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Economics/Math (split from OPEC thread)

Discussions about the economic and financial ramifications of PEAK OIL
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Unread postby shortonoil » Sun 24 Sep 2006, 11:57:19

DantesPeak said:

$this->bbcode_second_pass_quote('', 'E')ven by my pessimistic expectations, the world economy is not in recession.


The world’s nine largest Central Banks are and have been expanding the money supply at a furious rate for the last five years. World monetary growth has been in excess of 10% over that period. The US FED has been the conservative member of the group, which is hard to believe, but true. What you are seeing as a growing world economy is actually a growing monetary base. Printing money is not the same thing as producing goods and services, but people believe it when the government says the economy has grown by X% in $s during the last year. It doesn’t mean a thing unless those $s are backed by goods and services; they aren’t!

$this->bbcode_second_pass_quote('', 'S')ince most OPEC countries and a few other next oil exporters have rising populations and rising economic expectations, net oil exports from these countries has already been dropping for the last year or so (granted there are important exceptions such a few small Persian Gulf countries.


I think, you are right on, about the falling export phenomena. It will only get worse as the funds from the high price of oil, which is benefiting the oil producing counties, start to sift down to their general populations. Increasing oil prices are giving them the money to buy their own oil. Wait until the neo-cons figure that one out ....... ha.
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Sun 24 Sep 2006, 17:43:24

$this->bbcode_second_pass_quote('shortonoil', 'N')ow, as long as the economy decays faster than oil production, we wouldn’t notice these little production adjustments. I agree with armegeddon, a failing economy will precede falling oil production. This is because net oil energy will fall faster than gross production. We watch the number of barrels produced, not the number of BTUs deliverd to end consumer. The economy depends on energy availability, not the number of barrels of oil pumped. When you factor in the immense about of energy required to develop oil fields, and the high level of exploration presently taking place, BTUs, per capita, are falling; so is the economy.


The problem is that the economy hasn't fallen. The DJIA's at 11500. Companies are still posting record profits. Getting a job is incredibly easy for qualified college graduates. Companies are offering $10K signing bonuses plus $60K/year to work for them. Unemployment is down. Oil imports to the U.S. are up. Every economic indicator suggests that the economy in the U.S. is doing "better" and consuming more oil than it was a year ago. Consumers seem to be cutting back on spending just a little to deal with their bills, but corporate profits are still up despite that; demand in India and China are making up for the consumer in the U.S.

Basically, the economy is the best it's been since Bush took office (Be sure to vote Democrat in 2006 if you want an economy that's "good" for the middle class.)

All this suggests that either this model is incorrect, or Peak Oil hasn't occurred yet for the purposes of the U.S. Most likely, in fact, world Peak Oil is at least three years off; probably more than ten.
(Having said that, light crude may have already peaked.)
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Re: September OPEC Production Falls - Petrologistics

Unread postby DantesPeak » Sun 24 Sep 2006, 18:03:34

$this->bbcode_second_pass_quote('GoIllini', '
')
Basically, the economy is the best it's been since Bush took office (Be sure to vote Democrat in 2006 if you want an economy that's "good" for the middle class.)

All this suggests that either this model is incorrect, or Peak Oil hasn't occurred yet for the purposes of the U.S. Most likely, in fact, world Peak Oil is at least three years off; probably more than ten.
(Having said that, light crude may have already peaked.)


I agree the economy is at its best and oil usage is up, which I would expect to be rising and falling together anyway - except for gradual productivity gains that let the economy grow a little faster than oil use. So, yes, PO will happen shortly before 'Peak Economy'.

I also agree that the ability for the US to finance this growth has occurred only due to the rapid expansion of the monetary base of other countries - especially China. Granted that the world in general also has been able to secure more energy for itself, which allows those countries to deliver oil and other hard goods to the US - which has run up the US trade deficit to record levels.

Coming into 2006, there may have been sufficient inventories to deal with what looks like a plateau in oil production - yet still have some economic growth. Also non-oil sources, such as coal in China, also supply energy for eocnomic growth.

Therefore the current level of economic growth doesn't prove Peak Oil has not occurred, but it does prove that Peak Total Energy has probably not occurred. I would concede if the world economy does advance strongly next year (2007) that we would have to re-evaluate whether broad based PO has occurred or not.

