PREDICTION COMING TRUE vis a vis Rise of Russia

Do see my posting on 3rd June, '08....and some others roundabout that time, I guess.

Russian forces have crossed into Georgia, Southern Ossetia. IMHO, Russians are the masters of the game when it comes to Ground Offensive combo of Tanks + Armored Vehicles + Infantry + Artillery ....and more.

Almost "Shock and Awe" or Blitzkrieg...call it whatever you may.

The capital of Southern Ossetia has fallen. Casualties 1500...officially.

The country of Georgia is under threat itself.

What is it for ? Oil, natural resources...one may never know. But as a layman, one can only guess.

Who's next ? Ukraine, Belarus, Latvia, Estonia. I don't think Ukraine, because it's quite formidable.

But this is SCARY....the Masters of Retreat and Attack, of Strategy & Tactics ...have applied their Logistics with respect to Ground Frontal Offensive and gobbled up a part of Georgia !

Is it ready ???? The European Missile Defense Shield....I mean.

OIL SCARCITY Cause...a Lesser Known Fact..and How to Make Money

We, as consumers of Oil, are worried about the end-prices of the gasoline/petrol.

But here's a lesser known chilling factor ..... LESSER & LESSER OIL RESERVES THAT CAN BE PROFITABLY UTILIZED ARE BEING DISCOVERED !

Check out the bar graph from hubbertpeak.com (Dr. Campbell's, I believe?) :

My take : We are on borrowed time vis a vis crude oil....it's all past discoveries. (gray shaded bars)

White shaded bars are future discoveries that have yet to be extracted.....we know the reservoirs there based on S.P., Resistivity, gamma and other geophysical logs. But, it's still to be run to production.

But, since it is only natural human psychology to only think in terms of 5 to 10 years, at the max., lot of specialists think it's over........

THE GLOBAL OIL CRISIS HAS JUST STARTED....yeah, it will be eased, just like crude oil's dropping $/barrel -wise ....but it's just a temporary respite 'cuz a few OPEC countries, led by the Saudis are revving up the oil production.

But within 5 years......DEMAND WILL FAR OUTREACH SUPPLY.

But, here's a silver lining behind every cloud :

Petro-stocks/funds, etc will be SWINGING WILDLY, one can make money buying & selling on a short-term basis.
IF THEY KNOW THE RESERVOIR POTENTIAL THE COMPANY HAS BOUGHT ;-)

Historic Blunder made with regard to a Deal

Currently, I've gotten into this habit of talking in riddles, so here goes :

No...I'm not opposing the deal itself. As it might be of strategic interest vis a vis India's N.E. 15,000 feet + A.P. border areas taking into account certain strategic placements of certain...
probably adding more 50 would have made a difference.

But what has ANGERED 95% of neutral Indians is the way in which it was achieved. And which has been revealed clearly by the media, for after all we are a democracy.
Which raises doubts as to does this foreign power wants us to totally remain within their control and hence a weak country? How much right do we really have to exercise our own free will in case there A.P. is threatened, not just the regular infiltrations that are occurring every day.

The same foreign policy mistake has been done by this foreign power vis a vis the following countries which it did not trust :

• Japan......a stronger Japan would have meant a bulwark against China & N. Korea.
• France, Germany & other European countries.....which would have served as a bulwark against an Eastern Socialist country that is now rapidly growing in power. There would have been no need of a Missile Defense Shield at all.
• A few of its southern neighbours.....now some real totalitarian regimes seem to be cropping up real fast.

" A bogeyman thought of a thousand times becomes the truth"...adapted from somebody else's quote.

Hope that doesn't become the case with this country now grappling with an Oil Crisis...

...or lack of intelligent foreign policy makers, shall I say.

OIL PRICE ESCALATION AMID CONFLICTS IN OIL RESERVE ZONES

Last posting, pointed out that 62% of Oil Reserves fall within SEVERE CONFLICT ZONES.

Now, juxtapose that with the "Hubbert Peak for World Oil" a theory propounded in the 1950s by Dr. M. King Hubbert is a Theory now widely accepted last few principles being :
1.Oil Production rises to a peak which can never be surpassed;
2. Once the peak has been passed, production declines until the resource is depleted.

I believe, we are extremely near the peak.

Of course, there WILL BE TEMPORARY SPURTS IN OIL PRODUCTION WITH DISCOVERY / PROFITABLE EXTRACTION OF OIL FROM RESERVES....

Note : Canada & other countries do have large oil reserves, but they are NOT PROFITABLY EXTRACTABLE.

Check out this graph from source : hubbertpeak.com




Note that negative figures mean NO OIL can be PROFITABLY EXTRACTED.
Positive figures = show number of years that oil can be PROFITABLY EXTRACTED.

Well, the graph, that's by Dr. Campbell, a geologist, shows an even grimer picture, doesn't it ?

I'd say, even 90% of the WORLD'S OIL RESERVES WHICH CAN BE PROFITABLY EXTRACTED FALLS WITHIN SEVERE CONFLICT ZONES.

Conflict zones where the majority of people are fluent with Avtomat Kalashnikova 47 & its variants , as also Katyushka ( Russian sense o' humour, I say) rockets...as say a Bengali is with fluently juggling deals with "real estate developers"....or a Marwari kid with day trading...or a young kibbutznik to infiltrate behind the opposite lines.

I say, this portends a SEVERE CRISIS !

....unless macro-managed, THE ESCALATIONS WILL RISE.

RESULTING IN STEEPER CRUDE OIL PRICES , "OIL SHOCK" and of course, the resultant CHAIN-REACTIONS >>> inflation, economy collapse for a few countries ( 10% at least).

This is because, when demand even for a temporary very short period exceeds supply, the market PANICS.

Message for all the auto e-mail receivers : BTW, I keep on changing / adding my auto
email postings as per my blogs, do it in a hurry. I got some 100+ on my list of all hues
and colors... including the White House, some senators to even quite a few socialists.
For example, my apologies if this reaches Feroz, and he gets annoyed for some reason...do e-mail me to let know which blogs auto-posting you would like to receive or not receive. For example, Feroz, you might want to receive getricheasily.blogspot.com but not this, do let me know. Cool, man, Take it easy....

