Posted on 08/25/2015 7:15:06 AM PDT by dennisw
“If you go back to December of 2011, the price of iron was $190 a metric ton. Now it's down to $44. We remember the price of oil being up at $140 some dollars and now it's the low $40,” he said. “This is a very significant indication of weakness in the global economy.”
The current global stock-market crash is eerily reminiscent of the Wall Street crash of 1929, investment expert and author James Dale Davidson told Newsmax TV.
“What we're seeing, if I could say it this way, is a rerun of 1929 with the main crash falling in Shanghai rather than in Wall Street,” he told “Newsmax Prime.”
“If you're not scared, you're not watching,” he said. “Since the last time I was on Newsmax TV on the 11th of August to discuss the Chinese devaluation, which was a small step, I said it was only the beginning of a major change that was going on. And since that time, $5 trillion have gone to money heaven, which is a significant change,” he said.
As to what to expect in the future, he explained that the answer can be found in the past. Specifically, the Wall Street crash of 1929.
“If you look back at these economic crises and stock market collapses that are associated with depressions, the first stage is what we've already seen, which is the big fall off in commodity prices,” he said.
“If you go back to the Great Depression, it didn't start in 1929 in all the countries, he said.
“It started in 1928 in Australia and in Argentina and Brazil, Uruguay, and Finland, Bulgaria, and in Germany. The depression had already begun by 1928 and then we had a huge, huge sell-off in Wall Street,
(Excerpt) Read more at newsmax.com ...
which sort of rang the bell so that anybody who was not watching then knew” that we were in deep trouble.
“We’re into this same kind of cycle as it relates to the collapse of world demand, the fact that we’ve had commodity prices plunging,” he said.
And while it’s human nature to think that tumbling oil prices are a good thing, it’s often a mixed blessing.
Already trading at six-year lows on a prolonged slump, U.S. crude fell $2.21 Monday to finish at $38.24 per barrel.
Oil hadn’t closed below $40 since February 2009, although it briefly traded below that level on Friday. Monday’s closing price was the lowest since Feb. 18, 2009, the AP reported.
“It is a good thing if you’re buying gasoline. It is not a good thing if you’re pumping energy from the ground,” he said.
“If you’re looking at the employment numbers in the United States, where did employment grow during this so-called recovery that we’ve been living through for the last six years? It grew in areas where they were drilling oil. It didn’t grow any place else,” he said.
“And this is probably not a coincidence because there really hasn’t been that much vigor in our so-called recovery and probably it’s going to go back down again.”
I don’t doubt we have serious problems but these gloom and doomers are all over the Internet scaring everybody. fear is good business for gold sellers especially. iron was at 190 as a result of the heavy printing from QE so it was a huge bubble as much as anything.Yes there was heavy demand but that was also from the bubble credit economy in China. Who knows where the real prices are, we may never know because the central banks have completely f’d up everything. The more they lose control the more volatile it’s going to get.
I beg to differ. The global puppetmasters now have the technology to rig the game in real-time.
We had deflation from 1920 on, because the Fed didn't do its job of keeping the money supply constant with increases in GNP/production.
The Fed did not play by the rules of the gold standard, which required prices to rise on the American side to offset falling prices in Europe. Gold WAS flowing in, but as Milton Friedman correctly showed, the Fed just sat on it.
The Crash sparked concerns, but it was Hoover's big gubment policies that started to make the Depression permanent, especially the RFC. He also hiked taxes.
Then FDR came in with a host of disastrous policies that ensured we would never get out of the Depression short of war, especially high taxes and the minimum wage law.
To some extent, falling commodities prices everywhere reflect he abundance of commodities and the relative ease of getting them (particularly oil). Crude may well go lower. The rise of shale production exponentially expanded the amount of gas and oil available, but that also sparked a defensive counter by OPEC oil producing countries to try and get the last ounce of wealth they could out of their fields.
The question few people want to---or perhaps better---are unable to address is, "if the Fed has 'inflated' the money supply so badly and if we're in so much debt, then why are we still battling DEFLATION?"
