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No! Lower Oil Prices Are Not An Economic Stimulus
It's been more than six months since oil prices started to plunge (and with them gas prices at the pump). That should (right?) be more than enough time for the status quo's narrative "tax cut" to filter through into the real economy and lift US Macro data... it hasn't... at all!
As David Stockman explained previously,
Indeed, this time the Wall Street touts have got the narrative so dead wrong that the day-traders and robo machines who track them are likely to be smacked-down on the dips over and over—– until there are no more dips left, only an honest-to-goodness plunge.
The false narrative is an old standby that is usually revived when worrisome clouds form on the global horizon. Namely, that the US economy has “decoupled” from the troubles brewing abroad; and that this time the collapse of crude oil amounts to a giant “tax cut” that will send US consumers into a frenzy of new spending, thereby fueling a surge of hiring, income and growth.
Nice theory - but it’s not going to happen. In the first place, the plunge in oil prices is not a “tax cut” and its doesn’t put a dime into the pockets of any consumer. That whole notion is just one more example of ritual incantation - a baseless repetitive refrain that flows from Keynesian doctrine and Wall Street bullhorns.
What will happen is that total “spending” in the US economy will be reallocated, not increased. And now that net petroleum imports have dropped to a 40 year low, the math is pretty straight forward; and its not indicative of a windfall boon to the domestic economy, at all.
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Oh and this...
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my fault - i forgot to get another six-pack of beer last time i filled up. i'll go take care of that now.
Cheer up, everybody. Simon Whatshisname on CNBS said lower oil prices, cross dressing and buggery are good for the economy.
SIMON SEZ - "Sheepie...Go Spend!"
"Go Spend!"
"It's contained."
Zerohedge logic: oil going down is bad for the economy. Oil going up is bad for the economy.
Oil demand dying because we discovered free energy is good.
Oil demand dying because the economy is dying is bad.
So those dumb serfs are *gasp* SAVING their FRNs?
OH THE HORROR!!!
I remember being told to do this back in Sept 2001. Shortly thereafter was the tax credit on ginormous sport-utes. After a few years, there was another tax credit to destroy those gas guzzlers. What a waste of resources.
What's so hard to figure....get paid to dig a hole, get paid to fill it.....with other people's money, or better still your own money!
Does simon say he gonna pay for it cause i gots no fiat only metal
Caught between the longing for love
And the struggle for the legal tender
Where the sirens sing and the Church bells ring
And the junk man pounds his fender
Where the veterans dream of the fight
Fast asleep at the traffic light
And the children solemnly wait
For the icecream vendor
Out into the cool of the evening
Strolls the pretender
He knows that all his hopes and dreams
Begin and end there
Jackson Browne
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
Causation.
Additionally, I'd really like to know what the strength of the economy has to do with stock prices. I've never seen a correlation.
"I'd really like to know what the strength of the economy has to do with stock prices. I've never seen a correlation."
blasphemy! BLASPHEMY!!!
The only correlation I see is the harder Joe Six Pack takes it up the chute the better the market does.
Hobbs is an admitted and confirmed "Mo", so I'm sure he welcomes the coming flogging/buggering
One last throttling for the muppets?
Fuck Wall Street. I rather enjoy lower energy prices and just because I save a few bucks on my energy does not mean I'm spending the difference at Wall Mart.....
I enjoy the low gas prices because I save even MORE. I cut my driving to the bone when gas went to $3 per gal. and now that it is cheaper my life style is still the same. I'm in the habit of making one trip count. You greedy bastards fucked up big time with high gas prices. Enjoy your surplus. Peak oil, bitches, heh. Peak fucking over the consumer.
How much of an economic stimulus can they expect when J6P saves approx. $100 on his monthly fuel bill? Where does J6P drive to anyway? J6P hasn't been working regularly for a number of years now.
Oil cos. own the refiners and they're compansating for the losses from crude sales by increasing their margins on the refined products to retail.
Cost of food hasn't decreased and neither have rents.
J6P is stuffing that $100 bill monthly under the mattress - hopefully - and only IF there really are any savings to main street.
Making the rounds at Walmart then driving over to Popeye's then to the mall to hangout with the other jobless is alot cheaper now.
I changed my own oil at 9.79 a quart 60$ for oil change I asked the cashier where was the rest of my barrel I bought boy what a fucking huh
The best perk is clean aquifers. Fuck Haliburton et al with the fracking nonsense.
Oh, they're getting fucked all right. To the tune of 6400 job losses. Not that this will affect the CEOs
Robots will replace humans by the time all those UI benefits run dry, so jobs don't really matter.
Low oil prices don't fix umpteen years of manipulated bullshit chart data? Go figure.....
Everyone already has a flat screen teevee and no one is touching smart tvs now that they admit they are filming your relations in the living room. Besides...most of the money has been spent on getting less food for more money.
Wait, the Tee Vee filmed me banging the neighbors wife?
