[KevO]

so say the E&P
$this->bbcode_second_pass_quote('', 'W')as the current recession the result of a normal business cycle? If so, life will return to normal as asset and commodity bubbles are squeezed out of the economy.

The price of oil will remain manageable, US consumers will begin looking for ever more powerful SUVs, and governments can afford to ignore fossil fuels in formulating policy.

Or was the recession primarily a consequence of peak oil? If it was the latter, the world is on notice that oil has entered its twilight years and fundamentally new approaches to transportation will be required to maintain accustomed standards of living.

In the absence of new solutions in the short to medium term, periods of prosperity will likely be punctuated by recurring oil price shocks and painful recessions as the world adjusts to a shortage of oil.

The dominant view is that this recession was caused primarily by a housing price bubble tied to excess leverage. When the bubble popped, mortgage quality deteriorated, leading ultimately to a banking crisis unparalleled since the Great Depression.

Analysis by economist James Hamilton, however, tends to support a more nuanced view. Hamilton, well known for his macroeconomic analysis of oil markets, can attribute a substantial portion of the current recession to oil prices. In August 2008, oil prices could explain the entire downturn. Subsequently, oil prices would have led to a shallow recession, but clearly other factors — possibly the bankruptcy of Lehman Brothers — look to have deepened and possibly prolonged the recession. In many ways, this recession, like many before, can be attributed at least in part to oil prices.

But was it a peak oil recession or merely a boom-bust cycle seen so many times before in the oil and gas industry?

[Jotapay]

It's always been my opinion that oil at $80/barrel killed the housing bubble.

[Armageddon]

Cheap money caused the bubble. It was orchestrated on purpose to create one final bubble before they cashed out.

[mos6507]

$this->bbcode_second_pass_quote('Armageddon', 'I')t was orchestrated on purpose to create one final bubble before they cashed out.

[Armageddon]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('Armageddon', 'C')heap money caused the bubble. It was orchestrated on purpose to create one final bubble before they cashed out.

[dinopello]

$this->bbcode_second_pass_quote('Armageddon', ' ')They raped the system.

[Armageddon]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('Armageddon', '')$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('Armageddon', 'C')heap money caused the bubble. It was orchestrated on purpose to create one final bubble before they cashed out.

[Carlhole]

The world is swimming in $60 - 80 oil. Most of that surge can be attributed to the weakening dollar - which everyone in the world MUST own.

I think that the dollar is being used to coordinate the equalization of Western and Eastern economies (Americans' spending power and standard of living diminishes while Asians see their economic prospects rise).

Investment banking geniuses created derivative mortgage-backed securities which were sold en masse for years to foreign banks throughout the world. Without a doubt, this had the effect of hauling the rest of the world onto the Titanic of the American debt-laden economy.

Thus, no matter what happens to the dollar, it doesn't matter - because all foreign entities must own them (not just America). The global economy will keep on keeping on simply because everyone HAS to trust the dollar as the currency instrument used in this vast global equalization project.

As the dollar weakens further, the vast holdings of the Chinese diminish along with everyone else's (including America's dollar interests). This gives China a huge stake in what happens to America economically. And America likewise has a huge stake in China's economic growth. The two economies are now virtually joined at the hip. Balancing and smoothing this wrenching economic change is what the Fed is trying to accomplish.

Was this all planned? Sh*t I don't know. But it sure seems like a natural organic process as the world becomes unified into a standard economy. People like Alex Jones rave about the "One-World Government" and all that. But really, what has driven this process has been the communications revolution, enabling the instantaneous transfer of funds worldwide and the advent of a global internet/global economy. The imperatives of multi-nationals corporations were equally significant.

The end of the housing bubble and the flood of money into commodities in 2008 has to be viewed in this broad global equalization context. Oil has indeed become more expensive due to the increasing difficulty in finding and producing it. Oil production has also suffered from a decade or more of under-investment. However, those factors would only account for a price to around the $50 - 60 level. The huge run-up in the price of oil and our recent Great Recession was a result of wrenching economic adjustments; Oil's big price rise was not a cause of them.

The cheap labor in China - along with that country's rapid growth - has become like global Capitalism's Sun, around which everything else will revolve for quite some time. Consider that alongside an aging US, European, and Japanse population and you can see why all these economic factors have created the recent Recession.

[ian807]

It was one factor certainly, but not the whole story.

Remember, the aggregate exposure of banks to derivatives is on the order of 200 Trillion (Trillion. With a "T") or so. Throw in all the other organizations in the US (cough, cough, Goldman Sachs. AIG, cough) and it goes up to something over 500 Trillion dollars of exposure just waiting for deleveraging. There there's the rest of the world, where BIS estimates bring us to over a Quadrillion dollars of exposure.

Derivatives are funny things. Counterparty risks on both sides should be insured, but sometimes aren't. Even if they are, you'd better hope the insurer (cough, AIG) has enough real money to cover if your bets go bad.

They went bad. There wasn't enough money, anywhere to cover the losses of this magnitude. Oil was one factor that made contracts go bad. Housing was another. Then it all started rolling downhill.

So derivatives, which make things much less risky when the economy is on the up, amplify the downside in a very unpleasant way.

And they're all still there. Nothing has changed. They're not being marked to market. Nobody big is taking the loss (real capitalism is for the little people, doncha know....).

[Chuckmak]

$this->bbcode_second_pass_quote('Armageddon', 'T')he NWO is going as planned.

[hillsidedigger]

The buildup of demand in anticipation of the Chinese olympics was a large source of the increase in the value of oil last summer.

The world was horrified by what was witnessed in China and any with any sense said "Sell, sell, sell" resulting in collapse within a few days.

[PrestonSturges]

But it's conservative dogma that some shifty brown skinned minorities in the US got subprime mortgages and this somehow crashed the global economy.

[The_Virginian]

Outside of "Bad credit" getting 200K + loans, Outside of CHINESE (and some US) Drywall in homes that forced people out of them, outside of 140+ dolllar a Barrel Oil, and outside of the way ALL Bubbles end...

I'm sure there was a conspiracy somewhere... ( Sub-prime loans packaged as AAA+ bonds!)

[mos6507]

$this->bbcode_second_pass_quote('Chuckmak', '')$this->bbcode_second_pass_quote('Armageddon', 'T')he NWO is going as planned.

[Armageddon]

$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('Chuckmak', '')$this->bbcode_second_pass_quote('Armageddon', 'T')he NWO is going as planned.

[Quinny]

I understand where you're coming from, but I actually believe there has to be some co-ordination be it some what reluctantly. I also believe although po is not the only reason for the crash, it is the prime reason behind the bubbles.

The disconnect between 'real wealth' and money meant that western powers and in particular the US had to have bubbles to keep the game in play. For all the criticism of bankers, they have managed to keep western standards of living way higher than we deserve in relation to the wealth we create. I don't agree with this, but most consumers and workers do.

If you imagine playing a neutral father figure at a meeting between the Chinese and US, the NWO route is probably the lesser of several evils in terms of its immediate impact.

Like Carhole says, with improved communications etc. you can't carry on living off the backs of others cheap labour for ever!

$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('Chuckmak', '')$this->bbcode_second_pass_quote('Armageddon', 'T')he NWO is going as planned.