Friday, 24 October 2008 02:00

It's every nation for themselves, now

First the US bankers threw as much garbage at the world as they could lift, with the US ratings agencies throwing perfume on the trash mid-flight to manage the "stank". Then the Irish guaranteed their bank deposits to an unheard of limit, basically giving the middle finger to the other European banking authorities (you see, money flowed to the "perceived safety of government backed bank funds from an already weakened UK and EU banking system), and now OPEC is cutting product in an effort to elevate oil prices amid a guaranteed global recession. Another "eff you" to the world.

Most people don't realize that in the grand scheme of things, oil has not really went down in price. It is exactly where it was in the summer of 2007 when I first contemplated the contracts. The OPEC nations have went on a "subprime like" debt driven spending binge, and need the petrodollars to keep flowing to support the facade that they are trying to build.

This is why HSBC is going to drop, the same general theory behind the fall of the US municipalities, and China/Korea. The debt in Dubai alone is crushing as they simultanesouly tried to create the new Wall Street, a tourist destinatiuon complete with a mega yacht deep water marina, a commercial and residential real estate hub, all from a dry patch of desert - from scratch in just a few years with practically no internal consumption at all relative to the more developed countries with major financial hubs. The other OPEC nations are not that far behind. You see, my friend, we are all subprime now.

The Organization of Petroleum Exporting Countries decided to make a deep cut in oil production, taking 1.5 million barrels a day off global markets as it embarks on the task of managing prices amid a potential global recession.

December light, sweet crude oil futures fell $3.34 to $64.50 a barrel in electronic trading on the New York Mercantile Exchange by midday in London.


Last modified on Friday, 24 October 2008 02:00


  • Comment Link Devin Elliot Friday, 24 October 2008 10:34 posted by Devin Elliot

    I come from a bio-energy industry, and I've been theorizing that if all the effort that has been going into saving a broken financial system was reallocated to the re-electrification of our grid to include capacity for all transport and to handle massive surpluses (rather than being barely capable of handling our capacity now) as well as the build out of biomass to energy and fuel, coal to liquid, natural gas to liquid, solar in all of its forms, wind and even tidal power, we would put people to work in the thousands in every single state of the union. This to me is the only real way to weather the amount of wealth destruction we are witnessing.

  • Comment Link Phil V Friday, 24 October 2008 10:04 posted by Phil V

    and it all becomes clear oil was a monetary bubble (as was gold, altho i still like gold for the future =) )

  • Comment Link Mark Hankins Friday, 24 October 2008 09:39 posted by Mark Hankins

    The petrobarons have missed a global paradigm shift.

    Energy can be made in a lot of different ways that don't involve pumping liquid petroleum
    out of the ground. Heck, "cold fusion" ( and the Bussard Polywell aren't out of the question (except that Bussard recently passed away).

    Energy can now be stored in things like lithium ion batteries and zebra batteries, and in
    hydrogen and in ammonia fuels, none of which produces CO2.

    Energy can even be harvested in orbit and beamed back to the surface.

    Although overall demand for petroleum will continue to increase for some time, demand per person is quite likely to go down. Meanwhile, lots and lots of econonomically recoverable petroleum has been found, and the production of the gear needed to get it is at an all time high.

    In short, petroleum is the buggy whip of the 21st century.

  • Comment Link Reggie Middleton Friday, 24 October 2008 08:24 posted by Reggie Middleton

    As an OPEC rep jawbones on CNBC as to the benevolent reasons why they cut production during a global recession (WTF?), the oil futures drigt down an additional $1.50. Here we have an oil cartel that has no cartel powers. Econ 101 thrown on its head. Cut supply, demand decreases... or was it that demand really wasn't worth $148 per barrel in the first place???

    To those guys who were on the first boombustblog boat ride, I wonder if any of you paid attention to my ruminations of shorting oil in the $140's.

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