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Why Sequestering The "Brent Vigilantes" Means Much More QE

Tyler Durden's picture




 

Perhaps there is a reason why Bernanke has not been completely hysterical about the sequester crashing his free-money induced party. The following chart shows the relatively strong correlation between US military spending and oil prices over the past 25 years. As we have discussed in depth, there is only one thing that can stop an over-confident central banker - the Brent Vigilantes - but should the sequester kick in with all its defense-spending slashing might, perhaps - just perhaps - that will weigh on the price of oil at the margin and provide just enough cushion for Bernanke et al. to do moar to maintain their key policy tool - the equity index.

 

 

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Fri, 03/15/2013 - 09:18 | 3332060 spastic_colon
spastic_colon's picture

today may just be a pause with a rising VIX so we can get a VIX crushing once again next week, oil is just a pawn in that game too

Fri, 03/15/2013 - 09:23 | 3332062 francis_sawyer
francis_sawyer's picture

It costs more than you think to drone the shit out of people...

~~~

While Obama is out droning the world, the people who voted for him are driving around in Priuses & Volts to stop global warming...

FULL FUCKING RETARD SOCIETY

Fri, 03/15/2013 - 09:48 | 3332132 finametrics
finametrics's picture

so the solution is to scrap a successful and safe militray initiative while buying ford excursions instead of honda's? what dumbfuck argument are you trying to make here clown?

Fri, 03/15/2013 - 10:00 | 3332160 BigJim
BigJim's picture

 ...so the solution is to scrap a successful and safe militray initiative...

Drones are 'safe'? LOL, for whom, exactly?

Fri, 03/15/2013 - 10:17 | 3332215 francis_sawyer
francis_sawyer's picture

I made a statement [which contrasted the 'zealot' like behavior of Obama supporters, vs. his perceived policies ~ which, from the onset, included so called 'environmentally friendly' initiatives such as alternative energies & transportation... AND ~ his supposed characteristics as a shepherd of 'peace' [as illustrated by his Nobel Peace Prize before he fucking began his term in office]... VERSUS ~ the reality, which is a guy who has wiggled his way into being able to drone people at will, lavish his cronies with counterfeit cash, & formulate the infrastructure for a totalitarian regime...

I made zero in the way of an 'argument' [in any way about people driving SUV's or WTFever]...

~~~

But if an ARGUMENT is what you're looking for ~ how about this?

How about we:

- Stop droning people on the whim of the teleprompter

- Stop the crony kleptocapitalism of initiatives such as SOLYNDRA

- Quit trading VOTES for CASH [like the bailout of GM]

- Stop tryin to take peoples guns away

- Allow people to do businbess [& succeed or fail] by themselves

That would be a good start, at least...

Fri, 03/15/2013 - 12:21 | 3332189 Pegasus Muse
Pegasus Muse's picture

China's insatiable demand for crude would likely take up any slack caused by the sequester. 

Besides, when has Congress/President ever really cut back on military spending when the nation was at war?  Not saying they won't, but it will be a first if they do.  And if they do, the MIC neocon mouthpieces will have a field day with O'blamer's 'betrayal of the military when the country is at war' ...

Fri, 03/15/2013 - 10:24 | 3332288 duo
duo's picture

And the coal producers are sending their product to China to make CO2 even faster than we can here.

Fri, 03/15/2013 - 13:32 | 3332913 SmittyinLA
SmittyinLA's picture

....and welcoming amnesty and mass immigration too 

Fri, 03/15/2013 - 09:20 | 3332064 put_peter
put_peter's picture

Why wont they just fake these stats as well...

Fri, 03/15/2013 - 09:20 | 3332065 Sheeple Shepard
Sheeple Shepard's picture

Go to war to get the oil, which only leads to a higher price of oil, which means more war to get oil.

Aint' that the darndest?

Fri, 03/15/2013 - 09:23 | 3332075 EscapeKey
EscapeKey's picture

depends on the amount of oil they fight for

Fri, 03/15/2013 - 09:25 | 3332080 HulkHogan
HulkHogan's picture

Freedom! We go there to give them FREEDOM! Building democracy one bomb at a time. USA! USA! USA!

Fri, 03/15/2013 - 09:33 | 3332096 BLOTTO
BLOTTO's picture

Ancient Eygptians sat on 100 Quadrillion barrels of oil...and never used a single drop.

.

What an ugly dirty stinky shitty product.

