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Goldman On Why The Fed Can't Have Its Low Unemployment, And Eat Cheap Oil Too
Jan Hatzius' economic team finally comes out with a report that bears presenting as it aptly discloses one of the core conundrums facing the Fed: you can have low unemployment (eventually... courtesy of many years of ZIRP and QE in an environment of "fiscal adjustment", or Goldman's term for Congressional "austerity"), or you can have low gas prices. But you can't have both. To wit: "The combination of tight energy markets and high unemployment poses a dilemma for monetary policy. If policy is kept easy to boost growth, unemployment will decline but the oil market is at risk of overheating. But if policy is tightened to confront the pressure from higher oil prices on (headline) inflation, unemployment is likely to remain far above desirable levels for a long time to come." And while the price of gas can be (very briefly) controlled by various volatility enhancing margin moves by the exchanges (which for those confused are nothing but self-reinforcing loops - increased vol leading to a margin hike, leads to more vol, leading to more margin hikes, etc). Too bad the CME can't just lower margin on unemployment to -100%. But it can't. Which is why very soon the Fed will be forced to admit to the whole world that "ultimately, a return to equilibrium in both the oil and labor market is likely to require an increase in the real price of oil. In theory, policymakers could react to this by targeting either a combination of temporarily higher headline inflation with stable core inflation, or stable headline with lower—and in an extreme case negative—core inflation." And here Goldman throws a stunner: when debating the implications for fiscal policy (we all know what monetary policy will look like: QE 3 through N), the firm proposes the following: "one complement to a low interest rate policy could be a higher energy tax. If one believes that higher real energy prices will be needed in coming years, an energy tax would promote that shift and also capture some of the surplus that would otherwise have gone to foreign producers." Is the government about to unleash some EPS destruction in the E&P and refining space? It appears Goldman has already given the green light which is really all it takes.
Full Hatzius/Tilton note:
Monetary Policy When Oil Is Scarce
- The combination of tight energy markets and high unemployment poses a dilemma for monetary policy. If policy is kept easy to boost growth, unemployment will decline but the oil market is at risk of overheating. But if policy is tightened to confront the pressure from higher oil prices on (headline) inflation, unemployment is likely to remain far above desirable levels for a long time to come.
- Ultimately, a return to equilibrium in both the oil and labor market is likely to require an increase in the real price of oil. In theory, policymakers could react to this by targeting either a combination of temporarily higher headline inflation with stable core inflation, or stable headline with lower—and in an extreme case negative—core inflation.
- The higher headline/stable core combination is likely to be much less painful for economic activity. Moreover, if long-term inflation expectations remain stable, the “sacrifice ratio”—the ultimate output loss needed to bring inflation back down—after real oil prices have reached equilibrium levels is likely to be negligible. Should inflation become embedded in higher inflation expectations, the sacrifice ratio would increase and tighter monetary policy may become unavoidable—but we see no evidence for this so far.
- One common objection against a low interest rate policy in response to a rising oil price is that it will shift the real income distribution from lower- to higher-income households. However, the employment opportunities of lower-income workers are far more sensitive to overall labor market performance, which is likely to be significantly stronger under a low interest rate policy.
I. Monetary Policy When Oil Is Scarce
Crude oil prices have eased over the past few weeks, as our commodity strategy team had anticipated. The July Brent crude future stands at $110/barrel as of this writing, down $15 from the late April peak. Likewise, gasoline prices have fallen about 40c/gallon.
But that does not mean that the threat from higher oil prices to economic activity and inflation is behind us. For one thing, prices remain significantly higher than they were six months earlier, and our analysis still suggests a negative impact on growth in the next couple of quarters even if prices stay near current levels. Moreover, the fundamental story of increased oil scarcity is unchanged, and our commodity strategists now see distinct upside risks to their current forecast of $120/barrel for Brent crude by late 2012. So the impact of scarcer oil and higher oil prices on
economic activity remains at the top of our list of worries.
Oil Scarcity Complicates Policy
We have argued repeatedly that there is still ample slack in the world economy. Despite rapid growth that has brought output near potential in many emerging markets, more sluggish recoveries in developed economies have kept the global output gap in the neighborhood of 3%.
Nowhere is slack more visible than in the US labor market. At present, the US unemployment rate stands at 9%, the highest level since the early 1980s other than the last couple of years. Moreover, the evidence suggests that most of the increase in the unemployment is due to cyclical weakness in the economy rather than “mismatch” between the available workers and the available jobs.
At the aggregate level, the US capital stock also seems relatively ample. Vacancies in the residential and commercial real estate sector are high, and utilization in most of the service sector also remains below average. Exhibit 1 illustrates a series of capacity measures in different sectors of the economy, with the right-hand column expressing these in a normalized format (standard deviations from average).
However, capacity in some areas is a lot more strained. Most significantly, the global oil market is very tight. Exhibit 2 shows the estimates from our commodity strategy team on the actual production and production capacity of crude petroleum worldwide. They estimate that effective spare capacity will be exhausted at some point in 2012 (depending to a large extent on the availability of Libyan supply).
