Wirtschaftsrealität und...

verfasst von Tofir, 22.06.2001, 08:25

eine tiefe Wahrheit von Thomas Jefferson:

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. -Thomas Jefferson





Current Economic Snapshot June 2001 - To Mislead Or Not To.... That Is The Question.


This executive summary on the current state of the Economy is made for the 21st century manager, who needs hard data in a short and comprehensible format.




General Commentary:


The Cabal Gold price suppressors started working early today, in view of the release of the DISMAL trade deficit figures.
And it is not surprising as well that Mr. Greenspan says there is no risk of inflation, since the world is seeing its 2 biggest economies, Japan and the US, in recession for the first time since the early 70's. The world is in the brink of Depression and all we get is misleading information and reports.


However, the foolishness of the current interventionist policies will be fully unveiled and understood when the gargantuan Derivative bubble starts to unwind, perhaps as soon as early next year.
Because, how can everything be all right when the 4 largest banks in the US as measured by assets, have credit exposures to capital ratio in the order of 120% to 1,144 %?
It is a good thing that the small public investors in these companies are ignorant of the danger, so that they can sleep peacefully at night.
In effect, the game is rigged in favor of these behemoths and they will have to be bailed out by the Government with taxpayer's money in a most efficient wealth transfer mechanism. You can count on it, because the only way that you can win in a Casino with the odds 10 to 1 stacked against you is if you are a friend of the owner.


Meanwhile, history repeats itself and oil is being Saddam-ized after Iraq declared the EMBARGO. This will effectively eliminate any chance of OPEC increasing output, and at the same time, will keep Iran and Iraq in good position to call the shots in OPEC decisions. This fall will be very interesting indeed.




Money Supply for May 2001:


M3 up 82.4 billion for the month of May to 7,500.1 billion from 7,417.7 billion.
For the 5 month period of Jan-May M3 was up 5.63 % or a 13.51% yearly growth rate for 2001.


M3 monthly yearly growth rates:


January 15.75%
February 9.86%
March 9.51%
April 17.65%
May 13.33%


M3 average yearly growth rate May 2000 - May 2001 INCREASED to 10.94% from previous month's 10.68% rate.
Since estimated GDP growth for this same period is about 3.4%, REAL INFLATION IS IN THE ORDER OF 7.5% ANNUALIZED RATE.


M1 is showing signs of breaking from the relative deflationary leash it has been subjected to. We shall report next month on it if the trend continues.


GDP:


Q1 GDP growth rate was reported at 2% for the first approximation, 1.3% for the first revision and we expect it to be revised downward further, after the misleading deficit reports of February and March have been corrected upwards.


Q1 GDP growth rate should be revised down to the order of 0.6% - 0.8 % growth rate.




Public Debt for End May 2001:


LOWER debt from 5,661 billion to 5,656 billion. The debt was lower by 5 billion during the last month. The Treasury has apparently been servicing the growth of debt by about 48 billion during the month.




Goods and Services Trade Deficit April 2001:


April's Goods and Services Trade Deficit came at $32.2 billion versus a $33.1 billion in March.
March was revised UPWARDS by a sizable 1.9 billion.
March was originally reported at 31.2 billion, so ALL the reports claiming that the deficit was reduced in April are factually correct, but MISLEADING.
Also, February's deficit was revised upward by a sizable 1.7 billion.
Therefore February's low deficit was misleading as well.




The goods deficit with Canada INCREASED from $4.3 billion in March to $4.6 billion in April.
The goods deficit with Mexico DECREASED from $2.8 billion in March to $2.2 billion in April.
The goods deficit with W. Europe INCREASED from $4.7 billion in March to $5.8 billion in April.
The goods deficit with China INCREASED from $5.7 billion in March to $6.3 billion in April.
The goods deficit with OPEC INCREASED from $3.2 billion in March to $3.7 billion in April.


2001 Yearly projected deficit stands at $396 billion, up 6 billion from last month's forecast, for a projected 7.07% increase from last year's deficit despite the current recession. What this indicator is telling us is that things will get much worse, before they get better.
The pundits forgot about the H2 recovery and are calling now for recovery early 2002.




Inflation:


The Crude Raw materials in the producing chain have increased in price 13.08 % from May 2000 to May 2001. May saw an DECREASE of 2.33 %.


Energy Crude materials have increased in the same period 31.27 %.
MAY saw an DECREASE of 3.72 %.


All commodities inflation is running at 3.80 % from May 2000 to May 2001, despite the manipulation of the precious metals markets.


The PPI (Producer Price Index) for May 2001 yearly average stands at 3.76 %.
Core PPI stands at 1.75 % YTD.
May figure stands at 0.07 % rate increase.


The CPI (Consumer Price Index) for May 2001 yearly average stands at 3.98 %.
Core CPI stands at 2.92 % YTD.
May figure stands at 0.40 % rate increase.


