Government Records Indicate Little Risk

November 4, 2016
The Guardian: Diver may have found 'lost nuke' missing since cold war off Canada coast

Government records indicate that the lost bomb was a dummy and poses little risk of nuclear detonation, said a spokesperson.

I was under the impression that a dummy bomb poses zero risk of nuclear detonation. Oh, wait. I get it. Perhaps the Canadian spokesperson doesn't fully trust our government records?

Let me set the record straight for any Canadians who don't quite understand how things work in my country.

When my government says that there are weapons of mass destruction to be found or not found, you can trust that we will either find them or not.

In fact, you can always trust my government. Remember when Ben Bernanke's government records indicated that there was no housing bubble to go bust back in 2005?

Well, the Cubs just busted their record by winning the World Series! Housing had absolutely nothing to do with it! Yes! Bernanke, you're the man!

One Overlooked Advantage of the Amero

North American monetary union

A concern with any unified North American currency is the differing economic situations between each country.

Like Germany and Greece? Hey, if Europe can pull it off then so can we! This is America, dammit! There is nothing we can't do if we put our minds to it!

So what is the overlooked advantage we would have? Well, right now we like to blame the POTUS (President Of The United States) for everything that goes wrong. It doesn't matter if it is a Clinton, a Bush, or an Obama. It doesn't even matter what the problem is. No matter what, the president is always to blame!

I just got off the phone with the Koch brothers, and they say we need to simplify the process. Make it even more clear to the American public who needs to be blamed.

An American Union could do just that. Instead of a POTUS, we would have a SCROTUM.

SCapegoat of 'R' Once Thrivin' United 'Mericas

Why did I lose my job? SCROTUM!
Why did my bank close? SCROTUM!
Why did my taxes rise? SCROTUM!
Why is the crime rate up? SCROTUM!
Why is my Social Security check missing? SCROTUM!
Why does my breath smell bad? SCROTUM!
Why did my wife sleep with the mailman? SCROTUM!
Why did they cancel Gilligan's Island? SCROTUM!

One office to take the blame! One office to protect and deflect! With nothing to gain and everything to lose, what could possibly go wrong? The SCROTUM is our future!! We must not let the European Union win!!

Rethinking Insane Retirement Rules

April 11, 2015
Retirement Rules: Rethinking a 4% Withdrawal Rate

After data showed that the rule, which posits the withdrawal of 4% of a portfolio in the first year of retirement, with annual adjustments for inflation thereafter, had worked in only two of 20 developed countries -- the U.S. and Canada -- Pfau dug deeper. He found that the rule wouldn’t work in a number of circumstances, including retiring during a market downturn and in a period of historically low interest rates.

It was a fine retirement rule in 10% of developed countries as long as interest rates weren't too low. Have no fear though. Nothing bad ever happens in the USA or Canada, Great Recessions and their aftermaths notwithstanding,

Why wouldn’t a more conservative investor stick with a bond ladder and call it a day?

For a more conservative individual, that may be a question to really think about -- especially since these calculations only assume fees of 0.5%, which is below the average mutual fund fee. The main drawback of not using stocks is no upside potential.

This retired conservative investor did more than really think about it heading into the Great Recession. As of 2004, I'm done with stocks. Those counting on upside potential from these lofty levels must really believe in never ending exponential growth stories. Good luck on that.

Counting on upside potential in retirement is a bit like counting one's chickens before they hatch. Yeah, call me old school. Not liking the long-term look of the chickens, especially with the Wall Street foxes guarding the hen house.

Have I mentioned lately that my last employer was on the front page of the Wall Street Journal for massive accounting fraud for months on end? Perhaps that affects my ability to trust Corporate America. Just a hunch.

The Economic Stimulus Vehicle of Choice!

December 8, 2014
'Calgary's Worst Driver': Woman gets ticket after video of botched backing up goes viral

Police have tracked down and issued a traffic ticket to a woman after a video dubbed “Calgary's worst driver” went viral over the weekend.

December 11, 2014
We’ve all been there: In defence of Calgary’s Worst Driver

It’s one thing to be a bozo on your own time, but as soon as you drag someone else into your incompetence, you should do the right thing and leave a note on your victim’s windshield.

