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"Far Worse Than 1986": The Oil Downturn Has No Parallel In Recorded History, Morgan Stanley Says
On Tuesday the market got yet another reminder of just how painful the "current commodity price environment" has been for producers when Chesapeake eliminated its common dividend in order to conserve cash.
After noting the plunge in Chesapeake’s shares (to a 12-year low) we subsequently outlined why the US shale "revolution" is now running out of lifelines as hedges roll off and as the next round of credit line assessments looms in October.
A persistent theme here - as regular readers are no doubt aware - has been the extent to which an ultra-accommodative Fed has contributed to a deflationary supply glut by ensuring that beleaguered producers retain access to capital markets. In short, cash-strapped companies who would have otherwise gone out of business have been able to stay afloat thanks to the fact that Fed policy has herded investors into risk assets.
In a ZIRP world, there’s plenty of demand for new HY issuance and ill-fated secondaries, which means the digging, drilling, and pumping gets to continue indefinitely in what may end up being one of the most dramatic instances of malinvestment the market has ever seen.
Those who contend that the downturn simply cannot last much longer - that the supply/demand imbalance will soon even out, that the market will clear sooner rather than later, and that even if the weaker hands are shaken out, the pain for the majors will be relatively short-lived - are perhaps ignoring the underlying narrative that helps to explain why the situation looks like it does. At heart, this is a struggle between the Fed’s ZIRP and the Saudis, who appear set to outlast the easy money that’s kept US producers alive.
Against that backdrop, and amid Wednesday's crude carnage, we turn to Morgan Stanley for more on why the current downturn will be "worse than 1986."
From Morgan Stanley
Worse than 1986? Really?
We have been expecting the current downturn to be as severe as the one in 1986 – the worst for at least 45 years – but not worse than that. Still, if oil prices follow the path suggested by the forward curve, our thesis may yet prove too optimistic.
Our constructive stance on the majors is based on four factors: 1) supply – we expected production growth to moderate following large capex cuts and the sharp decline in the rig count; 2) demand – we anticipated that the fall in price would boost oil products demand; 3) cost and capex – we foresaw both falling sharply, similar to the industry's response in 1986; and 4) valuation – relative DY and P/BV indicated 35-year lows.
So far this year, we can put a tick against three of them [but] our expectation on supply has not materialised: US tight oil production growth has started to roll over, but this has been more than offset by OPEC, which has added ~1.5 mb/d since February.
On current trajectory, this downturn could become worse than 1986: An additional +1.5 mb/d is roughly one year of oil demand growth. If sustained, this could delay the rebalancing of oil markets by a year as well. The forward curve has started to price this in: as the chart shows, the forward curve currently points towards a recovery in prices that is far worse than in 1986. This means the industrial downturn could also be worse. In that case, there would be little in analysable history that could be a guide to this cycle.
[There are] strong similarities between the current oil price downturn and the one that occurred in 1985/86. The trajectory of oil prices is similar on both occasions. There were also common reasons for the collapse.
A high and stable oil price in the preceding four years stimulated technological innovation and led to a high level of investment. This resulted in strong production growth outside OPEC, exceeding the rate of global demand growth. When it became clear that OPEC would no longer rein in production to balance the market (as it did during both the Nov 1985 and Nov 2014 OPEC meetings) the price collapsed.
And although MS notes that similar to 1986, costs and capex are likely to come in sharply while demand growth should materialize, the supply side of the equation is not cooperating thanks to increased output from OPEC.
Due to the sharp slowdown in drilling activity and the high decline rate of tight oil wells, we expected production in the US to flatline and start declining in 2H. This seems to be happening: according to the US Department of Energy, tight oil production in June was 94 kb/d below the April level, and it forecasts further falls of 90 kb/d in both July and August.
Now that capex is falling, we anticipated non-US production to be flat at best. Still, this has not yet been the case. At the time of our 'Looking Beyond the Nadir' report in February, OPEC production stood at ~30.2 mb/d. This increased substantially to 31.3 mb/d in May and 31.7 mb/d in June, i.e. OPEC has added 1.5 mb/d to global supply in the last four months alone.
Our commodity analyst Adam Longson argues that the oil market is currently ~800,000 b/d oversupplied. This suggests that the current oversupply in the oil market is fully due to OPEC's production increase since February alone.
We anticipated that OPEC would not cut, but we didn't foresee such a sharp increase. In our view, this is the main reason why the rebalancing of oil markets had not yet gained momentum.
If oil prices follow the path suggested by the forward curve, and essentially remain rangebound around levels seen in the last 2-3 months, this downturn would be more severe than that in 1986. As there was no sharp downturn in the ~15 years before that, the current downturn could be the worst of the last 45+ years.
If this were to be the case, there would be nothing in our experience that would be a guide to the next phases of this cycle, especially over the relatively near term. In fact, there may be nothing in analysable history.
Needless to say, this does not bode well for everyone who has unwittingly thrown good money after bad on the assumption that the Saudis will cut production and trigger a rebound in crude.
In addition to the immense pressure from persistently low prices, US producers also face a Fed rate hike cycle and thus the beginning of the end for easy money.
Of course, the more expensive it is to fund money-losing producers, the less willing investors will be to perpetuate this delay-and-pray scheme, which brings us right back to what we've been saying for months: the expiration date for heavily indebted US drillers is fast approaching, and if Morgan Stanley thinks the oil downturn has no parallel in "analysable history," wait until they see the carnage that will unfold in HY credit when a few high profile defaults in the oil patch send the retail crowd running for the junk bond ETF exits.
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Now that the futures hedges are coming off, they can really ram the price into the ground.
Wait until the run on currencies starts from the deflationary debt crash.
Good luck buying oil with paper or digits.
I don't want to sound like a broken record....but in 1986 the real estate market in Houston got completely wiped out...Condo's selling for $15,000, darn nice homes going selling under 100k.
There is absolutely no hint of that now in Houston...real estate prices are still on full-retard mode, and nice homes built in the mid/late 60's are being mowed down every single day in 77024 to make way for the 8,000 square foot, "my ceilings are higher than your ceilings" homes.
as for me....I can't wait for mean regression...the sooner the better, but as of today, Houston skyline is still loaded with cranes and a race to build as fast as they possibly can.
Think what a bargain you'll get in North Dakota come spring time.