Exhibit 3 shows how unusual the current combination of low (US) labor utilization and high (global) oil utilization is by historical standards. For comparison purposes, we express the US labor gap and effective spare capacity in oil production in standard deviations relative to their historical averages. The US labor gap is two standard deviations below the historical average while oil capacity utilization is one standard deviation above the historical average.
This stark contrast in resource utilization between different factors of production is problematic from the perspective of US policymakers. If policy is kept easy and this translates into above-trend growth, the labor gap will shrink but the oil market will overheat. This could put severe upward pressure on (headline) inflation and therefore downward pressure on real income, especially among lower- and middle-income households. But if policy is tightened to confront the inflationary pressure, unemployment could remain far above desirable levels for a long time to come.
The low rate of growth in oil supply is likely to exacerbate this tension in coming years. Our commodity strategists expect oil production capacity to grow only about 1% per year (see Exhibit 4). Meanwhile, the growth rate of “oil productivity”— dollars of real GDP per barrel of oil—has averaged about 2% over the long term (Exhibit 5). If these trends continue, then the supply of oil can support a global growth pace of only about 3% without generating upward pressure on oil prices. For global growth of better than 4%—consistent with our forecasts and the “consensus” outlook—oil productivity and/or oil production need to accelerate. The most plausible reason for either to occur would be an increase in real oil prices, as the charts make clear.
A “Crude” Framework for Policy Tradeoffs
We illustrate US policymakers’ dilemma schematically in Exhibit 6, which shows the equilibrium—defined as a normal level of capacity utilization—in the labor and oil markets as a function of the price of oil and the real interest rate.
Schedule L denotes equilibrium in the labor market, i.e. full employment. It slopes downward because a higher real interest rate needs to be offset by a decline in oil prices for overall economic activity to stay unchanged, and thus for full employment to be maintained. Points to the right of schedule L indicate a slack labor market (because of too-tight monetary policy and/or too-high oil prices), while points to the left indicate a tight labor market.
Schedule O denotes equilibrium in the oil market. It also slopes downward, again because a higher real interest rate needs to be offset by a decline in oil prices for full oil utilization to be maintained. Crucially, however, the slope of schedule O is steeper than that of schedule L. In other words, a given increase in oil prices has a larger effect on oil utilization than on labor utilization. The reason is that higher oil prices not only lower the overall level of economic activity but also induce some degree of substitution away from oil use and toward other factors of production.
Point A approximates the current situation. The oil market is in (uneasy) equilibrium but the labor market is clearly well below full employment. Labor market weakness gives the Fed an incentive to lower real interest rates—e.g., by keeping the funds rate lower for longer than generally expected or, more radically, by returning to quantitative easing. Over time, schedule O is likely to shift up to O’ if our commodity strategists’ view of the supply trend is correct. This increases the equilibrium oil price and, at a given real interest rate, the labor shortfall (point B). An easy monetary policy could help bring the labor market back to equilibrium over time (point C) but at the cost of even more upward pressure on oil prices and headline inflation. So what should policymakers do?
Core Deflation Is a Very Painful Way of Raising Real Oil Prices
Ultimately, the only way to bring both the labor market and the oil market into equilibrium is likely to be through a further increase in the real oil price. This would presumably increase oil supply by making exploration and production more attractive, and reduce oil demand by increasing energy efficiency.
Real oil prices can increase in one of two ways. Either the nominal price of oil rises, or the nominal price of everything else declines. Put differently, policymakers could react to oil scarcity either by accommodating higher headline inflation for a time while trying to keep core inflation on target, or focus on keeping headline inflation at target while pushing core inflation much lower. Neither path is particularly pleasant, since a relative increase in energy prices implies lower living standards for energy consumers. The question for policymakers is then how to minimize the costs of the adjustment in relative prices.
As long as long-term inflation expectations remain stable, there is a strong case for facilitating the adjustment via temporarily higher headline inflation instead of lower core inflation. If inflation expectations are stable, the “sacrifice ratio”—the output cost of bringing inflation back down to the target—after oil prices have reached their equilibrium level is likely to be quite low. In contrast, a policy that focused on keeping headline inflation at or below 2% would almost certainly be very painful. This is because of downward price rigidities that make it costly in terms of output losses to push core inflation or wage growth too close to—let alone below—zero.
If higher headline inflation gets embedded in longterm inflation expectations and higher nominal wage growth, however, the cost of a loose policy rises significantly. This is because the “sacrifice ratio” for bringing inflation back down again would then increase substantially.
Fortunately, there is little sign that the oil price increases to date have led to a serious increase in inflation expectations. This is shown in Exhibit 7, which plots two key measures of long-term inflation expectations: the 5-year forward breakeven inflation rate discounted in the Treasury bond market and the 4-9 year 1-year forward inflation expectation of consumers according to the University of Michigan consumer sentiment survey. Both measures are close to their averages over the past decade.
