Every empire goes through what appears to be an inevitable series of conditions which accompany its rise to dominance and then its fall to ashes. This has proven especially true for the 3 key modern empires: the British, the American and the Soviet Union.
So, what are the signs of a rising or falling empire? They all seem to progress in 12 repeating steps:
1. Escape From Tyranny Through Revolution Or Civil War
Every empire begins from the ashes of either a civil war or revolution which results from the unacceptable societal, economic or political conditions preceeding it. In America, we had the Revolutionary War, which was brought about as the colonists sought to escape religious persecution. It could also be an economically-inspired uprising such as the worker's rebellion in the Soviet Union, leading the rise of the "utopian" Marxist state.
2. Dawn Of The Age Of Idealism, Hope And A New Political Doctrine
In the United States, the American Revolution led to the writing of the Constitution, probably the greatest document ever written. In the Soviet Union, by comparison, Karl Marx' "Das Kapital", outlined the ideal worker's state where everyone was to contribute according to their abilities and receive according to their needs. In Britain, it was Adam Smith's "Invisible Hand" from "The Wealth Of Nations".
Das Kapital sounds great in theory....terrible in practice.
3. Rise Of Economic And Military Power
The adoption of complete laissez-faire capitalism, combined with a new frontier of rich, unexploited resources ushered in the American rise to power. By World War I, the United States was a major economic and military power.
By World War II, America stood alone as the sole nuclear power. The Soviet Union, which never quite achieved economic power as a result of its centrally-controlled economy, nonetheless became a huge military power and soon joined America as the 2nd atomic-ready nation. Prior to the United States' rise to number 1, Britain ruled the skies of Europe with its Royal Air Force.
4. Political Stability
In the early growth stages of an empire, the vast majority of the population is nationalistic and usually quite devoted to the political system created to address the inequities that characterized the prior system. It could be the rejection of a class system in the Soviet Union, or the rejection of restricted personal freedoms which led to the creation of our Bill Of Rights. Either way, the new political system is highly embraced and thought to be the ultimate answer to a perceived notion of fairness.
5. Gradual Social Decay
Before you know it, other constituencies want to join the party. In America, there have been the suffragettes demanding gender equality or the civil rights movement which sought racial equality.
In Britain, the various splinter groups of the oppressive Catholic church sought religious equality. In the Soviet Union, religious persecution led to huge emigration of Jews to ultimately form Israel.
6. Restriction Of Freedoms
As the Empire grows and progresses, certain groups start to feel left out, especially as the new economic order benefits some more, even much more, than others. Those groups feeling left behind, will begin to form a political majority and learn how to use the new political system to take resources from others.
President Franklin Delano Roosevelt, during his administration, fundamentally changed the political system and destroyed the Constitution with the New Deal. In it, freedom-destroying institutions such as Social Security were created, a juggernaut that was set in motion for which we are now paying a dear price. In addition, Roosevelt changed the Supreme Court in such a way that the Constitution was rendered invalid by the ultimate law-making body. That beautiful document, sadly, will never recover.
7. Quantum Economic Or Military Change
In order to become an Empire, any country must, at least lead either an economic or military revolution, but preferably both. In the United States, the "assembly line" led to our own "manufacturing revolution". The advent of nukes, led a military revolution. But, that wasn't all.
This country also led the "high-tech" revolution begun with computer technology and carrying through Al Gore's invention: the internet. The Soviet Union, because of its inefficient economic system, had to resort to a massive military buildup which resulted from its fear of Adolph Hitler's Germany. The Brits controlled a global trading empire with interests in virtually every continent.
8 Rise Of Colonialism
Every Empire, as it gets more powerful, with the population still supporting it, will seek to protect or expand its reach.
