Perspectives on the global economic changes

[panduranghari]

I think US should impose 50% customs duty on imported crude oil to protect it's domestic "energy" industry.

It will cause even more fall in the price of oil. WTI will fall even more making shale even more of a loss leader. It's demand destruction, pure and simple. If Iran comes online, the Brent price will fall even further ( Iranian crude is second only in quality to Iraq while Saudi North Sea Shale etc. Have a comparatively of higher refining cost).

Almost all SPR's internationally are full. And some how the Arabs understand oil in the ground is more valuable than dollars in the bank.

[Austin]

Pandu , US is net importer of energy even with shale so any customer duty would just make gas expensive for them and they can compensate with any shale resource they have.

Not sure even in theory such measure would run foul to WTO or other FTA.

Shale is now going bankrupt and talks are in corner to bail them out.

[Gyan]

USA needs to provide long term protection to its energy sector by keeping internal crude oil prices around USD 50 per barrel, Failing which the circle of Crude oil at USD 100-150 barrel will be repeated down the line. The issue is:- Whether the indigenous oil/energy sector majors are able to influence the US politicians or the Saudi-MNC lobby is able to buy them off?

[Austin]

Protecting by tarrif barriers would be against free market and Oil goes through its cyclic lows and highs so the low this time wont sustain neither would the highs , eventually the market would stabalise to some price.

US or any other country would be better off going to clean energy thats the best anti-dote for any country in the world to move away from fossil energy.

[Austin]

Did government deregulation cause the financial cr? Did the partial repeal of the Glass-Steagall Act lead to America's banking cr - and to massive .

Peter Schiff and Stefan Molyneux - Myths About Economic Collapse Economic collapse and financial cr is rising any moment. Getting informed about .

[Austin]

Jim Rickards on the Fed, helicopter money, and Chinese devaluation , Jim says in his interview China grows around 3 to 3.5 % in reality

[ramana]

The head of DAVOS WEF was saying for China to grow at 7.5% they need to add a Switzerland every year and the reporter was lapping it up and repeating it!!!

[panduranghari]

If you believe the Fed or anyone else has any control, its going to get very bad. T bill yield below 2%, WTI below 30 and it wont stop until its at 20, EM defaults coming - Brazil will go first, Rmb devaluation should be in excess of 50% ( horror!). IMO Fed will reduce interest rates again. In this world, there are 3 assets - gold, oil and currencies. Currencies are being decimated by strong dollar - the floating exchange rate is under threat. Oil is being oversold. Only gold will survive this carnage. Even Silver will fall. Extreme Turbulence ahead.

[Austin]

These Are the World's Most Innovative Economies

http://www.bloomberg.com/news/articles/ ... -economies

[Austin]

Exclusive: Situation worse than it was in 2007, says chairman of the OECD's review committee

World faces wave of epic debt defaults, fears central bank veteran

[Suraj]

The Chinese are being urged to devalue the Yuan by 50%. It won't end there though. It will just set of a chain of competitive devaluation.

[Vayutuvan]

Sorry if already linked. The wobble in yuan causing problems for the world.

Fight or flight: China’s leaders face a menu of unappealing exchange-rate options

[panduranghari]

Posted in the past buy worth posting again. Good interview from 2009 to read in full. http://europe.newsweek.com/qa-zimbabwes ... 8131?rm=eu

This is the exact fate awaiting USA.

Newsweek- Now the global economy is also going through a credit crunch. What do you make of that?
Gideon Gono (Zimbabwean Central Bank Head) -I sit back and see the world today crying over the recent credit crunch, becoming hysterical about something which has not even lasted for a year, and I have been living with it for 10 years. My country has had to go for the past decade without credit.

NW- Your critics blame your monetary policies for Zimbabwe's economic problems.
GG- I've been condemned by traditional economists who said that printing money is responsible for inflation. Out of the necessity to exist, to ensure my people survive, I had to find myself printing money. I found myself doing extraordinary things that aren't in the textbooks. Then the IMF asked the U.S. to please print money. I began to see the whole world now in a mode of practicing what they have been saying I should not. I decided that God had been on my side and had come to vindicate me.

NW- In November you shut down Zimbabwe's stock exchange. Will you open it again?
GG- The stockbrokers were creating a money supply that wasn't there. I printed Z$1.5 quadrillion, but the exchange was operating with Z$100 sextillion. So I said, "Who is doing my job?" Unless there is more discipline and honor, the exchange will stay closed. I can't be bothered. I don't know when it'll open. It's a free market, a business which must be allowed to succeed or fail.

[Muppalla]

I need an expert's help in understanding this news:
http://www.msn.com/en-us/money/markets/ ... li=BBnb7Kv

how easy money can make Oil demand suddenly higher or how the price of Oil can increase?

