The U.S. currency dropped against 12 of its 16 major counterparts as the International Monetary Fund said traders are probably using the dollar to fund so-called carry trades around the world and it may still be overvalued.
I hope everyone here in The United States takes a moment to understand what this means. Let me lay it out for you:
When the global economy truly recovers oil will skyrocket up to or beyond the $150 where it was in late 2008. If the dollar is indeed still "overvalued" and going to 40 as many technicians predict, oil will likely reach $300 a barrel. This will in turn drive gasoline prices north of $6, heating oil will reach $7-8/gallon, and diesel will be commensurate with heating oil.
This will in turn decimate the trucking industry. Now you know why Buffett bought BNI. Many things he may be, but dumb isn't one of them. Trucks will of course remain for terminal-to-door deliveries but for long-haul they will simply be uneconomic. Those who currently are employed in this business will lose their jobs. All of them.
The middle class will be decimated. Those who live in suburbia, who are primarily middle-class Americans, will find themselves faced with commuting costs that are double or more what they pay now. Those in the middle class who live in the Northeast where heating oil is the primary fuel for winter, where natural gas infrastructure does not exist to replace heating oil, will find themselves choosing between heat and food in large numbers.
What's far worse is that all carry trades eventually unwind and in the history of the markets I have never seen it happen in an "orderly" fashion. Japan witnessed the destruction of the Yen Carry last year and it was horrific. We will see it in the future - exactly when cannot be predicted with certainty, but that it will happen in an uncontrolled fashion will be. While this "unwind" will bring relief from sky-high commodity prices it will do so at the expense of asset prices, which will collapse.
LINK HERE
great. thanks for the uplifting article.
ReplyDeleteIt all makes sense. Honestly I think I will be relieved when it does happen. Better to rip the bandage off than just keep picking at the scab.
ReplyDeleteThis is much more painful - and probably deliberate.
Well the economy isn't suppose to recover for decades anyway I thought?
ReplyDeleteAll this and sooner than that. When the first US/Israel F-16 crosses Iranian airspace to deposit it's first gift, the oil buying for middle class will be history.
ReplyDeleteIf oil goes sky high then other commodity prices are going to go much higher, not lower. That part doesn't make sense. And though I believe the system is going to crash, I am not positive this one potential influence will be the lone cause.
ReplyDeleteHi, I just bought your 400 survival manuals. How do I get access to the materials? Let me know. Thanks!
ReplyDeleteWhat do you guys/gals think of transporatation companies such as Fedex Or UPS in the near future? If oil goes to the extreme discussed in article. I'm giving it 2 thumbs down.
ReplyDeleteThey will be hurting, but will survive simply because the costs are passed directly onto the customer in real time. Literally, when you log into UPS Worldship it goes out to calculate any fuel surcharges.
ReplyDeleteThe ones that will really be suffering are the trucking companies in general. It will get even more cutthroat.
Worst even still, way down the ladder, will be the companies that build trucks like Freightliner. They won't be able to give trucks away. They will have to downsize to a service/parts organization and give up on new truck sales.
Ppl in the northeast who need fuel will either convert to solar and woodfire or attack the banksters, who conveniently also live in the northeast. Yahoo has already published photos on the mansions AIG execs live in, same could be done for the banksters.
ReplyDeleteI know Donald Trump has his own penthouse, probably with his own parachute, emergency elevator, whatever. Will banksters be safe in their luxury apartments, as were the lords of yore? remains to be seen
I wouldnt exactly be putting my money in those. Just take a look at what happened to the airlines last year. There were at least 4 or 5 bankruptcies and industry wide problems with prices going up and demand going down. I would be more concerned about food getting to the grocery stores, what access there was to water, and how to get around depending on where you live.
ReplyDeleteSorry to say this (I am going to be Bashed) but the "things is about to get worse" has been going for a while now and nothing has happened. What about FEMA and all the martial law things that were supposed to happen? A lot of you will not agree with me but I believe that things are starting to get better. The weak US$$ can only boost our exports and help create more jobs. There no hint of hyperinflation, the stock market soaring (even though not a barometer of the economy)is making the balance sheet of banks, companies and indviduals look better, The current price of gold is not sustanable and investors will eventually go back to the US$$ and stabilise its value. One can have very exteme views and say things will get worse, and as we all know econimic analysis are based on the assumption "other factors remaining the same" which as we all know is not the case.....
ReplyDelete5:58 I think you have come to this blog late and have NO idea what Inflation really is. You better view Chris Martenson's Crash Course it's FREE! The same remarks were stated about GOLD when it was $600 then $800 then $1000 now $1100. The stock market soaring is an indication of INFLATION the dollar is worth less and the market goes UP. JUST LIKE ZIMBABWE. Get a lesson in INFLATION!
ReplyDelete5:54 INFLATION is indicated by CPI not asset or share price. The reason why US$$ is falling when stock market is soaring is because investors are taking more risk by selling $$ and buying stock; it has nothing to do with inflation. You are the one who needs the basic crash course.
