Financial Crisis

Oil Crash 2016 Terrifies Banksters

Oil Barrels with Red Arrow isolated on white background. 3D rendergc2reddit-logoOff the keyboard of Michale Snyder

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Published on The Economic Collapse on January 18, 2016

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Last time around it was subprime mortgages, but this time it is oil that is playing a starring role in a global financial crisis.  Since the start of 2015, 42 North American oil companies have filed for bankruptcy, 130,000 good paying energy jobs have been lost in the United States, and at this point 50 percent of all energy junk bonds are “distressed” according to Standard & Poor’s.  As you will see below, some of the big banks have a tremendous amount of loan exposure to the energy industry, and now they are bracing for big losses.  And the longer the price of oil stays this low, the worse the carnage is going to get.

Today, the price of oil has been hovering around 29 dollars a barrel, and over the past 18 months the price of oil has fallen by more than 70 percent.  This is something that has many U.S. consumers very excited.  The average price of a gallon of gasoline nationally is just $1.89 at the moment, and on Monday it was selling for as low as 46 cents a gallon at one station in Michigan.

But this oil crash is nothing to cheer about as far as the big banks are concerned.  During the boom years, those banks gave out billions upon billions of dollars in loans to fund exceedingly expensive drilling projects all over the world.

Now those firms are dropping like flies, and the big banks could potentially be facing absolutely catastrophic losses.  The following examples come from CNN

For instance, Wells Fargo (WFC) is sitting on more than $17 billion in loans to the oil and gas sector. The bank is setting aside $1.2 billion in reserves to cover losses because of the “continued deterioration within the energy sector.”

JPMorgan Chase (JPM) is setting aside an extra $124 million to cover potential losses in its oil and gas loans. It warned that figure could rise to $750 million if oil prices unexpectedly stay at their current $30 level for the next 18 months.

Citigroup is another bank that also has a tremendous amount of exposure

Citigroup (C) built up loan loss reserves in the energy space by $300 million. The bank said the move reflects its view that “oil prices are likely to remain low for a longer period of time.”

If oil stays around $30 a barrel, Citi is bracing for about $600 million of energy credit losses in the first half of 2016. Citi said that figure could double to $1.2 billion if oil dropped to $25 a barrel and stayed there.

For the moment, these big banks are telling the public that the damage can be contained.

But didn’t they tell us the same thing about subprime mortgages in 2008?

We are already seeing bank stocks start to slide precipitously.  People are beginning to realize that these banks are dangerously exposed to a lot of really bad deals.

If the price of oil were to shoot back up above 50 dollars in very short order, the damage would probably be manageable.  Unfortunately, that does not appear likely to happen.  In fact, now that sanctions have been lifted on Iran, the Iranians are planning to flood the world with massive amounts of oil that they have been storing in tankers at sea

Iran has been carefully planning for its return from the economic penalty box by hoarding tons of oil in tankers at sea.

Now that the U.S. and European Union have lifted some sanctions on Iran, the OPEC country can begin selling its massive stockpile of oil.

The sale of this seaborne oil will allow Iran to get an immediate financial boost before it ramps up production. The onslaught of Iranian oil is coming at a terrible time for the global oil markets, which are already drowning in an epic supply glut.

Just the other day, I explained that some of the biggest banks in the world are now projecting that the price of oil could soon fall much, much lower.

Morgan Stanley says that it could go as low as 20 dollars a barrel, the Royal Bank of Scotland says that it could go as low as 16 dollars a barrel, and Standard Chartered says that it could go as low as 10 dollars a barrel.

But the truth is that the price of oil does not need to go down one penny more to have a catastrophic impact on global financial markets.  If it just stays right here, we will see an endless parade of layoffs, energy company bankruptcies  and debt defaults.  Without any change, junk bonds will continue to crash and financial institutions will continue to go down like dominoes.

We are already experiencing a major disaster.  Things are already so bad that some forms of low quality crude oil are literally selling for next to nothing.  The following comes from Bloomberg

Oil is so plentiful and cheap in the U.S. that at least one buyer says it would pay almost nothing to take a certain type of low-quality crude.

