Oil, War, & Drastic Global Change
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
The first thing that popped into our minds on Tuesday when WTI oil briefly broached $30 for its first $20 handle in many years, was that this should be triggering a Gawdawful amount of bets, $30 being such an obvious number. Which in turn would of necessity lead to a -brief- rise in prices.
Apparently even that is not so easy to see, since when prices did indeed go up after, some 3% at the ‘top’, ‘analysts’ fell over each other talking up ‘bottom’, ‘rebound’ and even ‘recovery’. We’re really addicted to that recovery idea, aren’t we? Well, sorry, but this is not about recovering, it’s about covering (wagers).
Same thing happened on Thursday after Brent hit that $20 handle, with prices up 2.5% at noon. That too, predictably, shall pass. Covering. On this early Friday morning, both WTI and Brent have resumed their fall, threatening $30 again. And those are just ‘official’ numbers, spot prices.
If as a producer you’re really squeezed by your overproduction and your credit lines and your overflowing storage, you’ll have to settle for less. And you will. Which is going to put downward pressure on oil prices for a while to come. Inventories are more than full all over the world. With oil that was largely purchased, somewhat ironically, because prices were perceived as being low.
Interestingly, people are finally waking up to the reality that this is a development that first started with falling demand. China. Told ya. And only afterwards did it turn into a supply issue as well, when every producer began pumping for their lives because demand was shrinking.
All the talk about Saudi Arabia’s ‘tactics’ being aimed at strangling US frackers never sounded very bright. By November 2014, the notorious OPEC meeting, the Saudi’s, well before most others including ‘analysts’, knew to what extent demand was plunging. They had first-hand knowledge. And they had ideas, too, about where that could lead prices. Alarm bells in the desert.
There are alarm bells ringing in many capitals, there’s not a single oil producer sitting comfy right now. And that’s why ‘official’ prices need to be taken with a bag of salt. Bloomberg puts the real price today at $26:
The Real Price of Oil Is Far Lower Than You Realize
While oil prices flashing across traders’ terminals are at the lowest in a decade, in real terms the collapse is even deeper. West Texas Intermediate futures, the U.S. benchmark, sank below $30 a barrel on Tuesday for the first time since 2003. Actual barrels of Saudi Arabian crude shipped to Asia are even cheaper, at $26 – the lowest since early 2002 once inflation is factored in and near levels seen before the turn of the millennium. Slumping oil prices are a critical signal that the boom in lending in China is “unwinding,” according to Adair Turner, chairman of the Institute for New Economic Thinking.
Slowing investment and construction in China, the world’s biggest energy user, is “sending an enormous deflationary impetus through to the world, and that is a significant part of what’s happening in this oil-price collapse,” Turner, former chairman of the U.K. Financial Services Authority, said. The nation’s economic expansion faltered last year to the slowest pace in a quarter of a century. “You see a big destruction in the income of the oil and commodity producers,” Turner said. “That is having a major effect on their expenditure across the world.”
Zero Hedge does one better and looks at 1998 dollars:
The ‘Real’ Price Of Oil Is Below $17
“You see a big destruction in the income of the oil and commodity producers,” exclaims an analyst but, as Bloomberg notes, while oil prices flashing across traders’ terminals are at the lowest in a decade, in real terms the collapse is considerably deeper. Adjusted for inflation, WTI is its lowest since 2002 and worse still Saudi Light Crude is trading at below $17 (in 1998 dollar terms) – the lowest since the 1980s… Slumping prices are a critical signal that the boom in lending in China is “unwinding,” according to Adair Turner, chairman of the Institute for New Economic Thinking.
In fact, while sub-$30 per barrel oil sounds very scary, Saudi prices would be less than $17 a barrel when converted into dollar levels for 1998, the year oil sank to its lowest since the 1980s. Slowing investment and construction in China, the world’s biggest energy user, is “sending an enormous deflationary impetus through to the world, and that is a significant part of what’s happening in this oil-price collapse,” Turner, former chairman of the U.K. Financial Services Authority, said.
But this still covers only light sweet crude. Heavier versions are already way below even those levels. Question: what does tar sands oil go for in 1998 dollars? $5 perhaps? A barrel’s worth of it fetched $8.35 in 2016 US dollars on Tuesday. And that does not stop production, because investment (sunk cost) has been spent so there’s no reason to cut, quite the contrary.
