Monday, April 13, 2009
The "Peak Demand" story was making its way around Wall Street trading floors today.
The price of crude fell as did the equities of the refiners. After all, if we had "Peak Demand" in 2007, what do we need all that refining capacity for?
Exactly! Sort of.
"Demand" can never exceed "Supply", as "Price" brings each into equilibrium. The financial media might want to spin this whichever way... that does not change the likely fact that 2007 was "Peak Oil" for the U.S.
I am and have been of the opinion that each and every recession since 1966, including the one we are currently experiencing was caused by a surge in oil prices. Now, those nice folks over at the Wall Street Journal have published an article providing me with a little bit of cover - perhaps I am not a fire breathing whacko after all.
I think we are in the storm that will last for the next 10 or 20 years. A "storm" I define as an ongoing contraction of REAL economic output that will have some very hard timing to predict, as well as the rate of change, but the ultimate outcome is not much in doubt to my mind. Whether deflation or hyper-inflation (either not enough money, or too much money) our lifestyles won't know the difference.
Unlike the "doomers", I don't believe the world is going to end. Many people here in Tennessee are already making significant adjustments in their lives - there is a brisk market for heirloom vegetable seeds, laying hens, milk goats, miniature cattle, etc... (just go to nashville.craigslist.com or localsalesnetwork.com and look at the ads for this stuff if you aren't interested in attending this weekend's farmer's flea market). SOMEBODY is doing some sort of adjusting. Mostly these are folks that are on SNAP, formerly known as Food Stamps, and have figured out that they need to stretch their food budget by growing some of their own. Rather than being seen as a bad thing, I view this as VERY hopeful and empowering.
Most people have lost all of their financial assets, or are very close. They will not be making any kind of comeback any time soon. If you still have some financial assets left, you had better become an excellent interpreter of your environment. Those that interpret their environment incorrectly will be joining the masses in their poverty. For better or worse, you will know soon enough how well your interpretive skills were operating.
In fact, the only folks that have not lost a big portion of their financial assets are those whose primary asset is a pension from a government source.
And therein lies the rub.
In the 1980's corporations got away from pension liability by dropping benefit plans in favor of contribution plans like the ubiquitous 401k. Not so governments. In fact, in order to please the voters of the public pension systems, politicians continued to increase the pension benefits of these unions members - with a concomitant increase in the liability of taxpayers. Taxpayers, who were themselves losing these self same benefits at their private employment.
And now the die is cast. The fates of these 2 competing and intertwined interests is ineluctable.
The Tax Revolt Cometh. This won't be easy, or quick. That is not how our system works. Our various governments will continue their extortions for as long as possible. The best thing that YOU can do for yourself is: Don't put your foot down. Property taxes and state income taxes will be the extraction point. You CAN vote with your feet and not live or own a home in the places. Already stuck? Don't do anything to increase your exposure... like buy a home.
I have been pounding away at this for years, and by looking at the blogsphere it would appear that this issue is coming into its own this very moment. Everybody is writing about it. It won't be long before it breaks into the mainstream media, and from there will come the public reaction.
Mentatt (at) yahoo (d0t) com
Posted by The Short Story Man at 7:32 PM