ReplyDelete5:38...I found a great site that explains the Zimbabwe situation with clarity.
ReplyDeletewww.preparingyourfamily.com
Just go to the right side of the page and click on Economy under the heading of Topic.
7:22 again you have NO IDEA what inflation is. Take the crash course you're so far out in LEFT field about Inflation its not funny. The media has conditioned your mind into a make believe world of what you THINK Inflation means. TAKE THE COURSE YOU ARE OUT IN LEFT FIELD I was the same as you... until I understood INFLATION
ReplyDeleteI'm with economic analyst here.
ReplyDeleteMosy over to zerohedge.com and read the numerous articles on how the fed is pumping the stock market with repo's and lots of assorted schemes to funnel money in through goldman sachs etc. It's all bullshit.
7:22 The stock market was 10,000 in 1999. The dollar was worth 50% MORE. Learn what inflation means before you spout those embarrassing stupid remarks
ReplyDeleteTake it easy on the newbee guys. We all learned from scratch at some point.
ReplyDeleteInflation will come like a steamroller when the banksters do their coordinated attack on what is left on the US Economy.
Like Abraham Lincoln knew and professed, we are at war with the bankers more than any other enemy foreign or domestic. Andrew Jackson's epitaph was the best: "I Killed the Bank" :)!!! Too bad all we have in important offices now are banker paid-off stooges.
Yeah! Chill out! Don't beat each other up. Everyones imput is valid and productive for discussion.
ReplyDeleteCalm Down people.
ReplyDeleteHere is a simple definition:
Inflation is a state in the economy of a country, when there is a price rise of goods as well as services.
Inflation Relationship with stock market:
Prices of stocks are determined by the net earnings of a company.In the event when inflation increases, the company earnings (worth) will also subside. This will adversely affect the stock prices and eventually the returns.(meaning stock price going down).
We are not seeing inflation right now. We ARE seeing a drop in the value of the dollar, and that has been occuring for years and years. I think inflation is inevitable, but that is just my opinion. People also put forth valid arguments for deflation. Just because they don't agree with you doesn't make them newbies or idiots. That's absurd. Grow up and try to be more tolerant of divergent ideas.
ReplyDeleteThe stock Market is soaring simply because of speculation, not inflation. The value of a company's stock is directly related to the earning capacity of that company (rate of return).
ReplyDeleteThe situation in the US is repeatedly being compared to Zimbabwe, I don't want to offend anyone but I find this comparison really stupid. The US$$ is I far as i know still the world reserve currency and that of Zimbabwe is not. Last time I went shopping I was not carrying buckets full of cash.
We have to compare like with like. unfortunately being the world No 1 Economy and advanced we don't have anyone to compare ourself with.
THat's a pure and simple lie , 11:42pm. The stock market is rising because the government is printing money and handing it to Goldman Sachs to 'invest', or 'provide liquidity' etc. more bullcrap. The Plunge Protection Team, aka Goldman Sachs.
ReplyDeleteIt's all bullshit. You work for them obviously.
It's all PURELY inflationary when you print up money that no one worked for to create. Total bulldinky.
Golds at $1115 this morning.
The U.S wont be the world reserve currency for much longer Bubba!!Read some world news recently and see countries slowly one by one dump the dollar to not draw attention all at once.Why on earth would they do such a thing? Look whats in front of you before its too late
ReplyDeleteThe current rise in the stock market is purely speculative to draw more people in.
ReplyDeleteOnce the top has been reached to "their" liking I expect another crash of which the greedy pigs will get one last chance to buy more assets and consolidate more power.
But what they really love is that they are going to buy up these assets for very cheap with "free" money from the govt. and with a weaker dollar meaning they get a double bang for their buck.
This will be where you and I are stuck with the final bill and are screwed.
One last collapse before the "real" inflation hits boys!
I can't wait!
ReplyDelete11:17 the media has entertained your mind about INFLATION. There are NO ideas, beliefs or wishes about what INFLATION means. MOST readers have this notion that Inflation mean prices go up. They don't understand packaging of inflation, subtle ways that companies put less in a bag and charge more. The fact that your money buys less and less EACH DAY. More substitutions in GAS so you go less further on a tank. Clothes that don't last as long as they used to, food that fills a bag that costs MORE MONEY.. The list goes on and on. THAT IS INFLATION. Get on the Chris Martenson Crash Course! There are MAKE BELIEVE IDEAS here that entertain what INFLATION is in your heads. GET THE FACTS STRAIGHT!
ReplyDeleteI think I'll just shoot myself.
ReplyDelete5:38 - When I read things like, "A lot of you will not agree with me but I believe that things are starting to get better. The weak US$$ can only boost our exports and help create more jobs. ....is making the balance sheet of banks, companies and indviduals look better", I must assume that
ReplyDeleteA)You truly believe this regurgitated propaganda you foddered from some MSM pig trough, or
B)You are some type of gov't shill,useful idiot,etc..
That is my picture. You do not have any right or permission to use it. I suggest you remove it promptly!
ReplyDeleteJennifer R Graevell
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ReplyDelete