The Soviet Union annexed the East Bloc creating the Warsaw Pact, including East Germany, Romania, Czechoslovakia, Poland, Bulgaria and Romania. The English presence was felt in far away places such as India, Australia, South Africa, Rhodesia, New Zealand, Canada, Scotland and Ireland. The United States created NATO (North Atlantic Treaty Organization) in response to the Soviet Bloc. During the aftermath of World War II, the entire planet fell into "spheres of influence", a code word for which military power you were aligned with: The Soviet Union's or America's.
9. Asset And Monetary Inflation
Every military buildup proves a huge boom to the economy and is supported politically. Politicians refuse to acknowledge the "law of diminishing returns" since they will buy arms and expand forces until increased expenditures begin to create economic distortions. The population will increasingly question the government's resource allocation decisions. Remember "Guns And Butter"? New thinking political doctrine held that you could spend lavishly on both domestic welfare programs AND have an unlimited defense budget. It was wrong.
Politicians learn that they can remain in office by promising everything, regardless of truth. They all arrive at the perfect solution: PRINT MONEY! What debt? Let's pay our bills in paper we just created.
10. Economic Decay
The growing burden of providing escalating social programs and military expenditures will start to affect the economy in an irreversible fashion. Budgets, that were formerly routinely balanced, will now start to have increasing deficits. Of course, deficit spending will be defended and, for a long period of time, money creation will seem to lead to great wealth.
The result of monetary solutions is that they lead to increasing inflation and ultimately destructive asset bubbles. The currency will lose value. The process will repeat as deficits get greater, money creation increases, inflation gets higher and the economy gets weaker. The process repeats.
11. Societal And Political Decay
As economic distress begins to be noticed, various interests begin to align. A united society becomes divided along gender, racial, demographic and economic lines. Each views the others with contempt and seeks to use the political system to combat the others.
Eventually, the combat turns to other forms of protest such as violence and civil unrest. The political authorities, in order to stem the violence, will restrict personal freedoms, perhaps even creating an internal security force such as the Department Of Homeland Security. Adolf Hitler had such a department. They knew it later by a different name: The Gestapo.
12. Escape From Tyranny Through Revolution Or Civil War
Yes, you can assume it's coming to a theatre or drive-in near you.
Marko's Take
Showing posts with label Great Britain. Show all posts
Showing posts with label Great Britain. Show all posts
Sunday, June 20, 2010
Saturday, May 29, 2010
World War III Continued
Inevitably, difficult financial times lead to more militarism. Currently, there are more than 50 military conflicts that are active and some, like the Middle East and the Korean Peninsula, are threatening to explode into all-out multi-nation wars.
The continent of Africa has been plagued by no less than 20 civil wars in the last few decades, although these are primarily tribal conflicts which are very localized. The MAJOR conflicts include the U.S. presence in Afghanistan and Iraq, the threatened nuclear showdown in the Middle East over proposed sanctions against Iran and the recent escalation of tension in North Korea. Lesser conflicts, tame for now, include the Chechen and Georgian civil wars which have threatened Russia.
Global military spending has grown sharply at a time when few countries can afford it given the massive budget deficits so many of them face. World military expenditures in 2008 are estimated to have reached $1.464 trillion in current dollars versus just over $1.2 trillion in 2005 adjusted for inflation.
This represents a 4% increase in real terms since 2007 and a 45% increase over the 10-year period since 1999. Put differently, worldwide military spending equates to 2.4% of world Gross Domestic Product (GDP), or $217 for each person in the world.
The U.S., with its massive spending budget, is the principal determinant of the current world trend and its military expenditure now accounts for 41.5% of the world total.
After Washington, the next highest spenders are China (5.8% of world total), France and Britain (4.5% each) and Russia (4.0%). The next 10 countries combined represent about 21.1% of the total with the rest of the planet making up the remaining 18.6%.
The total U.S. military budget of approximately $700 billion, if completely wiped out, would not even cut the budget deficit in half! It represents more than 50% of the entire discretionary portion of the budget. Of that total, about $200 billion is being spent annually in Iraq and Afghanistan.
Sadly, rising tensions in two key areas of the world, the Middle East and Korea, suggest that a reduction in military spending is very unlikely in the intermediate term.