I suggest, "We just stimulated the global economy! Congratulations!"

Defense? Who needs a defense? This is an economic miracle! We've all been there and we need to keep doing it. You know, smashing into stationary vehicles and then fleeing the scene. It can really add to GDP if we all do our part!

Repair labor bills? Cha-ching!
Repair shop employment? Cha-ching!
Repair part bills? Cha-ching!
Part manufacturer employment? Cha-ching!
Traffic ticket government revenue? Cha-ching!
Traffic enforcement employment? Cha-ching!
Reporter employment? Cha-ching!
Google (YouTube) shareholder profits? Cha-ching!

Real prosperity, baby. That's what I'm talking about. Or not. Your call.

Brick and Mortar Stores' Worst Nightmare

The following chart shows the 2-year moving average of nonstore retail employment.


Click to enlarge.

I have good news, bad news, and a worst nightmare for the brick and mortar retailers.

First, the good news. Few Americans read Canadian Living. You therefore don't have to worry too much about consumers using smart phone apps that will cost you money. Hey, I'm just trying to start off on an optimistic note. It's the best I can do.

Next, the bad news. Nonstore retail employment was growing parabolically. That just can't be good for you over the long-term.

And now, the worst nightmare. The nonstore retail employment parabolic trend failed this year. Normally, you'd think a failure here would be good news, but, well, I don't really know how to put this, it kind of failed to the upside. Sorry about that.

We should not dwell on the negative though. This is fantastic news for our economy. Nonstore retailers have added 2,300 jobs since the peak in 2000. Hooray!

So what if  440,000 jobs have been cut by department stores since the peak in 2001? The employment bleeding can't go on forever, right? Over the long-term, we certainly can't lose more than 15.4 million retail jobs overall. That's just right out.

A tragic or comic plot is not a straight line: it is a parabola following the shapes of the mouths on the conventional masks. - Northrop Frye

Now would probably be a good time to once again point out that no economic parabola can grow forever, even ones which fail to the upside. It will more than likely end in tragedy and/or comedy someday, perhaps much sooner than most expect. In fact, the term "blow-off top" comes to mind.

Source Data:
St. Louis Fed: All Employees: Retail Trade: Nonstore Retailers

Small Time Deposits vs. Large Time Deposits

Click to enlarge.

Small time deposits have become an endangered species.

There was a temporary exponential trend failure (seen in the break from the blue line) heading into the Great Recession, but we're apparently getting back on trend soon (using the new red line).

Giant Sucking Sound

The phrase, coined during the 1992 U.S. presidential campaign, referred to the sound of U.S. jobs heading south for Mexico should the proposed free-trade agreement go into effect.

North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA) is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994.

Click to enlarge.

Source Data:
St. Louis Fed: Custom Chart
St. Louis Fed: Trade Balance: Goods and Services, Balance of Payments Basis

Waste Not Want Not

July 2012
GMO: Welcome to Dystopia!

We are five years into a severe global food crisis that is very unlikely to go away. It will threaten poor countries with increased malnutrition and starvation and even collapse. Resource squabbles and waves of food-induced migration will threaten global stability and global growth. This threat is badly underestimated by almost everybody and all institutions with the possible exception of some military establishments.

Waste Not Want Not

The Waste Not Want Not poster from World War I was published by the Canada Food Board to encourage Canadian women to preserve perishable foods.

File:Waste not want not WWI poster.jpg

While we are on the topic of waste, here is a chart of real sewage and waste disposal construction spending per capita (June 2012 dollars).



While we are on the topic of construction spending, here is a chart of real religious construction spending per capita (June 2012 dollars).



July 5, 2012
Vatican reports worst deficit in years: $18.4 million

The effects of the euro zone debt crisis has reached into some of the holiest of halls, pushing the Vatican into one of its worst budget deficits in years.

Quotes about Religion

Religion: keeping the poor from killing the rich for 2000 years. - Bumper sticker

Oh oh.

This post inspired by a friend who sent me the link to the GMO article.

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

A World of Currency Manipulators!