However I would not expect the total world economy to keep growing once we have past Peak Energy use - except for a small amount which represents productivity improvements.
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Unread postby shortonoil » Sun 24 Sep 2006, 20:08:09

GoIllini said:

$this->bbcode_second_pass_quote('', 'T')he problem is that the economy hasn't fallen. The DJIA's at 11500. Companies are still posting record profits.


Ford has just lain off 1/3 of its work force, GM is sitting with $13 billion in assets against $300 billion in liabilities. The housing market, the originator of 2/3 of the increase in GDP for the last five years has the highest inventories in decades. Toll and most major builders are slashing projects by the gross. Intel just let 10,000 go. Most of the major airlines are bankrupt. The bond market is inverted, the best indicator of a recession to come, and American personal debt is skyrocketing, while their home ATM is going out of service. All of this is happening while the current account deficit is headed for the stratosphere. If the DJIA had just kept up with inflation it would now be over 14,500. The NAZ has just managed to gain back 40% of its 2000 high. Yea, great economy!
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Unread postby GoIllini » Mon 25 Sep 2006, 02:55:06

$this->bbcode_second_pass_quote('shortonoil', '
')The world’s nine largest Central Banks are and have been expanding the money supply at a furious rate for the last five years. World monetary growth has been in excess of 10% over that period. The US FED has been the conservative member of the group, which is hard to believe, but true. What you are seeing as a growing world economy is actually a growing monetary base. Printing money is not the same thing as producing goods and services, but people believe it when the government says the economy has grown by X% in $s during the last year. It doesn’t mean a thing unless those $s are backed by goods and services; they aren’t!

To be fair, real GDP is balanced against an inflation index/market basket. Having said that, Real GDP has been increasing, as well as nominal GDP. At the very least, we're not getting into stagflation.

Again, if you can avoid causing inflation, it doesn't hurt the economy- either short-term or long-term- to do something as crazy as quadruple the money supply.
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Mon 25 Sep 2006, 03:09:08

$this->bbcode_second_pass_quote('DantesPeak', '
')Coming into 2006, there may have been sufficient inventories to deal with what looks like a plateau in oil production - yet still have some economic growth. Also non-oil sources, such as coal in China, also supply energy for eocnomic growth.

Dante,

It's not just that we're drawing down our inventories to fuel economic growth. In fact, inventories of oil are near record levels right now. Oil prices go down every single time the EIA releases the most recent inventory report, because inventories keep exceeding even the market's expectations for buildups.

$this->bbcode_second_pass_quote('', 'T')herefore the current level of economic growth doesn't prove Peak Oil has not occurred, but it does prove that Peak Total Energy has probably not occurred. I would concede if the world economy does advance strongly next year (2007) that we would have to re-evaluate whether broad based PO has occurred or not.

It's extremely difficult to either prove or disprove that Peak Oil has occurred. Having said that, oil S&D fundamentals look decent. I'm not saying you should go out and buy a Hummer, but maybe it's safe for us to stop obsessively carpooling. (Naturally, conservation is always a good thing with finite resources.)

$this->bbcode_second_pass_quote('', 'H')owever I would not expect the total world economy to keep growing once we have past Peak Energy use - except for a small amount which represents productivity improvements.

Things have looked better and better in terms of energy over the past 18 months. At this point, we may make it to nuclear with reprocessing. If that happens, it's likely that "Peak Energy Usage" may hit thirty seconds before some global thermonuclear war wipes out civilization (perhaps in 500 years). Alternatively, it's important to realize that entropy is a statistical law that describes the movement of millions of atoms. Nothing prevents all of the air in the room you're in from moving over to one side and causing you to suffocate but a very similar statistical law that says the odds are maybe on the order of one in 10^10^10, and we may be able to find a work-around for entropy, given a few thousand years.
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Unread postby GoIllini » Mon 25 Sep 2006, 03:32:04

$this->bbcode_second_pass_quote('shortonoil', '[')b]GoIllini said:

$this->bbcode_second_pass_quote('', 'T')he problem is that the economy hasn't fallen. The DJIA's at 11500. Companies are still posting record profits.


Ford has just lain off 1/3 of its work force, GM is sitting with $13 billion in assets against $300 billion in liabilities. The housing market, the originator of 2/3 of the increase in GDP for the last five years has the highest inventories in decades. Toll and most major builders are slashing projects by the gross. Intel just let 10,000 go. Most of the major airlines are bankrupt. The bond market is inverted, the best indicator of a recession to come, and American personal debt is skyrocketing, while their home ATM is going out of service. All of this is happening while the current account deficit is headed for the stratosphere. If the DJIA had just kept up with inflation it would now be over 14,500. The NAZ has just managed to gain back 40% of its 2000 high. Yea, great economy!


