[CARVER]

$this->bbcode_second_pass_quote('threadbear', '
')... Deflationary theory is based on North American model of the depression of the thirties. It ain't going to happen here--not even temporarily

[oilluber]

$this->bbcode_second_pass_quote('CARVER', '')$this->bbcode_second_pass_quote('threadbear', '
')I think we will first see another spike in oil prices when Peak Oil hits mainstream and a lot more people will speculate in the oil market. Right
after that I think it will crash.

I think the stock markets are now in decline (reached a high last week, at least over here).

[threadbear]

$this->bbcode_second_pass_quote('CARVER', '')$this->bbcode_second_pass_quote('threadbear', '
')... Deflationary theory is based on North American model of the depression of the thirties. It ain't going to happen here--not even temporarily

[marko]

$this->bbcode_second_pass_quote('shady28', 'I')'m pretty sure Greenspan has been around so long because he has been determined to use monetary policy to push the economy forward under any administration.

[threadbear]

Marko--WalMart and Target have razor thin margins per unit and rely on volume and economies of scale. They won't survive unless they alter their marketing dramatically. They can't trim enough to counter the wave of poverty they'll be encountering. A strong dollar- relative to other currencies, cheap foreign labour, and oligopolic pressure brought to bear on their suppliers have enabled Americans to survive deflation style wages. They HAVE been living deflation. You're predicting the past here.

The American dollar is going to be realigned internationally, and that is what is going to hurt. The idea that other currencies will drop in a synchronized fashion, allowing the US to go on purchasing goods from China assumes many things, first of which is that China doesn't have a vested interest in seeing the US crater as it creates a stronger engine of consumption domestically.

If the US is successful and controls the flow of oil in the Middle East, that will have serious repercussions for the US, economically. China won't continue underwriting American economy if this happens.

If on the other hand the US doesn't control the flow of oil into China, this allows China to develop in a more unimpeded fashion, and they don't need the US. Either way, the US suffers economically, as China lets its currency climb ever higher relative to the American dollar.

The US has been important internationally as the biggest consumer. It is no longer in the international community's best interest to perpetuate this system. It WILL be cut adrift, and that is an inflationary scenario. Americans should take advantage and buy everything they can in the big ensuing yard sale, as that will unfold over a period of no more than six months, after the sh** starts hitting the fan.

[shady28]

$this->bbcode_second_pass_quote('marko', '')$this->bbcode_second_pass_quote('shady28', 'I')'m pretty sure Greenspan has been around so long because he has been determined to use monetary policy to push the economy forward under any administration.

[MrBean]

$this->bbcode_second_pass_quote('marko', '
')This is what happens when the currency collapses. I do not foresee an immediate collapse of the dollar. Too many Asian countries are prepared to defend the dollar. No one wanted to defend the Argentine peso.

I have argued that, during the initial year or two of the recession, Asian central banks are going to be desperately buying dollars and US Treasury bills in an effort to support the dollar and the US economy, on which they are heavily dependent. Only after Asian money creation spins out of control and leads to hyperinflation there will they be forced to give up this policy. Then the dollar will drop like a stone, leading to hyperinflation in the US.

[CARVER]

$this->bbcode_second_pass_quote('threadbear', '
')
Yes, very temporary deflation in the SUV type market. This makes perfect sense. If it's already sitting in your lot, deteriorating in value, why not sell at firesale prices? Hell, they may even give them away!

I guess when it comes to getting rid of inventory of any kind, the economy could throw a big garage sale.

It's just extrapolating from there to draw conclusions about an on-going deflation, isn't likely to play out.

I even question hyperinflation, as wages aren't going to go up commensurate to the amount of money that the fed prints or wants to print.If you look at past hyperinflations, wages rose to accomodate rising prices.

Banks won't lend to indigents, and demand and desire are two very different things. The entire economy rests on a mountain of debt, but that rests on the expectation that the debt will be paid back. You don't need a gold backed system for this,--you can have a paper system that will function using these paramters. You could use cowrie shells, bird feathers, little glass marbles, beads, or sticks and accomplish the same.

The problem arises when banks start to assume that they won't be paid back, by many they previously lent to. Then the system locks up, for those in the middle and lower end of the spectrum with prices high, but not spiralling out of control.

What makes you think oil markets will crash? Smoke and mirrors?

[oilluber]

$this->bbcode_second_pass_quote('CARVER', '')$this->bbcode_second_pass_quote('threadbear', '
')
Yes, very temporary deflation in the SUV type market. This makes perfect sense. If it's already sitting in your lot, deteriorating in value, why not sell at firesale prices? Hell, they may even give them away!

I guess when it comes to getting rid of inventory of any kind, the economy could throw a big garage sale.

It's just extrapolating from there to draw conclusions about an on-going deflation, isn't likely to play out.

I even question hyperinflation, as wages aren't going to go up commensurate to the amount of money that the fed prints or wants to print.If you look at past hyperinflations, wages rose to accomodate rising prices.

Banks won't lend to indigents, and demand and desire are two very different things. The entire economy rests on a mountain of debt, but that rests on the expectation that the debt will be paid back. You don't need a gold backed system for this,--you can have a paper system that will function using these paramters. You could use cowrie shells, bird feathers, little glass marbles, beads, or sticks and accomplish the same.

The problem arises when banks start to assume that they won't be paid back, by many they previously lent to. Then the system locks up, for those in the middle and lower end of the spectrum with prices high, but not spiralling out of control.

What makes you think oil markets will crash? Smoke and mirrors?

[CARVER]

$this->bbcode_second_pass_quote('oilluber', '
')...
So !!, to make this thesis make money, buy oil stocks now,
unload at above 80 bucks, wait for recession,
buy back oil stocks at 35 barrel level.
Finally, I have an answer to a complicated question.

