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  • Gold, Oil And Lithium: Trade-Off - A Study In Global Economic Collapse 0 comments
    Jul 17, 2012 11:11 AM | about stocks: ABX, TRRXF, MUX, GALXF, RDNAF, OROCF, LITHF, TLTHF, FMC, ROC, LIT, MCP, REE, F, TM, GM, NSANF, DOW, AONEQ, JCI, IBM, BASFY, FCX, RIO, BHP, TCK, SSNLF, TSLA, CAR, VALE, BYDDY, POT, ALLRF, MOS, SOIL, IPI, NPTH, PPRTF-OLD

    Gold: Reuters: Central Banks Preparing For Coordinated Action To Provide Liquidity After Greek Election If Needed GLD, SLV

     

    Gold Catalyst: Eurozone finance ministers agree to 100 billion euro Spain bailout GLD, SLV

     

    Reinventing Fire: The Business-led Transition Beyond Oil and Coal To Electric Cars and Alternative Energy

    "Can we make it this time? Will we buy our own technology, but made in China again? We are slipping dangerously behind the point of no return, blindfolded by special interests towards impending Oil Peak and following it Energy Crunch."

    We have an interesting study of the modern interconnected financial system - once it became insolvent the only way out is to pump liquidity in all forms to keep it running, debase the currencies and inflate the debt out covering the more and more uncovered losses along the way. Capital is eroded, banks are under constant "run" risk and nobody can take risk any more - the velocity of money drops with the real lending.
    The razor sharp edge between deflation and Inflation will be tilt by all means to the inflation side on the world wide base - Gold and Silver will be the store of value as thousand years before. The complication will come with Oil price and its Mega-trend: Inflation multiplied by peak Oil - there is No More Cheap Oil. With FED involved in QE and record low and Negative Real Rates Oil became the real FED who controls the economic cycle now.
    Now, try to add another input into your understanding of the global economic system - that all markets are rigged and manipulated:

     

    Business Insider: Everyone Is Passing Around This 'Whistleblower' Letter Claiming To Know About Market Manipulation At JPMorgan


    "With today's news from JP Morgan the old article from Business Insider is taking the new context at least - what revelations will be next now? JP Morgan's name is all over the place with the recent scandals - we can not tell yet that it will become the "Next Lehman moment" which will unleash QE3 - but company's involvements in MF Global bankruptcy, PFG bankruptcy, Trading Loss Revelations and today's announcement about "cooking the books" are not leaving any room for "error".

    "Box 1
    When Trucks Stop, America Stops A Timeline Showing the Deterioration of Major Industries Following a Truck Stoppage
    The first 24 hours

    • Delivery of medical supplies to affected areas will cease. • Hospitals will run out of basic supplies such as syringes and catheters within hours. Radiopharmaceuticals

    will deteriorate and become unusable. • Service stations will begin to run out of fuel. • Manufacturers using JIT manufacturing will develop component shortages. • US mail and other package delivery will cease.

    Within one day

    • Food shortages will begin to develop. • Automobile fuel availability and delivery will dwindle, leading to sky-rocketing prices and long lines at

    the gas pumps. • Without manufacturing components and trucks for product delivery, assembly lines will shut down putting

    thousands out of work.

    Within two to three days

    • Food shortages will escalate, especially in the face of hoarding and consumer panic. • Supplies of essentials such as bottled water, powdered milk, and canned meat at major retailers will

    disappear. • ATMs will run out of cash and banks will be unable to process transactions. • Service stations will completely run out of fuel for autos and trucks. • Garbage will start piling up in urban and suburban areas. • Container ships will sit idle in ports and rail transport will be disrupted eventually coming to a standstill.

    Within a week

    • Automobile travel will cease due to lack of fuel. Without autos and busses, many people will not be able to get to work, shop for groceries, or access medical care.

    • Hospitals will begin to exhaust oxygen supplies. Within two weeks

    • The nation's clean water will begin to run dry.

    Within 4 weeks

    • The nation will exhaust its clean water supply and water will be safe only after boiling. As a result gastrointestinal illness will increase, further taxing an already weakened health care system.

    Holcomb, R When Trucks Stop, America Stops American Trucking Association"

    Overview

    "This study considers the relationship between a global systemic banking, monetary and solvency crisis and its implications for the real-time flow of goods and services in the globalised economy. It outlines how contagion in the financial system could set off semi-autonomous contagion in supply- chains globally, even where buyers and sellers are linked by solvency, sound money and bank intermediation. The cross-contagion between the financial system and trade/production networks is mutually reinforcing.

    It is argued that in order to understand systemic risk in the globalised economy, account must be taken of how growing complexity (interconnectedness, interdependence and the speed of processes), the de-localisation of production and concentration within key pillars of the globalised economy have magnified global vulnerability and opened up the possibility of a rapid and large- scale collapse. 'Collapse' in this sense means the irreversible loss of socio-economic complexity which fundamentally transforms the nature of the economy. These crucial issues have not been recognised by policy-makers nor are they reflected in economic thinking or modelling.

    As the globalised economy has become more complex and ever faster (for example, Just-in-Timelogistics), the ability of the real economy to pick up and globally transmit supply-chain failure, and then contagion, has become greater and potentially more devastating in its impacts. In a more complex and interdependent economy, fewer failures are required to transmit cascading failure through socio-economic systems. In addition, we have normalised massive increases in the complex conditionality that underpins modern societies and our welfare. Thus we have problems seeing, never mind planning for such eventualities, while the risk of them occurring has increased significantly. The most powerful primary cause of such an event would be a large-scale financial shock initially centring on some of the most complex and trade central parts of the globalised economy.

    The argument that a large-scale and globalised financial-banking-monetary crisis is likely arises from two sources. Firstly, from the outcome and management of credit over-expansion and global imbalances and the growing stresses in the Eurozone and global banking system. Secondly, from the manifest risk that we are at a peak in global oil production, and that affordable, real-time production will begin to decline in the next few years. In the latter case, the credit backing of fractional reserve banks, monetary systems and financial assets are fundamentally incompatible with energy constraints. It is argued that in the coming years there are multiple routes to a large- scale breakdown in the global financial system, comprising systemic banking collapses, monetary system failure, credit and financial asset vaporization. This breakdown, however and whenever it comes, is likely to be fast and disorderly and could overwhelm society's ability to respond.

    We consider one scenario to give a practical dimension to understanding supply-chain contagion: a break-up of the Euro and an intertwined systemic banking crisis. Simple argument and modelling will point to the likelihood of a food security crisis within days in the directly affected countries and an initially exponential spread of production failures across the world beginning within a week. This will reinforce and spread financial system contagion. It is also argued that the longer the crisis goes on, the greater the likelihood of its irreversibility. This could be in as little as three weeks.

    This study draws upon simple ideas drawn from ecology, systems dynamics, and the study of complex networks to frame the discussion of the globalised economy. Real-life events such as United Kingdom fuel blockades (2000) and the Japanese Tsunami (2011) are used to shed light on modern trade vulnerability."

    Trade-Off

    Financial System Supply-Chain Cross-Contagion: a study in global collapse.

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