Soaring Oil Prices A Main Concern For Asia

The Euro debt had posed a big threat to the economic growth in Asia. This threat however will soon be replaced by the rising oil prices. The high prices on oil will suffocate oil demand while having adverse effects on exports. It may also prove to be a trigger for sparking inflation.
The global economy is counting on Asia to minimise the impact of the recession in Europe and also aid the US to make a full economic recovery. Any economic threat to Asia poses a threat to the global economy as Asia will play a crucial role in buffering the impact of the recession.
As the threat of a financial crisis looming over the horizon receded, the steep oil price paints a negative picture, threatening economic growth in Asia.
Oil is an important commodity in Asia. Asia is the largest consumer of oil and accounts for more than 31% of the global oil demand. Asia is home to the four largest oil consuming countries in the world such as China, Japan, India and South Korea.
Asiaimports almost two thirds of oil to satisfy its oil demand. Even after excluding Japan this makes for a huge oil bill. The expenses on oil also take a larger share of the gross domestic product (GDP) in Asian countries as opposed to countries in the west.
In fact, the oil demand from Asia is in part the reason why prices remained modest in spite of the slow economic growth and the European debt crisis. Most analysts believe that the geopolitics in the Middle East is the major reason for the current hike in oil prices. Although this is a factor responsible for high oil prices, it is not the whole truth. Asia's huge appetite for oil is also in part responsible for escalating oil prices.
At present the immediate threat to Asia seems inflation due to spiked prices. However, the true threat is to the economic growth in Asia. Exports to the west are already fragile and may not be able to withstand another blow. Even India, China, Japan and South Korea may feel the harsh impact of spiked prices.
It is critical to analyse the impact of the oil shocks and its likely cause. The negative impact of the soaring prices will be less damaging if they are caused by an increase in demand rather than due to a disruption in oil supply.

Why Oil Prices in Europe Are More Than In the US

Today, the whole world is going through a fuel crisis and suffering from higher prices on oil.
The current situations show that Europe, especially the Euro zone is seriously affected by the higher oil prices than any other part of the world. One of the reasons is relative cost of the Euro and the US dollar; the currencies of the Europe and the US. The price of Brent oil in Euros is as same as it was during 2008s. The comparison between dollar and Euro is more in favour of the US and so, the cost of same quantity of Brent oil in the US is comparatively less.
The other reason why oil price in the US is less than that of in the countries in Euro zone is the local oil production. Since 2002, oil production in Europe has prominently decreased. This decline in oil production has had major negative impact on European economy. In contrast to this, oil production in the US, especially in North America has increased recently.
Moreover, the fact is that European oil does not yield benefits for all the European nations. It fetches all the benefits for the countries that extract oil; such as Norway and the UK, and not Europe.
Also, the US utilizes coal and nuclear as fuel significantly and so, it has to import comparatively less of oil than countries in Euro zone. The countries that import oil, also import natural gas. Since the prices on natural gas in the US are relatively dirt cheap than those in Europe, the European countries get doubly hit. And so, the usage of other sources of energy, availability of locally extracted oil and the low prices on natural gas are the main and triggering reasons why oil in the US costs far much less in totality than that of in Europe.
And to flash a light on the reasons why there is significant difference between the prices of oil in the US and Euro zone countries, the opinions of the experts of oil and gas industry affirm that the US gasoline is not taxed as highly as it is taxed in Britain and Europe as a whole.
The experts also add that as the European economy is already frail and as Europe does not have shale gas reserves that the US has, it is more prone to suffer from the higher prices on oil. The situation might get worse if the dollar strengthens more. It will trigger the prices on oil in pounds and euros even further.

What Is The Dow Jones Index? And Who Is The CME Group?

