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Commodities Crash Is Prelude to Blowout

Aug. 3, 2015 (EIRNS)—Reflecting the disappearance of growth and demand in trans-Atlantic economies, the downward slide in commodity prices is accelerating, surpassing even the low reached during the financial collapse in 2008, and reaching a 13-year low this month. According to the global head of commodities at Dow Jones Indices, which maintains the longest-standing commodity index, "This is one of the worst months in history for commodities."

Its "GSCI" index of 24 major industrial and household commodities lost 14% of its value in July alone, with nearly every single component dropping. This is rare, because energy, metals, and agricultural goods have no "market correlations" — it is economic collapse they are reflecting.

Over the past year as a whole, Bloomberg’s 18-commodity index average has fallen a huge 26%.

In energy and mining (oil), this has meant accelerating layoffs. Some 80,000 jobs have disappeared in the U.S. oilfield services industries this year. In mining, Anglo-American Corp. announced 55,000 layoffs early last week, one-third of its workforce. Now the oil majors are joining: Shell, 6,500 layoffs; Chevron, 1,500; the British oil service company Centrica, 6,000; the Italian energy contractor Saipem, 9,000; BP, 4,500.

As world trade volume is actually dropping since March, shipping container rates are falling sharply, Reuters reported. Containers from Asia to ports in the Mediterranean fell 34% in July; from Asia to the U.S. West Coast, 4.7%; to the U.S. East Coast, 13.7%. This is a sign of what is causing factory manufacturing in China to contract during this year; but hundreds of billions of dollars in infrastructure investments are likely to get China’s overall growth rising again.

One publication today, Men’s News Daily, reminds about 2008:

"If we were going to see a stock market crash in the United States in the fall of 2015 (to use a hypothetical example), we would expect to see commodity prices begin to crash a few months ahead of time. This is precisely what happened just before the great financial crisis of 2008, and we are watching the exact same thing happen again right now.... And what they are telling us is that we are rapidly approaching a global economic meltdown."