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Zero Hedge article-- Next Sacrificial Lehman

Discussions about the economic and financial ramifications of PEAK OIL

Zero Hedge article-- Next Sacrificial Lehman

Unread postby threadbare » Fri 24 Feb 2012, 11:50:25

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: ... trlp-happy
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Re: Zero hedge article-- Next Sacrificial Lehman

Unread postby Mesuge » Fri 24 Feb 2012, 12:41:41

One of the best ZH contributions for its readership is the daily/yearly progress reporting from the battlefield market, specifically the increasing unreliability of these markets, when so many long time investors are just about to pack and leave the casino as the house changes the rules of the game on the fly with increasing frequency and destructive results. At that point only central banksters and few primary dealers stay, as the losses are covered by taxpayers money i.e. printing likely leading to hyper-inflation. It's totally rigged. Unless you are some sort of a woonder-kind or do you have 'reliable' insider info from papa bankster or other head honcho in the know, it's absolutely not worth the uber elevated risk at least since late 2007. There are better instruments to preserve wealth (fight inflation) off the market.
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Re: Zero hedge article-- Next Sacrificial Lehman

Unread postby mmasters » Fri 24 Feb 2012, 13:07:06

I think the central banks have enough of an angle on it working in concert that there wont be any big crash or abandonment of a major currency and we'll print our way out of most the problems. Combined with the oil shocks this will lead to an economy that shrinks and alternates from recession (they'll term recovery) to depression (they'll term recession). The US will go third world and the third world will go the way of Africa. The US will go part electric and natural gas transportation in a few years when people have had enough of oil and attempt to get away from it. If you can play the shocks oil will be a great investment followed by natural gas.
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Re: Zero hedge article-- Next Sacrificial Lehman

Unread postby bratticus » Fri 24 Feb 2012, 20:26:51

$200 Oil Coming As Central Banks Go CTRL+P Happy
Tyler Durden / ZeroHedge / February 24, 2012

... the sole reason why crude prices are surging ... is because global liquidity has risen by $2 trillion in a few short months, on the most epic shadow liquidity tsunami launched in history in lieu of QE3

The only reason a dog wags his tail is the tidal forces of the moon move it around. I can prove it too: the dog is wagging his tail and the moon is in the sky.

Durden does little more than state his ideology and expect everybody to believe it as much as he does.

Why weren't oil prices as high in January as in February? Was there a huge shift in global liquidity this month?

Pay no attention to the way that the nation which produces oil at the second fastest rate in the world, Iran, has gone from producing over 4 million barrels a day to 3.5 million. Durden knows It's turtles all the way down.
Iran says February oil output steady despite sanctions
Amena Bakr / Reuters / February 23, 2012

... "The production for this month will be the same as the previous, around 3.5 (million bpd)," Mohammad Ali Khatibi told Reuters.

... The Islamic Republic's oil output has fallen over the last two years by more than 250,000 bpd, or 6.6 percent, and could lose more than 300,000 bpd this year and a further 200,000 bpd in 2013, Vienna-based consultants JBC Energy estimate.
Last edited by bratticus on Fri 24 Feb 2012, 20:38:48, edited 1 time in total.
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Re: Zero hedge article-- Next Sacrificial Lehman

Unread postby Beery1 » Fri 24 Feb 2012, 20:38:11

threadbare wrote:The Wiemer style printing that's going on...

Do you mean 'Weimar'?
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Re: Zero hedge article-- Next Sacrificial Lehman

Unread postby AgentR11 » Fri 24 Feb 2012, 20:38:23

Just to throw my customary remark in here; there is no way a nation state can back its currency with gold. Traders are simply too fast, any arbitrage opportunity that presented itself would empty the vaults of gold before you could say, "what". OTOH, if you refuse exchange-ability, then the currency is not truly backed by gold, and no one of any import will be fooled.

Fiat is here to stay, whether people like it or not; and balanced against a basically free market for the buying and selling of gold and other currencies, its really not a bad solution.
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Re: Zero hedge article-- Next Sacrificial Lehman

Unread postby ColossalContrarian » Fri 24 Feb 2012, 21:03:56

I don't think "undulating plateau" is as descriptive as "spike-crash-spike-crash-spike-crash". So people get excited when the price goes back up and then wonder what the heck is going on when it comes crashing down...
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Re: Zero hedge article-- Next Sacrificial Lehman

Unread postby MD » Fri 24 Feb 2012, 21:22:54

Isn't it obvious by now? Every time the American Economy turns towards Good News, gas prices spike and kill retail.

Just pointing out the obvious.. :cry:
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