Money Supply Inflation from May 2000 - May 2001 is running at 10.94% a year.


ECI Q1 (Employment Cost Indicator) came in at about 1.1 % or 4.5 % yearly rate.


The Future Inflation Gauge of the Economic Cycle Research Institute, an index that Mr. Alan Greenspan is known to monitor, bottomed out in May apparently.


The FIG, which is an designed to anticipate cyclical turning points in inflation fell to 106.1 in May from 107.3 in April.
The smoothed annualized growth rate of the index increased to -15.7% in May from -15.9% the prior month.


Deflation, being the reverse of Inflation, is still the same coin, except that looked at from the other side.
As prices are lagging by an estimated 6% to 7% the behavior of M3, we have a relative deflation that has the Chairman of the Fed convinced that inflation is not a threat. We would like to know what"is" his definition of inflation, because under the popular notion of inflation, your money starts to loose value against things as time passes by as a consequence of money supply, while with deflation your assets start to loose value against money as time passes by. And when you have relative deflation by virtue of monetary hyper-inflation it would seem to the author that we are all getting a double whammy.


A little reminder:


If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. -Thomas Jefferson




Total Debt and Derivatives:


Total debt for the 12 months from end April 2000 to April 2001 was up 4.76%, down from the previous month's 5.41% rate, from 17,650 billion to 18,491 billion. (Fed Statistics).
This puts the average debt per person at the amazing quantity of $66,600.


Per capita debt DECREASE of $330 this month.


The decrease could be attributed to 2 factors: FED tinkering with the data and or debt destruction through the current recession, as personal savings rate remains negatively flat.


Derivatives keep growing like there was no tomorrow.
Credit Derivatives stood at $35.7 trillion for Q1 while Total Derivatives stood at $43.9 trillion, with the seven largest banks accounting for 96% of them.
Gold derivatives stood at $83.2 billion for Q1, versus 87.5 billion in Q4 2000.
Total credit exposure to capital ratio is 473% at Chase and a mind boggling 1,144% at Morgan.
And this is to the relief of Mr. Greenspan thanks to the bilateral netting between banks and counter-parties.
Without the netting the risk would approach INFINITY. If one domino falls the others will.
However, the Euro finalization at the beginning of next year is sure to cause volatility and noise in the system reminiscent of 1998.
And even though the netting effect has suppressed in THEORY 70% of the exposure, we all know what happened to LTCM with volatility. The THEORY simply did not work.
Gold can indeed also induce MAJOR volatility. Therefore, no surprise that the Cabal gold bashing mongers woke up early today.




Precious Metals:


Gold prices are being contained and manipulated flagrantly.
We sincerely hope that the landmark lawsuit of Reg Howe and GATA will soon produce some measurable results.
Gold derivatives for Q2 should jump substantially accordingly.


It is already apparent that gold investors are counteracting the suppressors.
As reported in the Cafe already, the Australian silver company going down Down Under will complicate things further for the shorts.




Oil and Energy:


The oil market is very interesting these days.
Iraq enforced an export EMBARGO at the beginning of the month to protest on a change of sanctions regime.
Following the same pattern of last year, prices lately have shown some downward pressure, despite the lower production and despite the lower shipments of oil at sea.
Since the supertankers shipping slowdown out of the Middle East started early May, we can expect that the slowdown in supply will hit US shores in July.
This will be good for the independent of the US.
If prices continue to weaken or remain steady, OPEC will not do anything in its early July meeting, effectively putting the control of OPEC oil production at the mercy of Iran and Iraq. Therefore, any escalation of hostilities in the region could prove beneficial to oil prices.


Latest EIA statistics indicate crude stocks are on a downward trend at 315.5 million barrels or 6.2% more than a year ago and AGA statistics show GAS stocks at 1.609 trillion CuF, or 7.7% more than last year.
Total motor gasoline stocks stand at 219.7 million barrels or 4.7% higher than a year ago.


There is a lot of trader talk on the"glut" of gasoline, oil and gas.
All it takes is some little instability such as a tropical storm to get prices spike volatility. Natural Gas produced liquids 7.9% lower in the first 4 months of 2001 compared to 2000. This trend bears watching.
The market is still priced for perfection.




"Azteca de Oro"




Disclaimer:


The information presented by the author is not intended to be used for investment purposes, and it may contain errors.
It is intended only to give the reader an eagle's view of the state of the economy and/or energy markets, as perceived by the author.
It reflects the author's opinion and no representation as to the accuracy of this data and/or opinions is made, as it may reflect on the bias or interpretation of the author.
However, to the best knowledge of the author, the data presented is accurate.

Gruss

tofir


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• Wirtschaftsrealität und... - Tofir, 22.06.2001, 08:25