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"The Wasteland" - How Central Planning Broke All Markets... And What We Can Do To Fix Them

Tyler Durden's picture


In his latest ruminations in ruination, Diapason's Sean Corrigan does nothing short of a brilliant post-modernist collage of all the fragments of our broken economic reality and capital markets which, just like the defining 20th century poem by TS Eliot (further exemplified by the Flesch-Kincaid reading complexity of Max+1 inherent in both works), summarizes the terminal situation that we currently find ourselves in. And while in The Waste Land, Eliot focused more on the existential breakdown of society in the "entre deux guerres" period, Corrigan does the same for the trader/financial archetype of the 21st century. But all is not lost. Just like the Waste Land ended on a glimmer of an optimistic note by invoking the Three Principal Virtues of the Brihadaranyaka Upanishad (be self-controlled, be charitable and be compassionate) wherein according to the Nobel winning author the germs of social salvation lay in understanding of our own intractable and self-destructive complexities, so too does Corrigan provide an outcome to our mangled reality based on a trio of our own actions which may one day save us from the economic, financial and capital destruction we (through the creeping dictatorial pervasiveness of central planning, but not only) have brought upon ourselves. "What lies broken, we can surely fix, but only if we break in turn the habits of mind and the tyranny of the man-made institutions which we first allowed to break the things we value - our freedom of association, our independence of action, and our individual chance of prosperity." 

Must read from Sean Corrigan

The Wasteland

So here we stand, exactly eighty years on from the collapse of CreditAnstalt, the run on the Danat bank, and the disastrous abrogation of Britain of sterling's gold status which turned and earlier stock market setback into an enervating slough of Depression.

Here, we stand, almost forty years to the day from Nixon's abandonment of the dollar's pivotal membership of the bastardized gold-exchange standard and the horrifying decade of rampant inflation which followed.

And here we stand, a week shy of four years after the Fed's first, tentative response to the looming CDO/wholesale funding disaster which would threaten to seep away not just those hooked up to the eyeballs in America's grotesque sub-prime bubble itself, but feckless borrowers and risk-insensitive lenders - both public and private -right around the globe.

So let us take stock of what we have wrought in the meanwhile by following mainstream economic exhortations to emulate what we thing the hallowed FDR may have enacted or the venerable Keynes may have ordained, were these two leading lights of cynical expedience and willful interventionism each alive today.

With over $2 trillion in excess reserves parked with the Fed, the ECB, and the BoE; with unsecured, interbank loans for anything other than the shorter of terms all but impossible to obtain; the the thirst for security sporadically driving rates on T-bills, general collateral - even deposits - below zero; with the benchmark LIBOR rates increasingly inoperative and their replacement OIS rates barely standardized - with the spread between the two varying widely and with the latter diverging from supposedly stable official base rates which they are supposed to reflect - it is clear that the money market is broken.

With even short-dated basis swaps between the major currencies wandering far, far from their near-zero normal levels, with countries like Brazil attracting peer group interest for imposing taxes on inflows into and bets on the appreciation of its currency; with the Swiss trying to stem a 7.8 sigma, one-in-300-trillion, two-week move in the currency by aiming to swell sight deposits by 10% of GDP and by showering hapless East European carrt-traders with precious francs; with EUR-USD risk reversals at their most extreme ever, both in absolute terms and as a percentage of underlying volatility - what can we say but that the FX market is broken.

With the DAX - for example - undergoing its own, 6.3 sigma, 7-in-a-billion chance, two-week move - one only exceeded in its compressed magnitude during the Crash of '87; with the peak five days of frantic selling seeing record volume, thanks in part to the less-than-benign influence of the high-frequency trading which hummed along the fibre-optic cabling at triple the normal rate and accounted for up to 75% of overall trades, according to the Nasdaq's biggest execution broker, it is no wonder the VIX doubled in only four days, a jump only exceeded by last May's HFT-led "flash crash." No wonder either that several European and Asian authorities saw fit to intervene, either to prop up prices or to outlaw short selling, or both. The only inference to be had - the equity market is broken.

With the ECB being forced to take drastic - and arguably illegitimate - action to cap the 3-month, 225 bps rise in the Spanish-Bund and the concomitant 270 bps rise in the Italy-Bund spread; with US Treasury bonds plunging amid the rout to record low nominal and negative implied real yields, all the way out to 10-Years; with record low mortgage rates forcing duration-hungry investors and hedgers to receive long-dated swaps at minus-40 bps; with record levels of junk issuance having been conducted at record low yields, before a frozen market saw spreads explode a 5.6 sigma, 218 bps to stand 50 bps wider in just ten days - to cite just a few instances of a widespread disruption - it is fairly evident that the bond market is also broken.

With the ratio between the two main oil benchmarks - WTI and Brent - having crashed from ts well-behaved, long-term, pre-crisis ratio of 1.07:1 +/-0.2, to hit 0.79:1; with gold trading to a 5% premium to platinum for only the second time in at least the past quarter-century; with base metals showing less and less correlation between price, curve shape, and visible inventory as funding games and warehouse manipulations distort trading patterns; with industrial commodities being driven more by CB inflationary-"Risk On" considerations than by the specifics of usage and production - perhaps we must admit that the commodity market is broken, too.

With the widespread frustration of the masses spilling out onto the streets of the Maghreb, Egypt, the Levant, the Gulf, Spain, Greece, Eastern Africa, Bangladesh, Chile, and others; with even the mighty Chinese Communist Party quailing before the popular wrath excited by the divisive symbolism of the high-speed rail crash; with 80% of surveyed US voters saying the country is "headed down the wrong track"; with widespread unease in Germany at the executive's dismissal of the citizens' understandable reluctance to bankroll the wider EU; with the emerging realization that three generations of an ever-encroaching, 'tutelary deity' welfarism have not only sapped the vitality out of the economic organism, but have bred out all vestige of responsibility and self-restraint from the teeming, unweanable mass of perennial dole-puppies it has whelped - it is therefore undeniable that politics-as-usual is broken too.

With the glaring failure to predict even the possibility - much less circumstance - of the recent Crash and with the even more foreseeable failure of its tired old, rehashed nostrums of ending the slump by means of an inequitable programme of corporate welfare, inflationary "unorthodoxy", and the unleashing of the debt-spewing monster of the state to gorge itself upon such things as individuals and private concerns no longer care to consumer, it should hardly be controversial to asset that mainstream macroeconomics - and the reputations of the many panderers to power who practice it - are equally broken.

Breaking the mold [or Datta. Dayadhvam. Damyata]

Whatever our individual pre-occupations with the specifics of this collapse, we must bear in mind that, amid all the wreckage, there are countless millions of hard-pressed souls, each trying to earn an honest living by first identifying and then satisfying the needs of their fellow men in the best, most cost-competitive manner they can accomplish. In the attempt to do so, the overwhelming majority of these strivers cannot fail to provide a living to others, too - whether by employing their labor directly in their own factories and offices, or indirectly, by buying in the goods and services these latter work to supply at the workbenches and computer docks of other hirers of their effort.

In their constant struggle to peer into an uncertain future so as to estimate whether anyone will buy their output and, if so, at what price; and then to decide what they can afford to pay in turn for the necessary means to meet this potential market, they cannot in any way be assisted by the ramification of all the multiple breakages outlined above.

If they cannot trust the signals being sent to them about the cost of inputs or the acceptable charge for outputs; if they cannot assume a certain stability in the rent and availability of working capital, or rely on the calculus of securing longer-term funding; if they and everyone with whom they deal are being subject to wild swings in currency rates and commodity prices; if there is no clarity about the framework of regulation, the structure of legislation, or the outlook for taxation - but only a well-founded pessimism that none of these are likely to change for the better; if they begin to see themselves as the targets both of material expropriation and pseudo-moral condemnation - are they then likely to gove full reign to their innate spirit of enterprise, to fully express their characteristic get-up-and-go and, by so doing, give the rest of us a greater opportunity to sell our wares in the marketplace for skill and sweat?

Hardly, and therein lies the rub. For if we are to pull ourselves out of the quagmire into which we have stumbled, it will be to little purpose to take three short, backward steps before hurling ourselves deeper int the morass, not just with renewed energy, byt while carrying the growing weight of mud which clings to our clothes as the result of each previous failed attempt.

Debt cannot be the cure for over indebtedness, nor a more rapidly debased currency the antidote to its ongoing debasement. We must forgo the intellectual conceit that we can impose some higher order on the seeming chaos of the world and instead we must simply smooth the way so that its own emergent properties can seek out a better constellation of interconnections, all by itself.