There is a group of 30 US companies controlling $3.8 Trillion US Dollars. These 30 companies make up the Dow Jones Industrial group which seem to have had a very high impact on the economy due to their collective market capitalization.
Usually an index for financial markets is a grouping of public companies that are tracked for daily performance. The largest public US industrial companies are grouped as part of the Dow Industrial Index. Many international and domestic investors make daily decisions based upon the performance of these companies.
The company in the US that commands the most amount of public investor cash is Apple Inc (AAPL), but it is not tracked by the Dow Jones Industrials. Royal Dutch Shell (RDS) and PetroChina Company Ltd (PTR) are also left off of the Dow Jones list even though they have more cash than the rest of the DJI list below Exxon, who tops the Dow Jones list as having the most cash.
The top 5 US companies with the most cash:
1. Apple Corporation (AAPL) $487.1Billion
2. Royal Dutch Shell (RDS.A&B) $467.6Billion
3. Exxon Mobil Corp (XOM) $418.6Billion
4. PetroChina Co Ltd (PTR) $274.8Billion
5. Microsoft Corp (MSFT) $264.1Billion
Exxon and Microsoft are both on the DJI Index, but they are not the top 2 positions for total US market capitalization. 3 of the top 5 largest US cash holders are petroleum companies totalling $1.2Trillion of US investor cash in their control. Apple and Microsoft together do not total as much as the top 3 US oil companies, but the Technology and Energy sectors are a strong couple.
Charles Henry Dow established the basis for technical analysis through his research of the original Dow Industrials. His partnership with Edward Jones and Charles Bergstresser was the beginning of Dow Jones & Company. DJ&C owns the Wall Street Journal, Barrons Magazine, and many other news services and products. Dow Jones makes money by selling ads, which is typically more lucrative when investors are fearful.
The Company was controlled for many years by the Bancroft family, notably by Mary Bancroft who was involved with the US intelligence in Switzerland during WWII. The family's control was taken over by Rupert Murdoch and the News Corporation in 2007 that also owns the New York Post and the Fox Media Networks, among other assets. The CME Group now owns the controlling amount of shares of the company. Dow Jones and the CME Group will choose to include the index of companies that will sell the most advertising and are willing to be on their list. That is their fiduciary responsibility to their shareholders. As soon as PetroChina makes a bid to acquire Exxon Mobil, the DJI list will have to be updated. Apple will join a list when they are offered the right price for use of their name.

The Conscience Of A Restorationist, II

Start The Restoration With Your Own Values
Today, the U.S. "news" media is undertaking what amounts to a new campaign of propaganda (or advertising, or marketing... you decide). The mainstream media is overwhelmingly "progressive," and no longer sees itself as a watchdog for the American people but as a tool in service of the nation's continued march toward statism (a march against the very people journalists once aspired to protect). Today's new media campaign is the promotion of what they're calling the Republican and conservative "war on women."
Here's what happened: the economy continues to flounder, and President Obama (leader of the progressive statist movement) began to suffer in the polls... rallying to his defense, the media changed the subject, doing their best to focus the nation on "social issues" and away from the economy... as part of this distraction, Democrats in Congress invited (in a last-minute switch) a young co-ed from Georgetown Law School, Susan Fluke, to address a Congressional committee on what they call the "women's health issue" of government-subsidized contraceptives on campus... conservative talker Rush Limbaugh, musing about Fluke's appeal to the committee to subsidize her contraceptives to the tune of a thousand dollars per school year, called Fluke a "prostitute" and a "slut"... the media, thrilled to continue the distraction from the economy, fired all their considerable weaponry at Limbaugh for using those words (and nothing at Fluke, who, at a rough cost of one dollar per condom, was asking taxpayers to pick up the tab for about three sexual encounters per day, somehow to be worked in around the nominal study of law)... Limbaugh issued a detailed apology, acknowledging the inappropriate choice of words and the distraction from his overall message about the central craziness of Fluke's appeal... the media scrambled over each other to declare the apology insincere... Limbaugh and other talkers kept talking about the issue... and the progressive media was then able to create this new campaign, pronouncing that their opponents had declared a "war on women."
Whew!
Over a long career, Rush Limbaugh has been called every dirty name in the book... and this is far from the first time he's been called a sexist. Anyone who listens to his show for more than a couple days in a row undoubtedly knows he's nothing of the sort. But that's not the point. For daring to stand up against the progressive march, Limbaugh is declared guilty of every mean motivation and heartless opinion the media can think of. He's not politically correct, that's for sure... and because of that, he's chastised by the political machine at every opportunity.
The same is true of everyone who stands against statism.
America, the leader and engine of the world, is deeply divided. A majority of Americans know in their hearts that a free citizenry, sovereign in a worldly sense, exercising entrepreneurial aspiration, is what the nation is supposed to be. A minority, though, opposes this idea in the interest of radical egalitarianism controlled by an all-powerful state. Because the statists control every major opinion-influencing institution in the nation (from academe to the media to the unelected federal bureaucracy to Hollywood), and because they've been persistently plugging away in the appeal to the inner "Victim" of each American, they are able to make the division of opinion seem much closer than it is. And they now have sufficient power, willingly handed them by a previously-free people, to be dangerously close to replacing the American Constitutional republic with a totalitarian state in the name of ensuring "fairness."
You need to do your part in the great project of our time: the restoration of America. You need to develop the conscience of a restorationist. The bad news is that it's a daunting task that faces us; the good news is that America has always functioned best on a project basis (see World War II), and that, working together and separately, we can turn this thing around.
At some point, you need to undertake a project to fight back against the "progressive" movement. A political campaign you could support... a new book or song you could create... a class you could teach... a business you could start... even a letter you could write to the editor of your local paper. But first, before any other project, you need to start with a restoration of your own personal values.
My guess is that Rush Limbaugh is able to withstand the withering attacks on his character by the statists because he is very clear on his personal values. He knows he's not a sexist, or a racist, or a greedy elitist, or any of a number of other things he's regularly called. And that's why your first project has to be a complete inventory of your own values. When your subsequent projects expose you to the same kind of criticism, even if at a lower and more-local level, believe me, that criticism is going to hurt. But its sting will be greatly diminished by two things: your values, and your friends. You will eventually find you have many friends who share your beliefs and who will join you in the fight... but you won't hang in there long enough to find those friends unless you first establish a bedrock of personal values.
When someone calls you a racist, do you know - without a doubt - that they're wrong? Because they will call you a racist. The fact that they have no evidence to support that accusation (or the fact that, indeed, there's plenty of evidence to the contrary) will not stop them, nor even slow them down. The statists must convince anyone you might influence that you are unworthy of their attention. They'll take their shots at you, without fail. So you have to know you really are NOT the bad things they'll accuse you of being. And that means you have to be clear about your own values.
Keep a journal... talk to your closest friends (especially your spouse)... read and view information that bolsters your values, and write and talk about your reactions to that material. Make a list of the top ten things you believe, or the five key principles that make you you. Find whatever method works for you, but find a way to restore your own confidence in your personal values. It's Job One.
You have lots of important projects to take on in the near future, as have the rest of us who need to make a contribution to the new "resistance." Those projects will place you under attack from the well-financed, well-practiced statists who will work hard to shoot you down. So start by creating your best, strongest immunity: a solid bedrock of personal values, and a clear understanding of your own beliefs and character. Make it your first project. If you do, you'll find in yourself a strong urge to ensure it isn't your last.

