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People are rushing into parliaments with ak47s. Really you actually think elected officials intentionally have done this.
At the heart of it is the fact democratic ways and rights and freedoms feed this virus. Two best countries in the world dealt with the virus effectively. Iceland and Taiwan use draconian but effective ways.
In these countries rights and freedoms set aside for a month. One used a mandatory phone app going from green to yellow to red. Green your good. Yellow someone sick passed by you and mandatory go home. Red arrested if not inside.
Police forces were tripled and contact tracing carefully done.
That is the cure. Are we willing? Or are we going down with the boat. I’ll be that rat jumped ship in the lifeboat thankyou. No dignity and heros don’t live long.December 23, 2015 at 4:49 am in reply to: An Urgent Christmas Call To The Finance Blogosphere #25783
Great I can put in $5 but the Greece has to act differently. Knowing the numbers logic states Greece cannot be part of the EU. The costs are to high. You cannot use inflation or any other tool to fix the situation. I hoped Greece would do an Icelandic default and be removal from the situation.
The EU doesn’t have the ability to help Greece and actually expects to remove assets to repay to the EU. This doesn’t alarm me cause a Greece sticking with the EU will slowly deteriorate. My perspective is either way Greece gets nothing no matter what from the EU.
The Red Cross has a speckled record with aid. The UN equally has similar record. They are bringing forth aid to places agreed upon by allied forces. Yes it really amounts to post war allegiances and where they want things to move. Old thinking, and no ownership for causing death to maintain that old thinking.August 10, 2015 at 11:37 am in reply to: TSHTF Podcast with Nicole Foss, Raúl Ilargi Meijer & RE #23085
How things are playing out are interesting. Pricing of stuff around the world is controlled almost like governments agreed on forcing everything to be stable like they really believe a full economic depression is at its roots the fault of the public.
I first saw this a number of years back when I was trucking. A huge fuel shortage happened but pricing didn’t change. Over a weeks period random stations ran out of fuel. It was more memorable for me because driving a semi truck stops started running out of fuel. We didn’t get stranded but trucks with smaller tanks were. Trucks with bad timing were. During this whole time nothing happened to price. Stations ran out but never increased there price. It was like there was a very strict pricing control amongst competition.
But now today its more interesting. China has place strict pricing controls to stop a run on their markets. According to new laws set out if you own a certain percentage, you a large player in ownership of that company, you are not allowed to sell or move more than a minor amount of shares out of that company for the next 3 months. All big plays, by law, must stay put.
Ok, what should we expect from a large communist country? Of course they put into play restrictions that are not in fair play with capitalism.
Although I had been watching China I missed Greece. They have shut down for 5 weeks only opening today. Down 15%.
So is this the pricing system around the world? Maybe prices already are stable but volume is cut. Meaning your ability to have access to your money makes no difference it will now be about timing. Consumers may be left with targeted purchasing.
Use to be said that you should have at least a months worth of normal consumption cash sitting in your account to handle wealth. Wealthy people know costs rise considerably when you run low on capital. Beyond that now it appears it may be in your interest to have a storage of consumption that allows you not to enter the market for a week possible a month – might be the strategy to allow us to thrive.
China is an interesting foreign playground. Its crazy to think we understand the rules and how they can be applied. So today I find out why the Chinese market cannot move drastically in a sell off.
So if you own stock in China and trade on their exchange watch out for this one. New law if you own more than 5% of any company you are in lock down for the next 5 months. You may buy more but cannot sell – them the rules. Goodbye freedom and hello stability – yeah free people won’t do something with that.
I want to see what happens to Mr. Buffet on this one. Can enough money influence the Chinese perspective or has a non elected rule got enough force to contain even the powerful interest from the West?
Lets watch to see how these rules play out.
So I see it again, not many are getting it. We have peaked in resources and in simplicity that means the end to growth. So many articles talking about returning to a growth model and the fact that increasing isn’t happening. If consumption doesn’t increase we call it lack of consumer confidence.
Coal and Resources:
If companies can’t pollute fuel resources faster we end up with a glut of cheap resources – LEAVE IT IN THE GROUND I say. A company write off? If we don’t keep mining coal then we have to place this as a ugly mark in the account books. Either we mine hard and fast or write off as a loss. What are you talking about. Stop mining your coal and fuel and leave it alone. Stake your claims and wait for brighter times. Only a duffus would think that reducing the amount of coal above ground will lower its value. If there is a demand for your product and price is low waiting for surplus to exit is always prudent. Slowing down consumption is not a world diasastor its a world victory.
What idiot chose to believe this lie? Great marketing. People entering into shopping malls is the peoples belief that times are good. Happiness and confidence can be found in the greatness of consumption. Am I surround by idiots? Our ability to consume will save the us. Sure I bet that thinking will save you stranded on a boat – the faster you consume the supplies the more confindent and thus better off you will be.
These are the words of the court jester in our current stupidity ring of thought: growth, sustainable growth, consumer confidence, demand, prosperity. Come on folks we are talking the same stinking pile here conspicuous consumption. A consumption that all math and science states clearly can’t be maintained.
Don’t be fooled an end to consumerism and the push for ever increasing consumption being an end in all of itself is not successful thought. One way or another we will find equaliberium of real need and exact amounts of supply – a resource based economy. This will be a happier time even though we won’t have our profits.
• “Monetary Policy Is Bankrupt” Dr. Lacy Hunt Warns (Tavares via Zero Hedge)
I have spoken about a theory I have. I call it viscosity of money. So there is no evidence but the theory looks good to me.