We must recognize that there are no workable macroeconomic solutions which can be laid down: that everything is a matter of functioning microeconomics building things up; that the diamond takes on its lustrous geometry, atom by atom; that the masterpiece hanging in the Louvre came into being brushstroke by painstaking brushstroke.

Only get the microeconomics right and all else will follow.

Make labor once more affordable and its terms no longer and indentured servitude for the employer. Ensure that entrepreneurship is no more risky than it has to be and that it reaps the full fruits of its success - as well as seeing that it bears the full responsibility for its failure - by clarifying law, minimizing red tape, and, once this is achieved, by resisting the bureaucratic urge to tinker any further.

Set prices free to perform their function, insist that markets are able to clear, and see to it that titles to property are both secure and simple to transfer. Under such circumstances, we will each help to build a lasting recovery for the other, one job and one company at a time, much more certain of our success - however much patience will be required in its achievement -than if we were to heed the thundering decree of some sweeping, Collectivist Five-Year Plan emanating from the mouths of the tin gods who frequent the Platonic centers of world power.

Financial markets may be broken, politics and mainstream economics may be broken, but, fortunately the economy of men is a robust, highly redundant network, furnished with its own immune system and self-help mechanism, consisting of unhampered entrepreneurial search and action.

As Adam Smith famously remarked, "there's a lot of ruin in a country" - though, contrary to what our present rulers seem to believe, he was not issuing a challenge to them to seek to quantify its limits.

If we are to avoid that final ruin, if we are to properly rectify much of what is broken and not merely smother it in inflationary balm and patch it over with a plaster of false accounting for a further, brief, electoral, half-life, there are three things which we could and should usefully add to the list of the downcast and destroyed.

These are, namely: that unsound money which is truly the root of all evil; the unfunded mountains of government debt with which such bad money engages in a poisonous symbiosis of executive tyranny and political corruption; the duty-free but rights-encrusted Provider State which waxes fat on that unholy alliance of illusory finance and which not only robs Peter piecemeal to pay Paul, but empowers Pericles to oversee the theft, and so suffuses the commonwealth with a miasma of perverse incentives, ethical degeneracy, and irreconcilable conflicts of interest.

What lies broken, we can surely fix, but only if we break in turn the habits of mind and the tyranny of the man-made institutions which we first allowed to break the things we value - our freedom of association, our independence of action, and our individual chance of prosperity.



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Sun, 08/14/2011 - 10:44 | 1558708 MCZH
MCZH's picture

cant say I agree with any of this.

Sun, 08/14/2011 - 10:48 | 1558714 damage
damage's picture

A central planner in our midst?

Sun, 08/14/2011 - 11:14 | 1558779 Cheesy Bastard
Cheesy Bastard's picture

Tell me, MCZH, do they pay well at the ministry of propaganda?

Sun, 08/14/2011 - 13:30 | 1559109 Michael
Michael's picture

We don't need a change in Washington DC, we need to completely restructure the Federal governing model. The US government is what's broken.

Sun, 08/14/2011 - 16:36 | 1559499 cranky-old-geezer
cranky-old-geezer's picture

The federal government does what every government does, extend its power and control as much as possible.

It's not the structure at fault. It's the people at fault. Those government mentalities.

When someone goes to work in government, any government, at any level, their thinking changes. They start thinking they're in control now. They feel the euphoria of being in control over people.

That feeling of control gradually morphs into predation. They become a predator. Uncaring. Spiteful. Even hating the people they're governing. Yes, deep down many in government hate the people they're governing, viewing them as second-class, even sub-human.

The seething hatred among government people for the public would shock you if you knew how bad it is. Government people despise the rest of us. Thy hate us with a passion.

That's what happens in the average human mind when you give someone control over other people. It progresses from not caring to outright resentment to seething hatred.

America's leaders can barely conceal their seething hatred of the American people. It's why they have no problem looting and plundering the American people. They'd like to kill us all off, but it would take away their fun looting and plundering.

So they settle for looting and plundering. They want to steal everything we have, leaving us in poverty.

If they can't do it via taxes, they do it via inflation, printing currency and spending it or giving it to their government friends.

That's exactly what we've been seeing since '08. Printing mountains of currency and spending it or giving it to their government friends.

And no, it's not going to stop. It's going to get worse.

Sun, 08/14/2011 - 19:18 | 1559949 Koffieshop
Koffieshop's picture

Some structures are easier exploited the others.

For example, if you would allow one of the Houses to be elected based on percentage of votes instead of a winner-takes-all type of deal, you will find yourself having more then just 2 political parties (If he Green Party collects 10% of the votes, they take 10% of the seats, etc..) This will make it a lot harder to buy/corrupt all house members.


I'm not claiming I have all the answers,  but there is no doubt in my mind that you can fight corruption by ajusting the rules of the system. The trouble ofc. is that no one in the established system wants changes that undermine their own position.



Sun, 08/14/2011 - 20:45 | 1560201 New_Meat
New_Meat's picture

Coffie guy: Please elucidate on your political system theories. <and ya gotta' get back to them English books and figure our basic gramma, don't cha' know>.

a) extra credit: where, in history, have your alternative views proven themselves over a period of <n> years/decades?

b) which frosh poly science section did you learn about alternative voting schemes?  I'm  even betting that you don't  know why RAH had proposed similar schemes.

c) compare-and-contrast the German/French/EU view of political partiez in "coallition governments" vs. U.S. republic/executive model.  Demonstrate effectiveness and ineffectiveness situations of each.

Don't worry, i'll be an honest and straightforward evaluator/critic/responder.  That is, I'll back up my assertions with data and contracict your comments with facts.  Or not--I might be wrong and, since I'm trying to slim down, that would be a way to avoid i) a fat chance, and ii) Ol' Rusty's smoker.  But, well, I never know.

But, well, I agree with you that in Chi-town, Boston, SF, <list goes on> your assessment that the corruption is embedded.

And don't do the stupid thing about "I'm not claiming I have all the answers" again.  Makes u look jejune to any adult who is watching.  fwiw

- Ned

Sun, 08/14/2011 - 22:19 | 1560350 Koffieshop
Koffieshop's picture

English is not my first language and the Chrome spell checker seems broken on this site.

Anyway, the system I am most familiar with is the Dutch one and I have seen events unfold there that would be impossible in the US election model.
The electorate occasionally 'revolts' and massively votes for a newcomer with views incompatible with the established parties. The 'revolutionary views' get absorbed into the mainstream thinking and balance is gradually restored.
This happened with Pim Fortuyn and Geert Wilders recently.

The door for this kind of process seems shut in the US. A candidate is either acceptable within the 2-party-system, or has very little chance of getting anywhere.
If the US had the Dutch election system then Ron Paul would have no problem running under his own flag instead of getting approved by the Republican Party first.

Now, you can demand I produce some essay, make fun of me for not using the right nomenclature..... or you could just explain where you think my reasoning goes wrong.

Sun, 08/14/2011 - 23:31 | 1560536 Real Estate Geek
Real Estate Geek's picture

Well played.

Sun, 08/14/2011 - 20:28 | 1560159 wilburpup
wilburpup's picture

And if they can't do it by any of the means above, they--49 states-- resort to lotteries to exploit the statistical ignorance of the poor and the stupid with the unbelievably cynical justification that it's all for "education."  It's a positive feedback loop---the more "education", the more people to exploit!  Now we are to be treated to state-sponsored internet gambling.  It's the next best thing to taxing Amazon transactions.

Sun, 08/14/2011 - 21:47 | 1560292 AmCockerSpaniel
AmCockerSpaniel's picture

"It's the people at fault."   You can stop there! No enterprise is any better than it's people. They deceive us, but only after they deceive them selves.

Sun, 08/14/2011 - 21:56 | 1560302 European American
European American's picture

Government is an innocent reflection of the collective quality of the people.

Mon, 08/15/2011 - 00:45 | 1560649 Michael
Michael's picture

Very well said, cranky-old-geezer. See what we started?

That's exactly what we've been seeing since '08. I'd also add, since NAFTA.

Sun, 08/14/2011 - 16:33 | 1559515 miguel991
miguel991's picture

US and the rest of the world. Great series here:


Sun, 08/14/2011 - 12:00 | 1558914 DormRoom
DormRoom's picture

Most hedge fund strategies depend on the Black-Scholes model, or a variant, which itself assumes a constant volatility coefficient.  There are entities (institutional, and otherwise) gaming the system by 'injecting volatility' into the markets via algorithms (fractal, and otherwise) to distort the option pricing mehanisms, and profiting from various arbitrage strategies.