Well, number one on day one is acknowledging something which everyone knows. They're a currency manipulator.

There's nothing I enjoy more than being told what I'm already supposed to know. And when we're done with China, let's go after Germany, Japan, Canada, and Mexico too! All the world is manipulating our world's reserve currency!

The following chart shows our real monthly trade deficit per capita (March 2012 dollars). The black line represents Germany, Japan, Canada, and Mexico. We have large trade deficits with each of them individually. The combination is a bit brutal. The red line represents China.


Click to enlarge.

It would seem that China was late to the currency manipulation party. Keep in mind that China has a whopping 1.3 billion people (roughly 4x more than the combined total of the other countries I have listed here). All things being equal, one would therefore expect to see their contribution to our trade deficit be much larger.

Perhaps China should do the rational thing and break into four smaller countries so that we don't notice them as much. Be like South Korea. Attempt to stay under the radar.

Or, alternatively, we can make China our scapegoat. It won't fix our problems but it will create some applause in a presidential debate. And in the end, isn't applause all that really matters?

Source Data:
St. Louis Fed: Custom Chart

A Vancouver Story

May 18, 2011
Howes sees downtown restaurant prospects changing

Business dropped just under 20 per cent in 2008. Our sales came back by about 8.5 per cent in 2009 and we got a sense that kind of level was not likely to change significantly.

...

When we made the decision to close we gave everybody one year’s notice.

It's a fascinating story from start to finish. Howes knew a year ago that he was going to close this Vancouver restaurant.

Meanwhile in that very same city...

May 18, 2011
Luxury housing market spikes as Canuck wealth grows

Vancouver benefited most from a flood of foreign investment, in particular from China, RE/MAX said. Though some other centres also got a boost from foreign cash, most of the demand came from increasingly wealthy Canadians, it said.

Sales in Ottawa were up almost 60%, Calgary 51%, Winnipeg 24% and Greater Toronto 9%, it said.

"Is there a bubble? No there's not, it's just underlying confidence," said Elton Ash, regional executive vice president, RE/MAX of Western Canada.

Something sure seems to be underlying, perhaps right to our faces.

Update:

May 18, 2011
Vancouver Housing Prices Pass New York and London as Chinese 'Move' In

At this point, using the measure above (median household income to median price), Vancouver is now more expensive than New York or London. And I am sure a lot less investment bankers work there, than in either of those 2 locales.

The Allure of False Competitiveness

February 4, 2011
Canadian-made games and the question of outsourcing

In the mid-1990s, the Irish government began enticing multinational corporations with offers of big tax cuts. Major tech companies including IBM, Google and HP took up the offer, which led to rapid economic growth and Ireland’s transformation into a “Celtic Tiger.” Over the course of a decade, the country went from one of Western Europe’s poorest economies to one of its wealthiest.

But critics warned that the incentives were creating a false competitiveness – that Ireland’s high-tech economy couldn’t really hack it if things got tough. To some extent, they were right.

2008–2011 Irish financial crisis

The costs of the bank rescues, NAMA and government deficits over the period look set to push Irish National Debt up to a ratio of 125% of GDP by 2015.

A Natural Gas Glut?

January 27, 2011
U.S. Company, in Reversal, Wants to Export Natural Gas

Mr. Souki’s plan “can be made to work,” said Nikos Tsafos, a gas expert at PFC Energy, a consultancy firm. He warned, however, that as more companies began exporting American gas, it could pull the price of the commodity up in the United States and push it down in international markets.

Skeptics predict that the current gas glut in the United States will spread around the world as shale is drilled in Europe and Asia, major producers like Russia increase exports and more L.N.G. export terminals are built in the United States.

“For heaven’s sake, Israel just discovered 16 trillion feet of gas,” said Mr. Gheit. “Indonesia, Qatar, Algeria, Nigeria and now Israel can all sell cheaper than the U.S.”

Here's a chart of inflation adjusted natural gas prices from 1922 through 2009.



I have added its median inflation adjusted price over the period in red. I'm not suggesting that natural gas prices (adjusted for inflation) will return to the median, but there would seem to be ample room for more downside surprises. As one who heats his home with natural gas, you would not see me complaining.