OIL SCARCITY & GEOPOLITICAL CONSEQUENCES

I was scouring the Net for almost an hour to find an image like this....maybe I was searching in the wrong places, because it doesn't generally take this much time.

Source of this image : Oil and Gas Journal...found it on the Net.



Any way, a picture tells a thousand words, as they say.

A careful analysis of this pic tells a chilling story :

• In this globe of almost 200+ nations, the top 20 countries hold 95% of the world's oil.
• Corollary : If, even 10 of them form a strategic partnership, they can hold the whole world AT RANSOM. Very chilling, indeed.
• SEVERE CONFLICT ZONES hold 62 % of the world's oil !!! I did the maths...add up Saudi Arabia + Kuwait + Iraq + Iran + UAE + Qatar + Libya + Nigeria (do check the news, please) =799 billion barrels. THAT IS = (799/1292) x 100 = 62 %. (Maybe I dropped 1 or 2 billionbarrels somewhere, go find it...am not responsible for the consequences ;-)
• Corollary : 62% in 8 countries that are SEVERE CONFLICT ZONES where nobody is winning. This means from "mass psychology" - intensification of conflict. This will INCREASE OIL PRICES like anything.
• Europe holds almost no oil ! Though the European Union's GDP is now about 2 to even 3 times that of the richest nation, U.S.A. I project their moneypower + unity might helpthem, this based on some calculations I did which are still inside my head -)
• U.S. consumes 25% of the world's oil. But they hold just 2% of the world's oil. But I notice their population is increasing at a fast rate, thanks to rapid rate of immigrationand population growth. I think the country is headed for a big problem. Well quitefrankly, I don't have an answer for their problems. And even if I did, shouldn't I be paid $$million$$ for that ;-)
• The projected #2 and #3 greatest oil-consuming nations in the years to come, that is India and China have insufficient oil vis a vis their demands. Severe inflation will hit these 2. Though there may be temporary let ups.
  

But, in these uncertain times, only a handful of people who can gauge the WILD UPS AND DOWNS of the market will MAKE A HUGE AMOUNT OF MONEY. (no peace of mind for them,though).

This is fact, dunno if it's good or bad. I'm just a neutral analyst, BTW.

GLOBAL ECONOMY REVIVAL SOLUTION...Problems & Solutions

1 Single Economic Problem can be solved most successfully by a Specialist.

Multiple Economic Problems, inter-connected, factors that have to be considered(economic,global security,geopolitical,"mass psychology",national considerations) can only be solved by a Generalist. Reason: A Specialist has a 1-track mind, a Generalist keeps his mind open.

Here are the PROBLEMS of the Global Economy right now...and in the persisting future. WARNING : Problems will sometimes seem to disappear, but only TEMPORARILY :

• Crude Oil is $140 / barrel. My prediction of it touching $200 / barrel (made in January 2008) now seems to be an accepted fact arrived after much calculations by the world's leading economists with Ph.D.'s, MBA's & what not under their belt.
• $140/barrel to upwards to $200/barrel will cause severe . The Money has to come from somewhere - where from ? The Banks, the Reserves, the Gold, Forex.
• Deficit.....$ trillion deficits by many countries....Apply Common sense. You owe the bank lotta money, the collector's gonna come some day, ain't it ? The deficit & amount owed by certain countries is mind-boggling....obviously the big manufacturers will stop having confidence in selling their stuff to these countries.
• Deficit Corollary. The relative devaluation of certain currencies will cause investors to flee certain markets....the stock markets will plunge drastically.
• Stock Markets Over-valued. This is especially true with respect to some developing countries where Foreign Investors (Institutional or Direct or otherwise) come flocking, make a "fast buck", buy/sell within months, and disappear to some other green pastures. Their own citizens are most to blame, buying and selling in hordes. These countries' stocks are highly over-valued. Obviously, they'll crash. Some have now crashed to realistic levels.

I've run out of time...could carry on & on.

So let me offer hasty SOLUTIONS :

• Deficit should be cut down at all costs. Increase tax. Encourage small businesses, instead of just appeasing the big monopolistic ones. This is especially applicable to developing countries.
• Oil rationing should be made part of a nation's policy. A radical thought, but any other short-term solution ?
• Developing nations' oil/gas companies should be privatized. To cut down on unnecessary costs.
• Human population Control.....In many sense, this is the numero uno problem.
• Over-reliance on specialists should be stopped IMMEDIATELY. Entrepreneurs, businessmen and even a few Under Grads might be able to offer "out of the box" solutions.

IN CASE THE DEVELOPED NATIONS FORGET....this was the way they became RICH NATIONS. U.S.A., European Countries, Asian Tigers took the lead not through a structured system.

But how do you recruit for part-time/freelance these generalists?

Very easy....let the countries' authorities apply Open Source Intelligence or OSINT , commercial I mean...(readers who don't know the meaning can search extensively via Google Search)

Gold price exponential rise post 9/11....get it before it's too late

Well, folks....one only has to look at the Gold Price (U.S.$ / ounce) post - 9/11 to arrive at certain conclusions.

Image source of graph is kitco.com :

My take :

The price covers a time range from 1975 - 2008 ...i.e. 33 years . I see a humongous peak round 'bout 80....time span is relatively moderate.

But check out how gold price is climbing steadily post- 9/11 !
In fact, the spike started from 1978....about the time when there was the OPEC First Oil Crisis, I guess......

But, remember, that was a relatively peaceful time....

The climb post December 2001....goes on and on and on....

PLUS......THIS IS IN DIRECT CORRELATION WITH THE ESCALATING GLOBAL TENSIONS.

But, then...the IMPORTANT QUESTION IS : how far has it climbed - % wise ?

If you look at the %wise climb ......I believe, one can STILL BUY GOLD.....

Wait till 5 years till the world is a bit calmer.....& SELL.....

