IPFS News Link • Economy - Economics USA

Trigger Points, Black Swans, And Other Unpleasant Realities

10-28-2010 • neithercorp.us/npress

I suspect with added currency instability, $150 a barrel oil is conceivable within the next 6 months. Two years ago, high gas prices frustrated Americans, but were still bearable. Today, after two years of static 20% real unemployment and trillions in lost savings, $150 oil would crush what’s left of this economy. Another good example of resource control would be China’s domination of “rare earth”, a metals material necessary for the manufacture of most electronics and some military defense products. China regulates about 97% of the rare earth market, and is beginning to hoard the needed ore (while claiming they will not) in response to economic collapse and trade decoupling: China’s exports of rare earth fell by 72% in July. The price of rare earth metals has increased seven-fold in the past six months. Considering the fact that one of the few industries left in the U.S., computer chips, relies entirely on this resource, its use as a trade weapon is evident. While mushrooming commodity prices are a good sign of inflation in the dollar, in some cases they can also reflect the first stages of trade combat. Tracking them can give you precious insight into more insidious hazards just over the horizon.