Energy Crunch

"A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest. By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD."
2010 Joint Operating Environment Report

Limitless Growth

"Nothing in conventional economics of any flavor suggests how to create 'growth' when oil is scarce/rationed and it costs $300 per barrel. Having been conceived in daylight, conventional economics has never experienced darkness, and has no way to conceptualize a world without 'limitless growth.'"
Charles Hugh Smith

The Marketing of Madness

One of my personal "flags" is when someone creates a catchy phrase or name for something that seems to be too important to be summarized by that catchy name.  A few examples might be "War On Terror", "WMD's", "Axis of Evil", "Shock and Awe", and "Main St. vs Wall St.".  When we were kids, we called it the "atomic bomb". That quickly presented images of a mushroom cloud. WMD's sounds really high tech and not really intimidating. "War On Terror" is nice and vague. It's better than saying "waging war on people that don't think like us". That's just too many words. "Shock and Awe" sounded really cool. Who wants to say "dropping missiles in a Middle Eastern city so that we can obtain control of oil reserves". That's just too complex.  Then we had "Desert Storm" and "Desert Shield".  With Mexico we now have the "Battle on The Border".  Main Street and Wall Street is perfect because it quickly creates a victim-villian relationship.  BP provided us with "Top Kill" and "Static Kill".
 
The latest one that I like has even been shortened to an abbreviation, "Q.E.".  Yes, quantitative easing.  This cute phrase represents the process where the Federal Reserve prints a bunch of money and we quickly go spend it on things we believe that we have to have.  The short term result is economic stimulation and a facade of economic strength.  The media now just calls the upcoming "printing event" QE2.  Sounds like a ship named after a British queen.  Get prepared for QE2.  The timing with an election only appears to be a  coincident.  Wink wink.

"The economy is weak. So you print money. The money pushes up asset prices.  People think they are wealthier. They think there’s a real boom going on.  They invest. They hire. They spend.  Then, there is a real boom!  Do you believe it works like that, dear reader? If you do, you should be an economist. Or a doorstop. There’s no doubt that printing money can create a boom. But it’s a phony boom, not a real one. And when it blows up…which it inevitably does…people are worse off than they were before.   It’s one thing to introduce small amounts of extra “money” into a growing, prosperous economy. It’s a fraud. It’s a mistake. But it doesn’t blow-up the system. It’s petty larceny; nobody cares.  It’s another thing to introduce large amounts of new currency into a funky, struggling economy."
Bill Bonner, The Daily Reckoning

The New Great Game

"The 'great game' of the 19th and early 20th centuries involved Britain's attempt to keep other great powers from establishing a foothold in Central Asia that could threaten Britain's interest in India. The new 'great game' involves players such as Iran, Turkey, Russia, and the United States vying for influence over the Caspian region and its oil supplies. For the United States and European countries, Caspian oil presents an opportunity to tap a source of oil outside the often turbulent Middle East. The three main oil producing Caspian countries (Azerbaijan, Kazakhstan, and Turkmenistan) are landlocked and rely on neighboring countries for access to western markets through pipelines. This adds another aspect to the competition for economic and political dominance of the area. The actors are not only concerned with oil and gas production but also with the pipelines that deliver those resources to market."
Ghassan Abdallah

Remember the map:
http://randomroving.blogspot.com/2010/04/important-map.html

Matthew Simmons Dies At 67

I was shocked to hear that "energy guru" Matthew Simmons died today. I had just listened to a lengthy interview of his on Friday and read several articles about him this weekend. He was very vocal on the "peak oil" topic and always provided very "data driven" presentations. I read many of his presentations over the years. He will be missed.

