kebu77

Worst Housing Number in Decades: What Is the Wall Street Media Smoking?

"In what universe do you think that a seasonally adjusted number of housing starts being 27% of what they were four years ago is good economic news, Mr. Wrixon?"

Actually, it could be. Builders could go to 0.0% I suppose but then would be OOB. Builders are "chasing" completions, which over the last two years have exceeded new-starts/permits by around 150-200k per month, with some months as high as 300k. You know the new-house mkt. has hit bottom, more or less, when completions fall more in line with new-starts/permits. We are at least several months off from this - - doesn't matter whether you do SA or NSA on this, result is roughly the same - - too many new completions competing with the current (recent completions and existing) housing inventory.

Why Stagflation Has Already Begun

"Does it not seem odd that oil prices are as high today as they were in 2007 following a 4-year world-wide economic up cycle?"

Not if you consider - -

> Peak world oil production occurred in 2008

> Opec production cutbacks, including Nigeria crashing due to bad govt.

> Mexico crashing, soon not to be an exporter

> China just completing its first SPR build out, and other large amounts of oil being hoarded at sea

> Substantial cutbacks in oil E&P investment

> failure of peoples and their govts. to recognize the need to transition to "declining oil" economies

As an old boss once asked, "What are we pretending not to know?"

Why Commodities May Be Nearing a Turning Point

On a longer time-scale (years, not weeks), peak oil could be something of a game-changer. (Bear with me in this streamlined version of energy history.)

Europe was hitting "peak wood" when coal came along. People forget what a positive game-changer coal was over 200 years ago.

But oil came along before peak coal (though some did prematurely speculate about coal peaking). And hydro-electric, nat-gas, and nuclear came along before peak oil. So here we are, two centuries into the industrial age, without encountering any negative game-changers.

But. . . it is time-consuming and expensive to expand hydro and nuclear and there is cause for concern (at least regionally in N. America) that nat-gas is on a plateau (Canadian declines and US increases). Without technological advances that are not on the horizon, solar makes a miniscule contribution. Wind is expanding, but from a small base. So, if as many are suggesting, we are at peak oil production (now or on a plateau that ends in the next five years, pick your prediction from several), in the mid-term commodities prices have nowhere to go but up.

While not directly responding to OT's article, the US badly needs a national discussion on energy, leading to a coherent energy policy. Hope is not a fact. We should want to know if peak oil is imminent, not place blind hope in a technology fix (which seems to be a standard response when peak oil is put on the table).

(Of course we could all get lucky. Dr. Brussard (RIP) was working on a cheap fusion device; the Navy Dept. is continung his research and could prove him right. But do you want to bet your kids on that?)