Crude At $10 Is Already A Reality For Canadian Oil-Sands Miners
Think oil in the $20s is bad? In Canada they’d be happy to sell it for $10. Canadian oil sands producers are feeling pain as bitumen – the thick, sticky substance at the center of the heated debate over TransCanada’s Keystone XL pipeline – hit a low of $8.35 on Tuesday, down from as much as $80 less than two years ago. Producers are all losing money at current prices, First Energy Capital’s Martin King said Tuesday at a conference in Calgary. Which doesn’t mean they’ll stop. Since most of the spending for bitumen extraction comes upfront, and thus is a sunk cost, production will continue and grow.
Another interesting question is where the price of oil would be right now if the perception of low prices had not made 2015 such a banner year for filling up storage space across the globe, including huge amounts of tankers that are left floating at sea, awaiting a ‘recovery’. But that is so last year:
Tanker Rates Tumble As Last Pillar Of Strength In Oil Market Crashes
If there was one silver-lining in the oil complex, it was the demand for VLCCs (as huge floating storage facilities or as China scooped up ‘cheap’ oil to refill their reserves) which drove tanker rates to record highs. Now, as Bloomberg notes so eloquently, it appears the party is over! Daily rates for benchmark Saudi Arabia-Japan VLCC cargoes have crashed 53% year-to-date to $50,955 (as it appears China’s record crude imports have ceased). In fact the rate crashed 12% today for the 12th straight daily decline from over $100,000 just a month ago…
China imported a record amount of crude last year as oil’s lowest annual average price in more than a decade spurred stockpiling and boosted demand from independent refiners. China’s crude imports last month was equivalent to 7.85 million barrels a day, 6% higher than the previous record of 7.4 million in April, Bloomberg calculations show.
China has exploited a plunge in crude prices by easing rules to allow private refiners, known as teapots, to import crude and by boosting shipments to fill emergency stockpiles. The nation’s overseas purchases may rise to 370 million metric tons this year, surpassing estimated U.S. imports of about 363 million tons, according to Li Li, a research director with ICIS China, an industry researcher. But given the crash in tanker rates – and implicitly demand – that “boom” appears to be over.
The consequences of all this will be felt all over the world, and for a long time to come. All of our economic systems run on oil, so many jobs are related to it, so many ‘fields’ in the economy, and no, things won’t get easier when oil is at $20 or $10, it’ll be a disaster of biblical proportions, like a swarm of locusts that leaves precious little behind. Squeeze oil and you squeeze the entire economic system. That’s what all the ‘low oil prices are great for the economy’ analysts missed (many still do).
Entire nations will undergo drastic changes in leadership and prosperity. Norway, Canada, North Dakota, Russia. But more than that, Middle East nations that rely entirely on oil, a dependency that won’t allow for many of their rulers to remain in office. Same goes for all OPEC nations, and many non-OPEC producers.
We can argue that a war of some kind or another can be the black swan that sets prices ‘straight’, but black swans are supposed to be the things you can’t see coming, and Middle East warfare for obvious reasons doesn’t even qualify for that definition.
The world is full of nations and rulers that are fighting for bare survival. And things like that don’t play out on a short term basis. For that reason alone, though there are many others as well, oil prices will remain under pressure for now.
Even a war will be hard put to turn that trend around at this point. Unless production facilities are destroyed on a large scale, war may just lead to even more production as demand keeps falling. The fact that Iran is preparing to ‘come back online’, promising an even steeper glut in world markets, is putting the Saudi’s on edge. Rumors of Libya wanting to return for a piece of the pie won’t exactly soothe emotions either.
And when, in a few years’ time, all the production cuts due to shut wells become our new reality, and eventually they must, then no, there will still not be an oil shortage. Because the economy will be doing so much worse by then that demand will have fallen more than supply.
Barring large scale warfare in the Middle East there is nothing that can solve the low oil price conundrum. But think about it, which Gulf nation can even afford such warfare in present times? For that matter, which nation in the world can?
The US may try and ignite a proxy war with Russia, but that would lead to an(other) endless and unwinnable war theater. Which would carry the threat of dragging in China as well. The US and its -soon even officially- shrinking economy can’t afford that. Which of course by no means guarantees it won’t try.
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FREE NIKOLI TESLA!!!!!! Your post made me happy!! Well done!!!
I think about Tesla often...
IF Tesla had succeeded in harnessing the energy via engaging the magno-sphere/?/solar wind transfer function of the World we would ALL be living in a completely different set of economic and social paradigms.
It is my intruition that eventually the Sun will be likely harnessed one way or another, either via tapping the magnetosphere or via vast solar arrays beaming some frequency band of energy to terrestrial receivers.
At that point I imagine that most manufacturing, probably even the growing of foodstuffs, would be done on the Moon and/or on nearby space stations.