Shortonoil,

These are normal changes in an economy that's moving more towards a service-oriented one. More and more kids these days are getting college degrees, and as a result, the economy is perfectly fine with fewer factory jobs, since they're getting replaced by white-collar ones. Meanwhile, GM and Ford are having to pay more. Did you know that some of those "poor" GM employees getting laid off are making six figure salaries without a college degree?

This year, investment banks are coming to UIUC to recruit. They normally recruit from 10-15 schools out east. For some perspective, this is almost like Google recruiters showing up at some community college and giving anyone with a 2.5 GPA or better and a CS or CE degree an interview. These are also some of the best jobs in the world. If you're an undergrad and land a job in IPOs, you'll work 100 hours a week, but make $120K your first year. (I prefer to be an 80 hour a week kinda guy, so that's not a job for me).

Google and Microsoft are wooing CS majors with $80-90K salaries. Heck, Kroger, a midwestern grocery chain, is offering $65K/year to business students.

Meanwhile, the market at least seems to go in 15 year cycles. It stayed flat from 1965 to 1980, and seems to be doing it again starting in 2000. The fact that we've nearly gotten back to where we were in 2000, already, means we're doing a lot better than we were in the '70s.

I don't want to wear rose-colored glasses, but we shouldn't let our gloom-and-doom caps keep us from seeing opportunities in the market, right now. It's a great time to get a job and start paying down debt, or start investing in whatever your views on peak-oil push you to invest in. If you're like me, you see a huge boom in the nuclear industry coming in the next 10-20 years. If you're like Monte, you'll probably be buying solar panels and land out in the country. If you're like neopeasant, you'll be buying weapons. The point is that, if there truly is an economic recovery happening, it's in our best interest to realize it so we can make hay while the sun's still shining.

$this->bbcode_second_pass_quote('', 'W')e have not locked horns for a while but I remember you. how are you doing?

I have a question, if you increased money supply where does the extra money go?

I'm doin' well. Thanks for asking. You?

If the economy is doing well, consumers and businesses will need something liquid to do business with, and the money will go into bank accounts, where it's needed. If the economy is not doing well, it'll go towards inflation. Inflation has been pretty reasonable this year in the U.S (it was up slightly), and a lot of currencies have kept up with the USD, so my thinking is that the economy does need this money.

If the extra money isn't used to make goods more expensive, then an increase in GDP means that we really are producing more than last year.
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Mon 25 Sep 2006, 03:54:25

$this->bbcode_second_pass_quote('ElijahJones', 'W')hat do you guys smoke down there in Illinois? You can work around the second law of thermodynamics? Please. I thought you were a professor or something?

No. I'm just a guy in CS.

Entropy is a statistical law. In theory, if every atom went crazy and "decided" to move to one end of the room I'm in right now, entropy would decrease. However, since there are something on the order of 10^25th atoms in my room right now, the odds that all of them would head in the same direction at once are infinitessimal, but theoretically possible. Still, as we move towards optical computers and start being able to compute things using less energy, it may be one day theoretically possible to compute how to set up a situation that would reduce entropy.

$this->bbcode_second_pass_quote('', 'E')veryone is aware that all the political planners and elitist userers are aware that the mood of the people set's the tone for the economy. That is hy they went out of their way to clear the field for massive consumer spending and housing starts after 9/11. I appreciate the heartfelt ode to Adam Smith, but the invisible handjob is over with. This economy is not strong, it is a house of cards and you are one of the few people I still see smoking the President's pipe.

Elijah,

Your statement may have been true two or three years ago, and definately six. However, aside from the fact that we are losing manufacturing capacity in some areas, the economy is fundamentally stronger than it's ever been. Corporate profits are at record levels. P/Es are very reasonable, if not extremely low. The job market's getting better for consumers, who are now interested in paying down debt, but it doesn't seem to be hurting the economy.

$this->bbcode_second_pass_quote('', 'S')ince this is an open forum and I am a good citizen, I won't heckle you. But I will be watching to see if you back up your jargon with something other than vague references to supply and demand fundamentals.

