The Time of Hype and Hope Is Ending (Beware the Collapse to Come) [View article]
Judging by past behaviour, isn't the Fed going to use it's agents to intervent in the market to kill the shorts? Since actual market trades are low, it takes relatively little of the Fed's infinite ability to print money to paint the Potemkin village of stocks one more time. None of this has a good outcome down the road of course, but certainly before the election ever larger pumping of the burst balloon would seem to be the likely outcome.
Probability of a Crisis Will Build in 2010 [View article]
I think Barclays has it right. In addition to the risk factors mentioned I can see others. The main one is simply that the Government money being pumped into the US economy is not starting a self-priming recovery. Since almost no funds are getting through to small business and they always lead the way out of recovery by employing more people, I don't see how recovery is possible. The decision to prop up zombie banks means that all the Government zero-interest money that they can't directly steal in bonuses is going to Treasuries or to cover up vast holes in their balance sheets. One of the US's major trading partners, the UK, is certainly going to have to bring in huge increases in taxes and heavy cutbacks in expenditure by June to avoid calamity in the bond markets. Other risk factors include Sovereign defaults in a vast array of countries, led perhaps by Eastern Europe, and the possibility of a major correction by China as she seeks to reign in inflation and asset booms. Any military action against Iran would lead to the Straights of Hormuz being blocked, and oil and gas not getting through. We may not know what is going to cause the house of cards to fall down, but it becomes obvious that it needs only a puff of wind.
The Oil Situation Could Be Worse Than We Thought [View article]
It's not clear in the FT article what the projections are for Saudi exports. The reality is that total production is flat, whilst home consumption is rising rapidly, and the Saudi's aren't about to increase prices at home to restrain their own consumption with unrest rife in the Middle East. Here are the charts: www.theoildrum.com/nod...
Eyeballing them it looks as though home consumption will rise from around 30% of total production to approximate parity with that available for export by around 2015.
I'm guessing that oil may sell for something of the order of $140-160 barrel, excluding US dollar falls. Of course, we might just have the mother of all recessions instead.
The proposed cuts in the UK are nicely counterbalanced by the promise of another £7bn to support Ireland - or more exactly the senior bondholders, as naturally the UK has extensive exposure. Whilst the wealthy are screaming at the idea of paying a bit more tax, they have retained their wealth through their dumb investments being bailed at the expense of the public purse The Germans paid for their workers to be put on short time, and so retained skills and keep their jobs at home. The Brits and Americans outsource jobs abroad instead and in the US especially the housing market has been destroyed by the resulting unemployment.
What has occurred in this slump is a massive wealth transfer to the wealthy, at the expense of everyone else, and now they whine about paying a fraction of this back in tax.
I'd agree that we can't spend our way out of this. However I find the prescription that the way out is by increasing savings, presumably by retaining tax cuts for the wealthy with their greater propensity to save, and more deregulation flies in the face of actual events. The idea of self regulation and efficient markets is pretty well exploded, along with the markets themselves. What is needed is vigorous enforcement of the regulations we already have, under the Rico act, to nail the gross market manipulation and outright fraud that has occurred. Most of the genius's responsible would be looking at confiscation of assets and keeping Bernie Madoff company instead of enjoying their golden parachutes. This would concentrate minds on the idea that the way to wealth is via productive investment, rather than creating the giant ponzi scheme the economy has become.
Where is the evidence that lack of capital investment is responsible for our troubles? The problem has been too much savings, counterbalanced by too much debt as 95% of the population tried to make up for falling real living standards. These excess savings, in the absence of profitable investment opportunities in factories etc at home, put their money into two things: investing abroad, and so destroying well paid jobs at home, and investments in fundamentally non-productive assets like real estate, in an asset price bubble. Unfortunately but quite inevitably this has led to the increasing indebtedness of the vast majority of people, and once the credit is maxed out the inability to buy the products to sustain growth. Just as Henry Ford knew, a healthy capitalist economy requires that workers are paid well enough to buy their own products.
