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Guest Post: Peak Dow, Peak GDP And Peak Oil

Tyler Durden's picture


Submitted by Charles Hugh Smith from Of Two Minds

Peak Dow, Peak GDP And Peak Oil

Peak Oil and Peak Credit do not exist in a vacuum; they're why we have Peak GDP, Peak Dow and peak Income.

You don't get Peak Oil and cheap abundance in everything else: you get Peak X, Y and Z, for example Peak Oil, Peak Dow and Peak GDP. Peaks come in causal series, and yesterday I highlighted one such series: Peak Housing, Peak Fraud, Peak Suburbia and Peak Property Taxes.

Would we really be surprised if Peak Oil was associated with Peak GDP and Peak Dow Jones stock market average? Let's start with a chart of global oil production and the Dow Jones Industrial Average (DJIA), courtesy of Chartist Friend from Pittsburgh.

This chart suggests the Dow may track oil production on the downside, just as it tracked it on the upside.

We get a slightly different but related view if we look at the price of gasoline and gross domestic product, a broad measure of economic activity. Here we see that high prices of gasoline are correlated with low economic activity/stagnant GDP:

While GDP is somewhat abstract, disposable household income is what's in our checking account. Once again we find a high cost of gasoline is correlated with stagnant income:

Common sense suggests that if employment is rising, the stock market should follow as more jobs means more wages, sales and profits. We see this correlation in the overlay of the S&P 500 (SPX) and employment until the latest recession and stock market Bull run-up: this is clearly a jobless "recovery" yet the stock market has more than doubled. Is this decoupling of employment from the stock market "the new normal" or an aberration that's about to revert to historical correlation? To do that, the market would need to fall in half or the economy would need to add 10+ million jobs in short order.

If we combine Peak Oil with Peak Credit, we get a household sector with stagnant disposable income burdened by servicing monumental debt loads. Here is a chart of household liabilities and wages/salaries, unadjusted for inflation. Household debt has completely outstripped income.

These charts do not paint a picture of robust recovery, they sketch a grim picture of stagnant household incomes and rising costs for fuel and debt service.


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Thu, 04/26/2012 - 12:04 | 2376888 SheepRevolution
SheepRevolution's picture

The first chart looks like one of my kid's drawings. Oh I taught him so well!

Thu, 04/26/2012 - 12:08 | 2376908 vast-dom
vast-dom's picture

Peak Bullshit

Thu, 04/26/2012 - 12:11 | 2376917 SilverTree
SilverTree's picture


Thu, 04/26/2012 - 12:22 | 2376958 Bring the Gold
Bring the Gold's picture

Hey abiotic folks, you really think that even if your theory is true, that the nougaty center of the earth is creating oil faster than its depleted? Follow up question, if oil is replenishing in a timely manner why the ultra expensive and risky deep sea exploration?

Final thought, the Peak Oil theory sure helps line up all the activity we have seen world wide for about 11+ years. Lots of disparate phenomena that look like elite desperation (eg openly stolen elections, emergent police states world wide, costly wars in oil rich regions etc etc ad nauseum) suddenly make a TON of sense when you view the world through a Peak Oil lens.

Thu, 04/26/2012 - 12:27 | 2376971 Gully Foyle
Gully Foyle's picture

Bring the Gold

Um,dude just because you observe a thing, then you observe a second, doesn't mean that the first caused the second or even that they are related.

The human mind needs to see patterns, we can't handle chaos.

We also enjoy the simplest solutions because we just are not designed to process complex thoughts.

I once read that you should have no more than five people work for you. That is because those five generate one hundred and twenty five combinations of issues through their interactions. Pretty hard to keep focused on that many problems and potential problems.

Thu, 04/26/2012 - 12:33 | 2377011 Bring the Gold
Bring the Gold's picture

Sure, there is complexity. I don't remember denying that... There are also large scale problems that cause tectonic shifts in the activities of large complex socities. To each their own.

Thu, 04/26/2012 - 13:18 | 2377188 Joeman34
Joeman34's picture

How do you get peak oil when U.S. production has increased to its highest level in a decade??

Peak oil is BS:

Thu, 04/26/2012 - 14:00 | 2377315 easypoints
easypoints's picture

Headlines from the Financial Times are usually hopium.

I still see a peak.

Thu, 04/26/2012 - 14:16 | 2377410 ATM
ATM's picture

Does highest in a decade also mean highest of all time?

Thu, 04/26/2012 - 14:46 | 2377527 Joeman34
Joeman34's picture

FT is only one of many sources reporting increased oil production in U.S.  Wow, junked for presenting facts.  The quality of debate on ZH is the only thing that's peaked in the recent past...

