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Stock Market Crash! (merged) Pt. 4

Discussions about the economic and financial ramifications of PEAK OIL

Re: Stock Market Crash! (merged) Pt. 4

Unread postby evilgenius » Sat 09 Feb 2019, 12:32:26

Armageddon wrote:1.5 trillion student loan debt - all time high
1.5 trillion auto loan debt - all time high
13 trillion household debt - all time high
9 trillion corporate debt - all time high
22 trillion US gov’t debt - all time high

We haven’t built this system on growth, we have build it on debt

Can I run up all my credit cards, take out loans for a house and a car and call myself wealthy?

There's a problem with simply citing debt. Debt is what the money supply is based upon. The more debt, the more money. What matters is what sort of rate structure the system can function under without overheating or stalling. That level is influenced by all kinds of factors. Some of those are things like pay scales, rates of savings, tax rates, and legal structure. Tax rates and legal structure have a bearing upon incentive to take risk as well as whether there is return from activity in already developed factors of production. They also have a bearing upon how wealth is shared among the members of an economy. I think that's where your criticisms have the most bearing. I don't think you are complaining so much about debt, but about both wealth and income inequality.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby marmico » Sat 09 Feb 2019, 13:09:43

There's a problem with simply citing debt.


Of course, context matters. But a doomtard from doomerville doesn't comprehend the interplay between income, liabilities and assets.

For instance, US household debt service payments are historically low.

Image

A further instance - US households have almost $10 trillion in savings deposits.

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Re: Stock Market Crash! (merged) Pt. 4

Unread postby evilgenius » Sat 09 Feb 2019, 13:24:31

shortonoil wrote:All the central banks announced that they are holding rates, or cutting them. The QT, were everything is wonderful and rates can go up, along with synchronous global growth just hasn't worked out quite as well as they had planned. Central bankers eating deep fried crow, on toast! This will be the recession from which the modern industrialized world will never recover. The EROI of fossil fuels is no longer high enough to power a recovery. The ERoEI of petroleum is down to 8.3:1. In 1960 it was 78:1. You know; back in the good old days! You remember, when Saudi Arabia could produce oil for 25¢ a barrel, sell it for $2.88, and get rich. Where a new well cost less than $100,000, and produced 50,000 barrels a day of nice light sweet crude. And etc. & etc. Now we are trying to pay off $247 trillion with liquified road tar, and camel pee. Don't worry, its contained, and QE can be reversed with the swipe of a pen, or the push of a button, or something. But, everything will be find as soon as Germany finds someone to buy their damn cars! OH, and China!

You are conflating the Export Land Model and EROEI when you bring up Saudi Arabia. The Saudis have a huge problem, in that they cannot allow their population to enjoy the sort of economy they could if the type of edge they have in resource production were in existence in almost any other place in the world. They are a monarchy. They have no interest in becoming a statutory monarchy, with only symbolic power, or an ex-monarchy. They make appeals to the religious right in their country to keep them in power, but they don't necessarily derive their power from that. They aren't a representation of Islam so much as a holdover from post-colonialism in the Islamic world. All those many things considered, the monarchy has a real grip upon the people of Saudi Arabia. There is enough going for them in the people's hearts that they back them, even if only out of obligation. And there is a military in place that could quell even the largest rebellion. The monarchy just has to keep the people happy with largess spending. Without an economy that expands and contracts according to economic activity, that may not always be possible. EROEI is not as large an issue for them as exchange rates and outside cultural influence.

You are right to point out demand as a serious issue. Right now there is a huge move toward change on many fronts. The biggest change may be a switch to electric over internal combustion power for transportation. There is a serious issue with affording that change. Those who are exemplifying the change don't have a problem affording the associated costs. That's what you get for an example when there is such income disparity between them and those who have to follow in order for the change to take place. Going entirely electric, though desirable, is not possible currently because the average man cannot afford it. They can't afford the infrastructure costs associated with charging. The grid can't handle the load and there aren't enough places for everyone to plug their cars in overnight. If we had the driverless world already we could make huge lots in various places, or other sorts of charging schemes where we could take the burden off of residences, where our cars could drive themselves to after they left us on our doorsteps, but we don't. We also can't just change how far away from work, or how we have to drive so many miles for work. If there were no hybridization model in car fleets electric power couldn't even be considered. The world as it stands for the great majority of people will run on oil for some time. The thing is, due to the wedge taken out of it by the electric part of hybridization, demand should decrease, unless actual growth in total numbers of automobiles grows very fast. What that ratio is may whittle at EROEI as well. Of course, there is EROEI to consider in battery production as well. And the batteries die at a certain rate while the gasoline engines remain viable. You can get those batteries at most auto parts stores, but they are still outside the price range of the average participant in the economy.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby onlooker » Sat 09 Feb 2019, 14:38:35

"The world as it stands for the great majority of people will run on oil for some time" Well, I guess Short some just do not and cannot fathom the coming collapse. Perhaps in more colloquial pedestrian terminology. Here goes. The world is as stated $247 trillion in debt , Shale fracking "miracle" is showing signs of petering out, the age of the cheap oil is ended. So, what is going to happen is at some point debtors are going under as the Economy is now relying on lending to remain viable and without true organic growth and instead contraction, loans will not be serviced. Then, all hell will break loose, as people of all shapes and stripes realize the era of economic growth has ended. Credit markets will seize up, aggravating the already slowing Economy. The cycle of the Oil Industry and the Economy pushing each other down, will then really get going. So Short is right, when it starts that will be the end of Modernity as we have known it.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby rockdoc123 » Sat 09 Feb 2019, 14:54:34

You remember, when Saudi Arabia could produce oil for 25¢ a barrel, sell it for $2.88, and get rich. Where a new well cost less than $100,000, and produced 50,000 barrels a day of nice light sweet crude. 