Yes it is worse than 87, and 83. In fact you have to reach all the way back to 1860 and the brief 1931-33 period to figure this one out. And given that most of the majors will require fresh credit roll over and drilling capital for the 2016 drill programs, this could get nasty. Most bonds are pricing that debt will be rolled over at the same terms, with at best 500 basis point moves for some of the most horrible offenders of debt binge drilling. Those were financed at 80/bbl projections on Par. Most corporates have locked in their hedges down at the low 60's. (all USD). For some corporates the capital programs needed to keep production flat, plus roll their bonds over at the 80/bbl interet rate are nearly 4x their current cash flows.Yet most HYG still trades at 80/100 or better.
This sailent fact is what is keeping the 51 billion in special situations PE money on the sidelines. Who wants to buy into the next GDP or PVA ? and then see a 50% haircut in 6 months. Very few on a standard 5% WACC (going to 8). That is also what keeps most of the major Pensions, Endowments and bond managers awake at night. What happens when a BBB+ rolls the yield at 300 bps. What happened to the money markets when nobody knew what was economical.
I believe that banking institution are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. - Thomas Jefferson
There are two ways to conquer a nation. One is by the sword. The other is by debt. - John Adams
http://galeinnes.blogspot.com/2015/07/the-invisible-enslavement.html
All of which means that the Shale boys HAVE to keep drilling the fuck out of the plays just to have ANY kind of revenue stream.
Which reinforces the glut and drives the price down....and on and on and.......ooopsies.
Same root cause and misalloation of resouces that occured in the housing bubble and all of the other bubbles that are now going on.
If this isn't a sign to ditch gold, then I don't know what is. King Dolla is now in control. Deflation. Live it. Learn it. Love it.
insistence on maintaining a strong dollar is what gutted the american export sector
strong dollar now means nothing but perpetuation of americas urban decay
sounds like a good reason to stack to me.
It could be worse, they could have a market capital like Twitter at $24 Billion but produce nothing at all.. There is so much stupid money in the markets right now it is unfathomable, really.
Bibi is going to start a war here pretty soon, and then the price of oil will skyrocket back to $200 / barrel. Just watch, nukes are gonna fly in 2016.
YES !! 100% correct. The recently established shale production in ND and a handful of other states, must run at a loss (very hot) just to keep shale oil production volumes up. As a moth goes to the flame and gets burned, the shale production (in 2015) will cause massive overproduction and may completely collapse the price of oil worldwide, until either shale production shuts down or OPEC production shuts down or rest of world shuts down production. On top of that there may be the largest deflationary spiral ever due to the 7 years of LIRP, ZIRP, and NIRP; so, all the false cities and false economies with shadow demand will now collapse and dry up.
So, both massive Oil overproduction and massive loss of (fiat built-up) actual demand and fake demand...concurrently !! wow.
Flame-out.
But it might take 1 year, 5 years or 10 years to burn through all that misallocation, with many small flame-outs along the way ?
Yeah...Sell at an operating loss and then make it up in volume of sales.
Perfect.
Mining companies are doing just that, right now.
Amazon
No shit.
It is not just Oil Drillers and Miners.
Stock Prices are elevated by Corporations acquiring insane amounts of debt to finance buybacks of Stock in order to keep share prices elevated.
There is no production.
There is no demand due to lack of liquidity.
They cannot create enough QE as the existing Finance fess cause insolvencies.
We are cooked.
Saudi Arabia makes sweet at $12 barrel. They can do this all day every day for the next 15 years. Canada makes sweet at $50 / barrel and moved quickly to devalue their dollar to make sure there oil industry does not get wiped out. Shale makes sweet at what $80? a barrel?
The major players can outwait the next two years to starve off the weak members of the oil pack.. Then like magic it will start creaping back up.
You seem to miss the point.
This is noy just about Oil.
This is not just about Gold. Silver, Copper or Nickel.
This is not just about Stawcks or Bonbs.
And as for the price of Oil??? It will not take that long.
$20 in Novenber followed by $200 next July...that is right...July, 2016.
Of course Gold will be at $1000 in November and by July, 2016 it will be at $5000.
Good luck enduring the HYPERINFLATION..
Deflations hisorically precede them.
courtesy of da fed -ZIRP up the arse, but hey someone was behind all these hy loans and trades,
S.A, vs the fed, yup the two major players, one with goods and the other with fiat. interesting...
carnage along the way, an economic battle in the war against humanity courtesy of da bankster cabel of econ hitmen...
OPEC is the cause of this. 1.5 MB/day added since February. That oil was and is not needed. They know that. But for that, oil would be 55 - 65 and US producers would not get creamed. But that IS the goal of OPEC. They also caused the 80s problems.
The Saudis made no secret of their intentions here. It amazes me that investors underestimated their resolve, or simply didn't believe them.
Saudis have a bigger war chest than the shale producers and could certainly sustain low prices for much longer, plus debt roll over is not a major factor in their decision-making, pricing out competitors however is, shale being the first. And if history is any guide, Saudis could play their role in collapsing another competitor, only this not Russia, but US. Russia most certainy suffers, but will benefit along with Saudis when prices recover and shale boom is done for.
they are making tons of cash at 59, 49 and even 30. who will win? ha...
US oil production also increased 1 MB/day since last summer, going from 8.5 MBd to 9.5 MBd
Why is it that OPEC should be the ones to cut production?
It's just a theory of mine, but the revulsion that the Arab world has for POTUS, both as a man and as a weak wrist-ed leader, is the heart of many of our international woes.
POTUS legacy building is epic.
So, are saying that financial engineering is coming to an end in the oil patch? And if so, will it spread?
I hope it YES to both. Ready for a real economy to sprout out from the ashes of this bastardized beast.
Yes. But it may take 5 years for the fiat financed excess shale Oil production to top-out and die off.
So it might be 10 years out before green shoots come out of the 'burn-out' ashes and rubble.
That is highly unlikely. It shall be far worse.
Ready for an economy to sprout out from the ashes and embers of a Thermonuclear Holocaust? Laughable in a macabre sense.
The outcome of the financial predicament will be DISMAL at best...and FATAL at worst.
I do not foresee a return to anything which we have ever knowm. Lack, destitution, and famine are actually the best that one can hope for.
The survivors will be healthy, strong, and laborers in the fields to eek out a meager survival.
Most skills which people have in a post collapse society will be without a market. Financialization and innovation will become forgotten vestiges of a prosperous past.
Hundreds of Millions, if not Billions, will die as a direct result of the Economic Collapse. The victims claimed will be your progeny, your relatives, your spouse, your friends, and many other acquaitances. NOBODY will escape this unscathed. . And if it does degenerate to Nuclear War then it will be an Extinction Level Event.
