The debt crisis is driving the economies of Western Europe and Japan into an unprecedented tailspin. It threatens the economic — and potentially political — stability of Russia, China and several emerging market nations. And it’s setting the stage for a global depression of epic dimensions.

The full article:

By Martin D. Weiss, Ph.D.

I hope you’ve had a great start to your New Year!

At the same time, however, I trust you are not counting on the latest holiday rally in the stock market — or the most recent incarnation of the Obama rescue package — to transform 2009 into a positive year for the economy.

The reasons: In addition to the massive wealth destruction I told you about two weeks ago and the continuing debt collapse I’ve been warning you about for many months now, the overseas engines of global growth are also collapsing.

This does not negate my long-term view that certain overseas economies offer great future opportunities. But it does represent a major short-term threat to U.S. investors, U.S. companies and the U.S. economy as a whole.

The undeniable reality: The debt crisis that first appeared in the U.S. subprime mortgage market … then precipitated a Wall Street meltdown … and has now driven the American economy into its sharpest decline since the Great Depression … has now spread to the entire world.

It is driving the economies of Western Europe and Japan into an unprecedented tailspin. It threatens the economic — and potentially political — stability of Russia, China and several emerging market nations. And it’s setting the stage for a global depression of epic dimensions.

Here are some of the most vulnerable major economies …

Never in modern history has the success or failure of a major emerging economy been so dependent on one single commodity! And never before has that commodity fallen so far and so fast as Russian crude oil!

Russia does have other resource and revenue sources. But in just the past six months, Urals crude, Russia’s primary export blend, has plunged from a high of nearly $141 per barrel to a low of a meager $32.34 — a 77% crash that’s pounded Russian stocks like a sledgehammer and sliced through the Russian economy like a serrated sickle.

The big dilemma: To balance its federal budget, Russia must get a minimum of $70 per barrel for its crude oil. But at $32 and change, it’s getting less than HALF that amount. The entire country is losing money hand over fist.

No wonder Russia’s stock market has plunged 72%, forcing 25 separate stock exchange shutdowns!

Transneft, the Russian oil transporter, is down from $2,025 in January 2008 to a recent low of $270. Gazprom, the natural gas monopoly, has lost more than two-thirds of its market capitalization since May. Meanwhile, Lukoil fell from a May peak of $113 to a recent low of $32.

Russia’s oil-driven real estate bubble is also collapsing. That’s why Russian construction and real estate giant Sistema-Hals lost more than 94% of its value last year alone … why PIK Group, another major construction giant, collapsed by 96% … and why the entire RCP Shares Index of Russian developers has sunk 92% since its record high in June 2007.

Ford, Renault and Volkswagen are halting production at Russian assembly lines. Unemployment is likely to surge to 10% and beyond. Massive amounts of foreign capital are fleeing the country.

In a desperate attempt to stem the tide, the Russian government has devalued the ruble 11 times since November, and thrown a quarter of its foreign currency reserves at the raging debt crisis. But it’s still not enough. Russia’s primary source of revenues — energy exports — is in shambles; and unless crude oil prices could somehow DOUBLE in a big hurry, Russia’s economic and financial decline cannot end.

Standard & Poor’s has cut Russia’s long-term debt rating for the first time in nine years, citing dangerous outflows and a “rapid depletion” of currency reserves. And more downgrades are in the offing. Even a major debt default is not unthinkable.

The biggest danger: Political upheaval and social unrest.

Even before this crisis, Russia’s middle class earned less than $500 per month. Now, with the devastating plunge in oil revenues already in place, those numbers are falling to even lower levels. For a nation with a cost of living that rivals that of the U.S., Western Europe and Japan, the last thing the Russian people needed was a depression. Yet that’s exactly what they’re getting.

I visited Russia last year before the collapse in oil prices. I spoke to a variety of professionals and people on the street. And I stayed with friends who work in government jobs.

From everything I had read, I had anticipated signs of greater prosperity. Instead, I was surprised to see how little average citizens had benefited from the recent years of rapid economic growth.

Yes, they have more access to a wider variety of goods that were scarce during the Soviet era. But most professionals — such as teachers, doctors, nurses and government employees — are still living on the edge of poverty.