Great stuff from Rosneft and also Russians want more transparency in oil market(real numbers of reserves, production etc.) and flee from "paper" financialized oil.
http://www.rosneft.com/attach/0/62/06/rosneft_presentation_eng_10022015.pdf
Most of this weeks savings at the pump are going into buying Powerball tickets.$450 Million jackpot. Odds of winning, 1 in 175,000.000.
Ten cent a barrel oil didn't get the USA out of the Depression.
Indeed it was proof of it.
Still....
Who's debt is that again?
so tired of fucking waiting
They turn the spicet on and off at the pump, and I mean the one at the top. They all are in aggreeance with the prices when they set them. It really is up to you to speculate on that. I am not saying the system is fair, I am saying it is what you make of it. Good luck. My predictions are 65 By next month.
Energy Company’s Consolidate…….Oil Price Cut Working
Oil Price Crash Brings Big Profits For Swiss Banks, Investment Corps
Trillions of dollars not going to regimes that hate us is a bad thing why?
"The fundamentals of the economy are strong."
-- Senator John InSane
Light sweet crude has probably found a temporary bottom and will bounce back up to the 70 dollar area over the next few months. But as this look at the projected future indicates, there is still a great deal of downside left before the the oil market finds anything resembling permanent support.
http://www.globaldeflationnews.com/oil-light-sweet-crudeelliott-wave-upd...
http://in.reuters.com/article/2015/02/11/usa-fed-employment-idINKBN0LF0AF20150211
Shifting goal posts on employment may signal slower Fed rate hikes
(Reuters) - Federal Reserve officials are debating a historic shift in one of its core economic gauges that could lead the central bank to move even slower than now thought once it lifts its rates from rock bottom levels.
According to interviews with half a dozen current and former Fed policymakers and staff, the concept that the economy can produce far lower levels of unemployment without stoking inflation is being built into Fed models and becoming increasingly entrenched in the central bank's views.
That shift may not delay the timing of the Fed's first rate increase, still expected in mid-year. But it does offer Chair Janet Yellen a good reason to move at a snail’s pace from then on to bring as many people as possible back to work and to push inflation back up to the Fed's 2-percent target.
Fed policymakers' December projections show most expect the Fed's benchmark rate to rise to 2.5 percent or above by the end of 2016 from the 0-0.25 percent range now.
On Monday, Fed governor Jerome Powell became the latest of policymakers to suggest the "natural" rate of unemployment, also referred to as a level of full employment, had fallen.
"Maybe the natural rate is lower...That it is five (percent) or even lower," Powell said. That would be significantly below current unemployment rate of 5.7 percent and the 5.2 percent to 5.5 percent range Fed officials have recently estimated as the level of unemployment at which inflation is likely to increase.
LOWER DESTINATION
Atlanta Fed President Dennis Lockhart said the question of the true level of full employment will come into focus when the Fed will have to decide whether to allow unemployment to drift to unusually low levels to push inflation towards its target.
“I am quite open to the idea that the destination we are trying to get to is lower than we have cited in the past,” he said on Friday.
The chiefs of the Boston Fed and the Minneapolis Fed have also said they are considering lowering their estimates, as did several staff at other Fed branches who declined to be quoted, in line with the central bank's policy for briefing the media.
For months, Fed policymakers have been puzzling over how the accelerating economy kept adding jobs but failed to spur wage and price increases that would cement the recovery and allow them to wind-down crisis era policies.
Now, there is growing sense that the point where the job market tightens enough to start pushing up wages and prices may be further away than earlier thought.
The U.S. central bank has no official target for full employment - generally expressed as the unemployment rate that is consistent with stable prices. But accurately estimating it is critical for the Fed, given its mandate is to safeguard economic conditions that allow maximum employment consistent with stable prices that the bank defines as 2 percent inflation.
Since the 1960s estimates of that "natural rate of unemployment" have averaged 6.3 percent, according to data published quarterly as part of the Fed's main economic model.
Beginning in 2013, however, its staff has been marking that rate down, from 5.6 percent to 5 percent by late last year. That may lead regional Fed presidents and board members to cut their quarterly estimates due next month.
Research at several Fed banks, both published and unpublished, puts the estimate as low as 4.7 percent.
Regardless of what ZH says here, falling gas prices do bring relief to the working public. I am spending alot less week to week than I did before. The ZH guys must be on a different system than me, but generally I'm better off when the things I need cost less.
All I know is when I get gas and put $30 in,the needle is a little farther towards F than it used to be. That's all that's changed.
In the short term - no it's not good. Let's see what the long term results are in September 2015.
Cheap oil prices will always be bad for oil producers and good for consumers no matter what the degree of cuts or the duration periods thereof. The problem is that the producers don't look at their markets the same way as computer makers look at their markets. If they did, and there is no real reason why they shouldn't, the consumers would be enjoying 1cent per gallon gas prices and general price deflation would be prevalent.