OK. You want very strong evidence that oil supply has been up over recent weeks? Take a look at total crude oil and petroleum stocks in the U.S:

http://tonto.eia.doe.gov/dnav/pet/pet_s ... _nus_w.htm

Stocks are increasing because oil is getting produced faster than we're consuming it right now. Now, there is an argument we're consuming less. Let's talk about it with this stuff from the DOE:

http://tonto.eia.doe.gov/dnav/pet/pet_s ... _nus_w.htm

It turns out that consumption is down very, very slightly, (end of the summer driving season) but that doesn't explain all of the inventory builds. The only explanation for the inventory builds is that more production is coming online.


$this->bbcode_second_pass_quote('', 'O')f course the damn market is going to respond to S&D that's what they do, even depleting markets respond to supply and demand. You know someday somebody is going to relalize that two intersecting straingth lines doe snot an ecnomoy make. How about dynamics and chaos, and the role of social psychology in economic mood?

Long-term, the market price tracks the intrinsic value of a commodity. We wouldn't see a $15/barrel drop in prices if there wasn't at least a small drop in the intrinsic value of oil.

$this->bbcode_second_pass_quote('', 'T')hat's enough. It just blows my mind how the notion 'err on the side of caution.' makes no sense to some people. Spend your way out of a recession, Keynes would be so proud. But you can't spend your way out the depletion of the foundation stone of the modern global economy. The global economy will return first to regional and then to local emphasis. And acompanying this change in the following decades will be untold suffering and loss of life. Why? Why won't good old homo sapiens just come together and smile on his brother?
I totally agree with you. We do need to be prudent. I obsess over every nickel I spend. But at the same time, once we've made sure we err on the side of caution, we need to err on the side of the mainstream.

$this->bbcode_second_pass_quote('', 'O')r will he?

The more moderate among us (you are extremely opitmistic) see that there are significant challenges ahead to our way of life. Stomping our feet and saying "our way of life is non-negotiable" won't make it go away.
I'm extremely optimistic? I see another 10-15 years of the '70s. If the typical american is moderate, I'm a standard deviation or two out in terms of pessimism. Having said that, I'm also a big contrarian. I'll see everyone taking one side of an issue, and I'll take another if I see a few holes in the argument.
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Re: September OPEC Production Falls - Petrologistics

Unread postby galacticsurfer » Mon 25 Sep 2006, 07:40:02

Gee, I have been waiting for the Great Depression II for a while now due to bursting of Big Credit Bubble in housing and Hedge Fund Derivatives bubble.

How about that Business Week Cover about all the jobs coming from Health Care, Housing and Government jobs, with everything else net in minus(Tech - 1,1 million jobs). So how can everybody cut everyone else's hair(or give a check up) for an IOU(Should I charge it to Visa or Mastercard Mrs. Doe?) A services economy is an illusion. Imports have to be paid with somethingh REAL. USA imports everything it uses except wheat and coal and then borrows the rest on the myth of a government promise(US Treasuries auction).

http://globaleconomicanalysis.blogspot.com/
http://www.rgemonitor.com/blog/roubini/

Maybe I just read some crazy pessimsts blogs like those above or am a born pessimist loser type but I just don't get the idea of selvectively reading the economy as being good because some hiring in some areas is getting done.

Except for the 3000 families with wealth of over $100 million the rest of the USA are losing income and stretching their consumption by increasing debt. The situation is so near to 1929 situation it is not funny. Huge debt and wide income disparities before a massive crash under a super conservative government with a hands off attitude to business.
"The horror, the horror"
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Re: September OPEC Production Falls - Petrologistics

Unread postby Doly » Mon 25 Sep 2006, 08:03:11

$this->bbcode_second_pass_quote('galacticsurfer', 'A') services economy is an illusion. Imports have to be paid with somethingh REAL.


Not sure about that. When the industrial revolution started, people said that, at the end of the day, it was land and the produce of the land what the economy was based on. An economy based on selling manufactured stuff was an illusion, in their worldview.
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Re: September OPEC Production Falls - Petrologistics

Unread postby Roy » Mon 25 Sep 2006, 12:43:35

$this->bbcode_second_pass_quote('', '
') Getting a job is incredibly easy for qualified college graduates. Companies are offering $10K signing bonuses plus $60K/year to work for them. Unemployment is down.


GoIllini, that sounds good, but it sure doesn't jibe with my experience at a major university.