You had best be prepared for this horror, mentally, physically and spiritually.
And I just do not believe that you have considered the impact of what you desire.
Is that really what you want? If so, then for what reason?
I am looking forward to this. And I have thought it through and I do have my reasons. Do you?
This is not just addressed to you, but, it is addressed to all that read it.
What are your reasons for desiring the consequential pain, suffering and death upon the unworthy?
Or is your statement and position not well thought through, flippant, lacking any moral foundation, and the truth is that you really do not want any of that?
I've thought long and hard.
To me, the species ( human) does not deserve to exist in an overpopulated real life version of Idiocracy.
I just want to be around to see some of the arrogant fuckwad entitlement whores suffer. I won't have to go far. I'm married to one.
They fucking made me like this.
I remember that. And a reversion to the mean is just about here; Neptune's in Pisces = oil found everywhere by damn near everybody. Until 2026.
You are missing the malinvested point. Companies no longer need to produce. Financial creativity is enough to float all boats. Fraud is now legal. So if you dont need to do anything but sell shares to the various central banks, pention funds and play computer games with the price discovery.
Thats why you can have a company that produces at a lost because oil selling is not what that business does, all business now sell, debt to the markets.
The whole world is now a vertual simulation of markets.
Reality has no place in it. Everyone will become to big to fail since they all are chained togather.
The value of money may not continue if there is no expectation of getting paid in it. What is the value of debt that cannot be paid in full only in depreciated payments that are ever extended and reduced. Thats how this all ends, death of money.
It can end no other way. Like a hole in the belly matters not how often you eat.
They still have to pump oil to make their debt payments.
That is what everyone is missing here. The saudis have to pump to pay their people not to revolt. The shale idiots have to pump to service their debt. The russians have to pump to maintain the gov and military. Iraq/iran have to pump to not be broke.
Because of all the debt nobody can stop until they go broke. The winners are the banksters, of course. And consumers who don't have jobs in the oil patch.
The same thing happened in Alberta in the 1980's. You could buy a house for a dollar just by assuming the mortgage remaining. Some properties only had 5 or ten years left on their mortgage. At lot of houses were taken off the market by the banks and given to property managers to rent out.
They are also building apartments everywhere and the rents are increasing at breakneck pace. I don't think this will end well. They say folks are moving in from other states, but to do what jobs? Crime is also up very very high with record theft and break ins in ALL parts of Houston. From what I was told, most of those cranes are building jobs paid for with money that was borrowed two or more years ago so they have to finish. The amount of commercial square footage comming on line in Houston to rent is more then most cities put together.
http://www.zerohedge.com/news/2015-02-11/houston-you-have-huge-problem-o...
The price of a house was only marginally correlated to the price of oil, however 18% prime Reagonomics definitely put an end to the debt binge. And this is going to repeat. History repeats, repeats repeats..
House prices are no longer driven by quality of the real economy. They're driven by artificial liquidity and debt.
We're going to see the crack up boom in real estate before this thing implodes.
Same thing in Calgary and Edmonton, which just makes me that much more scared that we will be that much more overbuilt when TSHTF. Average commercial rents fell 2$ a sq ft (from $28 down to $26) in the last month in Calgary, and there is a shit ton of inventory that will soon be hitting the market. Edmonton is adding 20-25% more leasable commercial area in its downtown with no discernible uptick in demand from quality tenants.
I hope it won't be, but this could be unbelievably bad...
Billions invested in bonds of shale producers last 6 months. Laughing my ass off thinking about just how terrified those investors must be right now.
OH OH....
Qualcomm is in the shitter.
Firing 15% of its workforce.
"We are making fundamental changes to position Qualcomm for improved execution, financial and operating performance," said CEO Steve Mollenkopf in a press release. "We are right-sizing our cost structure and focusing our investments around the highest return opportunities while reaffirming our intent to return significant capital to stockholders and refreshing our Board of Directors."
HEHEH....yeah....right sizing. No money to be made in premium Android phones as the likes of Mediatek and Samsung are eating away at that market. Apple supplies their own ARM based designed for their phones, so the high end is off the table. And they have no ARM based micro-server plans to speak of.
Whoopsies. Qualcomm is the Intel of the mobile world.
" Qualcomm also announced a partnership with hedge fund Jana Partners through which three members will be added to Qualcomm's board of directors. The company has been under pressure from the hedge fund to spin off its chip business from its highly profitable patent-licensing business."
Great....a fucking hedge fund manager on the board. Now THAT'S a good sign !! LOL !!
Qualcomm also taking "heat" from their overheating 810 chip.
But will they shitcan their full-time employees or their H1-B Indian contingent?
I took a contract job with them about 3 years ago. I was the token white person with actual experience in my group.
Standard Disclaimer: Sweat shop and the illogical pursuit of a 64-bit ARM processor. The reference manual is over 5,000 hyperlinked pages in a pdf file... By comparison, the SPARC architecture manual (v9), although a bit dated is just under 200 pages.
Right sizing sounds like something McDonalds would do to my french fries if I dare buy any of the non-rotting entitities from the counter. In 2000 I still remember Nortel Networks was the hottest crap since sliced bread there shares $100/per. I personally knew people that invested $100,000 thinking that Nortel was going to go into China, was going to do this, was going to do that - blah blah blah. The reality was whatever Nortel did was irrelevant. Hot market money decided it was 'in' and money flowed into it by the billions. Today Nortel Network stocks are worth $0.00
Today hot money flows into Google and Twitter and Facebook by the billions. $24 Billion market cap for Twitter?! At least Nortel Networks produced a phone and run some fiber optic lines. History repeats repeats and repeats, I see twitter becoming worthless here in a year when the fad is over. I see facebook loosing 90% of it's share value.
I would assume that MS sent a forward copy of this to the FOMC because this information is likely to encourage the Fed to continue ZIRP. Those with rose colored glasses should stop reading this comment now.
The U.S. economy is a virtual zombie, kept alive by easy credit. Even those seemingly good numbers coming out of the car biz is simpy another credit bubble, including a huge amount of high risk credit. Let's use autos as a metaphor here. If interest rates increase, tight oil producers would not be able to roll their debt and would go bankrupt. U.S. oil production would decline. If OPEC did not fill the supply gap, prices would rise. If they did fill the gap, the U.S. trade balance would get worse, but let's assume OPEC sits tight (not a great assumption, but I want to make a point). The effect of increasing interest rates would be to reduce production. Prices would then rise. Now, let's look at our new car owner. The increased cost of gas would consume more of his/her cash flow. They could either buy less, causing an economic downturn, or default. If either the economy goes down or defaults increase the Fed would be looking to juice the economy and would reduce rates, reinitiating ZIRP. The Fed is a reactionary organization, not a leader.