Our conclusion is close to the bottom line from our analysis using our version of the so-called Taylor rule. This says that in the anchored inflation
expectations regime of the past 25 years, increases in oil prices are more likely to lead to a cut in the funds rate—i.e. an attempt by Fed officials to loosen financial conditions—than to a hike.
Implications of Low Rates for the Income Distribution
One common objection against a low-interest rate policy in response to a rising oil price is that it will shift the real income distribution from lower- to higher-income consumers [our emphasis]. And on the face of it, there is some evidence for this contention. According to the
Labor Department, the bottom 20% of the income distribution devote 4.6% of their total spending to gasoline purchases, against 3.5% for the top 20%. This implies that a 10% increase in gasoline prices cuts about 0.1% more from the real income of lower-income households than higher-income ones.
However, it is important to evaluate the effects of low rates not only via the impact on oil prices but also via the impact on the labor market. This is because the costs of keeping unemployment higher for longer—or in terms of Exhibit 6, staying at point A or B rather than moving to point C—disproportionately fall on lower-income workers. Exhibit 8 suggests that an extra 1 percentage point of unemployment among college graduates implies about 3 points of extra unemployment among those with less than a highschool education. Because their fortunes are so sensitive to overall labor market developments, we estimate that it takes a drop of only about 0.1 percentage point in the aggregate unemployment rate to offset the impact of a 10% rise in oil prices on the income distribution.
This suggests that the commonly heard argument that lower-income workers as a whole are hurt by a policy of keeping interest rates low in the face of higher oil prices is somewhat misleading. With no change in jobs or wages, higher oil prices clearly do hurt real incomes—more so for the typical lower-income household. But insofar as lower rates bring about labor market improvement, this will lead to significant gains in real income for a subset of households drawn disproportionately from the lower end of the income distribution.
Implications of (and for) Fiscal Policy
Policymakers’ range of options for dealing with underemployment is limited not only by the tight oil market, but also by government finances, which are on an unsustainable path. The US requires a large fiscal adjustment which will impose a meaningful drag on growth in coming years and exacerbate the shortfall in labor demand.
In this context, one complement to a low interest rate policy could be a higher energy tax. If one believes that higher real energy prices will be needed in coming years, an energy tax would promote that shift and also capture some of the surplus that would otherwise have gone to foreign producers. (In the first quarter, US household spending on energy goods, mostly gasoline, was $70bn higher than the 2010 average—a run rate of 0.5% of GDP.) Higher energy taxes could either be offset by reductions to other taxes, or used to help reduce the federal deficit. In any case, whether it occurs through energy taxes, other taxes, or spending cuts, fiscal adjustment will only reinforce the case for a long period of easy monetary policy.
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Man and I thought the Fed ate iPads! Thats just gross eating oil too!
In all seriousness though, I do think the scarcity of oil is a fundamental game changer for humanity. I cannot imagine the destruction that humanity must see in the next fifty years. Its either we destroy the earth and suck it dry of natural resources or we destroy the population and make things self-sustaining once again. I fear we and humanity will do both. I chose not to bring a child into this world for that reason. Let the uneducated proletariat breed and bring their children into the destruction my generation's parents and forefathers have caused. My generation as a whole will continue kicking the can down the road, so to say... I can't say that I'm too proud of my generation either.
Foxconn confirms 3rd death at plant linked to iPad
http://www.reuters.com/article/2011/05/22/us-foxconn-idUSTRE74L2IP20110522
I can't wait until the world is full of even more uneducated, drooling tards. Would you like EXTRA BIGASS FRIES?
The idea of getting a handjob at Starbucks sounds pretty cool. I can't believe you like money too. We should hang out.
Oops Mish hates us :(
Then WHY do we make the stupid laws that allow them to breed unfettered? We're ENCOURAGING them to breed like rabbits...I don't get it...why? For the votes? They sure as hell don't pay any appreciable taxes.
Is not every dime spent on a food stamp or social program adding to GDP? What about prisons?
Are you sure we havn't tried to acquire some form of immune deficiency for third world population control?
In that case, the government should just mail out checks for $1 million to every American so we can boost GDP.
...
...
"the scarcity of oil is a fundamental game changer for humanity."
YOU DIPSHIT! PEAK OIL IS A FUCKING SCAM!
~O~
Yes.
There are unicorns in the middle of the planet who eat magma
and poop out oil. As long as those unicorns never die off, the world
will always have an unlimited supply of oil.
What could be safer and smarter than sucking trillions upon trillions
of cubic feet out of the middle of the planet???
Yes you're right. Everyone panic! There is no more oil!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!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Let's ratchet up the price. Shall we Dipshit?
You realize there is a difference between "Peak Oil" and "No Oil"?
Right right?
Yes, false scarcity leads to bigger profit margins, but I'm going to
bet on the fact that Earth's oil can is less than half-way full.
