How big of a false dawn will there be?

william the wie

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Nov 18, 2009
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Australian floods have taken out many of their coal fields and the US as the Saudi of coal will take up most of that slack.

Chinese Capital Control reform will inject something in the low trillions of capital into the world economy as it gathers speed.

The US is still best of the worst by a fairly wide margin so its safe haven status will kick in as the EU crisis worsens.

That's the good news. The bad news.

The EU crisis will worsen until it hits bottom but then all of the lovely loot will flow right back out just as soon as everyone is certain that the bottom has been reached.

The Australian coal fields will reopen and take back the China and Indian markets due to a better than 2 to 1 logistics advantage relative to the US.

The CCC reform is supposed to cushion the Chinese real estate bust, which is going to happen. Once it happens the flow of new money will end and perhaps reverse.

In future episodes of how the US capital markets implode banking and residential real estate are still steering for the big splash at the bottom and the splash will be big.

So what are going to be some of the non-obvious effects of these capital flows?
 
How do you "take out" a coal field?

Is this hard rock mining or strip mining?

If it is open pit mining I can see your point, but coal isn't ordinarily mined that way in the US anyway.
 
How do you "take out" a coal field?

Is this hard rock mining or strip mining?

If it is open pit mining I can see your point, but coal isn't ordinarily mined that way in the US anyway.
Insurance and liability costs are causing more mines worldwide to switch to strip mining. Most of the coal mine employment and deaths in the US are the result of shaft mining but most of our coal is from strip mines. I don't know the current figure for total costs/100 tons of coal for each type of mine but labor/safety costs per worker are much higher in shaft mines and those costs keep going up year by year. But you are right that most of the mines, not so much coal mines, in the US are hard rock mines. Coal mining involves much higher danger than the mining of other minerals because of the much higher percentage of poisonous/explosive gases trapped in the coal so changeover costs to terrace (horizontal strip mines that are rarely used and the name may have changed) and vertical strip mines become more positive every year.
 
GLADSTONE, Australia - Australia's flood-stricken coal industry may be disrupted for months after key rail and road links were washed away, while some infrastructure could take years to repair, authorities said on Friday.

The floods have swamped mines in Queensland State, paralyzing operations that produce 35 per cent of Australia's estimated 259 million tonnes of exportable coal. Australia accounts for two-thirds of global exports of coking-coal, needed to make steel.

"There are some aspects of the rebuilding of infrastructure that will take, potentially, years," Major-General Mick Slater, chief of the flood recovery operation in Queensland, told a news conference in flood-hit Rockhampton town.

"We still don't know what it looks like underwater. I know that major roads, rail lines and bridges are all damaged."

A snap survey by Reuters showed the median expectation among analysts was that recovery in coal output to pre-flood levels would take about three months.

Read more: Australia floods causing coal industry long-term damage

Australia floods causing coal industry long-term damage
 
Yeah the BBC had a similar, perhaps the same, report a couple of days ago. The adverse effects of the floods on Australian agriculture means that costs will be up and revenues down for fixing the problems. With larger than normal spring floods in the FSU expected and continued disinvestment in agriculture in Argentina food exports from the US to the rest of the world will also sky-rocket and ethanol will be cut back or abandoned. Obama may be able to parley this into reelection.
 
"A snap survey by Reuters showed the median expectation among analysts was that recovery in coal output to pre-flood levels would take about three months."
 
Australian floods have taken out many of their coal fields and the US as the Saudi of coal will take up most of that slack.

Chinese Capital Control reform will inject something in the low trillions of capital into the world economy as it gathers speed.

The US is still best of the worst by a fairly wide margin so its safe haven status will kick in as the EU crisis worsens.

That's the good news. The bad news.

The EU crisis will worsen until it hits bottom but then all of the lovely loot will flow right back out just as soon as everyone is certain that the bottom has been reached.

The Australian coal fields will reopen and take back the China and Indian markets due to a better than 2 to 1 logistics advantage relative to the US.