Escalating Conflicts that will drive up Oil Prices

Besides Iraq, Iran & Afghanistan...there are some other conflicts/situations that will drive up oil prices:

• Escalating Nigeria conflict between Northern & Southern parts.
• Iran Pipeline thru' Afghanistan to India & beyond in jeopardy as the entire stretch is conflict-bound.
• Yemen Islamic fundamentalists & Qaeda elements infiltrating Saudi Arabia.
• Russian oil pipelines under threat from Chechen militants.
• Turkish infiltration into oil-rich Kurdistan
• Central Asian countries' destabilization due to Turkish ambitions and over-ambitious oil companies.
• Kuwait oilfields under the shadow of the Shia Crescent rising in power.
• Same applies for the smaller countries of the Mid-East

Global Conflicts cause Rising Oil Prices that Trigger Inflation Hike

Global conflicts ...some new fronts might open up : such is the worry in the market.

A few such are : A massive Israeli military exercise and some remarks that point to a possibility of a confrontation with Iran. This is speculation...but if it happens it will have massive impact on oil prices.....MASSIVE. reason is 40% of the world's oil passes through the narrow Gulf of Hormuz off Iran. This is an extremely strategic area.

A conflict in Iran might mean shutdown of oil from Iran as well as Iraq as all the oil has to pass through this.

Recent attacks in oil-rich Nigeria......these are hit and run operations from speedboats.

The ongoing Iraq & Mid East Crisis. Pipelines are easy targets and there is no cheaper alternative to it.

Oil Prices are hence on the boil.

Leading to massive global inflation.

My crude oil price predictions coming true

Do see my earlier posts when I predicted crude oil CAN EVEN TOUCH $200 / BARREL by 2008 end !

People were skeptical...I guess they are not now. Oil's touching $ 140 / barrel . It was $ 65 / barrel last June.

Check out Graph source is from www.wtrg.com ....





So.....what does it imply ?


Massive inflation rate globally.

Countries that are not able to manage macro-economic factors, falling into debts.....will have to repay it sometime....and in

the process suffer severe losses.

I would bet the European Union would DO STRONGLY ON A LONG-TERM BASIS.

If you are a global investor, buy blue-chip European Stocks.
Developing countries' blue chip stocks buy after serious research.

Wasn't Nostradamus a poor feller like me ? Heck, who cares ?

Predictions come true again - Indian Stocks nosediving

Check out my last post....when I said the Indian stocks are way over-inflated.

Well, as I write....the Sensex (Indian equivalent of the Dow Jones) has nosedived below 15,000. Check out the graph I gave last post...... It's elementary to note from such a sharp steep peak.

Well, here's the quantitative analysis :

• Crude oil prices sky rocketting, now it'll breach $140 / barrel
• US subprime lending problem
• Global credit crunch
• Inside India...rising inflation rates
• Slowdown in domestic industrial production numbers
• Middle East Crisis may deepen with Iran flexing up its ante
• High inflation rates, ACTUALLY double digit (real rate, that is....it doesn't take a genious to figure out it's double digit already if one goes to the market)
• slowdown in GDP has been reported
• corporate earnings have fallen in many key sector year-to-year basis
• Foreign investors are fleeing the market. Problem with most Indians is that they have very little confidence in their own stock markets.....whenever they see FIIs fleeing, they start dumping their own stuff. This is a crying shame.
• Another big factor is - Indian Prime Minister Dr. Manmohan Singh 's hands are tied. He saved India from ruins way back. But now, political compulsions have forced him NOT TO TAKE BOLD STEPS........this may be the SINGLE MOST IMPORTANT FACTOR TO THE INDIAN STOCK MARKET TAKING EVEN MORE HEAVY BLOWS.

But I think the good news is:

The lowest level the SENSEX will go down is to 12,000. I've come to this figure inputting all the factors cumulatively. This is THE REALISTIC FIGURE.

In fact, even now, one can buy into some blue chip stocks.
As also steel, I.T. (those which depend heavily on offshore projects), pharma, banks, cement.

U.S. Stocks (DJIA) versus Indian Stocks(Sensex) .....graph analysis

I'm comparing this graph (Graph source: yahoo.com) Indian Stocks (Sensex) versus the U.S. Stocks (Dow Jones Industrial Average).

Red line = DJIA

Blue Line = Sensex

Note that the graph is a linear one, not logarithmic.

Well, I find something fishy over here.

Sure, the Indian economy IS GROWING at a fast paced, blistering rate. The U.S. economy is slowing down.

But is the DIFFERENCE so great ????

And this is a percentage % increase graph.......so that's why I think the Indian stocks are quite ..................
OVER-VALUED.

Note the extremely SHARP RISE OF THE GRAPH AFTER 2005 !

Just too steep a gradient. Beats me......

Rise of Russia .....within the next 10 years

Last posting...I predicted the Fall of the Chinese economy. I hurt a few of my friends who happened to be socialists in this part of India....waaaah, waaaah...so sorrrrry.

And, this is for Alana del Valle Israel, who I thought was from Israel, but who turned out to be from Phillipines, actually in the U.S., but dating an Indian. Globalization 101 (practical lab) for me.

But you see, my dear readers, I only write from an OBJECTIVE, NEUTRAL point of view.

So, here's my prediction as to WHY Russia will rise again. Quantitatively, here are the points :

• Russian Military & Defense Strategies. They are one of the best in the world, IMHO. Historically, Russians have proven to be masters at this. Flashback the Great Russian Retreat from the forces of Napolean and the unthinkable crushing of Napoleon's mighty forces. This was the beginning of Napoleon's downfall. Cut back also to World War 2. Russian Retreat straight back uptil Stalingrad. The Battle of Stalingrad. The Germans never recovered from this. This was the beginning of Hitler's downfall.
• Russians still have the largest number of nuclear warheads, I believe. 17,000...as against 10,000+ of the U.S. Though the accuracy of these nukes are bad.
• AK47 (Atomotav Kalashnikova) was designed by Mikhail Kalashnikov while he was in a hospital bed. I blame it on the nurses, I tell ya...had they paid proper attention, this mischievous, most innocent looking genious wouldn't have gone about making such stuff. The design was so flawless that it has stood the test of time. 60+ years.......think 'bout it. So, They posess one of the best brainpower. Their mathematical ability is acknowledged as one of the best. Apply that brainpower to warfare and you have a deadly cocktail.
• ECONOMY. Russia has had enough flow of capital into its system. It has huge reserves of basic stuff, like oil, ores, etc.
• Oil. Russian has struck extremely clever strategic partnerships with Venezuela and other countries, and has not angered the Middle East OPEC countries. It can later utilize this.
• Politically, I really don't want to comment much.....but at least compared to China, there was no vast disparity between the urban rich and the rural poor during the time of the Soviets.
• Middle tier and small businessmen could flourish in Russia.....if this is allowed, economic backbone will remain strong.
  

