Sunday, December 13, 2009

Data, The War

WOW!

Just when you thought inventories of petroleum products were almost overflowing, you get data this week that 12.7 million barrels of petroleum products & crude were drawn down. Still, consumption of product, other than gasoline, is down big. This does not support the goldilocks scenario portrayed by the U.S. equity market, and a warm winter would likely portend a significant decline in distillate, and crude Oil, prices - or at least I think so... that is, unless you have a few more inventory reports like today... that would be a game changer.

I want to be long Oil for delivery out a couple years, but I really think that the probability is with lower, not higher prices, in the near term (not calculating the effects of a dust up with Iran).

Imports continue south in a big way, and demand for petroleum products is just awful here in the U.S.. That does not speak well for the near term economic picture. On the other hand, China has increased imports faster than we lost them... but, I would not put a great deal of stock in the "Chinese Miracle" just yet. They do, however, seem more interested in buying Oil than Gold.... and they have the cash....

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It is no secret that I am a Right of Center Libertarian type, and a Registered Republican - and I am COMPLETELY opposed to ANY (further) involvement in Afghanistan and Iraq.

I am not alone (from Jack Hunter at American Conservative):

For eight long years under George W. Bush, conservatives endorsed a don’t ask, don’t tell foreign policy–they did not really ask why their country was at war and Republican leaders did not tell, or bother, Americans with any of the gory details. Missions were accomplished, we fought them over there so we didn’t have to fight them here and troops were supported by simply supporting the wars they fought, with little to no dissent. But why were we fighting? What was “victory?” How many had to die? What was the cost? Conservatives did not ask-Republican politicians did not tell.

But some Republicans are finally asking. Regarding President Obama’s decision to escalate the war in Afghanistan, columnist Reihan Salam writes: “Rep. Jason Chaffetz, a Utah Republican known for his independent streak, has made a conservative case for withdrawal.” Says Chaffetz: “Our military is not a defensive force for rough neighborhoods around the world. They are trained to be an offensive, mission-driven military force to protect the United States of America. They are not trained to be nation builders or policemen… If our mission in Afghanistan is simply to protect the populace and build the nation, then I believe the time has come to bring our troops home.”

Is Chaffetz’s position on Afghanistan a sign of things to come? Salam thinks so, writing: “my guess is that by the 2010 congressional elections, dozens of Republican candidates will be doing the same across the country.”

We can only hope. As a conservative, I have long found it perplexing that to a large extent the American Right has been defined by its enthusiasm for going to war virtually anywhere, for virtually any reason and often for no good reason.
How's that for a candid assessment?

This would be an excellent time to start bringing service folks back from all points on the globe.

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The U.S. wealth and elite class, DOMINATED BY THE LEFT (Wall Street is NOT REPUBLICAN! It is DOMINATED by GOLDMAN SACHS, the ANTI-CHRIST, and they don't get more liberal-democrat than GOVERNMENT SACHS!), has never been so blind (IMHO) as to how bad conditions are for the "Reagan Democrats" and Small Biz Republicans on Main Street (they pretend to give a good fart about the people that are so far down and out there is no shot in h*ll of improving their lot in less then 3 generations, but the people that actually get up every morning and try to do the right thing? They dismiss them as a "bunch of nose picking, gun toting" rednecks, white trash, rubes...) and I fully expect over the next 5 years or so that economic conditions will deteriorate badly. As I have often said, I can't time my toaster oven, so don't expect me to give you any kind of firm time line - I will demure - but I give the outcome a virtual certainty. (I give it a 55% probability of a hyper-inflationary blow off, a 35% probability of a deflationary collapse, and 10% Armageddon/No problem/standard stagflation.)

I do not for 1 SECOND believe that the U.S. will reduce its spending profile - neither for social programs NOR the military budget. It then follows that the system will go Chernobyl at some point... and if you really want to time that point? Follow Oil imports, inventories, and production.

I am not hoping for or wishing for this... this is just what the data says to me.






24 comments:

Anonymous said...

It is interesting that no matter how hard we try, it is next to impossible to predict markets. As soon as something happens, all the participants react continuing to obscure an obvious choice. This seems to be fundamental. If things were predictable, everyone would win. I've been thinking about this for a while. Your 55%, 35%, 10% scenarios just brought it to mind. Interesting.

Regards,

Coal Guy

Jacob Gittes said...

Greg,
Great post. I've been a right-of-center Libertarian - maybe I still am, but I don't care so much anymore.

We can't time the markets, but we can predict,with certainly, that a focus on the family, local community, and local markets and resilience will pay off in many ways, no matter what happens.

That is, even if things weren't going to implode or explode, reducing our reliance on monopolies, oligarchic large-scale systems, and corrupt national governments will ALWAYS provide some kind of very positive return, even if "only" psychological, spiritual, and social.

But... aren't those the greatest goods, anyway? Considering the likelihood of a real catastrophic outcome, such changes in our lives will likely be necessary for survival, and definitely necessary for a life that is worth living.

