[smiley]

I'm a long time fan of Puplava, not in the least because he makes difficult economic subjects understandable for mere mortals like me. But also because he doesn't seem to serve a certain personal interest (I always get a bit suspicious when an article ends with "And that's why you should invest in x,y or z".

In his last paper he looks at the financial markets and the risk they pose for the 'real economy'. I think he makes a pretty strong case.$this->bbcode_second_pass_quote('', 'T')he real economy is where widgets are made, factories are built, oil is found, minerals are mined, plumbing is fixed, children are educated, and the sick are healed. On top of the real economy lies the financial economy made up of bank and central bank credit, mortgage securitization and derivatives. This is where the real outlet for inflation has taken its course. It is a world of excesses — excesses in credit, excesses in speculation, and excesses in risk-taking. This is where the real danger of risk contagion will have its genesis

[RiverRat]

Excellent article ! It seems he feels that housing and the banking industry are most vulnerable.

He lays out all the ‘tipping points’ and says that everything must work out perfect to avoid a crisis. I would like to hear his strategy for positioning oneself in the face of this possible ‘unwinding’.

I guess one could liquidate stocks into money market funds or cd’s. Or one could possibly short all the ‘fluff’. I need to read up on ‘bear market’ investing.

[MaterialExcess]

Great article. I love the way he refers to Greenspan as Mr Bubbles.

I keep saying a huge financial crisis is probably going to delay peak oil about 5 - 10 years. Mr Bubbles has used just about every trick he has to hold this economy together. When the next shock comes along he will have no tricks left and it will all fall apart.

[Ludi]

$this->bbcode_second_pass_quote('MaterialExcess', 'I') keep saying a huge financial crisis is probably going to delay peak oil about 5 - 10 years.

[Doly]

People sometimes forget that the reason one worries about peak oil is because it will case a big economic crisis. It doesn't necessarily have to start at the point of maximum production, it may start a bit sooner. Actually, it looks like that's the case. I'm convinced that the roots of the looming crisis are in the trade deficit, and the roots of the trade deficit is the enormous amounts of money USA has to spend on oil.

[linlithgowoil]

wouldn't an economic crash actually be worse than actual oil shortages for the average person? it might happen before we get to that point. and, of course, it might cause the crash.

either way, even without peak oil, the world economy is due a recession. everyone knows it, everyone 'feels' it, they just dont want to believe it.

[khebab]

Great link! thanks!

That graph is really scary!

[RiverRat]

I noticed it … That graph is ridiculous. The masses better get their head out of the a$$es.

I need to devise a way to prey on the idiots that are gonna get burnt. After all… there were people that made fortunes during the great depression. Is that why it is called ‘capitalism’? You ‘capitalize’ on the stupidity of others?

[FatherOfTwo]

$this->bbcode_second_pass_quote('RiverRat', 'I') noticed it. That graph is ridiculous. The masses better get their head out of the a$$es.
I need to devise a way to prey on the idiots that are gonna get burnt. After all… there were people that made fortunes during the great depression. Is that why it is called ‘capitalism’? You ‘capitalize’ on the stupidity of others?

[frankthetank]

You should be able to buy their souls for little or nothing

I've seen graphs like those. When telling people about problems we face it would be handy to throw out a couple of these..sometimes seeing it makes it more believeable.

[halfin]

If and when people come to believe in Peak Oil, that it is coming within the next few years, it will have immediate effects.

One of the properties of the commodities market is that the future price of a commodity can't be bigger than today's price plus the storage costs. For example, if a consensus arose that oil was going to be $70/bbl next year, and if you could store oil for one year for say $1/bbl, then oil will be selling for at least $69/bbl this year. That's because if oil was less, you could buy it now, store it and make a profit next year.

The result is that the price structure of a commodities market can't sustain a large expected increase, for a storable commodity. And oil is relatively cheap to store. In fact, the cheapest way to "store" it is simply to leave it in the ground, which costs essentially nothing. So with oil, we will always see today's price as being about equal to or greater than the expected future price.

Therefore, if people do come to believe in Peak Oil and that the price in the near future is going to be very high, that's going to affect today's price immediately. Current prices will climb to roughly what people believe the future price will be. Any difference will solely be due to uncertainly about the likelihood of the scenario playing out. If it becomes the consensus that a serious shortage is a few years out, prices will climb immediately.

The result is that we are likely to see the first impact of Peak Oil as high oil prices, even before the supply/demand crunch hits. Every person who reads this board, everybody who sees a TV story or the new Peak Oil TV movie or reads an article about it, is adding to the store of people who are going to believe in the scenario. Once this group reaches a certain critical mass, the effects will begin to happen. Oil prices will shoot up even with no immediately supply problems.