What it is about is the type of money that flows. So if we have velocity meaning the speed that money transfers from one to another viscosity would be chunk sizes that move well. So your groceries purchases move in chunks of 100’s. Its limits are the paycheque of the consumer and the limits of cash not existing in more than 100 dollar bills. So your mortgage moves electronically in chunks close to 1000 straight from one account to another. Now QE moves in the 10 of millions purchasing mystrious products.
Now the importance of viscosity is to the small economy. Your grocer does not see anything but the smallest chunk. The thought is to save the to big to fail and leave the rest but the rest is more important than the total. There needs to be a shift in importance. We can operate without the mortgages and failed banking but can’t operate operate without the small micro system.
If the public gets the value of opting out of electronic credit and its endless payments, then and only then do we get a change. Drop out of all electronic cash, use printed money and cut off the big chunk money from the small chunks. Allow the big chunk to fail.
In all these articles I see the trend. Easy oil is gone and difficult oil is in fashion.
Since we pluck the easy fruit a new shift happens. Costly oil, oil that requires large amount of energy to remove, costly oil is vulnerable. I develope a world view based on variables. When certain variables grow war becomes more likely until war actually happens for example.
Well in a capitalist economy you have two types of oil uncostly and costly. As both cause an over supply it is an easy battle. Costly oil is only viable at a high price.
It is obvious to me the next variables. After shut downs and cut backs it will be hopelessly difficult for costly oil to find willing investors to take real risk. Previously investors had a steady state long term approach. Now they will know investments must return principle amounts quickly and hope to get return there after. Its a new difficult landscape.
Now I don’t need return on investment. I need my capital back quickly. My capital has to be returned to me before the next downturn in the price of oil. During that downturn I need enough back room deals to protect my returns.
Oil extraction like many others within energy is better suited to government sector than the whims of the market. I think we will see that in the future.
Mathematically speaking all parties involved had the same understanding on these things. In absolutely no way could Greece ever pay the principle of their debt in real terms. I mean if their debt was converted into lets say pounds of gold and they couldn’t use inflation to reduce the amount of the debt there wasn’t a soul that believed they had the ability to repay.
Again mathematically speaking everyone can agree Greece might be able to make a interest payment but only in good economic years.
Knowing this than let me state the obvious: a Greek default is not a risk factor investors took into consideration it is a forgone conclusion. So each investor placed money into something knowing there wasn’t the least possibility of return and the principle would certainly be lost.
Lets say thank you to these selfless souls. Greece move on to the spot everyone agrees you are moving to. Just say special thanks EU and IMF good bye, don’t let the door hit you on the way out. Welcome in Russia and China your new bestest buddies. Get back to what Greece does well – tourism.
If bankruptcy of a nation is so horrible it sure didn’t look like it for Iceland.
I think the benefits of QE are being understated. This bond buying and maintenance of things has a side benefit. Its about maintaining the lie. Ok maybe not completely accurate it about maintaining many lies.
A concept that many have is they have the option to save for the future. What they are putting aside for retirement fits in the end into these bonds and the banks being saved by them. A failure ends a wide range of programs designed for retirement. People who think they are placing themselves in no risk retirements are connected to this failure.
I listen to many fools who believe the government has the ability to print them out of this situation which if you study economics we all should realize that is not a posibility. This is about the prevention of harm to people who acted prudently and justly deserve their retirement.
The shale oil thing is very interesting. Possibly is this a deep thought business plan called: take the money and run? Selling the only thing of value what is the purpose unless someone in management is leaving with a large amount of cash? Normal business practice is to separate the two ventures so that one is allowed to collapse without exposing the other. Is there a thought that shale oil has a large profit base left in it?
My final thought is about Greece. If Ukraine was so welcome to the EU and resources where going to be dropped that to Ukraine how was this to unfold. I have always pictured the wealth of Greece to be a whole lot grander than Ukraine. So if Greece is at the bottom of the pile and it looks like Spain is right close where exactly does Ukraine think it will sit? Why exactly does the grass in the EU look so green? If they think its so great have some of your people do a little tour of Greece and Spain cause it will be a short term before you are treated likewise.
I have been studying computational chaos for about a year now. Looking to see how this effects the markets. I think what is going on with bailouts causes a different problem.
To explain how this fits a short bit of history. Computational chaos is under the field of fluid dynamics. Leonardo da Vinci ran an experiment. He build a stream added a rock. At a low flow everything stayed at a steady state. Up the flow and after the rock a vortex appeared. Even greater flow and the vortex moves further away from the rock. When a larger flow occurs the vortex jumps from between the two states. Infact a greater flow creates four states the next jump is to 8.
Increases will cause mutliple vortexes and double of the previous state. Further confusing the issues is if a vortex tries to form before the old has ceased. In this cause the old vortex influence the position of the next.
What does this have to do with Greece and bailouts? Bailouts are like increasing the flow of water. The vortexes are like price discovery.
Its not an issue of socialism its an issue that nothing is going to work. Further aid destablizes prices. Look at oil. I read an article that oil has stabalized at $50 but the next day its at $45. Then there is an article that oil will bottom out at $40 and the next day oil is at $48. Its a jumping vortex with multiple stable states.
All of the best of math can’t predict the position of the vortexes. They can predict states that are attracted and repulsed. No one can predict the timing though of a change.
The new norm is that rather than QE not having an effect its the opposite. QE has an ever increasing destabilizing effect. Ironic the very thing present to cause the solution causes the problem.
