Monday, January 24, 2011

In the hole

Wall Street markets were up today and everybody is feeling bullish. The Federal Reserve printing a fresh trillion has gotten things going. Commodities are up and the sky is the limit so money is pouring in from your pension and 401k managers. Wave goodbye to it, you‘ll never see it again.

Nothing about this market bubble is building the real economy of course but they will take credit for the natural up tick that you can expect after a recession has run this long. The improvements we are seeing will quickly evaporate as commodity prices rise. There is a pretty good chance we’ll see $4.00 gas soon and if the economy can handle it, you’ll see $5.00 gas.

And no, it’s not peak oil, that is not going to happen overnight. There is still plenty of oil and the market should reflect that, this is Wall Street manipulation. Keep in mind that the big oil companies don’t pay “market” price for oil anyway, they have plenty of their own that they got cheap. If you think the high price of gas is good for the planet, guess again. Tanking the economy only makes it harder to get off fossil fuels.

Expect food prices to far exceed the last bubble when millions died as food became priced out of reach. There will be massive rioting in countries where people pay half their income for food already. The further out of reach food becomes the more the price goes up in a bubble economy as money making opportunities abound. This also drives down supply as it becomes difficult for third world farmers to afford to put in a crop. Less local supply of course drives the price up even higher and this means there is even more money to make.

You can expect this bubble to grow fast and end quickly, almost certainly by September 2012. A 1500 point Dow should guarantee a Republican sweep when combined with unlimited corporate spending thanks to the five Republicans on the Supreme Court. There is talk of impeachment as several of Justices haven’t been reporting millions of income from rightwing sources on their disclosure forms over the years. But Obama likes to move forward and such crimes are by definition in the past so don’t expect anything to happen.

The buzzword for Obama is now economic “competitiveness“, this has long been rightwing code for union busting, maybe he is just using it as slogan and thinks he can ride the bubble through the election. There is simply no way to “compete” with India, China, Brazil, Vietnam and on down the list. The idea of protecting our domestic economy like all the successful countries do is not even spoken of, except to wrongly blame the Great Depression and even the current one on such “protectionism”. The history from 1790 to 1980 seems to not exist anymore, it’s all gone down the memory hole. The American Dream is going down right behind it.


Steve said...

Dear Prairie2,

If you check w/ the leading experts on Peak Oil(Richard Heinberg) they will tell you that we are on the "bumpy plateau" right now and that's why there seems to be plenty of oil. The truth will become evident shortly that all the easy to get oil is gone and now it takes a lot of energy to extract what's left and in difficult to reach places. When the world demand is 87 million barrels/day and the world can only produce 85 million / day that's when you'll see a spike in prices. As you know, China is using more oil every day and very soon there will be shortages and lines at the gas station and then maybe people will get the message that resources are finite.

prairie2 said...

Steve, I'm not sure what your point is, do you want your belief in peak oil confirmed? Of course we will reach peak oil, but this is not it. We've always been on the edge of peak oil, it's in the interest of big oil to keep it that way, too much oil drives down the market.

Messy Kitchen, Frazzled Cook said...

Isn't "peak oil" like diamonds? DeBeers hypes that diamonds are rare and special, thus keeping the prices high. Oil will "peak" but when that happens is probably anyone's guess because it is in their (oil companies) best interest (making a killing and making wars to get oil) to keep us in the dark and certainly to keep us from creating different forms of energy.

This country is not sauntering towards becoming a third world nation, we are in the back seat of an old jalopy, driven by insane mad men careening down a hill with no brakes. All that's left is the impact. Crash!

Anonymous said...

Nasty oil companies?

Net Profit Margin

Apple, Inc. 22.45%

Exxon Mobil 7.93%

prairie2 said...

Comparing Apples and rotten oranges. You don't pump computers through a 48" pipeline for one thing. It's just wrong headed to compare the oil company profits to the oil they handle and not the investment in equipment which would give you astronomical profits, like using the volume of the ocean to minimize the profits of a tug boat company.