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This Is One of the Most Worrying Signs of Economic Collapse

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Falling Oil Prices Is a Warning Sign to Investors of an Economic Collapse in 2017

Oil can’t seem to hold its price this year. Whenever it crosses the $50.00/barrel mark, it falls back a dollar or two. This might be good for drivers when they fill up at the pump, but it’s not a good sign for the economy. It’s a symptom of lack of demand, and thus, economic collapse in 2017 or 2018.

Not long ago, in the 1970s and 1980s, higher oil prices would drive up inflation and were seen as hampering growth. Then again, a few decades ago, oil production was concentrated in a handful of mostly North African and Middle Eastern countries. There were few alternatives to hydrocarbon energy resources then and the 20th century economic model was founded on the availability of cheap petroleum. It was used to fuel your car and make the plastic cups from which you drank.

But nowadays, there are credible alternatives to oil. Today, a low oil price doesn’t even produce the kinds of savings at the pump to make much difference. Most people around the world drive highly fuel-efficient vehicles. Electronics have produced great efficiency benefits. In turn, new mining and extracting methods have allowed oil companies to find more oil and get it out more cheaply.

Thus, overall demand has dropped, considering the increase in supply. In the 1970s, the idea of peak oil, or a limited supply of this resource, helped convince people that it was scarce. Scarcity meant those who controlled oil could charge whatever they wanted. All that has changed now. Peak oil has been replaced by “climate change” as the harbinger of energy/industry catastrophe. Thus, the only thing left as a tool to raise prices is a major increase in demand.

None of the world’s advanced economies have shown real growth. Stock markets are operating on an overdeveloped sense of optimism, which will soon end in a massive 1929- or 2008-style market collapse and financial crash. It will happen when bullish investors, who have been pumping the market caps of some truly questionable propositions (Snap Inc (NYSE:SNAP), anyone?) wake up and smell the bitter coffee. Just look at the U.S. jobs growth rate. It hasn’t recovered in a real sense, thus why should oil prices go up?

job growth

There are new tech, housing, and overall—personal and public—debt bubbles just waiting explode. Thus, falling oil prices reflect the fact that the real world works differently than the markets. It’s only a matter of time until the two catch up. Falling oil prices point to economic collapse.

Investors appear to be convinced the new dynamics of the oil price has not escaped their attention. There is a creepy nervousness that exudes from the markets. Probably none of the traders, and those who choose to invest in raw materials, received the adequate training to manage similar dynamics.

Last year, in August 2016, oil futures fell below $40.00 a barrel. The negative phase was supposed to have stopped after OPEC agreed to production cuts in the fall of 2016. Oil would hit $60.00 in 2017, they said. Well, so far it has not. More alarmingly, oil prices can barely hold on to $50.00/barrel before falling to the $47.00-48.00 range.

Oil Is Going Down, But What About Gold?

Some might say that gold hasn’t moved up much either. Gold, however, did make significant gains in the wake of Trump’s political crisis. The U.S. President’s trip abroad—to Saudi Arabia, Israel, Belgium, and Italy—has dampened the effects of the crisis, but there’s no telling where it could lead once he gets back to Washington. That said, a political crisis in the U.S. and a major terrorist attack in Europe are the kinds of events that used to push oil prices up.

Instead, oil prices are down. And the fact is, if oil prices did make a significant move, the overall ability of most middle-class Americans to sustain the increase is questionable. Adding $50.00-$100.00 more in gasoline/fuel expenses—let alone home gas etc.—would add much stress on families who are but a sudden car or home repair away from financial breakdown. And these are the families with members earning a middle-class income.

If the oil price drops sharply, it’s because the world economy is no longer safe. The lack of certainty about Trump’s fiscal and economic policies is fueling some nervousness. The impression is that the market no longer trusts the simple words of the American president who, on more than one occasion, promised a change of historical route and now claims a diametrically opposite one. The most obvious reason for lower oil prices is that the overall health of the world economy is at risk.

lombardiletter



65 Comments on "This Is One of the Most Worrying Signs of Economic Collapse"

  1. Davy on Fri, 2nd Jun 2017 7:21 am 

    Exactly onlooker, my comment in no way support what Trump and the conservatives want and did. This was more than Trump because most US conservatives wanted withdrawal. At a minimum the US should do a Euro style alternative energy program while not promoting coal. Curiously alternative energy has momentum up and coal down so this is a trend anyhow.

    I am making a point that the world is playing the blame and complain game by extending and pretending the reality of global economics and CO2. It is a lie and a farce and to support such an agreement is fake green. Real action, real green is mean with an all inclusive global depression without loopholes immediately. The consequences of this will be pain and suffering and not fairly distributed. That is the reality of a horrible existential catch 22 we are in and not going to escape. The inconvient truth to this catch 22 is it is likely too late because nature is now in abrupt change.

