January 12, 2015 at 10:14 pm #18296Raúl Ilargi MeijerKeymaster
DPC Chicago & Alton Railroad, Joliet, Illinois 1901 Boy, did the ‘experts’ and ‘analysts’ drop the ball on this one, or what’s the story. Only today,
[See the full post at: At Last The ‘Experts’ Wake Up To Oil]January 12, 2015 at 11:21 pm #18299TulsatimeParticipant
All of the above seems to imply a vast empty chamber underneath stock prices. A flash crash, without the instant bounce back will be the most likely result when everyone sees all the daylight under their feet. I just wonder if the secret ‘we prepare in secret’ departments are hard at work trying to fix a way that the oligarchs don’t lose their shirts in the process.January 12, 2015 at 11:42 pm #18300earlmardleParticipant
Seems to me that what the smart guys will really be looking for is “someone” to take out a major Saudi oil processing facility, and maybe a port. That would punish the Saudis for having the temerity to undermine the shale debt boom, massively cut global production, drive up the cost of oil again as everybody in the ME panicked over whether they were going to be next and restore the shale profitability, and hence their debt-service-ability.
And I’ll give you fair odds that one of those “somebodies” is sitting in a Koch basement right now, chortling over how simple its going to be to get the damned world back into line.January 13, 2015 at 12:10 am #18301pecParticipant
A very long history of really bad advice very publicly given. But the role of publicly given financial advice is to move the market, i.e. the follower dweebs. Ilargi said it, himself: the financial firms who pay these public advice givers might, just might, be placing bets against these predictions becoming the actual future. Its hard to tell from the public record whether people who pay the people who talk are believing fools, or very smart poker players, feining astonishment as to how impossibly the market is behaving.
Nobody among the producers is any more pumping light sweet crude using conventional technology, so no producer is selling his oil for the bench-mark price. The people who have money when the assets of the producer companies are offered at auction will be the real winners. But all this is just another bit of conventional wisdom for a different phase of the cycle of life.January 13, 2015 at 12:18 am #18302steve from virginiaParticipant
The cost to extract petroleum is greater than what can be earned by way of its use which is simply waste. What pays for fuel are trillion$ in loans. The credit regime is falling apart, not the petroleum industry (although that is going to fail as well).
There is nothing the establishment can do about it. More easing/QE = more bankrupt customers = less bid for fuel. Cutting extraction will bankrupt more customers and the bid will vanish. Increasing extraction will simply dump excess fuel onto the markets. The same bankrupt customers who cannot afford fuel are looked to pay for tax cuts and other driller subsidies. This ignores the +5 years of subsidies for drillers already, including ZIRP and bottomless moral hazard. There is no bid because of the effect of these subsidies on the customers … who now have no means to pay.
Price does not reflect the cost to extract but the (negative) return on consumption = Conservation by Other Means.
We are all Greeks, now. Enjoy your car-free future!January 13, 2015 at 1:51 am #18303BirdshakParticipant
Congratulations, Ilargi. Well done! Just don’t hurt your arm patting yourself on the back. We need you to forge ahead with positive suggestions what we, your devoted readers, can do to keep our heads above the surface of this cesspool. Thank you.January 13, 2015 at 2:00 am #18304Golden OxenParticipant
I find the whole oil issue and all it’s variables too complex. One thing I can say definitely however is beware and treat with utmost caution anything coming from Goldman Suchs.
A used car salesman will give you a more honest researched opinion on a car he is trying to sell you.January 13, 2015 at 2:22 am #18305Mike TwainParticipant
Goldman-Sachs and the Chicago-Alton Railroad. How many investors were robbed in that scheme. First time GS was indicted if my memory serves. Did you pick that picture just because, Ilargi?January 13, 2015 at 2:27 am #18306rapierParticipant
The main issue for the financial markets is that liquidity is being reduced and or destroyed by the oil plunge. I hate using the word liquidity but the word money doesn’t quite cover it. Well I don’t think it does.
As Lee Adler says, channeling that old reprobate Joe Granville, the stock market is simply a measure of liquidity in the financial system. Every other story about what stock values mean is BS. Stocks rise and fall on the amount of money available to speculate in them, The door is now open for a bear market in stocks. Even Dragi’s $500bn over the next year might not be enough to close the breech. Unless the Fed starts QE again. Which will destroy another chunk of their credibility.January 13, 2015 at 5:29 am #18307NassimParticipant
Here is a not completely atypical story about Australian weather:
This guy went inland and saw that his house was burnt down on TV. He could not drive back as the place he was at had 200mm (8″) of rain. The place where he is trapped has most years very little rainfall.January 13, 2015 at 7:42 am #18311HansSuterParticipant
Just finished reading Galbraith’s End of normal. He states banks don’t lend money for production of goods etc. But banks have lent money to drillers. But on second thought: banks betted on the oil trend, not on a production facility.January 13, 2015 at 4:54 pm #18334BirdshakParticipant
You see, they need to keep us alive, else from whom would they steal, each other? Not likely. Having lived as a small farmer all my life, I know how food is kept cheap as pabulum, enabling the urbanites to stay alive for continued mugging. The farmer’s income is thus insufficient to sustain business, so various government programs and tax incentives are put in place to keep the farmer alive for continued mugging. What a sad, desperate game they play, having to carry billions of poor people in order to afford their house in the Hamptons. For the rest of us, how hopeful and encouraging to live on little, preparing us for the time when little is left.
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