@ATM, Does not need to be highest of all time.  Peak oil theory states production will never rise again and can only decline.  Thus, production increases in U.S. invalidate the theory.  Sorry.


Thu, 04/26/2012 - 15:37 | 2377645 easypoints
easypoints's picture

The Peak Oil Theory is a prediction that charting yearly production over the global data set will produce something similar to a bell curve. Individual wells, fields, countries, and even world producion, can fluctuate within this theory. Do you believe that U.S. Production charts are not representative of a bell curve?

Thu, 04/26/2012 - 15:37 | 2377727 AGuy
AGuy's picture

There is an abundant supply of $300 bbl oil, however the supply of $30 bbl oil has been permanently depleted. The only reason why US production has gone up is because the price of oil has nearly quadrupled. Note that although the price of oil nearly quadrupled the amount of domestic production only increased a small fraction.

The US increases of oil production are temporary, Shale oil drilling will top out in the next two or three years. However, declines from convential oil production will likely exceed shale oil increases in the next 12 to 18 months. Higher oil prices affords increased drilling from less economical fields, but high prices also lead to demand destruction. Demand destruction will lead to significant price declines, forcing shale oil production to shut-in and stop drilling, Slowly the price of oil will creep back and the shale oil drilling will resume, but the US will never come close to exceeding its peak production in the 1970's. Also note that US demand for oil is down by about 15% from 21 mbpd to about 18 mpbd. The cost of oil has a big impact on consumption.




Thu, 04/26/2012 - 16:03 | 2377848 Decolat
Decolat's picture

Occasional increases average out into a bell curve over time.

Skip to 3:00 if you're in a hurry, but the whole thing is worth the time to see.

Thu, 04/26/2012 - 14:49 | 2377535 Matt
Matt's picture

highest level in a decade is still much lower than 1970. Noise vs trend, check it out.


Thu, 04/26/2012 - 12:36 | 2377018 Oh regional Indian
Oh regional Indian's picture

Post hoc, ergo propter hoc...

Peak oil has a lot of demand side answers that have been viciously suppressed or just plain bought off. The Pouge Carb (Canada)...he was bought off, died rich and miserable, unable to speak, legally bound...the water-guy, Stanley Meyers, who was poisoned the night he got his DoD contract (WWII aircraft engines ran on part water, it's old techniques anyways)... then there is th ewhole Brown's gas thing...

On and on and on....

Peak oil, in it's totality is a scam. There is stuff out there to kill 40% off the demand side pronto!

Peak all this shit is a scam, our real troubles lie esle-where, not in this nut-house scenario being burned on people's minds 24/7





Thu, 04/26/2012 - 12:43 | 2377053 Spastica Rex
Spastica Rex's picture

But ori, I think you are talking about an anti-growth solution. Yeast in a petri dish never choose to reproduce less.

Thu, 04/26/2012 - 14:34 | 2377475 BobPaulson
BobPaulson's picture

"Yeast in a petri dish never choose to reproduce less"

Is that quote yours? It's damn good. If there is an original source, would you be good enough to post? I love it.

The inherent problem of evolution is that we don't do shrinkage. Sawtooth waves are the natural progression.

Thu, 04/26/2012 - 15:06 | 2377596 Spastica Rex
Spastica Rex's picture

That's mine. CC licensed, no attribution required. Share and share alike.

Thu, 04/26/2012 - 16:03 | 2377846 Oh regional Indian
Oh regional Indian's picture

But that is in this current, triangular world Bob, perhaps it's time the edges got rounded out a little.

We are intelligent enough,collectively to be wave riders instead of wall crashers. Its' all about choices and consensus and conscience.

And true enough Spastica. But when everyone tries to rush for the exits simultaneously or the pipe of life suddenly shrinks by a third or more, you'd better understand how to shrink a little right.

Seems like what we are coming up to. Like a birth canal slide or a sperm to egg chase, take your pick.


Thu, 04/26/2012 - 17:31 | 2378184 Spastica Rex
Spastica Rex's picture

I don't think we disagree much at all, except maybe on the likelihood that humanti is going to make a collective wise choice. I'm coming to belive that there is no such thing as collective "free will," and that our species is merely outgrowing its petri dish.

I really AM Bob, Vivek.

Fri, 04/27/2012 - 00:49 | 2379281 Oh regional Indian
Oh regional Indian's picture

Well, you sure are a SubGenius BobRex, that is fer shure.


PS: I'm still wondering...nah..... :-)

Thu, 04/26/2012 - 12:53 | 2377086 Bring the Gold
Bring the Gold's picture

So you say that I'm claiming false causation and then bust out conspiracy theories about engines that run on If you are asserting that dependence on Oil has been for decades a scam, sure I'm willing to buy that there is transparent history (see Carter plan below) that would back that up. There probably were viable alternatives had we embarked on them in time. For instance, had we continued with Carter's plan for the past 32 years we probably would be largely energy independent in the US.