NY Times biography:
http://dealbook.blogs.nytimes.com/2010/08/09/matthew-simmons-noted-energy-banker-dies-at-67/

RR links:
http://randomroving.blogspot.com/2003/04/future-of-oil-patch.html

http://randomroving.blogspot.com/2004/07/coming-energy-crunch-and-hubberts-peak.html

Peak Oil Curve - Hubberts Peak

The King Saves For The Grandchildren

Will this be the trigger for the next major "leg up" in oil prices?
"The monarch told Saudi scholars studying in Washington that he had ordered all oil exploration to cease 'in order to keep the earth’s wealth for our sons and grandsons.'"
Source: State-owned Saudi News Agency

Pruning The Late Bloomers

"Here in 2010, a few late bloomers are making new all-time highs. I never thought the long term inflationary topping process would take this long, but it has. At each of these peaks, investors have focused on one area or another. Every time it’s happened, the area of focus has reversed trend, plummeting in price by 50% or more.  This latest credit reflation is the weakest yet, so it hardly inspires confidence that today’s isolated bull markets will end any differently. Each time a bull market matures, investors are sure it can’t reverse. They said that about technology and internet stocks; they said it about real estate; they said it about oil. Now that a couple of markets are at all-time highs, we hear the same argument about them. This is natural, because investors always want to own markets that are way up. But investors in those previous booms are never going to get back to breakeven. Many of them were ruined."
Robert Prechter, Elliott Wave International

China's Oil Plan

While we continue to squabble in our country, China is on a "full court press" with their energy strategic plan.

"It’s a pretty safe bet that, as one of the world’s fastest growing economies, China needs a lot of energy. And with an oil appetite that grows by 7.5% each year, seven times faster than the U.S., the country’s reserves don’t even begin to compare to the consumption.  But fuelling the blistering pace of its economy is China’s number one priority, and it is on a mission to lock down its energy interests all around the world. The emerging powerhouse has often felt that it was the last one onto the energy playing field with a lot of catching up to do.  Today, Chinese national oil companies (NOCs) are setting up shop everywhere from the Middle East all the way to the oil sands of Canada, and they’re open for business. The three NOCs – CNPC/PetroChina, Sinopec and CNOOC Ltd – are slated to produce a record breaking one million barrels daily. That’s Australia’s daily fuel consumption!  It isn’t just their oil production that’s going through the roof. Since 2009, China has committed nearly US$25 billion into corporate and asset acquisitions. China isn’t going it alone either, and fully realizes the importance of forging partnerships with other international oil companies to develop oil fields.  And with Beijing firmly behind them, they’re only doubling their efforts this year. Chinese NOCs accounted for nearly 20% of all global deal values in the first quarter of 2010. This share will only get bigger as the year carries on and energy security continues to dominate the agenda.  Armed with strong finances, an aggressive approach, and implicit government backing, Chinese companies are well placed to spearhead the nation’s mission of diversifying its international energy portfolio. The latest thing to catch their attention: the mysterious oil elephants of East Africa."
Marin Katusa

Same Old Black Gold Story

This week President Obama made a case for focusing on an energy policy. Jon Stewart's research team did an amazing job with this one.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
An Energy-Independent Future
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party

So we leave this video with how much confidence that our fearless leaders will solve the problem. It will take a major crisis much greater than this oil spill to "move this beast".

Cascading Bubbles

For reasons unknown, I've never really liked the term "bubble", but due to a lack of a better term, I'll use it today to illustrate a point.  I've always liked the phrase "overshoot and collapse" which is used in the biological realm to explain the rapid growth and subsequent crash in the population of a given species.  That's a subject for a later post.

I thought it would be interesting to analyze the impact of the money supply through time on various "bubbles".  The chart below illustrates quite beautifully how the money supply (M3-black dash) impacts the rise and fall of all markets.  The chart compares 5 asset types: technology, financials, oil, homebuilding, and wheat.  These all have experienced drastic "rise and falls" since the mid to late 90's.  Many commodities followed the exact pattern, but I used oil and wheat as two examples.  Click on the chart for a larger view.

Observations that can be made:

1. 
   
   M3 (money supply) rises in the early 80's (Reagan), flattens in late 80's (Bush I), rapidly accelerates in 1995 (Clinton), and keeps rising rapidly after 2000 (Bush II).
2. 
   
   Reagan pulls us out of the doldrums not by magical things called "trickle down" or "supply side", but by turning on the "money supply accelerator" in the early 80's.  Note the M3 Rate of Change curve on the bottom.  A trending up curve indicates a rapidly increasing money supplly while the downtrend is decelerating.
3. 
   
   The Great Maestro, Alan Greenspan, pulls off the accelerator in 1988 and Bush I loses re-election.
4. 
   
   Note that during the "flat" M3 from 1988-1995, the markets are aligned and flat. 
5. 
   
