Obama can't make good on the threat because the United States can't replace those commodities because it is the Democrats who are blocking exports of US natural gas, which has caused an enormous build-up of inventory in the United States.
The implied threat, when Merkel used the word "catastrophe," was the wrong thing to say because of what that implies. Russian foreign minister Sergei Lavrov most likely told him the same thing – that Putin is determined to go forward with his plans also implying that Putin may becoming a little less “stable” shall we say.
The S&P 500 fell back this week because traders are afraid of a combination Black Swan effect again where you have a major geopolitical event that is threatening to escalate and become a major military event at the same time that Chinese economic data is dramatically slowing. The Chinese are indicating this by allowing selective bond defaults in China showing that they’re prepared to burst the bubble that has been created in Chinese commodities through inflows of foreign money.
What got the Unwashed to put money into these Chinese deals was this assumption that the People’s Bank of China (PBOC) the central bank would bail out deals and not allow any of the bonds which were floated to finance them to default. Now the Chinese are allowing these bond issues to default.
So why would the Unwashed believe that? Because they were told a "story" by western brokers who have a vested interest in China since they are already invested there through their own mutual funds or some sort of funds that they needed to get taken out and revolve the equity. This would get themselves out and get the western Unwashed, led by the US Unwashed, in.
In other words, it sounds good and convincing -- that of course the Chinese government isn’t going to allow any defaults because there would be a potential cascading effect in the Chinese economy.
It should also be noted that this week was the first time a real "fear bid" came into the market. Now, as we've said before, there's a setup for a potential Combo Black Swan effect – a geopolitical event that could turn into a military event which combined with an economic event in China could become a geo-economic event.
HREF="http://www.almartinraw.com/index.html">Al Martin Raw
* AL MARTIN, author of "The Conspirators: Secrets of an Iran Contra Insider," is an Independent Political-Economic Analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. He is also currently trading the commodity futures market day and night and has a teleconferencing service to facilitate transactions in the markets. This is a service for independent experienced traders.
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