The bubbles in India, China and price pattern in Gold and oil forecast worldwide depression with relatively high commodity inflation
Paula Harris
Sep. 17, 2006

The rise Gold and Oil (energy) prices and then relatively slow collapse is telling a bad story for the world economies. The total explicit bubbles in India and China where corruption ranks way higher than efficiencies and productivity confirms the forecasts from the oil and gold markets.

The world economies experienced a false boom from central banks’ easy money policies and Governments’ fiscal policies. Any one and anywhere in the world, be in India, China or America, were allowed to borrow as much as they want without little regard to their credit experience and capabilities to return the money. The standard of loan underwriting was lowered to fuel just one thing. These individuals will buy goods and services with the borrowed money and in result all the economies will prosper. They did. The economies experienced some booms since 2003. Now is the pay back time. And these same individuals do not have the means to pay back.

The Gold market says currencies have no value. The oil market says the economies have gone up beyond their debt servicing capabilities. When the bubbles bursts – whether it is in American real estate or India or China - it is nasty – always it is a blood bath.

The world most likely will experience what America experienced in nineteen-thirties but at a much higher scale. The economies those days were disjointed. Today the world is connected by the new ‘Globalization’. The catastrophic fall now will be really bad – real nasty. Every country will be affected.

Add to that the possibility of adverse weather patterns, tsunamis, earthquakes, floods, volcanoes, typhoons, storms and what not. The crop prices most likely triple in no time. That will be a major problem. The weather cycle watchers are forecasting deep trouble for quite some time.

Add to that the terrorism issue involving Airlines and Airports. The civil aviation is already challenged in every part of the world.

It is time for Federal Reserve in US to preempt fast and decisively now. They should not do what they did in 1987. They should lower the rates after the big stock market crash. It will be too late this time. It is time for them to act now.

The bubbles in India, China and price pattern in Gold and oil forecast worldwide depression with relatively high commodity inflation
Paula Harris
It is time for Federal Reserve in US to preempt fast and decisively now. They should not do what they did in 1987. They should lower the rates after the big stock market crash. It will be too late this time. It is time for them to act now.
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