November 9, 2010
Natural gas glut changes global energy forecast

Even rising global gas use, which will increase faster than any other fossil fuel, won't overcome a production surge that is emerging from shale gas resource development in the United States, and in Canada.

"The gas glut will be with us 10 more years," IEA chief economist Fatih Birol told Reuters.

International Energy Outlook 2010: Natural Gas

Although the extent of the world's tight gas, shale gas, and coalbed methane resource base has not yet been assessed fully, the IEO2010 Reference case projects a substantial increase in those supplies—especially in the United States, but also in Canada and China. In the United States, one of the keys to increasing natural gas production has been advances in horizontal drilling and hydraulic fracturing technologies, which have made it possible to develop the country's vast shale gas resources, and have helped to increase total U.S. natural gas resources by almost 50 percent over the past decade.

August 18, 2003
INTERVIEW WITH MATTHEW SIMMONS

Well, I know you understand it, but people need to understand the concept of peaking and irreversible decline. It’s a sharper issue with gas, which doesn’t follow a bell curve but tends to fall off a cliff.

There will always be oil and gas in the ground, even a million years from now. The question is, will you be a microbe to go down and eat the oil in small pockets at depths no one can afford or is able to drill to? Will you spend hundreds of thousands to drill a gas well that will run dry in a few months? All the big deposits have been found and exploited. There aren’t going to be any dramatic new discoveries and the discovery trends have made this abundantly clear.

Oops.

Update:


The red trend line shows the 12-month moving average.

Here's a chart that adjusts for population growth.



December 27, 2005
Hurricane Impacts on the U.S. Oil and Natural Gas Markets

Hurricanes Katrina and Rita damaged a number of natural gas processing facilities on the Gulf Coast.

Source Data:
EIA: Natural Gas Prices
EIA: U.S. Natural Gas Gross Withdrawals
BLS: CPI
St. Louis Fed: Population

Inflation Constrained Deficits

Marshall Auerback: Fiscal Policy Setting Stage for a New Bubble

As far as government deficits go, what we argue is that there are no financial constraints-there is a real resource constraint. In other words, inflation is the ultimate constraint. We shouldn't be constructing fiscal policy with some sort of vague, undefined notion that it's fiscally sustainable. Nor should we define "fiscal sustainability" via some arbitrary number as Kenneth Rogoff and Carmen Reinhart have done in their recent book, This Time Is Different: Eight Centuries of Financial Folly, wherein they say if a debt-to-GDP ratio gets above 90%, then bad things start to happen. That's not an accurate way to look at it because you have to consider the economic context and the institutional arrangements governing the economy. A pure fiat currency regime, as we have in the U.S. or Canada, for example, is vastly different than a country which operates a currency peg system, such as Latvia or Argentina in the 1990s.

I would tend to agree or I would not want to own TIPS.

MA: I don't think inflation per se is a problem. Food and energy price increases have been significant and they are real. I'm not trying to diminish their importance; but in the absence of income and job growth, people have to heat their homes, fuel their cars and feed their families. That just means more discretionary income is tied up in those areas, which means less discretionary income for retail, restaurants, etc. I think the ultimate impact is deflationary rather than inflationary.

Also, the high rates of unemployment are not going anywhere. Labor has no pricing power. There's no generalized increase of consumer price inflation. As that perception grows, the marginal bid could be taken out of the gold market for a while, which is why I am cautious on the gold price short term.

Once again, I would tend to agree. I'm just not seeing the increases in consumer price inflation that many seem to see.

Gold Bubble Impossible? Really?

BullionBullsCanada: The Impossibility of a Gold Bubble

In an ocean of propaganda, there are few forms of disinformation as annoying as the endless “gold bubble” babble.

Then prepare to be annoyed some more.

Despite the quintupling of the price of gold off of its absolute bottom, gold is arguably just as “cheap” today as it was when the price was below $300/oz. The reason is simple: the fiat paper currencies in which the price of gold must be expressed have been debauched/diluted by Western central banks (and the governments they represent) just as fast as the price of gold has been able to rise.

