Jobs, Shale, Debt and Minsky

[Raúl Ilargi Meijer]

Arthur Rothstein President Roosevelt tours drought area, near Bismarck, North Dakota Aug 1936 OK, I don’t see a whole lot of comprehension out there,
[See the full post at: Jobs, Shale, Debt and Minsky]

[Variable81]

@ Ilargi,

I don’t hate Greeks, but I’m not sure how I feel about Calgarians…

Any chance of a similar analysis on the Canadian Oil (Tar) Sands?
And how do the collapse of the price of oil impact NatGas?

My understanding was that the only reason the Tar Sands were even viable was because a) NatGas was so cheap and b) Oil was so expensive, so it make sense to convert a bunch of cheap NatGas into SynCrude… basically an energy arbitrage with little EROEI…

And at least give me some credit for being consistent – if I’m going to beat up on the poor Greeks in your other posts and say they might be better off by going through collapse, I guess I have to apply that same logic to my Canuck brethren too…

Cheers,
-GBV

[rapier]

Unfortunately I can’t find Lee Adler’s most recent article on how fracking has accounted for most all the increase in industrial production post 08 and has been a significant contributor to all sorts of economic stats. Keep in mind that the credit expansion part of the fracking boom has been a positive too. Positive to the extent that credit expansion is an existential systematic necessity. Wall Street pouring credit into oil and gas production was integral to the motive for the whole scheme or one might say the whole reason for it.

Now that the worm has turned bad things for bad economic numbers are good for Fed money printing along with deflation of course. Be ready for the message that the Fed will not be raising rates next year coming soon, as if they could anyway. The Fed actually can’t raise Treasury rates. Junk is another matter. Instead when the jobs and industrial production and other numbers turn bad get ready for QE V.

QE by the Fed, BOJ, even the EU when the war with Putin gives the ECB a free hand to finally go full printing mode,and whatever you call it in China is never going to end. There is no limit to the trillions central banks are going to ‘print’. That’s my take anyway. Expecting some definitive quantum leap down in the economy and markets is probably wrong for some years to come. I could be wrong but I could be right.

[John Day]

Cognitive Dissonance; that’s the form of suffering which is causing such irate and “illogical”, as Mr Spock would say, responses as regard the workings of deflation.
The implication that something very harsh is already happening, and will overtake all that we know, even when gas gets cheaper and the problem looks solved, is very hard to accept.
It’s easier to “rage, rage against the dying of the light”.
Guy McPherson gets a much harder time with the cognitive dissonance he engenders with his extrapolation of global warming of 10 degrees F, 6 degrees C by something like 2030, yeah, 15 years from now.
This is worse than most say, and it’s at the bad end of the spectrum of bad.
He’s a sincere and respectable man, not trying to sell anything, and with proper academic credentials.
https://truth-out.org/news/item/27714-are-humans-going-extinct

[Golden Oxen]

I would not want to be in the business of trying to sell junk bonds of frackers to investors these days.

The yields would have to be so enticing, that they alone would have to give concern as to their worthiness and ability to pay.

We are one week into December and still no kick in oil prices?

Yes, there are much more attractive instruments to be selling these days.

[william]

I have not changed my position I believe we have reached peak oil. But that does not mean we have reached the end of oil just the 50% mark. There are many who are saying the estimates of oil reserve in the shale industry is outrageously meaningless.

Note that the article states:

Adam Sieminski put it last year: “For natural gas, the EIA has no doubt at all that production can continue to grow all the way out to 2040.”

What does this mean? Well everything has continued on a steady state of growth and after 2040 it ends. That is over simplified. We started exploiting raw energy from the ground causing a powerful boom starting around 400 years ago. We are accustomed to that level – a lifestyle. The cost of maintaining the lifestyle is cheap when every year energy is removed from the ground at an increasing pace.

The exponential growth is the doubling time. Lets say the doubling time is 15 years. After the period of doubling the next doubling will consume the exact same amount as all the doubling of everything previous combined. Oil consumption grows somewhere around 2% exponentially. This means every 36 years if oil has not peaked the consumption over the next period will be all the barrels of oil starting from the first ending at the previous period.

Problem for us is we have become dependant on that rate of growth. Each system currently assumes growth. Banks have lent money based on the concept of assuming exponential growth will continue indefinitely.

Governments and the military have realize the problem. They instituted more confusion and less accountability. This gives them a little breathing room but its crazy because it weakens credibility. The last banking disastor as an example. Bankrupt small countries and collapsing the largest banks but no person held accountable.

I don’t believe we have the ability to double our consumption and thus yes we have reached peak oil.

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