Sunday, October 25, 2015

More Evidence the Commodity Bust is Leading to a Recession


In my opinion the problem is too much hot money serving Wall Street,European banks, and other powerful institutional investors, leading to global bubbles - such as the Dot.com bubble, the housing bubble, the student loan bubble, and most of all, the commodities bubble. 

The commodities bubble is so diverse and globalized that consequences are hard to predict beyond severe bankruptcies in extractive industries, widespread and large bank losses, and wide spread economic contraction.

These arguments are developed in my new book, Dispossession: Liberalism's Crisis that I've been posting excerpted ideas and passages from for feedback and discussion.

Throughout this book I gradually weave in the implications of the commodities bubble. I discuss environmental, political, and individual effects from financial speculation by extractive industries, including banking. 

I warn that the commodities bubble appears to have been erupting for at least a year now and the bankruptcies are probably just beginning for many debt-burdened energy producers. 

The derivatives based on commodity markets are prey to the same financial fraud as found endemic in the derivatives producing the housing crisis. Fraud allows for more leverage and more risk, inflating the bubble even more.

An article from The New York Times illustrates what I mean by an imploding global commodities bubble:

Nelson, D. Schwartz and Julie Creswell, “A Global Chill in Commodity Demand Hits America’s Heartland,” October 23, 2015 http://www.nytimes.com/2015/10/25/business/energy-environment/americas-heartland-feels-a-chill-from-collapsing-commodity-prices.html?emc=edit_th_20151024&nl=todaysheadlines&nlid=32962000

In China and other emerging markets, growth is waning and demand
for the raw materials that drive the global economy has dried up.

GRANITE CITY, Ill. — A thousand miles south of this gritty steel town on the Mississippi River, West Texas oil rigs have shuddered to a halt. Seven hundred miles north, mines in the Iron Range of Minnesota have been stilled. The drilling rigs, with their deep underground pipes, once consumed much of the steel that Granite City’s blast furnaces could produce, while the mines supplied the raw material. So now, more than 2,000 workers at the mammoth United States Steel plant not far from St. Louis are waiting to see if they will be next. This month, the company warned them it might be forced to idle the plant. Layoffs could begin around Christmas.
China's economy is slowing down and the slow-down is going to worsen as global demand contracts, especially for extracted commodites, including and especially oil and natural gas:
The International Energy Agency, an energy watchdog, forecasts global oil demand growth falling from 1.8 million barrels a day this year to 1.2 million next year.http://majiasblog.blogspot.com/2015/10/sounds-like-economic-depression-to-me.html
Oil price deflation and stagnation are going to cause widespread acquisitions and bankruptcies.

The Federal Reserve and European technocrats have failed utterly to prevent another global crisis. 

The reason is there is too much extractive greed throughout every level of our interdependent global social system constituted primarily by large and powerful institutions, both private and state owned, with neither capable of authentic stewarship.

 
FURTHER READING



Trafigura: Purveyor of Toxic Waste Also Threatens Global Commodities Markets

 Catastrophic Risks in US Energy Infrastructures http://majiasblog.blogspot.com/2015/09/catastrophic-riks-in-us-energy.html


Erased Exposure Data Being Used to Shutdown Discussion Concerning Causes of Fukushima Children's Thyroid Cancer http://majiasblog.blogspot.com/2015/10/erased-exposure-data-being-used-to.html

 

6 comments:

  1. I have been following these bubbles since the neoliberal coup of the sock puppet ronald reagan in 1980. There was the accompanying stock bubble that left america saddled with a several trillion dollar debt.

    Ravi Batra produced an excellent book about speculative bubbles and historical cycles at that time. His book The Coming Depression predicted the 1987 stock crash. It was priscient about the 1987 crash The rotten politicians and media managed to sweep the horrendous economic decline and inequalities that began in 1987 under the rug for
    ever since then as several bubbles and catastrophes have ensued.