[TSJones]

Russian ruble keeps on falling, hits new record low

http://finance.yahoo.com/news/russian-r ... 57605.html

"I wouldn't call it collapse"

MOSCOW (AP) — The Russian ruble hit another historic low against the dollar Thursday as currencies slid across the former Soviet Union against the backdrop of low oil prices.

Thursday's slip means the ruble is at its lowest level since the currency was redenominated in 1998, during Russia's worst post-Soviet economic crisis. President Vladimir Putin's spokesman Dmitry Peskov insisted, however, that the situation was not critical.

"I wouldn't use the word 'collapse.' The rate is really changing, the rate is volatile, but it's far from a collapse," he said Thursday in comments reported by Russian news agencies. Putin had no plans for any emergency meetings, he added.

The steep decline in oil prices — which are trading at 12-year lows — has been a severe blow to Russia's oil-dependent economy. The ruble's new lows this week follow the lifting of international sanctions against Iran, which increases the supply of oil on global markets.

The IMF predicted Tuesday that Russia's economy will contract 1 percent in 2016 following a fall of 3.7 percent last year, before returning to 1 percent growth next year. The ruble has lost more than half its value against the dollar in the last two years.

Also Thursday, the Russian central bank said it had revoked the license of Vneshprombank, one of the country's top 50 lenders, after finding evidence that "persons exercising control over the bank" had stripped its assets, adding that law enforcement would be involved in tracking the missing money. The funds may have been spent in Russia, Europe and the U.S. on property such as real estate, shares and "expensive vehicles," the central bank said in a statement.

Vneshprombank reportedly holds funds for major Russian state companies.

Thursday's fall in the ruble was accompanied by slides in other post-Soviet currencies. The Belarusian ruble slid 5.1 percent to the dollar, trading at 21.564 on Thursday afternoon. It has lost around 14 percent of its value against the dollar since January 1.

In the Central Asian nation of Kazakhstan, another major ex-Soviet oil producer, the tenge currency fell to a record 383.91 against the dollar Thursday as the economy felt the pressure of low energy prices. Central bank head Daniyar Akishev ruled out introducing capital controls and said he did not expect major shocks for the country's balance of payments since "most of the negative scenarios ... have already happened."

[TSJones]

I need an expert's help in understanding this news:
http://www.msn.com/en-us/money/markets/ ... li=BBnb7Kv

how easy money can make Oil demand suddenly higher or how the price of Oil can increase?

in the world of oil, at this particular time, demand has plummeted.

QE, for the ECB countries in particular, creates the hope of stimulating their economies even though they were much later than the US in applying Keynesian remedies.

Economic growth creates demand. Oil is highly susceptible to demand. thus, the potential rise in the price of oil.

[chanakyaa]

Which data suggests demand has "plummeted"?

Global Petroleum and Other Liquids

[TSJones]

Which data suggests demand has "plummeted"?

Global Petroleum and Other Liquids

don't care what yer chart says, there is a current over build up of oil and the European economy is creeping along at a .3% growth rate. Thus, ECB QE and a hope for increase in demand. Any which way you wanna look at it.

humble request: kindly read Muppalla's linked article first before commenting.

sometimes pricing is affected not by reality but by perception like when oil was over $140 a bbl and the world was filled with oil.

[Austin]

Russian ruble keeps on falling, hits new record low

http://finance.yahoo.com/news/russian-r ... 57605.html

"I wouldn't call it collapse"

MOSCOW (AP) — The Russian ruble hit another historic low against the dollar Thursday as currencies slid across the former Soviet Union against the backdrop of low oil prices.

Thursday's slip means the ruble is at its lowest level since the currency was redenominated in 1998, during Russia's worst post-Soviet economic crisis. President Vladimir Putin's spokesman Dmitry Peskov insisted, however, that the situation was not critical.

"I wouldn't use the word 'collapse.' The rate is really changing, the rate is volatile, but it's far from a collapse," he said Thursday in comments reported by Russian news agencies. Putin had no plans for any emergency meetings, he added.

The steep decline in oil prices — which are trading at 12-year lows — has been a severe blow to Russia's oil-dependent economy. The ruble's new lows this week follow the lifting of international sanctions against Iran, which increases the supply of oil on global markets.

The IMF predicted Tuesday that Russia's economy will contract 1 percent in 2016 following a fall of 3.7 percent last year, before returning to 1 percent growth next year. The ruble has lost more than half its value against the dollar in the last two years.

Also Thursday, the Russian central bank said it had revoked the license of Vneshprombank, one of the country's top 50 lenders, after finding evidence that "persons exercising control over the bank" had stripped its assets, adding that law enforcement would be involved in tracking the missing money. The funds may have been spent in Russia, Europe and the U.S. on property such as real estate, shares and "expensive vehicles," the central bank said in a statement.