Fri, 03/15/2013 - 09:35 | 3332101 Ghordius
Ghordius's picture

rosegardens need manure and suburbs need oil derivates

Fri, 03/15/2013 - 10:01 | 3332164 BigJim
BigJim's picture

 ...Ancient Eygptians sat on 100 Quadrillion barrels of oil...and never used a single drop....

They didn't need mechanical slaves. They had the real thing.

Fri, 03/15/2013 - 09:22 | 3332070 Yen Cross
Yen Cross's picture

   Don't give Bernanke any ideas Tyler. It's bad enough as it is.

Fri, 03/15/2013 - 09:26 | 3332081 buzzsaw99
buzzsaw99's picture

the bernank's only idea is to make his banker and billionaire buddies richer then go on a speaking tour for $2M a throw.

Fri, 03/15/2013 - 09:31 | 3332094 Yen Cross
Yen Cross's picture

 It just makes your stomach turn Buzz. +1

Fri, 03/15/2013 - 09:22 | 3332072 q99x2
q99x2's picture

That F'n Bernanke M'Fer would pay for China's army if they'd let him.

Fri, 03/15/2013 - 13:39 | 3332940 SmittyinLA
SmittyinLA's picture

We are China's army 

Fri, 03/15/2013 - 09:23 | 3332073 buzzsaw99
buzzsaw99's picture

it takes multiple wars at a time when one used to suffice. foment, spend, foment, spend

Fri, 03/15/2013 - 09:23 | 3332074 SheepDog-One
SheepDog-One's picture

'Maintain' their key policy tool, the equity indexes? Pretty good 'maintaining' here well over all-time highs and never even a red day ever again.

Fri, 03/15/2013 - 09:26 | 3332084 Shizzmoney
Shizzmoney's picture

This chart also correlates with the rising amount of dead brown people in Mexico, Iraq, Pakistan, and Libya in the last 5-10 years.

The only more precious commodity than oil is blood.  It's the thing that REALLY backs the Federal Reserve Note.

Fri, 03/15/2013 - 09:51 | 3332091 dick cheneys ghost
dick cheneys ghost's picture

Interesting chart........the Gold price started to move up around 2000/2001 and the Euro was introduced around the same time..............

 

(of course 9/11 happened around the same time too)

 

Im sure there is no correlation/connection btw 9/11, the Euro (as a potential competing Reserve currency replacing the dollar & Petro dollar), Gold, peak oil and Uncle sam going full RETARD with wars, drones, NDAA and money printing...

Fri, 03/15/2013 - 10:39 | 3332359 Shizzmoney
Shizzmoney's picture

One thing is missed here (although excellent obvservation):

Interesting chart........the Gold price started to move up around 2000/2001 and the Euro was introduced around the same time..............

(of course 9/11 happened around the same time too)

The biggest of them all (and it happens like a week or 2 after 9.11) - China gets the A-OK into the WTO.  This is what built the "consumer economy" which led to the housing and spending bubble Bush/Greenspan wanted (and somewhat continues today)/

"Keep shopping" was only going to be sustained by cheap, niggard labor by Communist Chinese wage slaves.....because the CEOs and the bankers who fund their debt for such ventures have to take as much off the top as possible at the expense of everyone else (while protected by the govt).

Fri, 03/15/2013 - 11:36 | 3332552 dick cheneys ghost
dick cheneys ghost's picture

Good point about China and the WTO......everything happens for a reason...

 

a couple of articles that really opened my eyes about the Euro/geopolitics/petrodollar etc etc

 

http://www.hindu.com/fline/fl1819/18190560.htm

 

http://www.guardian.co.uk/business/2003/feb/23/oilandpetrol.theeuro

Fri, 03/15/2013 - 09:31 | 3332093 machineh
machineh's picture

Intuitively it's appealing that oil and mil spending would correlate.

But both roughly track inflation.

So one could find dozens of relationships like this.

The price of oil probably tracks the revenues of the tattoo industry, too. 