I think your writing style would be more awesome if you lead with an insult,
put an insult in the middle, then and insult near the end
and finish with a Hiaku.
Exactly! Some of us aren't so short sighted as that guy to think that there will be plenty of oil many generations into the future. Some of humanity truly does care about the long term survival and thriving of life on this planet and oil may in fact be necessary for many years to make a transition away from oil dependence. We've only been sucking the tit of mother nature for a few years and we've nearly sucked her breast dry... It takes millions of years to replenish...
So climate change is human caused and not solar related also?
Look, the fact is that carbon is the most abundant element in the earths crust.. are diamonds dead dinosaurs? or algea?
http://freeenergynews.com/Directory/Theory/SustainableOil/
http://www.google.com/search?q=russian+abiotic+wells&sourceid=ie7&rls=com.microsoft:en-us:IE-SearchBox&ie=&oe=
TPTB WANT high oil not cheap oil.
Okay, as soon as oil reaches $200 or $250 a barrel, it might be economically viable to invest in the infastructure and technology necessary to produce Abiotic Oil in a sufficient enough quantity to compensate for the decline in Middle Eastern production. I'm sure we have another 5 or 10 years. We'll only need 100,000,000 barrels a day by then. That's a brilliant solution.
The world will never run out of oil. It will run out of oil that you can afford to buy in order to ship or fly stuff half way around the world. What we have already run out of is 50$ oil and probably 60 & 70$ oil. We might have some more 80$ oil left. Rest assured that before long we will be out of 100$, then 150$ oil. That's when "Necessity is (and will be) the mother of invention."
It's a simple concept.
The International Energy Agency along with numerous others agree that world oil production peaked in 2006 around 86,000,000 barrels a day. We will never pull it out of the ground that quickly again because it no longer bubbles up out of the ground in Pennsylvania. We have to scrape it out of sand and burn it out of rocks. We get excited about oil that is three miles deep off the coast of Brazil. None of that oil gets to market quickly or flows as easily to the refineries as it does in the desert a few miles from a waiting tanker.
World oil demand is expected to reach 89,000,000 barrels a day this year.
The back half of the peak is proven science. Once we are off the plateau, expect a 2% to 4% decline in production every year.
Simple supply and demand, Dipshit.
"We will never pull it out of the ground that quickly again"
Ok, dipshit. Maybe you didn't watch the underwater cameras that were pointed at the BP wellhead in the GOM. I'll assume you did not see that evidence. Just to clue you in, the pressure was so high they couldn't cap it for months.
You're pretty fucking stupid, aren't you? How many miles did they have to drill under the sea for that oil to come out? The deeper they have to drill, the more it costs.
To echo Sun's post, the fact that they were drilling that far underwater in the GoM should be a huge hint as to the current oil situation.
Amazing how many words and graphs are necessary for them to say what has been said here by many for months and months.
The words and graphs are just part of the dog and pony show to try and make Goldman look like a legit investment bank. In my opinion they're just a bunch of wall street gangsters. How many of Goldman's clients declared bankruptcy after being sold a boatload of shitizzle?
Courtesy of Senator Levin's Report on Wall Street Crooks (page 394):
On June 18, 2007, Goldman sold $100 million worth of Timberwolf securities to an
Australian hedge fund, Basis Capital. Just 16 days later, on July 4, Goldman informed Basis Capital that the securities had lost value, and it had to post additional cash collateral to secure its CDS contract. On July 12, Goldman told Basis Capital that the value had dropped again, and still more collateral needed to be posted. In less than a month, the value of Timberwolf had fallen by
$37.5 million. Basis Capital posted the additional capital, but soon after declared bankruptcy.
Yes, of course. The cure for problems caused by government intervention is more government intervention.
The lapses in logical construction of these weekly pronouncements is staggering.
No need to discuss what happens to the rest of the economy when the price of oil increases artifically through reverse price controls, i.e. higher gas tax, increasing the rate of inflation in all gas/oil related goods, squeezing profit margins, and leading to the tried and true method of cutting costs --- layoffs.
its just like the Voters.. they voted last time and the time before to get this exact same result.. now they cant! Yep! you guessed it! they cant wait to Vote some more... like that will change anything! ever!
But hope springs eternal! or?.. you cant fix stupid! depends on your point of view!
"--- layoffs."
See my post above.
The thing that stays constant is that 84 million barrels will be pumped today that we will never see again.
Relentless, Day by day.
Since we are past peak, Everyday is a day squandered. No Long term plan being implemented.
Good economy, bad economy. 84 million bpd gone either way.
The candle burns down. And we, in the mean time, are doing nothing long term about the darkness. We feel prould to scrap a little dripped wax from the sides and put it on top, thinking that will help us.
Taking my grandaughter to the DC Zoo yesterday, Taking the Metro Blue Line from the southern end, Onto the Red line walking to the zoo.
We Need that simplicity to jump on a train ANYWHERE on our rail line and get to anyother city just as easily.