Korean tensions have resulted from recent revelations that North Korea is responsible for the sinking of South Korean warship Cheonan in March. Because nuclear power North Korea shares a border with China, Beijing has been restrained about supporting sanctions against Pyongyang. That seems to have changed.
During a visit to Seoul yesterday, China’s premier Wen Jiabao said that China would not protect “whoever sank” the South Korean warship, offering Seoul some encouragement that Beijing might not block moves to punish North Korea at the United Nations Security Council for killing 46 sailors.
South Korea has given China the complete technical report on the sinking and has said it would welcome a Chinese delegation should they want to inspect the shattered hull and corroded torpedo retrieved from the seabed.
North Korea has put its oversized army on alert and has threatened to invade South Korea if Seoul breaches any restricted areas. The last thing China wants is a nuclear civil war on its southern border with millions of Korean refugees seeking asylum.
Russia also has a keen interest in the Korean Peninsula. Moscow said on Thursday that it would stage large-scale naval exercises off North Korea next month that were planned before the stand-off on the peninsula. Sailors “will be on a high level of alert and capable of reacting adequately to any threat”, the Russian Navy told Interfax.
Iran sits on the second largest oil reserves on the planet and is vying to join the nuclear club, a policy vehemently opposed by Israel and the United States as well as the United Nations Security Council. Opposition to Tehran's plans now includes France, China, Russia and Britain - making it virtually certain that sanctions will be imposed. Iran has responded to the possibility of sanctions by threatening military action in the region and cutting off oil exports which need to go through the Straits of Hormuz.
The criticality of maintaining oil flow virtually assures a multi-nation armed conflict and the possibility of the use of nuclear weapons by Israel or Iran with the inevitable rise in global terrorism. It is also likely that any regional conflict would draw in nations such as Syria, Pakistan, Turkey, Yemen and Egypt who will oppose any action taken by Israel.
Unfortunately, the militarism witnessed today is only likely to grow worse. As nations become more determined to "look out for number one", the ability to cooperate diplomatically will be less likely. Otherwise, passive domestic populations will become more supportive of military actions to protect their countries economic interests. Defaulting debtor nations will incur the wrath of their creditors. Protective trade restrictions, which were utter failures during the Great Depression, will become more politically popular.
This is yet another reason to maintain a heavy stake in Gold. If free trade becomes restricted, currencies will be less useful as a means of exchange and the use of the only globally recognized currency will increase exponentially.
Marko's Take
Our latest video blog which proposes a 7-Step solution to fixing Social Security will be posted in the next day. If you want to know the important aspects of that fraud and ponzi scheme called Social Security, check out our video entitled "Social In-Security: The Problem' by clicking here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI.
The continent of Africa has been plagued by no less than 20 civil wars in the last few decades, although these are primarily tribal conflicts which are very localized. The MAJOR conflicts include the U.S. presence in Afghanistan and Iraq, the threatened nuclear showdown in the Middle East over proposed sanctions against Iran and the recent escalation of tension in North Korea. Lesser conflicts, tame for now, include the Chechen and Georgian civil wars which have threatened Russia.
Global military spending has grown sharply at a time when few countries can afford it given the massive budget deficits so many of them face. World military expenditures in 2008 are estimated to have reached $1.464 trillion in current dollars versus just over $1.2 trillion in 2005 adjusted for inflation.
This represents a 4% increase in real terms since 2007 and a 45% increase over the 10-year period since 1999. Put differently, worldwide military spending equates to 2.4% of world Gross Domestic Product (GDP), or $217 for each person in the world.
The U.S., with its massive spending budget, is the principal determinant of the current world trend and its military expenditure now accounts for 41.5% of the world total.
After Washington, the next highest spenders are China (5.8% of world total), France and Britain (4.5% each) and Russia (4.0%). The next 10 countries combined represent about 21.1% of the total with the rest of the planet making up the remaining 18.6%.