That said, NOW we have reached the point where turning the Titanic around isn't really an option. Switching over to any energy source alternative (assuming one exists that could adequately replace the energy density of oil, there isn't one that is publicly acknowledged...) would simply take too long. Indeed, it couldn't happen at all without a HUGE decrease in the standard of living in the West and also the developing countries eg BRICs at least during the transition phase.

Nobody wants to hear that, and that is the root of Peak Oil denial. It floors me that people seem to believe in limitless supplies of all resources when everything from the Dodo, to Easter Island, to the Thylicaine and any other number of things has proven that in fact there are LIMITS to resources on Earth. Yes those were island examples, we are a floating island in space. Whatever though, clearly we are pretty far from Peak Denial.

Thu, 04/26/2012 - 14:37 | 2377484 Decolat
Decolat's picture

Thank you. Global resource depletion, tangled in with exponential population growth, is something few can (or want to) wrap their heads around.


I really doubt abiotic oil exists. The earth is hot down there though. If I were to invest in long term energy, deep well geothermal has potential. Drilling 6+ miles to inject water for steam extraction is the tricky part. It's been done before, at enormous cost. But if the heat source remains viable for centuries, the initial capital investment for drilling may prove worthwhile and profitable. Alot of fresh water, another diminishing resource, would be used and lost. Would it be worth it?

Thu, 04/26/2012 - 14:39 | 2377496 Oh regional Indian
Oh regional Indian's picture

Peak EVERYTHING is a Technochracy ruled, resource based (on false assumptions and false, engineered booms and busts, famines and floods) FRAUD of enormous proportions.

You sound like your paycheck comes from Peak Oil HAVING to be a reality. I believed it till I saw other-wise. 

It's not about it's limitlessness, it's about it's being burnt in 15%-30% efficient IC engines. where, with a simple change, you can boost performance by 40%. i can do it. To any IC engned car.

Are you an academic per-chance?


Thu, 04/26/2012 - 17:56 | 2378279 Marginal Call
Marginal Call's picture

I got a 2008 Dodge Ram.  Feel free to demonstrate on my rig.

Thu, 04/26/2012 - 14:19 | 2377408 palmereldritch
palmereldritch's picture

You can add Tom Ogle to that list ORI:

Imagine how diluted their petrodollar-fiat-debt control matrix would be by having 'false-sell' fuel supplies extended by a super-efficiency of 100 mph in the 70's....

Thu, 04/26/2012 - 13:09 | 2377157 ElvisDog
ElvisDog's picture

Here's what I dont' understand about the abiotic theory - the temperature of the inner Earth is hot. The mantle, the closest layer below the surface is over 1000 degrees Kelvin ( The auto-ignition temperature of oil is 670 degrees Kelvin. So even if the Earth is creating oil abiotically, how is it not burning and converting into other substances?

Thu, 04/26/2012 - 14:35 | 2377470 palmereldritch
palmereldritch's picture

It's near the Upper Mantle where it is generated and you forgot to factor in tremendous pressure at depth.

Inorganic chemistry + (Heat + Pressure @ depth) = Geologic Processes

Think of petroleum as a liquid mineral.

Thu, 04/26/2012 - 14:50 | 2377538 SemperFord
SemperFord's picture

lack of oxygen maybe??? IDK

Thu, 04/26/2012 - 13:12 | 2377172 NewWorldOrange
NewWorldOrange's picture

Yeah, oil will be "replenished", after man destroys itself (and most other species) and all the carcasses become the New Oil, a few million years from now. The radiation-immune mutants that evolve by then will probably drill for all of our nuclear waste instead, however.

Thu, 04/26/2012 - 12:11 | 2376918 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

  peak ponzi

Thu, 04/26/2012 - 12:17 | 2376937 SilverDoctors
SilverDoctors's picture

Don't forget the peak dollar.  This will be a bigger factor than peak oil as the world turns to using gold and the yuan in place of the dollar. 
Jim Willie states gold is winning the Epic Battle.  Just ask Iran and the Chinese.

Thu, 04/26/2012 - 12:23 | 2376960 LawsofPhysics
LawsofPhysics's picture

Gold-YES, Yaun?  Are you saying that the Yaun is not manipulated by the PBoC?- FAIL.

Thu, 04/26/2012 - 15:56 | 2377815 Matt
Matt's picture

read the comment again. the previous poster made no claims about the Yuan not being manipulated, simply that the Yuan will increase in prominence and the USD decline. As the American sphere of influence shrinks and China's grows, the Yuan will be used more and more for trade between China and its partners. It is not a better currency, it just is the currency of the regional power.