Vneshprombank reportedly holds funds for major Russian state companies.

Thursday's fall in the ruble was accompanied by slides in other post-Soviet currencies. The Belarusian ruble slid 5.1 percent to the dollar, trading at 21.564 on Thursday afternoon. It has lost around 14 percent of its value against the dollar since January 1.

In the Central Asian nation of Kazakhstan, another major ex-Soviet oil producer, the tenge currency fell to a record 383.91 against the dollar Thursday as the economy felt the pressure of low energy prices. Central bank head Daniyar Akishev ruled out introducing capital controls and said he did not expect major shocks for the country's balance of payments since "most of the negative scenarios ... have already happened."

Rouble is no longer defended by Central Bank as it moved to inflation targeting , as oil is falling so is rouble also currency speculator is having their own time but thats whats market economy is about.

[Austin]

http://economictimes.indiatimes.com/new ... 675748.cms

[Austin]

Any reason why the market is going up and oil price is bouncing ? What happened since yesterday evening all markets are in green

[Suraj]

Any reason why the market is going up and oil price is bouncing ? What happened since yesterday evening all markets are in green

The oil price bounce is giving confidence to the market. Draghi's speech on 'we will do whatever it takes' is also helping, plus the Chinese capital infusions announced a couple of days ago, and Xi's statement that he'll protect their stock market.

[Austin]

Thanks Suraj , I think the last 2 event mentioned led to rise of oil price and consequently the market

[chanakyaa]

TSJ, my question to you asking for data points with reference to "plummeting demand" was not in reference to your entire post, just in case you misinterpreted it. I do agree with your explanation of possible relationship of QE and higher oil prices.

About the article, yes I read it. 98% of the article refers to "supply (and its sources)" and its impact on "price", with a very VAGUE reference to "demand" (millions of gallons of oil consumer/year) prospects.

Oil futures hit their lowest since 2003 this week as investors fretted over the prospects for prices amid a global glut of crude and slowing demand due to economic weakness, especially in world No. 2 economy, China.

By the way, the graph that I highlighted is not "my" graph. It is is the graph of EIA, same entity referred to in the article. And the article was published in January 12, 2016.

Which data points are you referring to that suggests the demand has "plummeted"?

[chanakyaa]

TSJ, my question to you asking for data points with reference to "plummeting demand" was not in reference to your entire post, just in case you misinterpreted it. I do agree with your explanation of possible relationship of QE and higher oil prices.

About the article, yes I read it. 98% of the article refers to "supply (and its sources)" and its impact on "price", with a very VAGUE reference to "demand" (millions of gallons of oil consumer/year) prospects.

Oil futures hit their lowest since 2003 this week as investors fretted over the prospects for prices amid a global glut of crude and slowing demand due to economic weakness, especially in world No. 2 economy, China.

By the way, the graph that I highlighted is not "my" graph. It is is the graph of EIA, same entity referred to in the article. And the article was published in January 12, 2016.

Which data points are you referring to that suggests the demand has "plummeted"?

[TSJones]

TSJ, my question to you asking for data points with reference to "plummeting demand" was not in reference to your entire post, just in case you misinterpreted it. I do agree with your explanation of possible relationship of QE and higher oil prices.

About the article, yes I read it. 98% of the article refers to "supply (and its sources)" and its impact on "price", with a very VAGUE reference to "demand" (millions of gallons of oil consumer/year) prospects.

Oil futures hit their lowest since 2003 this week as investors fretted over the prospects for prices amid a global glut of crude and slowing demand due to economic weakness, especially in world No. 2 economy, China.

By the way, the graph that I highlighted is not "my" graph. It is is the graph of EIA, same entity referred to in the article. And the article was published in January 12, 2016.

Which data points are you referring to that suggests the demand has "plummeted"?

Slowing or plummeting makes no difference to me, it is the perception that counts and thus fuels speculation of the price of oil. oil production and usage stats made no difference when oil was at $140 a bbl. What mattered was that a lot of money was chasing oil from both China and Fed QE. The financial demand is no longer there now that China is having difficulties and the Fed has stopped QE. I don't care what the operation and production demand is or isn't. The financial demand has plummeted for the reasons that I have stated.

[chanakyaa]

Norway’s largest bank calls for total end to cash
Citing the “dangers and disadvantages” of cash, DNB Bank has called for it to be completely phased out.

Norway’s largest bank, DNB, has said that cash has fallen out of favour with everyday Norwegians and is instead primarily used on the black market and in laundering schemes.