It's Raining Money! - Money Flowing Freely From World Central Banks

It's raining money... so rip off the roof and stay in bed, it's raining money! It is no wonder the stock market is rising. There is so much liquidity in the market place and with interest rates so low there is no place to go but "risk on" assets.
What this means in simple terms is that central banks are creating another bubble. Just as I first reported in this newsletter back on November 19, 2010,
Playing With Bubbles,
"As the Fed gives us the gift of yet another bubble, investors need to know how to capitalize on this short term phenomenon and how to prepare for the inevitable burst....The Fed has no interest in fixing the root cause, which is lack of demand, just a quick fix to get us past the next election."
Once again, rather than fix the problem so we can get on with a true recovery and adjust to slower growth from a rapidly aging population and a massively over-indebted population, they are making the same mistakes of the past: creating more money through debt just like they did in 1998 stock market bubble and 2003 real estate bubble. These are the very issues, along with what investors need to do, that are discussed in great depth in Facing Goliath: How to Triumph in the Dangerous Market Ahead. When will these kids learn that the answer to too much debt is not more debt!
Last week I reported that the amount of the growth in liquidity in global systems has become staggering, with the US. Federal Reserve's $2.9 trillion, the ECB's (European Central Bank) $3.6 trillion and the BOE's (Bank of England) $1.1 Trillion. This week, I have expanded the research to include the eight largest central bank balance sheets including Japan and other Eurozone members. When combined they total a whopping $15 trillion and rising. With the entire world's stock markets currently at a combined $48 trillion, central banks now equal one-third of world equity values.
Now, the good thing about bubbles is that it drives asset prices higher. Investors that know how to participate in the current bubble with the least risk possible and know when to get out, will do well. There are definitely good opportunities out there for nimble investors who know what they're doing, so be the expert or hire one.
Investor Strategy: Naturally we cannot just sit with money in the bank earning nothing, nor can we afford to stay dormant with an old fashioned buy-and-hold (buy-and-hope) approach. Both are destined for disaster. We must take what the market gives us, when it gives it to us....but without all the risk - Invest for need, not for greed. Investing your hard earned money in the sweet spot is critical. That means getting the very best returns with the least amount of risk possible, and having personal exit strategy.

