A: The Great Housing Crash
B: The Great Oil Speculative Madness
B: The Great Oil Speculative Madness
June 06, 2008
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A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.
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96 comments:
What Great Oil Speculative Madness? If there were speculators, there would be stockpiles of oil all over the place. There are not, it's all being consumed. This is the correct price of oil. It's not getting expensive measured in gold is it?
its not an oil bubble...its a prelude to bombing iran and the worthlessness of the dollar. Buy gold and silver. Israel has no right to bomb Iran and neither does the US.
Hedge funds are attacking oil right now something fierce, along with new ETF-enabled main street speculation. Demand didn't go up 11% today. Supply didn't fall 11% today. It's speculation and it's crazed.
Watch the SEC and politicians step in with force in the next week but I don't know how they can stop it (the wild speculation) apart from banning the ETF
Get popcorn. And park the car.
You're cracking me up keith. :D
"Get popcorn. And park the car."
what's playing at the old drive-in tonight? HousingPanic followed by its sequel OilPanic
C.The Great Food Crisis
What are you going to eat when you go to the grocery store and the shelves are empty?
Never mind - that CAN'T happen here, right? Right? Right..?
My opinion is the only one that counts and I say that the USA and Israel have the right to bomb Iran.
If anyone disagrees with me, I will attack them on this forum, in writing, on a personal level.
Keith, you need to moderate more, you're much too easy-going. The shallow, braying tautologies and puerile tantrums of such sniveling crybabies as [anonymous 10:11 PM] above are becoming tedious.
What's scarier right now? It's a close call. The oil speculation is scarier right now, but only because it's happening more quickly and is more immediate. When the Alt-A resets begin in earnest, and gas is over $5 a gallon, I think that our already stretched and thinning social fabric may begin to tear. God, I hope I'm wrong...
All assets trade on future forcasted supply and demand. Supply didn't drop 11% today, but it might in the future. Buy the rumor sell the news. Did you ever take a finance or economics class?
Both are very scary!
I'm scared of the oil "bubble(?)" because I'm afraid it will end: if it ends, my gold could drop back to the price I bought it for.
I'm scared of the housing crash because, well, again, I'm afraid it will end: if it ends, the house I sold will fail to drop below the price I sold it for.
So rah-rah keep 'em both going for a while longer. (And I think they will--I think they will only end when everyone's on board with them.)
$200 a barell oil is around the corner people:
Israeli minister: Israel prepared to attack Iran
JERUSALEM (AP) — Israel will attack Iran if it doesn't abandon its nuclear program, a Cabinet minister hoping to replace embattled Prime Minister Ehud Olmert was quoted Friday as saying.
Shaul Mofaz, a former chief of staff and defense minister, also said Iranian President Mahmoud Ahmadinejad, who has called for Israel's destruction, "will disappear before Israel does," the Yediot Ahronot daily reported.
Olmert has gone no further than hinting Israel was prepared to use force against Iranian nuclear facilities, saying this week that "the Iranian threat must be stopped by all means."
According to the newspaper report, Mofaz — who is now transportation minister — has concluded international sanctions haven't curbed Tehran's nuclear ambitions.
"If Iran continues its nuclear arms program — we will attack it," he was quoted as saying. "The sanctions aren't effective. There will be no choice but to attack Iran to halt the Iranian nuclear program."
http://tinyurl.com/3smz3q
Oh, and speaking of Isreal and Iran, it will be the 27th anniversary tomorrow of Israel's attack on the Iraqi nuclear reactor. I wonder how the Israeli miltitary plans to mark the anniversary....
Oil is no crazier than your AAPL stock Keith, except oil is a necessity and an ipod is not.
"Watch the SEC and politicians step in with force in the next week"
And watch the problem get worse.
OIL PANIC
FISH PANIC
HOUSE PANIC
GAS PANIC
UNEMPLOYMENT PANIC
FOOD PANIC
DOLLAR PANIC
ECONOMIC PANIC
STOCK PANIC THIS FALL!
I will pick OIL PANIC all the way to the gold and silver bank.
What is also scary is I dont see a housing price bottom in sight. It may deflate 90% by the time we are all said and done. Wealth destruction is gaining steam.
