World Bank Offers Dire Forecast for World Economy
In a bleaker assessment than those of most private forecasters, the World Bank predicted Sunday that the global economy would shrink in 2009 for the first time since World War II.
The World Bank also warned that global trade would contract for the first time since 1982, and that the decline would be the biggest since the 1930s.
Meanwhile, at the Wall Street Journal, they’re writing: Dow 5000? There’s a Case for It. I’d take this as a sign that a rally is imminent. On the other hand, the last fourth of the story is people poo-poohing the markets tumbling to record lows, so maybe the Wall Street Journal isn’t bearish enough yet.
They should read their own stories. Here’s another one from the Wall Street Journal: New Fears as Credit Markets Tighten Up. From the story: “The credit markets are seizing up again amid new anxieties about the global financial system.”
AIG is trying to blackmail us again in: AIG Told U.S. Failure May Cripple Banks, Money Funds. The sad thing is, it will probably work.
Now here’s where it gets weird, as Broon would say. All this bad economic news, and crude oil looks like it’s putting in a bottom …
Oil at $50 Looms as OPEC Plans Fourth Cut, Complies With Production Quotas OPEC’s record production cuts are draining the glut in world oil markets, leading traders to bet that $50 crude is two months away.
Now let’s look at the chart …
But how about all that oil stored in oil tankers? Well, Bloomberg tells us …
The drop in global inventories is shrinking profit earned from storing crude, paid from a so-called contango, where prices for delivery in the future are higher than costs for immediate consumption. The potential $17.93-a-barrel profit available in December to speculators who bought and stored oil for a year has plunged 57 percent for London’s Brent oil.
Dubai crude, a benchmark for OPEC oil exports to Asia, now costs more for immediate delivery than in the months ahead. The so-called backwardation is a sign of tightening crude supplies. In the last two weeks, BP Plc, the world’s third-largest oil company, sold and unloaded more than 2 million barrels stored on the supertanker Eagle Vienna it had moored off Scotland’s Orkney Islands.
So, is this the bottom for crude? I’m taking a “show me” attitude. If it is, there will be plenty of time to get onboard.
Anyway, the markets aren’t exactly happy campers this morning.
The current decline is happening faster than the 1929-1932 rout. Floyd Norris at the NYT writes:
It has been 513 calendar days since the stock market peaked on Oct. 9, 2007. Since then, the S&P 500 is down 56 percent and the Dow is off 53 percent.
On Jan. 29, 1931 — the identical number of days after the 1929 market peak — the S&P 500 was down 49 percent and the Dow was down 56 percent. The 1929 crash got off to a much faster start, but we have now more or less caught up.
IN OTHER NEWS
Scientists to Issue Stark Warning Over Dramatic New Sea Level Figures
These revisions suggest sea-level rises could easily top a metre by 2100 – a figure that is backed by the US Geological Survey, which this year warned that they could reach as much as 1.5 metres (5 feet). Rising oceans will also contaminate both surface and underground fresh water supplies, worsening the world’s existing fresh-water shortage.
The Greenland and Antarctic ice sheets represent vast reserves of frozen fresh water. The former would add 7 meters (23 feet) to sea levels if melted completely; the latter would bring a further 60 meters (197 feet) rise to the levels of the world’s oceans.
Florida Highway Upgrade Goes Private. Sean’s note: I’d like to think this won’t end in embezzlement and fraud, but considering the history of Florida politics, the odds are against it.
Related posts:
- Are You Ready for $15 Gasoline? Riverwired points to an interview on CNBC with “Management Information Services Senior Energy Advisor” Robert Hirsch, who warns that gasoline could...
- Bearish news on energy Oil prices are cratering today; I guess investors think the bad news is factored in. I kind of expected this...
- What’s Up With Oil Oil got a big boost today thanks to the government bailout plan. But what number should we watch? I’d...