Europe Has Pneumonia - China Catches A Cold

Stock and commodity markets were not happy at the start of this week when it became clear that Europe's long-anticipated recession is helping to slow the Chinese economy, global commerce's power plant in recent years.
The European Union and China are each other's largest trading partners, if you consider the 27-member EU to be a single entity. (Among individual nations, the United States, Japan and South Korea occupy China's top spots, with Chinese-ruled Hong Kong sitting between Japan and South Korea.) It is not surprising that a downturn in Europe would have significant effects back in China. In fact, what may be most encouraging about the situation is how mild those effects could be, at least if things ago according to the Communist-led government's latest plan.
After several years in which all of the world's major economies and markets seemed to move in violent lockstep, a healthy degree of diversity is creeping into the system. The natural checks and balances of a diversified world economy are trying to reassert themselves.
China is targeting growth of 7.5 percent this year, and plans for growth to average 7 percent annually over the next five years. The previous five-year plan called for annual growth of 8 percent. The country routinely beat the benchmark, notching a 14 percent gain as recently as 2007.
These would be eye-popping numbers in North America or Europe, but until recently, Chinese leaders believed they needed growth of at least 8 percent annually in order to absorb the approximately 10 million workers who joined the labor force each year. Now, China's labor growth has slowed thanks to decades of strict family planning and a rural-to-urban migration that has largely run its course. China is realizing both that it can learn to live with slower growth and that it probably has to, because top export markets in Europe and America are not likely to keep Chinese factories expanding at the accustomed rates.
Europe's economy contracted 0.3 percent in the last quarter of 2011, and the downturn seems likely to continue through at least the first quarter of 2012. This would put Europe in its second recession of the past three years. Fiscal tightening across the continent, combined with ongoing sovereign debt worries, continue to sap consumer demand and business confidence.
Yet the same bleak news that pounded the markets this week points toward stabilization ahead. Slower export demand from Europe and America is prompting the Chinese to stimulate domestic consumption. The Chinese also are allowing their currency to appreciate somewhat faster than in the past. Both of these steps will help keep China's trade in better balance. Increased demand within China would ultimately result in a greater appetite for Chinese purchases of machinery, food products and consumer goods from the slower-growing Western economies.
Another benefit of slower demand is a reduction in upward pressure on a broad spectrum of commodity prices, ranging from oil to copper. Lower prices for physical inputs allow companies to spend more money on capital projects or on an expanded labor force.
Finally, the improving prospects of the world's largest economy, namely ours, provide an additional driver to improve conditions elsewhere. American demand powered the world economy long before China took center stage. Though U.S. growth, at less than 3 percent, is not robust, it is helping to offset the slowdowns in Europe and China. The world should see similar contributions from midrange economies like South Korea and Russia (the latter benefiting from high oil prices) and from some emerging countries. Brazil is struggling with rising prices and wages and slowing Chinese demand for its commodities, but an improving U.S. economy is good news for Brazil as well.
There are plenty of short- and long-term risks to the global economy. A financial blowup in Greece or elsewhere in Europe, another nasty confrontation over American government finances, or a geopolitical crisis in the Middle East or the Pacific could derail business confidence in the U.S., causing us to backslide into the rest of the struggling pack. Longer term, the world is full of dangerous economic imbalances, which range from unfunded pensions and entitlements to aging populations and shrinking labor pools. We will deal with some of these issues for many years, or decades, together with other issues that are not yet even on our radar.
But it's nice to see the current relaxation of the financial contagions that have beset us for the past five years. Europe may have pneumonia, but China has only caught a cold, and we are feeling pretty fit. Things could be better, but we have seen worse.

