In the post above I listed commoditiy speculation as one of the areas the banks et al might look to, for bubble creation and synthetic profits to ramp their share price, which ramps the markets which gives the illusion of recovery.
Well, the Journal of Commerce just published its Industrial Price Commodity Smoothed Price Index. It’s a page turner. No its not, actually. But it does make it quite clear that real demand – by which I and they mean, demand from people who actually want to USE the commodity, as opposed to specualtors just buying a future on it, – is falling at its fastest pace since Oct. ’08. The Index puked up 57% of its value in May alone. Investors are dumping their holdings at the fastest rate since February.
The last time this happened was shortly before the ’08 crash. At that time the OECD was still predicting a rising market. They really are so myopically arrogant. Anyway, half the items the Index tracks are not traded in markets much used by speculators. Which is possibly why the Index has been quite a good barometer of real dmand and use.
Now none of this says there is going to be another ’08 crash next week or even next month. There are just too many variables and too many mountebank policiticans who will agree to any bail out they are told to. But what it does say, is that we are NOT going to get. We are not going to get the levels of growth all the banks, governments, Central banks, the OECD and all the uncle tom pundits are rolling their eyes about. Not from anything real anyway. Not in China, not in Japan and not in Europe.
China is laying in longer term supplies using US debt holdings as currency. But at home I think you shouyld watch this Hond strike. It could well be a litmus test. I think it’s going to be bitter if Honda do not capitulate as Apple just did at Foxconn. The Honda workers are the visible tip of real wage unrest. Combine that with a property slump which is on its way like a slow wave across China and you could have a torrid time. All I’m saying is keep an eye on it. The tinder is dry and this is a spark.
The US,itself faced with a china slow down and regional bank defaults, is, I think, going to announce another huge stimulus within 6 months. Ramp job for sure. Bond markets will hold their breath. This will happen in part from vast and building internal market pressure, not least from regional banks and state treasuries, but also as a political response to Germany.
The US is going to get out a big stick and say to Germany, ‘Hey, remember, WE are the big dog round here not you. We decide on global macro policy not you.’ I think there are those in the US who think this is necessary and overdue. A bit of pack pecking order enforcement.
Anyway it will be intersting to see how wrong I am on that one as well. It’s the problem with living in a parallel reality from the main media and their experts. Somtimes I think it would be more appropriate if this blog came in on crackly wavering short wave, not in digital clarity.
Put all this together and it says to me that withouth looking forward to a square meal from growth in manufacturing, it just means banks will have to look to cannibalism and speculation. Eat smaller banks and suck on the public neck some more via currency betting.
This summer is going to be great.
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