[technet]

The economy didnt crash because of mortgage derivatives they were just the side effect of high priced oil. Think into it for 5 minutes its 10th grader economics. Its not that complicated.

The little guys, self employed with liar loans do what for a living ?

They drive gas guzzling F100 trucks about the place, fix peoples gardens, plumbing, electrics, contracts on building sites, farms etc etc. and live hand to mouth with little or no savings and everything vested in their small business. These independants are the backbone of the booming economy, since the corporations cannot employ everyone and the govt.doesnt create real jobs for anyone. The self employed guy eating a tank of gas or more per day drives the real economic booms, since it puts money into the hands of many more consumers when these guys are busy in work.

Push oil from $50 to $150 and their weekly fuel overhead goes to 3 times and their mortgage goes out of the window.

Then consider the next fish up the food chain, the small privately owned local business with 1 to 100 employees. They also rely on cheap oil to get their products from suppliers and get their products out to customers. They employ a fair amount of the workforce and the owners are usually heavily invested in their businesses.

Add to increasing oil prices, increased food prices, 20% of a farmers overhead is fuel, and another chunk is fertiliser that is also oil based..... overnight our little guy is bleeding to death, he has to pay his gas or he has no job, he lives in the suburbs far from where his main work is, and he is mobile between multiple sites on different sides of town. He has to put food on the table, he has 1.5 kids and the wife is pregnant with another one because business was booming and times looked good.... so paying the mortgage suddenly goes pretty low on the list.

His American dream is looking pretty shabby and he's thinking, well he can just rent a cheap place and dump his house and stay in business since he's only got a tiny deposit in it.... who cares.... better than going broke....

A booming economy relies on cheap energy which is cheap oil (since our stupid Govts. didnt make policy to get alternatives in place). Its only been 65 years since World War 2 ended, Who can blame them they hardly had any time at all.

Take cheap oil out of the picture and you have no booming economy. You have hundreds of angry guys in their trucks, wielding shotguns and heading for washington... if they can afford the gas !

The swine flu was the G20 desperately trying to hold down the price of oil for summer, this is exactly the moment when oil usually runs in price for summer. ... oh my God Conspiracy Theory, but wait and listen... 2 minutes... Mexico is caught redhanded holding the murder weapon. !

Its always about oil, even world war 2 was about oil and there was shitloads of the stuff back then

Mexico is the only oil proudcer that fully hedged its oil production for 2009 at $70 a barrel so its the only one that had nothing to lose from banging their own economy with a hystertical outbust of bullshit... it wasnt swine flu it was bullflu...... talk about insider trading.....

Its always oil, and the oil traders are jittery like hell now we are nearly back to $60, they ate swine flu for lunch and carried on buying.....

The governments are scared because we are running thin on oil and its all about controlling the population and preparing for the worst, because they havent bothered to put in other energy policies and when the public finds out they are screwed because their govt was busy on a power trip and filling the oil company buddies pockets and stalling on real energy policy there will be a revolution......there will have to be since without oil we have no food, no cheap goods from china, no supermarkets, no nothing....... that's why obama was allowed in to be the peace maker....... first Bush to rob the dying economy silly and then Obama to carry on robbing with a new smily face on it that no one dare criticise....... Obama is going to be the carrot and stick president, smily on one side and draconian communofascist military govt on the other.

Right now the oil inventories have been climbing and climbing but the oil market doesnt believe the supply and demand curve. Prices keep moving higher, the traders know its just a temporary glitch.... supply and demand pah ! in oil there is only demand now since the oil fields are dying, mexico is dying, north sea is dying and saudi didnt let anyone in to audit in 30 years, they are still claiming 1979 reserves after 30 years of pumping 10 million barrels a day.... you pump 109,500 million barrels of oil out of the ground and you say you still have the same amount in the ground.... either you are lying and your oil is flowing like water and should be 50 cents a barrel, or you are lying about what is left under the ground. it cant be both... either way we are all getting screwed.

Now we are going to see inventories falling and falling as the excess comes out of the system and the economic situation plays out much better than expected, since there was no real economic crash, no real drop in demand, only a wash out as the price of oil crashed the machine.............. The Govt. crane has come and pulled the machine out of the ditch... its not road worthy at all, but they dont care and this means soon we will see $100 oil again, which will start to crash the economy again, because the easy credit and freewheeling economy relies on cheap energy and $100 oil is not cheap energy. Notice the dramatic economic rebound we had since oil went below $50. This is what is driving things, not stupid govt bailouts.

