Train Smash – Chapter 2

·         At $1350, gold shows a break down on the P&F chart below. $1300 will be the next stop. (Chart source: Stockcharts.com)

·         If it drops below $1248 then according to the second chart below, it can get to $1,076 (still above the rising trend line) (Chart source: Stockcharts.com)

·         Third chart below shows Baltic Dry Index is still falling. By implication, tempo of international trade is falling (Chart source: investmenttools.com/futures/bdi_baltic_dry_index.htm )

·         Fourth chart below shows that bullish investor sentiment is starting to waiver. (Chart source: Decisionpoint.com)

·         Fifth chart below (30 year yield) shows tightening attitude to credit (Chart source: Stockcharts.com)

·         Sixth chart below (10 year yield) shows breakout – with 5.8% as destination (Chart source: Stockcharts.com)

·         Seventh chart below (10 year yield with scale adjusted to exclude noise) shows destination of between  4.87% and 5.2% depending on technique (The rock) (Chart source: Stockcharts.com)

·         Eighth chart shows that oil is headed for $135 – $141 a barrel (The hard place) (Chart source: Stockcharts.com)

·         US Public Debt as at today is: $14,053,512,150,448.45   (The other hard place) (Source:treasurydirect.gov/NP/BPDLogin?application=np )

·         Table at bottom shows that domestic house prices in China are grossly overpriced in terms of affordability (Source: numbeo.com/property-investment/rankings.jsp ). If you scroll through you will see that parts of India and the old USSR are basket cases.

Analyst Comment

The markets seem to be expecting an outcome whereby the Republicans are going to “force” a series of budget cuts and tighter Fed discipline. 5% on $14 trillion represents an interest burden of  $700 billion PER YEAR. $700 p.a. billion interest burden in an environment of slowing tax revenues and tighter Fed discipline as the oil price rises casts doubt on credit worthiness of sovereign USA.

Q: Can China carry the world economy?

A: The domestic real estate market in China is a house of cards. Domestic growth has been a function of real estate development and the wealth effect.

Q: Can Chinese infrastructure spending drive the world economy?

A: The recently announced energy contracts between  China with GE  (not yet signed) (ft.com/cms/s/0/f14afc34-2347-11e0-b6a3-00144feab49a.html#axzz1BbwW8dwp ) will generate REVENUE that amounts to around 0.5% of the US’s annual interest burden

Conclusion

Conditions for a train smash continue to build.

Conditions favourable to tweaking society’s organizational infrastructure/s are therefore also emerging. Voters will be receptive to changes that bring feral leaders under tight control. Beyond Neanderthal makes some conceptual, philosophical suggestions regarding possible changes. The Last Finesse (my new 40+ chapter novel which will be completed in April 2011) makes some hard-nosed, coal-face suggestions regarding possible changes. If you are interested in acquiring a copy of The Last Finesse, please email me at [email protected] and I will put you on my database. Please specify if you would prefer hard copy or e-book.

Brian Bloom

Author, Beyond Neanderthal

beyondneanderthal.com

[email protected]