Folks, we are in the throes of economic war and most of us haven't a clue as to the enemy. It isn't really OPEC, but they may be an ally of the enemy. The true enemy is the financial system itself - the big banks. To the extent the Fed enables this behavior, it is part of the problem, not the solution. Easy credit is creating dilemas that constrain policy choices. By issuing too much high risk credit the banksters have made it tough for the Fed to raise rates. Welcome to Japan.
From where I sit the best answer is a painful one. The Fed should do a Volcker; raise rates and keep raising rates until credit is being created at a rate equal to or lower than economic growth. Yes, there would be an absolute hemorroage in the markets. Lots of folks would lose lots of money. As long as this global Ponzi scheme continues we will be seeing rampant insider looting and other criminality because prosecution could cause the systemic collapse the entire regulatory apparatus fears most. End ZIRP now!
Whatver happened to ekm? I'd love to hear his take on this?
Imminent never came so he slinked away....... again.
Ah...gotcha
MH & DE,
or CIO. he's been silent for a long while now.
His account was banned.
http://www.zerohedge.com/users/ekm1
"Access denied. You are not authorized to access this page."
Maybe he will / or has come back under a different name.
I also hope TruthInSunshine returns.
Yep, most of the scared rabbits predicting imminent doom slunk away like cowards. I hope they are at least quietly reading, so they might learn something.
The only moron I see left is Tall "nuclear war" Tom. Hopefully he'll fuck off soon when the world doesn't blow up tomorrow.
Nobody is making anything or going anywhere anymore. We have electronic gadgets and everyplace is the same anyhow. Who needs oil.
ya Obama invented renewables so we edon't need energy on windless nights...we will just burn our garabage and call it BIOMASS and pretend it isn't the worst source of energy since caveman times!
Almost 30% of all oil use is non-fuel.
It's used to make all those electronics you are talking about, including every computer.
And everything you buy comes to you by truck or plane or both.
No oil, you die.
If oil prices rise, substitutes are found and more drilling occurs.
If oil prices fall, more uses are found.
I've heard this same tired rhetoric my whole life. It's gotten very old.
He is talking about all the products which rely on petrochemicals ... which you arrogantly assume can easily be replaced with non-oil based substitutes?
Regards,
Cooter
Fuck plastic.
Wood and brass FTW
Steampunk bitches!
You live in a fantasy world.
No plastic, you live in the stone age for a little while.
Then you die, unless you are an Amish self-sufficient farmer.
He just wants his laptop to weigh 70#.
Apparently you folks who are engaged in free markets are not true believers.
I do not arrogantly assume. It's a fact.
When a new product is needed to replace one that is no longer available, and if there is profit to be made by doing so, those products will be developed.
That's completely ignoring the fact that we have never ever run out of petrochemicals in the first place.
Just how many substitutes do we have for sugar, for instance?
The profit motive is a whole lot stronger than many of you give it credit for.
Most people don't follow your comment regarding 30% ...
http://cdn2.bigcommerce.com/n-nr1m3w/efflhiii/products/1003/images/753/p...
(this is an expensive technical chart/poster - largest free variant I could find)
That said, I didn't think it was that high. Got a source?
Regards,
Cooter
3 minutes without air, 3 days without water, 3 weeks without food, 3 months without oil.
Let me know again when the world runs out of oil.
We're not going to run out of oil. Ever. We're going to simply leave a shitload of it in the ground and quit using it.
I never run out of toothpaste. I just cant get that last bit near the opening.
who need oil.
lol...
i got an experience for you. right now, where you are, front of your computer... the game is called " seek the plastic ".
you have 60min to run all around your house from your keyboard to the tires of your car in the garage by the fridge joints on its door to the bottle of water or any food content inside.
when you will realize that without oil your whole world is no longer existing because the cost of the pre 1950 era of industry is just 25000% fucking incompatible with the actual cadence of production and packaging.
The stupidity about the importance of oil and gas to society is amazing.
The lack of knowledge about how many things are only available due to oil is staggering.
Narrative over truth, it's the ZeroHedge way.
https://www.youtube.com/watch?v=5uASQgLwaIs
Regards,
Cooter
Then there is fertilizer made from oil and nat. gas. too. Best stock up on candles too for when the lights go out unless you have a load of bee's wax since most candles are made from oil too.
buy a lot of those outdoor yard solar lights, good for charging batteries too.
Amazing how people survived for thousands of years without petrochemicals. Those poor saps really weren't living at all were they.
/sarc
There is a lot of knowledge required to live a stone age, bronze age or iron age lifestyle without oil that people today just don't have. Most people do not have a clue how food is produced. Most people could not walk down the road and differentiate between edible and poisonous weeds. Give people seeds and the minimal amount of direction about the correct amount of watering and pest control, and they will deplete the soil. (To be fair, a lot of ancient civilizations depleted their soil too. But they didn't know about things like the phosphorous cycle either, and I would argue that without synthetic NPK fertilizers, we have depleted our soil too.) None of that gets into food preservation techniques that went out of style with the introduction of refridgeration.
And that's just food. How many people know how to tan leather in any of the old fashioned ways? To raise sheep for wool? To grow and spin cotton? How to get potable water from a natural source? How to melt iron without industrial processes (i.e. with just charcoal?)
It's not that it is impossible to live without oil, it is that we have forgotten how.
Point well-taken. I was just trying to say that life would not be impossible without oil.
I don't know why you got junked for that.
No, life would not be impossible, but we would be forced to take on a very different viewpoint regarding death. It would be more in line with what our ancestors thought. Here is some ancient law on the matter:
But then again, buning crops was a big fucking deal back then:
The point being, shit that our modern technology lets us take for granted today what was life or death even in the Roman Republic. It's kind of like hanging a horse thief. Most people today think that is a bit harsh. But 150 years ago, if your horse was stolen, it could very well mean your death.
How many times will you idiots repeat these straw men before you learn?
Oil will NEVER run out. Never. The price will just wind it's way up, killing demand for the more wasteful uses. This is econ 101 by the way.
When plastic gets too expensive, packing peanuts will be replaced by straw. Polyester shirts --> cotton. Perhaps only lining food containers will be worth the cost. Who knows?