Mass Transit plans? forget it. They only TALK about bullet trains in the same manner that they talk about fusion.
ONE DAY......
Ya, Fusion is the energy source of the future and always will be. Same can be said about Mass transit.
Just ONE example.
WE ARE PHUKED
There is no spoon.
So I am eating my Fruity Pebbles with my hand.
It's almost impossible to get them out from underneath my
finger nails once they've dried.
Try using your teeth and scrape them out. You'll also consume the dried feces that is caked under your nails but it will not harm your health to consume the same shit that you produce.
I'm sorry you didn't get raptured,
but why don't you fry the egg on your
face and make the best of it.
I keep my dried feces cakes in my arm pits,
and I only eat them on Canadian Frosting day.
Very clever. Can we call that peak dipshit? Or is your supply going to overwhelm our demand?
Can we be serious for a moment?
"Peak Nikola Telsa Blood" is a FUCKING POOP HOLE SCAM!!!!
There will always be a infinite supply of Nikola Tesla's blood!
Anyone who tells you other wise is a dipshit stick!
Another tax? Hmmm. And how much did Goldman give to the President Barry Soetoro campaign?
it will be a tax on the retial side only.. same as it ever was.. it is called.. or it should have been called! the stupid tax.. as it is the same ole' shit!
A better question is "How many elections will Goldman Sachs give to
the President Nobel Prize Weiner?"
Who'ld a thunk it?"According to the
Labor Department, the bottom 20% of the income distribution devote 4.6% of their total spending to gasoline purchases, against 3.5% for the top 20%. This implies that a 10% increase in gasoline prices cuts about 0.1% more from the real income of lower-income households than higher-income ones."
These figures are misleading, lower incomes are hit much harder than Labor dept suggests, surely! Look out Walmart!
I will get flamed and junked beyond compare for the following...
The most sane thing the US can do is to implement a carbon tax that is also applied to imports. There must be a corresponding reduction in payroll taxes to reduce the regressivity.
Why would it make sense? It would make lot of Chinese imports uncompetative. Per pound of carbon, the US is the most efficient manufacturer of steel. It would exploit the less carbon intensive NG reserves that the US posseses. It also exploits the internal lines of communication that the US possesses, an unmatched freight rail system.
A gradually phased increase in the Carbon tax would also alternatives more viable without directly subsidizing them, i.e. the market decides the winners. The government is determining the loosers not picking winners....
make the chinese products uncompetitive? why? with all due respect to chuck schumer if that was the goal you dont built up china in the first place...
"but you cant have both" - try telling it to the masses...
Everything you say makes sense to me... I would love to buy you a bottle of pinot noir...that a friend I knew long time ago when we were in University, and who've I've lost from view and rediscovered forty years later, makes in California. You are the first educated and seemingly, I say it in all humility, as I don't consider myself one,intelligent american who understands energy and the 'international labor arbitrage' trap.
Kudos to you...
I consider myself flattered and I do have a weakness for Pinot. Partial to Burgandies though, make mine a Charmes-Chambertain... :)
But seriously, a carbon tax is a no brainer, no cap'n trade bullshit. It rewards efficient producers and users, it weeds out the marginal. A carbon tax that allows the reduction, nay, elimination of payroll taxes is a boost for employment. It is straightforward to apply, no need for an over-reaching bureaucracy.
I disagree, Mr. Gore, but I will not junk you.
I don't mind disagreement, but what do you propose?
Well, at this point any tax levied goes to a junkie. I propose SOME FUCKIN' FISCAL RESTRAINT prior to any "implementation of ideas". Having said that, some things I've thought about: Semi annual National tax exempt Federal lottery(10% to the winner's home state, 40% to big brother, 50% to the winner). Maybe a look at international financial aid sent abroad? Remember the WTO loves the $$ support, but oil's thicker than dollars, do you really think that'll(carbon tax to benefit the US)last, what? 5 minutes, maybe 10 minutes, before the cartel hikes barrel prices? How many Nat Gas converter kits are available to negate instant $25 dollar a gallon gasoline?
Let's talk real numbers....
What fraction of the US budget is related to the securing of oil? 300 billion per year is a reasonable estimate. Maybe, just maybe, the price that the US consumer pays should reflect that hidden cost. If you want to have 2 wars, have a draft instead of funnelling money to private contractors at 7 times the cost. I don;t like the idea of "private mercenaries" playing a role in National security. Any glance at history reveals this to be a bad idea.
Fiscal responsibility, lets go...
1) Claw back SS if mandatory IRA/401-K withdrawals exceed $75,000 pa
1a) Raise SS/Medicare eligibility ages...
2) Accept that Medicare cannot underwrite certain medical procedures. Sorry, but getting a quadruple bypass at 82 costing $400,000 when you paid in a total of $20,000 just doesn't cut it...
3) Tax rent income at a higher rate than productive captial. Encourage active capital formation.
4) Tobin tax, to discourage short term non-productive transactions.
5) Phase out income tax up to a certain level, replace with National Sales tax to discourage mindless consumption.
