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Tuesday, 3 May 2016

Economic Bubbles Bound to Burst




The Conservative View - Blowing bubbles

STILWELL, Okla. -- I haven’t seen a child yet who didn’t like to get a bottle of bubbles and take the little round wand that is inside of the bottle and start blowing into it and making countless bubbles. For a while it seems that the bubbles will last forever, but it is a fact that they will eventually fall to the ground and burst. When you take an objective look at the world’s economies they bear a striking resemblance to a child blowing bubbles.
Over the past couple of decades we have seen several economic bubbles form and each time countless people have lost their shirts. The tech bubble in 2000 and the real estate bubble in 2008 are two of the most recent examples.

Sadly we humans never seem to understand why these upheavals happen. Too many of us become blinded by the promise of getting rich quick. We have a habit of believing those who tell us that everything is just fine and the markets will keep going up. I remember the time just before the 2008 collapse; financial institutions were loaning money to anyone who had a pulse even if they didn’t have the ability to pay the loan back.





The Lawmakers Who Control Your Digital Future Are Clueless About Technology  
Feinstein and Burr’s bill is not based in any technical reality. Companies like Apple, Microsoft and Google would have to entirely re-engineer how they encrypt user data, leaving it vulnerable to attackers in the process. No encryption expert has identified a way to allow law enforcement access to encrypted communications without also jeopardizing the security of the everyday user.


Right now, the housing market seems to be firing on all cylinders if you follow existing-home sales data. March existing sales rose 5.1%. But, then, this is a lagging indicator, pointing toward prior performance.
Leading indicators paint a completely different picture for the housing market, telling us that March’s strength won’t last long. And we can use this leading information to make one simple trade to take advantage of the situation.


The reason debt is needed is because while energy products can indeed produce a large “energy profit,” this energy profit is spread over many years in the future. In order to actually be able to obtain the benefit of this energy profit in a timeframe where the economy can use it, the financial system needs to bring forward some or all of the energy profit to an earlier timeframe. It is only when businesses can do this, that they have money to pay workers. This time shifting also allows businesses to earn a financial profit themselves. Governments indirectly benefit as well, because they can then tax the higher wages of workers and businesses, so that governmental services can be provided, including paved roads and good schools.




U.S. Energy Secretary sees oil supply, demand rebalancing in a year



U.S. Energy Secretary Ernest Moniz said he expects global oil supply and demand to rebalance in about a year’s time.  Benchmark crude oil prices, which hit almost 13-year lows earlier in 2016, surged nearly 20 percent in April on a softer dollar and lower U.S. production. However, market participants remain skeptical about the sustainability of the rally given a persistent global supply overhang.  “The recent rise in prices is not something I think that the companies are willing to reverse their investment trends on,” Moniz told reporters on Monday after the G7 energy ministers’ meeting in Kitakyushu, southwestern Japan.  “Rig counts in the United States are quite low … a rebalancing of global supply and demand looks to be quite credible, roughly speaking on a one-year time scale.  “That may change the dynamic but structurally we clearly continue to have a very very large inventory of oil,” he added.
“We are still unbalanced.”  U.S. oil output is expected to drop by 600,000 barrels per day (bpd) this year from a year ago as producers respond to low crude prices, Moniz said, citing U.S. Department of Energy projections.

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