Don’t worry, just a little bump - $70 is just around the corner. Short traders just keep making those margin calls, mortgage the house if you have to. Fortunes await you! PO is for pansies and doomers. At $70 short some more ..... it is going back to $22 .... the world is awash with oil ........ reality has nothing to do with it, its all in those charts!!!!!!!!!!
Posted: Tue May 17, 2005 2:53 pm Post subject: Economics 3.0
Tyler_JC wrote:
Having read your "Reversing the Polarity" post, I'm interested in finding out your take on all of this.
I believe that we are actually seeing the "emergence" of new forms of financial capital based upon the sharing of risk and reward using "partnership-based" legal models and tools (such as the US LLC and the "new" UK LLP - which is NOT the same as a US LLP).
In essence the "Capital Partnership" - simply put - a way of "Co-owning" productive capital where the investors and the users share revenues in "n'ths" (ie shares but not as we know them Jim) - introduces an entirely new way of funding which is neither debt nor "equity" as we know it, but something new.
Moreover, the "Clearing Union" or "Guarantee Society" allows individuals to create credit "peer to peer" - backed by a mutual guarantee and operating within an accounting system/barter network and with a manager of credit creation/ guarantee limits.
Together, these tools will come to replace the existing system simply because any enterprise which does NOT use them will be at a disadvantage to one that DOES - which is an "emergent" phenomenon.
We will need to invent new language and mechanisms to encompass this.
eg a "National Equity" rather than a "National Debt" and so on, since public investment (by pension funds) in a "Capital Partnership" is not a Debt at all......
Underlying all this are questions in relation to the metaphysical assumptions underpinning Economics.
ie it's not "either/or" (debt or equity: freehold or leasehold; subject or object; guilty or not guilty) but "both/and" (ie "open capital"/ "temporary equity": "Co-ownership"/ "ownership in common": Pre-intellectual "Reality"; "not proven")
All of this heads away into abstractions I do not understand. I am interested in applications; ie "what works" and I think we have here in the "Clearing Union" and "Capital partnership" new ways of sharing risk and revenue which "work".
Joined: May 02, 2005 Posts: 3266 Location: One more question...
Posted: Thu May 19, 2005 1:33 am Post subject: Re: Oil is the Fuse, Debt Bubble is the Bomb
spot5050 wrote:
Debt increases the tension on all economic formulae.
Debt is a magnifying glass or amplifier which makes the economy more sensitive.
Debt is 'gearing'.
BUT
Debt is not a switch. It doesn't have a level beyond which it 'snaps'.
Economics is full of swings and balances, not binary switches. There are some switches, but debt isn't one of them.
Where was debt referred to as a "switch"? _________________ "Don't ever become a pessimist... a pessimist is correct oftener than an optimist, but an optimist has more fun, and neither can stop the march of events."
Robert A. Heinlein
Joined: May 02, 2005 Posts: 3266 Location: One more question...
Posted: Thu May 19, 2005 7:48 am Post subject:
Leanan wrote:
Quote:
Debt is not a switch. It doesn't have a level beyond which it 'snaps'.
What if it becomes clear that you cannot and will not ever repay the debts you have incurred?
You file bankruptcy, The pressure has increased until a decision is made. A decision that certainly resembles a switch. _________________ "Don't ever become a pessimist... a pessimist is correct oftener than an optimist, but an optimist has more fun, and neither can stop the march of events."
Robert A. Heinlein
Joined: Dec 07, 2004 Posts: 463 Location: Cheshire, England
Posted: Thu May 19, 2005 12:35 pm Post subject:
MD wrote:
Where was debt referred to as a "switch"?
Your OP uses the word 'trigger' which I'm always suspicious of when discussing economics. If I see that word, then I'm immediately looking for some justification of its use.
MD wrote:
Oil is the Fuse, Debt Bubble is the Bomb.
It appears that one moderate oil shock from the disruption of several hundred million barrels of oil could trigger the implosion of the US economy.
Economics is about upward pressure on X, downward pressure on Y, etc etc.
I suppose really I'm questioning your use of language.
MD wrote:
You file bankruptcy, The pressure has increased until a decision is made. A decision that certainly resembles a switch.
That's exactly my point. People see switches like that one, which occur on a personal level, and translate them to a macro level. eg;
"I've lost my job. It feels like the end of my world so it must be the end of everyone elses too."
But if you depersonalise the way you think about it, you see things rather differently.