6) Raise the cap on SS contributions currently $106,000, lower the witholding..
7) Eliminate corporate welfare for Big Ag, in general eliminate most Ag subsidies.
8) Eliminate Ethanol tax credit
9) Claw back the true cost of the financial bailout...
10) Eliminate the hidden subsidies the trucking industry recieves. Make them pay for the damage they are responsible for.
Just a few ideas... some better some worse...
What will happen is that congress will raise new taxes and not cut any of the old ones.
Do you have any experience in the tax industry?
I cannot be held responsible for the behaviour of others. If these people are the choice of the American voter, and they fail to hold them accountable, what can I do. I was requested to come up with some fiscal sanity....
The tax code has to be scrapped. There are too many provisions, loop holes, special cases, riders etc... Too many people and entities are subsidized in the tax code. It is not about who pays, it is about how those that don't pay don't....
The carbon tax is an excellent idea. Steering towards something is almost always bad government policy designed to help the profits of one corporation or another. Steering away, however, is just intelligent governing.
Great post.
I have always believed that government policies should like behave like that. It is not easy to agree on what it right and how to get there, but a consensus on what is wrong is easier to achieve.
You need to let Them achieve absolute control of the supply and distribution of energy producing natural resources, and the reserve currency with which they will be transacted, before you ask Them to dictate the affordability of using those resources.
You'll have to be patient.. let the emergers emerge.. enjoy the float for a while.. then you can happily collect the value added Utopian peace dividend ever after.
LOL, your answer for corrupt and incompetent statism, is for more corruption and statism. Typical statist.
And your answer is Somalia....
Anarchy != Chaos
If you can't keep up, take notes: http://pixel420.com/pixel420/stateless/
Give me a comprehensive list of those sucessful societies that you would classify as Anarchist (in whatever reasonable flavor you desire)...
One more time. If you are looking for CHEAP mountain house, load the freaking boat. I share this because I know you folks are just as bad as I am. Love me ZH brothern
http://www.costco.com/Browse/Product.aspx?prodid=11539429
Shockah. You can have asset and price inflation, or something else. For God's sake, somebody let Bernanke in on this. Benflation gots to know.
Jan Hatzius has to be the biggest idiot in the financial world. How many times has this idiot contradicted himself, been caught in a bold faced lie, or caught making statments that cost GS clinets millions in losses while these pricks collect fees and bonuses.
The FIRE world is just full of liars. Very easy to paint with a broad brush, because lying and deception are the core business and ethic values.
Hey! Hey!! NOW!!! Goldman Loves those Suckers! they make Bonus Time the Best! time!
Goldmans laid into financial speak the reality of why;
"Peak Oil = End Of Growth"
Simple as that. We have peaked world wide already. That means that there will be on the average less oil pumped per day from this point forward. Economy heats up, you hit your head on supply constraints. Price goes up. Demands drops.
Rinse, repeat. Only with a lower world producton each time.
Welcome to the Dim Ages.
The paradigm of endless growth must change, and along with it the monetary system which cannot live without it.
They're only about 5 years behind the curve.
It doesn't have to be the end of growth, but I think the current concept of growth is part of the problem, rather than part of the solution. If we can get off oil, then we don't hit the supply constraints. Having said that, we're talking 2 decades minimum, and more like 5.
In the meantime, recycling companies (mine the landfills), commodities, energy companies (all types), inflation hedges are the places to be.
Have you not been paying attention to ALL of Tylers GS posts?
It's ALL a fucking lie. Wake up dipshits! Goldman is manipulating you. Except when it comes to Oil, right Alice?
When it comes to Oil Goldman is tell the truth and nothing but the truth. What a smart group of ZHeeple.
Yes, because Inflation has nothing to do with it, right? You're an idiot, and should stick to dog groomimg and driving your Prius.
Foxconn confirms 3rd death at plant linked to iPad
http://www.reuters.com/article/2011/05/22/us-foxconn-idUSTRE74L2IP20110522
I believe they (Zimbabwe Ben) will resolve this in favor of lowering energy prices simply because high unemployment is more abstract to the electorate than high gas prices (which you feel every time you fill up) and the Fed would rather work with BO for another four years than Romney or a GOP candidate. It's hard to win a presidential election with high unemployment AND high gas prices, and I think they'll go for lower gas prices as a fix to get BO back in.
Summary: too cheap money make people poorer.
And people we so gullible and fell for it period and bought themselves that big house and crap and nothing to show for.
IT'S A MAN BABY!
http://www.youtube.com/watch?v=WgOIEGz7o_s
Goldman Sachs prefers market manipulation to free market solutions to the energy crisis. What else is new.
free markets mean win/lose. the squid prefers win-win/lose-lose.
The unemployed could eat oil. For a while.
To rebalance things.