Kudos.
Be well... And I'm still looking for work doing editing or analysis for anyone out there in the Transition Towns movement, re-localization, alt energy, peak oil, etc. Yes, I have a job. I also run my own side-business, but wish to get involved in "bigger things." (Is this comment now considered SPAM?)

Abraham said...

I like to remind people that the Iraq Quagmire is a Republican project. No mistake that the Resolution came up for a vote less than a month before the 2002 election. I still carry around copies of the vote in my briefcase.

In the House 97% of Repubs voted in favor. 61% of Democrats were against. In the Senate 98% R's in favor and less than half of Dems, 43% to be exact, in favor.

Repub president, Repub Congress, Repub war. I was against it from the beginning. People in pickup trucks with American flags spit on us and gave us the finger. Now that is patriotism!! Palin voters more likely.

http://en.wikipedia.org/wiki/Iraq_Resolution

I too am amazed that so called "conservatives" would shill for the use of "preemptive" force in other countries. That's why I'm careful to call them Republicans. I'm more conservative than most Republicans and I'm from Massachusetts and work in Cambridge sometimes.

A Quaker in a Strange Land said...

Abe:

I was NEVER for the Iraq war. I feel even less enthusiastic for Afghanistan. Forget all of the complicated political BS - War in the historical sense cannot be won in either location, and a political solution from within is just as unlikely. I would not waste a single American Life or US$ anywhere in the Middle East.

But what do I know.

Our system is really, really on the brink - wasting resources on people that can't or won't save/help themselves abroad is just absurd when we have so many here in the U.S. that won't save/help themselves.... Cause they are too busy watching "Nancy Grace".

bureaucrat said...

A good point that reinforces why we're all here: oil rules the world. We are in Iraq because of oil, there is no real replacement for the long-chain hydrocarbons oil provides, and it is even a great indicator of how we are going economically. Oil has been in the $70-80 range and pump prices are mostly holding also. Yet demand for gasoline continues to rise. Economically speaking, we apparently have a lot of people driving in circles, or trying desperately to find work. We also have a lot of people like me whose paychecks haven't been affected, and are driving (and spending) as much as before. I still can't see what all the fuss is about the declining imports into the U.S. There is nowhere to store it. And the U.S. domestic production of oil is over 5.5 mbpd. It was under 5 a year ago. The Gulf is producing oil like mad .. after a long delay. Something may happen, but for now ... status quo.

bureaucrat said...

I was for the Iraq war for the first two years. I don't like the idea of dictators, and women and children being tortured. I could justify to myself the death of an 18 year old soldier in service to that cause. But who would have thought the Republicans (who ran that war) would try to turn it into a live game of monopoly and make $$ off of it? Sick.

Stephen B. said...

The Republicans can finally see that Iraq and/or Afghanistan is a bad idea now that a Democratic president is leading the charge there rather than their own boy?

OMG I'm *so* surprised..... NOT!

I agree too, great post Greg.

Donal Lang said...

Greg; as an European I'm not too knowledgable about the finer details of American politics.

So which particular detail of "bunch of nose picking, gun toting" rednecks, white trash, rubes.." isn't true? ;-)

A Quaker in a Strange Land said...

Donal:

For what its worth, I am the epitome of nose picking, gun toting, white trash... If you wanted to break my fingers just punch me in the nose... but folks like me that get up everyday, feed the kids, pay the bills, obey the law... not "rock stars"... just regular folks running small businesses... our Government has created a huge bureaucracy to serve the needs of people they have addicted to their various service. But the exponential function applies here, as well.

OUr system is collapsing under the weight of Social Security, Medicare, Public Employee Pensions, government worker salaries and benefits... we have become a nation that takes from the HAVE NOTS in an effort to give to the haves.

A Quaker in a Strange Land said...

AND our military budget

Donal Lang said...

Greg; your system is collapsing because of the bailout money given to banks to pay bonuses and so they can continue to gamble other people's money on stocks.
Its collapsing because GWB cut taxes AND started two wars, all at the same time.
Its collapsing because you've stopped making the stuff you buy. Its collapsing because no-one saves, but everyone spends; from rednecks to government.
Its collapsing because greed (for money, for food, for bigger cars and houses) has replaced the work ethic.

I say again; your medical system costs TWICE per capita what an European system costs, even though you've left out 30 million people! And medical bills are the primary reason for individual bankruptcy!!

Fix all the first stuff, and then maybe you can afford a civilised medical system - like, say, Cuba!

A Quaker in a Strange Land said...

Stephan:

All Republicans are not alike, any more than all Blacks or Whites are alike.

And even if they were, correcting a stupid policy, WHATEVER the reason, is the only valid option.

Bur:

I am absolutely, positively unwilling to sacrifice my son to protect "women and children" elsewhere in the world.

Americans just don't see the manipulation: Want to gain support for a stupid military excursion? Just claim that there is rape and child abuse and "we must put a stop to that"... over 50% of the American electorate are female - and that special interest group falls for that one EVERY TIME.

Sorry, you can't kill my son to save their daughter.

A Quaker in a Strange Land said...

Donal:

That is beyond Horse Sh*t. Worse, you know it.

