Summary: Yesterday we asked if food prices will continue to rise, destabilizing the third world? Today we ask the same question, with the Sun as the suspect. This takes us to the frontier of science, beyond the cartoon certainties fed to us by the news media. This is un-news, hidden from the public as these uncertainties challenge the story of human-emitted CO2 as the driver of Earth’s climate. If the sun continues to slow, and if that cools our world, then the resulting cool phase will send food prices on a one-way trip to the moon, which will rock the world. But despite the confident assertions on many sceptic website, this remains just speculation. One of the many shockwaves (low probability, high inpact) scenarios for which we should prepare — but not panic.
It’s February already! When I was just 19 someone told me that when I turned 21 the speed at which time elapses would double, and then when I turned 45, it would double again. With January gone in a blink, the subjective acceleration of elapsed time is confirmed again. It makes me aware of how little time any of us have in our brief spans of life, and so how important it is to think forward to the future we help to create.
Summary: Riots around the world in 2008 and this year show the effects of rising food prices. There are many drivers of prices — increasing consumption, under-investment, pests/disease, weather. And despite the propaganda, cool cycles usually cause more harm than warm cycles. In this series we examine two wild cards, potentially causing years of cool weather. Today: decadal climate cycles. Tomorrow: solar cycles. At the end of this post are links to more information about the emerging food crisis and global climate cycles.
Summary: One of the saddest aspects of the Internet is that it so often fails to make us smarter. In a mutant version of Gresham’s Law, loud amateurs too-often drown out the voices of experts. Here we have an excerpt from a 1975 book that tells us more about Peak Oil than a typical dozen posts on most peak oil websites. It’s an example of expert knowledge effectively lost to society by the proliferation of mental chass. At the end are links to more on this subject.
Three days ago we noted that in just the first week of January, the US Mint had sold 2,221,000 ounces of silver “a number which if run-rated would be an absolutely all time monthly record,” A quick glance at the tally today, shows that something very scary is going on. In the subsequent three days, the number has surged by 50% and has hit 3,407,000 ounces of silver! In just the first 12 days of the month we have already surpassed the total monthly sales of 9 separate months of 2010.
The most recent figures for Chinese gold consumption have just been released, and my goodness they’re large. The figures are up 480% on last year to 209.7 metric tons in the past 10 months, accounting for 10% of global production.
Summary: Readers of the FM website respond to its contents with a flood of comments (emailed or using the comment form). Mostly critical, appropriate to it content — speculation about the topics on the edge of the known. Some brilliant. Some illustrate why America might have a very difficult time in the coming years. Here we discuss responses to About the coming large rise in food prices. Links to more information appear at the end.
Summary: Rising food prices might be one of the most important geopolitical trends of the decade. This is another post in a series, describing the causes and effects; links to other chapters appear at the end.
With just over a week left to the QE2 announcement, discussion over the amount, implications and effectiveness of QE2 are almost as prevalent (and moot) as those over the imminent collapse of the MBS system. Although whereas the latter is exclusively the provenance of legal interpretation of various contractual terms, and as such most who opine either way will soon be proven wrong to quite wrong, as in America contracts no longer are enforced (did nobody learn anything from the GM/Chrysler fiasco for pete’s sake), when it comes to printing money the ultimate outcome will certainly have an impact. And the more the printing, the better. One of the amusing debates on the topic has been how much debt will the Fed print. Those who continue to refuse to acknowledge that the economy is in a near-comatose state, of course, hold on to the hope that the amount will be negligible: something like $500 billion (there was a time when half a trillion was a lot of money). A month ago we stated that the full amount will be much larger, and that the Fed will be a marginal buyer of up to $3 trillion. Turns out, even we were optimistic. A brand new analysis by Jan Hatzius, which performs a top down look at how much monetary stimulus is needed to fill the estimated 300 bps hole between the -7% Taylor Implied Funds Rate (of which, Hatzius believes, various other Federal interventions have already filled roughly 400 bps of differential) and the existing 0.2% FF rate. Using some back of the envelope math, the Goldman strategist concludes that every $1 trillion in new LSAP (large scale asset purchases) is the equivalent of a 75 bps rate cut (much less than comparable estimates by Dudley, 100-150bps, and Rudebusch, 130bps). In other words: the Fed will need to print $4 trillion in new money to close the Taylor gap. And here we were thinking the economy is in shambles. Incidentally, $4 trillion in crisp new dollar bills (stored in bank excess reserve vaults) will create just a tad of buying interest in commodities such as gold and oil…
The conversation surrounding what seems to be a slowdown in China’s rare earth sector has been verging towards the bizarre recently, with news sources arguing that an embargo of exports of the minerals to Japan is obvious, unconfirmed, non-existant, over,continuing, and expanding to the West.