Mankind could focus on the health and happiness of human existance, on preserving nature and protecting the bio-sphere, so much more...
We ARE history's middle children.
We know the present system is not sustanable -or equitable.
We know in our hearts we can do better for ourselves and the World.
Our grand posterity awaits.
Our TRULY GREAT accomplisments seem imminent even as we struggle amongst Ourselves.
The Era of Humble Pride in stewardship of natural beauty and biological diversity awaits.
I do believe that WE have a responsibility to both Ourselves and to the Other Denizens of this planet.
We are SO fucking close...
Perhaps, in a parallel universe, we have already done so.
And in a parallel universe Ringo Star can actually drum
Plagiarized Red Dwarf quote "Sarc on standby Holly"
Bubbles
'WE', gotta machete our way thru a jungle of Ashkenazi's and Bilderbergers first before any of that will happen.
Throxx...
spot on!
The poor EE student (C average) knows more about LCR circuits than Nikola Tesla ever did. His misunderstanding of LCR circuits lead to his illusions about "free energy".
Tesla was obviously brilliant (3 phase motors). But there were holes in his understanding.
Be careful, there may be some 'holes in your understanding'
http://conspiracybuzz.info/2016/01/india-permits-free-energy-technology-...
Saw yesterday that two of the principles from VT took delivery of two units...
You make a good argument Throxx. You are entirely correct that money is broken and there is a need to return to sound money principles. Moreover that the solution is to look towards commodities as a basis for money and why not the most strategic commodity of the day - oil? Personally though I support the idea of a commodity index to back money, because the weighted indexed value of all commodities does not change as rapidly as the value of a single given commodity.
The fundamental problem I believe is a banking and political one. Without the means to create infinite money supply central banks are unable to enable the spending plans of governments and perform "stabilisation" to fuel the political cycle and achieve political ambitions at a whim. This is an unacceptable conclusion for policy makers, even though it would lead to a much more reliable economic system that would endure smaller garden variety recessions and crises instead of increasingly deadly ones and ultimately a fatal one.
Until we seperate state and economics finally and completely nothing will change and we will continue to accelerate towards complete collectivism and economic disintigration. Fix the prevalant philosophy and we fix politics, fix politics and we fix economics too.
Electricity is at least as important as oil and electricity's import is rising as oil's declines. Why do you think the price of oil is declining? Because we project needing more?? You give the inbred Sauds too much credit.
BTW, reg unleaded in 1.67 in Colorado. You Cali people need to look at your taxes and fees to understand your $3 petrol. You like your gov't you pay for your gov't.
The real price of oil is what someone is willing to pay for it. Everything else is bullshit. I for one am not going to bemoan people that have been provided a living by having been born on a sea of oil that are now having to get off their dead ass and work.
Well, everybody's IRAs and wages are at 1998 levels, so why not oil?
Besides, the price we're talking about is only indirectly the price for the liquid stuff. What's really being bought and sold is abstract coupons for the liquid stuff. Demand never justified $140/bbl, and lack of demand doesn't justify $26/bbl, or less.
It's like the price of a generic blood pressure medication a relative of mine takes. When his insurance company signed a new deal with Walgreen's, a 90-day supply cost him $5, or about a nickel a day. When they switched to a different pharmacy, the same generic pill cost him $130 for a 30-day supply, or $390 for that same 30-day supply; $4.33 a day. Neither of those prices could possibly be appropriate, or everything we've ever heard from economists is completely fucked-up and wrong.
The price on all things is determined by what the majority of people can afford to spend.
It is not rocket science ... governments encouraged the borrowing to buy trade instead of spending because it was already failing to achieve growth.
Nothing new in that ... what is new is that you can start to realise when you reach a max growth scenario no matter how much QE you do you do not get real sustainable growth ... alot of money growing the bad debts though lol.
Swmnguy, your relative should look into alternative ways of lowering his BP. One way that is actually approved by the FDA is Resperate. It helps you slow your breathing. Or, just have him buy the book The Relaxation Response and learn to meditate. This automatically slows breathing and acconplishes lowering of BP.
Supplementing with magnesium glycinate and arginine also lower BP, not to mention weigh loss.
People who depend on drugs to correct a lifetime of poor diet and health habits deserve what they get, ignorant and self important cardiologists who only know drugs and the side effects that are sure to follow, which require even more drugs.