Thu, 04/26/2012 - 13:22 | 2377209 Bullish Bear
Bullish Bear's picture

Far out. The bullshit will have to start piling up exponentially now to cover up the truth.

Thu, 04/26/2012 - 12:05 | 2376897 LawsofPhysics
LawsofPhysics's picture

Call it what it all really is.  Peak stupidity on all fronts.  The insane are now in full control of the asylum, hedge accordingly.

Thu, 04/26/2012 - 12:08 | 2376899 Cognitive Dissonance
Cognitive Dissonance's picture

Talk about ugly charts. Truly ugly charts.

And yet......and yet the band plays on as if rescue is just over the horizon.

Ben with some close friends.

Ben with friends

Thu, 04/26/2012 - 12:13 | 2376909 Spastica Rex
Spastica Rex's picture

God doesn't believe in limits. The Kingdom Of God is abiotic. Who do you think started all this "peak" nonsense, hmm? Could it be.....Satan?

edit: One should feel free to insert "The Invisible Hand" for "God," if that is what one places one's faith in. Likewise, one can use "hippies" for "Satan" if one prefers.

Thu, 04/26/2012 - 12:15 | 2376928 CPL
CPL's picture

Spaghetti Monster doesn't believe in limits. The Kingdom Of Spaghetti monster is abiotic. Who do you think started all this "peak" nonsense, hmm? Could it be.....Ninjas?

Thu, 04/26/2012 - 12:16 | 2376933 Spastica Rex
Spastica Rex's picture

The Invisible Pink Unicorn is acceptable, too.

Thu, 04/26/2012 - 12:20 | 2376951 Gully Foyle
Gully Foyle's picture

The Way is a limitless vessel;
Used by the self, it is not filled by the world;
It cannot be cut, knotted, dimmed or stilled;
Its depths are hidden, ubiquitous and eternal;
I don't know where it comes from;
It comes before nature.

Thu, 04/26/2012 - 12:21 | 2376956 LawsofPhysics
LawsofPhysics's picture

precisely, anything make-beleive is acceptable, damn, I missed the sarcasm again.

Thu, 04/26/2012 - 12:28 | 2376976 Gully Foyle
Gully Foyle's picture


Everything is true/false/and meaningless.

Thu, 04/26/2012 - 12:19 | 2376945 CPL
CPL's picture

Sardonic doesn't work well on mildly insane financial forums.

Thu, 04/26/2012 - 12:21 | 2376955 Spastica Rex
Spastica Rex's picture

Sardonic=Islamo-gay-fascist, so - no.

Thu, 04/26/2012 - 12:20 | 2376953 GeneMarchbanks
GeneMarchbanks's picture

Protracted exchange incoming? I'd say affirmative, but let's see if I can be succinct to spare us all: Nissan Leaf, let's not quibble over reasons.

Thu, 04/26/2012 - 14:49 | 2377536 NewWorldOrange
NewWorldOrange's picture

Gene! DAMN you just got BUSTED. A CLASSIC example of why trolling on this blog is VERY BAD idea:

Start here:

Thu, 04/26/2012 - 14:11 | 2377396 GeneMarchbanks
Thu, 04/26/2012 - 12:17 | 2376936 CPL
CPL's picture

Papa SMurf doesn't believe in limits. The Kingdom Of Papa Smurf is abiotic. Who do you think started all this "peak" nonsense, hmm? Could it be.....Gargamel?

Thu, 04/26/2012 - 12:40 | 2377042 Oh regional Indian
Oh regional Indian's picture

Actually the supply-side did.

It's really quite elementary.

We are living a supply-side end-game dystopia.

The demand side is just sitting back, dazed and con-fuzed!


Thu, 04/26/2012 - 12:19 | 2376944 LawsofPhysics
LawsofPhysics's picture

Fucking harlarious.  

Hey moron, the next time your car breaks down or a loved one gets cancer, you have a choice.  Look to the bible for a real fix or the user's manual and science.

The bible, like other works of fiction, provides comfort and guidance etc.

Beleive it or not, by actually trying to disprove  the theory of evolution a number of cures for many diseases have been developed and lives have been saved.


How many lives have been taken in the name of your bible/God.  I THINK IT IS PRETTY FUCKING CLEAR WHERE SATAN RESIDES.

Thu, 04/26/2012 - 12:22 | 2376959 Gully Foyle
Gully Foyle's picture


Sorry dude but there is no fix for Cancer. A patch maybe, but no fix.

Modern medicine has no fix for anything, we patch. I heard someone say " Medicine is what we do while we wait for nature to take it's course".

That sums it up.

