Category: The Big Picture

Failure of western democracy, tensions between the US and China, the Arab Spring and other major global events.

Posted on

You can't borrow yourself out of debt: The Secret of Oz

“You can’t borrow yourself out of debt any more than drink yourself sober.”

Bill Still on the on-going debt problem and the solution proposed by L. Frank Baum in the Wizard of Oz.

Comment:~ The solution proposed is not a magic bullet. Money printed by Treasury, whether in the form of banknotes (“scrip”) or tally sticks, is still Treasury debt; Treasury effectively borrows when the currency is issued in payment and settles when the notes are presented in payment of taxes. It also debases the currency, though not as fast as debt created by the banks. This video serves as a reminder that we still have not solved the global debt problem — merely postponed the inevitable by issuing further debt.

Posted on

Nouriel Roubini's Global EconoMonitor » Scary Oil

Nouriel Roubini: The last three global recessions (prior to 2008) were each caused by a geopolitical shock in the Middle East that led to a sharp spike in oil prices. The 1973 Yom Kippur War between Israel and the Arab states led to global stagflation (recession and inflation) in 1974-1975. The Iranian revolution in 1979 led to global stagflation in 1980-1982. And Iraq’s invasion of Kuwait in the summer of 1990 led to the global recession of 1990-1991.

Even the recent global recession, though triggered by a financial crisis, was exacerbated by spiking oil prices in 2008. With the barrel price reaching $145 in July of that year, oil-importing advanced economies and emerging markets alike faced a recessionary tipping point.

……..Oil is already well above $100/barrel, despite weak economic growth in advanced countries and many emerging markets. The fear premium might push prices significantly higher, even if no military conflict ultimately takes place, and could trigger a global recession if one does.

via EconoMonitor : Nouriel Roubini’s Global EconoMonitor » Scary Oil.

Posted on

Ray Dalio on global deleveraging, growth and inflation

Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, speaks with Matthew Bishop, US business editor and New York bureau chief for The Economist:

[gigya src=”http://c.brightcove.com/services/viewer/federated_f9?isVid=1″ bgcolor=”#FFFFFF” flashVars=”videoId=1491113553001&playerID=57825992001&playerKey=AQ~~,AAAADXaozYk~,BawJ37gnfAnGoMxEdQj_T9APQXRHKyAC&domain=embed&dynamicStreaming=true” base=”http://admin.brightcove.com” name=”flashObj” width=”486″ height=”412″ seamlesstabbing=”false” type=”application/x-shockwave-flash” allowFullScreen=”true” swLiveConnect=”true” allowScriptAccess=”always” pluginspage=”http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash”]

Posted on

Treating China as an enemy – Telegraph Blogs

Ambrose Evans-Pritchard: China remains poor, with a per capita income of just $7,000. It faces the classic “middle income trap” in a few years time when the low-hanging fruit of catch-up growth is exhausted. The country will soon have to make the switch from copying technology to cutting-edge invention, the challenge that has defeated so many economies over the years and made a mockery of so many extrapolation curves.

As the World Bank warns in its latest report (out Monday), China risks coming down to earth with a thud unless it breaks the state stranglehold on investment.

My own guess is that China will go through a nasty little hangover as it purges toxins from the great credit boom of the last five years, before settling down to more pedestrian growth rates. It will be a big economic power, but not so vast it upturns the whole global system. It risks becoming old before it is rich.

via Treating China as an enemy – Telegraph Blogs.

Comment:~ The main threat from China is not military but economic. It has the potential to destabilize the global economy through its aggressive currency/trade policies. If the major players are able to resolve this, we are likely to see a scale-back of current tensions.

Posted on

The link between cosmic rays and cloud formation ~ Center for Sun-Climate Research

For more than 20 years, satellite records of low-altitude clouds have closely followed variations in cosmic rays (diagram 1). Just how cosmic rays take part in cloud-making appeared in the SKY experiment, conducted in the basement of the National Space Institute. Electrons set free in the air by passing cosmic rays help to assemble the building blocks for cloud condensation nuclei on which water vapour condenses to make clouds

Cosmic-ray Intensities and Low-level Cloud Formation
1. Red depicts cosmic-ray intensities and blue, the low-level cloudiness

via Center for Sun-Climate Research.