The problem is that once you inject volatiity, using your algorithms, computerized hedge fund strategies must adjust by dumping/buying equities.  This is why we are witnessing greater than two sigma movements.


If you can game the mathematical model, which all computerized trading is based on, you can make obscene amounts of alpha.

Sun, 08/14/2011 - 12:22 | 1558978 spankthebernank
spankthebernank's picture

Is that you Jim Simons?

Sun, 08/14/2011 - 12:34 | 1559007 spiral_eyes
spiral_eyes's picture

more good news!

pentagon plans for war with china!

bullish for everything!

military keynesianism, bitchez! 

Sun, 08/14/2011 - 12:58 | 1559063 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Unless the U. S. has a nucleur war in mind which would kill billons worldwide, China is holding most of the cards here.  All China has to do is pull the plug on the U. S. Treasury Bond market and the U. S. mighty war machine grinds to a halt almost overnight!                Tuco

Sun, 08/14/2011 - 13:21 | 1559089 DormRoom
DormRoom's picture

When was the last time a nation went to war with its largest trading partner? It would ruin both economies, and lead to a global depression.


New cold war by 2025

Sun, 08/14/2011 - 13:33 | 1559112 spiral_eyes
spiral_eyes's picture

the last time? 1914. 

Sun, 08/14/2011 - 13:45 | 1559137 DormRoom
DormRoom's picture

yeah?  Did that war turned out well for the colonial powers?  The British pound ceased to be the world's reserve currency.  And an upstart nation, America, became the manufacturing floor of the world, for the colonial powers.


Sun, 08/14/2011 - 17:07 | 1559625 cranky-old-geezer
cranky-old-geezer's picture

Actually it would hurt America much more than China.

China is developing trade relations with the rest of the world.  America is a shrinking part of China's worldwide market.

On the military side China is developing an Asian nuclear alliance. Russia is in.  Pakistan is in. Soon India and Iran will be in.

At that point it will far outclass America's nuclear capability, land troop capability, and naval capability.   But nuclear capability is all that really counts, and the alliance will take things to the nuclear level right out of the gate, telling America get out of the middle east of face nuclear attack from all directions.   America will quietly leave, saying "we won" all the way home.

No, America won't attack China.  No way. Because it's China-Russiia-Pakistan right now.  Soon it will be India and Iran also, and America wouldn't even dream of going up against that.

Sun, 08/14/2011 - 19:42 | 1560050 trav7777
trav7777's picture

even if every single nation on earth banded together, they would still not be at parity with our naval capability.

We're literally that far ahead.

India is not joining any alliance Pakistan is in anyhow

Sun, 08/14/2011 - 20:52 | 1560215 New_Meat
New_Meat's picture

trav- ya, gotta kill the USN is a fact/policy, will come on in various forms, including killing sailor ethos, subz "manning" etc.

U might wish to watch TPMB, who is really far out, I met him at Newport, quite clear thinker, although he's rather unconventional in his thinking.

and stuff.  Especially, the comments that a U.S. frigate dominated all vessels in the harbor in India.

- Ned

{Dang, I was hoping to draw u into a food fight this afternoon, my bad ;-)}

well, perhaps not ;-)

Sun, 08/14/2011 - 21:04 | 1560232 DormRoom
DormRoom's picture

You do realize the US is a debt ceiling away from not being able to pay its military.  If China ever stopped buying US Treasuries, the US would likely not be able to meet it's fiscal commitments, and may in time, stop paying the military.


And a unpaid military force is quite fickle.  Ask the Romans.  Most of her legions disbanded when they discovered their gold wages were tungsten.

Mon, 08/15/2011 - 15:41 | 1562692 Kobe Beef
Kobe Beef's picture

We can only hope those betrayed US servicemen would have the wherewithal to return home & clean out the "domestic enemies" infesting DC. Then they could do Detroit.

Sun, 08/14/2011 - 23:59 | 1560437 cranky-old-geezer
cranky-old-geezer's picture

Our naval capability won't matter going forward.  Things are moving to the nuclear level very soon, and we'll be way outclassed by the ANA.

Russia ...a firm member of that alliance... has the biggest nuclear weapon ever created, the 57 megaton Tsar bomb. It would take out an area the size of Ohio.   And they've likely figured out how to boost the yield to 75 megaton by now.

That alliance won't have our pseudo-religious wishy-washy weak-kneed limp-wristed gutless lack of will to push the nuclear launch buttons, and our gutless politicians know it.

That's why America will tuck tail and back out of the middle east when the nuclear ultimatum is communicated to them.  And yes they'll say "we won" trying to save face. 

Our naval capability will be meaningless going forward in another way. In this new age of hypersonic anti-ship missles, which we have NO defense against, our carriers are sitting ducks out there.

Perhaps China will just take out a couple to prove the point.

Sun, 08/14/2011 - 13:28 | 1559107 GeneH3
GeneH3's picture

Destructive nuclear war is obsolete. A few well-placed EMP weapons and it's over for the U.S. as we know it.  Our technological society, which stands udefended, will disintegrate into chaos. Rather than focus on our Defense, our arrogant political "leaders" squandered our resources on Offense.

Sun, 08/14/2011 - 20:59 | 1560225 optimator
optimator's picture

"Rather than focus on defense".  Like a Maginot Line we can relax behind?  Compare China's nuclear deterrent to ours.  There is only one thing worse than a nuclear war and that is losing a nuclear war.

Sun, 08/14/2011 - 21:10 | 1560239 New_Meat
New_Meat's picture

Child, GeneH3<must be the stupid, no, the clueless, gene>:  This Gives You AN OPPORUNITY TO IMPROVE Your worthless life:

"Destructive nuclear war is obsolete.",

Wow, whe knew, Kennan and the gang had that whole thingie wrapped up in like the early 1950z.  Why, even Ronnie knew this, that's how he killed the Soviets (with absolute contribution from Maggie and THE Pope), and destroyed their political system.  No Saul involved, either.

Evidently, you don't know much about how thingz happen in the real world.

But the night is eventuating and  I'd doubt u could figure out any other commentz:

= Ned

Mon, 08/15/2011 - 15:51 | 1562723 Kobe Beef
Kobe Beef's picture

Evidently you dont know how the real world works either.

Please tell us your conviction that St. Ronnie the Senile Avenger who, along with his British PM & papal figurehead, slayed the Soviet Dragon (without the help of the Mystical Saul, no less) is only Sarcasm.

Until then, stay on whatever drugs you're on & stay off the message boards. Thanks for coming out.

Sun, 08/14/2011 - 21:13 | 1560242 New_Meat
New_Meat's picture

extra credit: RAH on war is obsolete--go figure

Sun, 08/14/2011 - 15:19 | 1559307 In Fed We Trust
In Fed We Trust's picture

And that will probabley be the time the AMERO is introduced. Of course the Chiense will be blamed along with people holding gold.

Sun, 08/14/2011 - 14:10 | 1559171 reader2010
reader2010's picture

There won't any wars with China as long as CCP keeps playing their assigned role. 

Sun, 08/14/2011 - 21:15 | 1560246 New_Meat
New_Meat's picture

"There won't any wars with China as long as..." they own trillionz of FRN debt.

That is called "reason to negotiate."

- Ned

Sun, 08/14/2011 - 19:14 | 1559993 sun tzu
sun tzu's picture

Hey dummy, the pentagon "plans" for wars with every country in the world. 

What proof is there that the US is mobilizing in Asia? I have heard of no increase in the number of US forces in the Pacific.

Sun, 08/14/2011 - 13:35 | 1559117 jm
jm's picture

So big players selling vol (suppressing its price) and thus the price of other varibales in models-- namely price (via dumping/buying equities)-- adjusts to vol rather than the other way around. 

Not sure what you mean by "gaming" this pathology as opposed to just act independently of it.

Sun, 08/14/2011 - 14:35 | 1559219 ToNYC
ToNYC's picture


True, according to your paradigm of course, however things change, to fill the need away from you.   HFTs are only lucky for now the un- regulators allow them to steal in the face of so many documenting witnesses. They might as well be banks as speculators in liquidity games that they comtrol.

Sun, 08/14/2011 - 10:57 | 1558733 CrashisOptimistic
CrashisOptimistic's picture

Nor should you agree.