When nat gas starts running out, perhaps fertilizer will be the last use.
Smaller cars. Gas guzzlers for the rich only.
All these changes will happen over decades.
Without cheap energy (Nuclear, Oil, not including expense of clean-up) we would not have made it to 8 billion population.
There have been studies showing if we only had Coal then 1 billion max population...if only wood then may be 200 million population.
It is all in the numbers of food/transportation/economics and population expansion.
Cheap Energy + fiat = huge population expansion
Expensive Energy without finance = very low population and horse powered vehicles (middle age societies).
IMO, we could do better than that, but it would take some serious attitude adjustments with how we view nature, the world and ourselves. Look into the Edo Period in Japan. They sustainably supported a population of 25-30 million for roughly 200 years on what they could grow on those dinky-ass islands plus what they could harvest from the sea. That was a totally non-industrial society. To put that into perspective, the state of Texas is ~268,000 square miles and Japan is ~146,000 square miles. Suffice it to say, they were not a very wasteful people. If a pot or a pan wore out, they didn't just throw it away. They took it to the smith and had it mended if they could.
All those things can be replaced with wood. A nice wood computer case would look beautiful in the living room.
How about wooden circuit boards and electrical cords? Wooden tires?
.
Eventually oil beneath the ground will run out. But before it does, oil will be manufactured from coal or co2. You need a nuclear power plant to do that. It's expensive, which is why it's not done yet.
But the things that MUST be produced from oil will be. The non essentials will have to be replaced.
Start of 20th century 1.5 billion humans now 7.3 billion without we're fucked
How does that gadget get into your hands
who would think crooked wall street banks given trillions to ramp commodities would end poorly. Hopefully there will be a purge of bankers...and their companies destroyed! You can always hope
Are they saying "this time is different?" NSS
The breath of Bloody Morgan would putrify anybody.
If Morgan says Stanley is Oliver Hardy and ready to be roasted on the spit, you better believe it !
Uhh, wat?
Seriously, when was the last time that you ever saw a piece here by Morgan Stanley? This has to be a paid advertisement.
"Nothing in analyzable history" has a certain je ne sais quoi.
Thats not an oil downturn. Thats an upturn in consumer spending capacity for everybody else. Schwing!
Don't worry. They'll cap it. Again. Faster, tighter and with bigger kickbacks than BP.
So the moneychangers will slowly die off from cheap oil .... what's the problem ?
Yes agree. But it may take 5 years to burn-through all the capex. So in 10 years we will get back to 'normal'.
10 years may be a long time, and probably 5 years in the middle might be without cheap food or cheap utilities (water, gas, electric).
If the oil/fiat/bank structure collapses then every man for himself, until the recovery. Maybe 2 really bad years ?
But we persist...
persistent.
we know it will end poorly when we learn that Goldman sold all the commodity contracts to widows, orphans, pension funds and insurance companies..
Robobackdater is standing by
Linda Green is back.Got parole/work release.
Cracks me up every time I read that we are facing a fed rate hike cycle. Fucking hilarious. Here's some food for thought; we have an over supply of oil because we have no demand thanks to the global depression we are currently in.
+100 Doc...
You falsely assume our rulers are benevolent and actually want to hold the financial system together.
In that assumption, you are incorrect.
You falsely assume you know what I think, and you know what they say when you ass-u-me.
Your own words, no assumptions necessary. Or is this statement supposed to be the lead in to why there WILL be a rate hike? Because we're in a depression right?
Doubt that very much, obviously you're saying there'll be no hike cause the economy sucks.
So I repeat, you falsely assume our leaders are benevolent and want to keep the system up. In that you are incorrect.
What the fuck does that statement you highlighted have to do with the powers that be wanting to hold the system together? You make no fucking sense. I will repeat what I have said in the past. We will never see a fed funds rate above 1% again. We may get a little hike to prolong the illusion that all is well, but we will never see "normal" rates again. When TPTB do collapse the system, and they will, there will be a false flag to give them cover.
All the fake zombie chinese cities will crumble over time, and all the planned fake shadow energy demand and planned population growth will disappear.
It will take a few years to burn-through all the fake financed oil production capex.
(1) Too much supply now, (2) estimated demand collapsing now, (3) real demand collapsing now (real deflationary spiral).
This three headed hydra will lay it all down.
Soon.
Thank you Dr. Douche Bag for contradicting yourself (ie lying), then regaling us with your moronic future predictions. You certainly sound like every pee-H-dee faggot I've ever known, as in being an arrogant know it all.
But but but lower oil prices are good for consumers and with a rise in rates oil will be cheaper as the dollar strengthens, but but American corporations make 47% of their money overseas and a stronger dollar is causing headwinds in profits.
Raise rates!! Come on, how about .05%, that'll show'em. Then get back on that QE train Casey Jones and print like there's no tomorrow because if the last 6 years are as good as it gets, we might as well hit the rest button and try something new. You could just send out checks to the peoples, at this point what difference would it make.
Reset button?
But but but lower oil prices are good for consumers and with a rise in rates oil will be cheaper as the dollar strengthens, but but American corporations make 47% of their money overseas and a stronger dollar is causing headwinds in profits.
Raise rates!! Come on, how about .05%, that'll show'em. Then get back on that QE train Casey Jones and print like there's no tomorrow because if the last 6 years are as good as it gets, we might as well hit the rest button and try something new. Or you could just send out checks to the peoples, at this point what difference would it make. That would surely help out main st. That's what you guys really want right, to help out the average Joe?
Sorry just found that blue pill, been looking for that thing for years.
If they do raise, it is simply so they can lower + QE4+++ and not be blamed for holding rates down too long.
Yep, I remember well, cheap oil in the mid 80's.
A gallon of gas was around $1.00 usd, give or take a few cents depending on the macro.
I also remember the fall of '87 really well.
The fall of '87!
Ha, you mean autumn right?
It was spring in NZ.
One month before the crash I had bought this farm, using bridging finance consisting of four 180-day bank bills.
The interest rates on the consecutive bills were 26%: 22%; 19% and 17.5%.
Those were the days :-)
lol. Yeah, rates were a tad bit higher in those days.
High interest rates destroy capital! The fed *had* to fix it!
/sarc
Regards,
Cooter
Yeah, I got a 90 day note at 23.5%. Fortunately I made out like a bandit on bargain inventory. Now it is 2015 and my inventory is at best worth no more than I paid for it. Looks like it may be time to close up shop.
