Europe, China put off hard decisions while riding coattails of QE3

Morally Hazardous

Dow Jones reports that an explosion on the export pipeline that carries crude from Iraq's northern oil fields to the Mediterranean port of Ceyhan in Turkey halted the flow for a few hours Sunday, an Iraqi Oil Ministry spokesman says.

Things are also heating up between China and Japan over islands with rare earth minerals. The AFP reports that, “The mouthpiece of China’s Communist Party warned Monday that Japan’s economy could suffer for up to 20 years if Beijing chose to impose sanctions over an escalating territorial row. Anti-Japanese protests have been held across China in recent days concerning a dispute over a group of small islands in the East China Sea claimed by both countries but controlled by Tokyo. The row intensified last week when the Japanese government bought three of the islands, effectively nationalizing them, and China responded by sending patrol ships into the waters around them."

Trade sanctions between Asia’s two biggest economies could cast a pall over growth on the continent, which major Western countries are counting on to drive recovery from the global slowdown. A commentary in the People’s Daily said the Japanese economy has already experienced two lost decades from the 1990s and was suffering further weakness in the aftermath of the world financial crisis and 2011 earthquake.‘’ Japan’s economy lacks immunity to Chinese economic measures,’’ the commentary said — although it added that given the interdependency of the two, sanctions would be a ‘’double-edged sword’’ for China The commentary — which only appeared in the paper’s overseas edition — said that Beijing in principle opposes economic sanctions to solve international disputes and would have to weigh carefully any decision to impose them. But it added: “Amidst a struggle that touches on territorial sovereignty, if Japan continues its provocations China will inevitably take on the fight.’’ The commentary said possible targets could include Japan’s manufacturing and financial industries, exports and investments in China as well as ‘’strategic material imports,’’ an apparent reference to rare earth metals used in many high-tech products.

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About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

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