Flint Hills Resources LLC, the refining arm of billionaire brothers Charles and David Koch’s industrial empire, said it offered to pay $1.50 a barrel Friday for North Dakota Sour, a high-sulfur grade of crude, according to a corrected list of prices posted on its website Monday. It had previously posted a price of -$0.50. The crude is down from $13.50 a barrel a year ago and $47.60 in January 2014.

While the near-zero price is due to the lack of pipeline capacity for a particular variety of ultra low quality crude, it underscores how dire things are in the U.S. oil patch.

A chart that I saw posted on Zero Hedge earlier today can help put all of this into perspective.  Whenever the price of oil falls really low relative to the price of gold, there is a major global crisis.  Right now an ounce of gold will purchase more oil than ever before, and many believe that this indicates that a new great crisis is upon us…

The number of barrels of oil that a single ounce of gold can buy has never, ever been higher.

Barrels Of Oil Per Ounce Of Gold

All over the planet, big banks are absolutely teeming with bad loans.  And to be honest, the big banks in the U.S. are probably in better shape than some of the major banks in Europe and Asia.  But once the dominoes start to fall, very few financial institutions are going to escape unscathed.

In the coming days I would expect to see more headlines like we just got out of Italy.  Apparently, Italian banks are nearing full meltdown mode, and short selling has been temporarily banned.  To me, it appears that we are just inches away from full-blown financial panic in Europe.

However, just like with the last financial crisis, you never quite know where the next “explosion” is going to happen next.

But one thing is for sure – the financial crisis that began during the second half of 2015 is raging out of control, and the pain that we have seen so far is just the beginning.

 

 

 

 

 

 

 

 

 

 

 

 

Global Financial Devastation

Off the keyboard of Michael Snyder

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Published on the Economic Collapse on June 29, 2015

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16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World

As we enter the second half of 2015, financial panic has gripped most of the globe.  Stock prices are crashing in China, in Europe and in the United States.  Greece is on the verge of a historic default, and now Puerto Rico and Ukraine are both threatening to default on their debts if they do not receive concessions from their creditors.  Not since the financial crisis of 2008 has so much financial chaos been unleashed all at once.  Could it be possible that the great financial crisis of 2015 has begun?  The following are 16 facts about the tremendous financial devastation that is happening all over the world right now…

1. On Monday, the Dow fell by 350 points.  That was the biggest one day decline that we have seen in two years.

2. In Europe, stocks got absolutely smashed.  Germany’s DAX index dropped 3.6 percent, and France’s CAC 40 was down 3.7 percent.

3. After Greece, Italy is considered to be the most financially troubled nation in the eurozone, and on Monday Italian stocks were down more than 5 percent.

4. Greek stocks were down an astounding 18 percent on Monday.

5. As the week began, we witnessed the largest one day increase in European bond spreads that we have seen in seven years.

6. Chinese stocks have already met the official definition of being in a “bear market” – the Shanghai Composite is already down more than 20 percent from the high earlier this year.

7. Overall, this Chinese stock market crash is the worst that we have witnessed in 19 years.

8. On Monday, Standard & Poor’s slashed Greece’s credit rating once again and publicly stated that it believes that Greece now has a 50 percent chance of leaving the euro.

9. On Tuesday, Greece is scheduled to make a 1.6 billion euro loan repayment.  One Greek official has already stated that this is not going to happen.

10. Greek banks have been totally shut down, and a daily cash withdrawal limit of 60 euros has been established.  Nobody knows when this limit will be lifted.

11. Yields on 10 year Greek government bonds have shot past 15 percent.

12. U.S. investors are far more exposed to Greece than most people realize.  The New York Times explains…

But the question of what happens when the markets do open is particularly acute for the hedge fund investors — including luminaries like David Einhorn and John Paulson — who have collectively poured more than 10 billion euros, or $11 billion, into Greek government bonds, bank stocks and a slew of other investments.

Through the weekend, Nicholas L. Papapolitis, a corporate lawyer here, was working round the clock comforting and cajoling his frantic hedge fund clients.

