[maverickdoc]

Forgetting peak oil for a minute, just the economic data :




http://www.alkalizeforhealth.net/gifs/n ... income.gif


going up by 2.3 billion per day...
http://www.brillig.com/debt_clock/


Cost of the iraq war $155,302,670,875
http://www.costofwar.com/


Problem is unlike the 1940’s We cannot grow our way out of the next depression.
Why? no cheap oil (you cannot forget Peak oil)

[pup55]

Allow me to contribute to this:

I used the EIA spreadsheet for oil prices and calculated the rolling 20, 100 and 200 day price increases (and decreases, if applicable) since 1983, then sorted for size to get the following:

$this->bbcode_second_pass_code('', '
20-day Price Spikes oil price percent
August 22, 1990 31.22 79%
May 12, 1986 15.77 51%
September 4, 1986 16.21 49%
March 30, 1999 16.8 48%
August 22, 1986 15.49 39%
May 9, 1986 15.86 39%
April 13, 1999 16.72 37%
April 20, 1989 24.65 33%
April 4, 2002 26.58 31%
March 20, 1996 23.06 30%
October 22, 2004 55.17 29%
June 11, 2003 32.36 28%
May 12, 1994 18.28 28%

100-day price spikes oil price percent
November 8, 1990 35.53 127%
April 20, 1989 24.65 76%
July 9, 1999 19.94 75%
March 7, 2000 34.13 63%
May 10, 2002 27.99 54%
December 23, 1986 16.91 52%
August 21, 1986 15.46 48%
September 19, 2000 36.51 48%
August 1, 1994 20.55 46%
October 20, 2004 54.92 39%

200-day price spikes oil price percent
November 22, 1999 27.07 132%
March 7, 2000 34.13 99%
September 27, 1990 39.54 91%
January 16, 1987 19.1 83%
May 11, 1987 19.41 79%
January 25, 2000 28.28 76%
September 9, 2002 29.73 70%
October 15, 2004 54.93 70%')


Most of the big historical price spikes occurred during the Gulf War.

Note that the last mini-recession, (2000) and the real recession (1991) were preceded by substantial oil price increases.

Also note that the oil price pretty close to doubled in the year before October 1987. This price rise was slow enough not to really rank very high on the "spike" lists, but was more of a slow-motion increase. If energetic, you might be able to graph this for us. The diligent pumping of money into the economy by Bubblespan saved us from an outright recession or worse. The so-called dot-com bubble burst of late 2000 early -2001 was also preceded by rapidly increasing oil prices in 1999.

In the grand scheme of things, on a percentage basis (which kicks out inflation) the current price rise we are having is a lightweight compared to some of these instances in the past. But, another 20% or so ($11 per barrel) might be enough to change the picture if done fast enough.

[khebab]

There is an interesting article on Forbes.com about the impact of surging oil prices:

Oil crisis now and then

The total oil bill for 2005 is forecasted to be around 329.3 $billions compared to 259.6 last year. In 1981, the bill was 416.7 $billions (adjusted for inflation). However, it is only 2.72% of the GDP (6.02% in 1981). Therefore, to reach the same percentage of the GDP oil prices have to pass $100.

[pup55]

The economy is a lot different from 1981. Maybe I will look up the portion of GDP that is currently"non-productive", such as government, insurance sales, people suing each other, and the NBA and subtract it from the gross GDP numbers (in both 1981 and 2005) to find energy expenditures as a percentage of the usefuleconomy.

My hypothesis is that down deep, under all the fluff in the current economy, there is a core of activity that consists of making things, building things, digging things out of the ground, refining, maybe or maybe not shippign things from one place to another, but actual useful work that people are doing, and if you compute oil expenditures for "useful economic work" for this time period, compared to 1981, it's right about the same as it always was, maybe higher now.

[threadbear]

Pup 55--Bingo, Man! Bingo.

Not to forget another "growth" area--the distribution network for all the stuff actually made overseas, which is going to take a huge hit from peak energy and weakening dollar.

Don't forget speculative excess economy spun off from the financialized economy. When the economy financialized and we had third world slaves doing all the actual work, while we spun off accounting, legal, etc... in our own domestic economy, we also had low interest rates that suckered people into the real estate boom (bubble), because they believed this horsesh** was sustainable.

[ECM]

I wonder how closely that chart follows the transfer of wealth in the U.S.

I did a chart for the last 40 years on transfer of wealth and this looks eerily familiar. I wish I could find it for comparison.

[khebab]

$this->bbcode_second_pass_quote('pup55', 'T')he economy is a lot different from 1981. Maybe I will look up the portion of GDP that is currently"non-productive", such as government, insurance sales, people suing each other, and the NBA and subtract it from the gross GDP numbers (in both 1981 and 2005) to find energy expenditures as a percentage of the usefuleconomy.

[smiley]

Some good comments on the vulnerability to an oil shock.

$this->bbcode_second_pass_quote('', 'T')he U.S. Economy is as Vulnerable as Ever to an Oil-Shock

By Peter Schiff

[pup55]

This thread started out life as a statement about the debt level relative to what it was in 1929 so I suppose out of respect to maverickdoc it is good to come back to the point which is, how dangerous of a situation we are now in.

The real problem with this debt load is that it is "debt" rather than "leverage". Back in the conservative 70's, they taught us that if you borrow money to acquire means of production, or to make yourself more productive, or to expand your business, then that is "leverage", which is good. If you borrow money to take a vacation, or to drive a slightly newer SUV or to get that liposuction you have been wanting, that's "debt" because you don't have anything to show for it in the end.

But, what with this "debt" situation, on top of the vulnerability on the oil issue, on top of people thinking that the economy is better than it is because the economic statistics are screwed up, we have a lot of problems and minimal ability to do anything about it.

[maverickdoc]

Thanks Pup,

As you have pointed out, rightfully that adjusted for inflation oil prices are not at an all time high. But it is quite high. The national debt is at an unprecedented level and growing fast. The dollar is falling relative to other currencies, and for the first time in history there is an alternative to the Dollar, namely the Euro. When you look at the picture in totality, just these three things spells trouble. Forget about Peak oil, for a moment.

[pup55]

As a further embellishment of this, (and to sort of wander off topic again) I am really concerned about the so-called effort to "cut government spending and get the budget under control" which was announced a couple of weeks ago.

Now obvioiusly, they are not going to actually do it (cut spending) but if they did, in this particular instance, it might actually be the worst thing they could do. Reason: take away a little bit of economic stimulus might start the whole structure to tumble over.

My recollection of 1929-1932 history is that in 1930 after TSHTF, Hoover (an instinctively conservative and frugal Quaker) cut back the federal budget so as to keep the federal debt from exploding. The result was that he made the economy worse by depriving it of liquidity. When Roosevelt took office, he did just the opposite, which had the effect of at least stabilizing the situation. This time around, there is some question as to whether we will have this tool available to us, because of our current status as credit mooch.

In this environment, any little incident may be the trigger event that starts the proverbial big line of dominoes to start falling.

[maverickdoc]

You are absolutely right.

[Specop_007]

Assuming that we (American economy) could bounce back from a real hard hit, in actuality a big crash would REALLY help out budding investors.
in my case (Which I will admit has alot of luck thrown into the pot) I would really like to see a bad market crash, provided of course I didnt lose my job and we could recover.
One could stand to make ALOT of money.
But, theres as much luck as anything in that wishful little scheme.