It seems money has a new cost. The cost of security. So EU bonds are sold with misleading pricing that confuses the big banks – I am not worried about them figuring this out but the domino effect once they price this out. Check bloomberg out
Now on to oil. People are forgetting oil priced at $150. The next few years changed the landscape. The damage was done quickly to refineries. Once hit no investor returned and they were dismantled. I predict the damage of oil under $50 will be the same.
Its a tipping point. Investors no longer feel secure about the price of oil. Just like the housing collapse where it no longer was true that houses always go up in price the same is true of oil. When investors no longer see price stability investment will stop. Guarenteed fracking companies that proceed to bankruptcy will not re-enter. Speculation will cool for a good period.
So long term the market will be less agile in oil. Opportunities will require less risk. Just like the other collapse’s this will remove large amounts of electronic currancy from the market. Kind of interesting QE puts the money in and volatile collapse removes it.
It seems some don’t get this about the tar sands. Any operator is committed once they start. A shut down any longer than a few hours will be a complete end to the operation. Liquid tar moves through the equipment but if it cools right down the only option is to discard the equipment and restart with new equipment, according to above articles at a cost of 1 billion.
This means no operator can stop, no matter what their cost. This means no new player is even going to consider this risk for a great deal of time. When oil hit $150 East coast refineries where stuck not being able to stop as well and when the dust settled they were sold, dismantled and sent to China.
The only difference is this time in the tar sands nothing is going to be dismantled the players are just going to walk away.
With oil its a bankruptcy game. No producer can stop and restart on a whim. All producers are going to stretch everything until they are forced to quit. After that bankruptcy, and after that no more interest in fracting or difficult oil for some time.
The Greece thing is obvious. The EU never gets its money back. They can forgive debt and Greece stays in the EU or not forgive and Greece leaves.
My reasoning about the Greek debt is this: Greece has a debt that mathematically beyond them. Sure deflation can happen that devalue the debt but that is just another way of saying you aint getting paid.
So this is the deal Germany, France, and the rest of the EU you aint getting paid stiff upper lip. Secondly if the punishment is too great for Greece they will leave and probably end up better off but you will lose face internationally.
As one who follows the oil thing another point should be noted. Oil producers can reduce production but definitely have a hard limit.
For example if for cost cutting I no longer employee as large a fleet of trucks to haul oil I then become stuck. I can hire more trucks when oil picks up again but its a slow process. If one loses the network of shipping, no matter what the price of oil swings to, I cannot just pick up and deliver.
The oil sands are in a much worse position. Its a mining operation. Each truck arrives by schedule. Repairs have to been done in a very short window of time. The truck delivers oily sand which is put through filters and then centrifical separators before being processed. If this becomes cold there is no process to fix it. No equipment exists to restart in the event of a complete cool down. The show must go on. The only other option is to allow a shut down and rebuild with new equipment to restart. So far as I know there has never been a shut down long enough to warrent a rebuild.
Now when the price of oil went up to $150 there were tankers sitting just off port waiting because suppliers wanted a better price. Refineries had the problem. Each refinery knew it couldn’t afford these prices. Each refinery knew it couldn’t run out of oil. A restart for a refinery would mean a list of problems. Some of the previous oil batch of refining is used in the next new batch of oil, using this up requires a longer period of initial refining. Losing the network of drivers due to a prolonged shut down poses another grid lock. Hiring a large group of inexperienced drivers will have many hickups. If the staff at the refinery don’t come back there is another group of people to hire. The likely hood of reaching production quotas for a year aren’t likely.
In this environment each refinery waited to see who would run out first. A bunch off the East coast were the unlucky candidates. They were quickly forced into receivership no matter what choices they made. China then went and purchased the plants and brought them somewhere in Asia.
I see the same thing with current oil. Bankruptcy and sale of assets. No real restart. Due to the new supply of oil not meeting demand the prices will rise significantly.
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.
A video describing how oil and the new junk bond link to create a banking problem.
Just like to point out though its not just an oil problem its a resource problem. Everything is being tapped to its limits and players are destablizing prices to gain a market position.
Noteable is that it takes a buyer for oil to create price. Manufacturing has done less buying which destablizes price. Governments with low cost oil realize the ability to damage high cost operators with low price oil.
Since commodities are dropping together my guess is manufacturing is slipping downward world wide. What I don’t believe is that this will be as bad as first thought. If growth slows and becomes non existent it would seem logical. Since we are trying to bring inflation to zero, growth should be zero. If you are not inflating you are not growing. Also the only things that are sustainable long term have a zero growth rate.
Think about it. Cancer is something with an eternal growth rate. Healthy people have a stable wieght and are not growing. What if a sustainable healthy economy only exists if there is no rate of growth.
Growth is really just another word for consumption of resources. When resources are limited it seems obvious that increasing consumption is not good.
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.
I have heard some pretty ubsurd stuff. This oil pricing is OPEC attacking us. They have as little control as we do. They are forced to act the way they are just to maintain themselves, to expect them to have better restraint then we do is dillusional.
I stand behind what I have called this all along a resource war. Resources price rises due to scarcity till manufacturing responds by cutting back. Suddenly with manufacturing cut backs there is now a surplus of resources. Now both are cutting back. But check this out its not just oil its different resources clear accross the board. There is no longer great value in consuming resources to produce products for this electronic money that is produced in the trillions with each QE.
