GLOBAL RESOURCES ANALYSIS
EFFECTS | EMERGING ECONOMIES
The market mechanism of declining energy/elements supply and accelerating demand for energy/elements will cause high sale/income/production revenues for all the energy/elements/soil/sun rich countries. The prosperity/wealth, domestic and foreign financial assets, gold reserves, foreign currency reserves and their (often named) Sovereign Wealth Funds has grown and still will grow further tremendously. They will buy controlling positions in companies listed in both emerging and western stock exchanges. In 2006 this was unthinkable and in 2007 they were invited as the rescuers of the financial industry. The EU discusses these days a written statement of the Foreign Governmental Wealth Funds that they'll only act by economic motivations and will not by political motivations. But is there really a difference between these two? Asking the stronger man, not be strong is an act of weakness. Real capital has been transferred to the Emerging World by purchases. The Western World has been too much focusing on consumption and face now the always attached severe phony capital problems, just when the whether turns worse. The financial market of the Western World has gambled and has lost their own beds. This implies also European Financials who have purchased over-valuated US over-consumption debts, that were covered by only in good whether working monolines (bond guarantee companies), who can never burry the burdens of all these losses. Ambac will be 'rescued' by a capital injection (of the insurance takers, who turn their claims on Ambac into Ambac 'company capital' on a way it can be noticed as Basel Tier One Capital) of only $ 3 billion on their apparently not much well thought trough risk exposure. These monolines market leaders 'guarantees' several trillions $. Monolines are the switchboard of the financial industry and the value of their current issued guarantees can not be determined. All guarantees of monolines will become worthless. The big beds are going bad (title of a book on this issue) in times of multiple simultaneously headwinds. The monolines are the black holes of the current financial system. The financials of Europe (and thereby the EU) will be grateful for the coming rescuing or even restarts supporting by the Foreign Governmental Wealth Funds, because phony loans will eventually be valued as phony and thereby worthless, slashing major deficits in the capital position of every financial in Europe. Pipelining losses for some time is possible, but this can not be done for ever. Monolines never can pay out al the losses on phony loans they've guaranteed. And unfortunately the monolines are the foundation of each financial world wide. Guarantees will become worthless, only real values will count. The market polarity change has also caused a capital polarity change and the Western World has made some severe stupid things to maintain consumption even after actual production was moved away, opening themselves for a huge pile of problems, SWFs (Sovereign Wealth Funds) can use the current and coming more severe problems by the financials to take over the global financial markets by acquiring huge banks (as in: customer bases) for a fraction of the value they had before Credit Crisis II. They SWFs own at least $ 3.000.000.000.000 and their capital grows each month mostly due to high energy prices. The used to be rich western world will become the main creditor of the energy and elements rich countries. Energy and elements are the transfer road of capital, wealth and prosperity.
Author: Gijs Graafland
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