Russia does have quite a lot of negatives like suppression of civil liberties and stuff like that, which I stronly disagree with. But then, this is just an objective analysis.

...........To Russia with love

CHINESE ECONOMY WILL COLLAPSE WITHIN 5 YEARS

My words have come true in the past...check out last post when I PREDICTED oil prices will rise.....it rose sharply to $112 / barrel.

But then, it is for history to judge the veracity of the statement I just made.

The main reason might be a QUALITATIVE ONE...maybe since just a few policymakers cannot control the economy of 25% of the world's population....maybe the system put too much pressure on the inhabitants of the mountains and plateaus of China, that make up more than two-thirds of its geographical area....maybe something far, far more fundamental.

But then, here's the QUANTITATIVE ANALYSIS :

1. Such a vast economy just CANNOT BE CONTROLLED by a handful of people. It needs a huge number of economists. Who have to have freedom. Freedom to collect neutral data, statistically analyse them neutrally, publish their findings neutrally. DEMOCRACY is needed to make the right decisions on the basis of their findings.
2. Massive disparity between the urban and the rural in China. The Chinese urban rich people live in plush apartments, enjoying lifestyles that are the envy of even middle class people of developed countries. The rural poor are forced to work in coal mines just to have two square meals a day. Thousands die in a year from coal mine collapses. Bloggers, check the Net for correct figures.
3. Environmental degradation of the WORST KIND has occured in China, thanks to human greed. Thsi has resulted in collapse of eco-systems, collapse of rural economies, collapse of rural cultures.
4. Uprising. In the Plateaus of Tibet (Xizang Province) they started. It has spread like wildfire. To parts of Sinkiang (Xinjiang Uygur) ethnic Tibetan groups and even Qinghai province. In exasperation, even the most non-violent, ever-smiling Dalai Lama has been attacked. Dalai Lama....IMHO, one of the most wise man on earth today. And the uprising has spread, and spreading......My friend Tsen Hsu once said, "One day, A wind shall come down from the mountains of China, my friends. That will sweep away the greed of the plains people of China, who control the country."
5. Oil. The fastest growing Chinese economy needs a vast amount of petroleum. Its foreign policy is so rigid that it will cease to get oil at the right prices from the OPEC countries.
6. Islamic fundamentalists are growing in power in Eastern Turkestan part of Sinkiang (Xinjiang Uygur), infiltration from Kazakhstan, Tajikistan, Uzbekistan, Pakistan Northern Areas and Afghanistan follows. This will be a MAJOR threat to the Chinese.
7. Massive military spending for developing Missile Defense System, ICBMs, IRBMs and conventional weapons will put strain on the economy.
8. Cheap "artificially controlled" prices of Chinese goods. As capitalism comes into China, the demand and supply chain will result in prices suddenly spiralling out of control.
9. China's stock markets are globally linked nowadays. How can you insulate it, how long can a handful of people insulate it from the GLOBAL CAUSES AND RESULTS ??? Tha markets will collapse.
10. The rural economy is already COLLAPSING.

End- Result : Massive collapse of the TIGHTLY-CONTROLLED, TWO-SYSTEM ECONOMY OF CHINA. Not a mere recession...not even an economic depression....but a total collapse.

BTW, a trillion $ question : how come the Dalai Lama never stops smiling -)

Oil prices might rise from today's $98 / barrel soon

This is immediately attributable to the fact that Turkey's troops have crossed into Iraq's Kurdistan. Kurdistan is oil-rich.

More than that it has high oil potential reserves. Are they after Iraq's Kurd-dominated Mossul, Kirkuk oilfields ?

Factor in also the Iranian unrest.

Escalating demand expectation from India after launch of world's cheapest car.

Venezuela - Russian agreement.

And, as I said earlier.....realization sinking in that the Earth is running out of oil that can be extracted profitably.

My global friends might start buying oil even at this price -)

Asian Stocks Slump.....are the fears justified ?

Today, we saw a meltdown of all the Asian Stock Markets......I was especially surprised at the Nikkei registering its sharpest fall since 9/11.

Are things really that bad ? I don't think so....

The U.S. economy might tend towards a recession, based on which assumption there was a reduction in the funds rate from 4.25 to 3.5 percent, that is 75 basis points. This, BTW, marked the greatest funds rate since 1990.

But then, such a move was aimed two-fold :

1. To prevent a recession
2. To prevent a panic global stock sell-off.

It might cause the opposite !

Because, the greatest rate cut in 18 years , AMIDST ALL THIS TALK OF RECESSION IN 3-4 COUNTRIES, would unnerve all.
Result: More and more people would sell off.
Leading to, of course.....more stocks slumping.

If outsourcing is ended, U.S. Economy might hit deep recession

It is the Era of Globalization.

One has to accept that developing countries would be exporting at much lesser prices, much lesser than the Euro or the U.S. $. price tag, be it on textiles or be it cars.

But then, at the same time, to stay afloat / make more profit, developed countries' companies have resorted to "outsourcing"......this is NECESSARY.......as it doesn't take much for a rival company to beat you....it can steal the thunder in 2 quarters.....

It is the "outsourcing" which has kept the U.S. economy afloat.

Let's take a look at the stock charts for the last 5 years
Image source: finance.yahoo.com
If we look at the Dow Jones Industrial Average for the last 5 years,

the profit percentage is much lesser than the Indian stock market.......it is apparent from the "COMPARATIVE STEEPNESS" of the 2 curves. The Indian stock markets had a far greater higher RETURN.

