spacer.png, 0 kB

Newsflash

CHINA IS THREATENING ECONOMIC WARFARE IF THE US IMPOSES IMPORT TARIFFS.  THIS REPORT APPEARED IN THE FOREIGN PRESS AUGUST 8, 2007 AND IS VERY SERIOUS.

 
Economic and Geopolitical Outlook for 2007 by Charles H. Coppes PDF Print E-mail
  PDF Print E-mail


 


 __________________________________________
 

      The outlook for the precious metals complex in 2007 remains strong and even Wall Street pundits are predicting $725 gold and $20 silver by year's end.  In 2006, gold and silver posted significant gains of 23% and  38% respectively.  I predict that this is the year that economists, financial analysts, and average Americans will begin to realize that our nation is facing what David Walker at the GOA calls “a major fiscal crisis” as mentioned on CBS 60 Minutes on July 8, 2007. 

 

     This warning is similar to Steven S. Roach, chief economist at Morgan Stanley, who suggests that we only have a 10% chance of avoiding “economic Armageddon” due to economic distortions and our twin deficits in the U.S.  The Fed policy of reducing interest rates to near zero with sixteen consecutive interest rate reductions beginning in 2001 has now caused the largest speculative real estate bubble in history.  Now that rates have been raised again this is causing the inevitable contraction or bust in the so-called business cycle. 

      So how large is this asset bubble in the housing market?  Outstanding household mortgage debt in the U.S. now totals a staggering $9.4 trillion dollars.  To better appreciate how large this speculative bubble is, from 1950 to 2000 accumulated household mortgage debt totaled $4.8 trillion dollars.  In only five short years, from 2001 to 2006, the American people signed on to an additional $4.6 trillion dollars – a figure that originally took fifty years to amass!  This is very big and very dangerous.  Sub-prime lenders account for 10% or more of this mortgage debt and several companies are beginning to default to their underwriters – typically large banks.  A large bulk of securitized mortgage debt has been sold in credit derivatives markets and a significant amount is being held by foreigners like China and Japan.  The contracting housing bubble is a risk contagion that can easily spread to other capital markets and I predict that this news will get much worse as the year progresses.

      At the same time that the Fed is trying orchestrate a “soft landing” for the economy it is forced to keep interest rates high, or at least high enough to attract foreign capital, but this also slows economic activity in the U.S.  It is a classic Catch-22 scenario.  After every boom there is a bust and it is likely that the Fed will not escape receiving blame for the coming meltdown.  All the while, the Fed is monetizing the national debt at an alarming rate.  So much so that they have suspended the broad money (M-3) reports exactly one year ago (March 2006).  The actual annual inflation rate is continuing at roughly 10% or more.  Another way of putting this is that our currency is being devalued by 10% each year.  How can investors and fixed assets keep pace with this steady erosion, fraud and hidden taxation?  How long will foreigners keep underwriting our debt-based economy and hold on to our U.S. securities and currency reserves?

     According to the London Herald Tribune (2/26/07), among the forty-seven major central banks of the world the Red Chinese hold a disproportionately large amount of foreign currency reserves – nearly $1 trillion.  Of this amount, fully one-third is in U.S. dollars and the Chinese are beginning to diversify out of the U.S. dollar and U.S. securities.  This is a trend that we will begin to see more and also hear more about in the coming months.  In his new book, The Coming China Wars, Peter Navarro points out the inevitable confrontation with the U.S. and China’s willingness to commit economic warfare.  This will certainly happen if Taiwan declares independence from Red China and involves the U.S. in defending this tiny island.  Although there is a virtual news blackout on this tense geopolitical development we can expect that it will become newsworthy starting this year and definitely into 2008.  Pentagon and intelligence think tanks are very much concerned about the coming China wars and China's growing military power.

