MaxWeber

Crude Oil and Gold: Not Worth Worrying Over

Oil is devalued and stagnating.

Understanding Energy: Professional Money Management and Peak Oil

There will be multiple peaks as production and transportation start shifting away from combustion. As combustion replaced steam, electricity will replace combustion. We are in the middle of that transition, evidenced by the momentary "hybrid" car fad. The demand for hydrocarbon fuel will diminish in relation to demands for other sources of electric energy. Existing system preferences for hydrocarbon fuel will eventually give way. When the market for energy finally opens up in this way it is likely that the thermodynamic limitations of hydrocarbon fuels will further erode demand. In the meantime oil is as necessary as ever to prevent starvation, disease and collapse. We will see entrenched oil interests fighting the devaluation, but even a middle term outlook (5-10 years) doesn't suggest a robust oil position. Peak oil won't matter once the market realises that its positions on oil will devalue as competing sources of electric energy enter. It's only a matter of time before we find that new energy demand is being more than adequately met by more cost-effective and thermodynamically efficient sources. Whether we see a peak in oil production or not, demand for future consumption is already waning.

Oil Supply and Contango: Drawn Down

It seems possible that this signals a stable low for oil throughout the prolonged stagnant recovery, factoring in on the middle term deflationary pressure that seems to be pulling the value of the dollar down. It could be the end of the petrodollar... though the dollar tries to inflate itself through fed action, the prolonged collapse in oil values (in spite of speculative action), it is dragged down by the weight of its circulation in the oil market. As a nation, it seems we may have to abandon oil and take up precious metals again to shore up dollar value.

More on Foreclosures: Real Estate Recovery Unlikely for Now

Does anyone think that the real estate market collapse is an indication of a greater systemic finance industry retraction? That this indicates that it is the finance sector which is dragging real estate down and not the other way around? Meaning mortgages are killing real estate, and not that real estate killed the mortgage market?

From Today's Numbers, A Recovery Is Hard to See

From a macro view of the US economy, it seems that we are in an oligopolistic environment in each of the dysfunctional markets. Whereas monopoly driven inelasticity plagued markets in the early 1900s, we are seeing more of a plutocratic oligopolistic inelasticity across multiple markets today. The difference today is that market inelasticity is caused by cooperative gaming by industry oligopolies, rather than monopolistic trusts. The results are sudden destabilizing cyclical inelastic effects on prices. Fuel and commodity price spikes followed by plummeting prices, inflated mortgage and related stock market bubbles, the health insurance bubble (and coming collapse - politically induced of course) - these artificial volitilies are the fallout of oligopolistic market gaming strategies. The end result could be irreparably broken markets. The idea that irrational behavior has gripped the market is a direct result of the breaking down of the rational relationship between supply, demand and price. If all of our broken markets were truly competitive these markets would be constantly self correcting, and gaming behaviors such as those which collapsed Lehman, AIG and BearStearns would be impossible. The fundamentals of the global economy (consumer growth, technological progress, market maturation) would, under a common sense interpretation, indicate a steady pace of reasonable growth (2-4%). But once one introduces the volatizing effects of oligopolistic market gaming, prices become distorted in short (1-5 year) bursts and the end result is pinball machine type action in valuations across markets. The market becomes impossible for the majority of players to engage in market stabilizing competitive behaviors, because they are wasting their energy trying to respond to oligopolistic price pressure. We don't have trusts to bust any more, we have de facto cartels... Until oligopolistic artificial price inelasticities are dealt with through rigorous policing of anti-competitive behaviors across all markets, we will continue to see these types of ongoing "Alice in Wonderland" markets. This is not the mainstream view, I understand. Anyone else have thoughts on this?

Priming the Pump for $20/Gal. Gas: Interview with Chris Steiner

It looks like the market for futures might be beginning its adaptation to a new long run value of petroleum. Hopefully this also means that we won't be living under monopoly conditions for the energy market any longer...

Manhattan Housing Descent Has Begun

New York as a city may see something of a downturn as the London/NY financial axis has been destabilizing for some time. With the behavior of the two spheres becoming less and less coupled, it could mean a long term downward pressure on economic activity in the upper and middle ranks of New York's residents.

