I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Joined: Sep 25, 2004 Posts: 4690 Location: Boston, MA
Posted: Sun May 15, 2005 9:58 am Post subject:
Pretty much.
The US economy is on the verge of collapse right now. The easy money party is ending and we all drank a little too much. If oil causes the US economy to go under...we are never getting out of it. Just as we start growing again oil production will be in serious decline. When this happens...it's lights out. The suburbs will be depopulated as people move to the cities for work. But there won't be any work because 1/2 of the US population lives in Suburbia and Suburbia's consumption fuels the economy.
So, yeah, we're screwed. I'm not even sure if the Dow will be above 1000 for the rest of the decade. BTW, have you ever read any of Jim Puplava's stuff? http://www.financialsense.com/ _________________ "www.peakoil.com is the Myspace of the Apocalypse."
Joined: Apr 04, 2005 Posts: 473 Location: Seattle, WA
Posted: Sun May 15, 2005 12:11 pm Post subject:
I don't think a mild shock will do it. I think we need something higher, like $100 a barrell to really do something like you're talking. And it needs to stay there for a while, not an interday spike, but a long one to two month consistent price level. Yes, then our economy is most definitely in trouble. If stayed there for 6 months...the suburbs would be over because you'd have massive defaults.
Joined: Sep 25, 2004 Posts: 4690 Location: Boston, MA
Posted: Sun May 15, 2005 3:10 pm Post subject:
Welcome to PO (Peak Oil) Cojock!
The Economics forum is relatively new and there are plenty of threads in the other forums that still need to be moved over. If you want to move your thread, just ask MonteQuest or one of the other moderators.
If you have a microphone and the inclination, you may wish to download PeakSpeak. It's like a chat room but with voices and a text box (for those who don't want the Feds to know what they sound like ). Having read your "Reversing the Polarity" post, I'm interested in finding out your take on all of this. _________________ "www.peakoil.com is the Myspace of the Apocalypse."
Joined: Aug 14, 2004 Posts: 2068 Location: San Diego, Ca.
Posted: Sun May 15, 2005 3:26 pm Post subject:
Quote:
If you want to move your thread, just ask MonteQuest or one of the other moderators.
It has been moved. _________________ "Peak oil isn't more than an interesting industry factoid and doesn't have anything to do with the hysterics speculated on ad nauseum around here!" ReserveGrowthRulz
Joined: Mar 13, 2005 Posts: 126 Location: Bellingham, Wash
Posted: Mon May 16, 2005 4:49 pm Post subject:
FoxV wrote:
does anybody know/suspect what the flash point for the credit bubble burst will be (ie what are the signs)...
I think so many volatile factors are at play here that it will probably be a combination of things.
Items that I see as flags right now:
- Amount of time houses are on the market is increasing in bellweather bubble areas, such as Miami, Vegas, SF Bay.
- Foreign investors' decreasing subsidy US debt, whether corporate, agency, or government (or indirectly consumer).
- Continued increase in economic growth (ie, GDP) versus wages.
I think oil willl be the proverbial straw that breaks the camel's back, as we see how jittery the markets are in response to fluctuation in oil prices.
does anybody know/suspect what the flash point for the credit bubble burst will be (ie what are the signs)...
I think so many volatile factors are at play here that it will probably be a combination of things.
Items that I see as flags right now:
- Amount of time houses are on the market is increasing in bellweather bubble areas, such as Miami, Vegas, SF Bay.
- Foreign investors' decreasing subsidy US debt, whether corporate, agency, or government (or indirectly consumer).
- Continued increase in economic growth (ie, GDP) versus wages.
I think oil willl be the proverbial straw that breaks the camel's back, as we see how jittery the markets are in response to fluctuation in oil prices.
Not to insult Muslims in any way, but consider the riots that errupted this week because of the Newsweek article about abuse to the Koran. There have been many stories in the past of a similar vein that did not spark anything like this reaction.
What I'm eluding to is that bad things can be set off by seemingly unrelated, small events. Pressures build up in the public space, most not even recognized. Low level exposure to fear, feelings of apathy and a sense that there is something wrong but not really knowing what.