What choice does the East have. They are swimming in US dollars. The more they have the less its worth – again the laws of supply and demand. Further should a country aquire such a large amount of US dollars it can become a threat to US sovernty. Suppose the East dumps their supply too fast. This could devalue and through the US into a depression. Thus the US could see any country owning to much of its currancy as a threat.
The money system no longer has value against the resources its trying to create wealth from. Reality: printed money, electronic numbers, and zero credit schemes have created a world where manufacturing of the East gets no value. The risk for the East to continue manufacturing and collecting a massive US currancy is war.
We want to blame someone for this but we need to stop. Look a knife cuts and its good that it cuts, we need it to cut and our world works because the same results happen the same way each time. Just like a knife cutting printing money devalues the currancy. If we lived in a world where each action didn’t have a common result it would be utter chaos.
I will enjoy a world where printing devalues money. I will enjoy a world where common sense returns. Where price equalibrium gets a fair value to the worker. Where countries can’t print their way out of problems. Where there is a source of value in products that makes sence.
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.
Most people don’t get the resource war thinking and how oil is involved. This is similar to siege tactics. Force the opposing side to consume their resources first in a costly fashion who ever is left is the commander of resources for the world.
Being commander of the resources of the world sounds great but there is a problem. You have certain needs as well and must make sure enough consumption to satisfy your needs. So you will be forced to feed enough manufacturing to your satisfy needs but not so much that manufacturing is able to gain the upper hand forcing you to sell resources at ever lower prices. If resource empire handles one level of pain and manufacturing empire handles a lower level of pain you are good and in control. If resource empire can’t handle a level of pain that manufacturing is fully willing to handle you have lost control.
I guarantee that the military thinks this way. I have come accross military communications. Its not a military secret.
What will oil prices be in the future – unstable. Prices are limited by the scarcity and the consumer’s capital. If what we are looking at is peak resources – which I believe we are – some things will happen. Prices will be unstable. Capitalism will have a growing inability to handle oil – investors will lose money. Population growth will end. Manufacturing will also be, in total, not growing but shrinking.
All doom and gloom – NO. The environment will improve with slower use of resources. We will reclaim landfill waste into resources. We will extend the use of manufactured products much longer.
We will be forced to another view where resources in the ground are savings in the bank and consuming those resources are an expence. Current capitalistic view is the consumption of resources is called profit. So when GM produces more cars it is profitable yet what they have really done is consume. Either capitalism dies or we do and right now its still a choice we can make.
Its not the end of the world but an exciting new beginning. There was a time when Kings and Queens ruled the world. A concept of democracy and people’s current world ended. Complete dread and fear yet the end result was an improvement. Hopefully we can find something to replace capitalism in the same way. No country can survive based on short sighted views that depleteing resources faster for the purposes of export is the solution to everything – that is exactly what American fracking is doing.
Most of every cent of every product on the market is represented by taxes, then by markup. Of course on the books the economy looks ok even when you buy those $1 shirts from China. On every good shipped in there is a duty charge and sales tax and fuel tax and a processing fee. The largest benefitor is government followed by middle men.
All the money spent on the goods little goes to paying for the actual process of making it and even less goes to the raw materials. Our economic system does not currently fairly represent the real cost of goods nor apply fair wealth to the actual production of the goods.
I still don’t see how with all the printing of money that it will not devalue money. If I was in charge and could use the new print economics system I would have fun with the idiocy of the whole idea. If printing money is so good then lets print off the debt. Double whammy QE and free up money for the needy (government). I could then even lower taxes. What is the worst that could happen? ;>
So looking at Japan’s debt being over 1 quadrillion and its gdp sloping towards 4.5 trillion. Meaning, if Japan could afford to spend 10% of GDP in an interest payment you could receive 45 cents for every $1000.
Remember GDP is the total of everything so if you collected all of that in a payment it would be the only payment because the country would have nothing left to continue.
Venezuela needs to go back to pre school. There is a book everything I ever needed to know I learnt in kindergarden. At under $100 a barrel it is simply not your turn right now. Yes you are playing musical chairs and the music just stopped. For your country oil is money in the bank and you are making withdrawls. But there is this thing called banking hours and for you its simply not open for you today
I am afraid not many are making a connection. China is not purchasing oil which has caused the surplus in the market forcing prices down. China is now not purchasing raw steel and I suspect a number of other purchases as well. They had a vast amount of gold and threatened to corner that market. What would cause the price to head downward when one player has purchased any spare capacity throttling the world’s market? I believe they are quietly currently dumping their gold in a desparate move to stabilize.
In a long though process I have developed a model of what I believe is going on. We have hit the resource problem that I predicted in my model, although somewhat later than I thought. Resouces and manufacturing play a game together. One needs the other and price reflects both need of resources and cost to get that resource. Unstable pricing forces a new realization.
I can’t believe how few get this – what it like in that funny little brain of yours. Low oil pricing reflects a massive slowdown in manufacturing yet unrealized. Once realsized resource sector will adjust (permentately shut down sites). Once manufacturing gains momentum the resource sector will not have the capacity supply need. It is going to rock back and forth. Starting in 2008, now 2014 and next between 2017 – 2019. Basing this cycle loosely on the hubberts curve.
I am venturing a guess but I am thinking that the shift in China’s thinking causing oil to drop is the start of a second drop. I believe that this should be a significant drop in the markets and if so it should be possible to perdict drops from here on.
My thinking is that we are in a resource war. We sit on the declining end of a bell curve. If this is the case then with accuracy will grow with each correction of the market.August 21, 2014 at 4:38 pm in reply to: Debt Rattle Aug 19 2014: Rising Rates and The End of Stimuland #14751
So its the end of stimulus … or are we just getting started.
