Is China unleashing a financial attack against the United States? Plus a look at soaring inflation.
China Unleashing Financial Attack Against US?
September 29 (King World News) – Stephanie Pomboy: “I’m just crazy enough to believe that China may intentionally unleash a credit contagion (via Evergrande) to burst our asset bubble and accelerate its progress toward challenging dollar hegemony.”
INFLATION WILL GET WORSE, NOT BETTER
Gerald Celente: Through 2022, prices will increase significantly more than expected in the world’s most advanced economies, the Organization for Economic Cooperation and Development (OECD) said.
Inflation’s pace will quicken to 4.5 percent in this year’s final quarter, the OECD said, boosted by logistics tangles and climbing commodity prices.
“There are risks of much more persistent pressure on inflation in the future,” Luis de Guindos, vice-president of the European Central Bank, told a Financial Times online conference, especially in light of spiking energy costs in Europe and Asia that could ripple throughout manufacturing and consumer economies (see related story)…
Natural gas prices have quadrupled in Europe so far this year, prompting governments to consider billions of euros in aid to households and affected businesses, the FT said.
Energy price jumps in Europe will boost inflation there by 0.2 to 0.3 percentage points this year, Morgan Stanley has calculated.
The OECD’s U.S. inflation forecast for the fourth quarter has risen from 2.9 percent earlier this summer to 3.6 percent now; the prediction for the U.K. went from 1.3 percent three months ago to 2.3 percent now.
In France, inflation will shoot to 1.6 percent, double the OECD’s earlier prediction. In Germany, prices will grow by 2.1 percent instead of the 1.6 percent forecast earlier.
The revised predictions come as the U.S. Federal Reserve and Bank of England are planning to cut back their economic stimulus and support programs.
Governments must communicate to their publics that rising inflation has “many temporary features” and is “mostly an adjustment of prices to levels that had always been expected after temporary dips” caused by the COVID-era economic shutdown, the OECD urged.
Policy makers face “a very difficult balancing act” managing inflation and they must discard the idea that they can fund anything simply by borrowing, OECD chief economist Laurence Boone said in comments quoted by the FT.
Blather about “temporary features” and “price adjustments” aside, Boone’s comment about central banks’ balancing act recognizes what we have been saying since before the COVID War: when Banksters shut off the flow of cheap money to fund speculation, markets will crash.
ASIA OUTBIDS EUROPE FOR U.S. NATURAL GAS
Europe is facing a near-crisis-level natural gas shortage, as we reported in “Will Surging Gas Prices Sink U.K., E.U. Economies?” (21 Sep 2021), but Asian buyers are outbidding Europe for U.S. supplies that could offset the shortfall.
Gas prices in the U.K. rose to the equivalent of about $26 per million BTUs on 20 September, about five times the price in the U.S, the Financial Times reported, and October futures contracts zoomed to record high prices on 27 September, according to Oilprice.com.
The U.K.’s soaring prices have not yet lured producers of liquefied natural gas, the form in which gas can be shipped across oceans from the U.S.
The gas continues to travel to Asia, and sometimes South America, where it fetches even higher prices.
Countries in Asia “have more purchasing power now,” one unnamed liquefied gas broker told the FT.
“Europe has pipeline supplies and China and Japan don’t have any alternatives,” the broker pointed out.
Liquefied gas can be shipped to Japan for a cost of about $10 per million BTUs and draws buyers willing to pay slightly more than Europe’s current prices.
Prices will continue to rise as the regions try to lock in fuel, the broker said, adding, “It’s a race to secure the supplies.”
Trafigura and other commodity brokers, as well as Shell, BP, TotalEnergies, and other oil majors, have gas supplies and sales contracts that enable them to profit from the bidding war, the FT said.
Much of Europe’s gas is pipelined in from Russia, which reports itself unable to meet Europe’s current demand; some European critics believe the shortage is a political strong-arm tactic.
Fuel is the commodity that underlies every economic sector.
Shortages and rising prices will define the pace of inflation around the world, meaning that prices throughout the global economy will be driven higher through the northern hemisphere’s winter heating season and into next summer as gas supplies are replenished, assuming that the supplies can be had and transport for them can be arranged.
Today’s fuel shortages and price inflation presages a longer arc of the same well into next year.
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