Even if you look at the 5 year chart (Image source : finance.yahoo.com ) of Singapore Straits, it shows a steady rise.......




Which is why, U.S. global investors are pouring in funds into Emerging Markets.

Again, one has to keep in mind, that the U.S. economy is doing this well primarily due to outsourcing.

If the Democrats come to power, and put an end to outsourcing.....rival European companies would start "outsourcing" to developing countries........and even some U.S. companies would find a way around to beat the others.

Geopolitical Crises that can trigger Economic Booms and Declines

It's an accepted notion, an accepted fact that Economical Growth and Decline are to a large degree governed by Geopolitical Crises and Maneuvering.

Let's look at the coming year of 2008. What have we here, folks ?

The Crisis in the Middle East is not waning. In fact, certain events are leading to greater instability - events like the global tension in Iran, the Benazir Bhutto assassination, the desperation of the Bush Administration since 2008 is election year.

Add to that a growing understanding amongst the OPEC countries.

Add the factor of high ESCALATION OF GASOLINE DEMAND IN DEVELOPING COUNTRIES.

END -RESULT : Oil Prices will skyrocket.

So, this will trigger inflation.......this inflation will hit most countries DEPENDENT on oil the most.

What about the leading economy ? The U.S. economy ? It is heavily into debt....and add to that the burden of War.

IMHO, we will see a further DECLINE in the U.S. $ against the Euro and all the developing countries' currencies. Furthermore, this decline is also due to an "artificial mass psychology" effect. If Gurus like George Soros , Gates and Warren Buffet openly state that they are dumping the U.S. $....won't it's value go down ?

The European Union is a HUGE ECONOMIC ENTITY......it's GDP is 1.5 to 2 times that of the U.S.
......It's a not much known fact. This will start to call the shots slowly in the global trading strategies. However, IMHO, it's still unclear HOW WELL THE European markets will perform.

Focus now the Asian economies like China, India & the Pacific Rim Countries. These, in the abscence of conflict, and taking advantage of the selling of their products at a cheaper price...However, I think China will start to face a GROWING CRISIS because it's economy is TOO CONTROLLED.....
.....However the rest of the Asian Economies WILL CONTINUE THEIR ECONOMIC BOOM.....though a bit chaotic.

So, best picks for the GLOBAL TRADER are certain MARKET SEGMENTS that will PROFIT within the DEVELOPING COUNTRIES' ECONOMY.

The best segments are obviously INFRASTRUCTURE -ORIENTED ......like Steel, Cement, etcetera. Almost all companies in this sector should outperform the basic market indices.
Outsourcing will lead to boom in the I.T. sector....however one has to do thorough research. Not all companies will fare well.
Export at cheaper prices will benefit the consumer goods and pharmaceutical sector also.

Global Economy Indicators....is it a war economy ??

It might be a bit early to say that it's a total war economy, where gold, silver prices are rising.

But then there are other indicators too:

The developed countries' stock markets are not giving good returns.....investors there are turning more and more to investing in emerging markets.

Now, check out the following graph:



Study the graph above......graph source: stockcharts.com

Note, the steady fall of the U.S. $ (red line)...it begins to fall post 9/11 .....of course, there's a buffer time period, the fall starts from 2002 end of first quarter.

Check out the rise of silver prices (blue) , it starts rising from about start of 2002....

It's exactly inverse proportional !

And that trend is continuing till as of today.

Now, wouldn't you say it's a global war economy ?...........

God knows

My prediction regarding gasoline prices have come true

Folks, please check my blog post dated August 15th , 2007.........3 months back.

Gasoline prices then were $ 73 / barrel , and I had predicted a very, very steep hike in prices $ / barrel.

The price today is $ 97 / barrel....it touched $ 99, but failed to break the psychological barrier of $ 100....

Anyway, if I sell today, how much profit do I make ?

32 % in 3 months.

As for sky rocketting prices within the recent period, check this graph from wtrg.com , portraying NYMEX Crude Oil:




The basic factors pumping up the price are the same as pointed out on August 15....

The "mass psychology" factor is starting in factor in slowly and steadily, as more and more people start to become aware of the Hubbert Peak of Oil Production.

This peak, which is , of course , IMPOSSIBLE TO PREDICT, is to come by around 2010 ......

After this, the RISING DEMAND FOR OIL CANNOT BE MET BY THE EXISTING SUPPLY.

My prediction is by year - end of 2008 it should touch a minimum of $ 150 / barrel.

There are going to be temporary slumps, but the macro -trend is up, up & up.

AL GORE - PACHOURI WIN NOBEL PEACE PRIZE.....

The Nobel Peace Prize has gone to the worthy, for a change....

It's a victory for environmentalists the world over......


Al Gore for president ?

Right Time to Invest in Gold

This just might be the right time to invest in gold. Market gurus are saying its the weakening dollar & a nervous global market. But it could be a culmination of many factors :

1. One is of course the weakening dollar, against the euro & other strong currencies. That always historically pushes up the gold.
   
2. It's basically a wartime economy, folks. Some analysts are of the opinion VHNWI 's are hoarding up on gold in billions. Besides these some corporations are also stuffing up gold.
3. This leads to a temporary shortage, pushing up gold prices even more in the future.
4. Further terrorist attacks or even the threat of further attacks will boost up gold further.
5. There's a credit crunch, leading to gold price increase.

It's Gold Rush 2 ...... INVEST before it's TOO LATE

GASOLINE PRICES……..LONG TERM PERSPECTIVE

We are seeing a slight hike in oil prices, about to $73 a barrel….this due to fears of a major storm strike in the Gulf of Mexico petrochemical & oil facilities.

But these are probably short-term rises….what prediction can we make on a long term…say 2-3 years ?

I’d say a very, very steep hike.

The reasons are:

The crisis in the Middle East show no signs of declining. In fact, they are escalating. The relation of quite a few oil consuming countries with Iran is deteriorating.

Then, there’s a nexus between some OPEC countries like Venezuela, Iran with China & other consumers…..this would cause a lot of jitters in Western & Far East capitalist countries.