Who honestly believes that?

According to Kitco.com, gold's absolute bottom was $252.80 on July 20, 1999. It now trades at $1,384.00. That's a 447.5% increase over 11.4 years. That works out to about 16.2% per year.

Meanwhile the seasonally adjusted CPI-U has risen from 166.700 (July 1999) to 219.146 (November 2010). That's an increase of 31.5% over 11.3 years. That works out to about 2.5% per year.

Gold has outperformed overall inflation by a whopping 13.7% per year and has done so for a full decade. And yet I'm told by "Bullion Bulls Canada" that a gold bubble is impossible?

Some might argue that the official government inflation figures are WAY off. Let's go down this path for a moment. Surely we'd see his "debauched/diluted" claim reflected in my electricity bill. We've been in an energy bull market for a full decade. Right?

So here's what my electricity bill has done.

The top rate for July 1999 was 6.8493 cents per KwH.
The top rate for October 2010 was 10.3527 cents per KwH.

That's a 51.1% increase over 11.25 years. That works out to about 3.7% per year. It's a bit higher than the overall CPI-U but consider that I'm specifically picking an energy product here. I have not cherry picked deflating computer and TV prices in order to make my point.

Meanwhile...

BullionBullsCanada: A Conservative Silver Forecast

Let’s assume that this 30% per year appreciation-rate is deemed “optimal” by these big-buyers. We can make a fairly persuasive argument that this is the case.

That passes for conservative these days? Even David Lereah wasn't *that* bold 10 years into a housing boom.

Update:
I was off a year on my math. It was just over 11 years (not 10) and that's been corrected. I should have double checked my math before posting but at least I eventually got around to it. Sorry!

Behold the Wonder of Technical Analysis!

Cash:
US Dollar: Very bullish
Euro: Very bullish
Yen: Very bullish
Canadian Dollar: Very bullish
Australian Dollar: Very bullish
Swiss Franc: Very bullish

Bonds:
US 30-Year Treasury Bond: Very Bullish

Hard Assets:
CRB: Very bullish
Gold: Very bullish
Oil: Very bullish

Stocks:
DJIA: Very bullish
S&P 500: Very bullish
Nasdaq: Very bullish
Dow World Index: Very bullish

Congratulations Ben Bernanke!

Technical analysis clearly shows that you've single-handedly created the foundation of a perfect prosperity miracle. No matter what investors do now, they will apparently be richly rewarded. Why did I ever doubt you?

Technical Analysis

Whether technical analysis actually works is a matter of controversy.

It works. Just wait. You'll see. Real prosperity is coming our way in huge chunks of ooey-gooey goodness!

I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer. - Warren Buffett

Nobody is flipping these charts upside down though. Ever. There's nothing but prosperity from here on out.

Super-goldilocks for the win!

The Sarcasm Report v.56

Deflation is the worry; inflation looms, too

More than any one data point, the bet on deflation really depends on pessimism: a glass-half-empty look at sluggish growth, feeble consumer demand and the large swath of American workers, factories and resources that are idle.

Deflation depends on pessimism? That's good to know. You won't find any of that here. If anything, this blog has been too optimistic.

Calculated Risk: Negative News Flow

Although not unexpected, the news flow is about to take a more negative tone starting with the existing home sales report on August 23rd.



There you go. More negative waves. Have a little faith baby. Have a little faith.

Strong economy may fix border problems, says top border official

"If you combine the natural resources of Canada with the fiscal and financial capital and knowledge of the United States with the human labor resources of Mexico, it will put us in a very good place to compete."

The human labor resources of Mexico? Sweet! The natural resources of Canada? Fantastic! The fiscal and financial capital and knowledge of the United States? Priceless!

Citigroup

Heavy exposure to troubled mortgages in the form of Collateralized debt obligation (CDO's), compounded by poor risk management led Citigroup into trouble as the subprime mortgage crisis worsened in 2008. The company had used elaborate mathematical risk models which looked at mortgages in particular geographical areas, but never included the possibility of a national housing downturn, or the prospect that millions of mortgage holders would default on their mortgages.

