Another week, another gain in the market. The market is now pricing in 4% growth for next year, a number I find fantastic, as in fantasy. This is a new bubble, caused by easy money from the Fed, the reserve bank of China, and various European central banks. You heard it here first. I think we all know what it looks like when bubbles burst. Unfortunately, I don't have a clue how much longer it will inflate.
Although governments everywhere are throwing money at large banks like rice at a wedding, none of this is making its way to consumers. Below are charts of household borrowing and net lending by US banks from 1950 to 2008. Banks were fed a few trillion dollars by governments, and called in or refused to renew another nearly $2 trillion last year. When banks decide it's ok to start lending again, that's when inflation is going to get started real quick. Notice that, once again, it was when Nixon took us off the gold standard that things really started to change.
|Household Borrowing, 1950 to 2008||Net landing by US banks, 1950 to 2008|
Officials at the International Atomic Energy Agency released a secret assessment saying that Tehran has the ability to make a nuclear bomb and is on the way to developing a missile system able to carry an atomic warhead. The document says Iran has "sufficient information" to build a bomb. It says Iran is likely to "overcome problems" on developing a delivery system.
As ample liquidity and low interest rates push Hong Kong property prices toward last year's peak levels, many analysts see a likely bubble forming, fueled by money from mainland China. A leading property price index recently came within 2% of the peak that it hit in the early months of 2008, before the financial crisis wreaked havoc in the global markets.
Market, market, on the wall, who's the biggest of them all? Below is the 100 largest entities in the world, sorted by yearly production. ExxonMobil is just bigger than Iran, Wal-Mart is the same size as Greece. How long until one of the 10 largest companies decides to go nuclear? When one does, their first explosion will be a lot bigger than N.Korea's little pop-tart, and there will be live coverage on pay-per-view. Pakistan, N.Korea, Myanmar (Burma) and Syria don't make the top 100 list, but Pakistan is nuclear and N.Korea is nearly. Myanmar and Syria were paying Russia and N.Korea to help them, but that seems to be stopped right now. As Japan, Germany, Canada and Australia all build nuclear reactors, they could be nuclear in a few months if they chose. Belgium, Germany, Italy, the Netherlands and Turkey all borrow US nukes for practice, whatever that means. Bechtel also doesn't make the top-100, but is the company that likely could become nuclear the fastest, followed closely by General Electric, Thomas Edison's company.
|ExxonMobil||Oil and gas||390||United States|
|Royal Dutch Shell||Oil and gas||355||Netherlands|
|BP||Oil and gas||292||United Kingdom|
|United Arab Emirates||270|
|Total||Oil and gas||217||France|
|Chevron||Oil and gas||214||United States|
|Saudi Aramco||Oil and gas||199||Saudi Arabia|
|ING Group||Financial services||197||Netherlands|
|ConocoPhillips||Oil and gas||187||United States|
|Ford Motor||Automotive||172||United States|
|General Electric||Conglomerate||169||United States||Nearly|
|Sinopec||Oil and gas||165||China|
|General Motors||Automotive||149||United States|
|AXA Group||Financial services||138||France|
|Eni||Oil and gas||128||Italy|
|Bank of America||Banking||119||United States|
|Berkshire Hathaway||Conglomerate||118||United States|
|J P Morgan Chase||Financial Services||116||United States|
|BNP Paribas||Financial Services||116||France|
|American International Group||Financial services||110||United States|
|Hyundai Kia||Automotive||109||South Korea|
|The Royal Bank of Scotland||Financial services||108||United Kingdom|
|Hewlett-Packard||Information tech||107||United States|
|Pemex||Oil and gas||104||Mexico|
|Société Générale||Financial Services||103||France|
|Crédit Agricole||Financial Services||102||France|
|IBM Corp.||Information tech||100||United States|