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The Oil-Drenched Black Swan, Part 1
Submitted by Charles Hugh-Smith via OfTwoMinds blog,
Given the presumed 17% expansion of the global economy since 2009, the tiny increases in production could not possibly flood the world in oil unless demand has cratered.
The term Black Swan shows up in all sorts of discussions, but what does it actually mean? Though the term has roots stretching back to the 16th century, today it refers to author Nassim Taleb's meaning as defined in his books, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets and The Black Swan: The Impact of the Highly Improbable:
"First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility.
Second, it carries an extreme 'impact'.
Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."
Simply put, black swans are undirected and unpredicted. The Wikipedia entry lists three criteria based on Taleb's work:
1. The event is a surprise (to the observer).
2. The event has a major effect.3. After the first recorded instance of the event, it is rationalized by hindsight, as if it could have been expected; that is, the relevant data were available but unaccounted for in risk mitigation programs.
It is my contention that the recent free-fall in the price of oil qualifies as a financial Black Swan. Let's go through the criteria:
1. How many analysts/pundits predicted the 37% decline in the price of oil, from $105/barrel in July to $66/barrel at the end of November?Perhaps somebody predicted a 37% drop in oil in the span of five months, but if so, I haven't run across their prediction.
For context, here is a chart of crude oil from 2010 to the present. Note that price has crashed through the support that held through the many crises of the past four years. The conclusion that this reflects a global decline in demand that characterizes recessions is undeniable.
I think we can fairly conclude that this free-fall in the price of oil qualifies as an outlier outside the realm of regular expectations, unpredicted and unpredictable.
Why was it unpredictable? In the past, oil spikes tipped the global economy into recession. This is visible in this chart of oil since 2002; the 100+% spike in oil from $70+/barrel to $140+/barrel in a matter of months helped push the global economy into recession.
The mechanism is common-sense: every additional dollar that must be spent on energy is taken away from spending on other goods and services. As consumption tanks, over-extended borrowers and lenders implode, "risk-on" borrowing and speculation dry up and the economy slides into recession.
But the current global recession did not result from an oil spike. Indeed, oil prices have been trading in a narrow band for several years, as we can see in this chart from the Energy Information Agency (EIA) of the U.S. government.
Given the official denial that the global economy is recessionary, it is not surprising that the free-fall in oil surprised the official class of analysts and pundits. Since declaring the global economy is in recession is sacrilege, it was impossible for conventional analysts/pundits to foresee a 37% drop in oil in a few months.
As for the drop in oil having a major impact: we have barely begun to feel the full consequences. But even the initial impact--the domino-like collapse of the commodity complex--qualifies.
I will address the financial impacts tomorrow, but rest assured these may well dwarf the collapse of the commodity complex.
As for concocting explanations and rationalizations after the fact, consider the shaky factual foundations of the current raft of rationalizations. The primary explanation for the free-fall in oil is rising production has created a temporary oversupply of oil: the world is awash in crude oil because producers have jacked up production so much.
Even the most cursory review of the data finds little support for this rationalization. According to the EIA, the average global crude oil production (including OPEC and all non-OPEC) per year is as follows:
2008: 74.0 million barrels per day (MBD)
2009: 72.7 MBD
2010: 74.4 MBD
2011: 74.5 MBD
2012: 75.9 MBD
2013: 76.0 MBD
2014: 76.9 MBD
The EIA estimates the global economy expanded by an average of 2.7% every year in this time frame. Thus we can estimate in a back-of-the-envelope fashion that oil consumption and production might rise in parallel with the global economy.
In the six years from 2009 to 2014, oil production rose 3.9%, from 74 MBD to 76.9 MBD. Meanwhile, cumulative global growth at 2.7% annually added 17.3% to the global economy in the same six-year period. What is remarkable is not the extremely modest expansion of oil production but how this modest growth apparently enabled a much larger expansion of the global economy. ( Other sources set the growth of global GDP in excess of 20% over this time frame.)
Global petroleum and other liquids reflects a similar modest expansion: from 89.1 MBD in 2012 to 91.4 MBD in 2014.
Given the presumed 17% to 20+% expansion of the global economy since 2009, the small increases in production could not possibly flood the world in oil unless demand has cratered. The "we're pumping so much oil" rationalizations for the 37% free-fall in oil don't hold up.
That leaves a sharp drop in demand and the rats fleeing the sinking ship exit from "risk-on" trades as the only explanations left. We will discuss these later in the week.