There’s a button for that, or maybe a fund. The saviour fund to end stimulus and create an arena for the end to ‘to big to fail’. So they are working on the largest biggest financial item to end the to big to fail. Does anyone see the failed logic?
Proper working markets means allowing the to big to fail to fail. Governments have involved themselves to far and its going to get obvious.June 6, 2014 at 3:07 am in reply to: Debt Rattle June 5 2014: You Won’t Have Anyone To Blame But Yourself #13361
so I skimmed the article – how much time do we have for reading? I saw this Say’s Law and looked it up – old and interesting.
Now my euro guy is very level headed but recently is talking some pretty strange stuff. Is the EU falling apart at the seems and banking their last straw they are willing to pump any amount to save? He also just recently stated they are considering ending consumer trades of silver. Up to now this guy has been so level headed very conservative but it is sounding like something is going to happen within weeks.
If anyone knows anything email me firstname.lastname@example.org
I took someone into the clinic and had to wait for them a while. Good thing I downloaded the text of the article onto a stick. I read it through moonreader. This was long but much easier on a tablet this way.
I wounder if people get it yet? Oil in the ground is a countries savings and extracting it is taking money out of the account. Further any country that states its energy indepence is based on faster extraction ix flawed and lieing. Faster extraction is faster bankruptcy.
When Shell says it is leaving a project due to the cost of extraction and the government is talking about throughing money towards this project again its deeply flawed. There is a dollar cost but that is not what Shell is talking about. Suppose it takes 1 barrel of oil to extract 10 barrels of oil you have a net gain of 9. Suppose the net gain is less than 2. At a certain point Shell can not continue and allow a margin for error.
The name of the game is depleted resources. It means we have consumed half the resources we can within the earths crust. It is complete folly to talk about oil coming from deeper in the crust. We drill as deep as we can. So deep infact that the rocks no longer maintain their strength and become plyable. That is all folks.
The silver lining is the environment. Imagine something so powerful it can make us reduce our consumption faster than any agreement our leadership can think up. Previous article to this about the climate and how people question whether it is happening will not matter. Like it or not in a depleted resource world means quickly using a lot less.
We picked the low hanging fruit of oil. Easy fast and in huge volumes. Poke a hole and watch it gush out. Almost no energy used in the extraction. Soon it stops gushing and it must be pumped but still not a problem.
When the hole gets really dry you need to pump in water or co2. The costs in energy consumed to get energy out goes up. Further and more important the oil is not easy nor is the volume huge.
Have you ever drank a slurpy? Stick a straw in and suck and you get high volumes of cold sugar based drink. Lets call it depleted when the color slighly changes. Soon after if you don’t slow down it stops giving drink and you get air no problem though because send the straw in somewhere else and you get more drink. Oil is like that. But sending down a new well is very costly so instead you slow down. The well will not collapse if you slow it down and in the end you extract more. Imagine the majority of the wells in the world all needing to do this. That is literally what we can see in the production data.
Everyone I talk to about peak thinks end of the world and mad max. Think trickle. Everything operates but way to slow. Alright if you get 200 mpg but otherwise a problem – or is it.
How to we get to 200+ miles to the gallon? Think kindergarden. Cooperation. A car at 30 mpg takes one person to the store or packed full 5 but the full consumed is the same. Suddenly in one step we are at 30*5 = 150 mpg. Pushing the concept further walking and biking for local stuff.
So in preparation get the bomb shelter stocked up with a higher end bike and extra tires and parts for repairing along with a good bike book, a few good pairs of shoes, some gardening equipment, and some good books that will help you not lose it while the whole thing goes down. It doesn’t cost much. Oil ending means ending consumerism and wild disposible goods. We will also be forced to sift through our “garbage” and get more life out of goods we need.
I keep telling people the lifestyle of the last 50 years is not maintainable. It completely depends on the extraction of oil steadily increasing. Expect a whole bunch of gloom as we go into crashes and the dumps. But look at it in perspective up till now we have not dealt in reality. We don’t pay the real price of goods. A vehicle manufactured here of outstanding quality is beyond what we want to pay. Clothing manufactured here again beyond what we will pay. Infact almost all consumer goods are shipped in from 3rd world nations paying less per day that a coffee we purchased this morning.
The perspective is this: If its a fair market and people receive fair value we would be dealt a blow. The equations do not balance. What is good is when the nature of things works. When a knife cuts it is good. When a hammer comes down and drives nail in it is good. That things in nature consistantly work that same way is good. The nature of allied countries sitting pretty with large deficiets and 3rd world nations producing most of the goods for these nations ia a huge inbalance. The economic force that adjusts the constant taker out of the picture and rewards the producer is long overdue.
We have operated as the consumer of choice for to long. We don’t pay. We are just the black hole of the economy constantly taking never giving and when the shit hits the fan it will be a good thing.
Its not doom and gloom its proper forces finally working correctly.
A special warning to investors. According to a number of retired oil exec geologists the equipment for exploring for wells is excellent. What the oil companies do though is over state a find. So lets say you say you have found a field worth 1 million and after extracting .2 million it is dry. What they then do is say they lost .8 million which of course they never had in the first place. They make use of investment vehicles that include uneducated investors to make high risk investments in exploring for fields. These investors take all the risk, In depleted oil new field discouveries will not happen much so the odds are highly against you.January 25, 2014 at 8:42 pm in reply to: Debt Rattle Jan 24 2014: Argentina Returns to Villa Miseria #10801
After reading through the article in its entirity I came to a general feeling that people don’t play by the rules and it gets everyone in trouble. We play games that are so old and predictable. As the old test states vanity of vanities everything is vanity … nothing is new under the sun what seems new has happened before.
