Debt Rattle May 2 2014: How Bubbles Burst In A Global Market
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Phillip Harrington Elvis in his Messerschmitt “bubble car”, with grandfather Jessie Presley 1956 More curious numbers every day. An increase of 288,00
[See the full post at: Debt Rattle May 2 2014: How Bubbles Burst In A Global Market]Economically, environmentally, morally – pick an “ally” – the whole world is on the edge of a precipice. I’m almost at a loss for words. I watched some videos today from 1994 by Sir James Goldsmith re GATT. A very successful businessman, he saw what was coming.
He describes how the economy should serve society, not society serve the economy. It’s a good listen, how jobs were and would be offshored. There are six parts, all extremely good. He was right. At least watch the first two videos, if you haven’t already seen them.
The annoying political lady comes in in Part 2, but leaves at the 3:00 mark in Part 4.Ukraine’s President can’t rely on enforcers in the East:
“On Thursday, it looked like violence might be avoided when coup-President Oleksandr Turchynov said that he had lost control of the situation. In an exasperated message to the media, Turchnov said, “It is hard to accept but it’s the truth, but the majority of law enforcers in the east are incapable of performing their duties.”
Turchynov was referring to the fact that Ukrainian troops have refused to attack their own countrymen. The mutiny has reportedly spread from elite airborne units to local police who sympathize with the protestors. The only group that’s willing to carry out Washington’s proxy war is the Right Sector neo-Nazis who helped topple the Yanukovych government.”
Though no one knows what the markets will do now that they are less dependent on fundamentals and more dependent on Central Banks, and though the Fed knows what it will do in an attempt to move them in a politically favorable direction, they can’t predict human action. So, Grantham’s tarot cards dovetail nicely with a crackup boom scenario.
Besides, where else can all the newly created monetization go? 0.75% CD’s? Cash in the mattress, with the price of consumer necessities on an ever increasing trajectory, causing a daily reduction in purchasing power?
Never mind looking at fundamental value. It doesn’t mean anything any longer.
It’s called Moral Hazard, and the American public seems to be just fine with it so long as the Bread and Circuses continue. ‘Till some 3+ sigma event occurs, I guess it’s just sit tight and be amused.
This is to revisit the EIA report and energy independence discussed here.
I went to look at it because I’ve seen the projections referenced a lot lately. Or at least the now widespread idea that it’s up up and away for another generation for oil and NG supplies.
Here is the report
https://www.eia.gov/forecasts/AEO/section_issues.cfm#tight_oil
It turns out they have 3 projections. The high, the reference and the low one. The absurd rosy one is what everyone is talking about. The one that set Illargi off, with good reason. One can suppose this absurd projection was forced onto the agency by political pressure.
Whatever the motive examining the reference or low projections is what we should be interested in. In both cases they predict peak US production is still a couple of years away and then a slow decline to 2040. In either case predicting the need to import only 30% or 40% of our needs out to 2040. We are now approaching imports of only 25% of consumption down from around 60% in the mid 00’s. This has been a huge deal systematically and has played a major role in the ‘recovery’. Well let’s say avoiding collapse. In part because the huge boom in credit funded drilling has provided a significant and much needed credit expansion and the drilling is now accounting for virtually all the increases, such as they are, in the Industrial Production numbers.
Point being, I guess, that on the oil/ng production front and the credit expansion front in the short term a shock here seems unlikely. I am speaking of the US only. If the fracking mania goes global then even more generally a systematic sudden shock is less likely from the energy arena.
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