“People are freaking out,” said Mr. Papapolitis, 32, his eyes red and his voice hoarse. “They have made some really big bets on Greece.”

13. The Governor of Puerto Rico has announced that the debts that the small island has accumulated are “not payable“.

14. Overall, the government of Puerto Rico owes approximately 72 billion dollars to the rest of the world.  Without debt restructuring, it is inevitable that Puerto Rico will default.  In fact, CNN says that it could happen by the end of this summer.

15. Ukraine has just announced that it may “suspend debt payments” if their creditors do not agree to take a 40 percent “haircut”.

16. This week the Bank for International Settlements has just come out with a new report that says that central banks around the world are “defenseless” to stop the next major global financial crisis.

Without a doubt, we are overdue for another major financial crisis.  All over the planet, stocks are massively overvalued, and financial markets have become completely disconnected from economic reality.  And when the next crash happens, many believe that it will be even worse than what we experienced back in 2008.  For example, just consider the words of Jim Rogers

“In the United States, we have had economic slowdowns every four to seven years since the beginning of the Republic. It’s now been six or seven years since our last stock market problem. We’re overdue for another problem.”

In Rogers’ view, low interest rates caused stock prices to increase significantly. He believes many assets are priced beyond their fundamentals thanks to the ultra-easy monetary policies by the Federal Reserve. Fed supporters argue such measures are good for investors, but Rogers takes a different view.

The Fed might tell us we don’t have to worry and that a correction or crash will never happen again. That’s balderdash! When this artificial sea of liquidity ends, we’re going to pay a terrible price. When the next economic problem occurs, it will be much worse because the debt is so much higher.”

Of course Rogers is far from alone.  A recent article by Paul B. Farrell expressed similar sentiments…

America’s 95 million investors are at huge risk. Remember the $10 trillion losses in the crash and recession of 2007-2009? The $8 trillion lost after the dot-com technology crash and recession of 2000-2003? This is the third big recession of the century. Yes, America will lose trillions again.

Especially with dead-ahead predictions like Mark Cook’s 4,000-point Dow correction. And Jeremy Grantham’s warning of a 50% crash around election time, with negative stock returns through the first term of the next president, beyond 2020. Starting soon.

Why is America so vulnerable when the next recession hits? Simple: The Fed’s cheap-money giveaway is killing America. When the downturn, correction, crash hits, it will compare to the 2008 crash. The Economist warns: “the world will be in a rotten position to do much about it. Rarely have so many large economies been so ill-equipped to manage a recession,” whatever the trigger.

Things have been relatively quiet in the financial world for so long that many have been sucked into a false sense of security.

But the underlying imbalances were always there, and they have been getting worse over time.

I believe that we are heading into a global financial collapse that will make what happened in 2008 look like a Sunday picnic by the time it is all said and done.

Global debt levels are at all-time highs, big banks all over the planet have been behaving more recklessly than ever, and financial markets are absolutely primed for a huge crash.

Hopefully things will calm down a bit as the rest of this week unfolds, but I wouldn’t count on it.

We have entered uncharted territory, and what comes next is going to shock the world.

Germany & Japan Hit the Skids

Off the keyboard of Michael Snyder

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Published on The Economic Collapse on October 8, 2014

Pigs on the Wing in Japan & Germany

Pigs on the Wing in Japan & Germany

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Serious Financial Trouble Is Erupting In Germany And Japan

Stock Market Collapse - Public DomainThere are some who believe that the next great financial crash will not begin in the United States.  Instead, they are convinced that a financial crisis that begins in Europe or in Japan (or both) will end up spreading across the globe and take down the U.S. too.  Time will tell if they are ultimately correct, but even now there are signs that financial trouble is already starting to erupt in both Germany and Japan.  German stocks have declined 10 percent since July, and that puts them in “correction” territory.  In Japan, the economy is a total mess right now.  According to figures that were just released, Japanese GDP contracted at a 7.1 percent annualized rate during the second quarter and private consumption contracted at a 19 percent annualized rate.  Could a financial collapse in either of those nations be the catalyst that sets off financial dominoes all over the planet?