Equally surprising is the popular disgust and disdain for the government. Public opinion surveys and press reports may indicate broad support for the Kremlin’s foreign policy, and they seem to be accurate. But support for domestic policies is another matter entirely.

My view: Any major disappointment with respect to pocketbook issues could lead to major political changes, the outcome of which is largely unpredictable.

China’s extraordinary expansion of the past decade fueled booms in global trade, commodities and emerging markets. It was a major growth engine that turbo-charged Australia, Brazil, Southeast Asia and even Japan.

Now, however, that engine is grinding to a screeching halt. Indeed, when historians look back to major pivot points of this global economic crisis, they will undoubtedly point to the abrupt end of China’s boom.

Many of us assumed that because China’s economy was growing so quickly — at a breakneck pace of 10% or more per year — it could easily afford to slow down by a few percentage points and still be in far better shape than most other economies.

But now I seriously question that theory. Indeed, more often than not, companies, industries and entire nations that enjoy the biggest booms are also vulnerable to some of the biggest busts. Instead of a mere slowdown, as many still seem to expect, China’s economy could suffer a wholesale collapse.

Exports, which still represent two-fifths of the Chinese economy, are already sinking fast. And the domestic economy, much of which depends directly or indirectly on the revenues flowing from exports, is also beginning to sink.

Warning signs are everywhere: Stocks, down 60% just in the last 12 months; imports, down 17.9% in November alone; foreign investments to China, off 36.5% last year.

In response, the government has slashed interest rates and pledged a $582 billion stimulus package. But that’s mere pocket change compared to China’s trillions in vulnerable exports. Moreover, it has done little to help millions of small- and medium-sized businesses which are already shutting down and laying off millions.

A big problem: 45% of the Chinese government bailout is earmarked for the cement and housing industry. Meanwhile, cash-flow problems are sweeping through the entire economy, downing airlines, manufacturers and property companies.

Airlines like China Southern and China Eastern, for example, have been losing money hand over fist. China’s auto sales are plunging. Its shipbuilding industry is in a tailspin. And its real estate market is collapsing.

Next, expect surging unemployment … mass reverse migrations from urban centers to the countryside … spreading popular unrest … and a major challenge to authority. Chinese leaders have already admitted that an economic downturn would test their ability to govern. Now, that downturn is here — and the ultimate test, on the near horizon.

Meanwhile …

, also heavily dependent on foreign demand for its goods, is suffering its worst export slump in recent memory. Overseas shipments plunged 12.1% in October and another 9.9% in November, forcing companies like Tata Motors, India’s biggest truck maker, and Hyundai Motor to cut output, fire workers and shut down factories.

AMERICANS enter the New Year in a strange new role: financial lunatics. We’ve been viewed by the wider world with mistrust and suspicion on other matters, but on the subject of money even our harshest critics have been inclined to believe that we knew what we were doing. They watched our investment bankers and emulated them: for a long time now half the planet’s college graduates seemed to want nothing more out of life than a job on Wall Street.

This is one reason the collapse of our financial system has inspired not merely a national but a global crisis of confidence. Good God, the world seems to be saying, if they don’t know what they are doing with money, who does?

Incredibly, intelligent people the world over remain willing to lend us money and even listen to our advice; they appear not to have realized the full extent of our madness. We have at least a brief chance to cure ourselves. But first we need to ask: of what?

Read More…

The price of oil is now about a quarter of what it was only a few months ago, and economic problems are building within Russia. Investors are gone; the stock market barely exists. After nine years of surpluses, Russia will have a budget deficit in 2009, and the solid economic growth of recent years may give way to a contraction. An increasing number of enterprises are shifting to two- or three-day workweeks, sending their employees on unpaid vacations or laying them off. Unemployment, which had been very low in recent years, is rising, and the country lacks an adequate social infrastructure to help those who are losing their jobs. The situation is especially grave in the numerous company towns where new jobs are almost impossible to find. Meanwhile, geographic mobility is strongly limited by Russia’s underdeveloped housing market.

Read More…

China’s vast manufacturing sector, the driving force behind the country’s celebrated economic growth story, is on the brink of technical recession as order books run dry and once humming factories fall silent.

Over the past 12 weeks the manufacturing purchasing mangers’ index (PMI) has painted a far more rapidly worsening picture than anyone predicted and now highlights China’s unexpectedly high vulnerability to the global financial crisis.