Get a grip or at least an education. My wife has high blood pressure and she neither has bad health habits or poor diet. In her family it's hereditary. Most cases of cancer are hereditary as are diabetes. You think all those women had their perfectly healthy breasts removed because it was cool? They did it because of their family history. At least a doctor went to school but we should listen to you and your quack practise of medicine. Not. Steve Jobs, and so many others, went to Mexico for natural cancer cures and they are now dead. Steve because by the time he went for a real cure it was too late.
"Most cases of cancer are hereditary as are diabetes."
While these things may be true they still don't negate what the other poster was saying (albeit in overly-loaded words), that such can be hedged/managed via diet. Consider:
http://www.telegraph.co.uk/news/science/science-news/12027265/Type-2-dia...
Yes, Type II is different from Type I.
For what it's worth, my wife is a cancer survivor, breast cancer. NO family history. Diet was above average. Best thing to do with affirmed cancer is GET RID OF IT ASAP! Something like Type II diabetes, on the other hand, CAN be managed (even cured if the above article is proven correct) w/o such drastic measures.
Yeah, DchangO, I was wondering, too, about why gas prices are still over the top in So Cal when I'm reading that others are paying around $2.00 or so per gallon. Thank for the answer. Yes, I am lazy.
ND Sour Crude is actually now at minus $0.50.
You ever pause to consider if oil wasn't really dead dinosaurs and scarce, but just like something you could get almost anywhere if you poked deep enough? Or why people refer to "money" floating around as extra "liquidity" sloshing around in some hypothetical drum somewhere? Or why it is so important that the price of this un-scarce resource is counted in Federal Reserve Notes, but the price is set by some Wahabi piece of shit in Saudi Arabia or other butt-hole country that has nothing else to offer civilization? Although, the Middle Easterners did make a novel solution to HVAC in their buildings and they are good at geometry.
Oil at 2 cents a barrel is more than oil is worth. Oil isn't worth the barrel it comes in. The Federal Reserve Note that pays for it isn't worth the paper it's printed on. Scarcity is what is truly gone in a World Economy. It's the people in control of the means of production that profit and collude to increase or decrease scarcity of resources, and their paid PR government shills are the designated dummies who tell us why it's GOOD!
Interest due to the Federal Reserve is never going to be printed. Nothing from nothing comes. There is no way out. Absolutely no way out under the rules of the inbred few, the disgusting parasites that feed on us. Cool heads prevail. Peaceful non-consent is the best way to slow the innevitable outcome.
Put one gallon of gas in your car drive it till it runs out. Then, push it back home. Once you have completed that little exercise, get back to me on what a gallon of gas is worth along with the barrel of oil it is derived from.
"But think about it, which Gulf nation can even afford such warfare in present times? For that matter, which nation in the world can?"
The first Gulf war was financed by the rest of the world via dollar. That was why the US got of the gold standard in the 70s and tie the dollar to oil: so they rest of the world could pay off the Vietnam war debt. And world keep on financing US wars by doing trade with dollars and buying US bonds.
Just wait until Russia, Iran and China start trading and buying/selling oil and gas in non dollar currencies. Ghadaffi and Hussein tried and both got whacked but Russia, China and Iran are bigger nuts to crack.
Vietnam was beyond stupid.
The US bought oil, shipped it half way around the world to US refineries, refined it, then added shit to it to make NAPALM, and then shipped the NAPALM half way around the world just to dump it and burn it in/on Vietnam.
...All while also policing/protecting Europe, Saudi Arabia and Israel.
It would probably have been cheaper and more productive to have nuked both the Saudi Arabian oil fields and Vietnam, and let Israel fend for itself or fade away...
Well, if you accept that the real reason Vietnam happened was because it was an attempt to muzzle in on the oil and gas fields that ring the South China Sea then you would understand why they tried it, led of course by their own Texas oil man, Lydon Johnson. What is beyond stupid is that the dark forces that run the US government keep believing that they can continue their murderous rampage and overt belligerence indefinitely, with no consequences. The consequences are real and coming to a State near you.
Actually Qaddafi by himself asking selling oil in anything but dollars wasn't the problem. The currency he proposed was an all Africa currency. They were going to establish 3 main banks, including an investment bank in Tripoli, and were going to manage their own fianancial affairs without outside meddling. Not only was it a danger to the petro dollar but it would break the stranglehold the IMF and World Bank had on Africa. For instance, courtesy of the Obombinater, all IMF loans would have to pass the global warming test. One country, Namibia I believe, wanted money to build a power plant powered by the waste natural gas they burn off from their oil production. IMF said no so the project died and so did the dream of improving their standard of living. If Qaddafi was still around he would have financed it through his Libyan Development Fund or the Africans would have if they got their banks going. When Qaddafi died so did the African currency plan. Now those countries, except those getting cash from China, are still chained to the IMF and World Bank.