Those who doubt the eventual impact of this free-fall drop in oil prices might want to review The Smith Uncertainty Principle (yes, it's my work):
Every sustained action has more than one consequence. Some consequences will appear positive for a time before revealing their destructive nature. Some will be foreseeable, some will not. Some will be controllable, some will not. Those that are unforeseen and uncontrollable will trigger waves of other unforeseen and uncontrollable consequences."
I call your attention to the last line, which I see as being most relevant to the full impact of oil's free-fall.
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True this ^
What is the sustainable consequence of and sustained stream of regurgitated "news"?
Is CHS's entire lifestyle sustained for him writing about the sustainability of our sustainable actions versus the sustainable blogging for food sector? Or is the fundamental sustained for freedom and children?
Sustained fundamental everyone else is the problem. Sustain my life style with fundamental donations.
Price exploration CANNOT be expressed as a function. It is inherently irrational as information is not homogenous across the counterparty universe.
There is no way to win at the game, when the casino collapses.
Tough reality, y'all. Grow food.
Nobody in the USSA is going to drive farther for non-existent employment.
Cheaper China trinkets won't stimulate the eCONomy.
Too little, too late.
Maybe it’s time for HMFC BHO to sell off a big chunk of the SPR to rescue GS.. kind’a like PM GB did with the UK’s AU at under 300
"3. After the first recorded instance of the event, it is rationalized by hindsight, as if it could have been expected; that is, the relevant data were available but unaccounted for in risk mitigation programs."
So, I guess nobody is allowed to comment, then. Maybe I will anyway.
Forget every major economy in the world is slowing, most notably China. Forget OPEC not cutting production in the face of increasing North American supply. Forget that oil production is, itself, based largely on anticipated future demand projections (with a significant time lag to bring any new production on line). Forget that there have been articles about oil storage facilities stuffed to the brim for well over a year now. Forget that US oil consumption has been going DOWN since 2008. And forget that oil has ALWAYS been a touchy commodity made even more unstable by Wall St. and their "tail wagging the dog" price influences.
Oh, and let's also forget that this "economic recovery" has been a lie since 2009, stretching the limits of believability between PROPOGANDA and REALITY to extremes.
The only thing unpredictable about this event was it's timing, which is ALWAYS unpredictable anyway. That doesn't invalidate after-the-fact explanations. It just means that markets can stay irrational longer than you can stay solvent.
That growth rate of 17% is ridiculous -
But we've all seen the headlines where hookers and blow are now part of various countries GDP figures now -
And I beleive the USA rejiggered the way it figures GDP growth rates that added a cool Trillin or so to our GDP -
So I believe that 17% figure is complete Bs.
As oil prices prove -
much of that gdp is Bankster Profits counted as GDP when bankster profits Take Away from the Productive economy.
Heck banking used to be under 10% of USA GDP - now its about 40% -
So I'd argue almost 30% of our GDP is complete bs - as the decreasing level of comfortable living wage jobs in tis country evaporate.
Interesting thinking which I did not consider. Your argument seems to have some merit. Milestones
Oil is traded on HIGHLY leveraged markets. I think this might be a leverage induced price collapse coupled with weak demand. What I would like to see is an analysis of real world consumption vs production vs futures positions
Ya think?
How about a $710 trillion derivatives market to play with???
How is it that no one, including the post author, mentioned that a dollar on the rise drops the price of oil in the US on its own?!
The dollar index chart is right there and the inverted nature of it screams a huge part of the answer for the price drop (for us) of a global commodity that is priced in dollars.
Priced in Russian Roubles, oil is the same price now as it was a year ago. See: http://www.infomine.com/investment/metal-prices/crude-oil/1-year/ and pick your currency of choice.
It is true that leverage in the fracking industry is massive. Nobody can argue that, the facts don't lie. As oil rode at a nice price level, lots of expensive oil was drilled for and is now in production, a perfect storm of expensive oil flowing into a sinking world economy. I keep hearing frack advocates saying that there is plenty of profit still in frack well, oil would need to sink to 50 dollars or less for the break even point to be broken. I do not believe that that is true, if you consuder leverage and debt service costs, transport from well head, etc. etc. Let me put it this way, what is the exact price a fracker gets for his oil at the very well head itself? And what are the costs to get that oil by truck and train out of the fields?
Oil is not equal, not at all. Price of production versus price paid at the well head = is the oil play real, or fake. And all debt service must be considered an expense of production.
Fracking is, next to tar sands, the most expensive large scale oil production. They, by all market laws, MUST be the first to be beaten up by this price collapse.
OMortal - this sounds like something out of Dilbert tweaking MBA-speak...
(And once upon a time I had an MBA.)
Sounds like someone just joined a cargo cult.
