The Oil Drum

How many matches Bernanke has and his willingness to deploy them doesn't convince me of whether or not a fire will ensue. This is why timing is so important in order to avoid the downward momentum getting beyond the rate of helicopter deployment.

Compounding the credit bubble is the oil chicken coming home to roost and the general perception that we are 'losing the war', whatever that means. The future of both those aspects will not be altered in the public mind by throwing money about. False confidence, like any confidence, takes time to build. There isn't any - time that is.

I agree with you in the classic sense, but this is looking like 1973 all over again, but for real this time. Vietnam was about ego, and OPEC was arbitrary. Now its really about oil. Really about oil. Adding more money won't change the fundamentals.

Exactly. In the case of Bernanke's helicopter, there is only so much air as you go up in altitude. That's why they don't use helicopters to get to the space station.

In the case of the Debt engine, the 'air' is the Perception of Perpetual Growth. Banks loan money (supposedly) because you are going to be worth more than you are at the moment they loan the money. Sub-prime believes that the house will increase in value to cover the interest on the loan (the only real value to a bank: the principal is just a present number, whereas interest is Future Income).
It's all about the future, yet nobody is asking the children what they want. Most of them would say "I want Mommy and Daddy to play with me, to cook pancakes, and to get me a puppy." That's it. The wisdom of children is more than the Fed. Most of the things encouraged by the Fed's low interest rates are going to fail without cheap energy. Most of the policies of the Oil Men in Washington are working to MAKE THEM FAIL through HIGHER Prices for energy in order to line their pockets with all that cash that consumers SEEM to have, since they haven't slowed down on buying gas at 3 times it's recent cost. Why? Because they are so in debt to the banks to pay for the house they bought when money was easy to get.

Remember: Energy is the air for Bernanke's helicopter. If he gets cold and shuts off the fan (an old test pilot joke), his helicopter is going to crash on top of the refinery that is fueling his helicopter. It can't come down to a soft landing. Any reduction in altitude is a knife in the eye of Growth Perception, and any increase in altitude(lower interest rates) increases the costs of resource inputs, requiring higher altitude. He's reached the altitude ceiling of that helicopter and it's heading strait for a big, black mountain called Peak Oil.

And that, my friends, is beautiful prose for the day. Back to farming for me. The chickens are hungry.

"If you want Change from the corporatocracy, keep it in your pocket. "