...

Over the past several decades, the United States government has engineered at least four different rescues of the institution now known as Citigroup.

We'll be supplying the world with "Citigov" and its elaborate mathematical risk models! How can we possibly lose? Woohoo!

The Prosperous Pension Pandemic

Funding ratios of corporate plans fall 15 points in quarter

“Year after year, the story remains the same: neither the public nor the private sector has shown a tolerance for the pain associated with the type of forward action needed to address the U.S. pension problem,” Howard Silverblatt, S&P senior index analyst and author of the report, said in a news release.

Year after year the story does remain the same. It's like we have debt and deficit monkeys on our backs. Go figure.

Markets, bond yields hammer pension performance

OTTAWA -- Stock market volatility and dropping federal bond yields were bad news in the second quarter for holders of Canadian pension plans.

Pensions can't make money with low bond yields any more than savers in general can? Who would have guessed?

Big Pensions Eye Lower Return Forecasts. Should You?

It’s no secret that public pensions across the country are seriously underfunded. What might not be so widely known is that many funds use an assumed rate of return of 8 percent. And based on what’s happening in California, that may be too optimistic.

8 percent returns may be too optimistic? It would only take 45 years to safely compound a total return of 8% at today's three month treasury bill yield (0.17%). It will just require some patience. That's all.

What? Pension plans expect it to only take 1 year? And they also expect to repeat the miracle 44 more times? Wow! I want to live in THAT world! Anything seems possible!

What the World Needs Now (Musical Tribute)

...is love sweet love.

Or alternatively, the world may need the largest-ever graduating class of crane operator apprentices coming out of Manitoba. Your call.

Largest Graduating Class of Building Crane Apprentice Operators Signals Province's Strong Economy: Selinger

Manitoba needs more people to help put up skyscrapers...



There is nothing better than a good lie.

Is Canada's Property Market Due For A Downturn?

Canada might be America's neighbor to the north, but it has a bubbly real estate market, even as the U.S. market continues to limp along. Consider these eye-raising facts: Canada's real estate prices have increased on average 40% in the last year while incomes have dropped.

China's Superbubble

China: the coming costs of a superbubble

About a decade ago, the Chinese government chose a policy of growth at any cost. China’s leaders see strong gross domestic product (GDP) growth not just as bragging rights, but as essential for political survival and national stability.

I believe that with every fiber of my being.

To maintain high employment, China has poured money into infrastructure and real estate projects. This explains why, in 2009, new floor space doubled and residential real estate prices surged 25 percent. This also explains why the Chinese keep building new skyscrapers even though existing ones are still vacant.

I absolutely believe that. I've stated for years that I thought China was recreating our Great Depression.

It will tank the commodity markets. Demand for industrial goods will fall off the cliff.

I believe that it is likely. I don't know when it will happen though. It could be years away even if I am right to believe it.

Finally, Chinese appetite for our fine currency will diminish, driving the dollar lower against the renminbi and boosting our interest rates higher. No more 5 percent mortgages and 6 percent car loans.

I do not believe that. Although Chinese appetite for our currency would diminish, I think there would be an enormous flight to US dollars if commodity markets tank and the Chinese miracle story becomes unhinged.

Put another way, the US dollar is an anti-commodity currency. The pain would be felt most in the commodity currencies, such as the Canadian dollar.

Compare and contrast the action in the Canadian dollar and the US dollar the last time commodity markets tanked (late 2008). That's the kind of flight to quality I'm talking about.

I'm not arguing that the US will make out like bandits if and when China stumbles (cheaper oil would help us). Most of our problems will still exist. Our problems may be fully priced in though. China's problems are not. Although their stock market is 50% off its all time high, it is still a miracle story in the eyes of many.

Update:

Caterpillar: Echo Bubble?

I bought Caterpillar (CAT) on August 10, 2000. Nobody else seemed to want it.



I sold it on July 8, 2004 for more than twice the price.



Everyone seems to want it now though. It currently trades with a P/E of 41. I'll pass.

Dr. Copper Is Certifiably Insane

That's my opinion, for what it is worth. It is clearly not shared by everyone.

