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US, Japan, New Zealand and inflation/recession conditions, Food and Oil prices – May 2008 summary

Posted by Adrian on May 15, 2008

The US economy desperate for any news that may reinvigorate a collapsing economy that now is clearly in Recession. No bottom to the housing foreclosures is in it’s self a worry, oil continues it’s march upwards. Goldman Sachs called $200 a barrel this year. I agree, I personally see 150+ in the next few months, say July 2008. If China starts to go into a hard landing, and that’s a possibility as exports have had a rapid decline. Oil may decline, but the oil hording that has taken place (globally, namely China) indicate that the 150+ range could eventuate very quickly. With Wall street clinging on to news that the credit crisis is somwhat over (I would say it’s not even half way through). Europe’s greater economy has started to tip downward, UK is in big trouble with a housing bubble that is ready to pop on a grand scale. Spain (also huge housing bubble) now imports water to Barcelona, this is another indicator of the severity of Northern Hemisphere droughts. Food and oil all have had huge impact on inflation in every country in the world. Oil is the big scare, with the 150+ barrel looming. Oil inflation will invertible shoot up food and other service based costs.

The stock markets are still indicating volatility, to me it’s a market that could get a big reality kick – especially when it’s pure speculation that is driving up stock prices. A big correction could be in the works, with the LIBOR rates about to get an overall. In other words corrected, so interbank lending rates could be a lot higher . This could shock the system, especially with the dodgey disclosure of banks and the recent ‘calming’ effect from the Fed’s liquidity into markets. We know the central banks have spent billions bailing out a handful of insolvent banks. All that it take now is a competitor or some leak, or an analyst really showing the dismal balance sheet of a particular bank.

Japan’s machine orders down . Recession now stares down on Japan and New Zealand

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