You are conflating the Export Land Model and EROEI when you bring up Saudi Arabia. The Saudis have a huge problem, in that they cannot allow their population to enjoy the sort of economy they could if the type of edge they have in resource production were in existence in almost any other place in the world. 


Both of you guys need to look at your maths

I assume the reference year is around 1950 when oil was selling for $2.77/bbl

Lets assume the lifting costs was only $0.25/bbl MOD
Then the margin on a bbl was $7.01
In 1950 SA was producing 500,000 bopd
That is a daily CF of $3.5 MM or annualized at $1.26 billion

compare this with 2017

In 2017 oil averaged $52.51
Lifting cost per bbl for Saudi Arabia is $4.50
The margin on a bbl is $48.01
Saudi production in 2017 averaged around 10.1 MMB/d
That is a daily CF of $484 MM or annualized at $176.5 billion

If we adjust the 1950 annualize income of $1.26 billion it becomes around $12.8 billion which is still short of the 2017 annualized CF by $163.7 billion

so no....things weren't better cash flow wise for Saudi Arabia back in the 1950's as you suggest.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Armageddon » Sat 09 Feb 2019, 18:21:27

onlooker wrote:"The world as it stands for the great majority of people will run on oil for some time" Well, I guess Short some just do not and cannot fathom the coming collapse. Perhaps in more colloquial pedestrian terminology. Here goes. The world is as stated $247 trillion in debt , Shale fracking "miracle" is showing signs of petering out, the age of the cheap oil is ended. So, what is going to happen is at some point debtors are going under as the Economy is now relying on lending to remain viable and without true organic growth and instead contraction, loans will not be serviced. Then, all hell will break loose, as people of all shapes and stripes realize the era of economic growth has ended. Credit markets will seize up, aggravating the already slowing Economy. The cycle of the Oil Industry and the Economy pushing each other down, will then really get going. So Short is right, when it starts that will be the end of Modernity as we have known it.



I think we are on the precipice of that right now.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Cog » Sat 09 Feb 2019, 19:48:00

Seems like that precipice thing is about worn out.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby vtsnowedin » Sat 09 Feb 2019, 20:01:12

rockdoc123 wrote:Both of you guys need to look at your maths

I assume the reference year is around 1950 when oil was selling for $2.77/bbl

Lets assume the lifting costs was only $0.25/bbl MOD
Then the margin on a bbl was $7.01
In 1950 SA was producing 500,000 bopd
That is a daily CF of $3.5 MM or annualized at $1.26 billion


I believe I see a typo there. Would not $2.77 oil with a lifting cost of $0.25 have a margin of $2.52 not $7.01? And on from there but I'll let you sort that out.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby rockdoc123 » Sat 09 Feb 2019, 20:45:03

yup.....made a typo there that carried through the calculation...so that is daily cash flow of $1.26 MM and annualized $459 MM, which of course makes the comparison by Short even worse. ($459 MM versus $176.5 billion in MOD or $4.7 billion vs $176.5 billion in 2017 dollars ).

Thanks for catching that! :oops:
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Yoshua » Sun 10 Feb 2019, 06:10:10

Rockhead is doing math!

:)

Venezuela has equal "reserves" to SA.

Orinoco extra heavy oil is extracted through steam injections...and the crude goes through a converter, mixed with naphtha and turned into a synthetic crude that is then shipped to be refined.

So how much does it cost to produce Orinoco extra heavy oil?
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby shortonoil » Sun 10 Feb 2019, 08:13:15

I think we are on the precipice of that right now.


What matters is how fast the decline takes place. Also, where you are. They will be eating each other sooner in Mogadishu than they will be in Boston. We hope?

Can modern civilization continue to exist in some deformed manner anywhere? These will be the real questions to surface over the next decade (assuming that we make it that far). We are still living with the potential to wipe most higher life forms off the planet in about 18 minutes. In spite of the number of lunatics that would love to jump on the button with both feet, we have to date restrained ourselves.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby evilgenius » Sun 10 Feb 2019, 11:03:49

The fact is that the Saudis have a problem not having used their own oil. Instead, they've opted for the model you get when you sell it. That's, basically, OPEC at large. I think it's why some people call a country discovering oil a curse. In places in the world where individuals or corporations aren't perceived as owners of the resource, or resource stream, ownership falls into the hands of the collective. That can, and has been, a recipe for corruption. Corruption tends to keep people in place, no matter how much money there is to better them. That's not what the US did with its oil. It is what the US has encouraged other countries in which oil has been discovered to do with theirs.