Add in the Buttnake easy money printing presses and oil is on a one way ticket to $250 a barrel, its a mess. $250 oil will give you your $2500 gold, finally all the goldbugs can go and have a circlejerk and leave everyone else alone with their told you so........

Crop prices will go to the moon, and then we have more mess, and then the economy will crash again, and bailouts wont work next time since its only about oil, and the govts. are already close to bankrupt...... to keep oil under $100 a barrel and food prices cheap, we need electric cars, its that simple. and not 1 or two per 10,000 cars, but all electric cars, a total swap over starting today and done in 3-4 years time.

And they dont want to dare to address the situation since oil gives them their hold on power, whereas electric cars any country can make and build and be free from oil, free from alot of imports and happy to speed about all day long..........

Its like watching a dying dictator, he rather take down the entire population than let go of his iron grip on power.

Oil is the hold over the whole population of the planet and they just refuse to let go of it, no matter what..... even if it kills the very economy feeding them....

Watch out for some more false flag operations coming over the summer.... the swine flu was a total faliure.....

ah... i forgot to mention afganistan which is very important since the govt will need a good supply of smack to keep the population doscile....

Never mind flu vaccines .... anyone for mandatory heroin injections ? .... ok we are getting silly now but you get my point.

God help us if the global warming turns out to be as valid as Swine Flu, if we get colder winters for the next 20 years as some research suggests, the heating oil demand is going to drive oil prices higher again.

Its a perfect storm for oil and i am neither a real believer in peak oil, since we will probably get through all this and ditch oil long before we run out, just as we did with coal. Nor am i a real conspiracy theorist. I have been trading crude oil for 10 years and i see this one coming.

If i didnt live in an apartment i'd be piling barrels of crude into my back garden right about now.... i am sure the wife would love that... hahaha.... .

Richard Jacob - Oil Trader.

[Madpaddy]

Interesting first post. I would agree with your post in general but I don't agree with your conclusions about the Swine Flu.

[Daniel_Plainview]

$this->bbcode_second_pass_quote('technet', 'T')he economy didnt crash because of mortgage derivatives they were just the side effect of high priced oil.

[bencole]

$this->bbcode_second_pass_quote('technet', '
')
Its a perfect storm for oil and i am neither a real believer in peak oil, since we will probably get through all this and ditch oil long before we run out

[Micki]

Not arguing everything but if you want to blame the whole economical mess on high oil price, shouldn't the economy then have a V bounce as oil prices have dropped significantly? And shouldn't the leadup to the crash had a noticable drop in demand for oil?
And what about that so called black hole where all printed money is said to disappear? Noone ever stopped to consider that it is used to patch up a quadrillion dollars of derivatives?
And wasn't it also a bit of coinsidence that the economy suddenly faltered as the subprime mortgages started resetting? And how exactly would high oilprices have resulted in the credit freeze.
I think you need to go back and do some more homework on derivaties. And I don't mean just mortgate linked such.

And you have completely misunderstood the hardcore goldbugs. It is not about high gold price. It is about fair system, end of manipulation, transparency and most of all about honest (and in US case constitutional) money. Gold can go to $2500 or $6000 but if the system works as it does today, the real gold bugs will be just as unhappy. Retired sipping pina coladas on the beach perhaps, but still unhappy.


And by the way
signing as Richard Jacob - Oil Trader rather than your user id; Does that mean You are Richard Jacob or is this rant taken from somewhere else or what?

[mos6507]

$this->bbcode_second_pass_quote('technet', '
')Push oil from $50 to $150 and their weekly fuel overhead goes to 3 times and their mortgage goes out of the window.

[copious.abundance]

You are wrong technet, it's all about wheat.

[Plantagenet]

$this->bbcode_second_pass_quote('technet', 'w')e will probably get through all this and ditch oil long before we run out, just as we did with coal.
Richard Jacob - Oil Trader.