“Today, there is approximately 50 billion kroner in circulation and [central bank] Norges Bank can only account for 40 percent of its use. That means that 60 percent of money usage is outside of any control. We believe that is due to under-the-table money and laundering,” bank executive Trond Bentestuen told VG.

"There are so many dangers and disadvantages associated with cash, we have concluded that it should be phased out," he added.

.....

[Austin]

Seems like we truly have no Demand and Supply to take care of prices for Oil and other commodity , Price seems high because of QE as soon as there is some news of QE getting tapered and interest rates getting high the prices fall and as soon as ECB says they will have support for QE they prices rises.

The true price discovery of commodity looks dead and any rise or fall is related to QE , what deep hole we are in

[TSJones]

It did the same for gold. Gold at $1800 an ounce? Are you kidding me? Spec money was running wild.

a lot of this was the result of futures markets trading where contracts are established for a delivery of a certain commodity by a certain date. contract law goes back to the code of Hammurabi(sp?) in ancient Mesopotamia.

I make no attempt to defend derivatives trading. it just exists and it is not going away.

[Neshant]

Gold is up in every currency except the dollar.

[Neshant]

The whole idea of some wise man sitting up in an ivory tower fiddling with interest rates (aka price fixing) and printing money (aka counterfeiting) is absurd. What part of this is capitalism? We are now so far into the idiocy of some guy sitting on a throne dictating how the economy should function that the absurdity of it all is lost even on the educated folks.

Another name for central banker is snake oil salesman.

[Austin]

It did the same for gold. Gold at $1800 an ounce? Are you kidding me? Spec money was running wild.

a lot of this was the result of futures markets trading where contracts are established for a delivery of a certain commodity by a certain date. contract law goes back to the code of Hammurabi(sp?) in ancient Mesopotamia.

I make no attempt to defend derivatives trading. it just exists and it is not going away.

Thats my point , Where is the real price discovery happening by market forces , why is gold not worth $5000 or $900 , why is Oil worth $32 today and till 3 days back was falling below $27 , did the supply side suddenly went down in past 2-3 days or the demand went up , where is the real price discovery of gold or oil happening

All that happened was Draghi to say that further stimulus will come by March and Oil zoomed up from 27 to 32 within 2 days
http://www.bloomberg.com/quote/CO1:COM

When Fed declared its intent to raise the interest rates and raised the rate by 0.25 basis point Oil started falling drastically since oct-nov note the steep decline in the price in that bloomberg chart since november , A time where Oil Prices are generally up due to Winter.

So we are caught in QE warp be it Fed , ECB or BOJ or PBOC , All we need is constant sustained QE in these times and have no real price discovery mechanism.

Are we Doomed as we dont have any Markets ? Looks like We will by QE and Die by it

[Gyan]

Long term QE is extremely destructive. In short term QE can be justified to prevent crash, panic, dis-order or chaos. In medium perhaps to get the economic activity and employment market moving. But in long term is drives up asset prices out of the reach of middle class, and due to less consumption, any nation will get caught in vicious circle of stagnation, like Japan.

US needs to raise the interest rates but keep it just below the normalative rates (say around 2%) to prevent bubbles and lower the asset prices to drive up the economic activity by enriching the middle class.

[Austin]

Long Term ? We already had 6 yrs of QE totaling ,$3,5 trillion and ZIRP, a moderate rise of interest rate caused market to crash and commodity on downhill

Now ECB hve their own 1.2 trillion QE cycle more stimulus expected in March

The bubble is big and perpetual

[hanumadu]

I hope they don't ask India next. If UPA is in power when the world comes to India for QE, UPA will only be glad to oblige. Anyway, India did not benefit from the QEs, so don't see why India should oblige.

[Austin]

India is in no position to do QE , jst ECB Fed perhaps even PBOC now

[Austin]

Saudi are burning their reserves , Check this report from Bloomberg

Saudi Arabia's Secret Holdings of U.S. Debt Are Suddenly a Big Deal

[Gyan]

Long Term ? We already had 6 yrs of QE totaling ,$3,5 trillion and ZIRP, a moderate rise of interest rate caused market to crash and commodity on downhill

Now ECB hve their own 1.2 trillion QE cycle more stimulus expected in March

The bubble is big and perpetual

QE + Low fiscal deficit is a guarantee for perpetual stagnation.

[panduranghari]

I hope they don't ask India next. If UPA is in power when the world comes to India for QE, UPA will only be glad to oblige. Anyway, India did not benefit from the QEs, so don't see why India should oblige.

RBI will do quantitative easing just like any other central bank. What is QE after all? Devaluation of the numeraire. RBI should have tightened in July-September last year and I was hopeful they did. Suraj saar was right then about no tightening. RR is just another Keynesian after all following Reaganomics to the core.

[Austin]

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