Debt Rattle New Year’s Day 2015
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DPC Gillender Building, corner of Nassau and Wall Streets, built 1897, wrecked 1910 1900 • Third Of Listed UK Oil And Gas Drillers Face Bankruptcy (Te
[See the full post at: Debt Rattle New Year’s Day 2015]Greece doesn’t really have a central bank. Only one in name only.
https://en.wikipedia.org/wiki/Bank_of_GreeceGreece doesn’t even have a currency.
https://en.wikipedia.org/wiki/Greek_drachmaWhat is Syriza’s plan exactly? I don’t get it. I think it is safe to assume they have no idea how to launch a new Greek money and even if they did nobody outside Greece would take it.
There would be no financial dealings in a new currency. Even if Greece left or got booted from the EU the Euro will still be used in financial transactions including the selling of Greek assets.
Who is going to loan the government money? Nobody. So the first default will be payments for government workers and services and transfer payments. In which case it’s doubtful the term government would have much meaning left.
Except for Eurasia there is no government without the the big central banks and their primary dealers. Politicians can dicker about this or that and pretend to govern but there is no plan B.
Which is why Syriza will most likely come to some sort of accomodations with the ECB and end up betraying the voters-as always happens in the new reality. At this point it seems that the people of Greece are truly screwed.
rapier – which leaves Greece is almost the same position as an abused spouse or one of Cosby’s victims. If they speak up, they face the prospect of being murdered or, in the Cosby victims’ cases, never working in the industry again, being blacklisted. If they don’t act up and they remain silent, they have a roof over their heads, their children are fed, but not much else. You’re damned if you do and damned if you don’t.
I say let the central banks/primary dealers and their psychopathic handlers twist. Was just listening to a psychologist who said, “People used to say that civilization was the cause of neurosis [having too much of a conscience]. My own point of view is that neurosis is the reason for civilization. It’s the very fact that most of us are hung-up [feel guilt and shame] about just doing any old thing we please to somebody else that enables us to have a civilized world.”
The world is presently being run by a small pack of bullies, aided and abetted by a whole lot of bully enablers who run around saying, “You can’t escape, there is no Plan B.” There is always a Plan B.
Reading through Jeremy Warner’s rant about peak oil people in his article “Even $20 oil will struggle to save self–harming eurozone”.
I am a believer in peak oil. I will put it this way, Jeremy, peak oil means the belief that the world does not have the ability to double its consumption. We consume 82 million barrels a day and I don’t have faith that in the next 10 years we will be at 120 million and finally at 160 million in 20 years. That is historically what our current steady climb up the bell curve has been like.
Its the view of oil that is causing the instability in price. Currently exponential growth is a factor in the stability of everything. Its a huge factor in the growth world wide of human luxuries.
Its not just supply and demand that factor in here. So a well slows its production. Governments have pushed their money that way shifting the picture by finding oil. Prices still go up despite new found oil. Manufacturing has a hard limit. Manufacturing can’t pay any price for oil the market will only place so much for the products. Manufacturing cuts back and will continue at a lower price. Manufacturing will not increase production based on a cheap price though, they base production on the ability to sell the product.
So consumers at the pump can handle a much higher price than manufacturing. But that consumption reflects less than half the total production. This reflects the problem of types of consumers for the product: consumers, manufacturing, and military. All buyers have a claim to the product and we all understand in a crisis the military will take and pay what they feel is reasonable.
The other thing affect price is the misleading costs factors. So some oil is widely energy expensive to obtain. The physical energy needed in its removal is high. We in turn use cash to obtain this oil. But the cash is funny money and the physical energy needed to remove the oil is real. Canada uses a mining type operation in the tar sands. Enormous equipment makes this possible but increasingly use greater amounts of energy. As the hole gets bigger and deeper, as the hole gets further and further away, as the supply of water becomes more difficult, as the polluted tailing pond becomes massive, as the energy needs surpass the grids system of supply each of these is a direct cost of this oil. Each of these have not been factored into the current price.
So in the Canadian high energy cost oil we pay for everything with cash. The government prints a money solution. This is where it becomes funny money to pay for a real cost. Printing causes money to devalue so the government switches tactics. They issue out debt cheaper and cheaper. They offer tax breaks and funny income tax laws that hide profit. So basically the government resorts to deception to create money which has a problem.
People figure out these things eventually. Books are balanced and greater thought placed into things. Time makes things increasingly harder to hide. When they do its a scramble for price discovery. That is what we have today a scramble for price discovery.
What is oil worth if the market is over supplied, but now production can’t be increased, but the dollar its being paid with has been over printed, but manufacturing slowdown may restart, but international instability appears to be ready to happen within a few days. So many buts that radically change everything about the price. I can’t tell you the price of oil. I can’t tell you the value of the dollar. Everything is in price discovery. Hold on for the ride.
William,
I think the readers of this blog will appreciate that the main issue at hand is that we don’t have honest money. It is my understanding that the founders of this country, called the United States of America, intended that the people control the issuance of currency. Was that not in the constitution? It is also my understanding that the Federal Reserve is no more “federal” than Federal Express. Hmm..seems like a problem, doesn’t it?
I think we know, as far as energy goes, there are different sources. People will tend to purchase and use what is the least expensive and/or most convenient. Oil will continue to be used until it loses that status. Concentrated energy is hard to beat right now, but as you say, that may change.
Chris M,
Excellent point! Paper money backed only with debt and promises will eventually lose confidence and die. It works only so long as the underlying debt can be increased exponentially. It seems we are starting to see the limit to that feature. When this scheme unravels there will be a world of hurt.TAE has a link to Jay Hanson on the front page. I’m surprised you don’t quote him on energy matters more often. He said, over 15 years ago, that if production input costs are mispriced, you can TEMPORARILY maintain oil production at an artificially high level. Hanson used as an example mispriced electricity with which to pump oil from a deep well. But the same is true for mispriced capital or other inputs.
The so called ‘oil resurgence’ of the USA has been exposed for what it was, financial engineering. Falling gasoline prices will give USA consumers a break in the near term. But the underlying problem, that the USA doesn’t produce much of value, will get worse. Look for a hyperinflationary collapse soon, as the decline in real gdp is balanced by greater levels of ‘out of thin air’ money.
William,
Thoughtful content there, Amigo.
Dmitry Orlov absolutely nails a character and behavioral analysis of essential traits of Anglo-American Imperialism. This may be the best piece of Orlov’s that I’ve seen.
It casts things in a clarifying historical context.
https://cluborlov.blogspot.com/2014/12/the-imperial-collapse-playbook.html
Here is food for thought about “how to shrink the economy without crashing it”, by Richard Heinberg of the Post Carbon Institute. Food for thought, cud to chew…How to Shrink the Economy without Crashing It: A Ten-Point Plan
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