2008 Economic Crash Reset

[rockgremlin]

This thread is my prognostication. Buckle up...here it comes. 2015 - maybe into 2016 might be a rough ride.


Let's take stock:

-- Oil is now down to under $45/barrel -- and there's no end in sight to the oil glut. OPEC refuses to budge on oil production. Gasoline is now under $2 bucks a gallon at the pump. Sure it's great that gas is cheap, but world economies that are based on petroleum production are taking a huge hit.

-- The economy in the U.S. is good. But everywhere else outside the U.S. is $hit. Some countries in Europe are threatening default, and have been this way for a little while.

-- Commodity prices -- base metals -- especially copper are dropping because demand cannot match supply. Yesterday copper prices dropped as much as is allowable in a single day -- down to $2.55/pound. Copper is in freefall and there's no end in sight. Copper producers will continue to flood the market, but the current global economic slowdown means copper consumption will not match production, perpetuating the current copper glut. This has a domino effect -- the copper producers can't produce at the dramatically lowered prices, so they have to shutter projects and institute layoffs to stay in business.

-- China's economic growth rate is expected to decline this year, which affects commodity prices as China is a huge consumer of raw materials, especially iron and copper.


The writing on the wall points to another global recession -- for some countries they're already there. Only logical that the U.S. should follow suit.

Thoughts?

[Scott P]

For the most part, the only economies that seem to be hurting are those dependent on oil. As far as the drop in metal prices go, a lot of the drop is attributed to China's economy slowing down and the fact that people tend to invest in stocks rather than metals when the stock market economy is up.

Oil prices will go back up and the low prices are only temporary.

Personally, I don't think it is cause for too much alarm, though it's likely that the inflated stock market will likely correct itself in the near future. One thing that could crash the economy is a large scale terrorist attack or a disease outbreak. Unless that happens, or unless another revolution or war takes place, things aren't looking so bad.

[Iceaxe]

I like turtles.

[oldno7]

I would say after yesterday's close and todays follow through, there is a very good chance we have entered a bear market.(lower highs)

Now waiting on lower lows to confirm. The market has only been held up by quantative easing. Hyper inflation is on the doorstep.

I would say rock has good information and is making a reasoned assumption.

[oldno7]

This should also be a concern:

http://theeconomiccollapseblog.com/archives/it-is-now-mathematically-impossible-to-pay-off-the-u-s-national-debt

[Iceaxe]

I would say rock has good information and is making a reasoned assumption.

I concur

[rockgremlin]

From a Bloomberg article today:

"Conditions for the [copper mining] industry are so bad that they’ll probably get to a point where they’re not that different from the downturn following the 2008 financial crisis, Rohr said. Copper’s plunge is leaving the world’s largest mining companies with nowhere left to hide from the rout engulfing commodities and increasing pressure on them to cut spending and dividends."

http://www.bloomberg.com/news/2015-01-14/nowhere-to-hide-for-miners-as-copper-joins-commodity-rout.html


"Cut spending" = layoffs. Labor costs are the highest expense mining companies have, and they're the first thing to get the axe when the market turns sour.

If this downturn is protracted, it could spell very bad news. I'm interpreting it as a bad omen. We've been in a bull market since pulling out of the 2008 recession, and now it may be time to pay the piper.

[witt]

I found the attached article interesting. I don't know what to make of the information, but it is certainly thought provoking

http://todaysmachiningworld.com/this-american-dollar/

[rockgremlin]

I found the attached article interesting. I don't know what to make of the information, but it is certainly thought provoking

http://todaysmachiningworld.com/this-american-dollar/


Interesting article, thanks for the post.

[oldno7]

This will help:

http://www.dailymail.co.uk/news/article-1106382/Europe-plunged-energy-crisis-Russia-cuts-gas-supply-Ukraine.html

[rockgremlin]

This will help:

http://www.dailymail.co.uk/news/article-1106382/Europe-plunged-energy-crisis-Russia-cuts-gas-supply-Ukraine.html

Nothing like military tensions to stir things up and raise prices.

[jman]

Nothing like military tensions to stir things up and raise prices.

Remember, war is ALWAYS good for business.

[Iceaxe]

^^^THIS^^^

[rockgremlin]

Now they're saying copper prices fell too much...ya think?

http://www.bloomberg.com/news/2015-01-16/copper-poised-for-biggest-weekly-fall-in-three-years-after-rout.html

Copper rose for a second day on speculation this week’s plunge to a five-year low was excessive. The metal is headed for the biggest weekly drop in three years amid lower energy costs and concern demand will wane as economic growth slows. Prices slumped 5.3 percent in London on Jan. 14 after the World Bank (http://topics.bloomberg.com/world-bank/) cut its forecast for global growth amid weakness in Asia and Europe. Copper is the worst performing non-energy raw material this year on the Bloomberg Commodity Index, which touched a 12-year low this week. The metal’s 14-day relative-strength index was at 23.1 today, below the level of 30 that signals to some traders and analysts who study charts that prices may rebound. “It ran too far down,” Steve Hardcastle, head of client services for industrial commodities at Sucden Financial Ltd. in London, said by phone. “The market needs to consolidate after the big fall,” and supply surpluses this year may be less than previously estimated, he said. Copper for delivery in three months gained 0.7 percent to $5,667 a metric ton by 11:07 a.m. today on the London (http://topics.bloomberg.com/london/) Metal Exchange. It’s down 7 percent this week, the most since September 2011. Copper for March delivery on the Comex in New York (http://topics.bloomberg.com/new-york/) rose 0.4 percent to $2.568 a pound.

Prices rose yesterday after a surge in China (http://topics.bloomberg.com/china/)’s credit growth eased concerns of slowing demand from the world’s biggest user of the metal. China accounts for 45 percent of global demand, Morgan Stanley estimates. “Copper is heading into 2015 looking much tighter than initially thought,” Standard Bank Plc said in a report today. “Expected losses and disruptions are already mounting.”
On the LME, zinc, aluminum, nickel and tin rose.