The hurricane(in England) the Thursday before does make it stick in my memory.
This is so annoying, lower commodity prices are a GOOD thing, to consumers of the commodity at least. Now if you have built your business or lent money based upon $100 oil, so be it. Why do we need $100 oil and $7 corn?
Its called capitalism.
sschu
Because the current financial system only works on inflation
The system is flawed if it can't deal with both.
Your Econ. 101 thesis doesn't work in a world flooded with derivative instruments and 200X leverage on junk debt.
Yes. and the LIRP, ZIRP and NIRP financed over production worldwide and in shale fields.
It might take a while for the price of oil to adjust to the actual demand (now spiralling down) and the actual supply (now spiralling up)...both spirals may take a few years to stop spinning and disrupting the real price of oil.
Haha. What a complete load of shit. A bunch of speculators have trillions of of dollars to push prices around. You are looking at hyperinflation + derivatives + leverage = complete unpredictability and massive volatility. The market cannot sustain a bet going either way because any bet they make is too GD big for it. Basicly, if you are in any paper connected to the banking system, you are an idiot. If you are making predictions based on wthat that paper is doing, you are a bigger idiot. It is all tainted. The exchanges cannot even insure this garbage anymore. A couple more moonshots followed by crashes and even the peanut gallery will understand.
well spake, quin.
cheaper oil, but the price at the pump is still sky high!!!
so big fat fucking blotus gum-mant can finance their failing pensions and debts.
Well yes, governments are in the oil biz. The feds collect 22.3 cents a gallon and the states average around 18 cents a gallon. They make that by sticking their hands out.
So, subtract out the 40 cents a gallon the various levels of govt make and the cost of boutique fuels and prices would be a good bit lower.
Of course there's also the big bad oil companies' profits, which average 9 cents a gallon. Horrors. To get that profit, they have to permit, explore, produce, refine, ship and retail the product.
There's also the fact the almost 30% of all oil use is non-fuel in nature.
Oil has been a boom-bust biz for a century and some people are just noticing.
No, that's not why.
Super major producers have been reducing their reserves for decades, some thought this was a sign they were losing ground. To the contrary, they, being insider elites, knew this day was coming and would be far more than a typical cyclical downturn in oil prices.
We are witnessing the destruction of every non-super major producer worldwide.
In the meantime, super majors are making their money refining and manufacturing instead of producing. Thus, they've kept prices high to offset whatever losses they take from their leftover production business. So, they'll survive this thing just fine, and notice they aren't raising bloody hell in government with their extremely powerful lobbyists.
Seem odd? It should, cause big oil gets what big oil wants. Apparently big oil doesn't want higher prices, cause big oil has planned for this event long ago.
Yes. It is about price control eventually. For now wipe out 90% of the fiat financed startups, and in the end, the price will rise again and under the control of the Super majors. OPEC has also done that a few times before, but now all the majors are probably 'on the same side' and over-producing together in tandem and goading each other on.
Not sure it was exactly planned that way, but that is the way it is going down now. Expect $10 oil at the bottom ?
No, you are wrong too. Gas is high because the refineries are smart enough not to over produce. They've lived thru this before and they've gotten good at reducing supply just enough to keep it tight.
BTW, most businesses have learned this. Remember when airlines used to have price wars? Now they take planes offline when demand falls. It's all probably collusion -- nobody wants to take market share any more?
Collusion is just another fraud against the people, and you know that doesn't get prosecuted any more.
This one article by Morgan Stanley should be enough to knock WTI down to $45 by early next week,at which point Goldman Sachs will release the same article,and knock it down to $42..At that point,I suspect we will see a rebound in prices,until the same article is released again,sometime in early August..
The wheels are coming off the hologram.
Lots of "ifs" in that article.
WTI prices in this downturn so far:
116.75 - 49.92
WTI prices in last downturn, 2008:
146.12 - 46.56.
http://www.macrotrends.net/1369/crude-oil-price-history-chart
Take a look of what has happened after each crash in oil prices, adjusted for inflation.
Summary: Morgan Stanley is trying to talk down the price of oil even more, so they can buy oils stock at ridiculoulsy low values. I'll be buying too, when the time comes.
That is prob now....
Still so many clueless bulls.
This is no cyclical downturn, you are about to witness the destruction of every non-super major worldwide. We haven't even made it to the global economic crash yet. But you go buy yourself some CLR stock, see how it works out for you.
Well, I am long WTI here and will ride the bitch down to 30 (averaging down along the way) if I have to. May buy some Nat Gas too.
Can't help myself it's so fucking cheap.
I still feel like people use oil for things.
Like Floyd and Jamie ( has that cunt recovered fully from his throat cancer?) i just assumed Property & Oil Prices just kept Rising and Rising. At least this is the model that they ALL use.
Whoulda Thunk it?
If there is a Saudi plot to eliminate the shale oil industry, as many claim, then there has never been a better excuse for a tariff, this one on imports of oil and on products where the use of oil is a major factor in their production.
Thinkor: "If there is a Saudi plot to eliminate the shale oil industry,.."
I guess everyone forgot about J. Kerry making his trip to Saudi Arabia and begging / pleading with them to pump like there is no tomorrow.... to deeeestrooooy the eeeevil Putin, hugh?
Would you put it past the Saudis to go gunning for the US Shale industry and the Russian oil industry at the same time while telling our jackasses that this'll kill Russia? I wouldn't. I don't trust the Saudis.
I didn't know that. They Saudis may not have been motivated by what Kerry said, but they would have at least seen it as a safer course of action than otherwise.
In addition to the immense pressure from persistently low prices, US producers also face a Fed rate hike cycle and thus the beginning of the end for easy money.
This indicates the real problem ... without realizing it at all. When you have a Medium of Exchange (MOE), where the interest rate can vary arbitrarily, you have a serious problem as a trader. You are shooting a moving target.
By the governing relation for any properly managed MOE: INFLATION = DEFAULT - INTEREST
Interest collections (loads) should have been applied long ago ... at the first sign of defaults. It's not about easy money. It's about trading deals that can't work in a crowding marketplace. It's tough enough to do deals when you're guaranteed a fixed MOE (i.e. no inflation of the MOE ... which has never happened). It's something else again when your business plan has a key parameter (i.e. interest) moving around arbitrarily.
Oil producers
Wanker Bankers.
Oil producers
Wanker Bankers.
Oil producers
Wanker Bankers.