MAY GOD BLESS EVERYONE IN THESE TIMES.
ICEMAN
Its going up because Obama has been nominated and there will be a withdraw from Iraq.
Oil is indeed a bubble.
There does not need to be an oil stockpile for there to be a price bubble.
The price is being driven by index speculator demand and hedge funds, who are leveraging their positions to create even bigger moves in the price.
Use your common sense people! Oil was about $50 a barrel last year. Today, it closed near $140. Do you REALLY think the world is all of a sudden using almost 3 times as much oil as we did ONE year ago?
Worldwide oil and inventory reports show that actual oil usage and supply has been virtually UNCHANGED during this crazy price spike. In fact, most indicators show oil consumption is actually down - not up.
It's a classic bubble and it WILL pop. It may go to $200 a barrel first, for all anyone knows. Never underestimate the power of the douchebags on Wall Street.
But there is NO way to explain the price of oil with supply and demand of the actual black stuff. It's demand for commodities futures and index investments that is driving this surge and nothing else. It will pop at some point - that is for sure.
Hey Keith since when is a supply vs. demand curve linear as you suggest?
I don't think this is necessarily a real price experience but if bushco and mcsame keep pushing this Iran BS these prices may become a permanent plateau.
AMEN! I was wondering when someone on this blog would notice! This is just like the insanity of the housing bubble, just instead of 6 percenters and mortgage fraudsters, it is being driven by margin accounts and hedge funds.
gabor said
"What Great Oil Speculative Madness? If there were speculators, there would be stockpiles of oil all over the place. There are not, it's all being consumed. This is the correct price of oil. It's not getting expensive measured in gold is it?"
This madness has NOTHING to do with the physical oil itself. It has EVERYTHING to do with the contracts being bid up at increasingly frenzied prices. The old greater fool theory. As far as Gold to oil cost, that is very tenuous at best.
The "fundies" are all out of whack. The foreign countries that supposedly are drinking this stuff with their morning coffee were only buying because it was being subsidized by their government. Now those subsidies are being cut back and ACTUAL market prices are hitting those consumers as well as our own. And how long do you think Europe is going to continue to consume when interest rates are going higher, the economy is slowing and their already high per liter prices go even higher?
What is ironic is that the housing bubble popping has caused this bubble, as all the locusts moved from stocks to housing to commodities. But it ALWAYS ends the same way folks. What pin do you think will pop this one?
Oh and I see the same arguments as every other bubble - Their not making anymore, this is a new era, lots of new wealth / population, increased environmental control etc. etc. It is one thing pushing this, just as the others - debt based investing, and it will pop. the leverage will unwind and it will be a heap of black sludge.
housing crash, clearly. i hate to say this but i hope oil continues to go up since i bought it at $110 in an etf (dbo) and don't drive a car very often since i live in a city. i know this is a hardship for so many people but these are the same folks who fraudulently bought homes and fucked over me and so many others. payback is a bitch.
to anon 10:11 -- israel should have bombed iran years ago. you're probably someone who thinks israel's bombing of iraq's nuke reactor was a mistake too...you moron. iran has 25% of the world's oil...it only needs a nuke reactor for nuke weapons.
it amazes me how many idiotic liberals read this blog.
"You're definitely seeing the fear trade today, with the dollar down, commodity prices up and bonds rallying," Stone said. CNN
Yes!
Rick in Boca
I agree with gabor. And so does "our" man, Peter Schiff, Keith. Oil prices won't be going down in dollar terms. If you think they will, short oil. Go ahead - I dare you.
The dollar is dying, and everyone around the world is starting to take notice. Oil isn't going back to $50/barrel. It's headed to $500/barrel, and, if John Williams at shadowstats is correct about the upcoming hyperinflation, I wouldn't be surprised to see $5,000/barrel. Hell, if Benny and the Helicopters have free reign, we may see $50,000/barrel.
Anyone saving dollars is going to get wiped out.
Did China use that much more oil today? Wow!
I though they had an earthquake and then a little flooding.....
Guess they are flooding the quake site with oil to find survivors.
