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Socio-Economics & History Commentary

UK Inflation Smashes Through 3%, Hits 3.5%, Bank of England Says Don’t Panic!

Hyper-inflation monster will rear its ugly head in 2011??

  • My bet is on inflation and a short sharp 6-12 months of hyper-inflation. By hyper-inflation I mean prices going up 10% per month at least. The Bank of England says: don’t panic, they have it all under control!? Yeah right? Why worry about tomorrow when you may not survive today. Nothing has changed essentially. All the policies taken are pointing to significant inflation. And it is clearly intentional, to debase the UK pound to inflate away debts. So, don’t be concerned? Put your hard earned money in hard assets like gold and silver. There is no way central banksters can debase precious metals. They are the currency of choice for 6000 years. Trust in gold/silver or trust banksters? The choice is obvious! Nadeem Walayat opines:
     
    The inflation mega-trend continues to forcefully manifest itself in the continuing surge higher of UK Inflation as measured by the Consumer Price Index (CPI) which soared from 2.9% to 3.5% for January data. Inflation has virtually doubled in a little over 2 months rising from 1.9% for November data to now stand at 3.5%, the surge in inflation has caught the whole mainstream media and academic economists by surprise that barely 2 months ago were still contemplating deflation. The RPI continued its spike higher rising to 3.7% from 2.4% the month before, and the real UK inflation rate as measured by the Market Oracle rose from 2.7% to now stand at 4.3%.
      
    Mervyn King, the Governor of the Bank of England was forced to write a letter to Alistair Darling to explain why he is incapable of doing his job i.e. keeping CPI inflation within the 1% and 2% band. The excuses contained within his latest letter include the VAT rise to 17.5% and rise in petrol prices, both of which he sees as highly temporary. Therefore it will be interesting to see what he writes in the letters to follow during the next 6 months as inflation stays above 3%.
     
    My analysis since November has been warning of a spike in UK inflation as part of an anticipated inflation mega-trend (18 Nov 2009 –     Deflationists Are WRONG, Prepare for the INFLATION Mega-Trend ) that culminated in the forecast of 27th December 2009 (UK CPI Inflation Forecast 2010, Imminent and Sustained Spike Above 3%) as the following updated graph shows today’s inflation rate is virtually exactly inline with the forecast that continues to project towards a sustained trend of above 3% for most of the year (see top chart).
      
    During 2010 the workers of Britain will increasingly be squeezed by the twin forces of inflation and tax hikes that could spark the dreaded wage price spiral that the Bank of England so fears, hence the repeatedly soothing public words that soaring inflation is temporary whilst privately panicking that they have lost control of inflation. Workers under intense pressure could boil over during the summer into serious civil unrest on a scale not seen since the 1980′s, especially after the next general election when the realisation dawns that Britain is EXACTLY where GREECE is in terms of the impact of the debt crisis and requirement for steep tax hikes and severe spending cuts.
     
    Whilst the risk of wage price spiral is still some way off, which usually follows a prolonged period of worker discontent, i.e. a outbreak of strikes right across the country which so far to large extent has yet to materialise as a consequence of the high unemployment following the recession. Therefore the risks of a wage price spiral are more likely to occur during 2011 than 2010 as British workers are forced to endure the pain, the only outlet for which they have is the next General Election. However the government recognising this, is engaged in a policy of bankrupting Britain to minimise voter discontent.

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February 17, 2010 Posted by | Economics, Social Trends | , , , , , , , , , , | Comments Off

Barton Biggs: Head for the Hills!

  • The warning signs are there for all to see. Yet, the majority choose not to see it and are in denial. A generational economic collapse and monetary crisis is coming to America and will reverberate throughout the world. It will be like Argentina’s economic collapse  in 2001/2. It will be alot worse: martial law, famine, economic collapse, society breakdown…. etc. If you will not listen to ‘loony’ bloggers like me, perhaps you will listen to ex. Morgan Stanley Chief Global Strategist, Barton Biggs. I doubt he is a conspiracy theorist or nut job! He is absolutely correct in saying a great crisis and opportunity is coming. The best time to buy is when there is blood in the streets!
     
    Bloomberg reported earlier this week that the former chief global stategist for Morgan Stanley is telling people to prepare for the worst.  One more time folks, this is no conspiracy theorist.  Barton Biggs, MORGAN STANLEY’S FORMER CHIEF GLOBAL STRATEGIST is telling you there is going to be an economic collapse. Read the article below.
      
    Barton Biggs has some offbeat advice for the rich: Insure yourself against war and disaster by buying a remote farm or ranch and stocking it with “seed, fertilizer, canned food, wine, medicine, clothes, etc.” The “etc.” must mean guns.
     
    “A few rounds over the approaching brigands’ heads would probably be a compelling persuader that there are easier farms to pillage,” he writes in his new book, “Wealth, War and Wisdom.”
     