A great deal of the money that other countries make off of the sale of oil goes to a small group at the top. I think the Saudi Royal family, and their surrounding cast members, is fairly large, but compared to the rest of the country they can be called small. Which also points out how in most of the oil producing countries there is a tribal element through which individuals have also to operate, creating another such layer between them and their individual freedom. The individual freedom perspective is very interesting in this case because it also has to do with stress upon the environment. Who owns that? We look upon it as a collective ownership when we consider global warming, but it is something that can only be addressed by individual decisions. At the same time, our choices are limited because of the structures all of us function within. We can't 3d print our own electric cars, or sustainable living spaces, yet. Neither are we interested. This is an industrialized world. In part it is made so because of the decisions of the "winners" under a certain individualistic point of view. But also because of the acquiescence of the so called losers who perpetuate collective points of view. We are more than happy to use what the winners give us without thinking. Our collective attitude toward those who provide what we consume is not much different in practice than that of philosophically collectivized states. Both ways of deriving value from nature seem flawed when taken to their extremes. It's Plato and Aristotle all over again. There is nothing new under the sun. Maybe the truth is that freedom always comes with a price. And, most often, that price is more the price of contemplation than blood. It's only contemplation that can figure out a plan, or form a better way, with understanding for those left out, when the way of blood, the default system, doesn't work.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby rockdoc123 » Sun 10 Feb 2019, 12:54:22

Venezuela has equal "reserves" to SA.

Orinoco extra heavy oil is extracted through steam injections...and the crude goes through a converter, mixed with naphtha and turned into a synthetic crude that is then shipped to be refined.

So how much does it cost to produce Orinoco extra heavy oil?


Perhaps you should have read the post from Short I was responding to dipshit. He was using Saudi Arabia as an example not Venezuela. :roll:
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Outcast_Searcher » Sun 10 Feb 2019, 14:02:50

Cog wrote:Seems like that precipice thing is about worn out.

Yup. Aside from certain sheep, mountain goats, eagles, etc., the world doesn't look like a constant precipice, decade after decade after decade.

And it's not that we don't have them from time to time. 2008-2009 was looking like one. 1997 was pretty damn scary. Even 1987 looked rather scary briefly (I lacked much market experience then). Same thing for 1981, when I got my first full time job and was paying my bills, and inflation was looking damn noticeable and scary places like the grocery store -- every week.

But the vast majority of the time, not so much.

But no, the fast crash crowd consistently says something like: "Let's cry "wolf" at every event, every headline, that we can twist to try to look like doom via FUD, taking things out of context, ignoring balance, only using non-credible, sources, etc., so we can get some attention", and then wonder why people with a little perspective or sanity mostly ignore them, or calmly point out various reasons, credible sources, etc. which point out why they're wrong or mostly wrong.

Fast crash doomers, your 15 minutes (several decades, actually), are up.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby onlooker » Sun 10 Feb 2019, 14:17:21

Outcast, if people here were specifying dates, I could understand your exasperation. But for the most part we are NOT. We are saying stresses are building up that will inevitably lead to a culminating breakdown. You can denigrate the Etp theory but not the poor economic fundamentals. Denier assertions and statistics are rebutted by Realist ones. Short may or may not be right. But economic entropy and decay continues apace.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Armageddon » Sun 10 Feb 2019, 17:06:27

IMF Cuts 2019 Global Growth Forecasts Again: "We Have No Idea," Says Lagarde

Global Trade Hits A Brick Wall


ZH


#shitstormbrewing
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby onlooker » Sun 10 Feb 2019, 17:59:31

https://seekingalpha.com/article/423846 ... 89GtdjsJTk

The coming-global-financial-crisis-debt-exhaustion
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby Armageddon » Sun 10 Feb 2019, 18:15:27

onlooker wrote:https://seekingalpha.com/article/4238463-coming-global-financial-crisis-debt-exhaustion?fbclid=IwAR1Uz2BCFnhHzD85hdSZvjSOOh9J_NXtUFEy1LibAnKybAjjD89GtdjsJTk

The coming-global-financial-crisis-debt-exhaustion



Hope you guys are hoarding gold and silver.
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby onlooker » Sun 10 Feb 2019, 19:03:18

https://www.zerohedge.com/news/2019-02- ... brick-wall
Global Trade hits a brick wall. No not the Immigration wall
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Re: Stock Market Crash! (merged) Pt. 4

Unread postby vtsnowedin » Sun 10 Feb 2019, 19:09:30

Armageddon wrote:
onlooker wrote:https://seekingalpha.com/article/4238463-coming-global-financial-crisis-debt-exhaustion?fbclid=IwAR1Uz2BCFnhHzD85hdSZvjSOOh9J_NXtUFEy1LibAnKybAjjD89GtdjsJTk

The coming-global-financial-crisis-debt-exhaustion



Hope you guys are hoarding gold and silver.

Can you eat gold or silver?
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