 

      Recent reports indicate that crude oil demand in China is expected to rise to 7.6 million barrels per day (compared to 26 million BPD in the U.S.).   This represents a 10% increase from 2006, and China’s energy needs will only continue to grow as this agrarian society moves into its thirtieth year of economic reforms that began in 1978.  As I have documented in my book (chapters four to six), China has a strategic alliance with Russia and Central Asian countries including Iran known as the Shanghai Cooperation Organization (see SCO logo above).  The SCO is the NATO of the East and a deliberate counterweight to U.S. hegemony in the region.  The fact that China is commercially allied with Iran is rather disconcerting, not to mention Russia in the region.  Rogue OPEC nations like Iran, Venezuela, and Indonesia could help lead the move towards the petroeuro instead of the petrodollar, and China could very well join in this critical effort.


      It is rather noteworthy that EU bonds have now surpassed U.S. bonds in international bond markets for the very first time (12/06).  Measured in U.S. dollars, the capitalization of European bonds now total $4.836 trillion compared to $3.892 trillion in American securities.  Why is this significant?  This is clear evidence that world markets are beginning to favor the Euro and EU assets and this can, and will, lead to a wholesale rejection of the collapsing U.S. dollar as the world’s reserve currency.  California-based Pacific Investment Management Company (PIMCO) is the largest U.S. bond fund in the U.S., but very few people know that it is owned by Allianz.AG in Germany.  The EU is poised to corner the bond market and soon the European Central Bank (ECB) in Frankfurt will be the most powerful central bank in the world.  America’s financial reckoning day is drawing near with each passing month and Americans need to wake up before it is too late.

 
 

   As I have mentioned elsewhere on my business Web site, Nikolai Kondratieff (1892-1938) demonstrated that Western capitalist societies experience long-term cycles of boom followed by bust.  These grand supercycles generally run about sixty years and the present supercycle began in 1949.  This period from 2007 to 2009 is a very critical period for economic and geopolitical tensions that are beginning to rise to the surface.  Starting in January of 2008 the first cohort of baby-boomers will begin to retire and this will only expose the nearly $66 trillion in unfunded liabilities for eighty million aging Americans.  In 2008 we will also have new elections and political leadership in the U.S.  Someone once said that politicians and diapers need to be changed often – and for the same reason.  It is unlikely, however, that either political party, the Fed, or anyone else will be able to reverse our nation’s path towards economic Armageddon.  Contrarian investors need to watch their investments closely this year and hedge themselves in hard assets, tangibles, foreign currency and other defensive strategies.

