Daily Digest 5/29 - UN & Bill Gross Warn of Dollar Crisis, Gold's Future, China's Appetite for US Farmland
- U.N. sees risk of crisis of confidence in dollar
- Gross Believes Not Raising Debt Ceiling Would Crush Dollar
- Another Volcker Moment at Hand? An Appraisal of $1500 Gold
- BBC HARDtalk - Jim Rogers Interview (part 1)
- Biggest Inflection Point of the Year
- What To Do With All The Nuclear Waste
- China is ravenous for farmland: Attempting to buy up millions of acres here
- Estimating the critical levels of petroleum consumption necessary to sustain the modern food production system
The United Nations warned on Wednesday of a possible crisis of confidence in, and even a "collapse" of, the U.S. dollar if its value against other currencies continued to decline.
In a mid-year review of the world economy, the U.N. economic division said such a development, stemming from the falling value of foreign dollar holdings, would imperil the global financial system.
PIMCO's Bill Gross appeared on CNBC's Squawk Box Friday morning. In his appearance, he echoed statements made by Treasury Secretary Timothy Geithner, President Obama, and Federal Reserve Chairman Ben Bernanke, stating that if the U.S. defaults on any future debt payments--even for a period of just six days--there will be disastrous consequences for the dollar.
Warning that such an event would amount to a default on the U.S. dollar, he predicted that if the debt ceiling is not raised, the world will switch to a different reserve currency in short order.
In any given market, it is essential to ask “what is reflected in the price?” This admonition is as true for gold as it would be for any particular stock, interest rate, credit default swap, junk bond, or farm acreage. Market prices are the sum total of known facts, opinions, sentiment, and expectations. The point of investing on the basis of contrary opinion is to take advantage of unexpected change.
Stephen Sackur talks to one of the world's most influential investors. Aged five, Jim Rogers was selling peanuts for profit; he became a hedge fund pioneer, a commodities trader and, years ago, he shifted much of his money, and his family too, out of the US and into Asia. But can even this maverick investor see new opportunities in a world riddled with economic uncertainty?
We need some brave leadership and knowledgeable decision making in the UK and elsewhere to bring back our manufacturing from China, enact agricultural and energy reforms and the necessary fiscal and monetary control/planning. Maybe then Jim would bring back some of his money to invest here given the opportunity.
Typically there are a few major inflection points in the year where assets either switch gears and reverse their prior trends or undergo an acceleration of their current trend. One of the key themes that have often marked these inflection points over the last few years is the general trend of the USD. At present the USD is at yet another major inflection point and what it does from here will have direct implications for not only asset allocation (bonds, stocks, commodities, currencies) but also sector allocation (cyclicals, non-cyclicals).
This week the International Atomic Energy Agency (IAEA) visited Fukushima Daiichi, to investigate the accident, and TEPCO’s emergency response actions. At Fukushima, massive amounts of high radioactive waste have been created, with no clear plan for long-term or permament storage. Spent nuclear fuel is about 95% Uranium, another 1% consists of heavy elements such as curium, americium, and plutonium.
As of May 18th 2011, almost 100,000 tons of radioactive water had leaked out of containment at Fukushima. The data also shows that the amount of radiated water may double by the end of December.
As a comparison, it is estimated that the United States has 71,862 tons of waste, according to state-by-state numbers obtained by the Associated Press. .
It's no secret China has been buying up vast amounts of natural resources like gold, copper, oil, and coal in recent years.
As more and more of its people begin eating meat, the country has now turned its attention to securing millions of acres to grow its own soybeans and other crops necessary for animal feed.
In Part 7, I examined the relationship between increasing global population and global petroleum production rates and found that they have a very strong linear correlation.
Based on this correlation, and suggestions that the Green Revolution in food production and delivery was made possible by petroleum consumption, I hypothesized that the increase in petroleum production was the cause of the increase in population. I further hypothesized that, because petroleum exports and production are likely to continue to decline in the near future (Part 5 and Part 6), there could be an immediate decline in population that follows the previous correlation between increasing global population and global petroleum production rates, but in reverse. An alternative hypothesis I posed was that global population will continue to increases, even in the face of declining petroleum consumption, possibly through further gains in the efficiency of the food production system.
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