I don't know. One answer might be that despite traditional productivity statistics, we are rapidly becoming so productive that prices can't catch up.
I may have suggested this before, but traditional free-market economists look at something like a phone in 1970, then a phone in 1980, and look at how much the price fell and measure progress/productivity by that. But the problem is that with computerization of everything, phones aren't phones. They are tvs, GPS devices, game systems, cameras, and on and on. I do NOT think the valuation system has been able to properly assess those changes. But I'm sure open to other explanations.
IOW by flooding the world with money the Fed and other central banks have ruined accurate price discovery on such things as iron commodity
Well, that prophesized communication device became reality about 10 years ago with the Palm Treo, Windows Mobile and Blackberry devices, and the modern Apple iPhone and Google Android cellphones are a maturation of that idea.
I asked my father once whether he realized in 1929 when financial people and high fliers were jumping out of windows that he would also be affected .
He replied that he did not. His customers assured him that they would build that new plant. They were putting off the start of construction for a few months, but definitely would build it.
His next call would tell him that they were not going to buy that equipment today, but come back next month....
And so on and so on as he traveled from one customer to another.
It was 1932 before he realized that those new plants were never going to be built and those new machines would never be purchased.
And by 1932 he had spent all of his savings chasing deals that never were going to materialize.
And most of his customers went broke as well.
It was sort of a financial version of “First they came for the xxxx but I did not worry for they came not for me.”
I think that is what we are seeing now. A slow erosion of wealth that takes us down a few at a time, but because we are still “OK”, we keep going not realizing that we could well be next.
Unrestricted free trade only works when every nation who is involved has the same financial structure, the same business ethics and the same goals in general.
We are seeing that in the EU. How can the EU possibly be a success when countries as diverse in work ethic, personal character, etc., as Germany and Greece?
We are going to end up with a financial reset, world wide.
As for all of the smart people who tell me that free trade is the way to prosperity, my reply is that I am old enough to remember the days before free trade was the rage and I certainly enjoyed life a lot more and made a lot of money when we were selling to and buying from each other.
But it’s not just phones. Not only did the scanner at the grocery store take the place of many clerks at the register, but it accounted for inventory and ordering, reducing jobs there too.
“The question few people want to-—or perhaps better-—are unable to address is, “if the Fed has ‘inflated’ the money supply so badly and if we’re in so much debt, then why are we still battling DEFLATION?””
I’m not really seeing deflation, what I see are prices correcting for certain items that were heavily invested in, as people are selling them off. If it were deflation, I think we’d be seeing a more general drop in prices.
Now, I don’t pay any attention to the inflation statistics anymore, since they do not tend to match up with reality once the government is done playing games with them. However, the prices in the grocery store have been rising steadily for about a decade (often hidden by slowly shrinking the product size instead of raising the sticker price). Go to buy a car, they charge you more money for less car, and that’s been going on for quite a while too. Housing prices have been rising steadily the last few years as well, despite the fact that we are just a few years past a huge correction in that segment. Those are all signs of inflation, to me.
speaking of oil, I have yet to see the prices really drop....yes, its cheaper than 2 yrs ago, but still quite high......
Seems headed in the right direction though. Gas is 2.17 a gallon less than half a mile from my home, more or less in the center of in DFW metro.
I think you’re right, especially in terms of sizes. But as spread over 10 years it ain’t much, especially if it should somehow be “representing” or be a symptom of supposedly massive debt.
However, I don't think that postpones things forever, unless the economy starts growing rapidly. One day those bills will come due, and the inflation might hit us all in a wave.
I had a chance to talk with my grandfather who was 34 in 1929. The big take away from that was prices for everything dropped, but no one had any money to buy anything. The economy rotted from the inside out.
The problem is not only China, it’s the U.S.
Our government is bloated beyond comprehension, time for drastic cuts - reduce agencies and people and payroll and eliminate overly generous unrealistic defined benefit plans that are funded with taxes.
Set a goal of immediately freezing overall government spending and redistribute funding to necessary government functions and allow other spending programs to wither on the vine.
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