Our student workers, engineering students mostly (all disciplines), were in large part enrolling for grad school/second majors or moving home due to not being able to find jobs. A lucky few started with our organization, and fewer were able to get jobs with family connections. Reminds me of when I graduated in '92.

You're making so many large generalizations in that post. Try adjusting the DJIA for inflation since 2000 using the Fed's own inflation calculator. Hmm.

So, in spite of being bombarded with "good news" about the economy by the MSM, I'm seeing it from on the ground, and it (savings rate, foreclosures, layoffs) doesn't resemble what they're telling me on the idjit box.

Germane quote: "Chocolate rations are being increased from 30 grams to 20 grams this month".

Thanks to the Ministry of Truth, we can now bury our heads back in the sand and continue consuming with reckless abandon. Short on cash? No worries, just borrow more and pay it back later when the rising tide lifts all boats!!! AS long as we keep investing our meager $400/month in the stock market and keep borrowing/spending everything will be ok!!!

True comedy.

What makes it even more tragic is that so many folks seem to believe it. Not here at PO.com of course (where the true believers are a distinct minority), but in the great "out there" that is America.

Finally, I'm truly glad that you're enjoying such prosperity in these times. There are less people like you than you think perhaps.

Cheers.

Ron Zook :) Nobody deserves that! :)
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Mon 25 Sep 2006, 15:51:26

$this->bbcode_second_pass_quote('Roy', 'G')oIllini, that sounds good, but it sure doesn't jibe with my experience at a major university.

You may have a point. Which university is this? UIUC is one of eleven colleges in a conference of other gigantic flagship state schools throughout the Midwest. Tuition's reasonable and most of the kids who go to school here (about 35,000 students) are from middle class families. UIUC is especially good in business and engineering, and it's pretty hard not to get a job as an engineering student, right now.

$this->bbcode_second_pass_quote('', 'O')ur student workers, engineering students mostly (all disciplines), were in large part enrolling for grad school/second majors or moving home due to not being able to find jobs. A lucky few started with our organization, and fewer were able to get jobs with family connections. Reminds me of when I graduated in '92.

Make sure you guys get yourselves on the radars of the oil companies. Shell was recruiting everybody from Chemical Engineers to Civil Engineers to work in their oilfields. Besides that, there's a decently sized infrastructure boom going on in the midwest, and a lot of the engineering firms are coming to campus to recruit. For CS majors like me, the job market is better than it's been since the dot-com days. That's not to say it's amazing, but it's pretty easy to get a nice job if you're graduating with a B average or better (that would be the second highest grade; something like a 2 if you're in Europe).

$this->bbcode_second_pass_quote('', 'Y')ou're making so many large generalizations in that post. Try adjusting the DJIA for inflation since 2000 using the Fed's own inflation calculator. Hmm.

The '70s had 10% inflation and the DJIA stayed flat- without adjustments for inflation- for 15 years. We've had no inflation, and the DJIA, without inflation, is where it was six years ago. Considering everyone was predicting we'd have a repeat of the '70s in the stock market after 2000, we're doing pretty well, given the circumstances.

$this->bbcode_second_pass_quote('', 'S')o, in spite of being bombarded with "good news" about the economy by the MSM, I'm seeing it from on the ground, and it (savings rate, foreclosures, layoffs) doesn't resemble what they're telling me on the idjit box.

What's the MSM?

In any case, my experience has been different from yours, and I'm a middle class guy going to a middle class school just like most of the other folks on these forums.

$this->bbcode_second_pass_quote('', 'G')ermane quote: "Chocolate rations are being increased from 30 grams to 20 grams this month".

Thanks to the Ministry of Truth, we can now bury our heads back in the sand and continue consuming with reckless abandon. Short on cash? No worries, just borrow more and pay it back later when the rising tide lifts all boats!!! AS long as we keep investing our meager $400/month in the stock market and keep borrowing/spending everything will be ok!!!
IMHO, consumers have stopped getting dumber. I'm trying to dig it up, but I've seen a decent amount of evidence to suggest that consumers have at least stopped getting deeper into debt.

$this->bbcode_second_pass_quote('', 'T')rue comedy.

What makes it even more tragic is that so many folks seem to believe it. Not here at PO.com of course (where the true believers are a distinct minority), but in the great "out there" that is America.