[CARVER]

"Durable orders plunge"

$this->bbcode_second_pass_quote('', 'T')he report showed a wide-spread weakness in orders. Machinery orders were down 6.2 percent, while fabricated metal product orders dropped 4.4 percent.

Technology orders fell 5.9 percent, with computer and related products falling 8.3 percent as communication orders fell 7.1 percent.

Non-defense aircraft orders plunged 20.2 percent, but even excluding orders from the often volatile transportation sector, orders fell 3.2 percent. Reuters had forecast that excluding transportation orders would be off only 0.6 percent.

[oilluber]

does anyone have a link for oil price pattern during the1970's ??
I wanted to see what the recession did to the oil price ??I am trying to decide whether to hold oil stocks through what appears to be a 2006 US recession next year.

Also PE ratios were pretty low like in the 5's I believe for the averages during the 74 period.

[oilluber]

i forgot to add that I found a chart of XOM
went from 3.2(1973) to about 1.75(1975),
so the oil stocks got hammered in that recession,
a supply crunch/inflation type recession.

[shady28]

$this->bbcode_second_pass_quote('CARVER', '
')Is that the sound of an economy grinding to a halt? Maybe it is starting already?

[LadyRuby]

A short article on why a declining dollar is good for the world, by bringing about an economic slowdown or recession in the US, reducing energy demand, and making energy prices cheaper for the rest of the world.

Don't despair the declining dollar
$this->bbcode_second_pass_quote('', '.')..Commentators and policy luminaries have been predicting and even hoping for a fall in the dollar for years, and with it a rebalancing of the US economy away from imports and consumption. Now that it is happening, they are in a lather, worrying about collapsing stockmarkets, surging inflation and generally the end of the world as we know it.

But this is ridiculous. ...

Yes, a dollar crash could bring some bad news as well. The economies whose currencies are at the other end of the seesaw, particularly the euro and the yen, would find their exporters suddenly being priced out of markets. The interest yields demanded on American Treasury bonds could jump sharply higher, as people lending to America (recently, mainly the Chinese and Japanese central banks, and Middle Eastern oil producing countries) demand higher yields to compensate for greater currency risk. The US Federal Reserve might have to raise its short-term interest rates by more than it wished, to deal with the inflationary impact of rising import prices.

Yet a crash of that sort looks unlikely. ...A fairly steady fall is much likelier than a plummet. As it happens, it will bring several clear benefits. One is a certain economic rationality: world trade and capital flows have been grossly imbalanced in recent years, with China and others essentially lending billions to American consumers to allow them to buy their exports. Such vendor financing can go on for a while, as it has, but it can't keep increasing forever.

America needs to save more, to finance its own purchases, but also to export more and import less. As the dollar's fall will indeed bring with it some rise in long-term borrowing costs, through the bond markets, that will choke off growth in demand and investment in the American economy, producing the slowdown or even recession that readjustment requires. A second benefit is that as a falling dollar helps American exporters and hurts importers, it will soften the protectionist noise that has been growing in the US, especially against China and especially in the run-up to the mid-term congressional elections this November.

Finally, though, a falling dollar and an American slowdown or recession will make oil and gas cheaper for all of us. America is the world's biggest single consumer of energy. A slowdown or recession will cut its demand for energy. That is likely to prove the pin that bursts the bubble of $70 a barrel oil prices. Yes, supply is tight, thanks to war and political instability and under-investment. But demand matters too in energy markets. Pundits have been demanding for years that America should guzzle less energy. Well, if a dollar decline brings a recession, that is exactly what will happen. Be careful what you wish for.

[AlCzervik]

Not to hijack your thread, but in that same vein, here is an awesome essay from Ron Paul on the dollar, gold, and a little bit about energy.
http://www.house.gov/paul/congrec/congr ... 042506.htm

[Colorado-Valley]

In a regular time, this argument makes sense. But this writer doesn't understand oil depletion. He thinks the current high prices are just from global politics and lack of exploration.

What if there's a recession, but the price of oil doesn't drop because of increasingly tight supplies? His slow-down could become a full-blown depression.

As we've talked about, peak oil will probably show itself to be a series of deeper and deeper recessions. Every time an economy tries to recover, it will try to use more oil, then energy prices will escalate, throwing the economy into another, more serious recession.

And of course this would be the optimistic scenario ... if depletion is more than, say, 5 percent a year, then things get really, really weird.

[NeoPeasant]

I think it is quite likely that peak oil production will occur due to the effects of a recession dropping demand for an extended period, followed by the inability of the oil industry to reach previous production levels once demand begins to recover. This would mean peak would occur earlier and at a lower production rate than it would have if it had just been a matter of physical production limits.

I have been reading about the collapsing suburban housing market and it's implications for the greater economy (you know, that stuff Kunstler has been raving about all along) and the news hasn't been good. I think peak could be at hand not due to the inability to produce more, but due to a failing economy's inability to demand more. We could even see a substantial drop in oil prices due to falling demand.

[Fishman]

What you speak of may be true, it's also possible this is the beginning of a recession induced by the run up on prices as we may be peaking at present. Time will be the only way to judge which is correct. Either way, preparation for peak may help one with a recession and visaversa. It would be wise to minimize your energy costs whether that means more insulation or go all the way to alternative energy. Grow some food,would be wise. Find ways to save money (which makes a recession worse too)

[lateStarter]

I've been struggling with this recently. We may indeed, encounter a major recession in the near future that could drop oil all the way back to 'who knows what'. In my opinion, that would only prolong the agony. Better to get it over with ASAP (although I also think we won't be 'getting over it' anytime soon either). Bottom line: no matter what happens, people are just going to keep breeding, and the problems are only going to get worse. Overshoot is a bitch...