    Biggs is no paranoid survivalist. He was chief global strategist at Morgan Stanley before leaving in 2003 to form hedge fund Traxis Partners. He doesn’t lock and load until the last page of this smart look at how World War II warped share prices, gutted wealth and remains a warning to investors. His message: Listen to markets, learn from history and prepare for the worst.
      …..
    The “wisdom” in the alliterative title refers to the spooky way markets can foreshadow the future. Biggs became fascinated with this phenomenon after discovering by chance that equity markets sensed major turning points in the war.
     
    The British stock market bottomed out in late June 1940 and started rising again before the truly grim days of the Battle of Britain in July to October, when the Germans were splintering London with bombs and preparing to invade the U.K.
     
    ‘Epic Bottom’
    The Dow Jones Industrial Average plumbed “an epic bottom” in late April and early May of 1942, then began climbing well before the U.S. victory in the Battle of Midway in June turned the tide against the Japanese.
     
    Berlin shares “peaked at the high-water mark of the German attack on Russia just before the advance German patrols actually saw the spires of Moscow in early December of 1941.” “Those were the three great momentum changes of World War II — although at the time, no one except the stock markets recognized them as such.”
     
    Biggs isn’t suggesting that Mr. Market is infallible: He can get “panicky and crazy in the heat of the moment,” he says. Over the long haul, though, markets display what James Surowiecki calls “the wisdom of crowds.” Like giant voting machines, they aggregate the judgments of individuals acting independently into a collective assessment. Biggs stress-tests this theory against events that shook nations from the Depression through the Korean War, which he calls “the last battle of World War II.”
     
    Refresher Course
    Biggs has read widely and thought deeply. He has a pleasing conversational style, an eye for memorable anecdotes and a weakness for Winston Churchill’s quips. His book works as a brisk refresher course. What really packs a wallop, though, is his combination of military history, market action, maps and charts. It’s one thing to say that the London market scraped bottom before the Battle of Britain. It’s another to show it.
     
    In May and June 1940, some 338,000 British and French troops had been evacuated from Dunkirk by a flotilla of fishing boats, tugs, barges, yachts and river steamers. The French and Belgian armies had collapsed; the Dutch had surrendered. Britain stood alone, as bombs shattered London and the Nazis prepared to invade. Yet stocks rallied.
     
    Mankind endures “an episode of great wealth destruction” at least once every century, Biggs reminds us. So the wealthy should prepare to ride out a disaster, be it a tsunami, a market meltdown or Islamic terrorists with a dirty bomb.
     
    The rich get complacent, assuming they will have time “to extricate themselves and their wealth” when trouble comes, Biggs says. The rich are mistaken, as the Holocaust proves.
     
    “Events move much faster than anyone expects,” he says, “and the barbarians are on top of you before you can escape.”

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February 17, 2010 Posted by | Economics, GeoPolitics, History | , , , , , , , , , , , , | 2 Comments

Global Warming: Where is the Evidence? Kyoto Anniversary Met With Skepticism !

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February 17, 2010 Posted by | GeoPolitics, Science & Technology | , | 3 Comments

William Engdahl: Wall Street In Death Agony As World’s Financial Fulcrum! Banksters Involvement In Greek Crisis!

February 17, 2010 Posted by | Economics, GeoPolitics | , , , , , , , , , | Comments Off

Kiss That V-Shaped Recovery Good-Bye: The U.S. “Worse Than Greece,”

  • Economist Michael Pento goes on TechTicker to explain the situation in America and how it is worse than Greece. It is a matter of time before American treasury bond market crashes. Yahoo Finance reports:
      
    There’s been many letters and symbols used over the last year to describe the shape of the U.S. economic recovery.  There’s the strong V-shaped recovery; the square root shaped recovery to connote a strong recovery followed by a period of flat to no growth; and the W-shaped recovery favored by those believing in a double dip recession.
     
    Tech Ticker guest Michael Pento has a new twist on the discussion. Pento, senior market strategist with Delta Global Advisors believes this is a tee-pee shaped recovery with the top of that tee-pee having already formed in the fourth quarter.
     
    Pento is negative on America’s near term economic prospects for three main reasons:  too little bank lending, too few jobs and too much public and private debt. “I’ve never seen a v-shaped recovery occur when commercial bank lending was down 7% year over year.  So, small business are not getting loans to create capital goods and to expand and hire individuals,” he observes.
     
    Exacerbating the problems at home, is what he describes, as a weak economy abroad.  With China looking to clamp down on growth, the EuroZone struggling with its own debt problems, Pento asks, “Where is the growth going to come from in demand from overseas?
     
    When he says “demand” he’s referring not only to products and services but also to our growing debt burden.  As the price of servicing our deficit grows, when the Federal Reserve tightens monetary policy, Pento is confident others will realize what he already does: the situation in the U.S. is “worse than Greece.”
     
    The way he sees it, there’s a strong potential for a bond and dollar crisis when China starts selling Treasuries.  “Tell me which shape recovery that will yield for the United States?”

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February 17, 2010 Posted by | Economics | , , , , , , , , , , | Comments Off

   

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