Finally, I'm truly glad that you're enjoying such prosperity in these times. There are less people like you than you think perhaps.

Cheers.

Ron Zook :) Nobody deserves that! :)

Haha!!! As the saying goes at UIUC:
"Wanna watch the Illini lose? Buy football tickets. Wanna watch 'em win? Buy basketball tickets."

Thanks.
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Re: September OPEC Production Falls - Petrologistics

Unread postby EnergyUnlimited » Mon 25 Sep 2006, 16:26:52

$this->bbcode_second_pass_quote('GoIllini', 'E')ntropy is a statistical law. In theory, if every atom went crazy and "decided" to move to one end of the room I'm in right now, entropy would decrease. However, since there are something on the order of 10^25th atoms in my room right now, the odds that all of them would head in the same direction at once are infinitessimal, but theoretically possible. Still, as we move towards optical computers and start being able to compute things using less energy, it may be one day theoretically possible to compute how to set up a situation that would reduce entropy.

Lets hope, that the same "wondersoftware" will allow you to work up set of winning numbers from next week National Lotery draw.
It is also a statistical problem, easy to deal with...
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Mon 25 Sep 2006, 17:24:28

$this->bbcode_second_pass_quote('galacticsurfer', 'G')ee, I have been waiting for the Great Depression II for a while now due to bursting of Big Credit Bubble in housing and Hedge Fund Derivatives bubble.

Ironically, the only hedge fund that's really gotten burnt lately on derivatives was one where a trader lost $ 6 Billion on natural gas.

Let's talk about derivatives for a sec. I used to be worried about them, but I got a chance to see how they worked at a job this summer.

The reason that people on these forums count trillions of dollars worth of derivatives on hundreds of billions of assets is simple:

Let's say I have a mortgage. It's worth $100K. I can make money by selling it as mortgage-backed bonds to investors for a total sum of $101K, and agreeing to give them any cash flows from the mortgage. At the same time, if the mortgage defaults, I'm not liable. So how the mortgage works no longer affects me. However, we've just gone from having $100K worth of securities to having $201K.

Additionally, you have to remember that for every person on one side of a derivatives transaction, there's someone on the other. Value just can't go up in smoke like it can when people buy stocks on margin.

$this->bbcode_second_pass_quote('', 'H')ow about that Business Week Cover about all the jobs coming from Health Care, Housing and Government jobs, with everything else net in minus(Tech - 1,1 million jobs). So how can everybody cut everyone else's hair(or give a check up) for an IOU(Should I charge it to Visa or Mastercard Mrs. Doe?) A services economy is an illusion. Imports have to be paid with somethingh REAL. USA imports everything it uses except wheat and coal and then borrows the rest on the myth of a government promise(US Treasuries auction).

We also manage the world's economy. People complain about how kids don't get good enough educations in the U.S, but we have to remember that our system is oriented around creativity and competitiveness, not rote memorization. Those two aspects of our education system give our country a good background for managing the economy.

$this->bbcode_second_pass_quote('', 'M')aybe I just read some crazy pessimsts blogs like those above or am a born pessimist loser type but I just don't get the idea of selvectively reading the economy as being good because some hiring in some areas is getting done.

Pessimists aren't losers, they're just experienced optimists! Having said that, I think it's important for us to weigh both sides of the "economy's tanking" and "DJIA to 50K" arguments. There's a lot of evidence on both sides, but I think it all adds up to an economy that's going to be relatively ho-hum for the next couple of years. IMHO, that's much better than how it's been for the past six years, so I think it's cause to celebrate.

$this->bbcode_second_pass_quote('', 'E')xcept for the 3000 families with wealth of over $100 million the rest of the USA are losing income and stretching their consumption by increasing debt. The situation is so near to 1929 situation it is not funny. Huge debt and wide income disparities before a massive crash under a super conservative government with a hands off attitude to business.

My understanding is that the crash of 1929 was caused- to a great extent- by the stock market. Specifically, people had been buying on margin like crazy, and P/E's went sky high.

IMHO, we don't have this situation right now. If anything, that was 2000. When the entire market is bracing for a recession, you hardly ever get a depression. Depressions and nasty crashes hit when people are expecting 20% returns for ten years into the future.