As you well know the US wants to rule the world and destroy any challengers and if they can't do it militarily they do it with the help of the banks and Wall Street along with the dollar. When the dollar or petro dollar loses it's power the parties over. Notice how right after the Chinese currency gets put in the international basket, along with the recent formation of the Brics and Chinese big banks, and the rise of the Shanghi Cooperation Council China is in it's death throes, at least according to the mainstream press. People who visit China regularly claim it's nowhere near as bad as the press makes out. One can make the case that to protect the dollar the US is using all it's financial weapons of destruction and the press to destroy China without dropping a single bomb. Same goes for the sanctions on Russia and outsiders crashing their financial markets and the ruble. The real reason no one on Wall Street goes to jail is that they are allowed to do what they want as long as they heed the call from DC to destroy the economy of another country. In the process make another fortune off the backs of the little people as they go jobless and hungry.
@NDY
Thank you for connecting together two dots which for me at least previously remained unconnected, "Global Warming" and the "Qui Bono?"
The PetroDollar stuff is basic to most ZH readers, but I read this blog for the occasional "Aha" moment of dot connection that puts another puzzle piece in place. You gave one to me.
The connection between establishing phoney CO standards (based on "bought and paid" for pseudo-science) and IMF banking/loans was something I hadn't yet made. It makes total sense yet remains so deeply out of the grasp of most "Kardasian Obsessed" Americans I doubt it will ever see the light of day. I'm still having trouble explaining The Fed to my friends.
Get hold of a copy of Michael "Jurassic Park"'s State of Fear. That nails AGW.
North Dakota is a nation???? Why isn't Texas in that list?
Their state bank just needs to start printing state currency, and presto - new de facto nation-state.
https://en.wikipedia.org/wiki/Bank_of_North_Dakota
They could very well become a Lesotho to our South Africa.
fuckit, im putting everything into schwinn
the ussa has for ~ seven decades propped up a hostile fascist arabian peninsula that has held an iron fist over its populations. denying them of freedom. these apostates or as OBL called them (the entire west coast of the arabian peninsula, too mumbarak's egypt, and as far north as erdogans, turkey, et.el) some 5,000 total sheikhs ( living the westerners life style?) is but a modest guesstimate`conservative number, spend the inheritance of the entire muslim population on themselves, while crucifying any and all who don't bow to their self anointed clerics via 'made-by-man-interpretation' as a delusional vanguard to protect, vis-a-vis a relgious police... their illegitimate modus-vivindes raison'd`etre is opaque, writ with psychotic xenophobia! the audacity to portray Allah's grandiose spiritual mosques for all to marvel as a potemkin`village PR bread & circus-- but again, used for 'profit only'! whoa!!!
the ussa is fed up with the Middle-East. we want out, period! if russia and china want it, they can have it. there are today ~ 1.62 billion muslims on the planet and growing in every continent.
again, let me reiterate... we don't need the ME oil as in regarding 'national security' via the idiot 'wilsoniaism internationalism-'ism', and the great war that brought us into wwii, because he never finnished wiping his ass, whilst declaring a hands-off wwi finale,... thus todays copycat neocons want the opposite regarding a wwiii with a 'hands-on?, brilliant foreign policy.
what foreign policy does america have other than for the 99.9% which includes... every 'Body', other than the american 'joe six-pack family'!
finally, its not in our interest to get into a vietnam or afghanistan? just ask the ussr & british. the middle-east is a islamic-awakening that is cruising for a fight, and with 1.5+/+ (sunni 90%) billion adherents jihadi/sharia law muslims willing to die for islam worldwide, its best to leave the russians' chinese, and indians in charge.
ps. those poor europeans...
So when gassing up makes people go broke, the economy is better.
The issue is whether people can afford to fill up, not what the price is.
Would you rather see oil at $1/bbl and be unemployed or see it at $300/bbl and be employed? Lots of "depends" in there, no?:
The timing's all wrong. Commodity prices (all of them, not just oil) had peaked in 2012. That's when China really began to slow down, as American prole households deleveraged (pulled in their belts and started paying that shit off, or simply defaulted on their debts), and it got harder to sell them crap they didn't need made in China. But there was no oil glut till 2014. The new supplies of shale oil were sold with little trouble.
By 2014 not only was it clear that QE wasn't working as promised to revive economies in the West any more than in Japan, but oil prices at or near record highs were starting to make Russia prosperous enough to assert itself against Uncle Sugar's eastward expansion of NATO.
