We could argue around the edges of your handicapping, but my numbers would be pretty close to yours.

The one thing I'd point out is that the timing and extent of the deleveraging is heavily influenced by recent gov't actions. So I'd boost the intervention weighting because of that.

Okay, so what will your argument be when the price goes below the marginal barrel? In my less than humble opinion it is the Feds who started this short squeeze in oil and are maintaining the downward pressure. A little bit of leverage in derivatives goes a hell of a long way. Moreover, we have no idea what agreements were made with other NOCs. There's a strong rumor going around that the Saudis are playing ball because they're terrified of Obama getting elected.

When the price suddenly snaps back we will have our answer but most people will either cry manipulators or supply/demand. Problem is, gov't data is no longer credible. All trust is being lost in these massive interventions. As Paul Volker stated on 9/5, "the markets are broken."

I guess after Fannie Mae/Freddie Mac there is nothing the business class will not allow the government to distort to protect their larger interest in control.

Back in the days of the civil rights protests, blacks organized boycotts of mass transit lines to protest segregated seating. Though they were key customers of these companies and the boycotts hurt, they did not succeed. Presumably the businessmen who owned the transit lines were willing to bleed in the short run rather than face the prospect of operating in a South without a caste system.

Now just to show the South in a more positive light while reinforcing the social power of American business, contrast this with what happened in Houston. When the business elite learned that a campaign of civil disobediance was being organized to break segregation at the lunch counters in the downtown department stores, it moved to disarm the conflict. Oveta Culp Hobby, who served in Eisenhower's cabinet, owned the Houston Post, and represented an ostensibly progressive image that Houston aggressively cultivated, spearheaded an effort to keep news of the protests out of all Houston media. Meanwhile the businessmen negotiated with each other to terminate Jim Crow. Their fear was not the protestors, but the possible actions of white racists - the Frankenstein monster they had created and exploited for generations. Houston went from Jim Crow to integration in a smoke-filled room. It could hardly have presented itself as Space City, home of the future, otherwise.

Short-term control versus long-term survival. That is the choice facing our owners, and the decision could still go either way.

The currency is strengthening because the amount in circulation is down. There is a big shortage of cash out there. And since the government+Fed is refusing to print, treasury borrowing is crowding out everyone else.

It is ironic, but if at this point only the Sovereign wealth funds have money and lots of it. They can buy anything they choose - and are choosing to buy nothing but treasuries.

If the Fed is to avoid Great Depression II they must lower rates now and by a good margin. IMO further significant lowering of rates is unlikely - because someone wants to take the dollar up (I can speculate on the reasons - but shall refrain from doing so)

The irony is that the one thing the US can do is create money and is choosing to destroy it. The US economy is basically a service economy (to quote Leanan - doing each others laundry) and the economy needs money to function, because people like to get paid in cash for their services.

Are we going to a barter system as the depression hits :-)