Crude Oil Down Almost 5% Today
Crude oil has collapsed under $65 to a new five-year low on predictions that oversupply would keep building until 2015. Indeed, We are preparing a special report on Energy. Some people have assumed this is a covert manipulation to bankrupt Russia. This is not true. We are in the last throes of the collapse in Socialism. Everything everyone has counted on is being torn down leaving sheer chaos behind. The collapse in energy will severely impact the Middle East. Oil producing countries have counted of high revenue and expanded their budgets. The collapse in oil forces them to pump more to make up the shortfall in budgets. Hence, S&P downgraded Saudi Arabia. The feeling in Qatar generally one finds also that perhaps the decline economically has begun.
The panic cycle was due this week. I have warned that a year-end closing below $75 will signal a serious trend change is potentially on the horizon. However, the critical support lies at $57. A year-end closing below this will signal a massive collapse a deflationary cycle will impact the oil producing regions. This will spark the old Texas-NY Arbitrage. When NY booms, Texas does into Depression. When Texas booms, the tables are reversed.
Big Bang 2015.75
Numerous emails have been coming in about what is “Big Bang” that we originally forecast at the 1985 Conference. To put this in plain cyclical terms, there has not been a trend that lasts for more than 26 years without serious change.
Originally, the depression that followed 1873 lasted for 26 years with reactions of course until the major bottom in 1899 when interest rates reached nearly 200% in the USA. This depression was originally called the “Great Depression”. That total was switch to the “Long Depression” after the collapse from 1929 into 1932. This decline was protracted because of the Silver Democrats trying to support the silver miners. They overvalues silver fixing the ratio at 16:1. The hope was to force silver to rise, but in fact the opposite took place.
We warned that Japan would enter a Great Depression that would also last for 26 years from 1989.95. The final low for Japan economically should materialize in 2016. This is where Japan may see a dramatic political shift akin to Britain abandoning the gold standard on Monday, September 21st, 1931. Britain leaving the gold standard even demonstrated to the world that austerity supports bonds holders at the expense of the people. September 21st, 1931 was an historic date; the suspension of the gold standard in Great Britain came only after the six years of painful effort of austerity followed the country’s return to gold in 1925 out of pride rather than practical economics.
We warned that 26 years from 1985 and the birth of the G5 at the Plaza Accord would mark the start of the economic decline. This gave us the target of 2011 – the breakout for the Dow. However, the target for Big Bang would be 31.4 years from the Plaza Accord. That brought us to 2016.
After the first of the year we will be issuing a Special Report in Big Bang and what we face the other side of 2015.75. The traditional analysis will preach that the stock market will crash. However, that may have been the events in 1929, but what happens when the crisis is in government? Will the stock market crash and then you run to government and pay them 5% to hold your money with negative interest rates?
It takes a major historical database to track HOW capital responds under different set-ups. It is not a one dimensional world with just 1929 as the outcome. Nor is it a hyperinflationary world of Revolutionary Germany and the collapse of the Dmark. If the future were truly that simplistic to figure out, then everyone can do that so why bother with any analysis?
We will let clients know when this report is ready for delivery. It will be an eye-opener to say the least. Once we have the year-end closings, the report will be set to roll.
1906 San Fran Earthquake Impacted Outflow of Capital From Germany
The nice think about our clients is the global diversity. From Germany, a reader informs us about the claims for the 1906 San Francisco earthquake also send capital flows pouring from German insurance companies to California. Indeed, the economic trends in Germany were set in motion at this time as well. I can confirm that there was a deflationary decline that certainly contributed to World War I. I have stated that when the economy does well, everyone is fat and happy. When the economy turns down, government are desperate to create war for the alternative is civil uprising against their policies. With this distinct trend in mind, now read what was sent in from Germany.
Marty,
Not just from East to West but also from Europe to SF: Munich Re and Allianz provided the bulk of reinsurance money to rebuild the city. I have to check again how much it was but it was such an amount of capital that Munich and even Germany started suffering from deflation. Maybe one more of the many reasons that eventually led to war in 1914.
Risk Management
A Coming California Earthquake?
California’s Drought Ranks Worst in at Least 1,200 Years. The flooding that is taking place warns of something else. The major earthquakes correlate to these periods of extreme drought and then extreme rainfall. That may place added street on the fault lines. We warned last April that there is a rising trend in magnitude. Our models correlate everything and as such this correlation between earthquakes, drought, and excessive rain fall is something that warrants much more study. As the Economic Confidence Model turns down, we should be aware that it appears the ECM includes nature.
The 1906 San Francisco Earthquake disrupted the capital flows and send capital rushing from East to West. This resulted in bank weakness in NYC and eventually failures in 1907. That set in motion an investigation and the the birth of the Federal Reserve with 12 independent branches to manage the capital flows.
It was WWI that altered the structure of the Fed first directing it to buy government bonds and then Roosevelt usurped the power of the Fed centralizing it in Washington ending the very purpose for the 12 branches. With each crisis Congress keeps changing the Fed and has never returned it to its original purpose.
Natural disasters are important. We have included these events into our database so that Socrates can correlate everything to establish definitive relationships. Hence, we are warning of a correlation that appears to increase the rise for a major earthquake in California. This could seriously disrupt the economy and set in motion a sever economic decline post 2015.75.
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