  2. makati1 on Fri, 2nd Jun 2017 8:10 am 

    Before anyone points a finger of blame, maybe you should take a look at this:

    http://www.usdebtclock.org/index.html

  3. makati1 on Fri, 2nd Jun 2017 8:14 am 

    Or this one:

    http://www.usdebtclock.org/world-debt-clock.html

  4. onlooker on Fri, 2nd Jun 2017 8:16 am 

    The problem Mak is in terms of environmental impact, China and India have themselves also, assumed a very pernicious role as well.

  5. Davy on Fri, 2nd Jun 2017 8:55 am 

    or this one:

    https://dailyreckoning.com/greatest-financial-bubble-history/

  6. TheNationalist on Fri, 2nd Jun 2017 9:31 am 

    The hysterical uneducated masses project their fears onto Trump. This is happening because nobody had the balls to say the Paris accords had zero chance of limiting temp rise to < 2c anyway.
    Soylent Green here we come?, or maybe all these massive industrialists can do what they should have done 20 years ago?

  7. ALCIADA-MOLE on Fri, 2nd Jun 2017 9:44 am 

    guys nationalist is another “baller” . funny how they like Putin the dictator and liar.

    Remember Taliban got bombed because they sheltered BIN? Putin said “patriotic forces” attacked US.

  8. TheNationalist on Fri, 2nd Jun 2017 10:05 am 

    Bin Laden was in his home in Pakistan the whole time watching the cricket on his 50″ plasma with his 7 wives running around after him / wiping his arse etc. At the bottom of his street was a huge Paki army base which he thought made him safe from Obongos illegal drone strikes.
    Dont make me larf!!

  9. Cloggie on Fri, 2nd Jun 2017 10:16 am 

    Bin Laden was in his home in Pakistan the whole time watching the cricket on his 50″ plasma with his 7 wives running around after him / wiping his arse etc. At the bottom of his street was a huge Paki army base which he thought made him safe from Obongos illegal drone strikes.
    Dont make me larf!!

    No photograph, no evidence, directly thrown overboard, or so we are told.

    3,000 people killed, billions of damage, giant intelligence services available, but not a single trial. One giant cover up. The framework of the 9/11 report was written by a Philip Zelikow, a neocon, that last sort of person you would trust to lead/control the investigation.

    https://en.wikipedia.org/wiki/Philip_D._Zelikow

    https://www.sott.net/article/327726-What-neocon-architect-of-the-9-11-Commission-Report-Philip-Zelikow-did-to-maintain-the-big-lie

    9/11 was the work of the US deep state, handled by CIA and Mossad, to create an excuse to invade foreign countries at will and a police state at home.

    #PatriotAct
    #ProgramNewAmericanCentury

  10. TheNationalist on Fri, 2nd Jun 2017 10:32 am 

    Yes I know clog, it all smells worse than an out of date lump of edam doesnt it.
    Perhaps BIN still lurks in a candlelit cave at Tora Bora with his trusty old kalashnikov, a subscription to Vlady Putins blog and his old CIA i.d. card. (just in case).
    If he is still alive you almost want him to make it now, like that old spider you just dont want to squash after he dodges your foot twice?

  11. onlooker on Fri, 2nd Jun 2017 10:34 am 

    9/11 was the work of the US deep state, handled by CIA and Mossad, to create an excuse to invade foreign countries at will and a police state at home.—-Very true

  12. Cloggie on Fri, 2nd Jun 2017 10:43 am 

    If he is still alive you almost want him to make it now, like that old spider you just dont want to squash after he dodges your foot twice?

    Most people who occupied themselves with 9/11, including me, think that bin Laden died in December 2001:

    http://www.anonews.co/binladen-died-2001/

    Bin Laden was on the CIA payroll in Afghanistan in order to drive the Soviets out of that country and bin delivered.

    There is no doubt that next he wanted to get the other intruders out of the “Holy Land of Islam”, namely the Americans themselves. Bin Laden was the precursor of ISIS, but bin Laden was no barbarian.

    Bin Laden always denied he was behind 9/11 and I believe him. He had no reason to deny that spectacular act if he really had been behind it. He knew on the day of 9/11 that he was going to be framed for the crime and that there was no way for him to escape from being blamed and that his death warrant had been signed.

  13. ALCIADA-MOLE on Fri, 2nd Jun 2017 10:56 am 

    whoa russian funded alternative media fanboys coming out en masse.

    Putin dicator enjoys kiling political oponents but he’s a nice guy!

    the credibility of alternative media just isn’t there.

  14. GregT on Fri, 2nd Jun 2017 11:05 am 

    Kind of makes one wonder what those U.S. ‘special’ forces were really doing that day, when they illegally crash landed their ‘special’ helicopter in Pakistan.

  15. Cloggie on Fri, 2nd Jun 2017 2:05 pm 

    whoa russian funded alternative media fanboys coming out en masse.
    Putin dicator enjoys kiling political oponents but he’s a nice guy!
    the credibility of alternative media just isn’t there.

    You landed yourself a nice affirmative action job at the Company, ALCIADA-MOLE?

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