ed233's  Instablog

One cannot be very successful if one speaks with a forked tongue. I will bet that President Obama and his administration will return from China with little more than some picturesque memories. You can fool some of the people some of the time but you cannot fool all of the people all of the time. President Obama wants the Chinese to make concessions while at the same time he and his administration are attempting to stack the deck. If he is sincere in obtaining something of substance he'll have to  negotiate his hand in a truly give and take proposition. But what can President Obama give the Chinese that they would expect. Unfortunately, what they want is contrary to the present economic policies implemented by the Obama administration. If you were an investor into a company that continually issues share capital for debt without anything in return then you as an investor would soon become negative and sell because your investment is in jeopardy. In the same way the US is watering down the Chinese investment by continuing along with administrative policies of printing money, and moving forward with expensive policies that require increasing exponential debt notwithstanding that the Chinese as investors have extended warnings concerning this type of action. At the same time the US administration complains that they are being treated unfairly by the Chinese. Does anybody believe for a second that this type of approach has any chance for success? Give me a break. Even George Bush had enough intelligence to know better than use this type of tactic.Disclosure: No positions'. LOL Looking after your money.

 In previous commentaries several months ago, I warned of the beginning of supply inflation. I haven't heard economists mention this type of inflation during the crisis. We are now I believe, beginning to enter a phase where the cost of certain commodities are going to esculate in price. I call that inflation. I believe it's coming sooner than later. Normally however, economists view inflation as an increase in the price of goods resulting from too many dollars chasing too few goods. They reason therefore that inflation is somewhere off into the distant future because the catalyst needed to ignite inflation is improving employment levels to where additional income or dollars are injected into the market place. So until that happens they reason there will be no inflation. Using that recipie for inflation, most believe there is nothing to worry about from the inflation front anywhere in sight.
  In my opinion they couldn't be further from the truth. I see oil, copper, uranium, metallurigical coal and other commodities increasing in price irrespective of demand levels. Welcome to the era of supplier producers demanding higher prices for goods accompamnied with a refusal to sell for a lesser price. You might ask how this becomes possible when demand isn't increasing. The answer is that supply becomes in-elastic in the sense that availablity of credit restricts competitors from  ramping-up additional production. Now you might ask where are the examples of this sort of action implemented by producer suppliers. As an example, I refer to Quatar an OPEC producer who recently raised prices 10% for the price of oil  they sold to China during the month of August of this year.  Additionally, supertankers who haul half of the world's oil have demanded higher rates. These  demands enable producers to lock in raised prices for commodities. This is the type of catalyst that propells an increase for certain commodities irrespective of the level of demand. Now when you add to this the additional problems for the currency market as a result of printing huge amounts of "I owe you's", prices eventually become volatile for commodities as they move higher. Now consider the present devaluing of the US dollar and the skeptisim surrounding the dollar's worth then it's no wonder that the price for gold is going to appreciate even though gold demand from jewellery has fallen off. Therefore, I look to see the price for precious metals to increase mainly as a result of a diminishing value for the US dollar currency caused by a huge debt and an exponential increase in the supply of printing dollar I owe you's which includes other countries as well. Foreign countries will move away from the US dollar preventing the US dollar from becoming a safe haven during risk aversion. And also look to see other countries distance themselves from the US dollar so as to prevent the US from exporting their huge fiscal debt from the domestic market  to the world markets via a common currency reserve. The global market will resist against any attempts to export the USA national debt. LOL Looking after your money. Disclosure: long gold and uranium producers.

    I predicted in a comment I made on June13th last there would be reaction to Mr. Obama's policies, The Canadian government would not waste any time advancing their desire to encourage the government of China to invest in the vast Canadian natural resources. Mr. Obama could have prevented this from happening had he come out in support of the oil sands projects and supported Canadian made products as opposed to remaining mute over the "Buy America" issue. Mr. Obama apparently supports a unilateral action of attempting to implement a cap and trade policy that has little or no support except for perhaps Mr. Al Gore who some believe will profit hansomly by an implementation of this policy. Not to mention the underhanded slapping of the oil industry, Mr. Obama still remains tight lipped concerning the push to "Buy America". 
  The Canadian oil sands is second to none regarding its vast resources. Years of mutual investment by both american and canadian investors working side by side to make sure the US has a steady source of oil pumping through the pipelines uninterrupted certainly caused reaction from the Canadian government. I wonder if Mr. Obama will require future oil from Canada to contain a special label like that which must accompany certain other canadian input products? Remember the oil reserves of Mexico are depleting year after year. There remains a few primary sources of oil that must come from questionable foreign jurisdictions of the world that couldn't give a damn about America. I understand that the Canadian oil sands is only producing about 7% of its capacity but when it ramps up the Americans might have given second thoughts more carefully. Given Mr. Obama's declining support for his socialistic policies it would seem that he might want to re-assess his positions going forward since he surely will need a friend that has always supported the USA.
  I would much rather see American investment working together with their cousins to the north than the Chinese goverenment purchasing canadian natural resources. LOL Looking after your money. Disclosure: no position.

Back on April fools day I wrote a commentary identifying the dangers lying ahead for the US dollar. I suggested that if the US kept up their policy of exorbidant spending and printing like a drunken sailor there would be dire consequences. Of course, Washington seems to be rapped up in defending their past stupid mistakes or running around like a chicken with their head cut off hoping that if they do something, regardless of what it is, some good has to come from their approvals. These legislative branches do not even seem to be prepared to read documents let alone use common sense. They don't realize that their consequences have rippling effects for the rest of the world. A country with the responsibility to act as the world's currency is irresponsible when their monetary policies act in such a way as to place the rest of the world in economic danger.

It does not take a rocket scientist to determine that if you are a counterfeiter and you introduce excessive dollars into a market you are debasing the existing currency to the detriment of those holding the old legitimate dollars. The world's currencies are affected in the same way. So long as the US debasing of the dollar continues by explosion of debt and printing excessive dollars then it is like counterfeiting when you introduce the debased dollar as a medium of exchange for international transactions. All other currencies will be infected likewise. Like a foreigner with a contageous disease flying from country to country without any regard to protection.

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I see rising unemployment everywhere about me. I see a housing industry in crisis. I see dwindling jobs available in the auto industry guaranteed at exorbidant head counts. I see a credit system in shambles. I see countries with credit problems far greater than credit agencies are willing to disclose. I see growing protectionism between friendly countries. I see massive deficits growing. I see growing resentment against a country trying to export it's excessive debt via a currency exchange. I see a rule of law being undermined in the interests of what is political gamesmanship. I don't see intrinsic values increasing in the foreseeable future. I see a bubble forming before my very eyes. Where is that expectation for buying in this market? LOL Looking after your money.