[shortonoil]

It appears that we are going to run out of money before we run out of oil. The fact that the debt is growing faster then the GDP is not surpassing. The cost of oil is increasing faster than the increase in productivity and production efficiency. What is truly being reflected in the recent numbers is that we are being to see the affects of the increased replacement cost of our, as yet, undepreciated assets. Where as we have been watching the effects on transpiration fuels as a result of increasing protoleum costs we have ignored the affect of the unstated increase cost of replacing depreciated assets. The world, not just the US, is in for a very unstable economic experience. An economic system based on growth backed by debt is just not possible in a world of continually increasing oil prices. It is even less possible in a world of decreasing oil supply.


In the future, the currency of wealth, will be knowledge

[zceb90]

$this->bbcode_second_pass_quote('shortonoil', '.')...The world, not just the US, is in for a very unstable economic experience. An economic system based on growth backed by debt is just not possible in a world of continually increasing oil prices. It is even less possible in a world of decreasing oil supply.

[shortonoil]

zceb90 wrote:

$this->bbcode_second_pass_quote('', 'I')t's worse than that, we are going to have rising oil prices and decreasing oil supply at the same time, at least until sufficient recession / depression is triggered to destroy enough demand to bring it back in line with supply.

[nth]

$this->bbcode_second_pass_quote('DantesPeak', 'H')owever they can not print enough money since the inflationary effects of prior money supply expansion has pushed up commodity prices throughout the world.

[nth]

$this->bbcode_second_pass_quote('shortonoil', '
')True, but we can not have growth without an increasing oil supply.

[linlithgowoil]

$this->bbcode_second_pass_quote('', 'J')ust a thought...Like a person who is about to file bankruptcy will go max out their credit cards

[shortonoil]

nth wrote:

$this->bbcode_second_pass_quote('', 'W')ell, I think there is a group of economists who believed that oil economy will end sometimes and growth will continue. So to accommodate their views, maybe you can exchange oil supply to energy production.

[BigBear]

Very well put " shortonoil" --there is no replacement for oil--just as there is no replacement for proper fiscal policies--economist are giving us neither.

[frankthetank]

Except in the 70's oil was only peaking in the US, not the world, like it is right now...

[ShawnAvery]

$this->bbcode_second_pass_quote('kochevnik', 'I')'m as big a contrarian as anyone ... but I've been hearing this for some 15+ years.

If there was any doubt about the US system it would show up in the interest rates. Consider it just like oil ... in the 1970's we had wage-price freezes, the 55 mph speed limit and mandated 68 degree thermostats ... you will see all of that and more long before you EVER seen serious problems from PO.

LIKEWISE you will also see double digit interest rates before you EVER see any serious financial problems in regards to the USA financial system. In the 1970's the prime interest rate was 14-15 percent and mortgages at 20+ percent. With 4 percent treasuries and 6 percent mortgages, I dont think we are ANYWHERE near the financial collapse predicted here and elsewhere ad nauseum.

It's coming of course, but by the time it gets here it will be obvious to everyone.

[tokyo_to_motueka]

$this->bbcode_second_pass_quote('kochevnik', 'I')t's coming of course, but by the time it gets here it will be obvious to everyone.

[Doly]

Why will it be sudden? Any economic reasoning supporting the sudden scenario as opposed to the gradual one?

[Mercani]

$this->bbcode_second_pass_quote('Doly', '
')
Why will it be sudden? Any economic reasoning supporting the sudden scenario as opposed to the gradual one?

[jato]

$this->bbcode_second_pass_quote('', 'w')hen it comes, the crash will be sudden and most people will be totally taken by surprise, exposed to the market.

[RiverRat]

The US society is highly leveraged in a financial sense. In a steadily rising economy this is advantageous. In a recessionary economy this is potentially disastrous.

With the US saving rate at an abysmal 0.2%, slow wage rate increases, low equity stakes in real estate and high health care costs, a little ‘hiccup’ at the top of the economy can quickly ripple downwards.

The majority of savings are tied up in 401k’s and IRA’s. These savings will be exposed to a recessionary environment and further eroded with a stiff tax penalty for early withdraws (if one decides to use these funds to support everyday life).

When one is extremely leveraged and highly exposed to the markets … this is a ‘bad mix’.

[Leanan]

Stocks are likely to head higher on this news:

http://money.cnn.com/2005/05/11/news/ec ... /index.htm

A smaller trade deficit is good for the U.S. economy, but I wonder if this is a sign of pain ahead. The reason for the drop was sharply lower imports, despite a 20% rise in the value of energy imports. Sounds to me like companies and their customers are cutting back, either because they can't afford to buy as much as usual, or because they're worried about the future and trying to save money.

[frankthetank]

I thought much the same as you. Its down to about 55bil vs 60bil ... A good thing is that exports are up (probably due to the weakened dollar), which is good for workers here.

I wonder if China revalues what these numbers will do? It would be awesome if America could become a manafacturer of quality products again.

[linlithgowoil]

it might be like what is happening in the UK - a slowdown/reverse in consumer spending. and most of our stuff in the UK is also made up of imports.

yes - this will probably be a temporary boost to the stocks (maybe?), but it does seem to indicate a slowdown in demand for imported goods which isnt good for the whole world.

are we seeing the first signs of the global downturn now?

[Pops]

Wow that is surprising – especially the narrowing with China!

Wonder how China-Mart is doing?

[MagnoliaFan]

Something had to give, eventually. This is a sure sign that the purchasing power of the average American has decreased significantly. The imports decreased a lot more than the rise in exports for the US.

The countries which have benefitted from the US trade deficit will have less acess to capital. Less capital, means less jobs.

India will see it's dotcom industry crash just as it did in the US in 2000. They are churning out 50,000 "engineering" graduates every year, with an ever-shrinking pie of outsourcing jobs, they will soon feel just like the US high-tech workers feel right now. What countries offer high-tech workers at a cheaper rate than India's?