So 100 years ago Europe played money with names/titles and ritual. Americans came refusing both ritual and names really upsetting the apple cart. They were undignified, uncultured and didn’t match the rules society wanted. Society lost that battle.
Now we are today saying China and India are not playing by our rules. What makes us think that we still get to be a judge?
Don’t forget it was American banks that came up with no credit no income no problem loans. They were the worst possible conditions that would seldom result in anything less than foreclosure. These were placed in stacks and marked AAA status and then some were sold to China and India. All criminal action took place inside America and no one was brought to justice – maybe this court we talk of should be looking here.
Last week a company call Shell did something suspicous. Oil companies get risk investors to invest in field exploration. The oil company overstates the amount of oil found and the money flys wild. After this the company finds a year with profits and wants not to pay for it. Well what you do is reevaluate the size of the field reducing close to your income. On the books you just lost an inventory within the ground and may even end up with a loss at the end of the year. No real losses ever occured for the oil company just peoples pension funds.
This happens legally due to government fraud. When we talk of black market operating in the government we don’t have to look beyond allied countries. What the courts don’t like is someone else defining the rules. But who is the economy?
Do not China and India produce most of the worlds products? Is not China and India the majority of the people? Maybe they get to decide what the world rules by and not us.
I believe the talk is right about technology dependence being linked to complexity and why then be in so much need of Apple. I have been working on problems of complexity and chaos theory when I came upon something a little different.
Sony came up with a walk man. Almost no buttons and nothing to special but it worked well. Google came up with a site that had almost a blank screen and nothing too special. Apple’s first ipod had very few buttons and was really simple to work with. Turns out they all were dealing with complexity and chaos within the device world.
Apples big concept, the angle they have on the rest of the industry, is the ability to deal with complexity and chaos. By making options that branch out from a relatively few options and dealing with making devices intuitive they have reduced some complexity.
I am a linux user and have been stunned that the level of complexity on many new devices. Walk up to a machine on an operating system you have never seen and attempt to find out how many steps it will take to write a document. Further how long will it take from pressing the button to turn on to getting into the word processor to type hello world. Depending what you are looking at you may not even succeed until you purchase some software.
My latest purchase is an Andriod Gemei G9. Its a 10″ tablet that cost me about $100. Problem was it was intended for the Chinese market. I was kicked off of Google play or any other place that had software for the machine. Eventually I found out the problem was the devices settings and government security software added. I systematically removed all software that had been placed on the machine but nothing seemed to work.
Finally I placed the machine into the developer’s side. I instantly got an icon I have not seen before and the screen looked foreign literally. My little android icon was lying on his back and a door opened over his chest with large Chinese lettering above. After this no part of the device worked, not even the power button. I gave up hope realizing I have lost $100.
An hour later the device suddenly came back to life. Stunned and happy I immediately began working on the device when I came up to my new problem. Everything had be reset and the language was set to Chinese. After much searching I found out over the net the G9 symbol that appears when you are changing the language.
The device works now relatively problem free, it doesn’t have any options to place it geographically within North America so the time tends to drift out of sync. But to get it working took a good background in linux/android and days of headache. Making my point about complexity and chaos. Nearly so high with this little device came close to death.
I recently purchased a case for it accidentally buying an ipad instead of android. Someone at work laughed and said he had done the same thing saying that it does not work until he saw my little device sitting inside. I began doing some research on just what I had. Turns out its a modern cpu hooked up to a screen from the last generation ipad with similar cameras. All production has over runs and I guess it would be nice to get rid of these new parts some where.
My point is the components are there cheaply. What costs is complexity in the hours making this device do work. You can pay nothing and spend your time trying to start getting to work or purchase simplicity initially and get to work.
Nicole mentioned something that follows the demographics of current boomers. The word she used was velocity in talking about the money supply. Let me add a further word the viscosity of the money supply.
It make more sense in the microeconomic view. Suppose you have two different demographics spending $100. One is a parent in a huge rush after work spending cash to deal with not having enough time to make meals for children. This level of panic in spending means the money goes to the hand of the pizza delivery person. Money is immediately push from one hand to another that day. It leaves the pizza place to purchase inventory and pay wages. On a daily basis the money moves from the till back to the economy 3 times a week as purchases are made to resupply. The same $20 bill moves between hands of the local economy lets say 4 times in a week. Its move from hand to hand is the drive of the economy.
Now on to the next senior. He purchases medication at a big box store. His $20 bills move into a till and sit. At the end of a month it travels not into peoples possession but into a truck and travels into head office. At the end of 3 months the value of that money is handed back to the same senior in the form of a dividend.
So velocity is the length of time it takes money to move from the possession of one individual to the next – a speed of the flow of money.
Now the delivery guy got a $3 tip for delivering the pizza. Later that night that $3 is spent on fries with his buddies. The $3 could travel many places in one week without notice from anyone. The senior wants an electric scooter and writes a cheque for $3000. This cheque travels only to the bank and is noticeable to the senior.
So viscosity is the size of the transaction. Large transaction travel in a significantly different way than small.
These two issues change an economy when it comes to a large group retiring. I call it dead heading. Japan despite being a society of savers collapsed economically because the large amount of people retiring. The retiring people change the flow of money.
