Wednesday, September 05, 2012

Cascading Economic Slowdown to Affect Energy Markets

Yesterday we looked at how economic problems in advanced nations might adversely affect the economies of the emerging and third worlds. It was asserted that such a cascading economic slowdown would likely lead to lowered demand for energy and commodities on the part of both emerging and third world nations.

Since recent demand growth for energy and commodities has arisen primarily from the emerging and third worlds, such a top-down cascading economic slowdown would be likely to suppress global energy and commodities markets -- possibly over a matter of decades, unless the anti-energy & anti-private sector biases of the US and EU governments were reversed.

Today we will look more specifically at how BRIC economies may already be suffering as a result of the significant and ongoing stagnation in EU and US economies, with reduced EU and US demand for BRIC and third world products.

China has already exhibited multiple signs of economic slowdown, which will ultimately lead to cascading reductions in demands for commodities by the middle kingdom. China can overproduce into a declining demand for only so long.

Russia is drowning in corruption, making it difficult for the wounded bear to acquire the foreign partnership and technical expertise it will need to maintain its high level of oil & gas output over the coming decade.

Russia is also suffering from an ongoing demographic tragedy affecting its core ethnic Russian population. A heavy influx of Muslim immigrants into Russia has tended to obscure this building tragedy, and many wide-eyed innocents are reporting that all is well with the Russian people. But sadly, since they do not stratify their analysis by ethnicity, their numbers and graphs are just so much garbage. The Al Fin blog has provided extensive coverage of this ongoing demographic catastrophe.

Brasil is, along with neighbor Venezuela, one of China's important suppliers, and will be hard hit by any sustained decline of Chinese demand for commodities.

And as the slowdown cascades down the supply line, other nations of South America, several nations of Africa, and many nations of South and Southeast Asia will likewise be affected.

Many economic analysts assume that if populations continue to grow, that meaningful market demand for commodities will grow apace. But that is naive. Many nations that are experiencing rapid population growth at this time, will not be able to pay for growing consumption in the face of a cascading economic slowdown.

Iron Ore and Coking Coal Price Collapse, and China

China Exhibiting "Zero Growth" or worse

China and Russia decline in global competitiveness

Six Signs of China's Deteriorating Economy

China's coming leadership of the world in doubt

Labels: , ,


Post a Comment

Subscribe to Post Comments [Atom]

<< Home

Newer Posts Older Posts