We’re Not In Kansas Anymore


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    Arthur Rothstein “Bank that failed. Kansas” May 1936 Few may have noticed it to date, but it’s not like we still live in the same world, just with low
    [See the full post at: We’re Not In Kansas Anymore]


    … but it’s a metaphor
    … But do let’s put it in perspective:

    … who cares about living in Kansas
    … We’re watching, in real time, the end of the fake reality created by the central banks.

    Only people with wealth live in Kansas
    If my wealthy master does not/cannot take care of me I will be obliged to leave to find a wealthy master that can/will take care of me

    Instead of leaving, some people want to impose pain on their wealthy masters by attacking and killing their children. (140?)


    Its a little understated. Oil is really labour in the market – simply doing physical labour instead of us doing it. Such a large shift in the price is the low hanging fruit. So we don’t experience a dynamic drop in wages or wealth our employee oil does.

    The size of the damage is on the grips of the 30’s and we have yet to experience any real pain – I guess that comes later.

    Again and again I have warned people. Big oil pulls out and lets you in on the ground floor of investing. Should sound fishy and it is. They know something you don’t.

    This is the beginning of a resource war. Right now its oil but others will take their turn too. Price instability is the new norm and next it will start with inconsistant volume. Its not that prices will zoom way beyond us common folk reach its that the pumps will be empty today – come back and try a different day.

    The new task for the oil industry will be to pace itself. Know that drawing it out fast will increase cost that will make you the first to be insolvent. Increasingly large amounts of steady volume can be drawn but at an ever increasing cost.

    Invest carefully. Look for steady returns and low overhead. Run from exploration and ground floor projects. Don’t even reward reinvestment into the industry its all a steady cost for here on.


    You mention that Putin and Maduro are unlikely to get bailed out. The same goes for most of the oil industry. Do you think any New Yorker would go along with bailing out Halliburton and Koch? Those are Names Of The Devil to a New Yorker.

    But I wouldn’t worry too much about the oil industry. They’ve been handling booms and busts for more than 100 years, much deeper and more frequent bubbles than any other industry. They know the routine, and the cities and states where oil has been a major player also know the routine.

    Only North Dakota is new to the oil game, but I’m not overly worried about them either. ND has been operating its government like an old-fashioned bank since statehood. Maintain a large reserve, don’t borrow or speculate, try to make a steady profit.

    Or in one sentence, Kansas may not be Kansas now, but Oklahoma is still Oklahoma.

    Mike Twain

    If you think JP, Citi, BOA, your congressman, your pension fund and your local banks and credit unions, not to mention all these big corps with ‘cash on the sidelines’ (Apple, Berkshire, etc) don’t have their fingers in the shale pie…then you haven’t looked far enough down the rabbit hole yet, Alice. It won’t be the oil men who are crying when they can’t make their payments, but the counter parties will get to learn how to sell used drilling equipment into no market but scrap. As they say ‘there will be blood’.


    Ah, so,,,this is how the Fed raises rates,,,it is ultimately forced to follow Junk spreads up?

    Judgment day is getting closer, unless the Fed instructs it’s Pentagon Subsidiary to knock some big holes in some pipelines, or otherwise choke off inputs to the refining industry.

    Or, maybe gramma isn’t as helpless as believed, and can still tweak things with massive intervention in the Futures.

    Or some of both?

    Interesting times, these.


    The Fed is well aware of the EM crisis it has spawned with its QE.No wonder US long bonds continues to rally hard … where else do you hide out? But how long can they go on with this charade and when will markets eventually lose confidence in the Feds ability to talk its way around the inevitable. Does the debt crisis hit in 2015, 16 or 17. Can they postpone it that long and can equities continue to rally under what appears to be a perpetual zero rate world? It could rally another 20-100% before this debt ponzi unravels.

    Something’s gotta give sooner or later….any thoughts?

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