I can't decide which of them I dislike more. Probably the wanker bankers. Morgan Stanley are probably lying in their latest scaremongering attempt. Fuck them and their oil industry clients.
It isn't odd that they're comparing the current US peak in oil production with the last one. :)
Can this not be explained by the following :
1. renewable energy revolution->downward pressure on demand
2.fracking in US->downward pressure on demand on world market (as still ban on exports)
3.nuclear deal with Iran in return for sanctions relief-> increase in supply
4.Global warming narrative with potential deal in Paris in december 2015->downward pressure on demand
5.economic depression ?
6.I have the impression that peak oil hysteria was possibly a scare tactic to justify high prices. Are people waking up to that ?
7.Young generation is too hooked to their internet connected devices to want a car to drive anywhere ? Or the sharing economy makes having your own car less of a must ? Think Uber,...
Your thoughts ?
Number 4 is arse-about- face.
There will be no deal that further reduces the already insipid demand.
piratepiet2,
my answers:
Primarily, it is the counter-intuitive results of systems which were based upon presuming endless exponential growth running into real limits of diminishing returns making that no longer possible. Civilization was based upon being able to make "money" out of nothing as debts, in order to "pay" for strip-mining the natural resources of the planet. Running into the real limits of diminishing returns, after we have high-graded ourselves to hell, show up first and foremost through the fundamentally fraudulent financial accounting systems. However, since those systems ARE ENFORCED FRAUDS, the intrusions of physical realities into those integrated systems of legalized lies backed by legalized violence results in various sorts of psychotic breakdowns, which manifest through a wide variety of counter-intuitive ways, because none of the mental models that people are using to perceive the real world were remotely close to being realistic, since those were based on being able to operate as professional liars and immaculate hypocrites.
As was recently concluded in another article that I also commented upon $900 Million Payday Is Billionaires' Reward For Crushing Twinkie-Maker's Labor Unions
In every way possible, on every possible level, it is a gross understatement to assert that: "In fact, there may be nothing in analysable history."
As I also explained in my reply under:
So You Say You "Don't" Want A Revolution?
There is nothing in human history to compare to the development of globalized electronic monkey money frauds, backed by the threat of force from apes with atomic bombs. The only thing that compares to the progress in physical science is the development of photosynthesis, which had profoundly revolutionary effects upon the evolution of life on planet Earth.
Nothing during "analysable HUMAN history" can be compared to advances in physical science enabling technologies to be developed that are trillions of times more powerful and capable, which then were primarily applied through social pyramid systems based upon ENFORCING FRAUDS.
The wild swings in the price of oil are due to hyper-complicated interactions within systems that were always based upon being able to back up lies with violence, so that everything that happens occurs through those infinite tunnels of deceits.
The renewable revolution is not yet sufficiently significant to explain the wide price swings in oil. Being able to make "money" out of nothing to speculate with is much more related to the wild price swings in oil. DEMAND DESTRUCTION is the single best explanation for the collapse of the price of oil, which in turn is related to those who are able and willing to make more "money" out of nothing to speculate with continuing to do that.
Nothing regarding the objective supply of oil explains the wild oscillations in the price of oil. Rather, the background steady deterioration due to diminishing returns from investments to extract oil ends up being leveraged up and down by many orders of magnitude, through fundamentally fraudulent financial accounting systems, such that those have intensely counter-intuitive manifestations, because there is nothing like that which was ever globally faced before, by the Neolithic styles of social pyramid systems, based upon being able to back up lies with violence.
The global warming narrative exists inside of that overall context that civilization is controlled by backing up lies with violence. Therefore, nothing can be trusted. Even although the greenhouse gas mechanisms exist, the overall climate includes more cosmic factors, such as the Sun and Earth magnetic fields, which are changing significantly in ways that nobody understands, and which factors were deliberately ignored by the mainstream climate models. In any case, there are not yet any sufficiently significant impacts from laws that are supposed to limit carbon emissions, but rather, only more scam "solutions" designed to deceptively be able to make more privatized profits, in ways which do not really resolve the bigger problems.
Economic depression is what I believe in the currently most significant reason for the DEMAND DESTRUCTION, that hit the price of oil. However, that cannot be comprehended outside of the extremely counter-intuitive aspects of how everything is priced through fundamentally fraudulent financial accounting systems.
Peak oil was not "hysteria," although the statistics can not be trusted regarding that, due to all of the vested interests that are behind misrepresenting that data. However, the basics appear to me to be irrefutable, without some series of technological miracles, none of which have been sufficiently proven to be possible, as far as I now know, our current kind of industrial civilization has sailed itself way up its shit creek without enough of a paddle, by presuming that there surely would be some technological miracles to save us from ourselves.
However, the basic problems are that money is measurement backed by murder, or that the debt controls depended upon the death controls. The history of oil can not be separated from the history of warfare, nor separated from the basic ways that civilization actually operates according to the principles and methods of organized crime. Again, there "nothing in analysable history" to be able to compare to what happens to petroleum resources, after the human murder systems have to adapt to the existence of weapons of mass destruction.
At the present time, we are cruising on the autopilot of human habits, to have developed globalized electronic frauds, backed by atomic bombs, in the forms of MAD Money As Debt, backed by MAD Mutual Assured Destruction. We have NOT adapted to that, other than mostly by continuing to follow our morbid psychological and political habits, which were based upon thousands of years of social successfulness through backing up deceits with destruction, and then through enforcing frauds.
The ways that the industrial revolution developed were never done with any overall rationality, but rather, were done in the expedient ways directed by the continued triumphs of organized crime. Therefore, the petroleum resources' real past was wrapped up in the paradoxical triumphs due to enforcing frauds, and so, the future of those must also continue to be wrapped upon in their continuing enforced frauds, which has wildly counter-intuitive consequences, related to the wild oscillations in the price of oil, that have no direct relationship to the relatively overall steady supply of oil, which has perhaps overall been plateauing.
The oil markets, like all other markets, are being rigged to the maximum possible degree by the people who most control the SOURCES of the public "money" supply as ENFORCED FRAUDS, which therefore, are able to create as much of that "money" out of nothing as they want to, in order to speculate with that, which are the primary reasons how and why the price of oil can be MADLY manipulated, in counter-intuitive ways, which will increasingly have even more MAD counter-intuitive consequences, because, overall, those ENFORCED FRAUDS are reaching their turning or tipping points, towards reaching the cusps of various psychotic breakdowns.
