101 comments on POLL: CLV08 went through $102/bbl..so, in the next 60 days, the front month price of CL will...
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101 comments on POLL: CLV08 went through $102/bbl..so, in the next 60 days, the front month price of CL will...
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So when will the massive increase in oil prices resume?
When the dollar starts dropping again.
Well, if you have several central banks selling everything and buying dollars...
The value of the dollar increased drastically during the Great Depression. As the money supply constricted, jobs were cut, and wages were reduced 25% to 50% across much of the economy. A dollar could buy a lot, but there weren't many dollars in circulation. My grandmother tells me of the years of barter when there was essentially no US currency in circulation in rural Mississippi.
Debt was a major defeating factor for many people. Family incomes plummeted. Prices plummeted, which sounds good. But their debt and payments stayed the same. Imagine most Americans maxed out on their debt today trying to cope with pay cuts and layoffs in their families.
If peak oil brings another depression, or if something else does, oil and everything else will be cheap for those who actually have money.
The Fed caused the Great Depression, or at least made it much much worse, through tightening of the money supply. Assuming they learned a lesson, and it wasn't done on purpose, it shouldn't pan out the same. Helicopter Ben admitted the Fed culpability.
http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=59405
I think if the Fed had played the same games our 1929 stock market crash would have already happened.
This has to be the single greatest myth told about the Great Depression --and mainly circulated by "privatize profits, socliaze losses" corporate socialists and pro-Wall Street revisionist historians.
The reality is almost the exact OPPOSITE: the Fed's (and Wall Street's) too-EASY monetary policies and extreme "hands-off" laissez-faire approach to regulation directly contributed to the Great Depression. Speculating on margin, the euphoric belief that the stock market would "only go up" and that stock prices "reached a permanently high plateau" drove stock prices absurdly high and eventually sowed the seeds for credit collapse (sound familiar --as in housing bubble?).
Had the 1920's-era Fed done it's supposed job ("taken away the punchbowl", reigned in stock speculation, heavily restricted trading-on-margin, raised bank reserve requirements, raised the Fed Funds rate early --well before the collapse), the Great Depression may likely never have happened, or at the very least, would have been much, much shallower.
Booms and busts (or "panics" as they used to be called) have occurred throughout recorded history, and this fact is the very definition of the "business cycle". There's no stopping them from happening altogether. About the only thing government *can* do about them is to implement policies designed to reduce the magnitude & duration and blunt some of the nastier social consequences; mainly regulation aimed at reigning in rampant speculation, credit/securities fraud, and reckless lending.
Unfortunately, what we have today is the exact opposite of that: government whose policies actually AMPLIFY boom/bust cycles and make them worse than they would otherwise be without government involvement.
ceiii2000, allow me to recommend some weekend reading for you:
http://www.amazon.com/Road-Serfdom-Fiftieth-Anniversary/dp/0226320618
http://www.amazon.com/Devil-Take-Hindmost-Financial-Speculation/dp/04522...
http://www.amazon.com/Irrational-Exuberance-Robert-J-Shiller/dp/07679236...
http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/09129862...
http://www.amazon.com/Greenspans-Bubbles-Ignorance-Federal-Reserve/dp/00...
Hey hey HARM,
I have to agree with you, but be careful asserting what caused the Great Depression unequivocally, historians are still to this day debating the reasons.
The similarities between then and now are pretty striking though. There was a huge and reckless boom in the economy, the stock market, and the creation of credit and debt. The economy was "globalized" or interconnected to a very large degree and there was a ubiquitous belief that the future would be bigger, brighter, and better than the present. People got carried away and then...
Something went wrong. The stock market crashed, people stopped borrowing, prices fell, output dropped, credit dried up, wages fell, people were layed off, banks failed, companies failed, and global trade barriers went up and trade went down. Then the situation exacerbated itself for several years. Coal consumption dropped by 30% peak to trough if memory serves.
This time it's a little different. But, like before we got carried away with a huge globalized boom driven by continuously expanding credit because we came to expect the future to always be better than the present so we borrowed heavily from that future.
Then something went wrong. Again the USA started it all off. We started two costly wars and then food and energy prices shot up and the subprime fiasco caused asset prices and debt to over shoot and then falter. Then credit dried up and banks failed. So far that's all we know of the story.
But, huge booms are followed by huge busts. A global recession at the very least, I personally think it will be the second great depression.
Looked at in from an economic perspective oil prices should be going down because the economy is contracting. On the other hand peak oil means that the oil supply isn't going to hold and prices should be going up.
It all comes down to rates of change. The question is which is going to contract faster, the economy or the oil supply? Is this just a pull back or the beginning of a larger trend? Sadly, I don't know. I do know that in the long run peak oil is going to be the more powerful force, but how long before that happens?
-Tim
Thanks for comments, Tim --point taken.
Unfortunately, I have to agree that we're probably not going to escape a long, deep recession this time around, though (peak oil aside) I'm not certain we're staring down GD2 just yet. This is the largest speculation-driven housing/credit bubble in my lifetime, and possibly since the Depression itself. With the stock market, USD and consumption going nowhere (except down) and most commodities in blow-off mode now, what else can come to the rescue? Like many here, I keep hoping there might be a boom in alternative energy (and I'd include next-gen nuclear in that category), but the P.O. clock is ticking, and there's not much political courage to go around these days.
"Interesting times" we're living in, for sure.
Within 3 weeks, but make it 2 instead. :-)
Soon enough. After the refineries come back online and China returns. By the end of September prices will be higher than they are now, and I feel a MASSIVE increase is in the cards until the end of the year.
China returns? Where did China go?
China is on vacation in the Bahamas.
The poster, eastender, I believe is referring to China's Olympics. Prior to the Olympic games, China was heavily importing oil and distillate. During the games, China greatly reduced their imports. They shut down factories. I am guessing, the Olympics were like a national holiday and that ports were slowed or shutdown as well. Now, China’s demand is coming back on-line.
Maybe not until after the Paralympics finishes?
No, she wasn't on the beach today
Ed
That's easy. Never. When McSame and the Holy Barracuda get to drillin' there will be ample supply to see us through till rapture time.
Perhaps price will start back up when some feedback loop starts to bite hard enough that the current trend is broken. As the price is destroyed, there will be many different incentives/forces that will result in production to decline.
The price of oil won't stop diving until the world economy pull our of ITS dive. When that will happens depends on how far the economy has to fall (may be years).