Read More…

While Washington is absorbed with the financial debacle, a deepening recession and wars in the Middle East, there is a gathering crisis in Taiwan.

Under the Ma Ying-jeou (???) government’s policy of rapid economic, cultural and political integration with China, the nation could be annexed by China within the next few years through the signing of a “peace accord,” internal subversion orchestrated by Beijing, or a Chinese invasion of Taiwan to which the Ma government will acquiesce.

Whether or not Taiwan preserves its democracy and a separate existence from China has real consequences, not just for Taiwanese but also for the Chinese, the Japanese and the Americans.

Read More…

Built by the Malam Missile and Space Factory of IAI, the MC4 uses state-of-the-art technology including GPS and camera sensors to scan areas where rocket launch sites may be suspected.

Once a launch is detected, the MC4 pinpoints the site and projected flight path. It also has the ability to back track launches already in progress.

According to Israeli sources, the MC4 gives the IDF the ability to hit rocket launch sites in a manner that did not exist during the Lebanese war.

Read More…

Russian leaders tell us that it is no banana republic, but notice that we DO need to be reminded of that fact or we might forget.

The article below lumps Russia together with Venezuela and Iran. I’m wondering if Russia has more in common with OPEC countries than the West?

Don’t gloat over the economic problems of Russia. It is these types of problems that are the seeds of war. So the silver lining to the global recession might just turn out to be a lead lining.

From the article:

As prices fall, so do the ambitions of Vladimir, Hugo and Mahmoud.

Spare a moment for a rogue trio of economic victims — Hugo, Vladimir and Mahmoud. Their dreams of world domination and tight grips on power are eroding as the price of oil falls. If there is a silver lining to global recession . . .

Read More…

This interesting article was written in 1993 by Samuel P. Huntington.

From the article:

WORLD POLITICS IS entering a new phase, and intellectuals have not hesitated to proliferate visions of what it will be — the end of history, the return of traditional rivalries between nation states, and the decline of the nation state from the conflicting pulls of tribalism and globalism, among others. Each of these visions catches aspects of the emerging reality. Yet they all miss a crucial, indeed a central, aspect of what global politics is likely to be in the coming years.

It is my hypothesis that the fundamental source of conflict in this new world will not be primarily ideological or primarily economic. The great divisions among humankind and the dominating source of conflict will be cultural. Nation states will remain the most powerful actors in world affairs, but the principal conflicts of global politics will occur between nations and groups of different civilizations. The clash of civilizations will be the battle lines of the future.

Conflict between civilizations will be the latest phase of the evolution of conflict in the modern world. For a century and a half after the emergence of the modern international system of the Peace of Westphalia, the conflicts of the Western world were largely among princes — emperors, absolute monarchs and constitutional monarchs attempting to expand their bureaucracies, their armies, their mercantilist economic strength and, most important, the territory they ruled. In the process they created nation states, and beginning with the French Revolution the principal lines of conflict were between nations rather than princes. In 1793, as R. R. Palmer put it, “The wars of kings were over; the ward of peoples had begun.” This nineteenth-century pattern lasted until the end of World war I. Then, as a result of the Russian Revolution and the reaction against it, the conflict of nations yielded to the conflict of ideologies, first among communism, fascism-Nazism and liberal democracy, and then between communism and liberal democracy. During the Cold War, this latter conflict became embodied in the struggle between the two superpowers, neither of which was a nation state in the classical European sense and each of which defined its identity in terms of ideology.

These conflicts between princes, nation states and ideologies were primarily conflicts within Western civilization, “Western civil wars,” as William Lind has labeled them. This was as true of the Cold war as it was of the world wars and the earlier wars of the seventeenth, eighteenth and nineteenth centuries. With the end of the Cold War, international politics moves out of its Western phase, and its center-piece becomes the interaction between the West and non-Western civilizations and among non-Western civilizations. In the politics of civilizations, the people and governments of non-Western civilizations no longer remain the objects of history as targets of Western colonialism but join the West as movers and shapers of history.

Read More…

In 2006 Peter Schiff tells over 1000 mortgage brokers they are about to be out of jobs. Watch how he completely nails the coming real estate/mortgage debacle before anyone else even realized it was coming.

