Article Review 2

This article was slightly easier to follow in a way than the first one. The author's primary claim is that a global collapse in commodity prices is beginning to cause problems in the financial sector and is also having an increasing effect on the US economy. The author notes that commodity prices have dropped 50% over the past 3 years, which is threatening to burst numerous bubbles in financial systems worldwide. He uses the examples of Shell's abandoning of Arctic drilling, Alcoa's split into 2 companies, and Glencore's stock collapse. The author then decides to go off on China, claiming that their economy is in collapse due to capital outflows and that the Communist party is trying to prop up a house of cards with more controls on the market and through devaluation of the yuan. He then connects this collapse in Chinese financial markets with an overproduction of commodities, including steel, that has led to overbuilding in Chinese cities that now threatens to become a "freight train of deflation" that will eventually make its way over to America. He then questions why people would overpay for stocks (19.6X earnings right now) when China, the driver of previous economic growth, is in such great trouble. He claims that markets would've long since corrected for the impending global economic slowdown if it weren't for the actions of the Fed. He finishes by claiming that the situation is much worse than what occurred in 2008, and Brazil's near-depression is evidence of that.