So what's next?
If, and its a BIG IF, my assessment is somewhat correct and Algeria or Iran (or both) join Libya then Oil is well above $150, at least for a while, and the U.S. economy gets smushed... along with the stock market, the housing market, the banks, employment... because the rate of change is simply coming to fast for these markets to adjust. Just think about what $150 Oil and 5% less of it means, for: FedEx, UPS, Ford, GM, GE, American Airlines, Boeing, etc...
I wouldn't buy a boat or a Winnebago at the moment, they will nearly free in the used market sometime soon... speaking of which... this would be an excellent moment to reflect on the theory that "the best things in life are free"...
The contraction in the economy this go around will be more dramatic than last time IF (BIG IF) the price of Oil stays high over a longer period of time. In 2008, Oil spent a few months over $100... this might be somewhat different.
The political ramifications of this are significant, too. Not just for Obama who simply won't survive it (unless the Republicans run Palin) but for all of the incumbent leaders in the West. The good news is that we can finally end the debate with the Keynesians and the Tax & Spenders... they are very dead in all of this - only adults will remain, although many folks won't be happy about it.
And this is just the warm up... cause if the Kingdom of Saudi Arabia goes - Holy Smokes! Oil could easily top $300 per barrel, with retail gasoline about $10 per gallon... think about that. Snap! The end of everything you know in a matter of days... this would be an excellent time to do that which you think you should, as there will be no more warning for Saudi Arabia's implosion than there was for Libya's implosion.
More soon.
8 comments:
don't worry Timmy says Central Banks Have A Lot Of Experience In Managing These Things:
http://www.zerohedge.com/article/geithner-says-not-worry-about-surging-oil-prices-central-banks-have-lot-experience-managing-
oOOo!
Good to hear from you.
That is just delicious, isn't it? WTF is up with these people?
Well, he is either nuts and believes it himself, or he is lying through his teeth and is nuts enough to think anyone else will believe him.
Either way the man is arrogant, misleading and dangerous in his narrative fallacies.
ANE = Available Net Exports = Net Oil Exports not consumed by Chindia
ANE were about 41 mbpd in 2005 and may be down to about 35 mbpd in 2011, probably trending down to about 27 mbpd in 2015.
So, a loss of 1.5 mbpd of global net oil exports from Libya would be on the order of 4.3% of ANE, based on the foregoing.
Government is a hallucination in the mind of governors... Geithner, et all are on the same dope, nothing will save them... not this time, this time IS different and they know it. Go ask Gaddafi.
All this isn't the end but it surely does feel like the end of the beginning. I've been thinking a lot about the first and last 15 minutes on the Titanic and today, those first 15 have just ended.
The million dollar question I have is how many minutes are there between this end and the beginning of the 'end' end.
Looks like I picked the wrong week...
Best,
Dan
I am wondering if the US situation will unravel as quickly as the ME is unraveling?????
Best, Marshall.
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