9.983 Million barrels here, and 9.983 Million barrels there, and pretty soon you are talking about real Oil

As I have been pointing out to anybody that comes near me:

Oil imports are down BIG - to 9,983,000 barrels each and every day for 2009.

So let's go to the videotape! (Or in our case, the calculator.)

9,983,000 X $80 X 365 days equals $291,503,600,000. Somehow I think that to be vaguely important.

You see, the U.S. trade deficit is ONLY about $400 BILLION for 2009, with nearly 75% of that for Oil. All we need to do is eliminate Oil imports and we will ONLY have a $110 Billion trade deficit! And this is with the US$ so low it could walk under a nickel without bending over.

The only reason Oil exporters were willing to do engage in this transaction is that The Powers That Be in those Oil exporting countries were, for all intents and purposes, US CITIZENS. They sent us their Oil, we sent them our "Money", they, as US citizens, repatriated that money and own a significant slug of the American economy and body politic. But this arrangement does not work out so hot for real citizens of those countries, and said arrangement is in its death throws - giving rise to militant Islam, confrontations with nuclear armed states, the destruction of our currency... among other unhappy outcomes. These policies were promulgated and and continued by Republicans and Democrats alike - including our current Hero in Chief.

We need new policies and a new political paradigm, and a way of accepting politically that which we have no control over - that we are going to be forced to live with smaller government, lesser services and benefits, and a new reliance on family and community (and when I say "community", it is with "family" as the foundation of the community), as well as self sufficient, enlightened self interest. I realize how painful this idea is for the Left... you guys felt you were sooooooo close - but everything held by Liberal dogma was built upon a foundation of plentiful and cheap Oil and energy, and that foundation is no more. You are going to have to come to terms with that, because the real risk now is a political crisis born of an insistence on having something that CANNOT be had.

Just look at California.

More soon.

Libertariananimal (at) gmail (d0t) com

A Picture Worth a Thousand Words

The IEA, Europe's version of the U.S. Department of Energy's EIA, just had their cover blown by one of those pesky "Whistle Blowers".

Seems the Oil supply situation is indeed much worse than the story portrayed in the media - a media that relies exclusively on data from the EIA and the IEA.

Well, here is a graph/picture worth the proverbial thousand words:

Seeing how this is nearly 2010, and anyone with a minimum of two (2) neurons still firing under their hat can see that I have better shot at the Nobel Peace Prize than the above graph has of coming to fruition.

Still want to save for the "Long Term"?

On a brighter note, I play chess against my computer using Apple's chess program a great deal - and last night I won! Never happened before. Given that, I am feeling pretty good that everything is right with the world... at least until I fire up another round with this miserable computer...

Libertariananimal (at) gmail (d0t) com

Something's Not Right

For months now I have had this feeling that "something is not quite right", or "the numbers don't tell me what my eyes are telling me", etc...

Today it occurred to me that the problem was with the data on small and family owned businesses - like mine, my brother's biz, my sister's biz, the sandwich shop on Federal Highway, the Realtors over on Palmetto Park Rd, the Pizza Shop that closed on the corner...

I see it in the vacancy of shops and offices here in sunny South Florida, and I hear it on the phone in speaking with my clients and prospects around the country. Business sucks - and that's for the lucky ones still IN business. The big corporations obviously had lots of fat to cut, considering unemployment and the length of the work week, but the little family business was always run pretty lean - and it relied almost exclusively on the owner. Everyone else working there usually supported the owner in his efforts. The supporting cast is gone and the small business owner is just barely hanging on. Business creation? Dead as fried chicken.

And the U.S. equity market is making new highs at the same time that the Junk Bond default rate is well into double digits - and rising. It really pays to be big, connected, and to have gone to one of the establishment's favored schools.

So, what can the government do? State, Local, and Federal governments can cut their regulatory elements to the bone. Will they? NAFC. Our government HATES business, especially small business.

I wonder what my little town in Wilson County, Tennessee will be like in 5 years. There is no big company there to bring employment, tax revenue, etc... (with the exception of WalMart - I wonder if the local folks know just how much damage that WalMart did to their nice little 200- year-old-city. Their down-town was once a vibrant commercial district that has no been reduced to a bunch of antique shops with starving proprietors.) 20% of the county's residents are already receiving food assistance, yet they still have enough money to smoke (and state laws in much of the South, tobacco states, do not exactly encourage people to quit smoking... there seems no shortage of older folks walking around with Oxygen tanks), which kinda/sorta tells me what kind of cultural/educational system they have...

Not that what they do have is the kind of life you would want for your kid... endless muffler, oil change, car repair, Taco Bell and The Waffle House type businesses... and in any event, as I said before.... business sucks. Yet the young people I speak with who are working in these establishments are college educated and indebted, well the ones without the Prison Tattoos, that is.

But at least The Powers That Be have decided to abandon the US$ in order to bail out the big banks... So we got that going for us.