The total U.S. military budget of approximately $700 billion, if completely wiped out, would not even cut the budget deficit in half! It represents more than 50% of the entire discretionary portion of the budget. Of that total, about $200 billion is being spent annually in Iraq and Afghanistan.
Sadly, rising tensions in two key areas of the world, the Middle East and Korea, suggest that a reduction in military spending is very unlikely in the intermediate term.
Korean tensions have resulted from recent revelations that North Korea is responsible for the sinking of South Korean warship Cheonan in March. Because nuclear power North Korea shares a border with China, Beijing has been restrained about supporting sanctions against Pyongyang. That seems to have changed.
During a visit to Seoul yesterday, China’s premier Wen Jiabao said that China would not protect “whoever sank” the South Korean warship, offering Seoul some encouragement that Beijing might not block moves to punish North Korea at the United Nations Security Council for killing 46 sailors.
South Korea has given China the complete technical report on the sinking and has said it would welcome a Chinese delegation should they want to inspect the shattered hull and corroded torpedo retrieved from the seabed.
North Korea has put its oversized army on alert and has threatened to invade South Korea if Seoul breaches any restricted areas. The last thing China wants is a nuclear civil war on its southern border with millions of Korean refugees seeking asylum.
Russia also has a keen interest in the Korean Peninsula. Moscow said on Thursday that it would stage large-scale naval exercises off North Korea next month that were planned before the stand-off on the peninsula. Sailors “will be on a high level of alert and capable of reacting adequately to any threat”, the Russian Navy told Interfax.
Iran sits on the second largest oil reserves on the planet and is vying to join the nuclear club, a policy vehemently opposed by Israel and the United States as well as the United Nations Security Council. Opposition to Tehran's plans now includes France, China, Russia and Britain - making it virtually certain that sanctions will be imposed. Iran has responded to the possibility of sanctions by threatening military action in the region and cutting off oil exports which need to go through the Straits of Hormuz.
The criticality of maintaining oil flow virtually assures a multi-nation armed conflict and the possibility of the use of nuclear weapons by Israel or Iran with the inevitable rise in global terrorism. It is also likely that any regional conflict would draw in nations such as Syria, Pakistan, Turkey, Yemen and Egypt who will oppose any action taken by Israel.
Unfortunately, the militarism witnessed today is only likely to grow worse. As nations become more determined to "look out for number one", the ability to cooperate diplomatically will be less likely. Otherwise, passive domestic populations will become more supportive of military actions to protect their countries economic interests. Defaulting debtor nations will incur the wrath of their creditors. Protective trade restrictions, which were utter failures during the Great Depression, will become more politically popular.
This is yet another reason to maintain a heavy stake in Gold. If free trade becomes restricted, currencies will be less useful as a means of exchange and the use of the only globally recognized currency will increase exponentially.
Marko's Take
Our latest video blog which proposes a 7-Step solution to fixing Social Security will be posted in the next day. If you want to know the important aspects of that fraud and ponzi scheme called Social Security, check out our video entitled "Social In-Security: The Problem' by clicking here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI.
Saturday, May 8, 2010
Iran Nuclear Showdown Looms Closer
Iran's nuclear program is one of the most controversial issues in one of the world's most volatile regions. American and European officials believe Tehran is planning to build nuclear weapons, while Iran's leadership mainains that its goal in developing a nuclear program is to generate electricity and preserve its vast oil reserves.
Top American military officials said in April 2010 that Iran could produce bomb-grade fuel for at least one nuclear weapon within a year, but would most likely need two to five years to manufacture a workable atomic bomb.
Pronouncements from Tehran have been all over the map. In a recent statement by Iranian cleric Ahmad Khatami, Iran has entered the world's "nuclear club" and major powers should accept it.
Khatami, a conservative hardliner also warned the major powers that Iran could "endanger your entire world" in any future confrontation.
The United States and Israel, Iran's arch foes, have not ruled out military action if diplomacy fails to resolve the row.