Is CHS's entire lifestyle sustained for him writing about the sustainability of our sustainable actions versus the sustainable blogging for food sector? Or is the fundamental sustained for freedom and children?
What a jerk
Point me to your information so I can be better enlightened random anonymous critic
Excellent informative article and you choose to throw darts at the author????
Stupid article.
He left out the facts that vehicles are becoming a lot moar efficient lately and sheeple drive a lot less too.
Plus the fact that global GDP now include a lot moar intangible items such as software, on-line subscriptions and tangible items not so dependent on oil to produce.
Why not look at coal production and say the same thing?
Shit, we had diesel cars that got 50 MPG in the 70s.
Well you got one thing right, that is the totally stupid part.
"we had diesel cars that got 50 MPG in the 70s."
That's right. Where did those diesel cars go? What has technology been up to these past 40 years?
We still have gasoline powered internal combustion engines getting 35 mpg, tops.
Did scientists and engineers suddenly get stupid?
Um...seriously did you even do a lick of research?
It's pretty common knowledge that the car industry in America at one point sought to make electric cars/high mpg after the government back in the 50's 60's was trying to respond to increasing smog in various cities, namely Los Angeles and New York. To make a long story short, Big Oil stepped in and the whole experiment went skyhigh.
Did it ever strike you odd that foreign cities have a lot less SUVs and tons of small compact cars? Science and technology has completely diverged from policy. A true democracy would be capable at this point, heck
Why not look at coal production
Oh.....you just hate polar bears don't you?
Yeah I hunt them year round to kill em off faster
So the global warming fags stop whining about them.
I knew you mooktards would like that one!
With your Sig turned sideways. . . gangsta polar bear hunting.
Lots of species can't coexist with rising human population.
One or the other.
Choose, then get over it.
if only we could figure out how to get that coexist non-working thing set up to target the Section 8, free cheese eatin species. Then we'd fucking have it made in the shade.
gangsta polar bear hunting.
Reminds me of the time I was walking in downtown Anchorage Alaska and came across gang of Eskimo gangbangers. My brain was screaming at me.....don't laugh.....you WILL die.
I turned the corner and just lost it.
Eskimo gangbangers.....that's some funny crap.
Yeah but they got nuthin on the Pigmy Eskimo gang bangers I come across.
Cause those little buggers are tough to hit and great shots at your knee caps!
I hear there's a jewish Eskimo that works for Goldman, his name's Iceberg.
Frosty Snowman?
They are still there. Hanging out outside Humpys.
Opinions on the "unforeseeable" consequences?
How can one postulate upon that future event one cannot foresee?
You ask, therefore, a moot question with as much meaning as, "What is East of the South Pole.?"
Come on Tom, that's the whole point of this site - trying to anticipate what the herd might miss and where the snake oil salesmen direct us away from.
I mean I did put "unforeseeable" in quotes which should signify that I wasn't speaking literally.
They are totally foreseable. Just about the only job growth in America recently has come from Texas and the Dakotas. (Both directly, and through the purchase of capital goods made elsewhere.) When rig counts drop and there is an excess capacity of tools, trucks, people, etc; things go downhill in a hurry. Excess supply leads to temporary deflation, which will probably boomerang once inventories are run through.
Please fasten your seatbelts and keep your hands and feet inside the car at all times.
Thank you. That was exactly the kind of analysis I was looking for.
How much of the difference between Global oil production and Global energy consumption can be explained by an increase in renewable energy (wind, solar, hydro, etc.)?
Answer: almost none. For energy, oil is primarily a transportation fuel source. Wind, hydro, solar, etc. are fuels primarily for electricity generation.
Yes, there can be some cross over. Some oil is used for generation and some electricity is used for transportation, but not much in either case. It always baffles me when so-called experts talk about solar and wind freeing us from dependence on foreign oil.
Time to pay the consequences bitches!*
Oh no.......it's time for some executive orders.
Get the big pen!
And time for moar printing.
Unknown unkowns?
very rumsfeldian, in fact decidedly anthraxian.
.
William. take a piece of paper and draw a circle around a small dot.
The dot represents all that I know which is not all that much.
The area within the small circle represents all that I know about that which I do not know. In other words..I am absolutely certain that I do not know it.
The Entire surface area othe the entire World is representative of all that I do not know about that which I do not know. The set includes that which I believe to know to be true and yet is erroneous.
That is what an unknown unknown is.
It is a rather humbling experience.
It is not the knowlege about not knowing. I can accept that because I am somewhat capable of exploration, discovery and learning. But it is the utter lack of capability for even being unable to begin to fathom the almost infinite information about which I will not have a chance at knowing during my temporal stay on this Planet.
In my quest to learn everything I have learned that I know nothing.