"It puts the Castrol on the skin, or else it gets the hose again"
Hey, waitaminute...didn't Goldman become a "Bank holding company" in 2008 to get/provide them ample discount window cash? Hmmn. Do they want out of the Treasury buying biddness now? I guess I'm not following too well, why they'd comment on these truths. Credibility? Nahh, surely they know that's gone forever.
Win the War on Debt: 80 Ways to Be Frugal and Save Money...
http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/05/win-war-on-de...
None of the suggestions help with the debt problem. They do help individuals who follow them reduce their own problem, but the debt problem is still there, built in.
Better examples:
On the other hand, there is so much debt that we are fucked. I don't believe enough people can be persuaded to use cash.
Boy, what in THE hell are you talking about.
When you pay a bank debt using credit, the credit and the debt are destroyed. Both go to zero.
When you pay a bank debt using cash, the debt is destroyed and the cash is not. A temporary credit entry is created when you put the money into the bank and that is destroyed with the debt. The cash continues to circulate.
The treasury responds to demand for cash by creating more as necessary. If we all continue to use cash or increase the use of cash, then the debts will be paid off faster.
Think of it as reducing the fractional reserve multiplier.
HTH.
Another smoke screen.
Follow the link below to find out why the Hong Kong Mercantile Exchange must be seen and understood as an extension of the Chinese government and its long term goals, and consequently, why it will not help create an equitable or realistic price discovery mechanism for gold. Not for now anyway.
http://thesilvergoldhedge.blogspot.com/2011/05/why-hong-kong-exchange-will-disappoint.html
The unemployment benefits in place had better last as long as the Republican tax cuts have been in place. That's ten years and counting. You can look at the WRAL web site and see that in the state of North Carolina, only 2500 jobs were created last year. That's with the tax cuts in place, unaltered, for ten years. There are unemployed people down at the Raleigh capitol, listening to every word that comes out of the Republicans mouths.
All Congressional Republicans should be out looking for jobs in the US. Take Rupert Murdoch, Rush Limbaugh, Sarah Palin, Mitch McConnell, Paul Ryan, the ACORN pimp and prostitute, and show EXACTLY where the Bush tax cuts have created jobs. If you can't, you need to be called liars, to your face. Last November, I had a Republican candidate backed up against a wall, asking him over and over: the tax cuts are in place, WHERE ARE THE JOBS? he looked like a deer caught in the headlights. It ended when another Republican candidate walked up and engaged him in conversation. Oh, and did I mention the Republican candidate lost to a Democrat.
I don't want to hear austerity for me when the rich are hiring lobbyists and getting richer.
The tax part at the end makes no sense. If oil prices are raised via taxes, the producers don't benefit so why would they increase capacity utilization? This is a strange wag the dog piece. Oil prices should increase due to a stronger labor market which is due to a stronger economy, which would then prompt an increase in capacity utilization. But they're saying that increasing oil prices through a forced decrease in real interest rates will lead to a stronger labor market.
They don't point out that this has already happened but the labor market hasn't improved. Their solution: more of the same, i.e. more q.e.
Looks like Goldman has been studying Canadian policy. We'll be back to a balanced budget in two years and full employment in one. And we pay $5.20 a gallon. Reagan sure fucked you guys down there with his gov't is bad bullshit. Toss in Greenspan and that witch Rand. You need a 10% vat tax, no mortgage interest deductions and the death penalty for lobbyists.
How about the death penalty for all Canadians sticking their nose where it does not belong?
Better now?
~O~
I lived in Canada for 20 years, you are full of it.
Why is Canada better off? Lots of natural resources divided by small population; plus, all defense needs handled for FREE by USA.
Don't make me laugh about the VAT - out of a nation of 30 million, a $1 billion plus underground economy developed overnight, with rates at just 7% (later lowered to 6%). Even so, many Canadians shop in Buffalo, NY and similar border crossings, don't they?
Real estate bubble in Canada is still bubbling, however. What will happen when it pops - nothing nice!
I lived in Canada for 20 years, you are full of it.
Why is Canada better off? Lots of natural resources divided by small population; plus, all defense needs handled for FREE by USA.
Don't make me laugh about the VAT - out of a nation of 30 million, a $1 billion plus underground economy developed overnight, with rates at just 7% (later lowered to 6%). Even so, many Canadians shop in Buffalo, NY and similar border crossings, don't they?
Real estate bubble in Canada is still bubbling, however. What will happen when it pops - nothing nice!
You guys are the living example of doing your neighbors laundry and charging them 50 grand a year. You rely on the rest of the world to feed your habits but give nothing in return except an IOU. Times up gents.
When will that Jan idiot admit easy money does not growth bringeth?
How many years for his light to go on?
I have no doubt oil will rise to $160 by end of year as Bank of America predicts.
The big numbers for oil require enough money, and demand. It isn't clear that the peaks will be as high in the future. Every time there is a peak in the price, there is demand destruction, the economy goes that wee bit lower.
You may find that it goes 150 -> 130 -> 120 etc.