   In 1995, Clinton leads the public to believe that he magically makes the deficit disappear and balances the budget.  Meanwhile, the money supply starts a significant upward climb.  Note the M3 Rate of Change on the bottom of the graph.  It rises rapidly.
6. 
   
   Subsequent with the rapid rise in M3 in 1995, the markets go into "chaos" mode.  The money supply drives the financials and technology through the roof.  Note the steepness of the curves after 1995 in all sectors.  The end result is the DotCom mania.  Now we understand where all of that crazy investment and venture capital money came from!
7. 
   
   DotCom crashes only to see the "credit bubble" move into financials, homebuilding, and commodities (oil/wheat).  2001 marks a "new beginning".  Same game, but different sectors.
8. 
   
   The markets all align in late 2008 subsequent with the steepest rise in M3 Rate of Change.  Then they ALL come crashing down.  As Robert Prechter with Elliott Wave International has stated, "all the same".  Equities and commodities crash together in perfect synchrony.
9. 
   
   Money supply has significant impact on the markets.  While the Federal Reserve was supposedly created to help "nudge" the market when it needed assistance, the contrary is presented from this 30 year history.  After 1995, it looks more like a heroin junky flying up and down.

Worse Than We Thought

Headlines for two recent mega-events, BP's oil spill and Greece's meltdown, caught my eye. Initial reports both used the phrase "worse than we thought". I believe that this phrase will be used and over-used a lot in the coming years. The hype and the facades are presented by the media on a daily basis, but the true facts and hard numbers go unreported and unnoticed. When reality rears its ugly face, we are told "it was worse than we thought". Thank you for the advance warning. Once again, I advise that you do your own research. Some examples below.

"Oil spill off US coast is worse than we thought, BP admits - BP has conceded that the extent of an oil slick in the Gulf of Mexico may be much worse than originally thought."
Source: Times Online

"Greece's budget deficit worse than first thought - Greece had a far larger budget deficit than expected last year and the figures may yet get worse, according to the European Union's statistics office."
Source: BBC

"Obama Administration's Summers: Economy is worse than we thought - Despite bracing for the worst, a comprehensive look at the official hard data has provided another dose of the sobering economic reality for the young Obama administration."
Source: Blogging Stocks

The economy "is worse, quite frankly, than everyone thought it was," Lawrence Summers, President Obama's chief economic advisor, said Sunday on NBC's Meet The Press.

"Worse than we thought - Report warns of 4C rise by 2100 - The world's scientists yesterday gave their starkest warning yet that a failure to cut greenhouse gas emissions will bring devastating climate change within a few decades."
Source: The Guardian

"S&P: Housing crisis worse than we thought 2 months ago - Standard & Poor's has downgraded Washington Mutual and stated that the housing situation is worse than it believed at the beginning of the year (when it believed the housing situation was pretty bad). S&P sez, according to AP."
Source: The Baltimore Sun

"True Colors (Even Worse Than We Thought)" - It seems that ugly crowd of protestors harassing members of Congress in the Capitol complex this afternoon got even uglier than we thought. As noted earlier, in addition to menacing behavior toward multiple members of Congress, one protestor called Rep. Barney Frank a "faggot", a taunt greeted by laughter from fellow protestors."
Source: TPM

"Tech Addiction Worse than We Thought - Ever felt like you wouldn't be able to live without your smartphone or daily access to media and communications technology? Well new research shows that the "crackberry" effect may be real, as people deprived of their gadgets may undergo withdrawal symptoms similar to those of drug addiction."
Source: Thomas Net News

"High Fructose Corn Syrup: Worse Than We Thought? - High fructose corn syrup, which has long been considered an equivalent to table sugar, might lead those who eat it to gain weight faster."
Source: That's Fit

"Even worse than we thought - three economists at the Inter-American Development Bank have a new paper that tries to quantify the damage caused by last month's earthquake in Haiti."
Source: The Economist

"Sea level rise: It's worse than we thought - Jakobshavn has doubled its speed in the past 15 years, draining increasing amounts of ice from the Greenland ice sheet into the ocean, and Holland, an oceanographer at New York University, has been trying to find out why."
Source: New Scientist