In fact, I suspect that the relatively high oil prices we are seeing today (twice what they were a year ago) are largely due to this factor. There seem to be no major supply problems; oil inventories have mostly been rising the past few weeks, although they were down a little this week. Yet oil has stayed close to $50/bbl. This may well be the first foreshadowing of a price rise that is sustained not by present-day shortages but by anticipated future shortages.

In a way, this is good because it means that people will start conserving and cutting back before we hit the serious crunch. But in a way, it is bad because most of the impact of Peak Oil is caused by the high prices, which will take away the benefits we have all experienced from cheap energy.

[MicroHydro]

$this->bbcode_second_pass_quote('halfin', 'O')ne of the properties of the commodities market is that the future price of a commodity can't be bigger than today's price plus the storage costs.

[Carlhole]

$this->bbcode_second_pass_quote('source', 'B')y Larry Chin
Online Journal Associate Editor


Nov 17, 2005

The American empire is an energy junkie in its death throes, punching for new veins and final fixes, knowing that the supplies of its drug of choice -- cheap oil -- are virtually depleted.

According to geologist Kenneth Deffeyes, author of Beyond Oil: The View from Beyond Hubbert’s Peak, this long-anticipated world oil peak is now -- Thanksgiving 2005. The holocaust of imperial thrashing -- epitomized by the Bush administration’s Peak Oil-fueled criminal atrocities -- promises to intensify, along with the denial and cover-up.

Confirmation of Peak Oil crisis is everywhere. Oil supplies may be lower than OPEC wants to admit. The second largest oil field in the world, situated in Kuwait, is running dry. The US trade deficit just hit another all-time high.

Yet in the US, we have witnessed the spectacle of rising stocks, in response to temporary and artificially manipulated low gas prices created only by the tapping (and possible depletion) of strategic reserves...(more)

[donshan]

Americans are beginning to wake up to the fact that with hundreds of Billions spent to prevent another 9/11 attack, little has been done to protect the economy from a cut-off of oil imports, and Bush should be doing something about it.

In this poll 90% feel lack of energy independence jeopardizes national security.

Yet another case of not being prepared, just like FEMA's Katrina non-planning and the post Iraq invasion non-planning.

Link

$this->bbcode_second_pass_quote('', 'W')ASHINGTON (Reuters) - Americans are nearly as worried about their country's dependence on foreign energy sources as they are about the war in Iraq, a poll released by the magazine Foreign Affairs showed on Thursday.

Almost half of the 1,000 Americans surveyed for the Public Agenda Confidence in U.S. Foreign Policy Index gave U.S. policymakers a failing grade in weaning the country from foreign oil.

Nearly 90 percent said the lack of energy independence jeopardizes national security.

...skip
Now with this issue having reached the tipping point in the public I think that that means the political complexion of that issue is about to change considerably," he added.

In the latest survey, 85 percent of respondents said the U.S. government could do something about energy dependence if it tried. The share of those who worried foreign conflicts will drive up oil prices or cut off supplies rose to 55 percent from 42 percent in the August poll.

[bart]

Good find, donshan!

An article by pollster Yankelovitch is online at Foreign Policy: The Tipping Points


I keep waiting for the politicians to start taking energy seriously as an issue. Maybe poll results like these will spur them into action.

My worry is that they'll respond by strewing subsidies in all the wrong directions -- paying more attention to special interests than to what's right.

[Ghog]

$this->bbcode_second_pass_quote('', 'M')y worry is that they'll respond by strewing subsidies in all the wrong directions -- paying more attention to special interests than to what's right.

[Revi]

It would be nice if we could do something about energy independence. How about solarizing half the homes in America? That would put a lot less stress on the grid and make for a lot more energy independence.

Who even knows anything about solar? We have been sold internal combustion for 50 years and have no idea even where to begin. The government would be a good place to start marketing solarization. Unfortunately most of them are beholden to large fossil fuel industries and won't let go. Just suggesting that there may be an allternative may be threatening to the large entrenched fossil fuel industries.

I figure that they can get stuffed. We switched half of our energy use over to solar based energy and feel a whole lot freer.

[dub_scratch]

Revi, I think your ideas about solar are terrific and should be the focus with regard to energy independence.

But on the other hand, if we don't reform our transport and our cities away from this outrageous car dependancy, then we are missing the big point. Our car dependancy has doubled our oil consumption as compared to other first-world economies: namely Japan, France, Germany and the UK. We cannot drill our way to energy independence and we cannot drive our way to energy independence.

[FairMaiden]

It just shows how very easy propaganda in the states really is. Bush says, "we are addicted to oil and must cut reliance on Middle Eastern oil" and all of the sudden its a huge concern. But before that, no one was worried. The sheeple are just following in line.