Gasoline consumption of developing countries like China & India are increasing exponentially.

Russia has overtaken the U.S. to be the second largest oil producer….and Gazprom is . Russia is flexing its muscles, and seems to be on a trade agreement with anti-capitalist allies.

And lastly, the MOST IMPORTANT FACT :

THE GLOBE IS RUNNING OUT OF OIL………some predict we have oil only till 2050….and by 2015 there would be a shortfall of 25%

It is a corollary of the Hubbert Peak of Oil Production.

So, my prediction is…..fear will drive the oil prices sky high.

SO THIS MIGHT BE JUST THE RIGHT TIME TO BUY THOSE OIL STOCKS…

THE COMING PANDEMIC & THE THREAT OF HUMAN EXTINCTION

As we are relying more and more on antibiotics, modern medical marvels, IMHO…we humans, the hairless apes who are now dominating this Blue Planet….are living on an “artificial life support system”.

This might sound shocking to you, but many experts agree this is the TRUTH.

Look around us……observe closely those “inferior” creatures who are around us – starting from the domesticated animals to the creatures of the wild.

Let’s say, bird flu or a dangerous strain of the ebola virus hits us.

WHO DO YOU THINK HAS A BETTER CHANCE OF SURVIVING?

The so-called “inferior” animals, through millions of years, developed a robust immune system…..they have been through hundreds of such bacterial & viral outbreaks…..the weakest have died in the beginning….much the stronger ones have survived.

Now, they are much equipped to fight off a pandemic like the Bird Flu. Sure, millions would die. But the majority will survive.

But, I don’t think humans have much chance.

Man of today, though much advanced in his “cranial capacity” is, from a biological point of view, a much poorer specimen than the Man of, say, 10,000 years back.

I think, the viruses & bacteria, under attack from our antibiotics & modern medical armament, are constantly mutating….more & more DEADLIER versions are coming up…and they will win……EVENTUALLY.

Let me turn around that famous quote “Life will find a way” from Jurassic Park, and reframe it in this way…..

“ The Microbes will find a Way”

Here’s a few facts:

Man has been around for some 2 million years.

Scorpions are thriving for 425–450 million years…

Spiders have been around for 400 million years…

Turning to more aesthetic creatures, the true cats were there 30 million years ago…

Long Term Market Prospectives

Though quite a few are pessimistic about the long-term prospects......I think you can buy quite a few blue chips...Google included

GROWTH OF GOOGLE…..

Google is set to be the greatest software giant mainly because of its vision.

We are witnessing a paradigm shift in computing, I.T. , ITES & the media. In the future, most of our computing / I.T activities will be on the Net. The success of Google has been due to its ability to understand this trend.

We bloggers are one example of the media shifting towards the Net. So, obviously, the advertisers are also shifting towards this new medium, from TV’s, movies & other channels of entertainment. We already have online videos, courtesy Youtube. There will be more CONVERGENCE.

Then, of course, there is the legendary Search Engine, which is now dominated by Google. In the future, more complex SQL facilities/parameters should be added to refine searches. Maybe, we might be able to query information FROM MULTIPLE WEBSITES into a COMPOSITE RESULT.

We already have some of these…like Google News, Google Groups, University, Scholar Search, Book Search.

We are also hoping for acceleration of the process of ONLINE PUBLISHING……Google already has a headstart…blogging is just the start of a REVOLUTION.

There are also useful applications like Docs & Spreadsheets which can be incorporated.

Then, take GOOGLE EARTH. IMHO, this is probably one of the greatest achievements on the Net. We have the entire globe at our disposal. I hope more & more LAYERS OF INFORMATION are added. After all, “a picture tells a thousand words”. With more R & D, this layman’s GIS will GROW…..

We hope Google adds querying facilities to Google Earth. It can, potentially, be the growth of the greatest software of this century. THEORETICALLY, you can put ALL THE DATA OF THIS GLOBE INTO THIS SOFTWARE. It could also be glimpses of real-time, with updates.

We should also have TOTAL DEMOCRACY FOR PROGRAMMERS....

Let’s say some software giant wants to fix it’s Operating System bug….It’ll post the problem it’s having, with some PRIZE MONEY OFFERED FOR SUCCESSFULLY FIXING THE BUG…..Programmers can dump their codes into an EVALUATION STORAGE of the SOFTWARE GIANT FACING AN O/S BUG…..the guy(or team) whose code(s) fixes the bug gets the PRIZE MONEY OFFERED. This’ll also save the company a huge amount of money.

FALL OF THE SENSEX & OTHER GLOBAL MARKETS

We have been witnessing the fall of global stock market indices, besides sharp falls in the Sensex.

This can be attributed to GLOBAL FACTORS + LOCAL FACTORS + MASS PSYCHOLOGY (call it “domino effect”).

Global factors……The Dow witnessed sharp falls a few days back…this was due to “bad lending” by sub-prime lenders….causing panic globally. Of course, if they fail, the lenders’ / banks / financial institutions might be in a mess…… So the Dow fell….)

Second factor was markets were overheated.

This led to Dow witnessing falls of around 2% & falls in the Pacific Rim Countries’ markets…fall on 14 March was Nikkei 225 (2.92%), Shanghai Composite, Sensex(3%), Sydney's S&P/ASX 200 (2.1%), Singapore's Straits Times(3.17%), S.Korean Kospi,(2%), Hong Kong's Hang Seng (2.8%)…..

Now let’s turn to the SENSEX.

It had touched a high of 14,500 in January 2007 & was expected to reach 15,000 + within March.

But then it started having mini crashes. It was going down to 12,500 ‘s, bounced back…people were optimistic….

But today it is down again at 12,900…..& the pundits were saying it should have been 16,000 + by this time (they were making this prediction in January)….

???Why this crash....

First of all, we're overly spooked by the GLOBAL FACTORS.....

But mainly.....

The SENSEX is witnessing a general MELTDOWN because of inherent weaknesses…..this had been previously warned by major market analysts…Merill Lynch, S&P, etc.

