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Member since May 2011 · 2485 posts · Location: Brisbane
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Subject: Global Money
Found an interesting article over on Spiegel.de:

From the article:  "Sheikh Bader al-Saad, head of the Kuwait Investment Authority, discusses Western fears of the increasing power of state-owned sovereign wealth funds, the global finance crisis and mistakes his fund made in investments at Daimler, Citigroup and Merrill Lynch."

This is the tail end of a very interesting interview:

Al-Saad: We believe in cycles in the economy and in currencies. One euro at $1.60 will not be sustainable. That's why we are in fact less interested in investing in Europe at this time, unless there are true values and the price is attractive.

SPIEGEL: Sometimes economies also drop out of the cycles. Take Argentina, for instance. It was once one of the world's wealthiest countries. But more than three decades ago a gradual decline began, which ended in collapse in 2001.

Al-Saad: If you give the example of Argentina, then you have to look at the case of China, which was, at a point in time, the world's largest economy and dominant power. The United States is experiencing the worst crisis I have seen in 28 years in this profession. But it is still the largest economy in the world. The Americans are also more dynamic and flexible than Europe. And, the United States has a much better demographic profile, which can refuel growth.

SPIEGEL: In other words, you don't believe that the United States will lose its dominant economic position.

Al-Saad: I believe that China and India will continue to lead global growth. Europe, due to an aging population, will lose its global weighting over the long term while United States will remain stable.
BLEARGH
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Member since May 2011 · 2485 posts · Location: Brisbane
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Subject: International Money
Continuing in this vein... 

Quote by Anatole Kaletsky:
Commodity inflation is far more lethal than a credit crunch for two reasons. It prevents central banks in advanced economies from cutting interest rates to keep their economies growing. Even worse, it encourages the governments of developing countries to turn their backs on global markets, resorting instead to price controls, trade restrictions and currency manipulations to protect their citizens from the rising costs of energy and food. For both these reasons, the boom in oil and commodity prices, if it lasts much longer, could reverse the globalisation process that has delivered 20 years of almost uninterrupted growth to America and Europe and rescued billions of people from extreme poverty in China, India, Brazil and many other countries.

"Anatole Kaletsky writes for The Times Comment pages on Thursdays. One of the country's leading commentators on economics, he was formerly Economics Editor and is now an Associate Editor of The Times. He has won many awards for his financial and political journalism. Before joining The Times, he worked for 12 years on the Financial Times" so you might assume he knows what he's talking about.

This sort of stuff fascinates me.  If you believe what you see on the news about a fuel shortage, it's not much of a leap to imagnie a near-future existence where people move away from the cities again to be close to the food, where the lines of communication get stretched out, where we regress and turn Road Warrior on each other, fighting for ...   Er, right.

So yeah, wondering about the money and the fuel is something I do.  It's nice to read articles like the one quoted above from the Times Online, laying out some of the issues and basically telling me all my guesses and theories are batshit.

Some other interesting snippets which, if read out of context, are meaningless.  RTFA!

Now consider the situation today in oil markets: the Gulf, according to Mr Rothman, is crammed with supertankers chartered by oil-producing governments to hold the inventories of oil they are pumping but cannot sell.

In short, the standard economic assumption that supply and demand drive prices is only a starting point for understanding financial markets. In boom-bust cycles, the textbook theory is not just slightly inaccurate but totally wrong.

The people who tell you that commodity prices today are driven by “economic fundamentals” are the same ones who said that house prices in Britain were rising because of land shortages.

The oil markets didn't suddenly discover China's oil demand nine months ago so this cannot explain the doubling of prices since last August. In fact, China's "insatiable" demand growth has decelerated.
BLEARGH
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