devsterd1
Cast Iron
- Joined
- Jan 12, 2007
- Location
- Norfolk VA
I've been wanting to start a thread about the economy worldwide for a while. It's a pretty big issue and I figured most people don't follow it so I thought I'd put as much info out as is reasonable in this format.
My impetus for finally starting this thread is watching the Hang Seng (Hong Kong) index tumble last night. Oil fell about $5 a barrel in about 8hrs while the index fell almost 1000 pts. I figured the Dow would drop about 500 pts. today, but with computer trading it's hard to tell anymore. The only thing I do know is that overall, every aspect of the world (financial) economy is now an empty shell. From banks to commodities to too much debt everywhere- "This Sucker's Goin' Down". First commodities, then, if it's still there, "Eurogeddon", the third part, if the banking sector still exists in a recognizable form, "International Banking- We Gamble, You Pay, We Stick a Meter on it Anyway".
First a quick disclaimer.....I'm not an economist, my ex-wife cleaned me out so I'm only spectator in this, and hopefully, I'm probably wrong. Do not look at this as investment advice pertaining to financials, brown rice or ammo. It's not. Just a little information for those who are unable, for whatever reason, to follow the world economy. Take it all with a big grain of salt.
COMMODITIES. We've discussed this here a lot. I've always tried to point out how commodities have been pretty flat until about 2000 and the passing of the Commodities Futures Trading Act. Previous to that, each commodity was pretty independent in that if one rose for a while it didn't affect the rest. Now commodities rise and fall as a group. The difference is the financialization of commodities. I finally found an article that explains what's going on in plain language. It's by an economist named Randy Wray. It's the best I've seen and really a must read if you want some insight into metal prices and commodities in general. Here's a quote and a link:
Randy Wray: The Biggest Bubble of All Time
Randy Wray from the link:
"Yes, commodity bubbles happen, but eventually reality sets in and brings the price back down to reality. You don’t get 3, 4, and 5 standard deviation events. A four standard deviation price rise falls outside 99.994% of all outcomes—one in 100,000 years; a five standard deviation price rise is about one in 2 million years. That pretty much covers the time since our ancestors beat things with big sticks.
But wait a minute. The standard deviation of price rises for iron (5), coal, copper, corn and silver (4), sorghum, palladium, and rubber (3.5), flaxseed, palm oil, soybeans, coconut oil, and nickel (3), and so on down through jute, cotton, uranium, tin, zinc, potosh and wool (2) are so unlikely that they quite simply could not have happened. Individually. Together, the likelihood that we’ve got an unlikely boom in almost all of the 33 commodities? All at the same time? Impossible. Cannot happen. Not in the lifetime of our sun, let alone our planet.
But it did."
Read it.......
I'd really like to hear from the European, Australian and Asian members...... and the locals of course.
Robespierre2012
My impetus for finally starting this thread is watching the Hang Seng (Hong Kong) index tumble last night. Oil fell about $5 a barrel in about 8hrs while the index fell almost 1000 pts. I figured the Dow would drop about 500 pts. today, but with computer trading it's hard to tell anymore. The only thing I do know is that overall, every aspect of the world (financial) economy is now an empty shell. From banks to commodities to too much debt everywhere- "This Sucker's Goin' Down". First commodities, then, if it's still there, "Eurogeddon", the third part, if the banking sector still exists in a recognizable form, "International Banking- We Gamble, You Pay, We Stick a Meter on it Anyway".
First a quick disclaimer.....I'm not an economist, my ex-wife cleaned me out so I'm only spectator in this, and hopefully, I'm probably wrong. Do not look at this as investment advice pertaining to financials, brown rice or ammo. It's not. Just a little information for those who are unable, for whatever reason, to follow the world economy. Take it all with a big grain of salt.
COMMODITIES. We've discussed this here a lot. I've always tried to point out how commodities have been pretty flat until about 2000 and the passing of the Commodities Futures Trading Act. Previous to that, each commodity was pretty independent in that if one rose for a while it didn't affect the rest. Now commodities rise and fall as a group. The difference is the financialization of commodities. I finally found an article that explains what's going on in plain language. It's by an economist named Randy Wray. It's the best I've seen and really a must read if you want some insight into metal prices and commodities in general. Here's a quote and a link:
Randy Wray: The Biggest Bubble of All Time
Randy Wray from the link:
"Yes, commodity bubbles happen, but eventually reality sets in and brings the price back down to reality. You don’t get 3, 4, and 5 standard deviation events. A four standard deviation price rise falls outside 99.994% of all outcomes—one in 100,000 years; a five standard deviation price rise is about one in 2 million years. That pretty much covers the time since our ancestors beat things with big sticks.
But wait a minute. The standard deviation of price rises for iron (5), coal, copper, corn and silver (4), sorghum, palladium, and rubber (3.5), flaxseed, palm oil, soybeans, coconut oil, and nickel (3), and so on down through jute, cotton, uranium, tin, zinc, potosh and wool (2) are so unlikely that they quite simply could not have happened. Individually. Together, the likelihood that we’ve got an unlikely boom in almost all of the 33 commodities? All at the same time? Impossible. Cannot happen. Not in the lifetime of our sun, let alone our planet.
But it did."
Read it.......
I'd really like to hear from the European, Australian and Asian members...... and the locals of course.
Robespierre2012