Part I
Part II
Part III
Part IV
Part V
Part VI
Part VII
Part VIII

By Doug Casey, Chairman, Casey Research, LLC.

Everybody wants predictions. The following article does a little better than that, in that I wrote it back in November of 1997, outlining several theories of history, and pointing to a logical way of anticipating what will likely happen to the world at large over the next generation.

As you will read, the methodology I relied upon for anticipating the events that are now unfolding — 11 years later — were actually quite accurate, confirming, in my mind at least, that now is a time to be very cautious in your personal and financial affairs.

The article is unaltered in its text from the original, though I have added some current commentary in bold italics

Doug Casey
December 16, 2008

“Don’t know much about the Middle Ages, look at the pictures an’ I turn the pages. Don’ know much about no rise and fall, don’ know much ’bout nothin’ at all” “Wonderful World,” Sam Cooke.

The lyrics quoted above probably describe the average American’s knowledge of history about as well as any academic study. Not only don’t they know anything about it, and think it’s irrelevant, but what they do know is inaccurate and slanted. And they must not think very much about the future either if the amount of consumer debt out there, mostly accumulating at 18% interest, is any indication.

One point of studying history is that it gives you an indication of what’s likely to happen now, if you can find an appropriate analog in the past. This is a tricky business because as you look at factors contributing to a trend, it’s not easy to determine which ones are really important. Making that determination is a judgment call, and everyone’s judgment is colored by his worldview, or Weltanschauung as the Germans would have it.

Let me briefly spell out my Weltanschauung so you can more accurately determine how it compares with your own, and how it may be influencing my interpretation of the future.

read more…..

In Moscow, Igor Panarin’s Forecasts Are All the Rage; America ‘Disintegrates’ in 2010

For a decade, Russian academic Igor Panarin has been predicting the U.S. will fall apart in 2010. For most of that time, he admits, few took his argument — that an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S. — very seriously. Now he’s found an eager audience: Russian state media.

Read More…

Documents marked “Top Secret, UK eyes only” which have just been de-classified by the National Archives, show the Labour government of 30 years ago was engulfed in a furious row over the inadequacy of the nation’s defences.

The papers paint a picture of a 1970s Britain that would have been virtually helpless in the face of a Soviet attack.

Read More…

Since then, Putin and other Russian leaders, including the foreign minister, Sergei Lavrov, claim that Russia “is, to some extent, a part of the Muslim world.” In an interview with Al Jazeera on Oct. 16, 2003, Putin stressed that, unlike Muslims living in Western Europe, those in Russia were indigenous, and that Islam had been present on Russian territory long before Christianity. So Russia now claims to have a privileged political relationship with the Arab and Muslim world and believes that, as a mostly European state, it has a historic vocation as a mediator between the Western and Muslim worlds.

Read More…

Last Monday, the entire upper house of parliament voted to extend the Russian presidential term from four years to six years, a move recommended by President Dmitry Medvedev in his annual November address. But really, you didn’t think the “reform” was meant for Medvedev, did you? Or that anything occurring behind the walls of the Kremlin is intended to extend the reign of this Putin-anointed technocrat?

Read More…

The Center for Defense Information (CDI) has published a report titled “America’s Defense Meltdown: 13 non-partisan insiders, retired military officers & defense specialists speak out.” The report flatly states that America’s defenses are “outdated,” with “insufficient” lethality bought at high expense. In a chapter written by a retired Marine Corps lieutenant colonel, we read: “The large standing forces were supposed to facilitate professional preparation for war, but the essential officer corps never truly professionalized itself.”

Read More…

The development of nuclear arsenals by both Iran and North Korea could lead to “a cascade of proliferation,” making it more probable that terrorists could get their hands on an atomic weapon, a congressionally chartered commission warned yesterday.

“It appears that we are at a ‘tipping point’ in proliferation,” the Congressional Commission on the Strategic Posture of the United States said in an interim report to lawmakers that was released yesterday.

Read More…

Through breathtaking discoveries, archaeologists are uncovering the early years of the ancient Maya to reveal a dynamic, sophisticated culture that was flourishing before the time of Christ. The Preclassic Maya—once dismissed as primitive—created massive pyramids, elaborate art, early writing, and more. Join National Geographic’s Dawn of the Maya as it investigates the rise one of the world’s greatest and most mysterious civilizations.

