have ships waiting in the Middle East, no people queuing up for gasoline," van der Veer told reporters in the Malaysian capital, where he was briefing on Shell's Asian business plan.
"From a stocks point of view the whole value chain works well... It (the price) has a lot to do with psychology."
Here I must chuckle. Yes, it’s true that the energy markets are reasonably well supplied, but the message given here is the wrong one.
The article above, like many others, implies that high oil prices are something of a mystery because “the markets are well-supplied.”
Yes, that’s exactly the point, but not in the way they mean. Demand is a function of price. At these prices, there is sufficient supply to meet that demand. That is, at $120/barrel, the market is well supplied.
If prices went down a lot, then demand would go up and the supplies would no longer be sufficient.
Instead of being puzzled by the most well-characterized of all possible relationships (supply-demand-price), we should be taking our clues directly from the data itself. The data is now saying that demand for oil is fairly balanced with demand with oil at $120+/barrel.
In turn, this tells us that if supply fell off from here (which is a distinct possibility), prices could move higher, maybe a lot higher, until demand was again in balance with the new supply.
Instead of being puzzled by the fact that oil prices are where they are, we should be asking a very different question: “Why has oil supply not flooded into the market in response to these prices?” To me, the clear answer is, “because it can’t.”
Food prices are rocketing all over Europe (May 31 – UK Telegraph)
AP
Shoppers in Madrid strain for 20,000kg of free fish distributed by fishermen protesting against rising fuel prices. It's not just us. All over Europe, the rocketing cost of food and fuel is straining family budgets, stirring unrest and shaking governments. David Blair examines the roots and the impact of a widening crisis.
A study conducted by the French finance ministry has found that supermarket prices have risen by up to 18 per cent in the past two months alone. Butter, pasta and milk have all gone up by nine per cent since last year. If you buy a baguette on the streets of Paris, the price will have risen by anything from five to eight per cent.
Yikes. Inflation is now taking off worldwide. These stories from Europe are really attention-getting. I predict that China will, sooner than later, unpeg their currency from the dollar in an attempt to avoid “importing our inflation.”
And if China does this, many others will follow suit.
Under this scenario, all the inflation experienced by other countries, due to their ties to a steadily weakening dollar, will create a massive tidal wave of inflation for the US.
Hey, all that inflation has to go somewhere, and if the other countries reject it by rejecting the dollar, that means we’ll get to experience all of it.
I am keeping a very close eye on interest rates (the coal-mine canaries in this story), the dollar index, and the price of gold. If/when I see a sudden break, I will be sending out an alert to my subscribers that will call for a fairly hefty realignment of dollars into inflation hedges.
Crisis lesson: Communities should unite (June 1 – Juneau Empire)tht
When the avalanches struck, no one knew how long this crisis was going to last or how painful the economic hit would be. The prospect of paying extremely high rates for up to three months had many people and businesses doubting their ability to weather the crisis.
But rather than panic, our community kept cool and started to conserve electricity. People began turning to conservation Web sites and online forums, as well as their neighbors, for tips on how to cut back on energy use. Armed with this information, people switched off lights, turned down the heat, lowered the temperature of water heaters, and dried their clothes on racks and clotheslines.
The result: The community cut its energy consumption by an unprecedented 30 percent.
Now here’s a heartwarming story. I’ve always advocated that big changes are on the way,. Some misinterpret this to mean that I think the world is going to end. Nope, I merely think it will be very different.
And I know that the sooner one begins to make gradual changes, the easier these future transitions will be. Can we learn to get by using a lot less energy?
Yes. No doubt about that.
Juneau proved that by cutting its energy consumption by 30% in response to a major crisis caused by the loss of a major electrical transmission line to a large avalanche this past winter. I call this a heartwarming story because it shows what can be done.