Fri, 03/15/2013 - 09:45 | 3332119 francis_sawyer
francis_sawyer's picture

The ramp coordinates perfectly with the DOT.COM bubble burst...

~~~

Greenspan's 'friends' [who later became Bernanke's friends] decided to dump all their inflated paper assets in VAPORWARE & SOCKPUPPET.COM and instead, pour it all into another form of VAPORWARE called 'PAPER GOLD'...

Military spending isn't just about stealing the oil anymore... It's about stealing the gold...

Fri, 03/15/2013 - 10:16 | 3332129 falak pema
falak pema's picture

the wages of greed, dressed up as prevention of terrorist sin and fear for sweet liberty bell of western world, all to protect the oil kingdom of heaven, without which we are in dire trouble!

From the Oligarchy viewpoint its generated awesome payback for the rich : THe state has gone from 300 to 700 B in expenditure paid by the common man; the Oligarchs of Oil kingdom, both Arab and ANglosaxon, have seen their profits increase via a price rise from 12 USD/bbl to 110 USd/bbl, aka 9 fold, and even if you debase the spike for inflation, the payout for the rich oil owners and the MIC shills is ominous at the expense of the first world nation tax payers! 

Isn't MAth a simple discipline! And...in that cheap oil period, before Chindia fed oil rise, during the 80-90s, we built the FIRE asset economy and dumped the USSR. Wow, wow! Awesome double whammy! And since then NWO...

Isn't the terrorist a convenient bogey man!

Ben Laden, thank God we invented your breed...like a reversed action Manchurian candidate. You didn't destroy us, you made us all rich, the new oligarchs of NWO! 

We learned our lessons well as new Crusaders. BUT THIS TIME ROUND WE MANAGED TO CONTROL ALL THE SPICE AND THE SILK OF THE WORLD FOR US, in our new kingdom of heaven. 

Pity now the fiat pump is jeopardising all that Great Gatsby stuff! 

Fri, 03/15/2013 - 10:24 | 3332259 GMadScientist
GMadScientist's picture

dollar hegemony, enforced at the end of a barrel, pun intended.

who cares, right? it's not their kids getting their limbs blown off.

http://www.youtube.com/watch?v=gZkvtuwbMW4

Fri, 03/15/2013 - 09:51 | 3332139 Seasmoke
Seasmoke's picture

Brent ...... Gold ....... Deflation

Which one does Bernanke fear the most.

Fri, 03/15/2013 - 09:56 | 3332150 Debeachesand Je...
Debeachesand Jerseyshores's picture

All of them.

Fri, 03/15/2013 - 10:25 | 3332297 GMadScientist
GMadScientist's picture

Rock...Scissors...Paper...

 

Fri, 03/15/2013 - 10:06 | 3332147 oak
oak's picture

the oil price is determined by the living standard of saudi arabia. they will live comfortably at us$110, not less.

if the oil price would not meet the level of their living standard, they would ensure that many events would happen.

the root is the petro-dollar.

Fri, 03/15/2013 - 10:13 | 3332218 azengrcat
azengrcat's picture

JP8 = $15/gal, Mongering aint cheap these days.

Fri, 03/15/2013 - 10:17 | 3332231 GMadScientist
GMadScientist's picture

There's a huge difference between deflecting inflation and merely delaying it; the sequester is the contrapositive of stimulus spending that pushes demand forward...the gubmint will get their gas...eventually.

Fri, 03/15/2013 - 10:17 | 3332243 Sudden Debt
Sudden Debt's picture

PUT IT ON A POSTER AND HANG IT IN EVERY DRAFT OFFICE!!!

and every draft officer can tell the recruits...

WHENEVER YOU GET YOUR BALLS BLOWN OFF, JUST LOOK A THIS CHART AND YOU'LL SEE IT'S ALL WORTH IT!!!

Here's a pen patriot... SIGN SO I GET MY BONUS!!!

Fri, 03/15/2013 - 12:31 | 3332731 Flakmeister
Flakmeister's picture

A really nice synopsis of the Bakken:

http://www.econbrowser.com/archives/2012/12/future_producti.html

Be sure to check out the comments....

Fri, 03/15/2013 - 13:26 | 3332893 oak
oak's picture

all those oil extraction needs large quantity of water. where is the water from?

Fri, 03/15/2013 - 15:26 | 3333275 Clowns on Acid
Clowns on Acid's picture

"just perhaps - that will weigh on the price of oil at the margin and provide just enough cushion for Bernanke et al. to do moar to maintain their key policy tool - the equity index."

Nawww...Tyler...Obama says that "we" can't wait to the last minute regarding a nuclear Iran. So....will saudi's open the flood gates in case of war....or open just enough that 110/115 per barrel  is considered "fair" war time oil price?

Cause it's all about fairness y'know.

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