Thu, 04/26/2012 - 12:25 | 2376963 LawsofPhysics
LawsofPhysics's picture

semantics, there is no "fix" for humanity either, doesn't mean you might want to stick around a bit longer now does it?  Hey, at least you are free to go ahead an shoot yourself in the head, I mean why wait for "nature to take its course", as you say.

Thu, 04/26/2012 - 12:29 | 2376984 Gully Foyle
Gully Foyle's picture


Humanity, like everything else, is evolving.

You can't fix evolution.

Thu, 04/26/2012 - 12:36 | 2377025 LawsofPhysics
LawsofPhysics's picture

Precisely, you are part of evolution. Whether or not your bloodline continues is another matter altogether.

Thu, 04/26/2012 - 14:48 | 2377531 Things that go bump
Things that go bump's picture

You remind me of an MRI of the brain I once saw on neurology grand rounds. It showed the tumor of a +20 year breast cancer survivor.  

Thu, 04/26/2012 - 12:24 | 2376965 GeneMarchbanks
GeneMarchbanks's picture

Who's harlarious but more importantly why are you fucking him?

Thu, 04/26/2012 - 12:27 | 2376973 LawsofPhysics
LawsofPhysics's picture

I think I missed the sarasm, my bad.

Thu, 04/26/2012 - 12:29 | 2376983 GeneMarchbanks
GeneMarchbanks's picture

'sarasm' you meant orgasm surely.

Thu, 04/26/2012 - 12:31 | 2376994 Gully Foyle
Gully Foyle's picture


I think he meant Saran wrap.

Maybe Saladin, or Salad dressing.

Thu, 04/26/2012 - 12:50 | 2377083 catacl1sm
catacl1sm's picture

Salad Shooter. He definately meant Salad Shooter.

Thu, 04/26/2012 - 12:37 | 2377027 Spastica Rex
Spastica Rex's picture

You should write or**sm becasue SkyNet picks up on those kinds of words and puts you in a databse. Or so someone told me on ZH the other day.

Thu, 04/26/2012 - 12:29 | 2376982 darteaus
darteaus's picture

"The bible, like other works of fiction..."

As the man of science you profess to be, please provide the link to the journal published, peer reviewed and results duplicated scientific experiment which scientifically proves your statement.  I'd love to review the methodology.

Or are you just making that statement as an article of [gasp!] faith?

Thu, 04/26/2012 - 12:32 | 2377007 Gully Foyle
Gully Foyle's picture


Funny how people live by faith everyday.

They go to bed having the faith they will wake up the next morning.

Thu, 04/26/2012 - 12:41 | 2377044 Spastica Rex
Spastica Rex's picture

Faith is neutral. People had faith in Jim Jones. "By their fruits" and whatnot.

Thu, 04/26/2012 - 13:02 | 2377048 LawsofPhysics
LawsofPhysics's picture

People go to bed with lots of things my friend, and wake up with them too, what is your point?  Don't make assumptions about my faith when you have no clue, it just shows your ignorance.

My point is that in science the whole point is to try and disprove things.  Try and do the same for the bible and people respond presisely as you do, hostile.  Maybe you want to go burn or kill some people now (as events like the inquisition did-protect that "faith" at all cost)?  How about you go be productive instead.

Thu, 04/26/2012 - 12:41 | 2377045 kridkrid
kridkrid's picture

I see what you did there... challenge him to prove the negative... nice work.

One doesn't need to prove the negative here, but merely recognize that most of the bible is little more the plagiarized re-telling of stories that predate the bible, sometimes by thousands of years.  It's an aggregation of mythology that existed at the time of its creation.

Thu, 04/26/2012 - 13:06 | 2377147 darteaus
darteaus's picture

"...challenge him to prove the negative..."

Nope.  He made the claim, and I asked for his scientific evidence.

In the scientific field, bold claims must be accompanied by bold evidence - not new assertions and ad hominium attacks.

It's the scientific way; didn't you know?

Thu, 04/26/2012 - 13:31 | 2377242 kridkrid
kridkrid's picture

no... it's exactly what you've done.  I don't care... I don't have a horse in this race, but you are asking him to prove a negative.  

Thu, 04/26/2012 - 13:06 | 2377148 knukles
knukles's picture

It is not illogical to assume that all mythology appears to have a root related to reality somewhere in the deep dark distant past. 
The co-incidnces of the great flood, the unexplicability of the Mayans to have known of Precession and the timley appearance of the constellations.... 
There would just seem, no matter how small, a good chance that there is a link to past experience.

Thu, 04/26/2012 - 13:39 | 2377283 kridkrid
kridkrid's picture

I can buy that.  If people presented the bible that way... a collection of mythology dating back 5000+ years, some of which may have some connection to past experience... I'd be good with that.  Quick... someone call my parents, my brother and sisters and most of my extended family :-).