Real unemployment is over 17%, not 10.2%, the highest since the 1930's - yet consumer debt as percentage of GDP is the U.S. is the highest in the history of modern economics.

While I lack the proverbial crystal ball, I think it highly probable that something bigger than just another economic dislocation is in the offing.

Libertariananimal (at) gmail (d0t) com

Like Broken Record

The EIA released its weekly data today, a day later than usual because of the Veteran's Day holiday - and the data was as ugly as it gets.

Imports of Oil into the U.S. accelerate their decline down 10.6% this year from 2008, and the market is not soaking up the decreased imports - inventories continue to bulge.

My sense is that the Oil inventories are correct and the mainstream economists are wrong (and that would include the equity market), but what the hell do I know... just kidding. The energy usage data simply does not support a return to an expanding U.S. economy, nor does the rail traffic data for crushed stone and lumber (remember all that "shovel ready stimulus" money? If the government was REALLY putting that money to good use building the nation's infrastructure, roads, ports, bridges, etc... one would expect the shipments of these 2 building products to increase substantially - especially from such an easy comparison point).

Total rail traffic is getting a boost from Coal and Corn (for ethanol) - and that makes sense given the U.S. decline in Oil imports - but even with that boost total traffic in 2009 is still down 16.9% for the last 4 weeks compared to the same period in 2oo7. Speaking of which... tax receipts are down 20%, rail traffic is down 16.9%, unemployment DOUBLED, but GDP declined... 6% total? (Peak to trough.) I gotta get a gig working in data collection for the Feds...

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The banks continue to "extend and pretend" to keep their balance sheets afloat - but for how much longer? A long, long, long, looooooong time, I'm afraid. If the banks/Fed/Administration was interested in the truth... well, an RTC style entity would serve the purpose of price discovery for these "assets"... anybody hear of anything like that? Nope. And you won't, at least not any time soon.

Our banking system is still belly button deep in sh*t.

Perversely, that might be very supportive of the US$ in the short term. Unless it isn't. We have entered the world of the surreal.

More soon,

Libertariananimal (at) gmail (d0t) com

The Unthinkable?

"Don't deny what your own eyes are seeing" was my admonishment to traders and brokers over the years...

So let's recap what we are seeing right now:

1. The Fed and Treasury appear to have walked away from the US$ in favor of housing and banking.

I would have thought they would have tried to walk the tight rope, but it appears that both their actions AND their speeches are telling folks to abandon the US$. "Don't deny what your own eyes are seeing".

2. The International Debt Market continues to buy Treasury bonds, notes, and bills - but for how much longer? The Japanese continue to buy, and have accelerated their purchases of, Treasury paper; clearly they believe that deflation is the bigger risk. They better be right, or the Treasury market is going to have one very, very unpleasant day sometime soon. (Disclosure: My biggest holding, bigger than precious metals are Treasury Notes.)

3. The Gold market does not believe in anything except Gold. That market continues to go vertical.

4. Natural Gas consumption denies the industrial pickup that the equity market foresees.

5. Oil prices in US$'s are high enough to tip the US over into another recession.

Given the above, I have no firm conviction on any course of action.

50% of American Children will receive Food Stamps

Before I tackle the recent AP report and study on children in need of food assistance I wanted to say how appalled and horrified I am at the cold blooded murder of innocent, hard working, honest men and women at Fort Hood. I have no insights into this particular tragedy other than that the violation of the sanctity of human life in this incident is beyond my abilities to properly place in its terrible perspective.

Sometimes I despair for my fellow man. This is one of those times.

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I use the "food stamp metric" as part of my analysis of the economy and markets.

The AP reported that 50% of all children, and 90% of "black youngsters", will receive food stamps before they reach adulthood.

How are we to take that? Clearly, it is a positive that children in the U.S. do not go hungry for the most part. What does it say about the parents? Does society, and certain special interest groups in particular, bear responsibility for its contribution to the disintegration of the family unit - or the lack of its formation in the first place?

Children living in poverty tend to have one circumstance in common - their father is missing in action, if you will. That the percentage of children living with both parents receiving food assistance is a fraction of all children receiving food assistance is beyond debate. It would seem that the critical input in this data set to work on would be how to encourage/force/cajole/shame/beg/ the children's fathers TO BE FATHERS.

This is a very complicated issue. For instance, the vast majority of "dead beat dads" are in prison, parole, or probation. Its very tough to provide for your children when you are wearing grey pajamas and eating off paper plates. Guess what happens latter in lives of the children of convicts? This is the "gift that keeps on giving" if you are a lawyer, cop, judge, corrections officer, etc... but the rest of us will not be able to support it for much longer.

This is quite the conundrum.

libertariananimal (at) gmail (d0t) com

Weekly EIA Data

The Weekly Status Report from the U.S. Dept. of Energy' EIA is in, and in no surprise the decline in the volume of imported Oil into the U.S continues to accelerate with year over year imports down 9.6%. With 10 months of data, and given the last 2 year's import decline, I think you can start to draw your own conclusions.