State Power, Social Power, and Communities

The more I read, the more I realize the true secret to success in business and life is related to the strength of relationships within a person's community. The myth of rugged isolated individualism, although enduring, is, in truth, only a myth. Economic, educational, even political effectiveness are all improved when people work together. Please don't misunderstand me, I haven't turned to economic communism; however, I can understand better how so many have been drawn into this illogically evil doctrine. Specifically, most people, if given the choice between being alone or in community, will choose community, even if the association is Biblically wrong, thus communism's growth. In fact, a cursory look at organizations as diverse as communism, the mafia, and gangs will exhibit the enduring need for community.
Communities versus Individualism
If community is essential to human beings, then the question is: How do we incorporate community into a society without sacrificing life, liberty, and property? Since liberty cannot exist where the State dictates, the idea of community and freedom precludes State control. Therefore, free communities are a misnomer unless they are voluntary organizations. However, although the non-involvement of the State is essential, it isn't sufficient to create community. The other side of the equation is for people to learn how to work within a community setting. Consequently, the atomistic rugged individualism of American myth must be replaced by men and women who work within a Biblical framework of ordered liberty and love. In other words, the greedy, self-centered capitalist is not a true picture of a free-enterprise Biblical community. In fact, this caricature of American freedoms pinpoints what is plaguing America - the loss of community roots and liberty (Social Power), instead, replaced by today's (State Power) crony capitalism.
Murray Rothbard, the late dean of Austrian Economists, wrote in Conceived in Liberty:
With Albert Jay Nock, the twentieth-century American political philosopher, I see history as centrally a race and conflict between "social power" - the productive consequence of voluntary interactions among men - and state power. In those eras of history when liberty - social power - has managed to race ahead of state power and control, the country and even mankind have flourished. In those eras when state power has managed to catch up with or surpass social power, mankind suffers and declines.
State Power versus Social Power
In sum, wherever State Power flourishes, Social Power declines. Thankfully, however, the reverse is true as well. By standing on the shoulders of both Nock and Rothbard, we see that societies can be organized around two competing philosophical choices:
1. State Power: Top down external discipline and the subsequent loss of liberty endured.
2. Social Power: Bottom up internal discipline and the subsequent ordered liberty enjoyed.
The first option is the real-life history of America since around the Civil War, with State Power moving ahead and Social Power in subsequent decline. Since 1913, however, the battle has become a run-away drubbing with State Powers triumphing in the Federal Reserve Act, the Federal Income Tax amendment, and the democratic election of Senators. In truth, it's hard to fathom a worse mixture of federal legislation (for Social Power) in one year in one country than what occurred in America in that fatal year of 1913. In other words, 1913 wasn't just (to use Oliver DeMille's term) a freedom shift, it was a freedom rout. I look forward to DeMille's book 1913 which elaborates on these fateful events.
The second option is America's (and the West's) best hope for freedom. America needs a community restoration, starting, not from the top down (State Power), but rather, from the bottom up (Social Power), in order to revitalize America. Social Power is fueled by social capital - a sociological concept which refers to the value of social relations and the role of cooperation and confidence to get collective results in any endeavor - to paraphrase Robert Putnam, in is classic Bowling Alone. Putnam explains the key role of social capital, "A society characterized by generalized reciprocity is more efficient than a distrustful society, for the same reason that money is more efficient than barter. If we don't have to balance every exchange instantly, we can get a lot more accomplished. Trustworthiness lubricates life. Frequent interaction among a diverse set of people tends to produce a norm of generalized reciprocity." Furthermore, Putnam argues, "Does social capital have salutary effects on individuals, communities, or even entire nations? Yes, an impressive and growing body of research suggest that civic connections help make us healthy, wealthy, and wise. Living without social capital is not easy, whether one is a villager in southern Italy or a poor person in the American inner city or a well-heeled entrepreneur in a high-tech district." Social capital matters, in other words, both personally, professionally, and politically.
Social Capital: Turning Aspiration into Realities
Putnam goes on to list five specific areas where the trust and understanding inured by social capital helps translate aspirations into realities:
1. Social capital allows citizens to resolve collective problems more easily through improved teamwork.
2. Social capital greases the wheels that allow communities to advance smoothly through improved trust.
3. Social capital helps widen the awareness of fellow citizens that their fates are intertwined through improved understanding.
4. Social capital serves as conduits for the flow of helpful information and resources to accomplish community and individual goals.
5. Social capital improves individual lives through psychological and biological processes. In fact, numerous studies suggest lives that are rich in social capital cope with trauma and illnesses significantly more effectively.
America's Social Capital Decline
Even with social capital's overwhelming advantages, Putnam acknowledges its decline, writing, "Americans have had a growing sense at some visceral level of disintegrating social bonds." He explains further, "More than 80% of Americans said there should be more emphasis on community, even if it puts more demands on individuals." In sum, social capital isn't just the fuel for Social Power - a necessary check on State Power - but it also enhances individual lives through the sense of belonging engendered within communities. Strikingly then, the decline of social capital, not only attacks society's freedoms, but also attacks an individual's well-being. With so much to gain and so much to lose, why aren't more people focused on the restoration of communities throughout America and the West? That question will be the subject of further articles.