Thu, 04/26/2012 - 15:27 | 2377683 earleflorida
earleflorida's picture

yep,... save the redeemable, and perish the poor --- who says that  eugenics is just for the well to do?indeed, practicing witchcraft in ones own backyard makes perfect 'cents' - b[u]y and fore  'sir Camelot de`Darwin', the chosen few, whilst ignoring the plague on thy sovereign neighbors front-step -- for the glory of his`kindness of deeds? cure the chosen, and eradicate the soiled below, as we evolve into cyborgs for the good of our species - mantled in cold steel, with but logic as a heart! cures are but todays 'WMD', masked in goodwill... 

Thu, 04/26/2012 - 12:09 | 2376911 Zola
Zola's picture

Please , could we also have peak corruption and peak stupidity as well ??

Thu, 04/26/2012 - 12:16 | 2376934 Cognitive Dissonance
Cognitive Dissonance's picture

One order of peak corruption and stupidity coming up.

Hold please.

Ummm. There seems to be a problem. You already have an order in for this from last decade. Do you wish to upgrade to the double trouble special?

Press 1 for yes, 2 for yes, 3 for yes, 4...........

Thu, 04/26/2012 - 12:31 | 2376995 AlaricBalth
AlaricBalth's picture

Hey CD. There will never be peak stupidity.

Thu, 04/26/2012 - 12:56 | 2377108 krispkritter
krispkritter's picture

Just when you thought you made it idiot-proof, along comes a new and improved idiot.

Never underestimate the power of human stupidity. R.A. Heinlen

Thu, 04/26/2012 - 12:58 | 2377112 Cognitive Dissonance
Cognitive Dissonance's picture

One can only hope you are wrong. Otherwise I want off this dirt ball from hell.

Scotty, beam me up. Please. I'm begging you.

In fact Mrs. Cog and I are working on this right now. Just downloaded the formula for rocket fuel and are ready for the testing phase to begin.


Thu, 04/26/2012 - 12:58 | 2377118 krispkritter
krispkritter's picture

Speaking of corruption and stupidity; live WH briefing:

Thu, 04/26/2012 - 13:22 | 2377210 Joeman34
Joeman34's picture

Maybe he would like to speak to Peggy...

Thu, 04/26/2012 - 12:09 | 2376912 CrashisOptimistic
CrashisOptimistic's picture

This article is absurd.

I could almost stop there, but hell, he spoke without anything to say, too.

Oil production is the limit on economic activity.  Eventually it's also the limit on population.  Why would all that define the Dow?  The Dow can move with share buybacks.  That would define earnings per share.

This article is an absurd stretch of cause and effect . . . of an effect that has not happened and may not.  What was the point of all this?

Oh, sorry, silly question.  Click revenue.

Thu, 04/26/2012 - 12:26 | 2376967 kridkrid
kridkrid's picture

Not his best work.

Thu, 04/26/2012 - 12:11 | 2376913 The Swedish Chef
The Swedish Chef's picture

"Common sense suggests that if employment is rising, the stock market should follow as more jobs means more wages, sales and profits."


Common sense suggests that if central banks got the markets by the balls, nothing else matters. 

Thu, 04/26/2012 - 12:11 | 2376919 AnarchoCapitalist
AnarchoCapitalist's picture

I am really sick of articles by this Charles Hugh Smith guy.


Thu, 04/26/2012 - 12:17 | 2376931 buzzsaw99
buzzsaw99's picture

The correlation on those charts sux ass.

Thu, 04/26/2012 - 12:47 | 2377074 skepticCarl
skepticCarl's picture


Thanks for saving me a lenghy reply, buzz!

Thu, 04/26/2012 - 12:17 | 2376938 marcusfenix
marcusfenix's picture

welcome to peak Idiocracy.

"welcome to COSTCO, I love you".

Thu, 04/26/2012 - 12:27 | 2376969 Spastica Rex
Spastica Rex's picture

+1 Idiocracy reference.

Thu, 04/26/2012 - 12:30 | 2376992 kridkrid
kridkrid's picture

I loved the concept and so much of the movie almost worked... but as a whole... it kind of missed.  Not sure why.  It always seemed so close.  Maybe my expectations were too high going in as I felt like I had pitched the concept 100 times before the movie was ever made.

Thu, 04/26/2012 - 12:33 | 2377016 Spastica Rex
Spastica Rex's picture

Mike Judge has GREAT concepts but poorly realized films. Both Idocracy and Office Space have great funny bits but are hardly great films. That's OK, becasue the messages are so accurate. TV has been his best medium, I think.