…….will be exploring LOCAL FACTORS & weaknesses of the Indian market next blog

;-) It’s not that weak…I should say 11,000 is the best “support level”.

Future Political Destabilization in India?

Recent assembly elections were held in Uttarakhand, Punjab & Manipur. The result? The Congress lost power in Uttarakhand & Punjab, but held on to Manipur. Now what does that mean?

Anti-incumbency was not the only cause. The underlying reason was the failure of the state governments on the economic front.

Price hikes of 9% (real value)…not talking of Consumer Price Index or Wholesale Price Index, only. WPI & CPI do not reflect real inflation. This over a sustained period of time caused angst among the voters.

The UPA government came to power in May 2004 highlighting failure of the NDA on the rural front. So obviously, there was great expectation amongst rural voters. But Congress failed miserably managing this front. So, in the Assembly elections rural voters went the BJP way.

In the urban areas, the UPA lost due to rising unemployment & rampant administrative corruption.

So, what does this project?

The coming U.P. elections are going to be a bad for the Congress also.

Remember, Congress has only 145 out of 543 Lok Sabha seats. It is artificially “supported” by the Communists, Samajwadis & most importantly other regional parties.

The Communists would come in a collision course with Congress due to differences in economic policy.
The Samajwadis are already in conflict with Congress after withdrawal of support in U.P.
The major blow would be the non-support of regional parties of South India, especially Tamil Nadu. (where also Congress is becoming unpopular).

The magic figure is 273…halfway of 543.

Communists are “blackmailing” the Congress.
SP has withdrawn power. After U.P., it will definitely never give support.
The key lies with the regional parties. DMK+ has a huge number of seats. If they decide they can get better governance with the BJP in centre, it can withdraw power. Or at least threaten to.

Which means…..UPA can fall short of 273

The key lies with DMK+……if they withdraw, the Left Front do not have the numbers to prop up the government.

The present government falls. Another mid-term elections…..

But this scenario is based on many “if-what” scenarios……it’s difficult to predict a total fall.

But I’m 100% sure, Congress would be in severe pressure for the next 2 years it is in power in India. (till May 2009 Lok Sabha elections, that is)

Fall and Rise of the Communist Blocs

1990’s saw the fall of the much touted Soviet Union.

The free-market driven countries heaved a sigh of relief. But they made a mistake of not aiding the fallen satellite communist countries of the Soviet Bloc.

Then came 9/11 & the rise of the Islamic fundamentalists.

Right now, the democracies of the world are making another great mistake. They are concentrating almost 90% of their energy & resources in the “War on Terror”.

THE RESULT : Totalitarian China has risen exponentially. Russia is also much stronger. Human rights in such totalitarian regimes are abysmal.

Not to speak that China is responsible of wiping out an ENTIRE SPECIES - Panthera Tigris …( the tiger ).

All we can do is just sit & watch….switch the channel, maybe ?

And maybe just watch with concern when Kim of North Korea when he fires one of those Taepodong II missiles ?

??? Why are the democracies of this world afraid to tackle the main problem, the main threat ?

Time to remember that old proverb …….“A stitch in time saves nine “

Middle East Oil …..”closed circuit phenomenon” ?

Thanks to the IMMATURITY of the Bush Administration, it seems the Midlde East is headed towards further destabilization. Such things would have been unthinkable during the Clinton-Gore administration.

What can be real threatening is what I call the “closed circuit phenomenon". It is a frightening scenario. The OPEC countries can shut out a significant part of the democracies, & trade oil to dictatorial countries.

Put in together Saudi Arabia, Iraq, Gulf States, Iran, Indonesia, Venezuela. They hold 80%+ of the oil. What they do is start trading with Russia, China & other dictatorships.

Democracies like India, Taiwan, Japan (the list goes on) are totally helpless in such a scenario, as they do not have sufficient reserves.

YOU HAVE A TRUE NIGHTMARE SCENARIO.

DISTURB NATURE, AND IT WILL DISTURB YOU

I must turn to the sad state of the environment. The major issues brought about by the activities of the human race are : deforestation, systematic killing of wildlife species, fossil fuel emissions, “artificial management of ecosystems”, population boom, etc.

Deforestation rates in rain forests is at an alarming rate, and you must remember that these are “ecological hotspots”. One strategic species goes missing from the system, and it can endanger a whole ecosystem web.

Tigers, snow leopards & countless key species are on the verge on extinction, thanks to the Chinese & others. They beam “If the buying stops, the killing will also”, but stopping the buying is actually a low priority in the minds of the people in power.

Mankind is worried only about Global Warming, because we think it’s the way Nature will strike us. Of course, hurricanes can eliminate thousands, tsunamis can decimate hundreds of thousands, but Nature can strike in innumerable ways.
& I’m not talking only of bird flu killing off just a few millions. BE WARNED….

Humans are making big bucks artificially managing ecosystems, introducing one species to offset other species exponential population growth. It is amusing to see developed countries like Australia obsessed with this, now targeting feral cats.

Rule # 1 of the Natural World : It is impossible to control Nature by one who is a sub-set of Nature itself.

But of course, the greatest threat is the population explosion, and you can thank the antibiotics for that. India seems to be in a mad frenzy to beat the others, followed by quite a few countries. They don’t address the issue because of vested interests.

The only solution is to have responsible people like Al Gore at the helm of the leadership in quite a few strategic countries. Unless politicians take initiative, the problem of Global Warming cannot be addressed. We, the common people, environmentalists, wildlife activists, etc have been trying for changes for decades, but the reality is : we’re losing.

Another factor is the participation of rapidly developing countries who are rampantly destroying their vegetation & other natural resources for a few yuans more. China leads the list of rogues, being responsible for the destruction of a keystone predator species, the tiger. Other countries like Brazil are also cutting down on the ecological “hotspots” of the Amazon Rain Forest where most of the biodiversity is concentrated. India’s role is also unsatisfactory.

That is why visionaries like Al Gore, Maneka Gandhi are needed at the helm of affairs. I believe a miniscule percentage of the human species really care about the environment, but still proper networking & unity amongst them can turn things around.