"Analyst: Downturn in cruise business worse than we thought - Another prominent Wall Street analyst is turning more bearish on the cruise business, noting that pricing is dropping at a rapid rate."
Source: USA Today

The Pakistani Boogeyman

"A U.S. drone attack targeting militants in Pakistan's troubled northwestern tribal region bordering Afghanistan has killed six of them, media reports quoting intelligence officials said.  It was the fifth such attack by pilot-less U.S. aircraft in the area in the past 17 days."
SOURCE: RTT News

"For a White House that has been seeking a new relationship with the Islamic world, the prospect of another terrorist plot that appears to be connected to Pakistan will present a series of complicated -- and politically treacherous -- issues to confront."
SOURCE: The Washington Post

Is it a coincidence, or do we always find a culprit sourced from the country that we want to justify military action against?  The "Christmas Day Pants Bomber" was from Nigeria, but somehow we immediately set our targets on Yemen.  Is it a coincidence that Yemen sits just south of our major oil supplier, Saudi Arabia?  It also has the Gulf of Aden off its coast where large oil tankers and pirates hang out?  Have you heard of the Bab El-Mandab?  Take a moment to understand the "chokepoints".
http://www.eia.doe.gov/cabs/World_Oil_Transit_Chokepoints/Background.html

Now we confirm a Pakistani male linked to the Times Square incident.  For the past month, we've been bombarding Pakistan with missiles fired from our military drones.  Is there a correlation?

"How con-VEEN-ient!"
The Church Lady - Saturday Night Live

The Less Thought About Resource

One of the most perplexing concepts is that on a planet covered by 75% water, we could actually experience shortages. Of course, seawater is not drinkable, so desalination is required. In prior posts I've touched on the concept of resource shortages. The most common topic regarding shortages is oil. The "peak oil" concept continues to gain traction. From my observation, a shortage of water is an unknown concept to most......unless your a Californian. They are realizing that living in a desert is a long term losing battle against nature.

http://www.cbsnews.com/video/watch/?id=6027412n
"A three-year drought in California is bringing a decades-long fight over water to a head, forcing tough choices." 60 Minutes

"The two "R's", religion and resources, will keep the Middle East on the front headlines. The "R's" will expand well beyond the Middle East before this is over."
Random Roving - January 1, 2010

The Next Commodity Boom

"The recent bout of low commodity prices and the continuing weakness of the financial system are setting the stage for another, even bigger commodity boom. For a short while, high commodity prices had been drawing capital into commodity production, but that stopped when prices fell. Now, while government bureaucrats are funneling hundreds of billions to weak banks, sick insurance companies, clueless automakers, and the politically well connected, the capital needed for new mines, pipelines, drilling projects, refineries, and crops has dried up. There will be consequences. When the economy crawls out of the current recession, today’s paucity of investment in commodity infrastructure will leave us with meager supplies and roaring prices."
James Quinn - July 2009
The entire article:
http://theburningplatform.com/economy/bet-on-stuff-1

Happy New Year!! 2010 is Here.

It's my favorite time of the year to make predictions. I'm still sticking with all of my prior predictions. I'm interested in the "20-something" year cycles, so one year doesn't really make much of a difference.

"I’m betting on Puplava’s forecast of massive inflation. Buy some Krugerrands and interest in an oil well." Random Roving 10-1-08
This one was a winner and I believe it will be for many years to come.

All four outcomes still seem to be possibilities. I'm still convinced that massive inflation is coming. Massive deflation could be right behind.

I'm going to comment on my January 1, 2008 predictions one by one:

· Oil: $150/barrel before $50/barrel - WRONG. Oil bottomed at $38/barrel. I'll repredict the same for 2010, but the price will likely not see either.

· Gold: $1500/ou before $500/ou - I believe that $1500 is looking good.

· Dow Jones Ind. Avg.: 5000 before 15000 - We're currently in the middle. It still could be time to take the money and run.

· Next ten years will be the toughest we’ve ever experienced in our lifetime - Sticking to my guns on this one. Read the "The Fourth Turning" for the details.

· Next twenty much tougher than last twenty - Sticking to my guns on this one. Read the "The Fourth Turning" for the details.

· Next fifty much tougher than last fifty - Sticking to my guns on this one. Read the "The Fourth Turning" for the details.

