Tyler Durden quotes assessment from from Bank of America. B of A predicts oil will rise to 200.00 per barrel, then reasons we will see something of a repeat of 2008, eventually. I think they figure the timeline is 5 years from massive inflation to deflationary collapse.
Imho, it's going to be way way worse than that. The Wiemer style printing that's going on is not going to allow for an eventual deflationary collapse, where commodities, like oil, drop back down in price. There will be a collapse but the dollar won't be salvaged it will have to be replaced with a new currency, likely backed by gold. The German currency was eventually replaced with another, under the Dawes plan, if memory serves me correctly. Check these 'facts'! Deflationary collapse implies a strengthening currency, one with increased purchasing power, like a Great Depression scenario. Nay, nay....this time it's going to be different!
The run up in commodities could coincide with a derivatives unwind, once the shadow inventory of houses hit the market and the banks have to declare what their assets are really worth. Up til then, their books state that all of the mortgages they are holding are worth their declared value, when the loan was originally structured and sliced and diced.
They are holding mortgages for houses worth 100,000, or less, but declaring the asset value as close to 300,000! Can you imagine the chaos in the mortgage backed securities derivatives, when this hits in a big way? It's as if the FIRE community has hidden cluster bombs in their own bank portfolios, or booby trapped themselves into a corner. When the shadow inventory of houses actually sell and their value is a third of what is expected in the long chain of occult math that make up the equations these notes are based on the sh** is really going to hit the fan. This is why, imho, so much inventory has been held off market--that and robo-signing.
Investors will respond by pumping the price of oil and gold and most other commodites higher and higher, distrusting fiat, more and more. This is without a war in Iran--and if anything, it is something that just might stall out any attempt to start a new war. The govt is going to be fighting a huge war at home, economically and possibly in the real sense. The U.S. is poised for revolution, following Europe's lead. The Greeks are going to end up lynching tptb, in their own Arab Spring moment. It could get very ugly. Get ready for it.
I'm going to give myself a slap on the back here, that may nauseate some, forgive me! I predicted in 2008, that oil could easily dive, as, peak oil aside, I figured the sudden spike in price wasn't due to contraction of supply. It was due to financial uncertainty and all kinds of flawed analysis by investors.
I am a peak oil advocate who was nearly booed off this site at that time. A few people on the forum nearly lost their shirts financially, because they weren't aware of the economic and political side of the oil price issue. It's a very easy mistake to make. Peak oil was and is a reality and it appeared to be diminishing rapidly in 2008, if one was gauging supply, simply by the price per barrel. But the price per barrel and actual peak, weren't actually related, at that time.
So my analysis, this time, for what it's worth. I think oil is going to go way up, stay up and likely won't go down in nominal terms. The run-up will have to do with weakness in the dollar. If you have no ethical problem with investing in oil, you can kick back and do it and feel safe. Other than that gold bullion. Silver--maybe.
Well, that's enough from me. Here's Tyler: http://www.zerohedge.com/news/200-oil-c ... trlp-happy