Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (10672)	8/13/2004 2:09:21 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Natural Gas Outlook As our 47-company 2Q04 survey shows, U.S. publicly traded oil and gas companies are now showing a 3.8% year-over-year gas production decline. ......... lots of text, charts, NG drillers, and other stuff ......... Conclusion Our bullish North American energy thesis has been, and continues to be, centered on the underlying problem of falling U.S. natural gas production. Much like in the 1970s, when oil production continued to fall, regardless of how many rigs were drilling, we think we are nearing (if not at) a similar crossroads in the U.S. gas supply picture. Given the inherent rate of decline in U.S. gas wells today, combined with what is still a muted response to drilling activity, we expect domestic gas production levels to continue trending south for the next several quarters. While this trend will almost certainly be led by the majors, the independents may not be able to reverse it as fast as many people might believe. While short-term gas prices and oil/gas price ratios should continue to be volatile, if oil prices remain near the $40/Bbl level, that would imply fair value for gas above $7/Mcf. read the article here: beacon1.rjf.com

To: Knighty Tin who wrote (10672)	8/13/2004 2:28:53 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

More from Heinz Date: Fri Aug 13 2004 11:24 trotsky (strat) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved note: the basic laws of economics are immutable. they don't depend on externalities like the size of one's military machine. to illustrate this argument, let's say China decides to dump its dollar reserves and buy gold and euros instead. in what way could this be ameliorated by the military? can one bomb China back into the dollar camp? similarly, the 'reserve currency' status is a potentially great danger in the long term, even though it's a short term boon. this is illustrated by the former British Empire's pound, which inhabited the 'reserve currency' status prior to the dollar. the demise of the pound eventually hastened the demise of the empire. the dollar enjoys the reserve currency status only as long as foreign creditors believe their claims can be cashed in. granted, this belief is not in immediate danger. but with foreign dollar claims piling up at frightening speed, the day the con game ends draws closer and closer. Date: Fri Aug 13 2004 11:00 trotsky (cjk) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "Exports had the biggest decline since September 2000, suggesting that other economies aren't expanding as rapidly." this is a misintepretation. since it is all done on credit, it only means that the domestic US credit bubble has been expanding very rapidly. exchanges of nothing for something are not wealth-creating activities. they consume wealth. Date: Fri Aug 13 2004 10:53 trotsky (Gourmet Dan, 8:44) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "we own these fools" that would be nice, but it's exactly the other way around. the 'fools' are the ones who have the production facilities, while you only have depreciating paper to offer. no doubt the creditors can, and probably will, eventually be stiffed on their dollar claims, but they'll still own the production facilities. they will simply have to alter their m.o., from their mercantilist export orientation toward domestic consumption of their output. note that your capacity to import their output depends entirely on whether they're prepared to lend you the money to do so. once they stop lending the money, the printing press mojo stops working, since the paper then won't buy anything anymore. just to clear up the confusion as to who owns whom.

To: Knighty Tin who wrote (10672)	8/13/2004 5:01:35 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Plunger on interest rates Along with the trade issue we have inflation arising from commodity price appreciation from demand in Newly Industrialising Countries. This price action is causing the Fed to raise rates to counteract it. Let's think about this. If there was general price appreciation driven by excess demand in the US then yes the Fed raising rates might be the right thing to bring back equilibrium. But as the US becomes a smaller and smaller part of the world economy, the Fed is going to have to constrain US demand a lot more in effect offsetting the recent demand growth from NICs. It seems to me firstly that this is nuts, the Fed won't crucify the US economy to save the global price of copper going up. Or oil. Secondly, they won't be able to raise rates any more because of the debt-berg. Only servicing costs at today's interest rates are within historic bounds relative to incomes, the actual level of debt is enormous. Thus interest rates have to stay low. If rates don't stay low, a vast swathe of the economy becomes stressed. It's OK the Fed squeezing marginal borrowers, but if you're in debt along with 60% of the population, you're OK because no-one gains if you're all forced to file bankruptcy. So rates have to stay low and the US keeps buying stuff from abroad ... so the USD is losing value and the US economy shrinking relative to the world ... I reckon the USD becomes irrelevant quite soon which means people like me (foreigner holding USDs for the convenience) will move on. But to what I'm not sure.