This week, the worst German industrial production figure since 2009 rattled global financial markets.  Germany is supposed to be the economic “rock” of Europe, but at this point that “rock” is starting to show cracks.

And certainly the civil war in Ukraine and the growing Ebola crisis are not helping things either.  German investors are becoming increasingly jittery, and as I mentioned above the German stock market has already declined 10 percent since July

German stocks, weighed down by the economic fallout spawned by the Ukraine-Russia crisis and the eurzone’s weak economy, are now down more than 10% from their July peak and officially in correction territory.

The DAX, Germany’s benchmark stock index, has succumbed to recent data points that show the German economy has ground to a halt, hurt in large part by the economic sanctions levied at its major trading partner, Russia, by the U.S. and European Union as a way to get Moscow to butt out of Ukraine’s affairs. The economic slowdown in the rest of the debt-hobbled eurozone has also hurt the German economy, considered the economic locomotive of Europe.

In trading today, the DAX fell as low as 8960.43, which put it down 10.7% from its July 3 closing high of 10,029.43 and off nearly 11% from its June 20 intraday peak of 10,050.98.

And when you look at some of the biggest corporate names in Germany, things look even more dramatic.

Just check out some of these numbers

The hardest hit sectors have been retailers, industrials and leisure stocks with sports clothing giant Adidas down 37.7pc for the year, airline Lufthansa down 27pc, car group Volkswagen sliding 23.6pc and Deutchse Bank falling 20.2pc so far this year.

Meanwhile, things in Japan appear to be going from bad to worse.

The government of Japan is more than a quadrillion yen in debt, and it has been furiously printing money and debasing the yen in a desperate attempt to get the Japanese economy going again.

Unfortunately for them, it is simply not working.  The revised economic numbers for the second quarter were absolutely disastrous.  The following comes from a Japanese news source

On an annualized basis, the GDP contraction was 7.1 percent, compared with 6.8 percent in the preliminary estimate. That makes it the worst performance since early 2009, at the height of the global financial crisis.

The blow from the first stage of the sales tax hike in April extended into this quarter, with retail sales and household spending falling in July. The administration signaled last week that it is prepared to boost stimulus to help weather a second stage of the levy scheduled for October 2015.

Corporate capital investment dropped 5.1 percent from the previous quarter, more than double the initial estimate of 2.5 percent.

Private consumption was meanwhile revised to a 5.1 percent drop from the initial reading of 5 percent, meaning it sank 19 percent on an annualized basis from the previous quarter, rather than the initial estimate of 18.7 percent, Monday’s report said.

For the moment, things are looking pretty good in the United States.

But as I have written about so many times, our financial markets are perfectly primed for a fall.

Other experts see things the same way.  Just consider what John Hussman wrote recently…

As I did in 2000 and 2007, I feel obligated to state an expectation that only seems like a bizarre assertion because the financial memory is just as short as the popular understanding of valuation is superficial: I view the stock market as likely to lose more than half of its value from its recent high to its ultimate low in this market cycle.

At present, however, market conditions couple valuations that are more than double pre-bubble norms (on historically reliable measures) with clear deterioration in market internals and our measures of trend uniformity. None of these factors provide support for the market here. In my view, speculators are dancing without a floor.

And it isn’t just stocks that could potentially be on the verge of a massive decline.  The bond market is also experiencing an unprecedented bubble right now.  And when that bubble bursts, the carnage will be unbelievable.  This has become so obvious that even CNBC is talking about it…

Picture this: The bond market gets spooked by a sudden interest rate scare, sending a throng of buyers streaming toward the exits, only to find a dearth of buyers on the other side.

As a result, liquidity evaporates, yields soar, and the U.S. finds itself smack in the middle of another debt crisis no one saw coming.

It’s a scenario that TABB Group fixed income head Anthony J. Perrotta believes is not all that far-fetched, considering the market had what could be considered a sneak preview in May 2013. That was the “taper tantrum,” which saw yields spike and stocks sell off after then-Federal Reserve Chairman Ben Bernanke made remarks that the market construed as indicating rates would rise sooner than expected.