However, much as our species think itself invincible due to its cranial capacity…….I believe NATURE WILL STRIKE BACK….(it has already begun in a very small way, it is amusing to see how we are already alarmed). In future, I will dwell in details on the scenarios of Nature’s Revenge.

Oncoming War : A Closer Look

As of today, what's going on, folks?

1. CUBAN MIS(HAP) CRISIS : Not the Missile crisis of the '60 s......but, it seems more hardliners are coming in, Raoul & all. What does it mean : more headache for the US, Canada, etc. B'coz it means Venezuela, Mexico & some other Latin American countries are going to join the party... What it means is: more OIL CRISIS, because of Venezuela....start investing in DOMESTIC OIL STOCKS, because Oil Companies that depend more on overseas oil basins are IN CRISIS.

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2. CHINA FACTOR >> "Dumping" of market goods through "artificial price control" will happen bigtime. The target: European markets + N. American markets. Now, these goods are mainly consumer goods ( categorically textiles, electronics, etc.). This will depress the consumer stock markets....You should get out of these within 1 year. At the same time buy into Steel & Cement because of construction going on in China & India.

War Escalation & Rising Stocks

As things look of now,

CONFLICTS WILL ESCALATE

Let's look at the threats first....
then look at how the Free World will react.....
& what it means to the stock market

A. THREAT FROM THE COMMUNIST BLOCs

1. The Communist bloc of countries have gotten a breather after 9/11. As the capitalist powers are engaged in fighting the War on Terror, China is becoming more & more stronger. There will come a time when Chinese expansionism will come in direct conflict with the interests of the Free World. I'm not talking of mere market squabbles. There is bound to be conflict.
2. Some Chinese allies (N.Korea & others) will take the opportunity. Or rather, they are already flexing their muscles...Taepodong ICBM missiles & what not. But then, these are basically monor compared to Threat
3. Russia. The capitalist countries should remember that a large part of their nuclear arsenal is still at large.
4. The other rising Latin American communist blocs, like Cuba & Venezuela. Some other socialist countries are already opposing

B. THREAT FROM THE ISLAMIC FUNDAMENTALIST FORCES

1. The Taliban is regrouping in Afghanistan Central Asia. The Western Baluchistan & NWFP areas of Pakistan are virtually run by them. As experts agree - another 9/11 scale attack is not a question of if, but when ?
2. Iraq/Syria/Mid East Sunni powers have aligned with Islamic fundamentalist forces
3. The Rise of the Shia Crescent. Iran, S. Iraq, Syria through to Lebanon. Not to speak of Iran going nuclear.

HOW THE FREE WORLD WILL REACT

Further terrorist attacks on Western & other capitalist powers will follow, FIRSTLY from the Islamic fundamentalist powers. This will definitely mean counter-attacks by USA & its allies. Nuclear confrontation cannot be ruled out, from either side.

Severe oil price hikes will follow

The Communist Bloc will act opportunistically. Their PRIMARY OBJECTIVE would be to cripple the capitalist market, through "dumping", "artificial price control" or othe means

? STOCK MARKETS :

Overall the indices will act see-saw. Not the trend you are familiar with today. But some stocks will rise after the initial see-saw.

Defence stocks. Their rise will be inevitable. Look into companies specializing in these sectors : companies associated with nuclear technology & missile components, suppliers of missile components & aero-defence, imaging & other surveillance companies

Oil stocks. After initial see-saws, they'll rise.

Steel & cement/infrastructure : Construction follows destruction, remember

AVOID : Fast Moving Consumer Goods Stocks, any stocks associated with spending.

REASON : Consumer spending/confidence will decrease

Next, I'll go into DETAILS of future conflicts, theatre by theatre. As well as how the markets will act.

I'll sometimes focus on the present geopolitical scenario, or what's a blog ;-) ?

Emerging Market Players

In these times of change, let us look at some sectors.

INFORMATION TECHNOLOGY :

We are evolving more & more towards a networked society. Where knowledge is shared, so that maximum utilization can be made.

I guess you can put your money on companies that are harnesing the potential of the Net, such as Google. The success of the search engine was just the start. Now one has a whole gamut of services, be it news, blogs, books, open source codes, photo organisers....

But the real stunner, to some, is Google Earth. You can travel to almost any part of the globe (it's like taking a free chopper ride, I'd like you guys to explore the river valleys of the Himalayas, or the Andes)....There seems to be a "gold mine" of Geo-spatial Information still hidden...

Google Earth will evolve, value additions will take place through merging GIS applications, as well as "real time" globe scanning, imagery intelligence, town-planning, etc.

Think of the potential :

You want to take a hike in the Himalayas, let's say to Pindari Glacier during the monsoons....log on to Google Earth RealTime, zoom in ...see if it's raining in there, see if there is any landslide before Dwali or not cutting the trekking route.

A dam with hydel power capacity needs to be built across a river. Civil engineers can study the flow variations in "real-time" for a more effective construction.

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CONVERGENCE . It’s the next big thing. You got PCs, mobiles, PDAs, TVs, so on….it’s just become too complex. We all want a SINGLE GADGET, & the companies are funding in for a One Stop Solution. As end – users, we just need ONE THING, not a million gadgets. Now, we ARE moving towards convergence. Your mobile is getting to look more and more like a PC, and vice versa. But, the billion $ question is: which companies are the nearest to the ONE GADGET ?

Nobody is really sure on that. But look around, do your R & D, and I hope you can find the dark horse that wins the race.

All I can say is, it’s going to be a company that you’ve probably not heard of.

Global Opportunities / Global Crisis

We are heading towards a global crisis....to deny it would be to deny Reality.

Bird Flu, Pandemics, Oil Shock, the ongoing wars .....to name a few.

The global stock markets will respond to these crises. For us, a proper market analysis will mean an understanding : When to buy (when others cry)....& when to sell (when others laugh)...

Oil Shock is coming.....imagine the potential of a fledgling company "patenting" a viable alternative energy source ?

HOWEVER, PURPOSE OF THIS BLOG IS MAKING PREDICTIONS....BASED ON PURE NEUTRAL ANALYSIS