Iran, a predominantly Shi'ite Muslim state, has said it would respond to any attack by targeting U.S. interests in the region and Israel, as well as closing the Strait of Hormuz, a waterway crucial for global oil supplies.
One key to reaching a non-military solution has been the cooperation of the United Nations Securtiy Council. China, which imports 12% of its oil from Iran, has been the most reluctant to endorse stringent sanctions.
President Nicolas Sarkozy of France told President Hu Jintao of China that nations would have to impose new sanctions on Iran if it refuses to curb its nuclear program, official Chinese news organizations reported on last week.
France has joined with the United States and Britain in pushing for a new package of economic sanctions from the United Nations (UN). Those countries accuse Iran of using its nuclear program to try to develop weapons. Iran has said it is interested in pursuing nuclear power, not arms.
Addressing the UN, President Mahmoud Ahmadinejad of Iran said that relations with the United States might never be repaired if new sanctions were imposed against his country, that the United Nations atomic agency had no authority to interfere into matters like missiles and that, despite his contested re-election last year, Iran had not become a republic of fear.
Later in the day, he suggested that relations with Tehran might never recover from a United States push for new economic and military sanctions against Iran through the United Nations Security Council. New penalties would “mean relations between Iran and the U.S. will never be improved again,” Mr. Ahmadinejad said at a news conference.
Of major concern is what options the U.S. has in response to a threatened attack by Iran against Israel or in attempting to sabotage Middle East oil supplies.
Defense Secretary Robert M. Gates has warned in a secret three-page memorandum to top White House officials that the United States does not have an effective long-range policy for dealing with Iran’s steady progress toward nuclear capability, according to government officials familiar with the document.
One senior official, speaking anonymously, described the document as “a wake-up call.” But White House officials dispute that view, insisting that for 15 months they had been conducting detailed planning for many possible outcomes regarding Iran’s nuclear program.
Mr. Gates’s memo appears to reflect concerns in the Pentagon and the military that the White House did not have a well prepared series of alternatives in place in case all the diplomatic steps finally failed. Separately, Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, wrote a “chairman’s guidance” to his staff last December conveying a sense of urgency about contingency planning. He cautioned that a military attack would have “limited results,” but he did not convey any warnings about policy shortcomings.
Thus, as Iran continues the development of its nuclear arsenal, options available to contain the situation appear limited. Israel has repeatedly warned of a pre-emptive strike if diplomatic initiatives fail. So far, the Obama Administration has successfully convinced Israel to remain patient while discussions are taking place.
However, given the stated intention of Iran to retaliate if sanctions are imposed, the potential outcomes are strewn with high risk. The last thing the sputtering world economy needs is a major disruption of Middle East oil supplies or an all-encompassing regional war.
Marko's Take
Our latest You Tube video, entitled "Social In-Security: The Problem", which tells you everything you need to know about the world's largest Ponzi scheme is now posted here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI. Our subsequent video, entitled "Social In-Security: The Solution" outlines a 7-step program to fix the mess. Hope you tune in!
Top American military officials said in April 2010 that Iran could produce bomb-grade fuel for at least one nuclear weapon within a year, but would most likely need two to five years to manufacture a workable atomic bomb.
Pronouncements from Tehran have been all over the map. In a recent statement by Iranian cleric Ahmad Khatami, Iran has entered the world's "nuclear club" and major powers should accept it.
Khatami, a conservative hardliner also warned the major powers that Iran could "endanger your entire world" in any future confrontation.
The United States and Israel, Iran's arch foes, have not ruled out military action if diplomacy fails to resolve the row.
Iran, a predominantly Shi'ite Muslim state, has said it would respond to any attack by targeting U.S. interests in the region and Israel, as well as closing the Strait of Hormuz, a waterway crucial for global oil supplies.
One key to reaching a non-military solution has been the cooperation of the United Nations Securtiy Council. China, which imports 12% of its oil from Iran, has been the most reluctant to endorse stringent sanctions.