Absent the bailouts, America likely would have made a stop in martial law. In my opinion, and I am NO Paulson or Goldman fan (somewhat of an understatement) Paulson's assessment was correct.

We were on the verge of world wide systemic collapse of the financial system last year, and the system is VERY humpty-dumpty like. There would be no putting it back together again.

While the bonuses and compensation might be disgusting, the bailout of less than $1T PALE in comparison to the $100T in total liabilities the US has, and the $300T the world has.

Come on Donal, you can work a calculator as well as me.

Donal Lang said...

But why was the bailout necessary? Because of US greed-culture by so-called bankers, just another word for gamblers. Its not banking to bet other people's money on zero sum games like the stock and commodity markets! And where were derivatives - bets on bets, invented?

Refute any detail of my posting and I'll respond in detail, but its all true as far as I can see.

If you start two wars, you don't cut taxes - you increase taxes to pay for it (or issue War Bonds). Or did GWB believe the Irqis would welcome him and give away all their oil?

And you don't make anything much. When the $ dropped I tried to find something worth importing. Nothing - its all made better and cheaper in China and Japan. As every American already knows.

And how long did you think the US could continue to borrow Japanese savings and Chinese profits before the shit hit the fan? And not borrowing to invest in infrastructure or manufacturing, but to blow on throwaway consumer goods and oil imports.

Now you're left with aging infrastructure, negligable manufacturing, your major industries (cars and houses) collapsed, and worse of all, an aging population that is still thinking 'entitlements'.

Who to blame? I'd say Reagan and GWB are pretty high on the list! Hard to slam Obama when he hasn't yet been there a whole year!!

A Quaker in a Strange Land said...

Donal:

The question is not germane to the conversation.

I too could go further back in history for root causes... but at that moment, if I were sitting in Paulson's and GWB's shoes... I would have done the sam thing.

Donal Lang said...

Hah! That's like having lung cancer and ignoring your 40-a-day habit for the last 50 years!

Give up the bad habits!

Anonymous said...

Donal,

Dubai just defaulted. Iceland defaulted. The UK, Ireland, Greece, the Baltic States and Japan are all on the brink. The list is longer than that. Are Ronald Reagan and GWB responsible for that too? This is a world-wide phenomenon. Wouldn't it be funny if the EU came unglued and the $US ended up the only major currency standing? It is not outside the realm of possibility.

Manufacturing is down in the US, but it isn't dead. There is still a lot here. More than the MSM would have you believe.

The US got into trouble long before Reagan. It takes a bi-partisan effort to make a mess of this magnitude. There is plenty to fix.

Regards,

Coal Guy

Anonymous said...

Greg,

The EIA data never adds up. The change in inventories ought to roughly track the sum of the two "Product stocks W/D of added" entries. It usually kind of does. Not this time. I think that some adjustment was taken based on some audit of inventories.

Regards,

Coal Guy

bureaucrat said...

There's a good chance anyone going into a military action these days is going to come out plenty alive. 57,000 Army guys died in Vietnam. Iraq is at only 4,373 deaths after 6 years. With every dollar that we spend for A++ emergency health care in war zones these days, the Army just doesn't allow their people to die anymore. :) Very often the rape/torture claims are real. And if it was your family being abused that way, even Mr. Hardheart Libertarian would pay anything to come to their rescue.

A Quaker in a Strange Land said...

Bur:

The catastrophic injuries that service members now survive are the untold number in that story.

Sorry. You can't maim my son to save their daughter. And I don't wish to maim my brother's, neighbor's or friend's kids, either.

bureaucrat said...

So how did you feel about them concentration camps in 1945? Do a cost-benefit analysis on them? Some things have to be above it all -- even above God. It's a miracle the founding fathers of this country managed to get anything done with so many concerned about how it would adversely affect them ...

bureaucrat said...

I'm afraid the atheist in me says preventing the average persons' pain and suffering till you can't prevent anymore is priority one for me, but, I don't have kids.

Anonymous said...

Love the Christmas spirit today!

Donal,

Been to your neck of the woods a few times and "picked" with the best of them.

" its all made better and cheaper "

I agree as anyone would that cheaper is correct,however, "better" is nowhere near correct. China particularly,has the worst,low grade garbage in almost ever product. Not that the US has standards much better in some things,but overall, the US has got China beat on quality. When US policy changes back in favor of homegrown products China will go to the way side in manufacturing. Who knows maybe the US will be an emerging market ( manufacturing ) again,one day. "American made" had meaning at one point,we will see it again. It is the American spirit that can not be matched! Anyone trying to get to America from their home country has it. A global idea with a place to practice.

B,

Your last comment on suffering is somewhat narrow. But that was the the idea when it was fed to you. Pain and suffering do not mean anything in regard to war. Only kill with Agenda, and no president is without blood on his hands, if you must place a face with the agenda. If that where the case we would adapt Africa,and not via Sally Fields.

Love talking about oil!

peace

bureaucrat said...

Talking about oil (and natural gas) is on hiatus while the amount in storage is so high. :) But it won't last forever ...