So, DC and Riyadh arranged a supply-side shock. Make oil and gasoline cheap enough, and American proles would use some of the money they saved to buy stuff again. Meanwhile, Russian proles would lose jobs and see inflation skyrocket, and turn against Putin.
Of course, it didn't work---the Chinese economy turned for the worse, US consumers didn't spend the gas windfall on crap they didn't need (most of it went to cover debt repayment and huge Obamacare premiums) and the most important rebel against banksterism to fall from power was Stephen Harper, not Putin.
But demand didn't collapse. The Chinese economy is genuinely much larger than it was 15 years ago, and imports of oil reflect that. The oil glut is the result of Saudi oil dumping, plain and simple.
IMHO, dumping trillions of counterfeited US Dollars into the hands of speculating financiers and their cronies affected the price far more than the marginal increase in output by Saudi Arabia.
Demand has little or nothing to do with price in an arbitrary fiat regime -certainly not in one where any and all price signals are confounded by wild leverage and derivatives pyramiding..
Please look at the charts I posted in my first thread posting above...
Decoupling the US Dollar entirely from Gold initiated and co-incided with the first wild wave of calorie/value to price decoupling.
Financialization, derivates pyramiding and QE -ALL non-caloric representations of neo-collateralization constructs devolved from backed currency regimes- were engineered in attampt to hide the actual levels of inflation and mis-allocation but ultimately acted to escalate volatility and project/distribute the inflation and associated unpayable usury and rentier shimming costs into other sectors of the economy beyond the accounting of energy backing the 'Petro-Dollar'.
An HONEST 'Petro-Dollar' would be directly exchangeable with any and every other measure of substance of similar uses in generation of industrial caloric output on a calorie equivalency basis: liquid nat-gas, ethanol, fischer-tropsch generated 'synthetic' liquid fuels, etc..
Some like caloric/cost ratio would also apply to alternatives resulting in output of equivalency as electricity, heat generation, etc..
Want STABLE 'money'?
-Define the unit of money as deliverable caloric output with as low a level of conversion and/or storage loss as possible.
Calories cannot be counterfeited.
A BTU is a BTU. A kilowatt is a kitowatt.
There is NO faking THAT. No accounting legerdermaine is possible. No coin shaving is possible. A measure is a measure.
Labor productivity would have a defined value in terms of currency.
Industrial output would have a defined value in terms of curency.
Economic efficiency would equal increased spending power.
Conservation would be expressed as savings and/or as an accumulation of wealth.
Create/capture cheaper energy and/or generate higher levels of productivity and reap higher output in Calorie-Dollar terms: and as output increases so would the level of living standards possible with existing resources...
I dream of UNcounterfeitable Power Money. Currency in the form of Stable Deliverable Caloric Units.
The perfect battery is the perfect wallet/safe.
Basing money on something that is consumed is ridiculous if not downright iditiotic. After you consume it, what's left?
We already have a non-destructable element that has been in use, world wide for over 50,000 years, gold.
Basing moneyness on something that can neither be scaled to meet industrial demand or divided as required for the purpose of individual transaction is foolish.
Double the industrial caloric output but only increase the amount of the unit of measure ( Gold ) by a fractional amount that is ighly difficult to verify and the whole gloal monetary system of inter-locked valuation of output from national budgets down to individual accounts of credit and debt becomes outrageously hard to re-balance.
Every time someone mints a few ounces of Gold the whole system would need to be re-oriented to account for this change in the accounting unit basis. ...Just handling the Gold reserves would conceivably destabilize the system as losing grams to handling would effectively de-monetize hundreds of millions of dollars in output.
Metallic references for monetary standards devolve by necessity into paper derivative coupons for practical purposes leading us all right back to the present speculative markets, manipulations, counterfeiting and fraud.
A set measure of delivered economic output as expressed in calorie cannot be faked or counterfeited or compromised once a valuation unit has been agreed.
I posit that the primary problem with caloric money is the method of storage/distribution.
We could indeed consider a regime of atomic weights expression at some point.
A set measure of Uranium theoretically contains a set measure of atomic energy that can be realized for instance; but, I still think that the problem associated with r-orienting the wealth accounts of the whole planet based on mining/finding a lump of calric dense fuel leads right back to monetaization instablility.
I seek a more fundamental standard, one that can be applied universally as an expression of labor value from the human to the industrial, and which is not based on discovering pockets of potential wealth under your feet but upon generating output.
As with oil: it doesn't matter how much is in the ground or the tank: measurable production of caloric output after transactional and transmission losses are what actually matter...
