GLOBAL RESOURCES ANALYSIS
HEADWINDS | DAMAGED BILATERALS
Relations between nations are just like human relations on micro level. There are intensive periods, there are silence periods, there are good times and there are hard times and there are people that don't have contact any contact for a long time or even never, even when to pass each other daily. Bilaterals can grow, bloom and turn into severe hard times of opposite interests. Bilaterals are certainly be damaged by debts. This is a danger for the largest economy of the world, because it behavior on the area of debts can severely threaten all her bilateral relations. The world is not very pleased by the US subprime crisis. Although they have bought the CDO by their selves and are responsible for their own risk management. Financials (and thereby countries) aren't pleased by the write downs caused by the subprime crisis. A financial crisis that more and more is seen as a result of a more structural problem: the polarity change from the US away from bank of the world to debtor of the world. An overall over stretchiness in credit use of federal state, all 50 states, all municipals, many companies and almost civilians. All spending far beyond real economic production by the easy accessibility of credit for the whole nation. The world is on the edge of cutting off the USA economy of credit. The US economy has been for years boosted by continue rising house prices. These prices were severely overrated and these over rated value will flows out of the system after the overvaluation is stretched to the max. When 70% of an economy is about consumer spending, nobody can tell how vital US companies really are without the capital fueling of rising house prices, that's something the future will tell is. The former 'profits' of banks are quoted already and being leveled by current losses. Maybe this also will also will apply for recent historical economic 'grow' figures. Building up debts and let other nations pay for it is not national economic growth, but both national and global damage. If the US federal government goes bankrupted, the USA a lot of current friendly bilateral will chill severely. Dollar positions worldwide are being diversified to baskets of currencies and baskets of currencies and commodities. An other issue is imago damage. Let's for this also look to the moral leader of the world. Internationally: A huge number of Iraqis have been killed and in Guantanamo Bay is not any international law applicable. Nationally: Civil rights of 300.000.000 US people are been withdraw severely, Martial Law is designed, for the one accident of terror that could happen by multiple governmental screw up before and on that day. Financially: The financially behavior of the US threaten both the future of their children and global stability. Damaged bilaterals are certainly a headwind in times of PeakOil.
Author: Gijs Graafland
Back to Headwinds Index
Download the full Global Resources Analysis report in PDF