Sask Gov's request to up CCGA advance

[wd9]

Careful Macdon, that kind of post may get unliked by SF3.

[macdon02]

There was heavy sarcasm in goat herding comment.... the point is protectionism is alive and well, we wont go into the mechanics of exporting and letters of credit issued in exchange for a boatload of grain, based on the bond market. Emerging market debt, all govt debt for that matter, that pays for our grain... Egypt had issues a couple months ago.

[macdon02]

I'll try and sum up in simple terms the debt issue. The ECBs zero interest program has forced European banks to buy high risk debt or lose money in the zirp environment. So DB and Commerz along with Spanish and others have put massive amounts of deposits into Turkey thinking the IMF is backing all things Turkey, no lose scenario. Erdogan implemented currency controls last week banning the lira from being exchanged out of country, due to the massive short on it. So the capital is essentially frozen in Turkey. These European banks can't get access to their money. At some point contagion will set in and panic will follow. This has driven a huge demand for reserve currency debt, US based. Hence the small dip in canadian and US mortgage rates this week. It's seen as "safe" for now. If/ when panic sets in, the ability of foreign emerging/ third world countries to borrow will freeze their ability to issue debt. Heaven forbid another country decides to implement the same policy. This is driving demand for reserve currency assets, stronger USD. This will be deflationary for all commodities. Watch coffee futures short term, it's taken out long term support and is likely heading for the 2002 lows ~. This will wipe out producers though the currency effect will soften things slightly. As Errol has alluded to in deflationary debt trap, this thing will unwind with no stopping it. See my cause for concern? We're could see countries starving with the inability to pay for food. Long term incredibly bullish, short term incredibly bearish.

[AlbertaFarmer5]

Macdon, can you define what you think of as long term vs short term? As in, long enough to store our way out of it, or long enough to get out while the getting is good?

[bucket]

Macdon, can you define what you think of as long term vs short term? As in, long enough to store our way out of it, or long enough to get out while the getting is good?

My answer .....both

[macdon02]

Macdon, can you define what you think of as long term vs short term? As in, long enough to store our way out of it, or long enough to get out while the getting is good?

Short term, 3 years ~ longer would be outside that. Every oil exporting country will go to max pumping ability in an effort to bankroll the social programs. It'll just depend when complete loss of confidence in govt hits these countries. There's a massive amount of $ in the bond market and when it flees it'll be inflationary. There's already talk of more QE and unthrottled printing.