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Advisor

Interesting day, hope they know what they're doing

virtually the whole commodity complex got poleaxed as the Saudis announced that they aren't going to cut oil production.

 

The official conspiracy theory is that they are bent on stopping the US oil miracle. Both assertions, their intent and The Miracle are mostly false but you have to have a story, nobody said it has to be a particularly good one.

 

Go back to 9/11 and you'll see the tracks of the US/Saudi/Israeli alliance. Saudis provided the patsies, the Israelis provided the operators ( Mossad agents detained on that day, later quietly repatriated) and the US created the openings and provided the subsequent coverup and war diversions.

 

Purpose was to insert the US in an endless war in the ME, and that part was quite successful.

 

By the very nature of things, Russia has become the natural ally of the opposing alliance which includes Syria and Iran.

 

At this point the game is to win by bankrupting Russia through sanctions and now lower oil prices.

 

First danger, is of course miscalculation and war with Russia.

Not a high probability but concerning.

 

Second would be the risk to the jerry rigged global economy- vast amounts of borrowed money for oil exploratrion and extraction in the US and globally. And maybe more frightening, the notion that the commodity crushing kicks off a deflationary spiral that nobody can stop.

 

Gotta think that in the end "we" are remarkably clever but perhaps too much by half.

 

Welcome to the continuous resource wars of the 21st century.  By their nature wars tend to enrich a few and impoverish the many.

 

 

 

8 Replies
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Advisor

Re: Interesting day, hope they know what they're doing

the economy has been jerry-rigged for a while

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Advisor

Re: Interesting day, hope they know what they're doing

XXX **bleep** straight!! Fully agree. What you got for a since when and a by whom and which side of the rig it has landed you on?
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Advisor

Re: Interesting day, hope they know what they're doing

Lots of decisions to be made. Some practical, some painstakingly tactical. http://www.nakedcapitalism.com/2014/11/oil-tanks-opec-fails-cut-production-us-shale-gas.html
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Veteran Advisor

Re: Interesting day, hope they know what they're doing

Gas going down but diesel still well above $3.00! Something very wrong with that!
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Advisor

Re: Interesting day, hope they know what they're doing

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Advisor

Re: Interesting day, hope they know what they're doing

**bleep** skippy.

 

But as far as the piece making a big deal about routine rollover of debt, if I didn't care what happened to this country I'd love to see a GOP government balance the budget in this sort of economy and have to take responsibility for the outcome.

 

But it ain't going to happen, Republicans just do their own form of keynesiansim with tax cuts and defense spending.

 

The closest thing to a fiscally responsible republican in the last half century was GHWB and he was overthrown for a small tax increase.

 

I guess if there is a possible source of fragility here it may very well be QE (globally) related and be a matter of ultra low interest rates and a lot of liquidity directing money into carry trades- particularly hot money flows to developing economies. With most of that denominated  USD, a fall in commodity prices coupled with a sharply rising USD creates a world of hurt.

 

More of a '94 Mexican or '98 Asia/Russia type of crisis. And speaking of the '98 crisis, LTCM almost blew the world apart on a few hundred $B of bad bets, Lord only knows how many more times bigger the wagers are now, or on what.

 

 

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Advisor

Re: Interesting day, hope they know what they're doing

BTW, I wouldn't be in a big hurry to lengthen out the maturity of debt on rollover.

 

I;m guessing that you'll see the 30 year under 2% before it is all over. With no QE, twist, whatever.

 

 

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Advisor

Posted in the wrong spot earlier..meant for here

That's a manageable situation with a long, long way way out in the future tail. The interest is a minuscule portion of the GDP and will remain so under the most modest of growth but you do touch on a very serious problem, incidently, in that same sort of scheme being a huge problem when applied to something in the private sector that has a foreseeable and predictable end on the horizon. Hens come home.