Stephen Harper, a rebel? HAhahahaha. That's too funny. Netanyahu and the New York banking Jews loved Harper so much they regularly fetted, anointed and stroked him. Just the kind of treatment a desperately lonely psychopath craves.
Harper's Canada was one of Netanyahu's few genuine allies in the ongoing fight against the Islamic menace. That was how he alienated the New York bankers, most of whom have no Jewish blood and none of whom worship any God but money. They hate the Jews as much as any Arab, and only tolerate Israel because of the Samson Option.
They've been working on wiping out Judaism and Christianity both and replacing it with Islam, a slave morality designed to keep the proles poor and submissive to their betters' will. Harper's hints he might do something to halt Islamisation in Canada was the last straw.
The destruction of US is the only way to save the world. YES 'destruction' is the right word b/c Americans are to cowards to do anything to take back the country from the MIC the real rulers of US government.
And here all this time I thought the cure for low oil prices would be low oil prices?
$20 barrel oil = World War MuZZie. Sunni Vs. Shia. Liver eater Vs. Donner Kebab eater. Radical vs Moderate
The price of petrol in Qatar is set to increase by more than 30 percent in a surprise hike that starts at midnight tonight (Jan 14/15).
http://dohanews.co/qatar-increases-petrol-prices-from-midnight-tonight/
" Entire nations will undergo drastic changes in leadership..."
And I don't subsidize oligarchs, monarchs and banksters as much when I fillup?
Doesn't sound all bad to me really.
Who brought Mr Doom to the party?
The challenge in the Middle East will be that the Liver Eaters and Wahhabists carry the biggest stick and aren't much for compromises.
Pakistani clerics block ‘un-Islamic’ child marriage billhttp://english.alarabiya.net/en/News/asia/2016/01/15/Pakistani-clerics-b...
The generally slowing world economy and the oil "glut" reminds me of the days at the begining of the Dust Bowl where wheat was wildly over produced, the environmental concerns seldom understood and the jobs, banking and investing economy deteriorating. For quite awhile in the 1930's farmers kept planting more and more wheat, hoping that it would be different "this time". Congress was full of fat cat city slickers who, much like today, didn't see anything much further west than the Mississippi river until one day much of the west literally blew in the windows in Washington. As we know the country struggled on until...WWII. Of course all this hoarding could very well be in preparation for WWIII and draconian rationing and control.
The parasites are just confused at the moment, they forgot what a free economy did for oil prices in the past. Maybe they will come to their senses and just go fuck off.
how come nobody asks if the high oil price was a scam rip off in the first place...maybe it's only worth 20 or 30 bucks a barrel and they were jacking us all this time.
it's not my fault government set their budgets based on BS out of this world oil prices... they were greedy
besides the difference between $20 oil and $100 oil is just BS inflation of the US dollar.
1950's price for a lot of things seem pretty good as that's all money was worth, maybe at those prices people can get a 4% return on savings
You need to price oil at a cost to discover, develop and replace it on the market - which today is quite high as most new oil reserves are found in unconventioanl sites - tar sands, tight oil, deep water oil - VERY expensive to process. Pricing oil at tits original cost ($10/$20) is just asking for an end to new finds and development projects. And this of course would lead to tragic circumstances for the global ecohnomy since a new oil field requires years to develop - a lag the real economy can not afford.
Eventually, however, it fails. The newer discoveries are incapable of offsetting the declines in the old wells, let alone increase overall production in order to support our growth meme.
This is the tide being sucked out to sea before the tsunami hits. Get ready.
This article begins to address an issue that I've written about before, market volatility. I take a look at what is happening with oil, commodities in general, currencies, bonds and other economic factors and I would suggest to you that if any government, anywhere, were directly responsible for the loss of tens of trillions of dollars, as the current crop of oligarchs has been, the revolution would have already started. Indeed, thanks to the never ending drone of 'free market' mavens, whenever the government does something stupid, like pays a MIC contractor 235.00 for a hammer or 1,000 for a flat-top toilet, the howls of protest can be heard from Key West to Anchorage. But when the Oligarchs lose Trillions, well, that is just the 'free market'. Not so much.
But not all government organizations are bad. In Canada, before Harper set to work continuing the destruction that Regan and Thatcher began, we had a thing called the Canadian Wheat Board. It was a quasi-government organization responsible for managing the market, providing a fair sale price to farmers, regardless of the supply and demand situation, storing excess production, providing low-cost loans for new planting seasons and finding new markets. It worked very, very well for decades. Now there are some out ther who would say, yes, but when the prices went down consumers didn't benefit from those reductions and that would be true. But consumers also didn't suffer from extreme price increases when prices went up, either since the cost of inventory had been averaged over many years. I would rather pay 30 cents more for a loaf of bread today than 5 dollars more for a loaf when some unforseen or created production disruption occurs.
