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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: t4texas who wrote (41373)	4/4/2005 8:01:19 PM
From: kodiak_bull	Respond to of 206118

T4: As for press reporting of anything, even world economics; it is often marked by a certain amount of lethargy. Like anyone, or even water, they are often driven by a search for the path of least resistance, or to seek its own lower level. Having said that, the FT piece, coupled with some of the bits of China information we have, certainly provides a serious counterpoint to the idea that China will grow at close to double digits for the foreseeable future, or that Chinese demand for energy and commodities will continue similarly. Journalists are trying to analyze China from the most recent historical analogies we have: The tanking of Japan in 1989 (which continues to this day) and the Asian Contagion of 1997. The journalists seem to be asking themselves before they write: will it be more like the one (bogus Japanese banks, insolvent in everything except form) or the other (internal recession bordering on financial panic which dominoes through the region and then to other continents)??? Being lazy, the journalists won't think too hard outside the box, just as they didn't think too hard outside the box during the last 3 years when they were writing about the coming Colossus of China. A couple of things we do know about China in 2005-2006: a change will come and it will have a big impact, at the very least on China. Will it cause a bear market in commodities? Most likely. How severe will that be? Hard to tell. Will it cause these oil prices to fall? Probably. How precipitously? Too soon to tell. I personally don't see that a panic in China will have the kind of knock-on effect for other Asian (or any other region's) demand for oil. If 50 million Chinese workers hit the unemployment lines, how will that depress industry (and therefore, industrial energy demand) in the rest of Asia? China reducing its imports will not, in my mind, do anything to oil other than pressure its price down, but Korea, Japan, the rest of Asia, the Americas--would they suddenly be less thirsty for $45 bbl oil than they were for $55 bbl oil? The last time we had a real drop in energy demand worldwide it WAS sparked by recession and panic in Asia, all across Asia, in fact, but in order to be well-informed, it's probably smartest to be thinking about how this Asian crisis will be different from the two others everyone is thinking about. There is also the chance that an implosion in China may lead to a repeat of falling demand, but for right now I don't see it. If it did, right at the time that every producer there is is trying his best to play musical chairs with $56 oil, then $50 oil, then $45 oil . . . then we could see sub $30 oil quicker than anyone imagined. Kind of the way we are getting to see $60 oil in the next few days . . . Kb

To: t4texas who wrote (41373)	4/4/2005 8:58:01 PM
From: Tommaso	Respond to of 206118

>>>you won't need to read or be swayed by ft.com articles on china's banking system.<<< The problem for me is that I can understand the paragraph quoted by jim_p from the Financial Times but I cannot follow what you are saying. There may be more reliable sources of information than FT, but I do not know what they are. The Chinese are certainly trying to nail down supplies of commodities from outside their country. I have watched while they took over the Sudan oil fields, which may possibly prove to be an extension of Saudi Arabia's, and watched them bid for Noranda. Maybe as Jim Rogers thinks, there will be a slowdown or even crash in China's economy, but it doesn't seem likely that they will stop wanting more and more oil. So no matter what troubles the banking system in China runs into, the demand for oil there will probably remain high and increase. Will high prices for oil cure high prices? Not automatically, it seems to me. Crude at $100 would surely make oil shale projects feasible in the U. S., but so many pilot projects have gone bust in that area that I think such a high price would have to become the standard and the expected future price, before large projects would be put into place. In the mean time, I will be putting more and more of my capital into tar sands projects, which are feasible right now.