We are NOT analyzing a "rational" market, we are actually analyzing runaway criminally insane markets. It is only from that perspective that one can comprehend the otherwise astonishingly counter-intuitive ways that the oil markets have been behaving. Personally, I believe that Peak Oil is real, however, I therefore think that that will provoke Peak Insanity.
The younger you are, the more you are being lied to, cheated and robbed by the political system that you were born into. Some young people may have an intuitive bullshit detector. However, the circuits of that have probably burned out due to the overload placed upon those detectors. The entire system was based on maximizing the short-term benefits, while that also simultaneously maximized the longer term costs, which was facilitated through fundamentally fraudulent financial accounting systems. Overall, therefore, the debts have been deferred onto future generations, and even more so, the deaths have been deferred onto future generations, in order that past and present generations could indulge in strip-mining the planet's natural resources as fast as possible, regardless of the overall eventual consequences from having done that ...
The more one learns about that, the worse it gets. Furthermore, the younger you are, the worse that will probably become. For generation after generation, people have been the victims of the best scientific brainwashing that money could buy. That continues to be the case now more than ever before. All in all, I can quite sympathize with young people who have turned their intuitive bullshit detectors off, because otherwise those would have their sirens blaring louder and louder, while their warning lights blinked brighter.
In order to become more realistic about human energy systems, one has to go through series of intellectual revolutions, in order to encompass how and why we have ended up operating our civilization through fundamentally fraudulent financial accounting systems, whereby those frauds by privately controlled banks were enforced by governments to achieve leverage levels which appear to have become so extremely unbalanced as to be criminally insane (as I just recited in my other comment I posted today under $900 Million Payday Is Billionaires' Reward For Crushing Twinkie-Maker's Labor Unions
In my view, it is impossible to exaggerate the degree to which that is literally the case, and since petroleum resources are the single most important component in our current kind of industrialization, those are also subject to being the most criminally insane, and therefore, the oil markets manifest the maximum counter-intuitive events.
Counterintuitive, right. That, or one too many hits on the bong.
Same difference!
Sigh...grammar princesses. Missing the field of gold to look at a pile of shit.
Great response Radical. Im looking in the 20s and have options placed over 60 to support that.
RIPS
hey thanks for the long answer Radical Marihuana. Will have to analyse it later.
One preliminary question to understand your frame of mind though (it is not meant as an offense or to ridicule) : do you feel depressed ?
Well,
piratepiet2,
I am able to maintain attitudes of transcendental hope, which do not depend upon anything finite. That also enables me to hold on to irrational hopes more than I objectively should. Therefore, despite my view that the material world is now dominated by runaway systems of lies backed by violence, and I see no politically practical ways to prevent that from automatically getting worse, faster, I continue to maintain somewhat sublime attitudes towards that.
Especially since I am more like a person sitting on the beach looking at satellite images that predict a hurricane is going to hit that beach, but at the present time, it is still a sunny, beautiful day there, and then ... Even though, from any finite perspective, the more I have learned about the most probable futures, especially for the younger generations, the worse those tend to look like they will most probably become, even the worst stories are still only stories ... I tend to try to maintain relative attitudes of high indifference towards the approaching social storms that are brewing on the horizon of history ...
... Ask me again when those social storms are actually blowing through whether or not I feel depressed then. I rather think that I would be too busy coping with those circumstances to be able to indulge in the luxury of being depressed ???
You're an odd duck, RM. That's intended as a complement. I'd rather be around odd than this new normal that we're experiencing. FYI, I did figure out who you are based on a posting on another website. Just an FYI if your privacy on ZH is important to you. If not, then carry on!
I have enjoyed reading many of your posts on ZH, El Vaquero!
Of course, I do NOT value my "privacy on ZH," nor anywhere else, for that matter. Rather, I have, so far, found that I can mostly count on most people deliberately ignoring me, no matter whatever I may write.
It seems to me that the main ways that the established systems have responded to our ancestors fighting to establish considerable degrees of legally protected "freedom of expression" is to deluge more radical truths with so much bullshit, that there is no practical point to expressing more radical truths.
There is even a label for that now:
http://www.zerohedge.com/news/2015-04-28/cyber-attacks-are-new-cold-war
Cyber-Attacks Are The New Cold War
"The warfare ideology today is ‘Multilateral Unconstrained Disruption’ (MUD). This unrestrictive warfare is meant to disrupt societal functioning; to ‘poison’ information to elevate distrust of all computer information."
Obviously, the established systems of MADNESS have NOT actually gone away. The political economy is still based on the enforced frauds of the MAD monetary system, which are still backed up by the MAD military system, HOWEVER, we are now watching more and more MUD thrown around on top of that MADNESS. Backing up lies with violence with technologies trillions of times more powerful and capable is the manifestation of the oxymoronic "scientific dictatorship," which is actually as profoundly unscientific about itself as it can possibly be. The same problem now applies to another classic oxymoron, "military intelligence."
Thousands of years of the history of warfare, whose successes were based on deceits and treacheries, have driven those kinds of successes to become runaway criminal insanities, which automatically become more psychotic the more socially successful those systems of being able to back up lies with violence become. Generation after generation, after generation, the social successfulness of operating systems of organized lies and robberies, becoming more sophisticated systems of enforced frauds, have driven too many of the people doing that to be such extreme manifestations of professional liars and immaculate hypocrites, that they tend to believe their own bullshit.
That is the overall context in which there have developed monetary systems based on electronic frauds, whose enforcement includes every possible weapon of mass destruction that could be developed, due to progress in physical sciences being applied to become better at backing up lies with violence, which now includes the new doctrine of MUD piled deeper and splashed around over all of the previously existing MADNESS. Indeed, at the present time, political "progress" amounts to spraying MUD on top of MADNESS.
Inside of that context, I regard myself as just another bit of flotsam and jetsam, being tossed around by the social energies, which apparently are organizing themselves into social storms. For instance, the apparent "ironies" with respect to the price of oil is that those will whipsaw themselves, through more and more severe time delays, so that the destruction of the productive capacities to be able to extract petroleum resources will get more and more out of phase, due to the wild oscillations in the price of oil putting "producers" out of business.
P.S.
I found it amusing to my macabre sense of humour when ZH labeled the devolution of the "new normal" to become the "new paranormal." Every day, it seems to be more and more actually demonstrated that "truth" is stranger than fiction, while what used to be presumed must be satire increasingly appears as the actual "news."
Meanwhile, I tend to enjoy the Zero Hedge Web site, due to the degree that it appears to appreciate and articulate that increasingly bizarre social fact.