[technet]

well its a bit of a rant and i didnt think into everything completely, but if you consider putting 30 gallons of fuel into a workhorse truck and those gallons of fuel go from $1.50 to $4.50 a gallon, then its not a small increase its a huge monthly increase. It could be $1000 per month extra costs... there's your average mortgage repayment right there.

nothing is ever simple and one dimensional, but the point i was trying to make is that the general mainstream media doesnt actually do any journalism to speak of.... sure a few good articles here and there from 3rd party contributors, but the overlying message to the public is way off.

there was never really a mention of high oil prices after they fell and no one looked into it....

the initial glitches in the mortgages, like northern rock and others that followed in the US were not so terrible, it was expected that some would of course fail, this was the risk. but i suspect the under lying reason why so many caved is because people were getting killed on energy and food costs.

swineflu was definitely a convenient attempt to squash oil prices coming into seasonal factors that always raise oil prices, mexico was happy to play ball since they probably got sold the line that it would help them out as well, and they had their oil hedged..... i am not saying the whole thing was just dreamed up for this purpose, but i am saying it was hammed up big time to try to create this effect.

using swine flu to drop oil prices is one of the only benefits of all this nonsense and panic. if there really was an epidemic what good is it generating such widespread panic. its silly. it was badly handled and oil prices is certainly a motive.

i am buying wheat right now actually, i think its got a long way to run. the tech funds are piling in, its breaking out.

i signed it off with my name since i wrote it, my user name on the forum is just a handle.

[technet]

oh and ps. we did ditch coal, name me one form of locomotion that coal is used for ? cars, trains, buses, planes, even ships... no i dont see any coal.... and you might be interested to know that there was huge panic in the 1700s about running out of coal and supplies being short but we never did run out of coal , and probably never will !.

peak oil doesnt even have to be a drop off in the fields, it can just be that 6 billion to 8 billion then 10 billion people with higher and higher standards of living simply cant get enough oil out of the ground at $50 a barrel to sustain all their needs....

it would be the same in 1000 years time.... if we ran our energy on moon rock at one point you wouldnt be able to land enough spaceships on the moon at once to get enough moon rock back to earth in time, so prices would simply rise and rise...

it would be the same with coal if we had no oil, how much coal can you really dig out in a year, at one point you simply cant get enough trucks into the mines fast enough to get the energy that everyone demands so prices go through the roof.

as the prices rise, the economy takes a hit.... some other hocus pocus can play a part, but a system can only maintain its velocity if it has a required source of energy. if that energy becomes restricted for some reason then it wills slow down... money and economics at the end is only a form of energetics.

[davep]

I tend to agree with mos on this.

Oil prices had nothing to do with the derivatives lunacy. They were bound to be found out eventually. OK, gas prices may have been a contributing factor to foreclosures that started the whole collapse of the house of cards, but they were a minor factor, not a major one, let alone the cause.

It was the leveraging of the banks with dodgy assets that created this. And it is still a huge problem, despite massive oil price decreases.

[technet]

think of it like this.... if i build a block of condos on the beach in south florida, and i cheap out on materials, cheat on building codes and make a lousy job, then i can get away with it, and in 20-30 years time the building will look like crap, the people that bought the condos will not have got value for money and cant resell and probably the whole thing will sold to a developer and get torn down, aka. a lot of crap that was built in the 1960s and 1970s..... but i am long gone.... .

however if a category 5 hurricane roars in 2 years after i built it and the place falls to pieces and collapses, killing a load of people and wiping out a load of mortgages, then there will be an investigation, banks, citizens, other builders, local govt. will all demand an investigation and i can end up in alot of hot water on account of that stupid hurricane... i can curse my luck on that hurricane.....

oil is clearly your hurricane in the mortgage markets.... some hits were coming ok, some people took out mortgages they couldnt afford but look at the figures....

they say some $10 Trillion dollars is wiped out... median house price in the US especially in cheapie liar loans is only about $250k.... so that is 40 million houses and they are not worth zero, they are worth something, perhaps not right at this minute but they are houses they are not cardboard.... so the story we are supposed to eat is that 40-50-60 million houses became worth almost zero over night because of all the liar loan mortgages....

the numbers are out of wack... not that many people took out mortgages they couldnt afford to repay... not that many people are so dumb and so stupid just to blast into things and the banks are not so stupid to run out so much money on them..... look at it... not many houses on mortgages are single occupants.... so you are talking about 80-150 million people with mortgages wiped out... who are all these people... how many forclosures were there to really cause all these losses.

there was a small percentage that was junk and always going to fail, just like in car loans, but clearly the hurricane that bought down the house of cards was oil prices and everything else that increased along with higher transport costs including food prices.

the media wants you to believe that the banks were completely out of control and the people taking loans were all fat liars, but its not correct.... i think neither party factored in a massive risk component in the cost of living.

of course all the mortgages failed on the roll over that is when the prices went up and they became unservicable... but there has to be a catalyst, most people try pretty hard to make ends meet and pay what they can..... the world is not full of lunatics, there are some but not enough to make this mess single handed. they needed some help..........