Joined: Nov 11, 2004 Posts: 977 Location: Heart of Canada's Oil Country
Posted: Thu May 19, 2005 2:22 pm Post subject:
Leanan wrote:
I don't understand what you're trying to say.
If I declare bankruptcy, it's not the end of the world for me. Really sucks for everyone who's lent me money, though.
It depends on how the bankruptcy laws are written, and what you are prepared to accept. At a minimum getting credit will be next to impossible. Forget about having any assets.
Additionally, with the new laws in the US, it is a lot harder to get your debt erased. Essentially it depends on whether or not your income is higher than the median in your state. If it is, you're on the hook for more of your debt.
http://www.bankruptcyaction.com/bankreform.htm _________________ Do not underestimate the difficulties of surviving the transition of peak oil, nor the dangers of global warming. We must embrace nuclear energy and renewables.
I'm not very religious, but I rememeber reading Revelation as a teen. One part was intriguing and I will paraphrase: the number 666 is the mark of the beast, and without this mark no man shall be able to buy or sell. Or something like that. Meaning you have to be one of the beast's followers to be able to conduct business of any kind.
My own personal interpretation is that credit cards are the mark of the beast since you need one for practically every transaction big and small in our modern era (ever try booking a hotel room without one?). Unless things change soon, they will trigger the next financial meltdown. The explosion of easy consumer credit over the last 20 yrs is a bomb unlike any other.
Joined: May 02, 2005 Posts: 3266 Location: One more question...
Posted: Thu May 19, 2005 4:00 pm Post subject:
spot5050 wrote:
MD wrote:
Where was debt referred to as a "switch"?
Your OP uses the word 'trigger' which I'm always suspicious of when discussing economics. If I see that word, then I'm immediately looking for some justification of its use.
MD wrote:
Oil is the Fuse, Debt Bubble is the Bomb.
It appears that one moderate oil shock from the disruption of several hundred million barrels of oil could trigger the implosion of the US economy.
Economics is about upward pressure on X, downward pressure on Y, etc etc.
I suppose really I'm questioning your use of language.
MD wrote:
You file bankruptcy, The pressure has increased until a decision is made. A decision that certainly resembles a switch.
That's exactly my point. People see switches like that one, which occur on a personal level, and translate them to a macro level. eg;
"I've lost my job. It feels like the end of my world so it must be the end of everyone elses too."
But if you depersonalise the way you think about it, you see things rather differently.
Several problems:
First: The "trigger" was referencing an oil shock, not debt.
Second: You argued against one analogy(oil shock as a trigger)using another unrelated analogy (debt as a switch). There is no relation between them, therefore the argument, in that context, has no meaning.
Third: Since it was mine, I will explain what I meant by the reference. There currently appears to be a problem in the US, sometimes referenced as "debt bubble". There has been serious questions raised as to the sustainability of the current debt situation. It has also been suggested that a moderate oil shock could very well push the "debt bubble" past the level of sustainability, which in concert with oil shock could then seriously disrupt the US economy. Thus the somewhat loose, but I thought nice sounding "fuse, bomb, target" like "oil, debt, economy" analogy. *shrug* _________________ "Don't ever become a pessimist... a pessimist is correct oftener than an optimist, but an optimist has more fun, and neither can stop the march of events."
Robert A. Heinlein
This figure is shocking...If true, and interest rates rise any further...we'll see as mass wave of bankruptcies and foreclosures...
Quote:
But seriously, taken as a whole this speech may be Mr. Greenspan's "irrational exuberance" moment for what's ahead in real estate, with Fannie & Freddie being the most fragile part of the bubble. He understands what they're up to. There are plenty of other alarming real estate trends out there that the Fed Chairman could relate in plain language. In California, for example, "interest-only" loans account for 61% of the home mortgages taken out in the first two months of 2005. In 2002, the figure was 2%.
This really only solidifies my view that periods of inflation (increasing 'money supply'/credit) and deflation (decreasing 'money' supply/credit), have consistently bled real wealth from average citizens..
I recall a post regarding an article from the American Banker Association's magazine in the early part of this century where the planned, in advance, a recession, by reducing the money (debt) supply.
I also recall a quote (threat) from a very powerful banker during this time period of causing a recession intentionally, and he did. I wish I had the quote and links handy...