Not that anyone cares, or should, I got to the thread late. I read the GS analysis and it's like the politician who uses the word "unsustainable" in order to look concerned, focused, up to speed but most importantly, safely distant from the details.
This para is almost enraging:
>>
The low rate of growth in oil supply is likely to exacerbate this tension in coming years. Our commodity strategists expect oil production capacity to grow only about 1% per year (see Exhibit 4). Meanwhile, the growth rate of “oil productivity”— dollars of real GDP per barrel of oil—has averaged about 2% over the long term (Exhibit 5). If these trends continue, then the supply of oil can support a global growth pace of only about 3% without generating upward pressure on oil prices.
>>
Your commodity strategists are pulling numbers out of their asses, most likely both collectively and individually. They don't have a FUCKING CLUE what the production capacity growth rate is going to be. They don't have any idea what the annual Ghawar production decline rate is BECAUSE IT'S A SAUDI STATE SECRET. They don't know what is happening at Thunderhorse. They don't know if wax will form inside the Aleyeska pipeline. They don't know if Royal Dutch Shell will spend BILLIONS in Russia to drill those **6000** wells per year that Russia has to drill just to have a chance to hold steady at 10 mbpd.
They can't know ANY of this stuff, and yet GS babbles forth with numerical bullshit designed to impress clients that they are on top of these quantities. It's deceptive. And it's likely worse than that. It's dangerous. They will propagate this stuff internally and believe it.
Tell you what, GS. Why don't you plug -2% or -3% into your models for oil production capacity over the next year or two. Then ramp that number to -5% or -6%. I don't know that those will be the numbers, but I'd venture to say they are more probable than yours. What do your models say if those numbers are FOR FUCKING EVER?
Actaully the Thunderhorse data is available...there is a faithful monthly update at TOD.... the production curves and water cut are not pretty....
Cool. I thought they went quiet when they tried to hide the collapse under "unplanned maintenance production suspension".
One thing worth noting in GS's babble. "Oil Productivity" as in $$ of real GDP per barrel of oil. This is a very backhanded and indirect admission or acceptance of something not fully embraced by those who should. Namely:
GDP does not come from credit, or banks, or finance, or economics professors or Walmart or GE or Apple. It comes from oil. Burn a barrel, get $XXX worth of GDP. Burn no barrels of oil and you get no GDP.
Period.
Doesn't matter what the Fed does or what the ECB does. If you don't consume oil, you don't have economic activity. It is the alpha asset and nothing can be done about that.
Not entirely true. Printing paper makes GDP look good.
...dead bankers in plastic bags
light my lamp with the Citi
you can never run out of Fight Club Soap http://www.youtube.com/watch?v=C9oUhZvCC18&feature=related
Peak nothin but QE infinity
too embarrassing to drive a GM car
Johnny law's breaking down his own door ...to try to get somebody to pay
Peak nothing! .....but Homeland Insecurity
instant oil in a song, how can anyone run out of it?
a guitar lick to go, a side order of Gecko Grease ....with Dimon on top
...the lamps running low.
dead bankers in plastic bags ...yeah
uh, light the lamp with the Citi... http://www.youtube.com/watch?v=X_DVS_303kQ&feature=related
Its obvious that increasing the money supply will increase oil prices. Forget oil, the Fed won't like what QE3 does to silver prices!
Peak Oil, or PEAK SILVER?
http://silverdoctors.blogspot.com/2011/05/peak-oil-or-peak-silver.html
How do you sleep at night, pimping your website on someone else's traffic? Let alone sleep . . . how do you look in the mirror?
Extinct silver 2020 as per USGS: "The U.S. Geological Society said just a couple years ago that silver would be the first element in the periodic table that would become extinct. It’s incredibly bullish. The USGS said that would happen by 2020"?: http://www.financialsensearchive.com/fsu/editorials/stangelo/2009/1111.html
Goldman- Sucks is a bit late to the Peak Oil party, about 30 defense agencies have been here for awhile.
GS could have said something back in 2004 when oil prices quadrupled from 1998 and the mortgage lending bubble was picking up steam. What's a bubble but a hedge against high oil prices, right?
Ditto the euro which is now a bystander to its users' euro- driven calamity. The PIIGS are Europe's energy insolvents.
Energy productivity in money is silly. It's return on energy invested that matters. Return on consumption is best ignored b/c the concept is probably too depressing. Even the doomers don't like it since the conclusion is the elimination of carz as the central feature of American life.
That's the real bottom line, no more cars. No more car businesses, no more highways or highway construction, no more acres of free parking. No carz, just bankruptcy.
Something poetic, right?
our monetary system is insolvency personified as a result of failure to grow.
Here's a blast from the past, bitches...the Grandpa of J6P from USA gave all you fuckers cheap oil, and this is what we get.
Learn here about 15 mins each see: http://www.archive.org/details/DesertVe1958 and see: http://www.archive.org/details/DesertVe1958_2
the warmongers dont want to pay taxes... $4 a gallon oil and oil war it is
.
BONERS BITCHEZ