Comment:~ It is important to bear in mind that the researchers do not exclude man-made warming, but treat this as one of several factors that influence climate change:

“The significant contribution from solar activity variations to global temperature increase does not, however, exclude other contributions to the rising global temperature, natural as well as human. However, taking into account the large uncertainty associated with the estimated human contribution, a good research-based estimate of the range of natural climate variations is an essential information. The NSI is focused on establishing the best possible and scientifically based evaluation of the size of solar induced effects on climate.”

Posted on

Climate change during the Earth’s history ~ Center for Sun-Climate Research

On long timescales the intensity of cosmic rays varies more emphatically because the influx from the Galaxy changes. During the past 500 million years, the Earth has passed through four ‘hothouse’ episodes, free of ice and with high sea levels, and four ‘icehouse’ episodes like the one we live in now, with ice-sheets, glaciers and relatively low sea levels.

Nir Shaviv of the Hebrew University in Jerusalem, together with Ján Veizer of the Ruhr University and the University of Ottawa, links these changes to the journey of the Sun and the Earth through the Milky Way Galaxy. They blame the icehouse episodes on encounters with bright spiral arms, where cosmic rays are most intense (diagram 3).

Changes in Tropical Sea-surface Temperatures over the past 500 million years Compared to Cosmic-rays Intensities

3. The red curve shows changes in tropical sea-surface temperatures over the past 500 million years. In the blue curve, drawn upside down to match, cosmic-rays intensities have varied according to our position relative to the Galaxy’s spiral arms. After Shaviv and Veizer

More frequent chilling events, every 34 million years or so, occur whenever the solar system passes through with the mid-plane of the Galaxy.

via Center for Sun-Climate Research.

Comment:~ What does not appear to be adequately explained is the divergence between tropical sea-surface temperatures and cosmic ray intensities in the latest cycle.

Posted on

Concerned Scientists Reply on Global Warming – WSJ.com

Science progresses by testing predictions against real world data obtained from direct observations and rigorous experiments. The stakes in the global-warming debate are much too high to ignore this observational evidence and declare the science settled. Though there are many more scientists who are extremely well qualified and have reached the same conclusions we have, we stress again that science is not a democratic exercise and our conclusions must be based on observational evidence.

The computer-model predictions of alarming global warming have seriously exaggerated the warming by CO2 and have underestimated other causes. Since CO2 is not a pollutant but a substantial benefit to agriculture, and since its warming potential has been greatly exaggerated, it is time for the world to rethink its frenzied pursuit of decarbonization at any cost.

via Concerned Scientists Reply on Global Warming – WSJ.com.

Posted on

Robert Kagan on Why the World Needs America – WSJ.com

Many foreign-policy experts see the present international order as the inevitable result of human progress, a combination of advancing science and technology, an increasingly global economy, strengthening international institutions, evolving “norms” of international behavior and the gradual but inevitable triumph of liberal democracy over other forms of government—forces of change that transcend the actions of men and nations.

……But international order is not an evolution; it is an imposition. It is the domination of one vision over others—in America’s case, the domination of free-market and democratic principles, together with an international system that supports them. The present order will last only as long as those who favor it and benefit from it retain the will and capacity to defend it.

via Robert Kagan on Why the World Needs America – WSJ.com.

Posted on

Living In A QE World | Jim Bianco

Central banks are ruling markets to a degree this generation has not seen. Collectively they are printing money to a degree never seen in human history.

So how does this process get reversed? How do central banks pull back trillions of dollars of money printing without throwing markets into a tailspin? Frankly, no one knows, least of all central banks as they continue to make new money printing records.

…..When/If these central banks go too far, as was eventually the case with home prices, expanding balance sheets will no longer be looked upon in a positive light. Instead they will be viewed in the same light as CDOs backed by sub-prime mortgages were when home prices were falling. The heads of these central banks will no longer be put on a pedestal but looked upon as eight Alan Greenspans that caused a financial crisis.

via Living In A QE World | The Big Picture.

Powered by WordPress / WordPress Maintenance By WPSmart