Boomers Say, “What, Me Worry?,” Goldman Issues Gloomy Forecast, Here Comes Another $250 Billion Problem, and More!
Apr 15th, 2008 | By Addison Wiggin | Category: International Investing
— Bit by bit, more details emerge about China’s plans to basically shut down Beijing’s economy in advance of the Olympics. All building construction in Beijing will halt three weeks before the opening ceremony. No digging, no pouring of concrete, no outdoor spray painting, either…all in the hopes of clearing the choking pollution that envelops the capital and poses a threat to athletes’ health.
Even before this announcement, factories in six provinces surrounding Beijing began shutting down. Still in the works: a decree that would clear the streets of most traffic. Can’t wait to see how that goes over.
— “What is the first thing people do when a blizzard is predicted?” writes a reader, regarding a bubble in commodities. “They make a run on the supermarkets. With the current thinking on ethanol in this country, especially by the present administration, we are in a blizzard situation.
“We are plowing every inch of arable land, and some marginal acres, to satisfy the apparent ‘demand’ for ethanol. Never mind the cotton, sugar cane, rice acreage being lost to corn and, to a lesser degree, to soybeans. The demand worldwide is eclipsing the supply of essential foods.
“A commodity bubble? Possibly, right now, but a sustained increase ultimately. Population continues to grow and essentials are becoming more scarce. Costs for food commodities will continue to rise. Cheap food as we have known it is, I’m afraid, a thing of history. Hard assets, especially metals, will continue to appreciate. However, nothing moves in a straight line. Expect corrections, but appreciation will continue.”
— “We are wasting massive amounts of ag land planting corn for ethanol,” responds another on the same subject. “China and India are booming, so silver (and all other metals) consumption is going to continue upward. Unless we get interference from the government, like what is happening to the price of silver and gold, I think all commodities still have a long way to go.
“That does not mean there will not be some hiccups along the way, nor will it prevent overshooting the natural supply/demand price; thus, it will go too high and then retreat some, and we are probably less than halfway to the top.”
The 5 responds: We seem to be reaching a consensus building among the readers who’ve written in and the balance of our analysts…why does that make us nervous?
— “The Frontier Airlines Chapter 11 is an interesting canary,” writes another, on a slightly different tack: “Nice people in a lousy business. Think low-fare competitors, government regulations, unions, business cycles and, of course, fuel costs. Now one more thing they can’t control — vendor credit. Unusual credit markets sure screw with business as usual. Who’s next?
“Keep peering through the fog. I always enjoy the read.”
— “This ‘recession’ will be different,” writes another reader, who divines something a tad more ominous through the fog than most. “It will not end. The USSA economy will fall in fits and starts until everyone in the USSA, as well as the rest of the world, fully acknowledges — the USSA is a third-world banana republic with nukes.
“And I predict that last part will become very problematic when the going gets really tough, for Americans have fewer ethics and scruples as the days pass (and it hasn’t gotten even slightly difficult yet). Already, most Americans have no qualms threatening (or even pressing the button) given even the lamest militant sound-bites from any so-called leader in either party.
“So I’m off to establish the best exercise in self-sufficient living I can muster in the deep boonies of the Andes — while I still can. It won’t be easy, but at least it will be real. Adios, gringos.”
The 5 responds: We’re assuming the ‘USSA’ is a thinly veiled snipe implying life in the USA is coming to resemble life in Soviet Russia. Good luck in the Andes.
Adios,
Addison Wiggin,
The 5 Min. Forecast
P.S.: The latest edition of The Demise of the Dollar seems to be attracting some attention in the Far East. Today and tomorrow, we’re fielding unsolicited interviews with South Korean public TV and the 21st Century Business Review, “China’s largest circulation business magazine, with 70 million readers.”
The South Korean film crew is flying directly from Seoul to our offices in Baltimore for the interview. Crazytown. We’ll let you know how it goes.
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Addison Wiggin is the editorial director and publisher of The Daily Reckoning, and executive publisher of Agora Financial. He is also one of the executive producers and writers of I.O.U.S.A. a feature length documentary film nominated for the Grand Jury Prize at the 2008 Sundance Film Festival.