[mos6507]

$this->bbcode_second_pass_quote('pstarr', 'm')os6507 I don't know how many times you have stated that the US housing crisis somehow managed to derail the entire world's economy simultaneously. Makes no sense.

[AAA]

$this->bbcode_second_pass_quote('technet', '
')
Richard Jacob - Oil Trader.

[mos6507]

$this->bbcode_second_pass_quote('technet', '
') the world is not full of lunatics, there are some but not enough to make this mess single handed. they needed some help..........

[technet]

actually i dont really go for the whole peak oil thing and until now i have always been trading oil short, because it had to come down in price..... lately i am long but its the first time in many years....

in 2005 i was on these forums when Katrina hit the oil fields, it was the peak oilers wet dream....... and i was shorting, and people tore me to pieces until a few weeks later when they saw oil was off $20 a barrel from its hurricane panic high, which only lasted about 24 hours.

i wrote what i wrote from a traders perspective.. i trade crude oil nearly every day, in and out and i have been doing it for 10 years now and its a great market, very transparent and very sensitive to the global politics and economics... its the king of all the markets in my opinion......

you could tell the swine flu panic was nonsense by the way oil prices behaved.. you could tell the post 911 terrorist attacks were no big deal by the way oil behaved, you could tell we were at some crescendo in 2008 by the way oil behaved.

ok... i agree its pointless arguing opinions, you need real facts and figures, you need to survery the people that got forclosed see why they failed, what there income was before the loan and when the loan failed, how there payments were at the time etc etc.

but there is no doubt that oil prices put a real crimp on things, and if you had been on the pulse of the oil markets in 2004,2005,2006 it was a real worry that the economy would fail above $75.... but somehow that all got swept under the carpet and at $150 it was all roses and we were off to $250.......

[technet]

$this->bbcode_second_pass_quote('AAA', '')$this->bbcode_second_pass_quote('technet', '
')
Richard Jacob - Oil Trader.

[technet]

the timing does match up nicely actually since the interest rates got carved in 2002 to try to stop the tech bubble crash and that started the whole mortgage bubble... .back then oil was sub $30 and most ARM have 3 year or 5 year fixed period to start with..... so in 2002 all these products were designed and no one figured that oil would break $40... $58 in June 2004 was outrageous.... and $75 in 2005 was the end of the world.... .but by then it was too late the packages had all been sold.... and you can see that $25 oil to $75 oil is aleady 3 times run.... so come 2007 the first batch was in serious trouble.... but these were the early birds.... by 2008 you have all the lot from 2004 kicking in as well which is when the general public really went awol on fliping condos etc. .......

now you can see some show on TV and they can scroll down a few hundred liar loans that are outrageous, but that still doesnt bring down $10T of mortgages ........

there is more to it than this..... even copper prices went from 70 cents to $4.... copper is another factor in production costs that spills over onto the consumers head.... ..... they call it Dr. Copper because its considered the economic indicator 2nd to none....... i dont even dare to trade it.... too crazy for my blood................

its no wonder Bernake doesnt dare to even mention raising interest rates, it will kill the banks completely as there will be another huge wave of defaults..............

we are stuck below 1% for quite a while i think

problem is this will carry on the same mess all over again, and it will again be oil that torpeodos the maniulation of the markets

in the 1980s they used to call the bond traders the vigilantes because they forced up the interest rates on the govt. because they refused to buy bonds at lower rates....

now its the oil market that is the vigilantes, oil will show that the FEDs monetary poliices are a disaster.... the longer interest rates stay low the more oil will run and force them to raise, but if they raise a pile more mortgages that rely on lower cost of living than we have today, will fail..... they are between a roofing tile and a barrel of crude......... nice !

[copious.abundance]

$this->bbcode_second_pass_quote('technet', 'i')n the 1980s they used to call the bond traders the vigilantes because they forced up the interest rates on the govt. because they refused to buy bonds at lower rates....