A Reasonable Case for Guarded Optimism

Does anyone else think that steady erosion and then collapse in median wealth in the US is the actual broken part of the economy? The credit implosion certainly affected lending and precipitated the realization of the sudden shift in economic outlooks, but I have a strong intuition that 1) because the majority of economic actors in the US have had their real purchasing power eroded over time 2) our growth capacity is atrophied. By this I mean, recent intensified concentration of wealth has resulted in an inefficient market for capital and goods. In other words, a hidden cost of moving a large percentage of the money supply into global finance has been the deprivation of the median economic actor to participate in capitalism as a fully functioning capitalist. Rather the median economic actor has become merely a consumer of financial products. This is to say that if the median economic actor in the US had experienced rising real purchasing power over the past decade they would not have borrowed as much overall and may have enjoyed greater opportunities for venture and medium-sized business investment fostering a more dense and robust economy shielded to a far greater degree than the highly concentrated risks of massive business failure. In sum, I am inclined to say that a diverse and well populated market is better functioning than a highly concentrated, vertically integrated one.

A Reasonable Case for Guarded Optimism

Does anyone else think that steady erosion and then collapse in median wealth in the US is the actual broken part of the economy? The credit implosion certainly affected lending and precipitated the realization of the sudden shift in economic outlooks, but I have a strong intuition that 1) because the majority of economic actors in the US have had their real purchasing power eroded over time 2) our growth capacity is atrophied. By this I mean, recent intensified concentration of wealth has resulted in an inefficient market for capital and goods. In other words, a hidden cost of moving a large percentage of the money supply into global finance has been the deprivation of the median economic actor to participate in capitalism as a fully functioning capitalist. Rather the median economic actor has become merely a consumer of financial products. This is to say that if the median economic actor in the US had experienced rising real purchasing power over the past decade they would not have borrowed as much overall and may have enjoyed greater opportunities for venture and medium-sized business investment fostering a more dense and robust economy shielded to a far greater degree than the highly concentrated risks of massive business failure. In sum, I am inclined to say that a diverse and well populated market is better functioning than a highly concentrated, vertically integrated one.

G20 Must Address the 'White Blue Eyed Bankers' Issue

Whether you agree with the politics of statements made here, the fact of the matter is that the risk of our fragile peace shattering before our very eyes is real. Ethnic, racial, class and national differences are surfacing, and the agonizing process of coming to consensus will require from all parties that differences be put aside to save the peace. Those who are from disprivileged backgrounds will look to those who come from a historical background of privilege and opportunity as the "Elite," and blame them for their suffering. Those who hail from privilege will frequently miscategorize the inability of the disprivileged to create financial security for themselves as a "fault," and blame them for their own suffering. These misperceptions are fundamental human flaws of the mind. Unless we can agree upon a common agenda, peace will be broken and rhetoric like this will become violent action. The Institutions which have stabilized much of the globe are faltering under the strain of mistrust, fear and blame. To avert violent global catastrophe, the Institutions which support peace must be revised, and in some cases abolished to create room for newer, more appropriate institutions. Rather than play Tit-for-Tat, it is critical today to see through the differences to recognize the common agenda. If we cannot agree on anything common, then political discord will shatter the markets, governments, nations, people rendering most of these selfish disagreements moot. "Elites" will be petty lords of a deflated fiefdom. "Underprivileged" will become starving, desperate masses. Compared to the racially, nationally and class - charged rhetoric I see here, I would rather see a list of agreements at this point and build on them. Honestly, what can we say as a species that we agree on in a nearly universal way? Figure those out and we can form/reform our next generation Institutions to serve those universal needs best.

The Great Awakening: Boomers, Your Crisis Has Arrived (Part 3 of 3)

I was SOOO into this until you started going "cassandra" on us. Ever hear the intro to Busta Rhyme's "Extinction Level Event"? It's like the same... you'd be great at writing sci-fi, but I think you're the one who is going off the deep end with the Fear Rhetoric, not Obama. He doesn't even approach the level of fear rhetoric we were getting out of the Cheney presidency... So check yourself before you wreck yourself, stop yelling "fire" in a crowded theater... According to your own horoscopic logic, your generation should really be thinking more pragmatically about all this. If you think it's all going to go to hell like this, why'd you go and have THREE kids?...

Will U.S. Growth Beat China's in 2009?

Yeah this reads a bit like paranoia to me. It's the type of panic-induced fear of others' incompetence that exacerbated the first Asian collapse. The Asian "tigers" pulled out fine even after a financial market that relegated the entire region into economic pariah status. Even if China stumbles, the memory of soviet/communist poverty and underdevelopment is more than likely recent enough to keep them from making large irrational errors (though there are bound to be errors, of course just as in the US!)...