Jb
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“It seems highly likely that momentum on the down leg will be replaced by inertia on the up leg with a diminished industry unwilling to jump back on the band wagon when price finally climbs back towards $100 / bbl, which it surely will do one day in the not too distant future.”
Inertia? Inertia from where? The consumer? Wall Street? The Pentagon? In what context will we reach $100 / bbl that can entice and sustain the industry?
“It’s a long day…livin’ in Reseda…”
Indeed, one might think Tsipras has ‘full moon fever’ watching Greece ‘free fallin.’
😉
Agree with GO, except I expect ‘big trouble’ after the last LTO fields drilled in the sweet spots start to decline in earnest.
“Each of the scenarios see strong recovery in oil price to the region of $100 come 2016.”
ninjin said: “Um, I may be a little thick, but why the assumption of 2016 demand rebound in all three scenarios?”
Ditto! Why the assumption that after LTO goes bankrupt in the US (and thousands of people get laid off…), that the marginal consumer is going to have the borrowing capacity to bring the marginal oil field back to life a few years hence? They can’t afford $100/b oil now. How will they afford it in the future?
“We’re very busy losing everything.”
Perfect summation.
Coincidentally, I bought a loaf of bread from a farm in Roseland, VA. (Vachon’s photo above) at the farmer’s market on Saturday. https://littlehatcreek.com/
A long overdue donation headed your way, Ilargi. Many thanks for the reminder and your ongoing efforts to keep us informed.
Lucas:
“I’m especially interested in the “steepness” of the initial stage and I think this is where I start to get skeptical about JMGs model.”
We are on the same page.
@ Lucas,
Agreed. Government responses to restore order during a cascading series of global defaults would be disproportional to the risks. We have plenty of modern examples such as the Rodney King riots, the failure of FEMA post-Katrina, the overthrow of governments in the MENA, etc. to appreciate the dangers of non-linear events. Further weaken these governments through unmanageable debts (Spain, Greece, Michigan, etc.) and you can forget any kind of meaningful response.
One thing that concerns me is that companies that make products that I might find useful during or after such a scenario (wood stove for example) might go out of business due to debt / lack of access to credit. It would seem prudent to purchase or stockpile those items ahead of time.
BTW, I should have mentioned that my quotes came from Mr. Greer’s current post.
My gut says, that since gold is not in circulation as ‘money’ the government won’t confiscate it in order to re-value the currency against it (again). Only the perception of gold’s value against the dollar (which is gaining in strength) represents a threat to the Fed.
The wealthy international billionaires, who contribute heavily to political campaigns, stand to lose the most if it’s confiscated. Besides, Bernanke will have to explain why gold is suddenly no longer just a ‘tradition.’ https://theautomaticearth.com/components/com_kunena/template/default/images/emoticons/wink.png
In the meantime, central banks around the world continue to buy, ship and store this little tradition at great cost…
@ Lucas,
With all due respect to Mr. Greer, I share your frustration with his prognostication. I do not understand how there can be a “really spectacular financial crisis” followed by “a lot of poverty and suffering” globally without the social order breaking down.
Yes, I’m sure the government will nationalize the banks, oil companies, etc. It would not surprise me to see rationing as well as martial law declared in urban areas where things are sure to get particularly nasty. I think the “next round of temporary recovery” is unlikely to look like a recovery at all, more like a period of relative stability at best.
I am also not convinced that the US government will confiscate gold held by private citizens. To what end? Collecting and storing gold costs money! I think the US government would do this only if they intended to use it as money for settling international debts, or for buying oil or other vital raw materials.