Thu, 04/26/2012 - 12:49 | 2377081 kridkrid
kridkrid's picture

I thought Office Space succeeded where Idocracy failed.  But like I said, I'm sure my expectations heading into each had a lot to do with it.  Kind of why most people hate marriage.

Thu, 04/26/2012 - 14:32 | 2377472 TheFourthStooge-ing
TheFourthStooge-ing's picture

The reason Idiocracy didn't quite work is that it had a happy ending.

A more realistic ending would have been pandemics, wars, starvation, and cannibalism.


Thu, 04/26/2012 - 12:23 | 2376961 azzhatter
azzhatter's picture

It seems to me we are becoming a 2 class society- haves and have nots. The haves are enough to sustain for now but that class is shrinking. As gas goes up, taxes go up, food costs go up do the have-nots start to eliminate igadgets,cable TV, eating out, driving etc. I have met several people who have gone from $75K jobs to $45k jobs in the past 3 years. Sooner or later that catches up with you. Purely anecdotal but I would think we may be peaking

Thu, 04/26/2012 - 14:40 | 2377497 DavidJ
DavidJ's picture

Someone I know went from 100K to 72K.  This is in IT / Business Analyst.

Thu, 04/26/2012 - 12:27 | 2376970 tahoebumsmith
tahoebumsmith's picture

Some may call it " Triple Peaks", I call it Head and Shoulders. 16 trillion dollars of fluff got us the head and another 10 Trillion ought to get us right down to the ass. About this time they will have stuck their heads so far up their asses, they will finally begin to stink. And yes, the Jobless recovery...One of my favorite quotes was from Peter Schiff a few years back...

"For those market boosters who are prattling on about the possibility of a "jobless recovery," I offer an invitation to join me for a breakfast of "fat-free bacon," "eggless omelets," and "no-carb bread." As unappetizing as such a meal may sound, it would nevertheless offer more substance than the oxymoronic concept of an economic resurgence without job creation."

And if I ever have to watch another video of Lloyd Blankfein lisping about sissys, I honestly think I will lose it...

Thu, 04/26/2012 - 12:55 | 2377103 Spastica Rex
Spastica Rex's picture

You forgot the drinks - sugar-free soda and alcohol-free beer.


Thu, 04/26/2012 - 12:28 | 2376975 FrankIvy
FrankIvy's picture

It's so simple, it's a tragedy that so few choose to see it.





For practical purposes, all energy is either from the Sun or from stored, depletable energy sources (Fossil Fuels, Nuclear).

All the power in the world pre-fossil fuels was from the Sun. 

Today, most power in the world is from the depletable sources, but those sources are now dwindling.

The fight today, before we return to the days of the Sun, is to control the dwindling resources.

Once you understand that Energy=GDP=Power, and energy per capita is declining, then foreign policy becomes obvious, economic depression  becomes obvious, loss of individual rights becomes obvious, and the future becomes obvious.

Most Americans don't want to understand that energy is depleting, because to do so would require a massive paradigm shift.  Most people, after a certain age, can't make that shift.  If you tell the average person that gas will eventually be rationed, their first thought is, that's impossible, because I wouldn't be able to commute to work.  Unwilling paradigm destruction usually is the result, rather than a willful paradigm shift.

Energy per capita has been declining for well over 10 years.  It will continue to do so for the next 50, if not 100.  We will return to the days when only the sun provided us with energy. 

America rose and was built on cheap energy.  It will fall and crumble on ever more expensive energy.

The true tragedy of the Oil Age, which is rapidly ending, is not how extraordinarily wasteful we all were.  It's the fact that so very, very few appreciate how phenomenally easy we've had it.

Thu, 04/26/2012 - 12:32 | 2377004 realtick
Thu, 04/26/2012 - 13:40 | 2377280 CrashisOptimistic
CrashisOptimistic's picture

Well said and well understood, Frank.

View the 20th century through a lens of oil and it all looks different, and more clear.

If Hitler's generals not grown up in a pre oil world, they would have piled on all resources towards shutting off oil from getting to England in the late 1930s before the US was ever involved.  It all came from the middle east then and would have been an easy blockade from the source.  Then presto, no RAF airplanes in the sky to stop you and Englad would have fallen long before the US was involved.

Reagan's boom years of the 80s happened to arrive when Alaskan oil did, what a coincidence.  

Technology itself derived from simply academic conferences, where thoughts could be easily exchanged, and that required travel . . . using oil.  Technology didn't put men on the moon.  Oil did.  Rockets and equipment got to the launch pad because of oil.

And now all that ends and there's nothing anyone can do about it.

Oh, one last nitpick.  Energy pre fossil fuels being solar . . . energy post fossil fuels is solar too.  The algae that made oil and the plant matter that made coal . . . all of it grew from sunshine.