If the strength of our financial markets reflected overall strength in the U.S. economy there would not be nearly as much cause for concern.

But at this point our financial markets have become completely and totally divorced from economic reality.

The truth is that our economic fundamentals continue to decay.  In fact, the IMF says that China now has the largest economy on the planet on a purchasing power basis.  The era of American economic dominance is ending.  It is just that the financial markets have not gotten the memo yet.

Hopefully we still have at least a few more months before stock markets all over the world start crashing.  But remember, we are entering the seventh year of the seven year cycle of economic crashes that so many people are talking about these days.  And we are definitely primed for a global financial collapse.

Sadly, most people did not see the crash of 2008 coming, and most people will not see the next one coming either.

Paradox of Grift

Off the keyboard of Steve from Virginia

Published on Economic Undertow on August 24, 2013

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Labor Force Participation 081813

 

The hissing sound being heard in the background in countries such as India and Indonesia is the air leaking out of the latest in the long line of speculative gambling ventures cooked up by Wall Street buccaneers and their public-sector valets … ventures that make up what remains of our economy these days. Since the Great Finance Collapse in 2008, billions in cheap dollar loans have been flowing overseas looking for quick killings to be made by creating — then selling — ‘assets’ to greater fools. As long as there is a generalized increase in the flows of credit, there are more- and greater fools to be had. Once credit flows diminish, the fool supply is exhausted; there is nothing to support the inflated asset prices. Soon enough, ‘hot’ dollars exit and the first tier fools cash out; this is the dreaded Minsky Moment, when the credit scaffold that supports the speculation empire collapses under its own weight.

Panic is being felt right now by those within emerging markets that heretofore have felt themselves immune to such things. Like Americans and Europeans before them, the hopeful moderns in Asia, Africa and Latin America believe ‘It’s different this time’ … that the winds of history are at their backs because once-upon-a-time the winds were at the Americans’ backs; that progress is a certainty, that it can be conjured or brought forth by way of modernist fetishes … stock-and bond casinos; gigantic ‘glitzy’ concrete high rises and shopping malls, jet vacations and luxury performance sedans; five-star resorts and 18-hole PGA Championship golf courses … the Las Vegas-style excrescences that decorate modernity like pigeon feces. When it becomes clear to the marginal market participant that the fetishes are just that … empty and possessing of no virtue or anything else in and of themselves … there are runs!

The runs are reflexive and pointless; ultimately self-defeating … there is nowhere to run to. There is no alternate universe of functioning modernist symbols; there is even less functioning that is non-modern! There is only universal ‘worth-iness’; like truthiness, a hollowed out version of the real thing. We are living the ‘Paradox of Grift’: as the impulse to steal increases … the worth of what is stolen or steal-able evaporates … (FT);

 

Emerging markets endure wild roller coaster rideThursday was another day of turmoil for emerging markets.

Unimpressed by the Turkish central bank’s recent efforts to support its currency, investors sent the lira down to a record low against the US dollar; India’s rupee fell to its lowest-ever level; Indonesia’s rupiah dropped to the weakest since 2009.

As if that were not enough, Malaysia’s ringgit and Thailand’s baht ended the day in a three-year trough.

 

‘Unimpressed by central banks’ efforts’? The central banks enable the background conditions for the runs in the first place! Their ‘no questions asked’ loans are a form of limitless moral hazard: no lender will be allowed to lose money regardless how how stupid, venal or corrupt their business. Central banks misprice risk by over-paying for bonds which are lenders’ IOUs. By doing so they bid others out of the marketplace. The result is repressed interest rates. Risk is a product of the false-pricing process itself … particularly that relating to the business of the stupid, venal and corrupt.

Put another way, the recent rise in interest rates and decline in many currencies is commonly held to be the result of Federal Reserve ‘taper’ or promised future reduction of monetary stimulus. This is backwards: interest rates are rising and currencies depreciated as the consequence of five years of ‘temporary’ easing; tapering is not an alternative but the conclusion of the short-term lending cycle that began in 2008.

