Monday, February 21, 2011

Data Overload And The Global Economy

The stock market is going to face data overload at the opening bell on Tuesday.  How the market reacts will be interesting.  Perhaps the dip will get bought.  It's become laughable at this point how inefficient this market has become at pricing in reality and risk.   The amount of risk hitting the global economy is mind boggling right now.

  • South Korea is experiencing a run on their banks.
  • On Tuesday Iran will send two navy ships through the Suez canal for the first time since 1979, while Israel views this move as provocative.  
  • Ireland elections are on Friday which threaten to force senior bondholders to incur a loss. Irish banks are experiencing an accelerating bank run and have resorted to issuing debt to themselves and then using that debt as collateral for additional funding.
  • Libya is falling into civil war which puts about 2% of oil production in jeopardy.
  • Revolutions continue in Bahrain, Algeria, Yemen.  Saudi Arabia is now surrounded by revolutions.
  • Iran is facing their own very serious revolution since the 2009 uprising.  Iran will not fall like Egypt fell.  It's been very quiet in Iran the past few days and one has to wonder when that country will erupt.  It's quite possible Iran sending ships through the Suez canal is meant to deflect attention from their own efforts to suppress the pending protests.
  • The USD is falling while gold and silver rally.  The USD reserve currency and fiat currency as a whole are dying.
  • Oil has risen over 10% in the past 48 hours.  If oil moves higher or at least holds these levels, the impact to the global economy will be devastating.  
  • Moody's just downgraded Japan to credit watch negative from stable.
  • China is raising reserve requirements to slow growth.
  • Equity markets have seen a parabolic rise on dwindling volume and rising margin.  Margin debt now stands at pre Lehman levels.
  • Food and energy inflation is rising to an unsustainable level worldwide.
  • The US is experiencing its own revolutions in Wisconsin and now Ohio as the reality of massive budget gaps is realized.
  • The US appears to be headed for a government shutdown as the debt ceiling fight lingers and the clock ticks.


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