Last time I tried to mention this is was not registered and I can see some alarming things.
First the worlds largest field the Qatar field has many wells operating at large losses to keep things looking good. Wells operate at %60 water and the percent seems to grow monthly. They aren’t viable – its just for show. This is the largest oil producing field in the world.
Second the US treasury has been falsely printing gold certificates to push the value of gold down. Its a guess on my part but I don’t see any other way they could be pushing the price down. They admit to using tools at their disposal to adjust its price. They aren’t selling any physical gold.
Third the price of oil is past $100. They may be testing the market. I believe they will see swift action.
Because of these 3 things I expect to see a market crash immediately within days.
I tried a few years ago to project what would happen if countries all knew that they and everyone else were, for want of a better word, screwed.
Lets say you knew that the system was going to fail and have a really hard reset. If you followed demographics and depletion of resources you might be thinking this way. News flash back in 1990 the economics prop stopped the lecture to have a class debate about a projected problem for 2015. Turns out the government has been watching this and understood the problem prior to 1980. I have spoken to Senators about it and there is no solution,
Back to what I was saying what if you knew that everyone was in the same boat. Colin Campbell stated the international banking community fully understood this and was playing hot potato. No one has a hope of being untouched, everyone is connected, so you attempt to be in better shape than competing interests.
Imagine if countries are taking the same approach. If we all knew the money would be worthless in the end spending crazy amounts now won’t hurt. They are playing hot potato. Since the US will not be the world currency of trade everyone is trying to keep up to their debt level as it will be the new norm. Once everything settles and you did not take out crazy amounts of debt your country will be at a loss when the whole thing restructures and the debts are erased.
Sound crazy? I believe this logic guides not only banking but democratic governments around the world.
Just like to point out something flawed. Should interest rates go up there is no sound theory for deflation. Higher interest rates by definition mean inflation.June 16, 2013 at 6:31 am in reply to: Nicole Foss – New Zealand And The End Of Economic Growth #7752
I would like suggest a few things as far as taking care and positioning oneself well. First ownership of property only will be useful as long as it is yours and not an investment. Investments lock one in as far as taxes and legal requirements. Further many places have legislation in place for rent increases and funny requirements that cost too high.
But there is a way to place oneself within a new system outside of the system of debt. Suppose instead of growing into a landlord one grows into a prep gardener and a lifeboat connection to a bunch of others. Now you grow enough for yourself and connect to others with a bunch of emergency services.
Split apart our needs. We need fast food and it costs us big time. How much frozen and canned foods are we using. No one is butchering their own food for supper tonight. We can’t function in our society without fast food. We can though create fast food at home and eliminate huge dependency. I am working on bread that only involves mixing a liquid with a dry in a container, letting it rise, and cooking it. It is getting close to ok. I have chili that takes less than 1/2 an hour to prepare. I have a thin crust pizza that takes about an hour start to finish.
Next gardening. We need to each grow most of our foods. This is difficult in the north. Things don’t store so well. One needs to look closely at this problem and grow what will survive the winter. I have practiced permaculture last year and found parts good. This year I moved towards square foot gardening. I am taking what works in each and not solely committed to either.
Primary to getting successful gardening is soil. Forget chemical science and forget testing ph and so forth. These lead you down the wrong path. One hand full of soil contains more life then humans on the earth. Visualize yourself as feeding this universe that exists in your garden these little critters need so much. My garden becomes a tossed salad every fall. Leaves and other organic matter cover the garden approximately 8 to 12 inches deep. Tossed into this is 1 to 2 inches soil and topped with an inch of soil. Come spring there is no organic matter to be found – if there is you are starting your garden too early.
Finally what to do with your savings. If the collapse happens and there is no growth your savings will be useless in long term survival – don’t use savings you will not be successful. Become self sufficient. Where to invest? I will be putting my money behind military. Governments will at all costs try and save the military and feed it well. Businesses that feed the military will receive funds during a depression at least for the first decade of a long depression.
Keep positive. Look Cuba survives and the people seem happy enough without a lot of things. It will not be the end, Its been fun but we always knew we weren’t the worlds greatest exporter and receive much more than we export. Lets face it when it balances out we got more than our share of fun.
Its a strange time but more and more I believe people might be getting it. Another site I follow has the same theme as here TIPPING POINTS
Anyway I think people are misdirected into thinking something else can happen here. NO we are not going to buy are way out of this mess (code word buy American) we will not pay down the debt we will not work our way out this mess. What is going down is a historical species drive collapse and possible extinction.
I don’t consider anything short of many dieing part of the solution. Further the cogs are slowly turning in a very predictable method. Stimulus will continue with less effectiveness. The next cog will be the cheap food policy failing. Finally institutions to big to fail will fail and cause so much violent government policy and warfare.
I predict a hyper inflation / deflating. Savings and consumer hard assets will fall dramatically in value. Taxes will inflate to deafening heights. In Manitoba the government has taken all assets out of the local hydro forcing them to take on debt. The debt level of this utility can never be paid off. So the province now collects taxes through electric bills, gas bills, auto insurance, sales tax, income tax, water bills, and even municipal school tax. Increasingly we are taxed past 75% when everything is taken into consideration.
So why would one think gold will drop to $1000 if it is a hedge against governments printing and loaning to much? Well it is not that simple. Although a hedge it also depends on available people ready to purchase. Now speculators can purchase but in the end they are only short term. Real manufacturing matters more in this case. If a real manufacture can not sell the product at the mark up, they slow down and eventually stop until inventory shrinks. You will notice oil does this and that is why gold will too. Silver does not follow gold as well as it has in the past because it is vital to manufacturing.