The present ever-increasing centralisation of wealth leads to an end point where a tiny group of people seek to invest almost all of the income of the society, but that can only result in asset price inflation as the impoverished population can't afford the goods.
The policies recommended here seem to me to be bound to make things worse, just as surely as ever increasing Government debt.
What is needed is an attack on the huge wealth disparities, as was done with the break up of the Morgan empires etc many years ago.
Only then can capitalism flourish, with small actors and small businesses competing, not behemoths competing for and buying political influence.
Housing: 1.2 Million Fewer Households, More Overcrowding [View article]
Yeah, what is happening is declining real living standards, masked by the different scams to support the connected and transfer their losses. in the name of 'supporting the system'
What Will It Take for an Underwater Homeowner to Walk Away? [View article]
Voluntary defaults are most likely to work their way from the top of the market down. The rich have better accountants, and are likelier to ignore the emotional blackmail of banks, who would stick to the last comma on the written contract to enforce their own rights, but change their tune to sing the praises of moral responsibility when how daft the contracts they have written becomes clear. Most of us know perfectly well when a personal relationship makes the repayment of a loan a moral obligation rather than a contractual arrangement. If banks what to preach morality they should start by withdrawing the usurious terms on credit cards which they use to dun the weak or unfortunate.
Bernanke's culpability is clear. It is also perfectly plain that Freddie and Fannie and loose money are trying to keep the party going. To some degree it may be appropriate for Government to expand it's deficit at a time when the private sector is contracting it's borrowings. For me the problem occurs because the money is going to industries with a proven record of failure, the financial system and car industry. Since these are entirely unreformed, failure and the loss of these funds is inevitable. For the finance industry, huge bonuses based on faked profitability not underlying sound business and encouraging unbridled risk taking and derivative trading are still the modus operandi. For the car industry the health care and pensions position bake failure into the cake. The same funds could have financed new institution which would actually provide funds for vibrant new businesses, instead of supporting failure a little longer. Bernanke is a walking example of this regulatory capture by the powerful.
Washington's Dilemma: This Isn't a Recession, It's a Collapse [View article]
Solutions are not to be expected from the crowd Obama appointed, who to a man failed to see the crisis coming and do not understand it's nature. Here is Taleb on the real problem and how to deal with it: www.ft.com/cms/s/0/4e0... Swapping debt for equity would tread on the toes of those who finance both parties, and would not be popular with the real power, Goldman Sachs et als.
From the above discussion of the inevitability of a bail out of the states, the point at which the ability of the Fed to raise funds without huge interest rate rises may come into play.
Another fine article, outlining the straightforwardly criminal behaviour of the financial Mafia! Where are the prosecutions and jail time? Bernie Madoff was small time.
The US has not fully woken up to high oil prices yet, as the American market is somewhat disconnected from the world market. Brent is currently trading at $7/barrel more than West Texas.
Here in the UK petrol looks to be heading towards around $7.70/US gallon, which is already pretty shocking.
The notion that the Saudis or anyone else can rapidly increase supply relies on unaudited figures for supposed spare capacity, which are taken as whatever the relevant country says it is. In the 70's the US was supposed to have spare capacity which could be brought online to make up for the shortfall when OPEC cut back. It turned out it didn't exist.
Obama making kissy-kissy with the Saudi's, or even military intervention, are in my view unlikely to produce much additional oil, although perhaps a little more could be released in the very short term.
The good news is that if oil prices continue to rise Nissan/Renault with their electric cars will make a packet, as will the battery suppliers, primarily NEC/AESC with LG as Nissan/Renaults second supplier, and even as second supplier they are LG's biggest customer, being way ahead of everyone else on electrification. Crystler might benefit too, as Fiat produce a large number of very competitive natural gas vehicles, which are likely to make a lot of sense for fleet operators where a single pump can often cover most of their runs. Most NG vehicles are dual fuel, so that you can just use petrol if going too far from base on occasion. Maintenance costs on NG vehicles are also small, as the clean-burning fuel does not mess up the engine the way petrol or diesel does.
'Should a quasi or defacto dictatorship come to America ...'