Central bank lending will decrease if for no other reason than the ongoing exhaustion of the supply of good collateral. The central bankers have been strip-mining good collateral from the private sector. When it is gone what remains is bad collateral and grave danger for central banks which risk becoming indistinguishable from their commercial lender clients … insolvent.

Reality is revealed as is the sun from behind a cloud; revelation is underway right now within emerging markets. At some point the central banks’ actions are measured against outcomes. Easing has been underway for five years. Where is the beef? This sort of examination is fatal to speculation which requires increasing hordes of credulous fools eager to borrow and lose, returning to borrow again and again. Reality emerges => fools are unmasked => central bankers ‘lose control’ of the processes they have been entrusted to properly manage, (WSJ);

 

Ten-Year Treasury Yield Nears 3%Treasury bonds took a beating for a second consecutive session, sending the benchmark 10-year note’s yield to a two-year high.

 

Most of this movement in price has occurred since May … this is another run!

 

The yield is nearing the 3% mark, a level the market last traded at back in July 2011. Bond prices fall when their yields rise.Better-than-forecast manufacturing reports from China and the euro zone drove cash out of safe-haven bonds and into stocks. Persistent anxiety over a shift in the Federal Reserve’s easy-money stimulus continued to push investors to lighten up on bond holdings.

 

When a central bank loses control, there is nothing that can be done on the monetary front when the need arises other than to wring hands and weep; there is effectively no lender of last resort. This might seem to be a small matter in abstract … but imagine the outcome in 2008 if the Federal Reserve and the European- and UK central banks had been ineffective or their programs ignored by the market participants. Stock markets would have collapsed entirely and the banks shuttered … as occurred in the United States during 1932- and 1933.

Because the central banks cannot create ‘new money’ (they are collateral constrained), because the central banks cannot create natural resources or real capital, because central banks cannot determine by command the money-cost-of-money … which is set at gas stations around the world by motorists buying fuel with money millions of times per day … the banks’ reach is limited. At the same time, they are integral to the operation of the credit system itself and the stability of all the different kinds of credit-derivatives markets: they are ‘Schrödinger’s banks’; important and useless at the same time.

Both industrial firms and sovereigns are credit dependencies. Industrial economies monetize resource capital destruction; commercial banks finance finance the process. Central banks stand behind commercial lenders with reserves. This position within the credit system is what makes central banks vital. At the same time, the banks overreach. The credit system is more than a few central banks propping up commercial lending zombies and lending back and forth to each other plus their governments. Central banks are designed to be lenders of last resort. When they become lenders of first resort and sole credit providers, there is effectively no credit at all. This is the point that is approaching right now.

The central banks are painted into a corner of their own making. If they offer unsecured loans hoping to generate waste-based ‘growth’ they become insolvent which kills what they attempt to create. Not making the loans removes fuel required by speculators, which also kills growth! Making loans that distort interest rate mechanism ‘poisons the well’ and interest rates increase … which kills growth. Likewise, not making the loans results in exactly the same thing. Over the longer-term, the banks cannot win: all roads lead not to Rome but toward rising interest rates, non-growth, insolvency and credit collapse.

According to the analysts, the bottom is dropping out of the Treasury market because of ‘good news’ in China and the eurozone. The fool supply diminution is made out to be something other than what it is; a bit like fracking: tens of thousands of holes are drilled into the ground so that the fools might dribble out …

A very bad man, indeed. There is in fact no end to them. The world is submerged under their mountainous claims. The costs associated with this ‘claims-surplus’ are far greater than any possible gain from it … indeed, more than what the claims are worth:
TCMDO 122612
Here is the ‘Paradox of Grift’ in a chart: total US credit market debt in billions of dollars. This debt = assets of the rich, their intent is to compel the non-rich to repay the debts with their labor. The ambition to steal everything outruns itself as debts in question are unmanageably enormous. They cannot be retired by anyone or anything and are therefore worthless.

A large percentage of this total is compounded debt service costs which by themselves increase exponentially. If the mean rate of interest on this debt is 4%, annual debt service costs for our credit market debt is greater than US$2 trillion. This is the bankers’ ‘cut’, no wonder they are well-dressed.