Never thought Rumsfeld would be a hedger...
You really do?
I actually do feel more like I do now than I did before I got here and read that comment!
Boy, it's a good thing that Someone has it clear this morning!
Wouldn't want to be confused, sittin here on this sack of seeds.
I think Tall Tom should go to work for the NSA...
An excellent summing up, Tall Tom. I feel exactly the same though I estimate that, in knowledge about science and the real physical world, I'm far more than one standard deviation beyond most commentators on this blog. Most of our species is too arrogantly ignorant to realize how ignorant they are. And therein lies the downfall of us all.
not even one little mention that the current price of oil is the product of a price war by a cartel led by the Saudi Kingdom? why not, because it spoils the market fundamentalism adopted by large swathes of the readership? which dislike to hear that markets could be in any way not perfect?
sure, rising production has given the opportunity for this move. nevertheless, come on, didn't you note the OPEC meeting? it's pure "market making" of the sort of "let's now bring some marginal producers to the cleaners" coupled with a strategic aim to several targets, of which Russia is only one of several (Venezuela anybody?)
of course well timed with a "strong dollar" moment, which is a double whammy for Russia
This will end poorly for everyone I do believe.
Trade is the only thing that matters, period. Cartels never go away peacefully sure, but they know this to be true as well. Shut down global trade and the world will go to war in earnest. This is the only thing history is very clear on.
The only way that a cartel can do that is by oversupplying the market. They haven't increased production enough (and neither has the US) to oversupply the market without the existence of cratering demand.
Politicians and cartels have to obey the laws of physics. Not the other way around.
You claim that to acknowledge that a cartel conspires to thwart market price signals contradicts what you call market fundamentalism? No, that doesn't follow. It would confirm what you call market fundamentalism as this would be a case of human actors suppressing the price signals that are the primary function of any market. Attempting to suppress prices by selling at a loss is unsustainable. Evans-Pritchard:
We shall see who breaks into little pieces first. This may be OPEC's last gasp. Or it may signal a secular collapse of the economies of the Global North as the energy sector--one of the few if not the only productive sector left--develops first into a wave of consolidation (already upon us) that passes into a crash. Good times!
Greenie for the "Good times"! at the end.
You're right - large swaths of the readership are probably market fundamentalists. I include myself in that group. But generally, I don't include cartel rule as an essential part of a market. Nor do any market fundamntalists I'm aware of. Usually when I hear someone bitch about a market failure, the only thing they think fails is that the market does not result in an outcome they themselves want. When people of their own free will and volition come to market to sell their goods to a group of people who have come to the same market of their own free will and volition to buy goods, that market can only "fail" due to some outside force preventing the peaceful trade between parties. Cartels can only exist at the pleasure of those in control, but they've got a host of problems on their own. Governments can and do protect cartels for numerous reasons. But don't make the mistake of thinking cartels are part and parcel to market fundamentalism.
Precisely. E.g. Cartels, guilds, unions, tarriffs and other protectionist trade policies, licensing or accredidation boards, rentiers of various kinds or classes, the regulatory operations of the central state, so-called "progressive" tax policies--these are organized and developed to mitigate, filter, arrest, resist, or thwart the outcomes of the free exchange of goods and services, the primary outcome being innovation, as in the case of Uber and the guild-member holders of taxi medallions. Where the costs of anti-market forces multiply beyond the social product you have what we have: Decline trending into secular collapse.
excellent replies, both of you. but it isn't alway gov that creates oligopolies or even monopolies. sometimes, it's natural. and that's where the "market fundamentalism" meme breaks down
I'll make one example set to give many ZH readers a bout of raised hairs: the EU and Gazprom
it's natural for Gazprom to buy and operate gas pipelines, up to a network from producer to consumer. hence the anti-trust, anti-monopolistic way to tackle this is to use - gasp! - government
but no european government alone can tackle this. and so enter the EU org, with a very simple solution: no mixing of producers and distributors, and "pipeline neutrality", meaning that the pipeline operators are not free to hinder flows at will
you see, I don't believe that without any gov at all all markets would be oligopoly-free. quite the opposite, in many cases. and I believe history is on my side in this, for all to see if wanting to
Market fundamentalism does not mean a criminal/exploitative market.
Free market doesn't mean government has no role. Government's job is to enforce contracts (make sure people don't break their promises), and make sure that the market participants who are powerful enough to do so don't twist and distort the very structure of the market for their own purposes (no monopolies, no cornering of markets, no squeezing, etc.)
The problem we have with government over-involvement is when markets are distorted for various social engineering projects; e.g. Fannie Mae/Freddie Mac, subsidizing student loans, regulating who you can and can't hire, so on and so forth.