You are a bit late. You can be imprisoned right now for life without trial. But of course that is only to protect against terrorism, and they would never misuse that power to cage the innocent, or suppress dissent - would they?
Mortgages: One in Five Borrowers Will Default [View article]
The Time of Hype and Hope Is Ending (Beware the Collapse to Come) [View article]
Since actual market trades are low, it takes relatively little of the Fed's infinite ability to print money to paint the Potemkin village of stocks one more time.
None of this has a good outcome down the road of course, but certainly before the election ever larger pumping of the burst balloon would seem to be the likely outcome.
Probability of a Crisis Will Build in 2010 [View article]
In addition to the risk factors mentioned I can see others.
The main one is simply that the Government money being pumped into the US economy is not starting a self-priming recovery.
Since almost no funds are getting through to small business and they always lead the way out of recovery by employing more people, I don't see how recovery is possible.
The decision to prop up zombie banks means that all the Government zero-interest money that they can't directly steal in bonuses is going to Treasuries or to cover up vast holes in their balance sheets.
One of the US's major trading partners, the UK, is certainly going to have to bring in huge increases in taxes and heavy cutbacks in expenditure by June to avoid calamity in the bond markets.
Other risk factors include Sovereign defaults in a vast array of countries, led perhaps by Eastern Europe, and the possibility of a major correction by China as she seeks to reign in inflation and asset booms.
Any military action against Iran would lead to the Straights of Hormuz being blocked, and oil and gas not getting through.
We may not know what is going to cause the house of cards to fall down, but it becomes obvious that it needs only a puff of wind.
The Oil Situation Could Be Worse Than We Thought [View article]
The reality is that total production is flat, whilst home consumption is rising rapidly, and the Saudi's aren't about to increase prices at home to restrain their own consumption with unrest rife in the Middle East.
Here are the charts:
www.theoildrum.com/nod...
Eyeballing them it looks as though home consumption will rise from around 30% of total production to approximate parity with that available for export by around 2015.
I'm guessing that oil may sell for something of the order of $140-160 barrel, excluding US dollar falls.
Of course, we might just have the mother of all recessions instead.
Why We're Headed for a Collapse [View article]
Whilst the wealthy are screaming at the idea of paying a bit more tax, they have retained their wealth through their dumb investments being bailed at the expense of the public purse
The Germans paid for their workers to be put on short time, and so retained skills and keep their jobs at home.
The Brits and Americans outsource jobs abroad instead and in the US especially the housing market has been destroyed by the resulting unemployment.
What has occurred in this slump is a massive wealth transfer to the wealthy, at the expense of everyone else, and now they whine about paying a fraction of this back in tax.
Robert Reich, Carts and Horses [View article]
The idea of self regulation and efficient markets is pretty well exploded, along with the markets themselves.
What is needed is vigorous enforcement of the regulations we already have, under the Rico act, to nail the gross market manipulation and outright fraud that has occurred.
Most of the genius's responsible would be looking at confiscation of assets and keeping Bernie Madoff company instead of enjoying their golden parachutes.
This would concentrate minds on the idea that the way to wealth is via productive investment, rather than creating the giant ponzi scheme the economy has become.
Where is the evidence that lack of capital investment is responsible for our troubles?
The problem has been too much savings, counterbalanced by too much debt as 95% of the population tried to make up for falling real living standards.
These excess savings, in the absence of profitable investment opportunities in factories etc at home, put their money into two things: investing abroad, and so destroying well paid jobs at home, and investments in fundamentally non-productive assets like real estate, in an asset price bubble.
Unfortunately but quite inevitably this has led to the increasing indebtedness of the vast majority of people, and once the credit is maxed out the inability to buy the products to sustain growth.
Just as Henry Ford knew, a healthy capitalist economy requires that workers are paid well enough to buy their own products.
The present ever-increasing centralisation of wealth leads to an end point where a tiny group of people seek to invest almost all of the income of the society, but that can only result in asset price inflation as the impoverished population can't afford the goods.
The policies recommended here seem to me to be bound to make things worse, just as surely as ever increasing Government debt.
