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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: DebtBomb who wrote (33851)	12/28/2010 9:58:23 AM
From: fugeguy	6 Recommendations Read Replies (3) \| Respond to of 71456

OPEC Tells the U.S. Consumer to Drop Dead…Care to Guess Why? 03:33 by John Galt. Filed under: Whatever By John Galt December 27, 2010 While we all enjoyed time with our families this holiday weekend, the nation of Qatar dropped a bombshell headline via Reuters (the link below is via 24/7 Emirates Business) which should be a hint as to how bad the situation in 2011 is going to get for the American consumer: Opec will not hike output in 2011, says Qatar The Kuwaiti and Qatari governments are not the primary representative for OPEC and their minions but when the Saudi government wishes to send a message, the lesser Gulf states are used to send it and in this case the message is loud and clear (from the article of December 25th): The world economy can withstand an oil price at $100 per barrel, Kuwait's oil minister said on Saturday. Asked in Cairo if the global economy can stand a $100 oil price, Minister Sheikh Ahmad Al-Abdullah Al-Sabah said: "Yes it can". Asked if he foresaw a rise in oil production, Sheikh Ahmad replied: "No, more compliance, more compliance". Meanwhile, Qatar's oil minister Abdullah Al-Attiyah said on Saturday he did not expect Opec to meet before its scheduled gathering in June 2011. So why the shift in opinion of the OPEC nations that $80 oil was acceptable and that prices at $100 or higher might just be intolerable for the Western economies, thus hurting the cartel? It could be related to this: The first question most people would ask, logically I might say, is what in the same heck does the balance sheet and reserve expansion of the Federal Reserve Bank of the United States have to do with a flea farting on a camel's butt in the middle of an OPEC desert sheikdom? The answer is: EVERYTHING The price of oil is unfortunately still denominated primarily in U.S. Dollars. Thus the more dollars the American banksters demand to be printed to bail their sorry butts out for bad decisions over the last three years, the greater the likelihood of hyperinflation and thus further dilution of the value of said dollar and destruction of the true value of the primary commodity that the OPEC cartel exports, aka, petroleum and its byproducts. This deterioration in purchasing power could be easily displayed in two graphs, the first one reflecting the price of oil since the approximate start of the financial crisis in the United States: The unseasonable increase in prices might well seem to be just a "fluke" to the mainstream media and those who pontificate that this is all those "evil Arabs" exploiting our "recovery" but the reality is found in the first chart where the central bank has elected to dilute the value of our currency and thus attempt to export inflation to those nations which produce petroleum based products. The inevitable problem with an increase in gas and diesel prices however, is the slowing of the American economic engine and that has been foretold in the two circled regions on the chart below where goods purchased as a whole, including durable and non-durable (Source: BEA GDP and components via the Federal Reserve) which illustrates that with each successive run up in petroleum prices, a decline in goods purchased occurs: This chart basically understates the obvious, the purchase of goods is not a leading but more accurately lagging indicator as to the future economic activity when you compare the price of gasoline and diesel. If you look at the circled areas, a spike in fuel prices lead up to an eventual decline in the purchase of all goods. This spike we are seeing now should and probably will result in a reduction of economic growth in the first quarter of next year and even more dramatic reductions in the second and third quarters. The Bubblemedia will proclaim the higher prices as a result of "demand" and the need for the American economy to keep expanding but the truth is that the monetary infusion is insufficient to do anything beyond inflating commodity prices and destroying what is left of the middle class. Thus I warn once again that the euphoria being expressed by "retailers" and Keynesian idiots will be short lived. The nations that do business with the U.S. are sick and tired of subsidizing our debt and consumerist mindset which means that the line in the sand, pardon the pun, has been drawn. These nations, along with numerous others, are no longer going to import inflation just to keep the American public as a happy customer. The inflation we have been exporting since 2003 is about to come home to roost and sadly for the average American, especially those that are unemployed or underemployed, it will impact at a magnitude unseen since Weimar Germany. johngaltfla.com

To: DebtBomb who wrote (33851)	12/28/2010 10:07:01 AM
From: John	2 Recommendations Read Replies (2) \| Respond to of 71456

I wonder if the currency war will become a physical war... China seems to be preparing in leaps and bounds. China missile may cause power shift ft.com excerpt: New Chinese anti-ship missile that will significantly alter the balance of military power in the Pacific is now operational, according to a senior US commander. Admiral Robert Willard, the top US commander in the Pacific, said the Chinese ballistic missile, which is designed to threaten US aircraft carriers in the region, had reached “initial operational capability”. His remarks signal that China is challenging the US ability to project military power in Asia much sooner than many had expected. The US and other countries in the Pacific region are increasingly concerned at the speed with which China is developing its naval power. Japan, for example, recently decided to refocus its military on the potential threat from China. “So now we know – China’s [anti-ship ballistic missile] is no longer aspirational,” Andrew Erickson, an expert on the Chinese military at the US Naval War College, said in response to Adm Willard’s comments to the Asahi newspaper. Defence analysts have called the Dongfeng 21 D missile a “game changer” since it could force US aircraft carriers to stay away from waters where China does not want to see them. These include the Taiwan Strait where a potential conflict could develop over the self-ruled island which China claims. The land-based missile is designed to target and track aircraft carrier groups with the help of satellites, unmanned aerial vehicles and over-the-horizon radar. Aircraft carriers and their accompanying ships are unable to defend themselves against such a threat. Aware of the missile’s development, the Pentagon has already started considering ways to counter the new threat, including a new concept for more closely integrated navy and air force operations. In September, Robert Gates, US defence secretary, said the development of such a missile would force the Pentagon to rethink the way carriers are deployed. “If the Chinese or somebody else has a highly accurate anti-ship cruise or ballistic missile that can take out a carrier at hundreds of miles of ranges and therefore in Asia puts us back behind the second island chain, how then do you use carriers differently in the future than we’ve used them in the past,” Mr Gates asked. The second chain of islands runs from the Bonins along the Marianas, Guam and Palau, forming a north-south line east of Japan and the Philippines. This line defines what China sees as its “near seas” – waters in which the US navy now frequently operates and are home to US naval bases and allies such as Japan and South Korea. Earlier this year, Adm Willard noted that China’s ASBM was undergoing extensive testing and was close to deployment. Observers believe China started production of missile motors last year and that the Chinese military is preparing a nuclear missile base in the southern city of Shaoguan for their deployment. Defence analysts have also linked several missile flight tests this year to the new weapon, but no conclusive evidence has been available to date. Adm Willard’s latest comments appear to remove any doubts. The term “initial operational capability” as used by the Pentagon indicates that some military units have started deployment of the weapon and are capable of using it. “Beijing has successfully developed, tested, and deployed the world’s first weapons system capable of targeting a moving carrier strike group from long-range, land-based mobile launchers,” said Mr Erickson. Adm Willard said the new Chinese weapon was still not fully-operational and would probably undergo testing for “several more years”. The key remaining step is a comprehensive test of the entire system at sea, which is much more difficult than test flights over land. China also needs to deploy more satellites to ensure seamless tracking of a moving target at sea. But defence experts caution that the weapon would immediately be a threat to US carriers because China could make up for a lack in accuracy by launching larger numbers of missiles.