Meanwhile, a look at commodities’ prices suggests — as does interest rate panic — that $110 crude is the ‘new $147 crude’, (Bloomberg):

 

Energy Commodity Futures

Commodity Units Price Change % Change Contract
Crude Oil (WTI) USD/bbl. 106.42 +1.39 +1.32% Oct 13
Crude Oil (Brent) USD/bbl. 111.04 +1.14 +1.04% Oct 13
RBOB Gasoline USd/gal. 300.72 +4.24 +1.43% Sep 13
NYMEX Natural Gas USD/MMBtu 3.49 -0.06 -1.69% Sep 13

 

Precious and Industrial Metals

Commodity Units Price Change % Change Contract
COMEX Gold USD/t oz. 1,395.80 +25.00 +1.82% Dec 13
Gold Spot USD/t oz. 1,397.73 +21.59 +1.57% N/A
COMEX Silver USD/t oz. 23.78 +0.70 +3.04% Dec 13
COMEX Copper USd/lb. 335.60 +2.15 +0.64% Dec 13
Platinum Spot USD/t oz. 1,541.13 +0.88 +0.06% N/A

 

Graph by Bloomberg. Relentlessly rising fuel prices tax funds away from consumption economies toward oil drillers even as the flow of funds to drillers returns diminished increments of crude. Each dollar spent to gain crude today returns less crude than yesterday … just as every dollar spent by drillers tomorrow will return less crude than today. The waste of 90+ million barrels of crude- and crude like substances every single day year after year has consequences: none of those barrels will ever be retrieved except in forms toxic to our grandchildren.

Underway around the world right now … is the very predictable outcome of conventional monetary- and economic policies. Governments and central banks succeeded in stimulating resource waste-capital destruction for a few short years under circumstances that did not — and will not in the future — favor it. In a sense, policy in the present has been the extension of Reaganism and reaction against the message borne by the oil shortages of the early 1970s: ‘pedal to the metal’ unrestrained exploitation of all resources including credit … and hoping for the happy ending because we’re Americans and we deserve it!

The result is a witches’ cauldron of misanthropic so-called ‘policies’: the liberalized bourgeois world with Adolph Hitler’s Boy’s Town fashion sensibilities, Sarah Palin’s “Drill, Baby, drill” energy policy, Joseph Stalin’s and Joe McCarthy’s reactionary paranoia … General Motors’ ‘Good for America’ waste and Madison Avenue ‘Mad Men’ rationalizing all of the above. Soon enough we are set to learn in real time that all of the above is a hoax; an empty bag. In the end nobody can fool Mother Nature, that claims against the human race are not found within the credit ledger but instead within the solar budget that we balance or else.

… or else … (Finger cutting gesture across throat.)

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QuoteThe FACT that the current incredibly STUPID e [...]

A federal judge in Texas ruled on Friday that Trum [...]

One of the scariest terms used in investing is the [...]

Typhoon Hagibis made landfall Saturday night local [...]

Scientists have unlocked the power of gold atoms b [...]

Quote from: azozeo on August 14, 2019, 10:41:33 AM [...]

Wisconsin Bill Would Remove Barrier to Using Gold, [...]

Under extreme conditions, gold rearranges its atom [...]

The cost of gold futures on the Comex exchange inc [...]

Quote from: Surly1 on October 12, 2019, 08:10:33 P [...]

Quote from: RE on October 12, 2019, 05:24:06 PMQuo [...]

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Quote from: RE on October 12, 2019, 04:24:08 AMYes [...]

Yes I read that also in followup reports.  Also th [...]

Alternate Perspectives

  • Two Ice Floes
  • Jumping Jack Flash
  • From Filmers to Farmers

Politicians’ Privilege By Cognitive Dissonance     Imagine for a moment you work for a small or medi [...]

Shaking the August Stick By Cognitive Dissonance     Sometime towards the end of the third or fourth [...]

Empire in Decline - Propaganda and the American Myth By Cognitive Dissonance     “Oh, what a tangled [...]