You can't fix geology.  Oil scarcity is at the core of all the problems.  Not manufactured money or manufactured anything.

Central plan all you want.  Or don't central plan all you want.  It's not going to matter.

You feed 7 billion or you don't.  Last time there was no oil, there was 1 billion people.  Good luck with feeding the 7 billion, regardless of central planning.

Sun, 08/14/2011 - 11:22 | 1558810 trav7777
trav7777's picture

so these were 6-8 sigma market moves eh?  Is there anyone who doesn't see these things never happening again?

Something has always been completely wrong with the risk model assumptions out there

Sun, 08/14/2011 - 11:38 | 1558861 mkkby
mkkby's picture

It takes an economics professor to be dumb enough to assume normal distributions for crowd behavior.  Funny how those 6 sigma events happen every 2 years or so.

Sun, 08/14/2011 - 15:39 | 1559351 ToNYC
ToNYC's picture


One could imagine more people seeing that Proof in the Pudding that no one wants to eat.

Sun, 08/14/2011 - 11:40 | 1558865 CrashisOptimistic
CrashisOptimistic's picture

Modeling is how you justify an economics staff, without being too explicit about stating that you have one just to reassure clients (not because they have any value).

They come to work each day and the cubicle guys take the big picture concept the Chief Economist gives them and they spend the day polishing coefficients of variables.  

Then they complete their "project" and plug in the latest statistics and make their call of prediction of this or that.

The next day a ship carrying lots of important parts sinks, disrupts this or that and someone goes bankrupt because of it, shoots himself and his family, upsets his father-in-law who happens to be a legislator, who introduces legislation that passes two weeks later and smashes all results from the model.

Then they hand out paychecks to the economics staff and the Chief Economist sends down modifications to the big picture and the staff gets started on their important coefficient work again.


Sun, 08/14/2011 - 17:50 | 1559756 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Gold to SPX ratio on 252 data points, 5.7 sigma on Wednesday or roughly 1 in 100 million odds.

On a mean reversion principle, short barbaric freedom and long fascist brave new worlds.

Sun, 08/14/2011 - 11:27 | 1558826 damage
damage's picture

Peak oil is bullshit cooked up by the oil companies so they can charge more for the stuff they've already found without searching for more.

Sun, 08/14/2011 - 11:59 | 1558908 LawsofPhysics
LawsofPhysics's picture

Do you work for an oil company?  Are you an engineer?  No?  Well, let me educate you a bit since I consult for Cheveron (who is investing heavily in biodiesel from algae) and my brother has been in oil and gas for 20+ years.

We will stop using oil with a lot of it in the ground.  Why?  Simple, cost recovery.  It simply is costing more and more to get the stuff out of the ground (both in capital and resources).  In most of the productive oil fields we have been pumping seawater into the field in order maintain good presure for recovery.  We have been doing this for over 40 years (yeah, these fields are massive).  One problem I work on is trying to inhibit the sulfate reducing organisms that are found in the oil.  These organisms are asleep until they come into contact with the seawater.  Seawater has a lot of sulfate in it.  These organisms oxidize the fats in the oil (oil is essentially fat idiot) and reduce the sulfate to hydrogen sulfide (an explosive and corrosive gas - hello BP disaster).  For reference, all humans oxidize sugars to carbon dioxide and reduce oxygen to water.

Educate yourself retard before spouting bullshit.  The planet has finite resources, and oil is one that is becoming more and more expensive to obtain, period.  My guess is that you also consider yourself a "conservative".  Well guess what, so am I. As a conservative I will not invest capital if the return on that investment is negative.  Guess what?  The oil companies won't invest capital either, if the return is negative.  You want to make a difference, go work for an engineering degree and then work for a solution instead of spouting bullshit.  Fucking hypocrit. 

Sun, 08/14/2011 - 12:38 | 1559022 TheTmfreak
TheTmfreak's picture

My fiance just finished an internship with them 2 days ago. Looks like we'll be moving to Houston or Louisana come next year...

I love when people bring up big oil "they charge so much money." 3 dollars and 50 cents of clownbux for a gallon is hardly "that expensive." Considering if one did the math of how much money that is in say... 1960 silver dimes, one finds out how NOT expensive oil is. (just how worthless the dollar is).

Also oil companies make what... cents per gallon? Governments make what... dollars per gallon? Oil companies are they only fucking reason globalization was ever able to move forward. The only possible moral "gotcha" that might be able to be said about big oil is the pure exploitation of unstable country resources. However while it may not necessarily benefit the local populace (who was going to do nothing with the resources to begin with...) it sure as hell made alot of other people live significantly "better" lives. 

Sun, 08/14/2011 - 15:28 | 1559329 snowball777
snowball777's picture

Governments make at most 66 cents per gallon (in CA) and $0.48 average nationwide. So take that off the top and consider the $3/gallon...$2.37 of which is cost of goods, $0.16 of which is admin and selling, and $0.39 of which is "other operating expenses" (wonder what that is).

It's all well and good to claim low profits, but if the reason is that execs at Exxon are taking home $6000/hr and $400M golden parachutes, then they should be laughed at when they "cry poverty".


Sun, 08/14/2011 - 19:21 | 1560010 sun tzu
sun tzu's picture

Basically, the government makes more money per gallon than the oil companies themselves.

Sounds like you should start up an oil company and make the big bucks since it's so easy. The fact that you have no idea about "other operating expenses" shows your ignorance. Oil prices go up and down. I worked for an oil company that went bankrupt in the late 1990's and thousands of people lost their jobs. Yep, easy money alright.

When will you rant about GE & Google making too much money and not paying taxes?

Sun, 08/14/2011 - 23:05 | 1560466 snowball777
snowball777's picture

No, they make less profit than they pay in taxes that are passed on to consumers at the pump (a neat trick only applicable to products with near inflexible demand). They pull in plenty of revenue and choose to distribute it to their execs in obscene compensation.

I've already complained about GE and Google and their dutch sandwich shenanigans.

Oil prices go up and down. Gas prices go up...and?


Sun, 08/14/2011 - 21:33 | 1560271 Prometheus418
Prometheus418's picture

Agreed.  I could care less how much profit the oil companies make- the reality of the situation is that they sell me a product for $3-4 a gallon that can power my car for thirty miles, and get me that distance in thirty minutes.  It'll still be a bargain if they're charging $20 a gallon, though I'm sure I'll personally be less than thrilled with that kind of price increase.

Nothing on earth provides that much power for that low a price.  Yeah, they're rich- good for them.  They make it possible for the rest of us to become rich as well, and they work for a living- unlike bankers, who just harvest cash from your personal credit, and then tell us we all should have known better.



Sun, 08/14/2011 - 12:48 | 1559049 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Sir, I belive you may be the founder of "Peak Critical Thinking"?      Tuco

Sun, 08/14/2011 - 13:28 | 1559106 LawsofPhysics
LawsofPhysics's picture

LOL!, Ah yes, another "academic" who has never removed a barrel of oil from the ground in his life.  The production numbers from wells that suddenly become viable again are far below keeping up with demand.  You are indeed a troll, and a bad one at that.  In many of these cases, the gorund has undergone major tectonic movement as well.  Just ask Japan what their thoughts are on that.

I strongly urge you to stop masterbating in your ivory tower and go out and talk to some folks who actually work these wells.  Moreover, in the questionable literature that you site you admit that your false "adiabatic" process does not keep up with demand.  Even if it wasn't a lie based on questionable "science" funded by questionable sources, it is still a losing proposition.  Like everything else on this finite planet, it is all a question of flux.  Oil is made up of fats.  The carbon for those fats must come from somewhere and then that carbon must be in the reduced form.  You also continue to ignore the economics of recovering oil.  These pathetic wells can not keep up with demand, where do you think they let us experiment?  Certainly not on a very productive well.  Overall oil production continues to decline world wide, this is well documented.  Biodiesel, ethanol, butanol have been replacing the declining flux for almost ten years but we are sitting at a critical juncture as this competes with agritcultural carbon.  I will admit that it does not help that that we continue to fight these corrosive forces either.  Just like many city water supplies, we are leaking a tremendous amount of oil in our pipelines as well.  I, and others are working on fixing this, but it takes time, demand is up, flux is down and the cost to recover continues to grow.  I see Cheveron's books, and most of the production information is available on DOE's website.