I honestly can't decide to what degree the new money in the market is driving up oil (and all other energy too, btw) and how much has roots in ever-increasing demand while supply stagnates or slowly decreases. Clearly there is a lot of speculative money in energy, but the speculators can't take delivery of the goods so are just riding the ups and downs to profit.
That said, oil is the big story because it impacts everyone -- regardless of how much they borrowed to finance a lifestyle.
I think high oil prices will bring more positive change than bad.
Keith: "Demand didn't go up 11% today. Supply didn't fall 11% today. It's speculation and it's crazed."
This is fairly basic economics. It's called elasticity. Supply or demand doesn't need to change by 10% for the price to change by 10%.
I do agree that the price changes are more reflective of runaway speculation rather than changes in the fundamentals.
Looks like to silly stimulus checks have been totally offset by the increase in energy costs. Now the traitors in WA are talking about another stimulus. Maybe we'll be at $200 oil soon?
There is an ELEMENT of speculation to this, but the trend is up and the longer people stay in denial, the more painful it's gonna be.
This could have been adjusted to smoothly if the USA and it's people started adjusting 5, 10, 30 years ago. Instead we went on a binge buying Hummers and McMansions.
Now it's gonna be painful.
Sorry. THIS IS NOT A BUBBLE.
Energy may go down a little as the Depression becomes full blown.
Listen to this weeks Financial Sense guest about The Second Great Depression.
Supply/Demand = Price. People are still paying $4/gallon for gas. There is demand and limited supply.
Oil will go to $300 by 2010.
This bubble will run it's course when the FED jacks the rates after the election.
We can't do ZIRP like Japan as we have zero savings. Wouldnt be suprised if OPEC increases production before then hoping for a soft landing.
Just as we said about the RE Bubble... A worldwide economic collapse serves no one's interests.
This is speculation at its worst. We saw a huge surge based on predictions and conjecture. Oil,like housing, has a long way to fall.
C. The thought of what 4 years of another republican war-mongerer will do to this country
The oil bubble is far worse at this moment. Everytime I go to the gas station, the prices are going higher and higher and now there are actual GAS LINES - at both Costco and Arco.
Scary sh*t
Oil isn't like corn or rice, you can't simply grow more next year and it won't go bad if you don't use it. Once you consume it it is gone, never to return.
That said, sure there is some speculation but I think the majority of the price increase is due to rising demand and the falling dollar. The USA uses so much more per capita than other countries that we are the only ones who can significantly reduce our consumption. but whatever we reduce by will be taken by rising demand in asia.
I don't think we will ever see $60 or even $80 oil again until the world moves on to other energy sources.
Watch the SEC and politicians step in with force in the next week but I don't know how they can stop it (the wild speculation) apart from banning the ETF
-------------------------------
SEC can't do sh*t. the trading will just move to non-SEC controlled markets.
Is it me? Or are these hedge fund managers just modern day pirates?
I mean, put their operations on boats and the comparisons are a complete match.
But really, it's peak oil everyone.
Gabor said...
What Great Oil Speculative Madness? If there were speculators, there would be stockpiles of oil all over the place. There are not, it's all being consumed. This is the correct price of oil. It's not getting expensive measured in gold is it?
===========================
Excellent Point!
As I mentioned in another post, salvage metal dealers in my area are buying it, stripping it, sorting it, and stacking it to the moon in their yards, waiting for the price to go up.
This from a salvage company employee bidding on used machinery at a farm/ estate auction I recently attended.
It was UNHEARD OF to see these guys at auctions before!
Former Nightline host Ted Koppel is desperate to sell his home.
It's actually been on the market for THREE YEARS already!
Koppel has been trying to sell his suburban Washington, DC home since 2005, when he originally listed it for $4.1 million.
And, now in 2008, he's cut the value by more than half.
Whatever it takes! Gotta unload!
Last August, he lowered the asking price to $2.3 million for the 9,000 square-foot, six bedroom home. It is located on 2.5 acres and includes an indoor pool, a maid's quarters, a gym, a sauna, and even a horse barn.
His current asking price is now $1.94 million.
As for Koppel and his wife, they have moved into a larger home a few miles away but still have not been able to sell their old place.
The economy is in such a shitter.