Mayan History

The geographic extent of the Maya civilization, known as the Maya area, extended throughout the southern Mexican states of Chiapas, Tabasco, and the Yucatán Peninsula states of Quintana Roo, Campeche and Yucatán. The Maya area also extended throughout the northern Central American region, including the present-day nations of Guatemala, Belize, El Salvador and western Honduras.

As the largest sub-region in Mesoamerica, it encompassed a vast and varied landscape, from the mountainous regions of the Sierra Madre to the semi-arid plains of northern Yucatán. Climate in the Maya region can vary tremendously, as the low-lying areas are particularly susceptible to the hurricanes and tropical storms that frequent the Caribbean.

The Maya area is generally divided into three loosely defined zones: the southern Maya highlands, the southern (or central) Maya lowlands, and the northern Maya lowlands. The southern Maya highlands include all of elevated terrain in Guatemala and the Chiapas highlands. The southern lowlands lie just north of the highlands, and incorporate the Petén of the Mexican states of Campeche and Quintana Roo and northern Guatemala, Belize and El Salvador. The northern lowlands cover the remainder of the Yucatán Peninsula, including the Puuc hills.

read more…..

Plan for ‘gas OPEC’ could tighten President Vladimir Putin’s grip on Europe’s gas supplies.

The advent of LNG may one day allow gas exporting countries, who gathered in Moscow last week to create a new organization, to act as a cartel along the lines of OPEC, holding sway over prices and supply, and thus consumers around the world.

Today, most natural gas is pumped through pipelines. Storage is difficult and the price of gas is linked to the price of oil.

Producers, like Russia’s Gazprom, set prices within decades-long contracts, typically lasting 25 years.

LNG changes all that.

Read More…


Moscow to oversee signing of “gas OPEC” charter
guardian.co.uk, UK - Dec 22, 2008
Although Russia says this so-called “gas OPEC” is not meant to emulate OPEC’s policies in setting output quotas, Tuesday’s gathering will be closely watched …

A review of Indian and Pakistani weapons of mass destruction and delivery systems shows just how scary the Indian subcontinent is at this present time.

“Pakistan uses both highly enriched uranium and plutonium for its nuclear weapons. The Khushab nuclear site has sufficient plutonium production for 40 to 50 warheads a year by itself. This site is coming on line and is a major expansion of Pakistani plutonium reprocessing capabilities;”

Estimated Pakistani nuclear weapons is probably in the neighborhood of 200 by the end of 2008.

“The sixth Pakistani nuclear test (May 30, 1998) at Kharan was a successful test of a sophisticated, compact, but powerful bomb designed to be carried by missiles. The Pakistanis are believed to be spiking their plutonium based nuclear weapons with tritium. Only a few grams of tritium can result in an increase of the explosive yield by 300% to 400%.”

India is thought to have nuclear weapons in the low hundreds, but it has enough plutonium for 1000 additional weapons.

“The Indian strategic delivery systems are extensive and include land based IRBMs and cruise missiles (with true ICBMs under development), sea based surface and submarine launched cruise missiles and naval air launched weapons from Indian aircraft carriers, and air launched missiles and bombs.”

Read Me…

Nuclear war between India and Pakistan:

“Toon enlisted Robock in an effort to project the results of an exchange in which India and Pakistan each used 50 Hiroshima-size bombs on population centers. Such an exchange would use less than half of 1% of the current global nuclear arsenal, according to Toon and Robock. They project that as many as 21 million people would die in the nuclear war—about half as many as died in all of World war II—and 5 million tons of soot would be lofted into the stratosphere (compared to the projection of as much as 150 million tons of soot from a much larger nuclear conflict involving the Cold war superpowers).”

Read More…

In August, Putin’s Russia seemed unstoppable, specifically after its five-day war with Georgia punctured the appearance of a new era of U.S. power in the former Soviet Caucasus and Central Asia. Georgia seemed the crowning achievement of a several-year-campaign of projecting Russian power over its borders after a decade of retrenchment following the Soviet collapse. On O and G, we have covered the Gazprom-led rivalry with the West to build new natural gas pipelines into Europe. Russia’s Nord Stream and South Stream pipelines appeared to beat out the West’s proposed Nabucco pipeline without breaking a sweat.

Not any longer. Simply put, Russia is in trouble.

Read More…