 
< Prev   Next >
spacer.png, 0 kB
spacer.png, 0 kB
spacer.png, 0 kB
viagra online sales
brand cialis
purchase cialis
cialis brand name
buy viagra ups
cialis cheap delivery
discount levitra purchase
canadian pharmacy viagra
propecia sell england
natural viagra
cialis levitra viagra
viagra 50 mg
cialis, can
viagra online shop
cialis tablets
buy real viagra online without prescription
viagra for sale without a prescription
order sildenafil online with no prescription
buy pfizer viagra online
large pharmacy discount code
viagra through canada
where to buy propecia
buy cialis online viagra
buy viagra canada
cialis for women
cialis, can
propecia generic canada
viagra cheap canada
levitra canadian
best deal for propecia
buy cialis online australia
generic propecia without prescription
buy cialis canada
daily dosage cialis
female viagra
cnadian viagra india
viagra online without prescription best price
china viagra
buy cheap propecia
cialis next day delivery uk
buy pfizer viagra online no prescription
cheap viagra sales
best price cialis
online pharmacy europe sildelafil
where to get levitra
buy generic cialis online
drug generic propecia
buy cheap viagra online now uk
levitra sales uk
where is propecia manufactured
where do you get viagra from
viagra cialis 69.00
canada propecia prescription
cheap viagra or cialis
canadian levitra
brand por cialis online 100mg
buy cialis without prescription
5 mg cialis
propecia pills
viagra for canada
purchase cialis overnight delivery
canadian pharmacy no prescription needed viagra
cialis on line canada
no prescription viagra
cialis online no prescription
genetic viagra
viagra injectable
buy cialis next day delivery
indian viagra
cheap levitra without prescription
no prescription
viagra online without prescription canada
generic viagra india
cialis profesional
free viagra without prescription
when will viagra be generic
cialis fast delivery usa
online pharmacies
cialis soft tablets
levitra prescription
buy viagra here in the uk
viagra for her
next day viagra
cheap generic levitra
40mg cialis
cheap viagra fast shipping
order cialis online canada
how to buy cialis
cialis 10mg
bio viagra herbal
viagra on line sale canada pharmacy
new canadianmeds
canada meds viagra
generic propecia finasteride
canadian pharmacy viagra
propecia studies
cialis germany
buy viagra generic
buy 10 mg levitra without prescription
cialis canadian pharmacy
propecia lowest price
generic viagra in canada
pharmacy selling viagra in israel
online order propecia
original viagra online
100mg viagra
buy viagra uk
cial is price
buy online viagra
order viagra online no rx prescription
cheap generic viagra online
get levitra online
canada price cialis
viagra from uk
high quality cialis
get viagra fast
we deliver to canada viagra
viagra prescription uk
viagra next day delivery
propecia.com
buy viagra lowest price canada
get cialis online
buying cialis no prescription
cheapest levitra
bruising on cialis
online pharmacy
generic levitra online
propecia fast no prescription
order cialis online from canada
best pharmacy store
purchase cialis overnight delivery
#1 canadian pharmacy online
cialis low price
order levitra
brand cialis for sale
viagra tablets for sale
viagra femele
cheap levitra no prescription
buy now online sildenafil
were to buy viagra
does propecia cause genetic disorders
canadian non prescription viagra
levitra 20 mg
levitra online pharmacy
cialis canada online pharmacy
cialis 20 mg 10 pills
buy levitra
cialis no prescription needed
viagra price
propecia for sale online
cialis vs viagra
buy cialis online
levitra without prescription
purchase cialis overnight delivery
levitra uk
cheap viagra online uk
buy cialis free shipping
online pharmacy australia no prescription
where can i buy viagra uk
buy propecia pills
pfizer viagra online
order viagra 25mg online canada
cialis
viagra buy
buy propecia prescriptions online
buy cialis without prescription
levitra 10 mg without prescriptions
viagra buy uk
viagra price germany
levitra buy online
cost of cialis
viagra ordering canada
purchase cialis canada
online prescription propecia
buy propecia 5mg
viagra original buy uk
generic viagra
canadian cialis
cialis online
viagra online canadiain
is viagra different from levitra
viagra india
buy cheap generic cialis
cialis buy purchase fast delivery
best propecia
viagra online sale
cialis on line india
cialis canadian generic
viagra prices
generic viagra canada
buy online levitra cialis viagra
where to purchase viagra
buy cialis cheap
cialis cost
buy viagra with check
cialis generic
order viagra online
where to find cialis
buy levitra online without prescription
propecia without a prescription
cialis london delivery
online viagra au
how to get viagra from canada
canadian generic cialis
cialis pills online
cialis discount
viagra online india
cialis without prescription brand name
discount cialis levitra viagra
canadian healthcare pharmacy
best levitra price
brand viagra canada online
viagra/usa
cheap fast viagra
25mg viagra
cialis professional
buy 100 mg cialis
cheap levitra tablets
cialis professional 100 mg
pharmacy online
canada pharmacy online no prescription
buy viagra and cilas usa
free viagra sample
cialis online canada
cialis alternative
viagra uk
generic propecia in uk
viagra online shop france
25mg viagra online
viagra buy online
viagra online 50mg
viagra overnight no prescription
viagra canada online pharmacy
best price propecia canada
cialis mexico
cialis 5 mg / canada / cheap
buy viagra cheap
order viagra online with no prescription
cialis germany
buy propecia now
buy viagra without a prescription
buy cialis online canada
buying viagra online uk
buy propecia without prescription
levitra buying
soft tab generic cialis online pharmacy
levitra sale
propecia orders
online pharmacy propecia sale
buy online propecia
buy cialis from canada
cialis next day delivery
buy cialis online
cheap generic viagra india
cnadian viagra india
cheapest propecia uk
cialis online
fast dilivery viagra to canada
buy cialis mexico
viagra buy uk 50mg
cialis dosagem
next day pharmacy
purchase propecia online
viagra online delivered next day
viagra 50 mg
canadian pharmacy cialis pfizer
viagra canada online pharmacy
spacer.png, 0 kB