Thu, 04/26/2012 - 12:30 | 2376989 darteaus
darteaus's picture

Peak Aboo!

Thu, 04/26/2012 - 12:30 | 2376991 NotApplicable
NotApplicable's picture

Clearly the answer is to prop up that declining consumer debt level by first securitizing it, then trade it for some more fresh ZIRPable credit.


Thu, 04/26/2012 - 12:31 | 2376997 kralizec
kralizec's picture

Peak patience?

Thu, 04/26/2012 - 12:31 | 2377000 gjp
gjp's picture

Really badly labeled, scaled, and conceptualized charts.  Stick to social commentary CHS, you're reasonably good at that.  I believe that the timing of our financial / economic crisis with possible peak oil / population is not coincidental, but the Dow could still go to 10 million as the shelves empty and we fight in the streets.  It's an artificial construct that can be manipulated at will.

Thu, 04/26/2012 - 12:32 | 2377003 dick cheneys ghost
dick cheneys ghost's picture

Has Russia made too many promises?


"Just a few of these promises include: to increase social spending by $170 billion, double the wages of doctors, policemen, and college professors, triple student stipends and increase maternity payments to boost Russia’s sagging birth rate, and the list goes on. Such is the immensity of Putin’s election promises that some analysts have speculated that oil would have to maintain a price of between $140 and $150 over the next six years to keep the federal budget from dipping into huge deficit spending."

Thu, 04/26/2012 - 12:47 | 2377068 AmazingLarry
AmazingLarry's picture

Peak bear. Ben wants up, not down. We're all bullish now!

Thu, 04/26/2012 - 12:49 | 2377075 poor fella
poor fella's picture

The last graph pretty much says it all.. 

Even if most people could continue to service their debt, how long will that take? And what about the lack of consumption in a system that relies on continual growth. How many people are exiting the workforce? How much debt can't be defaulted on? If it can be wiped out through default, how will that ripple feel in an uber-leveraged financial system? How does 50% youth unemployment affect payment?

Americans screwed themselves - It's The System, stupid.

Thu, 04/26/2012 - 12:54 | 2377095 skepticCarl
skepticCarl's picture

One thing not near it's peak, nor even starting up the slope, is harnessing solar power.  I expect (that's right, expect) breakthroughs in artificial photosynthesis and other methods of capturing the huge photo and electro-magnetic radiation that bathes the earth every day. 

Thu, 04/26/2012 - 13:00 | 2377124 LawsofPhysics
LawsofPhysics's picture

If only we had the capital (and cheap energy source) to make those smart investments.  The capital mal-invetment and mis-allocation continues.

Thu, 04/26/2012 - 14:31 | 2377466 easypoints
easypoints's picture

Exactly. You can only implement a new infrastructure by using the one you have already, and it takes time, capital, and resources that are being squandered. That's the biggest problem with the peak oil predicament, just like so many other current trends: Lying and can-kicking eventually have repercussions. 

Thu, 04/26/2012 - 13:12 | 2377169 poor fella
poor fella's picture

5 trillion Fed bailout-dollars could have paid for a solar system on EVERY home in the U.S.!

It's not optimal of course, but still.

Thu, 04/26/2012 - 14:20 | 2377422 Eric L. Prentis
Eric L. Prentis's picture

Peak oil is predicted yearly, since at least 1970. Someone has an ax to grind.

Thu, 04/26/2012 - 18:04 | 2377546 Bob Sacamano
Bob Sacamano's picture

In 1970, the first chart would have showed oil production peaking in 1972 with a big decline thereafter.

In 1990, the first chart would have showed oil production peaking in 1992 with a big decline thereafter.

In 2010, the first chart would have showed oil production peaking in 2012 with a big decline thereafter.

Which is why some folks don't fully buy into the extreme projected case. 


And tell me what are the numbers on the left scale?  They are certainly wrong for the DJIA -- which traded 600-1000 from 1966 to 1980 and now stands at 13,000 (that chart shows it doubling from 1980 to 2012).  This guy is crap.

Thu, 04/26/2012 - 15:11 | 2377620 orangegeek
orangegeek's picture

Closing in on the 2008 SP500 high.


The one tell that makes this suspect is the very low volume behind this push up since Dec 2011.  Not a sign of strength.

Thu, 04/26/2012 - 16:30 | 2377949 rhaan
rhaan's picture

Now get a true graph for oil production and forget about peak oil for this and the next century.



Thu, 04/26/2012 - 18:16 | 2378363 Curt W
Curt W's picture

How many times, in 24hrs. does the oil market open and close.

Everyday I look and it is down to a higher number.

Kinda reminds me of jobless claims.

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