Wouldn't a strong dollar/weak ruble help the Russians as far as oil exports are concerned?
They still sell their oil in dollars. A weaker ruble means for every dollar of oil they sell, they get more rubles. Rubles are what they spend internally inside their country.
Put another way, pull up a chart of oil priced in rubles, if you can. I bet the decline doesn't look nearly as bad as oil priced in dollars.
Good points, Ghordius!
As you know, the biggest cartel is the banking cartel that creates the public "money" supply out of nothing, (which is backed up by governments' powers to murder, which was in turn captured by the banksters' abilities to apply the methods of organized crime to the political processes.)
BLaCK SWaN CRuDe..
Illustrated the FRACTAL NATURE of these phenomena.
The political economy is actually based on the ability to enforce frauds. That is how and why there can be such wild swings in the prices of things! There are cascading layers of the ability to enforce frauds which travel through one cartel to another, to another ...
Given that the public "money" supply is a cartel, which is the result of the successful application of the methods of organized crime to control civilization, the physical world has an INFINITELY COMPLICATED relationship to the human world, since the connection between human laws and natural laws is the ability to back up lies with violence, which processes travel through fractal tunnels of deceits, where the lies are different at every level ...
There is NO level of "truth," but rather, the genuinely existing "market" is based on the ultimately open market for murder (which operated most successfully in the most deceitful of possible ways) because that is the source which enables enforcing frauds, which is what makes the "money," whose supply determines the "price" of natural resources.
The hidden prices of the financial frauds are the costs of the murders to back up the measurements done through using that form of "money." The production of destruction controls production. The cost of producing destruction is the most important factor behind the cost of producing anything else, including things like extracting petroleum resources.
Since the actually existing economic systems are based on enforced frauds, paradoxically, that is what is fundamental. There is a de facto "free market" in murder, which sustains the fraudulent financial markets. Prices can swing wildly, due to the ways that civilization is controlled by systems that back up lies with violence, where the lies are different at every level, and the "truth" is nowhere to be found, other than VIA INFINITELY COMPLICATED MANIFESTATIONS OF ORGANIZED CRIME FRACTALS.
There is cartel after cartel, after cartel, all operating through systems of legalized lies, backed by legalized violence, which finally depend upon nothing else but the ability to back up lies with violence. That is what I consider REALISTIC "market fundamentalism."
The industrial revolution, primarily driven by extracting petroleum resources, is the history of backing up lies with violence, repeating on a larger and larger scale, first as a tragedy, and then as a farce. The ability to enforce frauds never stops them from being false, but the violence to back up those lies continues to be able to drive society to become more criminally insane, since it civilization is controlled by organized crime, in ways whereby, of course, the vast majority of people either deliberately ignore that, or foolishly propose "solutions" to that problem which depend upon stopping that from happening. There are NO ways to stop the de facto "free market" in murder being the foundation of all the rest of the markets, which results in the financial markets being based upon layer after layer of enforced frauds, with cartel after cartel cascading down through those layers ...
Somewhere through all of that, I believe, is a relatively more objective physical world, (in which natural resources exist, and their extraction has relatively objective costs, however, that world operates upon us through its primary manifestation being the ability to back up lies with violence. The crucial core to the conundrum is that the history of warfare developed death controls whose successes were based upon the maximum possible deceits, while the controlled opposition groups to those established systems were selected to continue to operate inside of that frame of reference of maximum deceitfulness.
The essential problem that the production of destruction controls production is deliberately denied and ignored by almost everyone. There could not be a sane and rational way to discuss how the human economy operated that did not include the human ecology, which means that the death controls systems would be the central feature to that sort of idealized rational discussion. However, THE FACTS are that our death controls operate through the maximum possible deceits, in order to back up debt controls based on the maximum possible frauds, where the "money" to "pay" for oil gets made out of nothing (while covertly, there operate murder systems to back up those measurements.)
Although none of the natural resources are made out of nothing, the "money" to pay for them is made out of nothing. That is the source of the wilder and wilder oscillations of therefore psychotic societies, controlled by systems of lies backed by violence, that require those societies to deliberately ignore and deny those basic facts about itself, since the most "successful" people inside of those societies are those who are best at operating the systems of organized lies and robberies. The great paradox is that civilizations are fractal manifestation of the application of the methods of organized crime, while doing that requires that to become the most totally taboo topic, which can only be discussed in the most preposterous of ways within the public spaces wherein that is done.