So when things fail some things will rise excessively and somethings will fail. My father purchased a Jag because during the depression things like that had no value. A loaf of bread on the other hand had much higher value. So don’t expect fair devaluing and learn how to make your own quick foods from scratch.
The trick to doing well is perspective. If you knew how bad it is going to be – lets say you went on a time machine and saw, then when you don’t experience the same level of pain as others, THEN … then things aren’t so bad.
Its about the bear thats attacking you. You are not out running the bear just your friend … nice knowing you
I would like to suggest something about all these people talking about attempts to fix the economy with debt – it is smoke and mirrors. Its just an illusion, a trick. What is the real agenda? Its a game called hot potato.
Let me start by explaining where I am coming from. I use to invest in the markets. Everyone trading has an angle – something that gives them an advantage. What was my angle – figuring out lies. In studying different techniques law courts have an interesting method: its called the law of first utterance. The first thing said has the most truth followed by statements guiding you away from truth. The law of first utterance describes human behavior quite well.
So how does the law of first utterance describe what is going on today? Colin Campbell predicted the last crash but much more importantly he described the current banking problem – so much of the worlds assets are on the books and all the resources accounted for but real repayment requires more and there is none. The current banking problem is REAL INTEREST CAN NEVER BE REPAID ON DEBTS the resources don’t exist to repay.
2008 was the beginning of the realization that formulas banks used to consider debt risk really completely depended on continuing resources freely flowing. If one resource failed to continue its rate of extraction banks will fail – and they did in 2008.
But the real problem is resources not banking. I just found out how much gold reserves Canada has – none. We have a building, we have security but we have none and the authorities readily admit to have no physical gold. How much do the States have – well in 2012 Germany demanded to see its physical gold stored in Fort Knox and was denied. Despite having claims to physical gold Germany abroad there might not be any at all.
The real kicker is a government run news organization is reporting something this large. Its serious cause once the government admits to things this size it means they are passing the buck – yeah but you already knew that we told you about that one. Check this documentary.
So where is all the physical gold according to them China and Russia. Don’t go blaming China though because the amount of physical gold they own is only a few percent worth of their GDP. Real value has left and is not coming back.
growth? That is the pivotal point. Consider that all land available is being pushed to its max. All marginal land is pasture for cattle, all land with low rain fall produces grains and all land with good access to water produces high maintenance plants. There is no great increase in productivity. Fertilizers, like drugs, produce well initially but after years of use greater and greater applications produce diminishing results.
Move on to mining, which I have invested in. Todays mines dig up a tonne of material and what is considered good enough for gold is just past 1 ounce of gold per tonne. Back 100 years ago mines produce more than 10 ounces per tonne and were not really considered viable under 3. We pull more and more tonnes out to obtain much less.
Turn to oil and you will find it has peaked at least 5 years ago. Nasa needed to know just how much energy a person needs per day. They designed a measure in jules of energy. Currently we consume somewhere in the mid 20’s jules of energy per day while the most impoverished places are under 5. Most of the consumption is in oil which is simply a storage of human work hours. Oil is the slave labor to produce and entertain us. Per gallon it provides more than 2 weeks labor.
Ask anyone who can do economics if you are reducing labor significantly, at the same time reducing mineral resources, and at the same time there is no expansion possible – in these scenarios ask what is the outcome.
Capitalism is the redistribution of wealth, a system of planing using disparity to drive the workforce to work harder. When you reach peak resources this problem arises: the drive to work harder uses limited resources up faster and depletes the country. Thus you make the problem worse.
Either we think of something new that does long term planning or we will be forced to accept something else. Its a given that capitalism will fail because it depends lots of surplus to redistribute. Take a piece of paper and slowly calculate the scenario even when the surplus starts a steady decline capitalism erodes. It will fail. If we don’t consider other ideas the only option left will be communism to plan the extraction of resources and control the use of fossil fuel. It seems to me we have a window of opportunity to figure on what system would be fair.
Just how close is North America walking to the debt edge. Take a look at
Canada just announce bail in legislation to allow banks to confiscate depositors money legally. Now it makes more sense because there doesn’t exist even 10% of funds necessary to do another USA bailout if 2008 happens again. We don’t have another few trillion and don’t have a method of creating it.
If the US has no ability to rescue itself than Canada is so bleakly defended that it will in many respects go down with the ship.March 23, 2013 at 6:49 am in reply to: The Cyprus Deal is Already Under Threat (Of Course) #7211
Just like to point out that some of the most conservative advice I am hearing about Europe is this is fast becoming one big dictatorship. Should expect something big within days. You piece together what he is saying and develop your own opinion.
Really people need to listen better. Capitalism is only the redistribution of wealth. Greece and now Italy better realize capitalism has no place in a disaster. Leaving the EU is not optional it is mandatory.
People confused about what I mean I have suggested looking at Katrina. When disaster struck people who attempted anything like capitalism was called profiteering. You were considered evil and the law would not protect you. Again and again in any place that needs disaster relief capitalism shuts down volunteers rise up and the military presents structure.
Greece, Italy and many others are in economic disaster and need to be zoned as such. Regrettable but we all know this
Clearly I have doubts that people get the intent of China, Russia, and India. The process will have as an outcome the ending of the US as the international currency of trade. This is certainly why zombie money doesn’t matter in size and shape to the basket of currency model and the ending of deficient governments.