Additionally, we have other markets to sell to that we didn't in 1929. If the U.S. consumer cuts spending (and he has a little, but not to the detriment of corporate profits), there are consumer markets in India and China that we can tap that weren't available to us in even 2000, let alone 1929.
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Mon 25 Sep 2006, 18:42:25

$this->bbcode_second_pass_quote('ElijahJones', 'W')ould you mind terribly if I asked how old you are GoIllini? I remember having optimism like yours when I was younger. I graduated magna cum laude (3.65) with a BS in math and a physics minor in 2000. While I was in school in the late 90's the economy was smoking hot for jobs. The dot.com bubble burst slowed that down alot. By I recall having a certain mindset during that time that really did not allow me to see any danger in such things. Why did the dot.com bubble happen for instance?

I'm a senior. 21. Unfortunately, I won't graduate Magna Cum Laude, but my grades are enough so that I'll meet the requirements of any company's hiring criteria. I was wondering who I was dealing with when you mentioned stochastic processes...

You probably know this better than I do, but IMHO, it happened because there were lots of companies out there that had billion dollar market caps that had never turned a dime of profit. At the very least, the equities market seems less shaky to me today than it would have six years ago.

$this->bbcode_second_pass_quote('', 'I')t also seems peculiar to me that someone with such an uncommon view of compared to the average on this site, would be just happily sitting here day after day telling us all how wonderful things are. What's the point? Are you trying to evangelize? Are we a fascination to you, a study project or maybe a paid internship? Or are you in peak oil pre-consciousness, that fuzzy denial that refuses to admit that the idea of peak oil scares you to death?

I'm a contrarian. Maybe it's because I like to intellectualize. When someone makes a balanced presentation of the facts, I love listening to it and asking the person questions, but if I feel like it's a little one-sided, I often look to see if there are holes in it, and take an opposing position.

As a forum, most people have their own views, and there's a lot of folks on here claiming that Peak Oil means catastrophe for the economy, if not civilization. That argument has a decent amount of merit, but there's some stuff that people miss, and I tend to focus on that stuff.

$this->bbcode_second_pass_quote('', 'O')h, yes, I remember now some of the other convo's we had in the past. It is always easy to feel very good about your future when you have every door open in front of you. That is why I asked your age, because youth think that way, "sky's the limit" etc. But at some point all humans of substance recognize that the type of upper middle class dream you have is right now available to only about .5% of the world population. Those large scale imbalances are serious problems if not economically (they at least represent productivity lost) but ethically.

Like every college student, I think I'm part of that half percent. While my background may make a compelling claim that it can be done, my Dad's story can make a better one:

He grew up in a family of eight brothers and sisters and two parents who worked in a factory, and lived in a small community in Wisconsin. 1/4 of his graduating class went to college, and he didn't get a dime from his parents. He managed to work his way through college, got a degree as an accountant, and now is a successful options/derivatives tax accountant. Had life dealt him another hand, he might be even more successful.

$this->bbcode_second_pass_quote('', 'I') can't speak for others, but it bothers me that our country consumes 30% of the World's energy, but has only about 2% of the World's population. It bothers me that those who are excellent in the acquiring of wealth have no conscience toward those less fortunate (for the most part).

That's the way our world is set up, and it's too bad. (Some of this goes back to certain spiritual beliefs I have- I swear I'm not here to evangelize! :) ) My perspective is colored by what I see in the U.S, and I want to make sure that my Dad's story can repeat itself in the future.

$this->bbcode_second_pass_quote('', 'I')t is pragamatic (but shortsighted) to simply say, "I am going to go as far as I can." "I've got the skills I've got the desire,...sky's the limit." But living without a sense of the connectedness that is everywhere is less in my opinion than humans are cpable of. The world would be a better place if we thought of life in terms of community and civic responsibility and not so much in terms of physical things.
Hmmm. We're on the same page, though I sometimes feel like my actions don't always line up with that. At the same time, while I'm a little less of a fan of getting rich and driving a Ferrari around and living in a huge mansion, I do think that one way to change things is to use capital.

$this->bbcode_second_pass_quote('', 'P')ersonally I could go much farther than I am now and I have walked away from opportunities for notoriety that did not fit with the ethics I hold in my heart.

And that was a point we talked about before. Yes, your school is great , all doors are open, but justice is without mercy to those who show no mercy. Part of being blessed is given back. A day will come when you will be given a choice to keep quiet and get paid or take a stand and gain the admiration of the just.

You've gotta point. If life is all about wealth and power, it's pretty empty.
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GoIllini
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