Meanderings By Cognitive Dissonance     Tis the Season Silly season is upon us. And I, for one, welc [...]

The Brainwashing of a Nation by Daniel Greenfield via Sultan Knish blog Image by ElisaRiva from Pixa [...]

Event Update For 2019-10-13http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-10-12http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-10-11http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-10-10http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2019-10-09http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

With fusion energy perpetually 20 years away we now also perpetually have [fill in the blank] years [...]

My mea culpa for having inadvertently neglected FF2F for so long, and an update on the upcoming post [...]

NYC plans to undertake the swindle of the civilisation by suing the companies that have enabled it t [...]

MbS, the personification of the age-old pre-revolutionary scenario in which an expiring regime attem [...]

Daily Doom Photo

man-watching-tv

Sustainability

  • Peak Surfer
  • SUN
  • Transition Voice

Soft Paths to Zero"While reducing emissions should be a priority, it is morally questionable to focus on relative [...]

Last of the Naked Apes"That we are still cutting down forests and wrecking soils is what makes us the last of our kin [...]

Ihere spam is Igbo for “I love you”"Sitting there in the back, in plain sight, draped in his ceremonial Babar garb, squeezing into [...]

Pretty cool, right?"There's a magic machine that sucks carbon dioxide out of the air, costs very little, and [...]

A Tyranny of Time"“We will move to a low-carbon world because nature will force us, or because policy will guide [...]

The folks at Windward have been doing great work at living sustainably for many years now.  Part of [...]

 The Daily SUN☼ Building a Better Tomorrow by Sustaining Universal Needs April 3, 2017 Powering Down [...]

Off the keyboard of Bob Montgomery Follow us on Twitter @doomstead666 Friend us on Facebook Publishe [...]

Visit SUN on Facebook Here [...]

What extinction crisis? Believe it or not, there are still climate science deniers out there. And th [...]

My new book, Abolish Oil Now, will talk about why the climate movement has failed and what we can do [...]

A new climate protest movement out of the UK has taken Europe by storm and made governments sit down [...]

The success of Apollo 11 flipped the American public from skeptics to fans. The climate movement nee [...]

Today's movement to abolish fossil fuels can learn from two different paths that the British an [...]

Top Commentariats

  • Our Finite World
  • Economic Undertow

We all know the Simpsons predicted the predicted the Trump presidency. But not a lot of people are a [...]

"You need very large storage " Hydrocarbons are energy-dense. Plus we have lots of deplete [...]

they award Nobel prizes for economics but not for more practical disciplines like geology. Hubbert d [...]

That's ironic. PG&E cuts off power to hundreds of thousands, but a downed power line in an [...]

You need very large storage to have enough stored up in the summer for winter, however. That has to [...]

Hi Steve. I recently found what I believe is a little gem, and I'm quite confident you'd a [...]

The Federal Reserve is thinking about capping yields? I don't know how long TPTB can keep this [...]

As some one who has spent years trying to figure out what the limits to growth are. let me say that [...]

Peak oil definitely happened for gods sake. Just because it isn't mad max right now is no indic [...]

@Volvo - KMO says he made some life choices he regrets. Not sure what they were. And I don't th [...]

RE Economics

Going Cashless

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Simplifying the Final Countdown

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Bond Market Collapse and the Banning of Cash

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Do Central Bankers Recognize there is NO GROWTH?

Discuss this article @ the ECONOMICS TABLE inside the...

Singularity of the Dollar

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Kurrency Kollapse: To Print or Not To Print?

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SWISSIE CAPITULATION!

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Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

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Merry Doomy Christmas

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Peak Customers: The Final Liquidation Sale

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Collapse Fiction

Useful Links

Technical Journals

The assessment of the effect of the electricity price on energy production is important when studyin [...]

Anticipating seasonal climate anomalies is essential for defining short-term adaptation measures. To [...]

The population that lives in cities has surpassed the one that lives in the countryside. Cities are [...]

Concerns exists regarding natural disasters, but what about the resulting power outages? This study [...]