Prove me wrong with facts, not more academic horseshit.  Like I said, we will stop using oil with plenty in the ground, demand, and the cost to recover will make it so.  The sun remains the only source of energy that the earth has ever known, and even it won't last forever.  It still burns hydrogen as the fuel for the fusion reaction and that is not infinite either.

Good luck with the unicorns shitting skittles, you should become and academic eCONomist.

Sun, 08/14/2011 - 14:41 | 1559231 asdasmos
asdasmos's picture

"I strongly urge you to stop masterbating in your ivory tower and go out and talk to some folks who actually work these wells."


Lmao, keep up the good work.

Sun, 08/14/2011 - 19:46 | 1560060 sun tzu
sun tzu's picture

Nobody here is denying that oil is a finite resource. It was a finite resource in 1920 when the chicken littles were screaming that the world would run out of oil in 20 years. The world might run out of oil in 20 years or 200 years. The Arctic hasn't been explored. The Rockies have been off-limits. More discoveries are made each year across the world. It will continue to cost more, but as long as it's the most economical and practical source of energy, it will be used. What is the alternative? Maybe biodiesel, but how much fresh water is needed? Will there be enough to supply the world? 

As far as oil production dropping - it has since 2008. That was likely due to less demand since the economy went into the shitter. OPEC has a tendency to reduce supply in order to prop up prices. I'm sure you're aware of that. Just because you claim to work as a consultant for Chevron does not make you the final authority on peak oil theory.

Sun, 08/14/2011 - 13:24 | 1559097 Freewheelin Franklin
Freewheelin Franklin's picture

Biodiesel from algae? Not sure about Chevron, but I know BP is involved in a partnersip with the DoD and NREL to create jet fuel from algae in case of a major war and our supply lines get cut off. As far as diesel fuel from algae, Jatropha shows much more promise. Both open and closed algae systems are riddled with problems.



Sun, 08/14/2011 - 13:37 | 1559110 LawsofPhysics
LawsofPhysics's picture

Yes, I know.  Working on the problems puts food on the table.  I believe Exxon has a big program as well, but thermodynamics is a bitch and the sun remains the only energy source Earth has ever known.  What is a world to do?  


Like any other plant oil source, the jatropha still need a source of fixed nitrogen.  Fixing nitrogen is energy intensive no matter how you do it (be it by Dupont or a nitrogen fixing bacteria)  Dupont burns oil and coal to fix nitrogen, while the bacteria burn ATP and do it slowly.  Either way, 7 billion people create quite the flux problem.  Right now 22% of the fossil fuel the world burns goes to fixing nitrogen for fertillizer.  It it over 30% if you count planting, harvesting and trucking crops around.  Yeah, lets put more stress on that system.  If we work hard enough, I am sure we can turn the world into Somalia.  Thermodynamics is indeed a bitch.  Unlike fiat, energy does not simply appear out of thin air.

Sun, 08/14/2011 - 13:44 | 1559132 tip e. canoe
tip e. canoe's picture

LoP, what about legumes for fixing nitrogen from the air?   or rerouting our urine?   how much nitrogen gets flushed down the toilet every day you think?

Sun, 08/14/2011 - 13:54 | 1559149 LawsofPhysics
LawsofPhysics's picture

No plants fix nitrogen.  Legumes provide a home for bacteria in their roots.  The legumes capture sunlight and fix CO2 into sugars that they share with the bacteria in exchange for the reduced nitrogen.  If you are using legumes for fuel, then you can not turn them back into the soil in order to grow food crops.  So you still need to burn some fuel to make the fertilizer.  Again, the issue is flux.  I agree with many that we can come to a sustainable level of flux.  Unfortunately, the earth can not support 7 billion people, especially 7 billion using the amount of energy that the average american uses.


With respect to reduced nitrogen, innovation and technology have distorted the global nitrogen cycle (many elements that are required for life cycle through a number of oxidation states, from oxided to reduced and energy from the sun keeps the cycles going - cycles stop, life stops).  There is no question that humanity can come to a renable level of energy consumption on a per person basis.  Unfortunately, people are not going to like the denominator in that equation.

Sun, 08/14/2011 - 14:10 | 1559169 tip e. canoe
tip e. canoe's picture

thanks for correcting my simplistic statement about nitrogen fixing.   it's all about the bacteria for sure.    but, i meant intercropping jatropha with legumes, not growing legumes for fuel.   and as far as i understand it though, there is nitrogen in the air though, yes?

someone posted a personal energy use quiz a couple weeks ago, really brought the issue home.   even though i'm in the lowest 1/4 of amer-i-cans, if the entire world population used the same amount as me, we would still need 2 earths.   fuckin a.

think i've brought it down about 25% since then, but that last 50% is going to be a bitch, for sure.   that damn refrigerator is a freakin hog.   and the laptop usage probably doesn't help either, been trying to cut that down too, but old habits die hard.

re: fertilizer -- been fermenting my own this year using only ingredients that i can find (or pee) for free.   no energy required, the bacteria does all the hard work.   love those little buggers.   then again, most people wouldn't have the stomach for the process.    wish more people would accept that shit sometimes stinks and that this is a good thing, but what can you do...

Sun, 08/14/2011 - 14:33 | 1559211 LawsofPhysics
LawsofPhysics's picture

I agree, most people don't want to get their hands dirty and most would not have a clue if they went to the market and the shelves were bare, let alone if their "money" no longer worked.

I spent some time in Russia after their collapse in 1996.  Trust me, the shelves go empty long before money dissappears.  Mainly because anything of real value becomes a currency of its own - like clean water.

Just so you have your terms right, fermentation implies an anaerobic process and while there are many bacteria that are nitrogen fixers and anaerobes, the best organisms that are nitrogen fixers actually benefit under aerobic growth.  They get more energy out of reducing oxygen to water.  You get more ATP this way, and it take 16 molecules of ATP and 8 low potential electrons to overcome the 900 kJ of energy required to break one nitrogen-nitrogen triple bond.  The thermodynamics are what they are.  Keep up the good work and get yourself some like-minded and well-armed neighbors.

Sun, 08/14/2011 - 14:44 | 1559230 tip e. canoe
tip e. canoe's picture

thanks for the tips on thermodynamics...that's good shit to know, literally.   now it's clear to me how & why aeroponics works so well.    beginning to also understand that a key is not choosing between anaerobic & aerobic, but finding a balance between the two.    can't explain the exact science of it, but, intuitively, i can observe that there's definitely a 'magic' happening in that sweet spot.

Sun, 08/14/2011 - 14:03 | 1559162 LawsofPhysics
LawsofPhysics's picture

With regard to nitrogen going tdown the toilet.  it is in many forms, some of which a plant can not use.  But hey, the easy answer is how comfortable you feel with having other people's shit and piss being mixed in with the soil that you are growing your vegetables in.  Even if we all did this (good luck with a city like L.A.), it still won't feed eveyone as plants take time and fresh water (another major problem) to grow.  At best (i.e. perfect weather and available fresh water), a family of five needs about five acres to live if they recycled everything.  There isn't enough arable land on earth for 7 billion people to each have an acre.  Then you have to factor in the weather.  But don't worry, more arable land and fresh water coming online as the earth warms, good news to be sure.

Sun, 08/14/2011 - 14:36 | 1559216 tip e. canoe
tip e. canoe's picture

saw this youtube once where this farmer in India said "Give me an acre, and I can feed 10 people".   as i'm learning the techniques of Stuart Coleman & Masanobu Fukuoka, etc, etc, etc., I become even more convinced that we can radically improve on the 1 human = 1 acre equation...on a micro-level.   the challenge is if and how to scale it up to the levels that you are discussing.   frankly, that's beyond my feeble mind to comprehend, but if & when someone figures it out, let me know, cuz i'm down for making the effort.

Sun, 08/14/2011 - 17:45 | 1559735 flattrader
flattrader's picture

That guy truly deserved that McArthur Genius award.

I heard him claim he can grow food on top of concrete with enough compost.

I believe him.

Sun, 08/14/2011 - 22:38 | 1560043 tip e. canoe
tip e. canoe's picture

no need to believe him, you can go to Milwaukee and see for yourself.   what's great about concrete is the tiny air pockets allow the bottom of the compost pile to be aerated even when fully saturated.

and yo Shirley, Will's the Man.   way deeper than even those who follow him realize.   he's the quintessential gentleman farmer and a shining example of the 'fix' that the original post espouses.   thanks for bringing him to everyone's attention here.

but even tho he has the practical aspects down, his org is still dependent on grants, even when he's proven that he can make a "profit".   something's not right with that equation.

