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
11 comments:
Perhaps the bloggers & mainstream media are writing more about "it" after so woefully underreporting the economic/energy situation that we were about to fall into. The public's 10-second attention span didn't help, but throughout the 2004-2007 period, CBS NBC and ABC CNN and Fox all fell down hard in neglecting to tell the public what was/is about to happen.
I'm sure Farmer Jeffords is enjoying all the pig shit and square dances that make TN such a delight to live in :), but there are a LOT of baby boomer children out there who even now don't realize that their urban-upper-middle class world of cool clothes, nice cars, big houses, lots of travel and enriching careers are hopelessly gone, killed by a future of debt obligations and wobbly energy. They deserved their chance to "live the 1990s" too. They are not going to change willingly. I've already noticed the graffiti along my train trip in Chicago has noticably increased. They are gonna get mad.
And as I've said before, the world isn't going to end with peak oil. But things are going to get more expensive, and certain lifestyles will have to be abandoned. Some may think that might be worse than the world ending. :)
I just watched the Obamaspeach and was struck by the ease with which he made to confilicting statements.
1. We got into this mess by allowing huge bubbles in consumer debt and housing to form and we can't let this happen again.
2. This recession is not the time to stop spending. Our economy depends on strong lending and consumer confidence.
Huh!!!
My new batch of fruit trees, berry bushes, grapes and potatoes arrived yesterday. I think it is time to get them into the ground.
All the gardening activity is a very good thing. It gets Americans re-grounded and may help in a food crunch.
However, even if everybody in the USA develops a green thumb, life will still be far far far from the technological utopia most of us have grown up in. The food self sufficiency ability still only puts us on equal footing with the peasants of the 12th century.
There is still a long long way down.
Utopia, like beauty, is in the eye of the beholder. Life will be smaller and more local and many will suffer greatly. Those of us with skill, will and land will do better.
Oh, and in regard to your war against the public employees (don't worry -- even dumb Mish hates overpaid government employees too), there was a time when government employees were not paid very much. They got their jobs thru nepotism, not civil service tests. They didn't see their govt. jobs as anything more than an opportunity to steal everyone blind. "If I'm not gonna get decent pay, I'll just get it another way." You ended up with a bureaucracy that was shitty, to put it mildly (Chicago, 1970s, comes to mind). Today we are indeed well paid with "modest" benefits, but in return, I think you'll agree, bureaucrats like the Navy seals rescue sailors pretty well, cops for the most part are not taking bribes on a mass scale anymore, and "customer service" is a reality at the Federal level and in city and state govt. too (at least here it is). But I know the Republicans always need someone to blame. Blame away.
Cheer up! The world is not ending, earlier generations survived to worst Crisis... this is a time for finding something non-economic to full fill your life style. The south of the world is getting the first months of the criss now. Merchandaising sales have droped 40%, construction 22%, unemployment (13%). The only thing one gets to keep are family, friends and education. LOL. Later, you build from there.
Besos y Abrazos, Francisca
Bureacrat says-
"And as I've said before, the world isn't going to end with peak oil."
Dr.Robert Hirsch says-
"As the report by Robert Hirsch - commissioned by the US department of energy - shows, the consequences of peak oil taking governments by surprise are at least as devastating as a smallpox epidemic. "Without timely mitigation, the economic, social and political costs will be unprecedented." Hirsch estimated that to avoid global economic collapse, we would need to begin "a mitigation crash programme 20 years before peaking".
Oh....and forget about Hirch's "timely mitigation".
We are doing exactly the opposite of timely mitigation. Oil exploration budgets are being slashed. The North Sea exploration activity is expected to be down 78% in 2009.
The combination of global financial crisis and throttled oil drilling may well build toward an oil price super-spike which could result in even greater damage than Hirch's worst projections.
Kathy!!
Keep it coming!
Anon @10:57 am:
We will be far better off than 12th century peasants because we know:
The earth is round, disease does not come from bad air or fog, and most of us can read and count - not so in 12th century ANYWHERE.
There will be no Utopia, just winners and losers. Life is like that, no?
The Greek scholar Eratosthenes calculated the circumference of the earth sometime the third centaury BC to with 99% accuracy and the Romans are well known for their universal hygiene, pottery and glassware. Nevertheless in the twelfth century AD kings ate on filthy wooden trenchers, bid not bathe, nor eat a balanced diet. The results would have been easily predictable to the ancients.
Apparently between the classical era and the medieval era something went horribly wrong.
Yes, Dan, something did go horribly wrong...
RELIGION, specifically those that came out of the Middle East, happened... and the rest, as they say, is history...
Post a Comment