    Kevin Phillips, an economic historian, who once worked for nixon, began writing about the folly of cronie capitalism under the Bushes and neoliveralism in the late 1980s He wrote the book The Conservative Crackup and several later books including Arrogant Capital in 1994 and Boiling Point in 1996, bemoaning the speculative bubbles that were and are destroying the world and america
    economically and environmentally.

    The conservative crackup never came to pass because neoliberal and neoconservative fascists have had a stranglehold on this country since the Bushes and through Obamas reign. Hillary clinton is one of them straight from the university of chicago and milton friedmans evil ilk. Kevin predicted the dot.com bubble of 2000 based on the Clintons embrace of neoliberalism and the repeal of the glass steagal act.

    The neolibneocons control the duoply of the republican and democratic parties in the us now and we are in a full tilt inverted totalitarian police state now.

    Most neoliberals came from the chicago school of economics. The neoliberalism that destroyed chile and is destroying the planet now. Kevin Here we are at the precipice of nuclear and environmental suicide. The economic house of cards has fallen several times since Ravi and Kevins books were published.

    times. times since 2000 but we are so brainwashed braindamaged and lost we cannot see it.

    The inverted totalitarian state of wolin is in place. Woe unto those who act to quickly from those of us who personally witnessed the chickenshit strength of jade helm. Chris hedges has been hammering your topic for a decade now majia and so I will have to read your book. Liberalism is a dead empty cause in america now. Show a liberal a homeless person and tjey are likely to run and hide or lie or deny or crucify. screw all the phonies.Thanks

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    1. I'm not familiar with Ravi Batra but I'm a super big fan of Kevin Phillips' books (I think I have all of them).

      By liberalism I mean the formal system of political and economic governance that was carved out by Adam Smith and John Locke, among familiar others.

      Liberalism's "other" is state capitalism, in my opinion, as illustrated by China and Russia's state oligarchs.

      Yet both systems share the same logics and operating procedures.

      Would love your feedback on my book when it finally makes it to print.

      Thanks for your comments here.

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    2. You are right Majia. I got carried away there. Adam smith was about mercantile liberalism. There is an excellent series of historical fiction books about a fictional british empire navy commander named aubrey . It is set in the early 19th century . The series is by Patrick O' Brian . The aubrey series documents smithian liberalism and mercantilism. The yellow admiral is one of the books.

      British mercantileism,The tullip bubble of the netherlands , the east india company, the opium wars, european empirialism, they were all manifestations of early globalism and exploitation. They all eventually evolved into globalism and american exceptionalism and neoliberalism.

      It is tragic is that the bourgeois liberal academics and middle class people have accepted the evil last phase of trade liberalism which is neoliberal fascism with open arms as hedges has so vociferously documented. They have really screwed themselves and now there is little or no opposition to this police state .

      There has to be a better way. an alternative Extraction prettified exploitation economic and ecological destruction. we have gone too far. The political opposition is crushed the middle class liberalsnown pussilinomous acceptance of the frauds fantasies illusions and delusions. progressiveism and critical thinkingbis the only hope.

      The liberal crackup and neolib neocon fascism isvwe are left with the ken buesselers of the world. The nuclear lie , the nuclear madness, the nuclear horror, is laid bare and we are left helpless to do much. The brute psycho financeers and evil monkey generals are allowed to do as they please.

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    3. You said it exactly:

      "It is tragic is that the bourgeois liberal academics and middle class people have accepted the evil last phase of trade liberalism which is neoliberal fascism with open arms as hedges has so vociferously documented. They have really screwed themselves and now there is little or no opposition to this police state"

      The liberal middle-class cannot believe the betrayal and is content to dwell in denial.

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  2. “The Pacific Is In Terminal Decline. The Fukushima Legacy Is Terrifying!” http://www.zengardner.com/pacific-terminal-decline-fukushima-legacy-terrifying/

    This is indeed a frightening video though it simply lays out what we already know but perhaps not in such detail as he has spent lots of time studying the coast of Western Canada. And it is largely dead. A lonely place he says now.

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    1. Yes my heart aches whenever I think of the Pacific and all the animals I love there.

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