Sun, 08/14/2011 - 21:47 | 1560293 Prometheus418
Prometheus418's picture

I get a lot of food out of my small plot, but I use chemical fertilizers- and those don't exist without oil.  If it wasn't for the fertilizers, the soil in my backyard would be dead by now.  

Not many good alternatives to oil- I'm still rooting for the best nuclear reactors we can come up with in every city.  There will be accidents, but in my view, the risk of an accident is preferable to the stark reality of mass starvation and deaths from lack of heat.  Somewhere in the wide world there may be an incredible source of power that can take the place of oil- but we haven't found it yet, and it's likely going to come down to using what we already know how to harness.

Sun, 08/14/2011 - 15:20 | 1559311 New_Meat
New_Meat's picture

Laws of Physics:

"... how comfortable you feel with having other people's shit and piss being mixed in with the soil that you are growing your vegetables in."

You're talking about Milorganite, n'est ce pas?

That stuff has been in business for quite a while.  Works good.

- Ned

{and, dang, you intervened with coherent logic above.  I was hoping to put a nickel into Trav and watch the fireworks :-( }

Sun, 08/14/2011 - 16:54 | 1559585 LawsofPhysics
LawsofPhysics's picture

Yes, several companies now doing the same thing.  The only thing that varies a little are the heavy atoms these mixes seem to be contaminated with.  I use several of these products on my own acerage.

Sun, 08/14/2011 - 19:49 | 1560072 trav7777
trav7777's picture

inflation, man...nickel won't cut it

Sun, 08/14/2011 - 20:55 | 1560219 New_Meat
New_Meat's picture

Peak-human-shit? ;-)

Sun, 08/14/2011 - 17:35 | 1559705 Pay Day Today
Pay Day Today's picture

LoP - a question, why is a lot of oil going to be left in the ground due to cost of recovery reasons? I can understand due to political or security instability. But there will be a demand for oil even at $200 or $300 per barrel. (Not a huge demand no doubt, but still significant).

Is the scenario that even at those prices, large volumes of oil will be uneconomic to recover?

Of course at $200 oil the world economy is going no where except backwards.

Sun, 08/14/2011 - 20:08 | 1560025 Koffieshop
Koffieshop's picture

Don't think in money, think in energy return/invest ratio.

If you get 1x worth of oil energy but need to invest 2x energy to get it, the stuff will stay in the ground no matter how much it costs.


I believe the current ratio for oil is 10:1 (don't quote me on this though).

The harder it will get to get to the oil the more the ratio will fall.

The more the oil ratio falls, the more attractive it will become to use some processed biomass synthetic instead of the real thing.

Sun, 08/14/2011 - 21:14 | 1560244 ATM
ATM's picture

Unless of course the government decides it's in our best interests to subsidize the removal with tax dollars so that their friends can keep working in a losing industry ad their relatives can skim fromt he entire endeavor.

Sun, 08/14/2011 - 15:01 | 1559267 CrashisOptimistic
CrashisOptimistic's picture

I keep a close eye on the biodiesel projects funded by XOM and CVX and I concur with LoP because it's not a discussion that is possible.  Mathematics is not subject to debate or politics or ideology.

A good rule of thumb is 1000 watts per 1 square meter.  That's solar energy.  All the mechanisms among all the plant and algae experiments to create oil Cannot Get Around Physics, the maximum is 1000 watts per square meter.  And that's with 100% conversion efficiency, which never happens.

The reason oil is 5.6 million BTUs per barrel is that it is 100s and 1000s of acres of organisms that were washed into the ocean and immediately covered with millions of tons of sand/sediment in some catastrophe 150 million years ago.  When you have, say, just 1 million years to work with, you'll have millions of such heavy rains or flood events occur to generate accumulation of the material and then mud slides or even quakes to move dirt over top.  Bury those acres and acres of raw material for the next 100 million years of 'cooking' and you have oil.

You Can't Do That In Real Time.  You can't buy a few acres of algae farm and expect it to produce oil in the quantities being mined that represent millions of acres over millions of years.  

Those acres gather solar energy.  They do it now.  They did it 150 million years ago.  You can't do what required 150 million years in real time.

We're screwed.  Face it.  Accept it.  Try to be one of the few who survive.

Sun, 08/14/2011 - 15:04 | 1559277 trav7777
trav7777's picture

Accepting it does not guarantee survival, man.  Luck does

Sun, 08/14/2011 - 23:04 | 1560461 StychoKiller
StychoKiller's picture

Conclusion:  The surface of a planet is NOT the correct place for an expanding technological civilization.

Sun, 08/14/2011 - 19:48 | 1560067 sun tzu
sun tzu's picture

So you're working on Chevron's leaking oil pipes and their biodiesel projects at the same time? Bullshit.

Sun, 08/14/2011 - 20:33 | 1560174 LawsofPhysics
LawsofPhysics's picture

Boy you don't read very well do you.  We are working on trying to prevent the hydrogen sulfide from being produced to begin with moron.  All we have to do is figure out how to prevent the sulfide reducers from growing.  I am not a mechanic or a machinist, I don't fix or fabricate pipes.  Don't go full retard on us now.

Sun, 08/14/2011 - 23:18 | 1560502 Triggernometry
Triggernometry's picture

Thermodynamics isn't a bitch, neither is physics. We will indeed leave plenty of oil underground as it starts costing more than one barrel of oils energy to pull one barrel out of the ground. Recent advances in material science are pushing the efficiency of solar panels and thermoelectric generators. Since solar panels lose efficiency as they heat up, coupling photovoltaic with thermoelectric generation will be the necessary technological symbiosis to meet increasing energy needs.

A physics professor I worked for gave his undergrads an extra credit question- what percentage of New Jersey's (this was a Rutgers professor) land area must be covered by solar panels in order to meet the entire country's energy needs?

Its a simple problem to work out yourself, but you may be surprised by your solution.

The algae problem is a very interesting, elegant idea for tapping nature to work for us, but unless algae can meet the need for complex, high molecular weight hydrocarbons, we'll still need to pump out some oil. That is, unless they find something else to make surfboards out of, or go back to using wood.

Sun, 08/14/2011 - 13:41 | 1559126 tip e. canoe
tip e. canoe's picture

jatropha is an awesome fucking plant.   grew one from seed this year...growing like crazy in 6 inches of compost.   one problem with it though is that (at least the strain i have) it's pretty toxic.   every time i touch it i get a crazy rash on the skin.

Sun, 08/14/2011 - 16:42 | 1559550 Shirley Wilfahrt
Shirley Wilfahrt's picture

I would think marine algae would be worthwhile research. The problem with algae is harvest/drying...


How about using waste paper....USA biggest export dry algae....then pelletize and torrify and toss it in with the coal??


We put men on the fucking moon ferfuksakes....

Sun, 08/14/2011 - 19:50 | 1560074 sun tzu
sun tzu's picture

What does putting men on the moon have to do with biodiesel? Does that mean we should have found a cure for the cold and flu too?

Sun, 08/14/2011 - 22:31 | 1560390 JW n FL
Sun, 08/14/2011 - 22:31 | 1560392 JW n FL
Sun, 08/14/2011 - 13:34 | 1559114 SamuelMaverick
SamuelMaverick's picture

Learn how to spell Chevron you liar.  Go troll somewhere else. I am sure a consultant does not know how to spell the name of the company he works for.

Sun, 08/14/2011 - 13:39 | 1559122 LawsofPhysics
LawsofPhysics's picture

So I mispelt "Chevron".  Do you have some facts to add?  No?  Troll indeed fucknut.

Sun, 08/14/2011 - 19:51 | 1560076 sun tzu
sun tzu's picture

You also claim to be fixing their leaking pipeline and working on their biodiesel projects at the same time. Fucking liar.

Sun, 08/14/2011 - 20:28 | 1560157 LawsofPhysics
LawsofPhysics's picture

Oil companies have many problems and projects.  Go put some clothes on and educate yourself and then you might be useful someday too.  I know what contracts we are working on.  Yeah, we are spread thin, but not for long.  Oil prices won't stay suppressed for much longer.  Hydrogen sulfide is nasty and just to be clear idiot. We are not fixing the pipes.  We are working on inhbiting the growth of the sulfate reducers so that none of the gas is produced to begin with.  If you are going to call anyone a liar, make sure you have your facts right. Otherwise you just look stupid, oh wait...

