The decade of our doom draws closer (half kidding. And the alliteration was just by happenstance).
In the meantime, I’ve been reading a book called “The Fourth Turning” by Strauss and Howe describing the cyclical pattern of history, roughly divided into 4 “quarters”: High, Awakening, Unraveling, and Crisis. They say with conviction that the US is approaching a Crisis in the next four years, and characterize US Turnings as roughly 70 years long. Great news, eh?
I’ll be praying for both me and all of you out there. May God be glorified through our lives in these tough times.
The level of crisis in the securities and investment banking industry is at its highest since records began, according to the Financial News annual Crisis Index.
The unique Financial News family of indices measures references to collapse, crisis, fraud and scandal in articles in Financial News and on Financial News Online each year. To create each index, the frequency of mentions is rebased to 100 starting in 1998 to reflect the three-and-a-half fold increase in the number of articles published by Financial News in the past decade.
Last year, the word “crisis” appeared in 692 articles, an increase of more than five times over the previous year. The Crisis Index leapt from 25.5 to 100.8, overtaking for the first time the base of 100 in 1998, the year of the Russian crisis and the collapse of hedge fund Long-Term Capital Management.
…The surge in the index was driven by the sub-prime crisis in the US spreading into international financial markets. More than 71% of all mentions of crisis referred to the credit crisis. The Collapse Index also enjoyed a strong year, rising 39% after the number of references to vehicles collapsing nearly doubled to 454.
When the price of a barrel of oil briefly hit $100 in trading last Wednesday morning, it was basically a nonevent. After adjusting for inflation, $100 per barrel in 2008 still isn’t a record. And really, what’s the difference between $99 and $100? (If you answered $1, come to the front of the class.)
…Obviously, China has a lot do with it. Its consumption of crude oil rose from 5.6 million barrels per day in 2003 to 7.6 million in 2007. Thanks in part to China’s growth, Asia in 2004 surpassed the United States as the largest consumer of oil in the world, according to Daniel Yergin, chairman of energy analyst Cambridge Energy Research Associates.
But demand is booming elsewhere, especially in the Middle East. The nations that have grown rich on petrodollars aren’t just spending money on champagne and lavish hotels on the French Riviera. They’re plowing cash into diversifying economies, building things that use lots of energy—condominium towers in Dubai, an indoor ski resort in Bahrain and petrochemical plants in Kuwait and Saudi Arabia. In the past, OPEC could calm oil markets by increasing supply. But OPEC members are now eating a lot more of what they grow. Between 1997 and 2007, notes Yergin, six Mideast OPEC members—Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates—boosted production by 2.5 million barrels per day. But they increased consumption by 1.9 million barrels per day. In effect, three quarters of the production increase stayed in the region.
A battered U.S. currency, geopolitical tension and insatiable global demand for commodities combined yesterday to help crude oil and gold break through symbolic price barriers on the first day of trading in the new year.
The price of a barrel of crude oil touched US$100 for the first time, while the spot price of an ounce of gold shot to US$860.10, surpassing the previous record of US$850 reached in January, 1980.
Oil’s rise in particular flew in the face of continued worries about a possible slowdown in the world’s largest economy.
“We have this persistent strength in commodity prices even when it’s becoming more and more apparent recession risks are mounting in the U.S. economy,” said Douglas Porter, BMO Capital Markets deputy chief economist.
With the rising cost of milk, eggs, meat and produce contributing to the biggest jump in food prices in 17 years, consumers are starting to feel the pinch.
Some shoppers, already dealing with falling home values and rising fuel costs, are finding creative ways to save, opting for cheaper ingredients and private-label goods and leaning more heavily on discount grocers. And restaurant diners, who have been eating out less frequently, will likely face even higher menu prices.
For Christmas dinner, Karen Littleton, a 54-year-old free-lance writer in San Antonio, said she bought a huge salmon fillet at discount retailer Costco Wholesale Corp. rather than an “exquisite fish,” such as Chilean sea bass, from a local grocery store.
She said she loves to prepare gourmet dishes, but “I’m using cheaper foods and having to be more imaginative with how I put them together. … I used to use eight or 10 ingredients in just a sauce, but those days are over.”