Norway

In 1985, the Saudis chose volume over price to defend their market share against new production from the North Sea, as well as cheating/discounting from other OPEC members in a period of weak demand. The Saudis had warned the world of their intentions, but many thought “it was merely an elaborate warning designed to scare other OPEC countries and restore discipline.” The parallels with today’s market structure are hard to miss, and the Saudi’s essential playbook remains the same...

If prices fall any further (and what’s going to stop them?), it would seem that most of the entire shale edifice must of necessity crumble to the ground. And that will cause an absolute earthquake in the financial world, because someone supplied the loans the whole thing leans on. An enormous amount of investors have been chasing high yield, including many institutional investors, and they’re about to get burned something bad. We might well be looking at the development of a story much bigger than just oil.

Anyone who was hoping the market would rebound on last-minute news that the US government has gotten funding for another 9 months, will be disappointed this morning, when futures are finally starting to notice the relentless decline in crude, and with Brent down another 1% as of this writing following yet another cut in the forecast of Global oil demand by the IEA (the 4th in the last 5 months) and with Chinese industrial production also missing estimates (recall that the Chinese slow-motion hard landing has been said by many to be the primary catalyst for the crude collapse) which however pushed Chinese stocks higher on hopes of even more stimulus, the S&P is trading lower by some 14 points, the 10 Year is in the red zone at 2.12%, and the USDJPY is close to session lows. In short: Kevin Henry's "ETF" desk at the NY Fed will have its work cut out to generate one of the now traditional pre-weekend feel good, boost confidence stock market ramps.

New oil projects are being scrapped in Norway amid falling production and low oil prices. The governor of Norway’s central bank says western Europe’s biggest oil producer is facing a major economic slowdown as crude prices continue to plunge. As Bloomberg reports, Oeystein Olsen said today after unexpectedly cutting rates and shocking markets to a new 5 year low in NOKEUR, "our job now is that we need to prevent a severe downturn in the economy... that is presently the major concern of the board."

• Shale operaters Goodrich, Oasis Petroleum cut spending for 2015 as oil slides (Reuters)
• Greece to hold elections in January if president vote fails (Reuters)
• Norway’s Shock Rate Cut Drives Krone to Lowest Since 2009 (BBG)
• ‘Severe Downturn’ Threatening Norway, Central Bank Governor Says (BBG)
• Russia’s Fifth Rate Increase Fails to Halt Ruble Slide to Record (BBG)
• SNB Says Deflation Risks Increased as Franc Cap Maintained (BBG)
• China eases bank lending restrictions, PBOC targets 10 trillion yuan in loans for 2014 (Reuters)
• Mobius Says China’s Bull Market Is Just Getting Started (BBG)
• How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)

The U.S. government justifies all of its militaristic and other interventions overseas using this false narrative that it holds some sort of moral high ground. It should now be abundantly clear to everyone that this invented ethical position is a total fabrication.   I can summarize my thoughts on this entire matter with the following: "If you're part of status quo, you can get away with anything. Murder, torture, theft of trillions. Until top guys are jailed it won't stop."

A dispassionate look at the week ahead.

You almost have to step outside of economics, even out of the financial world as a whole, to pose what is the most elementary question about our economy today. That can’t be right.  The most elementary question is not how we can achieve growth, it’s whether we need growth, and what we would need it for that is important enough to destroy our entire societies and economies for.... We’re in dire need of fresh blood and smart new ideas to clean up the mess the present ideologies and their puppets and puppetmasters have created.

Perhaps those sub-$50 Bakken prices tell us pretty much where global prices are ahead. And then we’ll take it from there. With 1.8 million barrels “that nobody needs” added to the shale industries growth intentions, where can prices go but down, unless someone starts a big war somewhere? Yesterday’s news that US new oil and gas well permits were off 40% last month may signal where the future of shale is really located. But oil is a field that knows a lot of inertia, long term contracts, future contracts, so changes come with a time lag. It’s also a field increasingly inhabited by desperate producers and government leaders, who wake up screaming in the middle of the night from dreaming about their heads impaled on stakes along desert roads.

What we experience today is completely contrary to the German (maybe not the U.S.) understanding of the role of the Central Bank. The ECB has now assumed a role not only to protect the value of our common currency against inflation but also to take action as if it is responsible to create economic growth and full employment with instruments like money printing, zero interest rates and unlimited investments in bonds which the free market is rejecting... Is it really worth it to increase the already heavy burden of public debt, which our children must service someday, by accepting even more debt in a vain effort to increase public demand? Let’s instead be happy with zero GDP growth, zero inflation and zero growth of public debt! That could be a more rational solution.

Once upon a time, the only place where a western fighter jet could come within meters of a Russian MiG was on Top Gun. However, according to a video released earlier today by the Norwegian Armed Forces, that is no longer the case. In the clip, a Russian MiG-31 "suddenly cut in front of one of two Norwegian aircraft sent up by NATO to intercept Russian aircraft in international airspace north off Norway. “What the hell,” says the Norwegian F-16 pilot in the video, as he dodges the MiG-31 passing him at a distance estimated to be closer than 20 meters (65 feet)."

Following last week's holiday-shortened week, which was supposed to be quiet and peaceful and was anything but thanks to OPEC's shocking announcement and a historic plunge in crude prices, we have yet another busy week of macroeconomic reports to look forward to.

“Rags to Riches” Much Easier In Scandinavia than America

Is the oil cartel impotent?  Is the price of oil going to fall further?  What to expect from tomorrow's OPEC meeting.

While OPEC has been mostly irrelevant in the past 5 years as a result of Saudi Arabia's recurring cartel-busting moves, which have seen the oil exporter frequently align with the US instead of with its OPEC "peers", and thanks to central banks flooding the market with liquidity helping crude prices remain high regardless of where actual global spot or future demand was, this Thanksgiving traders will be periodically resurfacing from a Tryptophan coma and refreshing their favorite headline news service for updates from Vienna, where a failure by OPEC to implement a significant output cut could send oil prices could plunging to $60 a barrel according to Reuters citing "market players" say.