President Nicolas Sarkozy of France told President Hu Jintao of China that nations would have to impose new sanctions on Iran if it refuses to curb its nuclear program, official Chinese news organizations reported on last week.
France has joined with the United States and Britain in pushing for a new package of economic sanctions from the United Nations (UN). Those countries accuse Iran of using its nuclear program to try to develop weapons. Iran has said it is interested in pursuing nuclear power, not arms.
Addressing the UN, President Mahmoud Ahmadinejad of Iran said that relations with the United States might never be repaired if new sanctions were imposed against his country, that the United Nations atomic agency had no authority to interfere into matters like missiles and that, despite his contested re-election last year, Iran had not become a republic of fear.
Later in the day, he suggested that relations with Tehran might never recover from a United States push for new economic and military sanctions against Iran through the United Nations Security Council. New penalties would “mean relations between Iran and the U.S. will never be improved again,” Mr. Ahmadinejad said at a news conference.
Of major concern is what options the U.S. has in response to a threatened attack by Iran against Israel or in attempting to sabotage Middle East oil supplies.
Defense Secretary Robert M. Gates has warned in a secret three-page memorandum to top White House officials that the United States does not have an effective long-range policy for dealing with Iran’s steady progress toward nuclear capability, according to government officials familiar with the document.
One senior official, speaking anonymously, described the document as “a wake-up call.” But White House officials dispute that view, insisting that for 15 months they had been conducting detailed planning for many possible outcomes regarding Iran’s nuclear program.
Mr. Gates’s memo appears to reflect concerns in the Pentagon and the military that the White House did not have a well prepared series of alternatives in place in case all the diplomatic steps finally failed. Separately, Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, wrote a “chairman’s guidance” to his staff last December conveying a sense of urgency about contingency planning. He cautioned that a military attack would have “limited results,” but he did not convey any warnings about policy shortcomings.
Thus, as Iran continues the development of its nuclear arsenal, options available to contain the situation appear limited. Israel has repeatedly warned of a pre-emptive strike if diplomatic initiatives fail. So far, the Obama Administration has successfully convinced Israel to remain patient while discussions are taking place.
However, given the stated intention of Iran to retaliate if sanctions are imposed, the potential outcomes are strewn with high risk. The last thing the sputtering world economy needs is a major disruption of Middle East oil supplies or an all-encompassing regional war.
Marko's Take
Our latest You Tube video, entitled "Social In-Security: The Problem", which tells you everything you need to know about the world's largest Ponzi scheme is now posted here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI. Our subsequent video, entitled "Social In-Security: The Solution" outlines a 7-step program to fix the mess. Hope you tune in!
Saturday, April 10, 2010
Oil Prices Threaten Recovery
While reported economic data suggests an ongoing recovery, there continues to be a rash of underlying problems which threaten to make any upturn short-lived. We've discussed the deteriorating situation in the Euro-Zone, especially Greece. Recently, another "bomb" has had its fuse lit - the sudden runup in oil prices.
Crude oil prices shot up to nearly $150 per barrel in mid-2008 before the financial crunch and deflation wave led to a several month crash to about $30. At the time, the world economy ground to a halt while financial intermediaries like Lehman, Bear Stearns, AIG, Fannie Mae and a slew of banks all found themselves insolvent in the blink of an eye.
Since bottoming, crude oil has ground steadily higher and appears ready to accelerate to the upside. This week, oil climbed to $87 a barrel, its highest level since October 2008 and prompted concerns that triple-digit crude was once again a propect in the not-so-distant future.
The latest surge seems to have been prompted by rising confidence in a global economic recovery, even if most traders and bankers are still cautious about supply and demand fundamentals.
Pricier oil and other key commodities, notably iron ore and copper, could ripple through the economy and financial markets, potentially triggering inflation and forcing central banks to lift interest rates from ultra-low levels. This could force bond yields higher, but lower the attractions of equities.