But, at least it's good for any potential home buyer's out there!
Boxing star Evander Holyfield is fighting back against several reports that he's having financial problems after news was leaked that his 109-room mansion (you read that right) was in foreclosure.
Reports were also stating that he's behind in child support
Ed McMahon and his wife Pamela sat down with Larry King on Thursday night to talk about his mortgage woes.
McMahon revealed to King, "If you spend more money than you make, you know what happens. A couple of divorces thrown in, a few things like that."
There is no doubt that the "uber" hedge funds are covering their credit market/subrime/siv portfolio losses with pumping billions into the "commodity futures". Guess which one it is... and the first guess doesn't count....
The Great Housing Crash
It's surreal. My energy fund is up 40% YTD, 60% since I bought in. SSGRX, baby.
I've have every dime I invested plus 20% out now and I'm still holding beaucoup shares. This could be my big winner of 2008.
And I bought a crapload of WMT today as it was falling. That's a keeper.
GLD is deader than disco.
C. The Great Die Off !!!
I can rent a house for half what it costs to buy it. I would like to rent some gasoline...
Check out the article "Who still thinks oil prices are driven by speculation?
www.energybulletin.net/45113.html
Also, find out what billionaire energy investor Boone Pickens has to say on the matter in below video:
www.tinyurl.se/13f
Finally, download these two documentaries from a torrent sajt (like http://thepiratebay.org):
"A crude awakening"
"The end of suburbia"
Once more, oil is not a bubble. This is different from back when the Hunt brothers tried to corner the silver market.
It is easy to hoard silver, all you need is a wault, but how many of these hedge funds do you think have their own tank farms.
Hedge funds are using massive leverage to attack the oil market by buying the ETF's (i.e. futures) with no intention of taking physical delivery. They're being enabled by by Morgan Stanley and Goldman Sachs. They're all on the same side of the trade right now and you know how that always ends up
I don't see how or when this action stops in the short term, so get some popcorn and a bike until it does
The good news? Alternative energies finally get lift-off in America, and god forbid someone says the words "conservation" and "mass transit"
Yes, it is the calling time to pay the Piper for that Wild-Wild-West Housing Bubble Party last night. Add in the maxed out CC debt, the home equity extract, the spend-like-there-is-no-tomorrow mentality of the Americano, the oversize SUV, the run-down-the-cow F350 pickup truck and the Americano is now having a handful of shits, pukes, and hangover biles to deal with. $150.00/barrel of oil in July 2008's... It is coming and it is coming right soon...
But worry not, my dear fat-ass buckteeth Americano, Dubya Shrub will lead you through the dark, ominous, pee-in-the-pant time. He has to, he has no choice, since the dim nitwit Americano voted for him 2 terms in a freaking-ass row. Yes, it is fittingly beautiful: "The head turkey leads the horde of wacka-doo-doo, BORKAFATTY, blind turkey down the gutter...".
Now, a little verse from the "Man With The White Beard" to cheer things up for the horde of Snapper Turtle, Porpoise, Armadillo, Raccoon, Opossum, Porcupine, Skunk, and "BORKAFATTY" AKA :::The Pig:::
Psalm 23:4
"Yea, though I walk through the valley of the shadow of the Housing Bubble,
I will fear no foreclosure:
for Dubya Shrub & Penis Shooter art with me:
thy bail-out and thy rebate-check, they comfort me."
How Do You Like the Collapse So Far?
05 Jun 2008
Take relentless population growth. Add decades of expanding per-capita resource consumption. Simmer slowly over rising global temperatures.
What do you get?
Traumatic information: that is, information that wounds us through the very act of obtaining it.
Everyone knows things are going wrong. But if you understand ecology, you know this in a way that others don’t. It’s not just that the current crop of world leaders is idiotic. It’s not just a matter of a few policies having gone awry. We’ve been on a perilous track since the dawn of agriculture, capturing more and more biosphere services for the benefit of just one species. Fossil fuels recently gave our kind an enormous economic and technological boost—but at the same time enabled us to go much further out on an ecological limb. No one knows the long-term carrying capacity of planet Earth for humans, absent cheap fossil fuels, but it’s likely a lot fewer than seven billion. The implication is not just sobering; it’s paralyzing.