There is a heavy social cost involved with allowing so called 'free markets' to operate. When I say free markets of course I am referring to what most of us in our lifetimes have come to understand what has been interpreted as free markets, which of course are not free at all. They are manipulated heavily by the lucky few who have Wall Street contacts, access to large amounts of liquidity and have been sanctioned as acceptable by the 1% to administer their investments. These people place huge bets, in the billions and billions of dollars on production. Sometimes they get it right, often they get it wrong, and when they get it really wrong, likey they have since 1980, the costs are enormous. In fact, the real end result of those costs has yet to play out. Whether it is the oil and gas industry, or the automobile industry, or the argiriculture industry or any other industry that has 'benefitted' from the ministrations of Wall Street in the last 35 years, tens of millions have lost their jobs, their pensions, their homes, their savings. They have been forced to move on like so many itinerate workers. Communities and whole countries have been destroyed. Tax bases have been destroyed. Means of production have been sold off for 10 cents on the dollar (to guess who), and in the case of the US, the political ramifications have yet to be truly felt. But they will be and before the year is out. This is not how you want to organize and run a society. It is destructive, deadly, vicious and nasty. There is no saving grace that anyone can identify in a system like that, except the few, who will lie about their true intention to argue that a so called free market is the ultimate that we can aspire to. Of course what they are really aruging about is this: I think I can game the system and get rich. But if a quasi-government body controls the prices, then I am prevented from doing that, therefore government bad, free market good. Bullshit.
In the late 1800's, again in the dirty thirties, and again post Regan (every 50 years, or a generation), corporations have tried and sometimes succeeded in creating market monopolies. They want to do that because competition and/or regulation is bad for the bottom line. They don't give a damn about the market or their customers or their employees or the societies they operate in (Cargill, Monsanto, Union Carbide, Dow etc), that has been proven beyond a shadow of a doubt. The only thing they really care about is making as much money as quickly as possible and paying the least amount of tax on it they can. That is called psychopathy, and fortunately more and more ordinary people are coming to understand the destruction that these monopolies have caused/are causing.
David Stockman postulated that the inflation that we experienced in the late 70's early 80's was due to a market failure to identify the demand increases of the boomer generation. Others aruge that it was the abandonment of Bretton Woods. I say it was both. But the subsequent market repsonse to the events of those years was of course, completely and utterly wrong, in the extreme. Go look him up and see what he thinks today. Instead of judicious investment in smart production, Regan/Thatcher cut taxes by 40% and there was a stampeed of capital out of North America and Europe into Emerging Markets such as China and India in the stupid and ridiculous notion that killing jobs at home (consumers) and creating them in low-cost locations was the 'proper' repsonse. What it was of course was more greed showing it's ugly face. The Oligarchs thought they had it made. All they had to do was to move critical capital overseas, strike some shady behind the scenes deals with the governments there and wait for the juicy profits to start rolling in. Only the profits never did roll in. China understood the 'Western way' better than the Oligarchs did and when it came time for China to abandon their population by revaluing the Renminbi up by 50%, they said NO. Good for them. Bad for the Oligarchs. They will never recover their capital now, no matter how hard they try to intimidate China. And even though Bernanke/Draghi tried to give them their money back, what they got was depreciated fiat in a world already oversupplied with fiat to the point where trillions do nothing more than move around the globe electronically looking for the best currency pair trade or the highest short term deposit rate. That capital is of no value. The country, the banking system, the society has been completely destroyed and the smartest economic minds have no idea what to do about it.
There are no perfect solutions in this world. The best we can ever hope for is to minimize greed and disruption and cronyism while creating a society that is stable and productive and happy. Doing that has become a lot harder now.
The one thing I know to be true is this. People keep learning, and relearning the same lessons over and over and over again. It's like some kind of cultural amnesia. Each generation, spurred on by glossy ads and cheap credit get sucked into believing that there is a free ride out there, that banks and lenders are 'on their side' and that they are doing the patriotic thing by consuming using debt. No bank or lender is 'on your side'. The odds are stacked against you right from the start when the government and the financial system are captured and sturctured in such a way as to make debt slavery enevitable. At least for those who mistakenly believe they are 'smarter' than the rest. As far as I'm concerned the very first task that has to be undertaken, at any cost, is to root out and eliminate every source of cronyism we can find. Then make education about human nature a basic part of the education curriculum. There is noting that is more important than doing that.