A HUGE difference from last year is that then the oil price was rising against the backdrop of a weaker dollar. This year crude and the dollar have risen together. In other words, had the dollar been weakening, the price of crude would be MUCH higher.
Prices are as much an effect of the economic expansion as a threat to it. China, the fastest-growing economy, is expected to consume 520,000 barrels per day more this year than last. China's growth in demand alone will make up 1/3 of the worldwide growth in crude demand.
Higher crude prices are starting to be felt at the pump. Only a couple of months ago, gasoline prices were under $3.00 per gallon, but in many places are now within reach of $4.00 and may shoot higher as the summer driving season gets underway.
In Great Britain, gasoline prices are now £6 gallon. This has lead to a significant falloff in demand and is an element in the declining pound and sluggish U.K. economy.
Adding further to fears are the recent escalation of tensions over the Iran situation, as more countries are prepared to impose sanctions. A huge unknown would how Tehran might react to sanctions and the prospect of a military reaction given the growing suspicions that the country is now a nuclear threat.
Furthermore, recently, Iraq has shown signs of destabilizing and plans to develop Baghdad's huge oil fields might be in jeopardy.
Clearly, any Middle Eastern military confrontation would immediately send crude oil prices well into the triple-digit range and have worldwide economic ramifications.
In the age of "Peak Oil", any disruption of supplies will have grave effects on the tenuous global financial structure.
Marko's Take
Our lastest video on the legality of the Personal Income Tax is now posted at (http://www.youtube.com/user/MarkosTakeTV#p/u/0/1TInKnCIikg)
Crude oil prices shot up to nearly $150 per barrel in mid-2008 before the financial crunch and deflation wave led to a several month crash to about $30. At the time, the world economy ground to a halt while financial intermediaries like Lehman, Bear Stearns, AIG, Fannie Mae and a slew of banks all found themselves insolvent in the blink of an eye.
Since bottoming, crude oil has ground steadily higher and appears ready to accelerate to the upside. This week, oil climbed to $87 a barrel, its highest level since October 2008 and prompted concerns that triple-digit crude was once again a propect in the not-so-distant future.
The latest surge seems to have been prompted by rising confidence in a global economic recovery, even if most traders and bankers are still cautious about supply and demand fundamentals.
Pricier oil and other key commodities, notably iron ore and copper, could ripple through the economy and financial markets, potentially triggering inflation and forcing central banks to lift interest rates from ultra-low levels. This could force bond yields higher, but lower the attractions of equities.
A HUGE difference from last year is that then the oil price was rising against the backdrop of a weaker dollar. This year crude and the dollar have risen together. In other words, had the dollar been weakening, the price of crude would be MUCH higher.
Prices are as much an effect of the economic expansion as a threat to it. China, the fastest-growing economy, is expected to consume 520,000 barrels per day more this year than last. China's growth in demand alone will make up 1/3 of the worldwide growth in crude demand.
Higher crude prices are starting to be felt at the pump. Only a couple of months ago, gasoline prices were under $3.00 per gallon, but in many places are now within reach of $4.00 and may shoot higher as the summer driving season gets underway.
In Great Britain, gasoline prices are now £6 gallon. This has lead to a significant falloff in demand and is an element in the declining pound and sluggish U.K. economy.
Adding further to fears are the recent escalation of tensions over the Iran situation, as more countries are prepared to impose sanctions. A huge unknown would how Tehran might react to sanctions and the prospect of a military reaction given the growing suspicions that the country is now a nuclear threat.
Furthermore, recently, Iraq has shown signs of destabilizing and plans to develop Baghdad's huge oil fields might be in jeopardy.
Clearly, any Middle Eastern military confrontation would immediately send crude oil prices well into the triple-digit range and have worldwide economic ramifications.
In the age of "Peak Oil", any disruption of supplies will have grave effects on the tenuous global financial structure.
Marko's Take
Our lastest video on the legality of the Personal Income Tax is now posted at (http://www.youtube.com/user/MarkosTakeTV#p/u/0/1TInKnCIikg)
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