· Military draft: within ten years, probably 5 - Sticking to my guns on this one. Read the "The Fourth Turning" for the details.

· Brett Favre won’t be playing for the Jets next season - CORRECT! But I never would have predicted a great season at the helm of the Vikings.

· Paris Hilton’s career tanks - Who really cares. It was a joke anyway.

· Saints win the Superbowl in 2010!!! - This was originally predicted on 10/1/08. This one is looking good despite two recent losses. I'll be considered a genius if this one plays out. Go Saints!!

"I believe that 2009 will be a very challenging year. I don't agree with the gurus that forecast a recession end by the third quarter of next year. Remember that those gurus just informed you that we've been in a recession for the past year. So much for proactive forecasting and timely notification. I think that we're in for a very long haul. A 26 year party requires a long hangover." Random Roving - 12/31/08

I chronicled the 26 year party in a little more detail.

I believe that the "sheeple" were awoken over the past fifteen months. It has become apparent to many that all of the pastures are not guaranteed to be "green" forever. Linear thinking might be giving way to cyclical or chaotic thinking.

My additional predictions for 2010 are:

-The continued printing of money by the Federal Reserve will wreak more havoc across the worldwide markets. Volatility is the new "norm".

-Commodities gone wild: Things will rise rapidly in price....food, fuel, gold, oil, grains, uranium, copper......

-I don't know if it will happen in 2010, but I believe that one of the next "too big to fails" will be JPM Chase. They hold more derivatives than any other company in the world. We've just seen the beginning of the derivative implosion. Remember, Warren called them "weapons of mass destruction".

-Protests and riots will continue to increase across the world. The mob is getting angrier and angrier. College campuses will continue to "heat up". The younger generation is awaking to the fact that their parents squandered their future. "Mom and dad, thanks for the debt burden!"

-Politics will get even uglier. The foundation for the new 3rd party is forming. The Peter Schiff Senate race will be interesting to watch.

-The mob will get even more angry. Beware of the angry white American man carrying the Bible.

-Politicians ratings will continue to fall aligning with a continued decline in mass social mood. Incumbents beware.

-The Heartland Theory will continue to play out for many years to come. The two "R's", religion and resources, will keep the Middle East on the front headlines. The "R's" will expand well beyond the Middle East before this is over.

-The President will continue to "take a beating". Read the "The Fourth Turning" for the details. He's been called a non-US citizen, a Communist, a Fascist, and a Socialist. What is left?

"I don’t think it matters who the next president is. I know that 99% of you will disagree with this statement. I believe that he will be doomed by the economic cycle. The cycle is much greater than a president or a political party. The next president will time it horribly like Carter did, but much worse. He will be the fall guy. He will be worn down by the Middle East like LBJ was with Vietnam. Hopefully he won’t receive the fate of JFK. Yes, that sounds pessimistic, but history is very repetitive." Random Roving - 11/4/08 Election Day

"Was Jimmy Carter really that bad of a president or did he time his economic cycle poorly? Was Bill Clinton really that good of a president or did he time his presidency extremely well? I believe that one was cursed and the other blessed from the “get go”. The next president, whoever he is, is doomed and will likely parallel Carter, JFK, or LBJ. Hopefully for him it will only be as bad as Carter." 6-30-08

-Xenophobia will continue to increase. Muslims and Mexicans will continue to be the easy targets. Which group or culture is next? Will the U.S. fragment and all will say "California, that's your problem!".

-The "patriotic" drums will beat even louder. The love for "our troops" will increase. Nationalism will continue its rise. You will be questioned by the "so called patriots" whether you really love your country.

-The "outer layer of the onions" will continue to struggle. Keep an eye on Iceland, Dubai, California, Honduras, Columbia, Argentina, Mexico, Iran, Pakistan, Detroit, Hungary, and Greece.

-Things built on "sand" will continue to struggle: California, Dubai, Arizona, Florida, and Las Vegas. Golf courses and cities are not naturally aligned with the habitat of a desert.

-The downward trend in social mood will present some very positive developments (yeah! finally!):

---families will move geographically and emotionally closer

---materialism will begin to fade toward more important things: family, God, friends, and true happiness.