Sun, 08/14/2011 - 21:39 | 1560281 Tom of the Missouri
Tom of the Missouri's picture

I totally agree with "sun tzu", "SamuelMaverick" and others.   "LawofPhysics" is a total and obvious "troll" and a complete fraud.   He is likely some frustrated environmentalist academic.  Perhaps he is Professor Paul Elrich himself for his arguments sound like his.   As a life long student of economics who once actually greased drilling piple joints off shore in the gulf and a modern day resident of the micro-world of economics, aka a business owner, I suggest "LawofPhysics" read a little of the late Julian Simon about disappearing commodities that never seem to disappear but just become more plentifu and less expensive, as the guy who mentioned the Baaken field, etc., mentioned.   $3.50 a gal. is expensive for gasoline? As the fradulennt environmentalist sucks down his bottled water at $10.00 to $20.00  a gallon.  I wonder which one of those was harder to find and  more difficult to deliver to the local retail outlet.

The only problem with oil, is as the author of the article most lucidly states, is the moronic and tyrannical government officials of the world with their taxes and regulations getting in the way down at the micro econ level of preventing the daily tasks of finding it, transporting  it, refinining it and selling it.  Given all the government hurdles to those tasks it is truly a miracle that any ever gets delivered at all. 

The final nail in "Law of Physics" coffin is when he resorted to name calling in one of his later posts.  What a great way to make an argument Mr, Peak Oil.   What a joke.  Why don't you fess up and tell us what you really do.  Are you a janitor at an oil company?

I love this article by the way.  The author nails it with his description of the current situation in the world markets and economics.  We are close to being totally screwed by the worlds ever more tyrannical central planners with their fiat currency overseeers and their economically and historically ignorant constituents that keep voting them in.   I also agree with the author's solutions which is simply getting out of the way of free people in free markets.    I am unfortunately not optimistic that they will ever get out of the way until after the whole thing takes a terrible and painful crash. Even then I think the  odds of a truly free people with a free market again arising out of the ashes are not good.  History shows that experiements like the one of the United States of America with purposefull limited government and truly free people are extremely rare indeed and is not likely to be repeated.  In fact, I think it is almost unique. Those guys back in Philidelpha 200 some odd years ago pledging their lives and fortunes for liberty againts a tyrant less tyranical than our current government were a rare bunch indeed.  I suggest reading some Thomas Hobbes for a view of some the more likely alternatives. 

Good luck though to all the legimiate ZH folks with the coming turbulent times. As a relatively new reader and brand new registered reader, this is my first comment on ZH.  I love the ZH blog and its great thought provoking posts and discussions. Thank you Mr. Durden whoever you are.




Sun, 08/14/2011 - 22:28 | 1560376 JW n FL
JW n FL's picture

how many of you Republicans will I have to suffer..

well the good news is! when the lights go out! you mother fuckers whill have a shelf life of like 5 fucking seconds..

but I digress.

it is not peak oil, it is peak light sweet crude oil.

the difference being.. earth verse pluto for quality of life standards for humn beings.

start here --->

when you try to talk yourself into that the guy who funded, the first to fund on a large scale! oil in canada is lying??

well, most of you are operating on faith not fact to begin with so there is honestly no helping that kind of stupid.

fuck off moron.

Sun, 08/14/2011 - 22:39 | 1560409 prole
prole's picture

You are the man Tom.

Sun, 08/14/2011 - 22:29 | 1560380 JW n FL
Sun, 08/14/2011 - 22:30 | 1560387 JW n FL
Sun, 08/14/2011 - 14:39 | 1559227 disabledvet
disabledvet's picture

"Peak oil is bullshit cooked up by the oil majors so they can charge more for a product they already have discovered and priced out." And just like that we have poetry. Excellent work ZH'ers! Case a beer all around.

Sun, 08/14/2011 - 22:28 | 1560379 JW n FL
Sun, 08/14/2011 - 23:11 | 1560483 Cabreado
Cabreado's picture

"Fucking hypocrit," as well as not knowing how to spell the name of the company you consult for both detract from your argument.

That is also the way the world works.

Other than that, you sound like a fairly knowledgeable asshol.

Sun, 08/14/2011 - 12:42 | 1559034 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

What happened to all the oil at Gull Island, The Bakken Field, and the 1,000,000,000,000 barrels of oil under the Rocky Mountains?  Did that all disappear?!               Tuco

Sun, 08/14/2011 - 13:00 | 1559068 Stuck on Zero
Stuck on Zero's picture

Sadly, it all disappeared after the IPOs.

Sun, 08/14/2011 - 13:18 | 1559087 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture


Sun, 08/14/2011 - 13:44 | 1559135 LawsofPhysics
LawsofPhysics's picture

Unfortunately, these fields have not produced the "projected" numbers.  Again, talk to folks who actually recover the oil.  As a rig worker will tell you, "it ain't easy".

Drink the hopium at you own risk and remember, chance always favors the prepared mind.


Sun, 08/14/2011 - 19:54 | 1560083 sun tzu
sun tzu's picture

It's never been easy but it's always been done. I'm sure the first deepwater drilling operation wasn't easy. Let me know when someone places an order for oil and the producers say they don't have any. 

Sun, 08/14/2011 - 15:01 | 1559266 trav7777
trav7777's picture

you should really investigate the production figures for kerogen in those shales...this is not oil, rather an oil precusor

Sun, 08/14/2011 - 22:31 | 1560393 JW n FL
Sun, 08/14/2011 - 14:11 | 1559159 Jason_1sandal
Jason_1sandal's picture

I find validity in this comment...


edit in Crisis... comment

Sun, 08/14/2011 - 14:39 | 1559224 ToNYC
ToNYC's picture


Mobility has gone too far. The long commute deal is over. Net working, building local satisfaction without the intermediate and tainted currency.


Sun, 08/14/2011 - 10:57 | 1558735 Tyler Durden
Tyler Durden's picture

From start to finish in 4 minutes?


Those speed reading programs really do work.

Sun, 08/14/2011 - 11:07 | 1558760 WestVillageIdiot
WestVillageIdiot's picture

Tyler, you might be amazed what some of us can do in 4 minutes.  Just ask my wife.

Sun, 08/14/2011 - 11:10 | 1558769 Long-John-Silver
Long-John-Silver's picture

My Wife can start an argument before I can finish a single sentence. 

Sun, 08/14/2011 - 11:17 | 1558793 WestVillageIdiot
WestVillageIdiot's picture

You have to wait until they're asleep.  It makes for a much smoother operation.

Sun, 08/14/2011 - 11:22 | 1558813 Cheesy Bastard
Cheesy Bastard's picture

A smoother 4 minutes of sex, or a smoother argument?

Sun, 08/14/2011 - 11:31 | 1558840 WestVillageIdiot
WestVillageIdiot's picture

Four minutes gives you time for both with a little left over for making a ham sandwich. 

Sun, 08/14/2011 - 12:16 | 1558925 Cheesy Bastard
Cheesy Bastard's picture

+1.  Lol.  You can also get an economics degree in 5 minutes.


Sun, 08/14/2011 - 11:36 | 1558855 falak pema
falak pema's picture

does the 4 minutes include the shower afterwards?

Sun, 08/14/2011 - 11:53 | 1558897 slewie the pi-rat
slewie the pi-rat's picture

no. just the first drag on the cig

Johnny Tillotson - Poetry In Motion - YouTube

poetry, BicHez!

Sun, 08/14/2011 - 16:11 | 1559447 Dave Thomas
Dave Thomas's picture

Most likely it's efficient German sex.



Sun, 08/14/2011 - 12:07 | 1558944 DeadFred
DeadFred's picture

LJS, you imply that you sometimes do get to finish a sentence. <green with envy>

Sun, 08/14/2011 - 12:39 | 1559027 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Charlton Heston, the first White Al Qaeda, when asked what was the secret to being successfully  married to the same woman decade after decade said.  "I always remembered the three magic words.  I was wrong."

Sun, 08/14/2011 - 11:24 | 1558815 High Plains Drifter
High Plains Drifter's picture

oh so you take cialis?  do you ever experience an erection lasting more than 4 hours?

Sun, 08/14/2011 - 11:32 | 1558847 WestVillageIdiot
WestVillageIdiot's picture

I thought all elections lasted over 4 hours.  They have to have time to fudge the results and lose the votes.  Don't they? 

Sun, 08/14/2011 - 12:30 | 1558994 gall batter
gall batter's picture

did you intentionally use the words "erection" and "fudge", here?