Hence, the financial and commodity markets tend to pretend to be divorced from the fundamental market in murder, because that was what worked best to be able to operate those established systems whereby money is measurement backed by murder. Generally speaking, we attempt to discuss debt controls without addressing the death controls. We attempt to operate human economics without addressing the human ecology. Our civilization has become quite criminally insane, and headed towards Peak Insanities, as witnessed by the increasingly absurd swings of oil prices. Human realities were ALWAYS organized lies operating robberies, which have recently been amplified by the industrial revolutions to become orders of magnitude more amplified levels of the fractals of organized crime controlling civilization!
In that context, I find that "market fundamentalists" tend to be like other fanatics that have little sense of humour, and especially not the kind of macabre sense of humour that it takes to appreciate the ways that the production of destruction controls production. Our socio/political systems are increasingly bad jokes, because those are dominated by the predator/parasite people, who have brainwashed the productive/prey people to use the language promoted by the predator/parasite people.
In the public spaces, everything regarding political economy is discussed using the language of the productive/prey people, while the economy is actually controlled by the predator/parasite people. The bogus bullshit "solutions" of most of the goofball "market fundamentalists" have everything as backwards as possible, since they desire the impossible ideals of the productive/prey people to become 100% dominant. That kind of controlled opposition could not promote worse bullshit "solutions," since such impossible ideals always make the opposite happen in the real world.
Anyone who looks at the history of petroleum resources should see that there were vicious spirals of using the power of that oil to fuel the murder systems that were centered around the power of that oil. However, despite how blatantly obvious that appears to be, somehow "market fundamentalists" continue to want to believe in their absurd religious ideologies, which apparently enable them to deliberately ignore, or deny should exist, the even more absurd state religions, namely, the monetary system and national security, which are both manifesting that money is measurement backed by murder.
Of course, while petroleum resources are the most important feature in our currently expressed industrialized civilization, those are being directed by the globalized systems of electronic monkey money, backed by apes with atomic bombs! That is all spinning out of control, as it becomes increasingly psychotic, since everything is controlled by systems of enforced frauds, whose social successes depend upon deliberately ignoring those facts. The apparent "price" of oil manifests inside of social pyramid systems which are based on the ability to back up lies with violence, and therefore, that is automatically becoming more erratic and criminally insane every day! Whether that is still a tragedy, or has become a farce, depends upon ones personal perspective, or point of view, upon that overall situation. Too bad. So sad!
It's farcical that it's gotten to this point. And tragic in the consequences of its manifestation.
When are Zero Hedgers emigrating to take advantage of Russia's paradise, prosperity and ultra-low oil prices?
Vlad is offering a half-price sale today on all citizenship fees!
Bring your dollars and he'll provide the destitute women.
Well, the Russians I know are doing just fine. Selling agricultural and oil products to China, and getting technology in return.
In case you missed it, trade is the only thing that matters, period. Remind us, what do all those SNAP babies in the states actually produce again?
More SNAP babies.
Exactly. 'merica, the new Africa...
"winning"
Nahh -- the USSA is not -- nor will it ever be that fucked up.
If you were to change your position to
"'merica the new former Yugoslavia" then I would agree with you completely.
Exactly. 'merica, the new Africa...
Naw....not quite yet.....we still have to import Ebola.
We're working really hard on that.....so far the Czar has been a dud.
"Naw....not quite yet.....we still have to import Ebola."
Obviously you missed the memo. It's in process.
Every transfer payment is more money in the pockets of big banks.
We Skyped with our extended family in Russia (east of Urals) yesterday and they report domestic products (not just imports) and even marshutka (trolley-bus) fares have gone up across the board.
One comment I've heard over and over from these folks is that Russian benzene (gas) prices only go up. Prices may be quiescent for some period of time, but once at a given level they never drop below that, even if oil prices decline.
At least in America gas prices go up and they also go down.
destitute in Russia means they have less stuff, they have the US equivalent to 1980s level stuff. Very backward of them.
Amerikan patriot:
I am an American, I do live in Russia (9 years now,) and I am working on citizenship. Not that easy to get and I really do wish it was half price!
Russia is a paradise and prosperous and I burn propane in my Volga, so I don't see the issue with expensive fuel...
What I see out of you is a lying pile of anti-Russian dung and I have friends in America (pertain to another stupid comment you gave) and they seem to be talking about prices going through the roof, in America. Gas price is only one tool used to appease the masses and you fall into that masses category...
I sat down last night and ate a $1.78 equivalent Big Mac, tell me that you can do the same in the US?
I live with Russians day in and day out, my wife is Russian and they are a fantastic people, they do not deserve to be treated the way that the USA/West is treating them and not a damn thing has to do with Putin. He is Russian and the attack is against Russian people and myself now. There are many thousands of people like me in Russia and we are being attacked also, by our own government...
