The Instability Express

Submitted by James Howard Kunstler  –  www.kunstler.com

The mentally-challenged kibitzers “out there” — in the hills and hollows of the commentary universe, cable news, the blogosphere, and the pathetic vestige of newspaperdom — are all jumping up and down in a rapture over cheap gasoline prices. Overlay on this picture the fairy tale of coming US energy independence, stir in the approach of winter in the North Dakota shale oil fields, put an early November polar vortex cherry on top, and you have quite a recipe for smashed expectations.

Plummeting oil prices are a symptom of terrible mounting instabilities in the world. After years of stagnation, complacency, and official pretense, the linked matrix of systems we depend on for running our techno-industrial society is shaking itself to pieces. American officials either don’t understand what they’re seeing, or don’t want you to know what they see. The tensions between energy, money, and economy have entered a new phase of destructive unwind.

The global economy has caught the equivalent of financial Ebola: deflation, which is the recognition that debts can’t be repaid, obligations can’t be met, and contracts won’t be honored. Credit evaporates and actual business declines steeply as a result of all those things. Who wants to send a cargo ship of aluminum ore to Guangzhou if nobody shows up at the dock with a certified check to pay for it? Financial Ebola means that the connective tissues of trade start to dissolve, and pretty soon blood starts dribbling out of national economies. Continue reading

Japan’s Last Stand

Submitted by Michael Pento – Pento Portfolio Strategies

There is a popular American military term called a “last stand”, which is meant to describe a situation where a combat force attempts to hold a defensive position in the face of overwhelming odds. The defensive force usually sustains very heavy casualties or is completely destroyed, as happened at Custer’s Last Stand. General Custer, misreading his enemy’s size and ability, fought his final and fatal battle of Little Bighorn; leading to complete annihilation of both himself and his troops.

The Japanese government is now partaking in a truly incredulous measure to expand its QE program in a desperate attempt to de-value its currency and re-inflate asset bubbles around the world.  In other words, Japan is constructing its own version of a “last stand”.

In a final attempt to grow the economy and increase inflation, Japan announced a plan to escalate its QE pace to $700 billion per year.  In addition to this, Japan’s state pension fund (the GPIF), intends to dump massive amounts of Japanese government bonds (JCB’s) and to double its investment in domestic and international stocks.  All this in a foolish attempt to increase inflation, which Japan mistakenly believes will spur on economic growth.  But these failed policies have now caused Japan to enter into an official recession once again, as GDP fell 1.6% in Q3 after falling 7.1% in the previous quarter. Continue reading

Cameron Says Second Global Crash Looming – Russian Relations Worsen at G20, Japan in Recession

Submitted by Mark O’Byrne  – Founding Partner of  GoldCore2014-08-12_1821

David Cameron warned last night that the global economy risked another crash and said in an article that ‘red warning lights’ were ‘flashing on the dashboard of the global economy’ and the eurozone was ‘teetering on the brink’ of another recession.

The warning came at the same time that the world’s largest economy, Japan, fell into another recession. Japan shrank by an annualised 1.6% in the third quarter. This followed a huge 7.3% contraction in the previous quarter caused by a rise in the national sales tax and ran counter to economists forecasts for a 2.1 percent rebound.

Mr Cameron’s warning follows a claim by Bank of England governor Mark Carney that a ‘spectre’ of economic stagnation was haunting Europe. Christine Lagarde, managing director of the International Monetary Fund, has also expressed fears that a diet of high debt, low growth and unemployment may yet become ‘the new normal in Europe’.

Writing in the Guardian at the close of the G20 summit in Brisbane, Cameron says there is now “a dangerous backdrop of instability and uncertainty” that presents a real risk to the UK recovery, adding that the eurozone slowdown is already having an impact on British exports and manufacturing.

Mr Cameron said global instability such as the continued eurozone crisis and the ebola outbreak threatened the UK’s recovery.

The G20 summit in Brisbane seems to have been a highly entertaining affair. Albeit for all the wrong reasons.

The 20 richest countries in the world pledged to magic up 2.1% of economic growth over the next five years. How this is suddenly possible after six years of failure is unclear but it makes for good PR. Climate change was also high on the agenda.

But it was the brow-beating of Vladimir Putin by the leaders of the increasingly repressive free world that got most of the media attention. Canada’s Harper reluctantly shook Putin’s hand while demanding Russia pull out of Ukraine or face the might of Canada. Continue reading