PeakOil is You
4% of GDP is $80 oil = Recession
Re: 4% of GDP is $80 oil = Recession
by Cloud9 » Sat 06 Feb 2010, 19:26:17
Sitting here on the side lines, it seems to me that when we hit $147 a barrel and $4 at the pump, discretionary income shifted direction and went into savings and into filling our gas tanks. The never ending optimists were hit square in the face by pessimism and the flow of money that was fueling speculation slowed. Ponzie schemes float on exponential influxes of cash. Once the cash flow slowed, the bezzel in the embezzlement showed and the house of cards came crashing down.
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Cloud9 - Intermediate Crude
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Re: 4% of GDP is $80 oil = Recession
by bratticus » Sat 06 Feb 2010, 19:35:13
$this->bbcode_second_pass_quote('diemos', '')$this->bbcode_second_pass_quote('bratticus', '
')
Do you have any explanation of why this was done?
')
Do you have any explanation of why this was done?
Because the financial players had found a way to collect a fee up front for making a bad loan and then passing any potential future losses onto some chump. In the end, that chump became the US taxpayer.
I think there's really two separate but concurrent processes involved. One is the US Peak Oil descent from 1971 on and the other is the wackiness that results from the acts of desperation caused by thirty years or more of that descent.
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Re: 4% of GDP is $80 oil = Recession
by mos6507 » Sat 06 Feb 2010, 19:47:49
$this->bbcode_second_pass_quote('bratticus', '
')So why did it take until the 21st century to try it?
')So why did it take until the 21st century to try it?
There have been housing bubbles before. What there hasn't been before are those "exotic" financial products, the CDOs, floating around the globalized financial markets. This was a perfect storm of greed and stupidity at multiple levels simultaneously where each participant in the clusterf*ck was not aware of the big picture. All documented perfectly in the Dateline piece.
There definitely is a house-that-jack-built connection between this and oil, but it's linked to the US oil peak in 1970, not the 2008 superspike.
- mos6507
Re: 4% of GDP is $80 oil = Recession
by mos6507 » Sat 06 Feb 2010, 19:53:13
$this->bbcode_second_pass_quote('Cloud9', 'S')itting here on the side lines, it seems to me that when we hit $147 a barrel and $4 at the pump, discretionary income shifted direction and went into savings and into filling our gas tanks. The never ending optimists were hit square in the face by pessimism and the flow of money that was fueling speculation slowed. Ponzie schemes float on exponential influxes of cash. Once the cash flow slowed, the bezzel in the embezzlement showed and the house of cards came crashing down.
We only had $147 oil for what, a few days, before everything collapsed? Your timing is off.
The housing crash started in 2007 or even late 2006 (it was not classified as a crash at first). The timeline of the ARM resets (the graph I keep posting) is the main determining factor on when the bubble popped, not oil prices. Housing prices had peaked and there was no way those homeowners were going to just keep making payments on their houses after the reset. They couldn't afford it even if their commute was free, and even if they could, they most assuredly wanted out anyway, which created a glut of home inventory, hence depressing prices.
You could have had all the free-flowing credit in the world, but the buyers had already dried up in the housing market.
Credit locked up because the bankers finally figured out they had a mountain of homeowners on their books who had fraudulent AAA ratings. It was a quarantine. They had to stop all incoming loans in order to assess the damage on their books and to stop any incoming bad loans by auditing the credit agencies.
Last edited by mos6507 on Sat 06 Feb 2010, 19:56:32, edited 1 time in total.
- mos6507
