This is what Nouriel Roubini has to say about the current moves in the US to bail out the banks according to an article in Reuters:

"They have swapped U.S. Treasury bonds for toxic securities. It is privatizing the gains and profits, and socializing the losses as usual. This is socialism for Wall Street and the rich."

The good news is that Roubini is bullish about the global economy!

I haven't blogged for a while.... the news about the global economy has been so widely reported and I didn't feel I had anything significant to add that hadn't been said before.

Suffice to say that I have been blogging about the problems in the US economy and the inter-connectedness of other economies for quite a while... And people are starting to wake up to the concept that if you spend a trillion dollars or so on a war and have to borrow the money from other countries at some point someone wakes up and smells the coffee and says "by the way what are your assets really worth?"

The opportunity now surely has to be for people around the world to subscribe to a new vision.

That vision has to be to move away from the cultural meme that was originated in the US by Edward Bernays. That meme goes, "We have to move the US from being a needs based society to a desires based society". I would venture to say that this concept was the most significant cultural export since the advent of Christ.

That meme which in essence is about self interest drives consumerism in China and India and everywhere. And it is out of control greed that is wrecking the planet. Every shareholder looking for a guaranteed ROI and every consumer looking for the latest greatest flat panel screen to view the latest blockbuster movie is a contributor.

And I am no different. I'm also looking for the quick investment in a stock that is going to go through a three to four x growth over the next six months and make an easy buck....

So how do we break free from this downward spiral?

The answer is that we are not going to, but it will be done for us.

I was reading a report from Ken Rutkowski earlier this morning about American consumerism. What I think is interesting is that the speed of the transmission of memes is increasing at a massive rate. And populism of an idea is going to cause the shipwreck regardless of what anyone does at the top to try to keep the ship of state afloat.

Here is what Ken's article said:


This is the thing that is going to truly alter society next. People are going to run from one side of the boat to the other as contrary stories appear. Eventually the boat capsizes. Sorry to be a doomsayer, but this is what is going to happen.

It is really about the big ideas in society.

Look at Afghanistan. That seems to be the next big focus for the western world's military misadventures.

The unfortunate reality is that while there may be Taleban or Al Quaida there using it as a staging base and they may be the problem, the real issue is the asymmetric issue of how they work. Afghanistan is the global centre of the opium trade. And from opium you get heroin. And heroin is sold at huge profits. While heroin is illegal it attracts high margins. If you legalized heroin you would remove its black market mark up and remove its profitability.

The problem is that the profits from illegal drugs like the profits from illegal arms are the life blood of the global banking industry. Think about it: Even drug dealers have to move their money around somehow. And the easiest way to do that is through the legitimate banking industry. I read sometime ago that around a third of the money in the financial system is from illegal drugs. So the point is that the people who touch that money are making money from it. They don't want their profits to decline so they aren't going to put any pressure on governments to do what needs to be done - to control the distribution of drugs by regulation.

So while you have that, no change will take place. The Teleban is not really any different to organized crime. And organized crime isnt getting any smaller...

So the train wreck unfolds slowly at first and then suddenly it goes into real time....

Somewhere in the next year or so we will see the results...

The UK seems to be having a seriously rocky road economically at the moment, and the future doesn't look too good either.

Check out the housing price trends. Looks set to drop a whopping 25% over the next 24 months according to The Times:

More info here if you are interested.

Check out this blog posting by Mike Shedlock.

He is a financial analyst who has excerpted some recent comments by Henry Paulson, the US Treasury Secretary.

From those comments he deduces that the US is preparing for some serious blood on the tracks in terms of the financial markets!

Here is what he says:

If ever there were examples of how interconnected we all are, we are seeing them right now.

First we had the oil price crisis which some people think is caused by speculators, but in reality is caused by the fact that the speculators have formed a belief that there is limited supply and increased demand. Hence market forces will set prices higher and higher until there is no further tolerance for higher price.

Now we have the news that the wild card of the Iowa floods is having greater impact on the local farmers than we might have expected. Check out this story.....(From Moneyweek)

"A catastrophe for Iowa farmers will not be just a catastrophe for Midwestern Americans. In the Iowa floods, we’ll see more evidence of how the problems of weird weather (climate change) combine and ramify the problems associated with Peak Oil. In this particular case they lead to an inflection point sometime around the 2008 harvest season, which will also be our time of political harvest.

These are not your daddy’s or granddaddy’s floods. These are 500-year floods, events not seen before non-Indian people started living out on that stretch of the North American prairie. The vast majority of homeowners in Eastern Iowa did not have flood insurance because the likelihood of being affected above the 500-year-line was so miniscule — their insurance agents actually advised them against getting it."

It seems that not only has the move into corn/ethanol reduced the availability of food, but now with the increased price of delivery via trucks and the reduced amount of recompense that farmers will receive via insurance that there are significant stresses on the whole agribusiness/infrastructure ecosystem.

Expect that the speculators will get onto this next and drive up futures in all food products in the US and that will impact prices in other countries too.

Unbelievable but true. People in the UK are stealing each other's vegetables!

Things must be getting tough...

Read this story in the Telegraph.

Kerry O'Brien did an interview with an global oil expert by the name of Richard Heinberg.

The program web page is here. You can go to the video or read the transcript of the interview there.

This is something really important to watch or read. This guy talks really convincingly about what the near future for the world is. He argues extremely succinctly about how global oil supply is what it is all about and if there really was enough supply the speculation would not be there. So we can expect volatility and high prices.

That means a total rethink of all global logistics including transportation, the way that we grow food, and the fundamental way that we operate in society.

If as Richard Heinberg suggests we need to build transportation around electricity, it is going to mean massive opportunity to those who plan to be in areas of business that provide into that kind of infrastructure.

Watch the interview - it is extremely important!

The real cost of war is the amount we are all paying to fill our cars right now.

Here is what one of the leading oil economists has to say about it...

And here is some more news about the US that should be putting people's teeth on edge....

Get into the bunker and make sure you have lots of supplies! And at the same time I am reading stories that based on Cheney's recent visit there, the Saudi's are starting to do nuclear fallout exercises.

Even South Korea, the bastion of support for all things American, is keeping out of the US this time around. According to the Financial Times one of the biggest pension funds there has declined to purchase more American debt:

This is exactly what happens in the classic downward spiral that is described in the article I blogged about below. This has got a long way to go before it fully plays out. And as the vortex grows it will start to pull in a lot more people, and cause a lot more pain. Witness the closing of Melbourne based stockbroker Opes Prime last Friday... I wonder how many people lost their shirts while just playing it straight.... ?