I was most likely crawling through a jungle killing Gooks while you were a speck of shit in someones mind. I have watched a wonderful country called America, turn into the biggest bully on the planet. We killed millions in Nam and I realized after trying to kill myself once from all the crap that we instilled upon other countries. That I needed to stay alive, for no other reason than to find scum suckers like you and pull their heads off in a fight...
You are no patriot and your mouth, actions and desires makes you my enemy, for you are what is wrong with America...
Stick it up your ass you slimy piece of horse shit and grow up...
He is more likely a parasite, a member of the tribe. "By deception we will wage wars. we will turn one nation against another."
Bob, you're the anti-Patriot, or what most Americans would rightfully call a traitor.
I've lived in Russia myself, also have a Russian wife, travel there frequently and Skype with Russians constantly. While I have an abiding fondness for the Russian people, I make no apologies for either Putin or the Soviet Union V2.0 that Vlad is doing his damndest to resurrect.
The best insight into Vlad's mind comes from something he said long ago, but which he has yet to disabuse us of: that the greatest geopolitical catastrophe the world experienced in the 20th century was the failure of the Soviet Union.
In other words, the greatest catastrophe of the 20th century wasn't the 60 million lives lost during WWII, nor was it the tens of millions that died during the Spanish influenza pandemic in the early part of the 20th century.
Rather, the 'catastrophe' was that 300 million folks were liberated from a totalitarian regime and a command economy that together were responsible for untold human misery.
Putin's self-centered, myopic assessment would be laughable if it didn't negatively impact so many lives.
You mentioned that you served in Vietnam. But despite your advanced age, given your admiration for the Russian regime, it's evident that you're still as dumb as a box of rocks!
Putin is doing his damndest to reconstitute the failed Soviet state in his vision (which, sadly, includes stealing Ukraine back, part of Georgia, and likely other bits and pieces like Kazakhstan and Belarus). That 'vision' also includes punishing those who speak out against the state (see, e.g., Mikhail Khodorkovsky), a state-controlled media where dissent has no place (see, e.g., Russia Today) and an economy whose key components (i.e., the oil industry and pipeline infrastructure) are largely owned by the state.
Through his transparent efforts, Vlad is simply reaping what he has sown. Because of this, the international coalition against Vlad the Tyrant welcomes lower oil, a lower ruble and a Russian economy that's on the cusp of full-blown recession.
If I were Vlad, I'd certainly appreciate a turn-coat like yourself, Bob. Perhaps approach the Russian government about starring in your own propaganda film. But don't come crawling back to the US, because we don't need witless fools like yourself.
You sound like Karl Denninger when it comes to geopolitical analysis: blind on one eye, which results in a "what the US does is by default the right thing, and that implies what all others do is evil."
You should reflect a little on how all main pillars of Western civilization are getting weakened or removed in the US:
- no torture in any case
- habeas corpus (and step by step the whole bill of rights)
- separation of power: 3 branches of government
- uniform application of the law
- true freedom of speech and no searches / surveillance without good cause
and many more.
And all other Western countries will follow, as they are in effect all satellites of the US.
So no sugarcoating here: the US is full steam degrading itself to become what the Soviet Union was. (And that started long before Obama.)
And any denial on that makes you a witless fool!
Putin on the other hand is moving Russia in the right direction, from a very low starting point.
While rule of law definitely is still an issue there, pointing only to mistreatment of an above-the-law oligarch is maybe not your best argument.
You need to pull your head out of your ass (it'll make a "thunk" sound when you've done it right).
You said "Putin on the other hand is moving Russia in the right direction, from a very low starting point."
Nope. Putin has undermined rule of law to the point that even before sanctions many western countries hesitated to do business in Russia. In other words, there is no rule of law. Just Vlad's cronies and buddies whom he makes inside deals with.
Likewise, free speech has only gotten worse under Putin. Another institution Vlad has weakened to the point of irrelevance. If you don't tow the Kremlin line, you're going to get run out of business, have your assets confiscated or worse. Try finding one real anti-Putin article on Russia Today - just a single article, Bob. You can't. Russia Today is lock, stock and barrel the Kremlin's communication arm, the way it gets its propaganda to the people.
Even CNN or MSNBC occasionally manage an article openly critical of Obama or his policies.
Let me get this straight:
You full on rant about Putin, and when it comes to the US you barely manage to bring up
Even CNN or MSNBC occasionally manage an article openly critical of Obama or his policies.
Wow, that's so great! It proves we have no controlled MSM. (cough, cough)
And all other points I mentioned you studiously avoid.