The CCC reform is supposed to cushion the Chinese real estate bust, which is going to happen. Once it happens the flow of new money will end and perhaps reverse.

In future episodes of how the US capital markets implode banking and residential real estate are still steering for the big splash at the bottom and the splash will be big.

So what are going to be some of the non-obvious effects of these capital flows?

I think we are in for a huge re-adjustment as it applies to standard of living. yes cheap goods via low cost manuf. and productivity gains puts almost any gadget or household item within reach of even our lower classes, but this is a double edged sword, from a qualitative lifestyle and health stand point, the trend is downward at least for the next 30-50 years.
 
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dude, its 1931 all over again, we just have to much noise going on in the background that acts like a filter, preventing us from making the connections and of course the lack of historical perspective is huge imho.
 
Yes and no. It is 1931 all over again for the developed economies.

Turkey, Brazil, India, Vietnam, South Korea China and Taiwan are all enjoying record prosperity.

But as far as the OP goes it looks to me as if shortages in strategic resources are all looming just over the horizon anyway, without kinks in the pipeline. Sooner than we expect it contractions will be routinely driven by resource scarcity and escalating commodity prices.

I expect that to manifest in turbulence and "shocks" rather than any smooth curve.
 
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Yes and no. It is 1931 all over again for the developed economies.

Turkey, Brazil, India, Vietnam, South Korea China and Taiwan are all enjoying record prosperity.

But as far as the OP goes it looks to me as if shortages in strategic resources are all looming just over the horizon anyway, without kinks in the pipeline. Sooner than we expect it contractions will be routinely driven by resource scarcity and escalating commodity prices.

true but yet I believe global balance is being lost or shifted at a quicker pace and we won't have a bretton woods etc. to correct it with or that is ensure our dominance;)....there is no WO trolley to jump off as we did in 71. The dollar and euro? yesterdays news, they just have not printed the story yet if you catch my drift.
 
I do but that doesn't mean I can predict the exact outcome.

oh heck no and nothing happens in a vacuum granted........but....
Getting on my hobbyhorse again Brazil is probably for real with the extent of the Amazon barge network but as to the rest of the emerging tigers they are committing the classic errors:

Inflation which leads to disinvestment and capital flight.

Oversubstituting economic growth for population growth. The US for example has the smallest population problems in terms of baby boom retirement of all developed and nearly all developing nations.

Neglecting expensive but non-romantic necessities such as anti-piracy patrols. The Horn of Africa has some value to the US so piracy there is reported. Pirate attacks in the strait of Malacca and the other Indian/Pacific chokepoints are not reported because that passage is not important to the US economy so it is an official war zone and has been for years.

In sum the logistics of the emerging economies really suck. The coming decade will be rough but the all hat, no cattle economies are headed for disaster. For at least 16.75 years and I do mean China, Russia, India, Japan, the EU and a host of smaller powers will be squeezed by a vise of their own making.
 
"Oversubstituting economic growth for population growth."

isn't this only an issue in nations in which citizens retire instead of working till they die? I mean without pension overhead what is the problem with an aging pop?
 
"Oversubstituting economic growth for population growth."

isn't this only an issue in nations in which citizens retire instead of working till they die? I mean without pension overhead what is the problem with an aging pop?
As a preacher one said about the choosing of deacons in Acts. "Getting the widows and grandmas mad at you is about as big a problem as you can get into." Old folks vote and that counts.
 
OK, I somehow suspect that the developing nations are not going to copy the western entitlements models.

As such I doubt an aging population will negatively impact their economies nearly as much as in the developed world.
 
OK, I somehow suspect that the developing nations are not going to copy the western entitlements models.

As such I doubt an aging population will negatively impact their economies nearly as much as in the developed world.
Brazil, Russia and China already have age and income related entitlements, India does not as of yet. Entitlements of various sorts are among the reasons that otherwise rich companies are still developing.
 

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