So what to do with such traumatic knowledge? An argument can be made for denial. Why ruin people’s day if there’s nothing they can do, if it’s too late to unseal our fate?
But we don’t know that it’s too late.
As hard as it is to get up every day and remember, "Oh yes, that’s right, we’re headed toward systemic collapse," in fact we can’t afford to forget it, if there are in fact measures to be taken to save a species, an ecosystem, or a human community.
To be sure, some of us are better able to handle the information than others. Many fragile psyches come unhinged without constant doses of hope and assurance. And so for their sake we need continuing positive messages—about a project to make a village sustainable, or about a new coal power plant halted by protest. Some will cling to these encouraging news bits, believing that the tide has turned and we’ll be fine after all. But as time goes on, collapse becomes undeniable. Limits to growth cease to be forecasts; instead, we see daily proof that we’re hitting the wall. As this happens, those who can handle the information spend more of their time managing the fraying emotions of those around them who can’t.
Strategy shifts. We move from rehearsing "Fifty simple things you can do to save the Earth" to discussing global triage.
As the Great Unraveling proceeds, there may in fact be only one occupation worthy of our attention: that of identifying the qualities that make our species worth saving, and then celebrating and exemplifying those qualities. If we concentrate on doing that, perhaps we win no matter what. Outwardly, it will probably look a lot like what many of us are already doing: working to save a species, an ecosystem, a human community; to make a village sustainable, or to halt a new coal power plant.
Taking in traumatic information and transmuting it into life-affirming action may turn out to be the most advanced and meaningful spiritual practice of our time.
http://tinyurl.com/6nh44e
"Hedge funds are using massive leverage to attack the oil market by buying the ETF's (i.e. futures) with no intention of taking physical delivery."
So what is your point Keith? Hedge funds are buying without buying?
Now you're the one sounding like a realtor.
Supply is flat and has been so for the past 3 years.
http://www.theoildrum.com/files/oildrum_graph_2.png
If prices are indeed going up faster than can be justified by rising demand, there should be a buildup in inventories, and this is simply not happening.
Read this for the real story on oil.
http://www.theoildrum.com/node/3726
The oil price is all speculation. More supply will come on line and the price will go back to $20. We can keep driving Hummers and live in far flung McMansions. Denial is a river in Africa.
I can't believe how stupid human beings can be, I mean those of you that cannot see a bubble being created after the housing bubble mess. No point in talking about oil. Keith your right about the hedge funds. The 30%ers will destroy it all. Got ammo.
ps. How many of you will have the steel to defend your families when it breaks, be strong.
Oil is like blood, it went from the ridiculous price of 10-20 bucks to the truer value.
Speculation means people can sell, we have nothing to sell. we consume more than we consume of oil. Supply is going DOWN not up. It may correct hard in its run up but its not the Nasdaq in 2000.
The dollar lost most of its "rebound" also. This only increases the price.
You keep saying "got gold?" its related. you can't love gold and hate oil. They are connected
"...This is the correct price of oil"
-----------------------
Isn't this what they said about houses? I feel like I'm living in 1988 again. It's just as easy to envision a positive outcome as it is an apocalyptic version. Imagine a breakthrough in energy technology that reduces or eliminates our dependency on oil making this all a moot point? It is entirely within the realm of possibility and I dare to say it's a probability that we will have safe, alternate power supplies in our lifetimes.
I don't know what the big deal with 4 or 5 dollar gas is.
No one was complaining when the price for a pack of cigarettes increased from 2 dollars to 5 dollars.
Anyone holding physical oil? TSHTF is just getting started. We have to bid for oil against countries that actually have money, like China and Japan. China is using your WalMArt money to buy up oil. They are creating "strategic reserves" like mad. We had better do something, this might help:
www.AmericansForJobsAndEnergy.org
GT Charlie
What speculation?! Now, if we look at what is happening with the oil supply as a CONSPIRACY by the oil producers AND the speculators...then I would agree.
The issue is, we don't really KNOW what is happening behind the scenes. Shoot...we don't even know how much oil there truly is left in the so-called 'proven reserves'.