Copper Panic and Recovery

As a metal heavily dependent on prevailing sentiment and consensus economic outlook in the best of times, it shouldn’t be surprising that copper was hit abnormally hard in the worst of times. By the time the dust from the panic settled in late December 2008, copper had plummeted 68.6% to $1.28 per pound! Such an epic decline in copper was unheard of.

It was only unheard of for those people who didn't listen to charts dating back to the Great Depression. According to the USGS, copper fell 68.3% from an average price of $405 per metric ton in 1929 to an average price of $128 per metric ton in 1932. Keep in mind these are just averages. Copper no doubt fell much more than that from the highest price in 1929 to the lowest price in 1932.

And Chinese GDP is actually growing despite the panic! In the year ending Q2 2009 that obviously straddled the stock panic, Chinese GDP actually grew by an amazing 7.1%! Chinese copper imports this year have risen to records in some months. Given the state of the world economy, copper demand (and hence prices) is likely to be far closer to pre-panic levels than the panic lows going forward.

As I've said before, I do not believe in the China story (at least in the short-term and mid-term). I've warned of the China story many times in the past on this blog (even before it crashed). Every instinct I have (mostly originating from my gut) tells me that China must be hurting at least as bad as we are right now. Their biggest customer (us) came to a screeching halt.

Copper was not falling because there was any fundamental reason for it to, but simply because traders were scared.

Yeah, right. No fundamental reason for copper to fall. If you believe that I have some excellent oceanfront property in Kansas I'd like to sell you.

Copper In The Home

An average single-family home uses 439 pounds of copper.

Copper In Transportation & Industry

There's more than 50 pounds of copper in a typical U.S.-built automobile: about 40 pounds for electrical and about 10 pounds for nonelectrical components.

If you just bought a new home and a new car, then you've also just bought about 500 pounds of copper. Better keep up the pace! I'm told copper is going back to pre-panic levels!

Look at that first chart in the first link. There's something on it I would like to point out.

"Still Low Relative to Trend"

Which trend might that be?

The "Pre-Panic Up Trend" of course. We'll be back on that global unsustainable trend before you know it. Kansas I'm telling you. Ocean front property!

Search Oceanfront Houses USA Listings in Kansas

This information is intended to help you in your search for a Oceanfront Houses USA homes, land, and condos for sale in Kansas. We feature areas in all 50 States, Canada, and the Caribbean.

The Anecdotal China Story

August 22, 2009
What Chinese authorities don't want you to see

"This is a seriously large building," says Hendry. "We're talking at least half a billion dollars to construct this thing. It's empty! Who is going to fill this thing? Who is going to pay the debt that that building is resting on?"

August 20, 2009
Great Mall of China isn’t so great

The South China Mall in Dongguan, China sounds good on paper. The holder of the title “World’s Largest Mall” is more than twice the size of the previous record holders, Mall of America in Minnesota and Edmonton Mall in Canada. The building includes nearly 7 million sq. ft. of space and is complete with 8,000 parking spots. It also features amusement park rides, themed outdoor areas, an indoor rain forest, and an artificial canal system.

But there is one thing missing … people

September 9, 2009
China Auto Sales Surge

Manufacturers and dealers have been offering price cuts on their vehicles, in some cases equivalent to a 5% purchase tax cut, to encourage consumers to buy larger models and meet sales targets, Mr. Zhang said.

Last week, a senior minister from China's economic planning agency warned of excess capacity arising in the next few years.

September 4, 2009
Wanted: Greater Fools To Support The Chinese Stock Market

After easy-money assurances failed to prevent a swoon in the Chinese stock market, one imagines the government is now happier than ever to get more liquidity pumping in.

The comment section of that last link is especially worthy of reading. CramerIsAssMonkey's (LOL!) comments led me to the following link.

August 31, 2009
UPDATE 1-Beijing's derivative default stance rattles banks

For banks that are hoping to sell more derivatives hedges in China, the world's fastest-expanding major economy and top commodities consumer, the danger goes beyond the immediate risk to existing contracts to the longer-term precedent that suggests Chinese companies can simply renege on deals when they like.