---gluttony and obesity will evolve back to more natural levels.

---religion will become smaller, "deeper", and more traditional. The megachurch and megamillionaire ministers might have seen "the peak". Hopefully they saved all of those millions from the book deals. The trend toward more "traditional" might spark some old flames. Keep an eye out for increased religious conflict though. The most hypocritical will be Christian vs Christian. Northern Ireland will be one to watch.

I'm sticking with my same recommendations from last year. They still are valid and wise.
My recommendations for the new year:
-Take care of what is important first
-Prepare for all scenarios
-Think for yourself
-Read a lot from diverse sources
-Be aware of who's Kool-Aid you're drinking
-Turn off the TV
-Enjoy life
-Pray a lot!

"As we move into a new year, the stock market's technically weak rally and the repercussions of the burst real estate will follow along. So stay flexible with your investment strategy because we could be in for another hard fall." Claus Vogt - Weiss Research Inc.

I continue to get feedback that this blog focuses too much on negative topics. I'm not sure if I feel more like Paul Revere or the weatherman. No one calls the weatherman a pessimist when he predicts that a hurricane will hit land in five days. They take his/her advice, prepare, and head to higher ground. Don't shoot the optimistic messenger! He's only trying to "fire a warning shot".

The Truth About Afghanistan

From F. William Engdahl:
"The second reason the US military remains in Afghanistan long after the world has forgotten even who the mysterious Osama bin Laden and his alleged Al Qaeda terrorist organization is or even if they exist, is as a pretext to build a permanent US military strike force with a series of permanent US airbases across Afghanistan. The aim of those bases is not to eradicate any Al Qaeda cells that may have survived in the caves of Tora Bora, or to eradicate a mythical “Taliban” which at this point according to eyewitness reports is made up overwhelmingly of local ordinary Afghanis fighting to rid their land once more of occupier armies as they did in the 11980’s against the Russians. The aim of the US bases in Afghanistan is to target and be able to strike at the two nations which today represent the only combined threat in the world today to an American global imperium, to America’s Full Spectrum Dominance as the Pentagon terms it."

"Afghanistan has historically been the heartland for the British-Russia Great Game, the struggle for control of Central Asia during the 19th and early 20th Centuries. British strategy then was to prevent Russia at all costs from controlling Afghanistan and thereby threatening Britain’s imperial crown jewel, India."

"Afghanistan is similarly regarded by Pentagon planners as highly strategic. It is a platform from which US military power could directly threaten Russia and China, as well as Iran and other oil-rich Middle East lands. Little has changed geopolitically over more than a century of wars."

The entire article:
http://www.financialsense.com/editorials/engdahl/2009/1021.html

The Worst Case Scenario

"When governments are confronted with dreadful domestic problems and faced with lack of oil supply, a foreign enemy will materialize who just happens to have vast amounts of oil. Since the supply of oil will be just as restricted for China and other Far East countries, there is likely to be armed conflict. Once war begins, no one can predict which direction it will go. If it spirals out of control, nuclear annihilation is a possibility. The collapse of the U.S. dollar would result in millions of Americans being financially wiped out. Millions of angry Americans with no gasoline and no money might get unruly. The possibility of civil war will be high. Will the American military fire on American citizens? The ruling elite will order the military to attack the riff-raff, but they risk the military turning their guns on them. The greatest risk in this scenario is that Americans turn to a strong leader who assumes dictatorial power in the guise of safety and security." James Quinn

Early Warning Indicators

"Rising gold and oil prices are symptoms of the inflationary monetary and fiscal policies that have been implemented. These were without doubt global governments' absurd and counterproductive answers to the popped real estate bubble. The breakouts in gold and crude oil are like early warning indicators. And the commodity markets are clearly telling us that inflation will rise sooner rather than later and will become a major problem for the world economy. Fortunately as investors, we can turn that problem into a tremendous opportunity."
Claus Vogt, Weiss Research Inc.

The Switch Is On

"Since March of this year alone, the U.S. dollar has plunged 14% and the Reuters-CRB index — a measure of the price we pay for oil, gas, food and other major basic necessities of life — has surged 30%."
Martin Weiss - Weiss Research Inc.

Changing of The Guard?

"This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves. The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states."
For the entire article:
http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html