The thing that always grabs my attention is that there truly does not exist an international organization that AUDITS oil production and distribution. No accounting, just numbers pulled out of thin air by the producers.
Now, if people pay close attention, they will notice a parallel development of 'peak oil' as well as the 'global warming is caused by humans' bs. I personally believe that this is designed to restrict developing nations (namely China and India...and maybe Brazil) from ever reaching 'western standards'. Its also designed to starve certain countries into submission given that 'cheap' energy as well as access to food production methods will become too expensive for that 'have-nots' Think it through...and you'll start seeing a pattern.
I also believe that global events don't happen 'just because'...they are engineered with a purpose. Just like the next global war that will great us eventually...
That said, oil is the big story because it impacts everyone -- regardless of how much they borrowed to finance a lifestyle.
---------------------------------
oil affects everyone but not like housing. People aren't going out and getting liar loans for 500k to purchase oil with. it does impact day to day activities but not nothing like inflated housing.
If prices are indeed going up faster than can be justified by rising demand, there should be a buildup in inventories, and this is simply not happening.
-----------------------------------
how do you justify the demand vs price? Some posters say that a 10% price increase must mean a 10% increase in demand. go back to econ 101, that is not correct. price vs demand is not 1:1
"it amazes me how many idiotic liberals read this blog."
The ultimate goal of the liberals on this blog is for gay illegal immigrants to sneak into the country and marry one another while burning American flags at their wedding.
If you are convinced that the recent oil price increase is a bubble you should short the hell out it. Most everybody in the media seems to think it's a bubble. You stand to make a fortune by going short, right? Am I missing something here?
bubbles can go on a lot longer than you'd ever think
same with crashes
never underestimate the madness of crowds, on the way up or on the way down
get some popcorn, but going long or short on this one at this point is just gambling
Keith,
This is most certainly NOT a bubble.
This is called a decoupling action. PETRO is decoupling from the DOLLAR. Remember that mesalliance. The future world currency will not be the dollar, and what you saw on Friday, was the future.
If foreigners, with OUR oil, won't sell it to us in exchange for the green-tinted toilet paper we call the greenback, what will happen?
Financial armageddon!
King of the Bitter Renters
Oil is a scarce natural resource that was being consumed at an exponential rate until production hit a wall. Now as production declines theres only one direction it can move in long term: up up and away. The day to day moves are what they are. We could go up $10 again monday or down $10 or anything inbetween. Who cares? It'll be $500 by the end of the Obama administration. Go ahead and s1hort it if you don't think so..
All you need to know on this subject is on the bottom chart.
http://tinyurl.com/4fc5nt
It's a bubble. Ride it or not. Your money. Your choice.
If you ride, be prepared to be nimble.
This one is much bigger than housing. And it wreaks more global havoc. While housing made many feel rich. This one will make many feel poor.
And yeah, I agree the government may step in.
"The economy is in such a shitter.
But, at least it's good for any potential home buyer's out there!"
Excuse me? And what if you are one of the 5.5% of the popualtion that is unemployed? (the rate is higher if we include those who are under-employed or gave up looking for a job)
No job = no mortgage
No mortgage = no house
No house = bitter renter
Let's see if Toyota didn't stop making the Rav4-ev, If General Motors didn't stop making the ev-1.
You would have two vehicles getting 125-150 miles per charge, 75-80 miles per hour like they were able to do in 1998-2005, they would be selling millions today. Does GM ever miss a chance to kick themselves in the ass?
To top it off GM sold the patent rights to the battery technology to Chevron.
Video of Ben Bernanke arriving at the very secretive Bilderberg 2008 Conference
As California faces one of its worst droughts in two decades, building projects are being curtailed for the first time under state law by the inability of developers to find long-term water supplies.
Water authorities and other government agencies scattered throughout the state, including here in sprawling Riverside County, east of Los Angeles, have begun denying, delaying or challenging authorization for dozens of housing tracts and other developments under a state law that requires a 20-year water supply as a condition for building.
What's scary is the laziness and greed of Americans these days.
I have a programming project out to bid and these arrogant American firms want $175,000 plus a percentage of the company - the AUDACITY!!!
