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Game changing?


               
2008 Feb 12, 3:59pm   17,505 views  152 comments

by SP   follow (0)  

Okay, give all the racist crap a rest for a while. This seems to be big enough to pay attention to...

What do you guys and gals think of this:
link to article

SOMA
Many observers have expressed disbelief that the Fed is actually aggressively reducing the monetary base, in particular that part of the base which directly affects the trading accounts of 20 of the world�s largest banks, the Fed's Primary Dealers ... The vast majority of market pundits, economists, and quasi-journalists for the mainstream infomercial outlets like Marketwatch, the Wall Street Journal, Bloomberg, and especially CNBC, are totally clueless. To a man and woman, they all think that the Fed has aggressively been adding liquidity to the system.

The proof, they say, is in the pudding and the Fed has just served it up in multicolored, multi-layered glory. The Fed itself is confirming, in graphical form, [that it] has aggressively collapsed the size of the System Open Market Account, beginning slowly last July, then moving aggressively beginning in December. The effect has been to withdraw billions of dollars of what is, in essence, margin buying power from the trading accounts of the Primary Dealers.

A lot of folks here are betting on inflation and commodities, so what do you all think of an actual bubble-deflation at work?
SP

[Racist, Sexist, Xenophobic, and Anti-American comments will be deleted, as will troll-posts.]

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1   OO   @   2008 Feb 12, 4:25pm  

Not all commodities are created equal.

Industrial commodities are heading for crash landing soon right around when Chinese economy takes a nosedive, copper, zinc, mineral ore and all that good stuff. These minerals are not in real shortage once the world economy contracts and the building boom is over, and one can always recycle them.

The only hard commodity that can substitute currency is oil. 60% of the world's transportation is reliant on oil, and the cheap oil is gone. It is the basis of our lifestyle. Sure, oil will crash, but that will not be due to a contracting world economy, but a reasonable alternative, which is at least 20 years away.

Agricultural commodities are just riding on the back of oil and natural gas. Corn will crash when the US reverses its stupid "burn food for fuel policy", but there are some staple foods like soybeans that are facing true shortage, temporarily of course.

I think it is important to put commodities into several bins and rank them in terms of demand-and-supply situations.

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