Quote:
I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Letter to the Secretary of the Treasury Albert Gallatin (1802) ; later published in The Debate Over The Recharter Of The Bank Bill (1809
Quote:
"I sincerely believe... that banking establishments are more
dangerous than standing armies, and that the principle of
spending money to be paid by posterity under the name of
funding is but swindling futurity on a large scale." --Thomas
Jefferson to John Taylor, 1816. ME 15:23
Quote:
"I hope we shall... crush in its birth the aristocracy of our
moneyed corporations, which dare already to challenge our
government to a trial of strength and bid defiance to the laws of
our country." --Thomas Jefferson to George Logan, 1816.
It depends on how the bankruptcy laws are written, and what you are prepared to accept. At a minimum getting credit will be next to impossible.
No, it won't. I know, because my credit history once got mixed up with some one in Arizona's. She has my first name and a social security number one number off from mine. She had a bankruptcy, but it didn't seem to stop her from opening accounts. Of course, she paid for it in higher interest rates.
In any case, my point was that often the one that suffers most in a bankruptcy isn't the debtor. Think Long Term Capital Management.
Joined: Dec 07, 2004 Posts: 463 Location: Cheshire, England
Posted: Fri May 20, 2005 1:08 pm Post subject:
MD wrote:
Several problems:
First: The "trigger" was referencing an oil shock, not debt.
Second: You argued against one analogy(oil shock as a trigger)using another unrelated analogy (debt as a switch). There is no relation between them, therefore the argument, in that context, has no meaning.
Third: Since it was mine, I will explain what I meant by the reference. There currently appears to be a problem in the US, sometimes referenced as "debt bubble". There has been serious questions raised as to the sustainability of the current debt situation. It has also been suggested that a moderate oil shock could very well push the "debt bubble" past the level of sustainability, which in concert with oil shock could then seriously disrupt the US economy. Thus the somewhat loose, but I thought nice sounding "fuse, bomb, target" like "oil, debt, economy" analogy. *shrug*
I take all your points.
I still object to the way you use emotive words like 'bubble', 'shock', 'fuse', 'bomb' etc. That's all I'm trying to say.
Language is important, it paints a picture. Reading about 'shock', 'bomb', 'crash' etc leaves a very different impression to reading about 'slowdown', 'upward pressure', 'downward pressure', 'easing off' etc. Do you see what I'm getting at?
The language you use matters. If you use inappropriate language, you create a false picture. Some people use emotive language deliberately, some accidentally; but either way the result is the same - a distorted worldview is created, full of imaginary switches, precipices, crashes, bangs, pops, bubbles, exploding bubbles etc etc.
Language is important. You can use it to help you get to the truth, or you can twist it for your own ends. You can either shoehorn the world into your belief system, or remodel your belief system to match reality.
Joined: May 02, 2005 Posts: 3266 Location: One more question...
Posted: Fri May 20, 2005 3:16 pm Post subject:
spot5050 wrote:
I take all your points.
I still object to the way you use emotive words like 'bubble', 'shock', 'fuse', 'bomb' etc. That's all I'm trying to say.
Language is important, it paints a picture. Reading about 'shock', 'bomb', 'crash' etc leaves a very different impression to reading about 'slowdown', 'upward pressure', 'downward pressure', 'easing off' etc. Do you see what I'm getting at?
The language you use matters. If you use inappropriate language, you create a false picture. Some people use emotive language deliberately, some accidentally; but either way the result is the same - a distorted worldview is created, full of imaginary switches, precipices, crashes, bangs, pops, bubbles, exploding bubbles etc etc.
Language is important. You can use it to help you get to the truth, or you can twist it for your own ends. You can either shoehorn the world into your belief system, or remodel your belief system to match reality.
VERY well said! Thank you.
Now then, my original post indicated my opinion that the combination of economic pressures could indeed produce a result that in some fashion resemble more of an "implosion". What are the economic factors that would tend to soften the problems created by the coincidence of oil schock and debt ratio in the US economy? _________________ "Don't ever become a pessimist... a pessimist is correct oftener than an optimist, but an optimist has more fun, and neither can stop the march of events."
Robert A. Heinlein
Joined: Oct 14, 2004 Posts: 1203 Location: Left the cult
Posted: Fri May 20, 2005 3:35 pm Post subject:
spot5050 wrote:
Language is important, it paints a picture. Reading about 'shock', 'bomb', 'crash' etc leaves a very different impression to reading about 'slowdown', 'upward pressure', 'downward pressure', 'easing off' etc. Do you see what I'm getting at?
I think you are making a mountain out of a mole hill.
I quite enjoyed the metaphor.
-- No mole hills were harmed in the making of this post. Portrayals of matter conversion were simulated. -- _________________ It's all downhill from here
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