Indian firms will do it for $10,000 in half the time and so far they all have better references, better feedback and have done better work overall.
No wonder why this country is f*cked and businesses are sending money overseas. I just joined the party too.
"As California faces one of its worst droughts in two decades, building projects are being curtailed for the first time under state law by the inability of developers to find long-term water supplies."
WaterPANIC anyone
C. Everything
We had a moral obligation to mainstream nulcear power during the 1960's and we blew it. Now e pay the price for allowing technically illiterate evironmental policy wonks to destroy an entire generation of balanced energy infrastructure as the US slides into a third world future.
Frank,
India IT prices have gone up 3 fold in 5 years (now half of US rates and climbing rapidly).
Attrition is 50% a year in IT firms. It's like the dot com bubble there now. Job jumping is rampant.
Good luck on the project. And ask about their attrition rates...
I'm so sorry to see you guys so wrong on this one.
Go listen to all the hours(I Did) of Financial Sense Newshour for June,7th.
THIS IS NOT A BUBBLE
There is plenty of oil left but it is hard to extract, and harder to refine. It's called extra heavy oil and bitumen. The world is running out of light sweet crude very fast.
It's hilarious that so many of you are clinging to your "it's different this time!" belief system. Those who deny the massive oil bubble are no different than those caught up in the real estate mania.
In 2000, you could buy five gallons of gas with a one-ounce silver piece.
In 2008, you can buy five gallons of gas with a one-ounce silver piece.
Hmm... yup, there's a bubble in oil, all right.
Hedge funds are using massive leverage to attack the oil market by buying the ETF's (i.e. futures) with no intention of taking physical delivery.
Indeed. And this means that every single month, they have to be SELLERS of contracts for prompt oil delivery. If you do not take physical delivery, then all commodity contracts are zero sum. Hence net speculative activity can contribute to volatility, but not long term directionality.
The question is whether there is a massive divergence bewteen the prices on the financial markets, and the physical markets, actual prices between producers and consumers.
Answer is "no". Of course the financial markets gyrate, and you have 5-15% noise. But the refineries (the ONLY actual customers of crude oil) certainly ARE paying more.
If they didn't have to, they wouldn't.
Simply put, producers of oil ARE hoarding it, in their own rocks underground because they know the oil will be more expensive in the future.
Why? Because of what their engineers are telling them about their own (and other people's) oil production.
This isn't speculation, this is fundamentals. It is entirely rational price behavior of a finite resource.
Both are manifestations of real problems, but neither is the actual root cause. The shill game of securitizing home equity is crushing the banking industry it was supposed to prop up. There's always someone finding a way to make a buck on a real crisis, like the supply/demand of oil. Speculation is merely exascerbating the underlying fundamental issue.
Frank,
India IT prices have gone up 3 fold in 5 years (now half of US rates and climbing rapidly).
Attrition is 50% a year in IT firms. It's like the dot com bubble there now. Job jumping is rampant.
Good luck on the project. And ask about their attrition rates...
This is not an IT project. It's a web design project. HUGE difference. DOPE.
"As California faces one of its worst droughts in two decades, building projects are being curtailed for the first time under state law by the inability of developers to find long-term water supplies."
The interesting part is that the root cause of the shortage isn't rainfall, but rather an outdated and deteriorating water infrastructure in CA thanks to the environmental nutjobs, just like we have insane gas prices because the green nuts haven't allowed a refinery to be built in 32 years. The Governator has stated this and is demanding funding to update the state's water infrastructure, but it's doubtful that the dems in the state house will give him the funds. It's easier for them to smugly blame "global warming" and continue to advance their wacko agenda.
A friend of mine came over the other night, and we just sat in the backyard and discussed what's been impacting most people ... skyrocketing gas prices.
He doesn't earn that much doing construction work on a medical building, so gas prices take a large part out of his paycheck.
He just tells me he doesn't look anymore at the price on the pump, and just fills up - and he's driving a small compact car.
Many people out there are hurting from these price increases, and many more will start hurting.
As the problem starts traveling further up the economic ladder, we'll start seeing the fire heat-up under the arses of our political puppet leaders.
This is so true.