I would suggest that there are alot more people, in the US in particular, that are in a state of knowing something is wrong. You can't tell me that a large portion of the home buyers who are mortgaged beyond recovery aren't at some level aware that they are in freefall. It's like the feeling you get when a big storm is approaching. _________________ Gravity is not a force, it is a boundary layer.
Everything is coincident.
Love: the state of suspended anticipation.
To get any appreciable distance from the Earth in
a sensible amount of time, you must lie.
I read today that the credit card companies will start increasing their monthly minimums to 4% from 2% of the balance ... should be interesting as all those McMaxed people panic. While the credit card companies are taking all the flak in the press for this, watch and see how the bankruptcy law screws over people who stretched to get McMansions and home equity loans because they just had to have the <furniture, Lexus, vacation, diamonds> right NOW --- and placed themselves in a position where the loss of an income or even a minor interruption can cause a death spiral. When rates go up on ARMs watch as the selling frenzy begins .... that's when I will make my move.
When I can buy something I'll make sure it's within a reasonable walk from a train station and within walking distance of groceries, banks, stores, etc. Get into the habit of living beneath your means and you'll do fine. Stretch yourself to the max and you'll get screwed sooner or later.
How does this tie to oil prices? A family who spent about $250 per month on gas two years ago for their Ford Leviathan and GMC Grendel's Mother could easily now be spending north of $400 ... which could put them over the edge when combined with other factors swirling about.
I agree that the two most important factors for the economy right now are peak oil and the credit bubble. It's funny though, each side has its cadre of experts - peak oil has Campbell, Heinberg, Simmons, Kunslter, Darley, Klare etc.., the credit bubble side has Puplava, Doug Noland, Richard Duncan, Richard Daughty, and a whole lot more, especially goldbugs etc - but noone seems to have the expertise to really put both things together.
For example, if the financial bubble bursts and we enter a 1929 like depression, oil demand and prices could dramatically decrease, at least in the short term. It wouldn't disprove the peak oil theorists, but would probably push peak oil back a few years until demand ramps up again.
If peak oil hits first, than I think you're right, it could trigger the credit collapse, but in turn this would be presumably followed by a slowdown in oil demand too, which again pushes back the peak.
It's quite tricky to predict what will happen, but interesting times ahead for sure! It's also interesting to note that both these things are kind of happening in parallel at the same time...
But the coming financial "perfect storm" is one of the reasons I'm more inclined to invest in gold than oil stocks at this point.
does anybody know/suspect what the flash point for the credit bubble burst will be (ie what are the signs)...
I think so many volatile factors are at play here that it will probably be a combination of things.
Items that I see as flags right now:
- Amount of time houses are on the market is increasing in bellweather bubble areas, such as Miami, Vegas, SF Bay.
- Foreign investors' decreasing subsidy US debt, whether corporate, agency, or government (or indirectly consumer).
- Continued increase in economic growth (ie, GDP) versus wages.
I think oil willl be the proverbial straw that breaks the camel's back, as we see how jittery the markets are in response to fluctuation in oil prices.
Not to insult Muslims in any way, but consider the riots that errupted this week because of the Newsweek article about abuse to the Koran. There have been many stories in the past of a similar vein that did not spark anything like this reaction.
What I'm eluding to is that bad things can be set off by seemingly unrelated, small events. Pressures build up in the public space, most not even recognized. Low level exposure to fear, feelings of apathy and a sense that there is something wrong but not really knowing what.
I would suggest that there are alot more people, in the US in particular, that are in a state of knowing something is wrong. You can't tell me that a large portion of the home buyers who are mortgaged beyond recovery aren't at some level aware that they are in freefall. It's like the feeling you get when a big storm is approaching.
Rod, Newsweek has been highly critical of Olduvai George. The chimp has been portrayed as a loonie right wing Christian nut-case by the magazine. In other words, Newsweek has been indulging in that most disreputable traditional habit of journalism, one we all thought was part of a bygone era. They told the truth. They're being clobbered by the administration for doing so. No doubt, the white house actually provided the "asset" to Newsweek, much like they provided the info about Bush's Viet nam desertion memo, to Dan Rather. Pure set up.
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). Having read your "Reversing the Polarity" post, I'm interested in finding out your take on all of this.