Talking about someone having his head up his ass...
Well sarcasm only works if there is some truth in it.
A few days ago I was thinking along the same lines and to my own surprise realized not much is missing before I'd consider a move to Russia a possibility.
Very glad we built another still. Western economies are still very much oil-based economies, period.
Keep that diesel cheap, we may build more storage for that as well.
stupid fucks.
It's the way the globalist banksters are trying to punish Putin and Russia for not playing their game.
I think we need a new meme : The 'Grey Swan Event" Heres why: The sloshing of debt, high margins, derivative complexities, political y driven CB interventions ....all adds up to 'NOBODY KNOWS THE OUTCOME OF ALL THIS SHIT '...and anything can bring it down ...thats the grey swan event ....perfectly predictable if you had any real idea of whats happening....but no one knows whats happening any more.
Correct, breadonwaters!
That is what my reply to Ghordius above also stated ...
Blatant manipulation who wooda thunk it?
Just in time for the winter, sorry Russia.
You can bet if you have a new well on the books...that it is not going to be drilled right now....what you will see is the oil companies with a bunch of cash..will buy out some of these over indebted companies for 10 cents on the dollar...wash rinse and repeat...as always...I am still awaiting the politicians here in Colombia to start scraming how broke they are..so far pretty quiet...but its comming....oil is 75% of exports and most of the foreign investment monies....and that is all goiing to dry up...fast..
At $65/barrel I guess a TESLA may be a solution looking for a problem or a bug in search of a 500hp 9 mpg SUV windshield.
so ratcheting up the price so it crushes the little guy is ok and what is normal ! .... but when big oil is losing money, that is really bad and has crazy consequences down the line !
It would actually be awesome if all of big oil cut their own throats like this due to their excessive GREED ! fuck them for once
I think you're missing the point that "big oil" is now nothing more than "big finance." Like the rest of the economy, production to meet expected demand has been replaced by production made possible by ZIRP.
Hell, the same is even true for the miners. Which is why Jim Sinclair talks about recourse vs. non-recourse loans when looking at them as an investment.
gotcha ...thanks !
this is going to end very badly
end very badly
ZIRP, then NIRP,
whatever may be next?
(...rhetorical questions.)
P.S.
Drilling Deeper: Interview with J. David HughesDon't worry.
Oil didn't just stop being used a few weeks ago. Someone pulled the paper futures support rug out from under it.
All the growth in the USA this last few years is from the oil boom....its not Obamas policies....and it will be shutting down if the price stays here....so watch our economy tank....when the strippers start to leave North Dakota...then you know its over...
This is cute. The author pretends to not know that oil prices don't have much to do with demand, and that its price is not amongst the most manipulated in the history of the galaxy.
The propaganda seems to be intent on painting shale as the poor beatdown victim of OPEC. I am going to hazard a guess that more laws will be passed to export petroleum products, big oil will continue to eat smaller oil, war, QE4 and there is another bull leg left to be seen in commodity cycle.
I like the article of Robert Fitzwilson on KWN as well, maybe even better.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/12/1_Wo...
tyler must work for a commodity hedge fund (that or another whore for the Saudis)...b/c for everyone else in the real world...this is a white swan
guest post by Charles Hugh Smith not Tyler.
Low crude will pop the bond bubble, I'm almost certain of that. Here comes a controlled collapse of the economy wich might very well result in WW3...
One thing is a fact - 2015 will be a very interesting year...
2015 will be a very interesting year...
Interesting like the Chinese Curse? "May you live in interesting times."
One for the history books? When it really gets interesting the historians
stop writing.
It becomes the most "interesting" after the human species commits collective suicide?
The world is so deep in a recession that it won't be noticed until we hit hyperinflation and everyones fiat paper is worthless crap.
Just Don't Go
Hunkered down populous
Black Friday Bombs
Cyber Monday will Bomb
etc.
Looks like justification for more QE. Got gold? When they announce QE there won't be an easy way to hedge your wealth.
How much of the difference betwee Global Oil Production and Global Energy Consumption can be attribute to an increase in the use of Renewable Energy Sources? If the use of Renewable Energy accounts for a large amount of Global Prduction recently, that could account for the differnce between the 17% rise in Demand and the lower supply of Oil. Just a thought; does anyone know the answer to this?
Laboring over trying to predict the next "Black Swan" is a fools errand. By definition (as indicated) they cannot be predicted.
No mention of all the dollars through QE propping up the oil price? be good to see the correlation of QE, oil and dollar strength. The convergence between dollar strength and oil drop is telling.
MBA - Mature Bald Accountant.
MBA - Mature Bald Accountant.