What is needed is an attack on the huge wealth disparities, as was done with the break up of the Morgan empires etc many years ago.
Only then can capitalism flourish, with small actors and small businesses competing, not behemoths competing for and buying political influence.
Gasland Takes On Fracking: What About Major Energy Cos.? [View article]
www.theoildrum.com/nod...
And here a comment on water pollution from another, Rockman:
www.theoildrum.com/nod...
I find the juxtaposition of the words 'seductive' and 'Michael Moore' both disorientating and nauseating!
Housing: 1.2 Million Fewer Households, More Overcrowding [View article]
What Will It Take for an Underwater Homeowner to Walk Away? [View article]
The rich have better accountants, and are likelier to ignore the emotional blackmail of banks, who would stick to the last comma on the written contract to enforce their own rights, but change their tune to sing the praises of moral responsibility when how daft the contracts they have written becomes clear.
Most of us know perfectly well when a personal relationship makes the repayment of a loan a moral obligation rather than a contractual arrangement.
If banks what to preach morality they should start by withdrawing the usurious terms on credit cards which they use to dun the weak or unfortunate.
Bernanke: Denying the Obvious [View article]
It is also perfectly plain that Freddie and Fannie and loose money are trying to keep the party going.
To some degree it may be appropriate for Government to expand it's deficit at a time when the private sector is contracting it's borrowings.
For me the problem occurs because the money is going to industries with a proven record of failure, the financial system and car industry.
Since these are entirely unreformed, failure and the loss of these funds is inevitable.
For the finance industry, huge bonuses based on faked profitability not underlying sound business and encouraging unbridled risk taking and derivative trading are still the modus operandi.
For the car industry the health care and pensions position bake failure into the cake.
The same funds could have financed new institution which would actually provide funds for vibrant new businesses, instead of supporting failure a little longer.
Bernanke is a walking example of this regulatory capture by the powerful.
Washington's Dilemma: This Isn't a Recession, It's a Collapse [View article]
Here is Taleb on the real problem and how to deal with it:
www.ft.com/cms/s/0/4e0...
Swapping debt for equity would tread on the toes of those who finance both parties, and would not be popular with the real power, Goldman Sachs et als.
From the above discussion of the inevitability of a bail out of the states, the point at which the ability of the Fed to raise funds without huge interest rate rises may come into play.
U.S. Energy Policy Is Responsible for Unrest in Egypt [View article]
IF YOU PUT IT ALL IN CAPITALS I STOP READING!
Goldman Sachs Finally Comes Clean [View article]
Where are the prosecutions and jail time?
Bernie Madoff was small time.
Another Oil Shock Coming? [View article]
Brent is currently trading at $7/barrel more than West Texas.
Here in the UK petrol looks to be heading towards around $7.70/US gallon, which is already pretty shocking.
The notion that the Saudis or anyone else can rapidly increase supply relies on unaudited figures for supposed spare capacity, which are taken as whatever the relevant country says it is.
In the 70's the US was supposed to have spare capacity which could be brought online to make up for the shortfall when OPEC cut back.
It turned out it didn't exist.
Obama making kissy-kissy with the Saudi's, or even military intervention, are in my view unlikely to produce much additional oil, although perhaps a little more could be released in the very short term.
The good news is that if oil prices continue to rise Nissan/Renault with their electric cars will make a packet, as will the battery suppliers, primarily NEC/AESC with LG as Nissan/Renaults second supplier, and even as second supplier they are LG's biggest customer, being way ahead of everyone else on electrification.
Crystler might benefit too, as Fiat produce a large number of very competitive natural gas vehicles, which are likely to make a lot of sense for fleet operators where a single pump can often cover most of their runs. Most NG vehicles are dual fuel, so that you can just use petrol if going too far from base on occasion.
Maintenance costs on NG vehicles are also small, as the clean-burning fuel does not mess up the engine the way petrol or diesel does.
How Hyperinflation Will Happen [View article]
You are a bit late. You can be imprisoned right now for life without trial.
But of course that is only to protect against terrorism, and they would never misuse that power to cage the innocent, or suppress dissent - would they?