Wednesday, Jul 08, 2009
Not one for Blue Beach
Telegraph: Shipping flashes early warning signals
Stocks are rolling over (S and P below 200 sma and looks as if it might close under) oil price (which was speculation anyway) down $10 a barrel over past few days, sterling droping sharply against the $ and the yen. The Baltic Dry Index is also starting to retrace. Bank stocks looking fragile.
If this quarters figures (out soon) can't be pumped up, we're going to head down sharply from here.
Posted by bellwether @ 06:00 PM (1116 views) Add Comment
11 Comments
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1. techieman said...
....and to think i questioned your bearish qualities last night!
2. titaniccaptain said...
"All the deeper signs suggest to me that action by the Fed, Bank of Japan, Bank of England, and the European Central Bank is still not enough to offset the deflation shock. Though I recognize that this is a deeply unpopular view these days in the blogosphere.".......not with me it aint!!!!!!!!!! been saying it for a while now.
Bellwether and Ambrose Evans-Pritchard........bloody class meeee old sausages.
3. bellwether said...
Glad to be able to reinstate the faith then TM. To you and TC too, the previous blog posted by AEP is worth a check. He refers quite cleverly to the forgotten period before the 1929 crash which saw stocks rocket up despite the fundementals haivng turned lousy about 18 months before (so much for markets being a leading indicator), parallels drawn with China where stimulus is being lost to asset and stock bubbles rather than productive endeavour. I don't know how grim this is going to get but I sense far grimer than most imagine.
4. debtfree said...
so it looks like the deflation powers are too strong, indeed bellwether, spot on.
so whats next?
As an example of deflation leading to hyperinflation, consider the case of the Weimar Republic . In 1920, Germany experienced a deflationary collapse, with the average citizen finding it harder and harder to get enough money for necessities. Banks, short of money, could not honor checks, and businesses were strapped for cash to buy materials and meet payroll. Fearing a collapse that would throw millions of workers out on the street, the German government desperately printed money in an attempt to re-inflate the economy. During this period, despite the government's money printing, the mark actually gained in value against foreign currencies, so that prices of imported goods fell by some 50%. (sound familiar?)
Eventually, as a result of the money supply's rapid expansion, the nation's massive foreign debt, and the shrinking economy, German citizens lost all confidence in their currency, and the Weimar Republic experience one of the worst cases of hyperinflation in modern economic history.
Unbelievable parallels with germany and usa, don't you think?
5. bellwether said...
Hyper inflation may be used to try and get out of debt (as Germany did) but hyperinflation itself leads to a deflationary collapse in any event, just one where you don't want to be holding the currency.
Hyper inflation is a loss of value (ie meaning) in a currency because there is too much of it and because no-one wants it, economic collapse, revolution and/or dictatorship usually follow quickly. An essential for hyper inflation (loss of meaning in the currency) seems to be a flight from the currency (not simply printing), or rather you keep printing beyond the point it mignt be thought to be useful to try and compensate for lose if value and money - to stop a flight from the currency. Where the dollar is the reserve currency, issued by far the largest economy in the world its not clear how there can be a flight from the dollar. There is nowhere to fly too.
People talk about hyper inflation with the dollar but
If there is hyperinflation in the US this would infer the wor
If it is localised inflation in the US, my concern is that ,
If we are talking about localised inflation in the UK, of course it is possible but there is no sign of it, and certain inhibiting factors which would have to be op
6. bellwether said...
excuse the bits at the end of post, started off on the wrong tangent
7. inflation is eating my savings said...
It has been suggested here that the downwave that seems to be engulfing us now is bad for sterling (worse than for other currencies). Is there a reason for this other than size? Any bets on true value versus Euro/dollar?
8. bellwether said...
Massive levels of debt at state and individual level (even relative to other debtor nations), huge and barely deflated housing bubble, no clear way to replace the consumer as engine of growth, grossly oversized public sector and financial sector , incompetent government are some of the reasons I see
9. bluebeach said...
Nice one BW! At least you are not propelling your own work / web page, unlike Pepe Le Pew, aka- Basil Fawlty. Yes, I know, I need to look at and try to understand the bigger picture.
10. bluebeach said...
But as you state @8 BW
"Massive levels of debt at state and individual level (even relative to other debtor nations), huge and barely deflated housing bubble"
it's all very frustrating for me!
11. debtfree said...
cheers BW.
"Where the dollar is the reserve currency, issued by far the largest economy in the world its not clear how there can be a flight from the dollar. There is nowhere to fly too. "
This is it, if there was another option....
July 8 (Bloomberg) -- Huang Xinyuan, who sells mining equipment and pesticides to customers across China’s border with Vietnam, says he no longer wants payment in U.S. dollars and prefers the yuan.
July 6 (Bloomberg) -- Three Shanghai companies agreed to settle import and export contracts in yuan for the first time, as China seeks to reduce the role of the dollar in global trade.
China is rapidly increasing its lending in Latin America as it pursues not only long-term access to commodities like soybeans and iron ore, but also an alternative to investing in United States Treasury notes.
DOHA, June 29 (Reuters) - Iran is in talks with Asian banks on a 1 billion euro ($1.40 billion) bond to finance the development of its largest gas field, as part of its pursuit of billions of energy sector funding, a senior Iranian oil official said on Monday.
This is all $ negative, it looks like the euro and yuan is where the landing is.