Sun, 08/14/2011 - 13:55 | 1559150 slewie the pi-rat
slewie the pi-rat's picture

way to bust the asians, g_bat!

Sun, 08/14/2011 - 11:58 | 1558910 Hulk
Hulk's picture

Had one that lasted throughout HS...

Sun, 08/14/2011 - 12:36 | 1559020 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture


Sun, 08/14/2011 - 11:12 | 1558771 disabledvet
disabledvet's picture

Talk about cognitive dissonance-here stands its very definition. I'd say it literally leaves a ringing in the ears but for what we all now know what that means. Face the facts? U luv the omnipotent government and so should we?

Sun, 08/14/2011 - 11:45 | 1558873 goldfish1
goldfish1's picture

the economy of men is a robust, highly redundant network, furnished with its own immune system and self-help mechanism, consisting of unhampered entrepreneurial search and action.

What we can do?


Novel concept. I might read the whole thing and think about it.

Sun, 08/14/2011 - 12:13 | 1558954 indygo55
indygo55's picture

Yeah but what about comprehension? I bet if you tested him on what was said he would FAIL! These trolls are everywhere. Like Bachmann won the straw poll by about 150 votes over Ron Paul but the media only talks about Bachmann and Pawlenty and Perry. I though the program was "Give me the control of a country's money and I care not who writes its laws."?


Sun, 08/14/2011 - 12:35 | 1559012 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

I think comprehension is supposed to be part of the equation also:)            Tuco

Sun, 08/14/2011 - 12:59 | 1559067 MichaelG
MichaelG's picture

I read it in less than 4. It's about Russia.

Sun, 08/14/2011 - 14:00 | 1559157 mcguire
mcguire's picture

tyler, as much as i enjoyed the prose (esp. the microecon as diamonds), the premise is still wrong.  strip away the prose, and the idea is this; the system is broken, we need to get back to free market capitalism.  but as to the first premise, i would argue that the system is NOT broken, it is working exactly as planned.  the long view of what is going on is nothing more than Babel part 2.  back in genesis, God thwarted the aspiration to world government by confounding languages.  it has taken until now for that effort to reach again a critical mass.  a simplistic view? hardly. if you research the dark history of the centuries, and especially that since the advent of freemasonry, you will see the aspirations and written plans of those who seek global domination under the rule of the few (the One, that is, Satan).  from this view, i dont see a system that is broken, but one that is breaking, and right on schedule.  this is the hegelian dialectic working in perfect order.  further, the appeal to 'get back to our microecon roots'.. this is an argument about 'agency' in the sociological sense.  and when faced with conspiracy, notions of agency break down.. how can one behave as a 'rational actor' when, for instance, one's own government is staging acts of false flag terrorism against its own people.  in a world where the government is murdering its own people and then lying about it in order to usher in a fascist police state, what does the 'rational actor' do??  this alone breaks any microeconomic revival that is argued for.. because the fault is not in 'we, the people', but in the invisible hand that is pushing us to the next stage of the dialectic.. 

Sun, 08/14/2011 - 21:25 | 1560257 Kayman
Kayman's picture


Good stuff as usual. 

ZIRP is the problem that purports to be the solution. We all know why we have it though...

And I don't know how you rebuild trust.  Perhaps there never was any trust.

Sun, 08/14/2011 - 11:06 | 1558758 ISEEIT
ISEEIT's picture

If you can't agree with any of this then I submit that you are a moron. Not name calling for personal insult. Name calling as identification. If you do not recognize the truth in this individuals rant then it is the fault of a regime that has mislead you, propagandized you into a fog of confusion. You are unlikely a moron of choice. You are likely a moron of intentional deception.

It is precisely the totalitarian manipulations of the elite that has brought our world to this unfortunate precipice. That you do not recognize that is by design.

Sun, 08/14/2011 - 11:13 | 1558774 Long-John-Silver
Sun, 08/14/2011 - 11:31 | 1558843 PaperBugsBurn
PaperBugsBurn's picture

But does your idol Michelle Bachman agree with this too???




She's hooked into the banksters through the "Club for Growth".

Sun, 08/14/2011 - 12:06 | 1558919 Marco
Marco's picture

The totalitarian manipulations has given the elite control of the vast majority of the worlds resources. How exactly is tearing down government while preserving property rights going to fix anything when by and large it would be protecting the property of the elite?

Yes, the elite owns a lot of paper ... but they also own land, water, power companies and even gold ... and they own most of it, just like they own most of the paper (which they are busily offloading on pension funds, central banks and governments as we speak). They own most of everything, period.

Government is purely a temporary tool the elite is using to bleed the middle class and give them control over capital. Somehow economic growth with the measly capital left uncontrolled by the elite will lift us all above our feudal lords? Unfucking bloody likely. Congratulations if you personally hitched a ride on their theft by investing in gold, giving you the means to buy a small estate ... but compared to the states and countries the elite will own outright in the end it's hardly worth mentioning.

In the end the elite will own all the natural monopolies the rest of humanity needs to do anything at all ... and free markets are going to do bugger all good. The elite dynasties will live a life of rentseeking, nothing will wrest them from their position at the top but force. Either the state or a revolution.

Sun, 08/14/2011 - 12:27 | 1558987 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Whenever referring to this group it should always be preceded by the word "demon" as in demon elite!  To do otherwise puts them on an extremely unwarranted pedestal.  Demons come from beneath not above!  Tuco

Sun, 08/14/2011 - 13:21 | 1559090 GFKjunior
GFKjunior's picture

I totally disagree, the free market is the great equalizer. It rewards innovation and new ideas, the elites will never be able to stop the free flow of information, unless they have help from the state.

Sun, 08/14/2011 - 14:31 | 1559206 Marco
Marco's picture

They will be able to stop access to arable land, fresh water, oil, iron ore, etc etc if they own it and their property rights are declared sacred ... able to extract nearly the full fruits of your labour and innovations as rent (in the end natural resources are a greater necessity than ideas).


In the end there is little difference between a state and a landlord.

Sun, 08/14/2011 - 17:00 | 1559608 AnAnonymous
AnAnonymous's picture

(in the end natural resources are a greater necessity than ideas).

Ouch. It hurts. Bad move. Better to keep the line "resources do not matter" to fit the ideological line of this website.

Sun, 08/14/2011 - 18:39 | 1559907 flattrader
flattrader's picture


You may want to crack open a history book and read all about those pesky monopolies and the whole anti-Trust era episode.

Yeah, so much for free markets equalizing everything and not quashing innovation.

Sun, 08/14/2011 - 21:30 | 1560265 Kayman
Kayman's picture

 unless they have help from the state.- you mean control of the message ?  You can count on one hand the people that control the message.

And when you find a free market, let the rest of us know.  You will have better luck finding a dodo bird.

Sun, 08/14/2011 - 13:21 | 1559091 GFKjunior
GFKjunior's picture

I totally disagree, the free market is the great equalizer. It rewards innovation and new ideas, the elites will never be able to stop the free flow of information, unless they have help from the state.

Sun, 08/14/2011 - 14:09 | 1559168 Shirley Wilfahrt
Shirley Wilfahrt's picture

You assume a free market. Other than the farmers in the KMart parking lot I'm not sure those exist anymore....

Sun, 08/14/2011 - 16:40 | 1559544 RockyRacoon
RockyRacoon's picture

I don't know how many stories I've read about kids being busted for lemonade stands.   That's crap.


...entrepreneurship is no more risky than it has to be and that it reaps the full fruits of its success - as well as seeing that it bears the full responsibility for its failure.

I say we start here and now and put some folks in jail for past indiscretions and crimes against the very nature of free trade and honest dealing.

Sun, 08/14/2011 - 12:25 | 1558981 Confuchius
Confuchius's picture

One can't usher in the noo wurld order without first destroying the old wurld order. Nothing could be more obvious.

Suggestion to the snakes and scorpions behind the noo wurld order (You know who you are) Find yourself new digs on Mars or Venus fast; as you're about to learn the true meaning of "liquidation"

Sun, 08/14/2011 - 11:14 | 1558781 Variance Doc
Variance Doc's picture

A clear, well reasoned response.  So convining, that I must say that I agree with you.



/sarc off/

Sun, 08/14/2011 - 12:18 | 1558966 Ricky Bobby
Ricky Bobby's picture


Boot licking camp guard.

Do NOT follow this link or you will be banned from the site!