Here in HB Ca., we have a rotting waist disposal system, where pipe corrosion has caused major run-off into the surrounding beach areas.
Right down the street they're building a new 5-story shopping complex - to be completed in about a year.
It will be interesting to see just how this new complex fares, partially because of the reasons you mention and also with gas prices rising.
Frank@Scottsdale-Sucks.com said...
"As California faces one of its worst droughts in two decades, building projects are being curtailed for the first time under state law by the inability of developers to find long-term water supplies."
The interesting part is that the root cause of the shortage isn't rainfall, but rather an outdated and deteriorating water infrastructure in CA thanks to the environmental nutjobs, just like we have insane gas prices because the green nuts haven't allowed a refinery to be built in 32 years. The Governator has stated this and is demanding funding to update the state's water infrastructure, but it's doubtful that the dems in the state house will give him the funds. It's easier for them to smugly blame "global warming" and continue to advance their wacko agenda.
It's hilarious that so many of you are clinging to your "it's different this time!" belief system. Those who deny the massive oil bubble are no different than those caught up in the real estate mania.
-------------------------------
then step up to the plate and go short!
I believed there was a housing bubble. I stepped up and shorted. was a little early and my puts expired worthless. I stepped up again and hit it big.
I then went short on financials and hit that one a little late but still made good coin.
I have been long oil for 4 years now. There may be some pull back but the fundamentals still point to level supply (they can't increase it in any significant way) and increasing demand. There are over a billion Chinese who are just starting to drive and use energy in a significant way. Then consider india.
I just read that some of the middle east oil ministers are thinking about dropping production in order to conserve their reserves..... makes me think they are worried about running out and missing out on the much higher prices to come.....
Those who deny the massive oil bubble are no different than those caught up in the real estate mania.
you nutjobs who deny the massive dollar bubble of the past 40 years are no different from the kooks caught up in the real estate mania. crude oil runs the world's economy. pieces of paper are nothing.
got thousands of mellon seeds growing alongside tomatoes from store seeds>? i hate tomatoes and melons
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OBAMA!
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W.C at least you have Amtrac within your walkable distances, im in the 5th largest city and the treasoners ripped up the track and their cronys have hindered every attempt at even motorized, or electric bicycles use in order to tax, regulate, insure and thus bleed from usage any attempt at sanity, saw one year toy like motorcycles at 200 bucks deemed illegal....as they say money gets justice, poverety gets the law................
Frank,
Po-TAY-to... Po-TAH-to...
Whatever.
Fact is that US developers aren't 17.5 times more - they are maybe 2 times more. So I'm not sure how someone responded with that. They must've thought you were a sucker.
In terms of the project, 1 month is small potatoes (however pronounced) And "web design" is pretty low on the cost totem pole i.e. anyone can do it. So even if you get scammed out of the 10K, you should be able to source elsewhere for not more than double - including Europe.
BTW... you're welcome.
The oil bubble will pop in March 2010, at around $500/bbl. . . with gold around $500/ozt, and DJIA around 10,000 (SPX at 1000). You heard it here first. I was the same guy who said a little over a week ago that SP500 was range-bound between 1440 and 1340 for the next three months, with a non-zero chance of crashing down to 1200.
Given all the noises about oil bubble in the bought-and-paid-for MSM, my guesss is that much of the pure speculation in oil has been on the short side and are getting creamed. Right now, the longs are the stronger hands hedging their currency risks in the course of managing supply cost (like airlines and refiners) and/or preserving capital for their clients (like pension and retirement funds).
Speaking of pirates, the real pirates are the fiat money issuers and lawmakers that require people to accept something that is intrinsicly worthless at face value in the course of commerce. It's as if the pirate started issueing receipts for goods that he looted from you; the receipts are not backed by anything and does not confer any right to get anything back from the pirate except for more receipts :-) The pirate still has your goods, although the worthless receipt might make you feel better in that coerced exchange :-)
Think of the following scenariio:
Banks loaned out $1T to buyers for home purchase and homeowners for HELOC. The sellers and HELOC borrowers got that cool $1T and spent it all on widgets. The widget makers now have the $1T, and know that much of it would have to be spent on buying raw material and labor cost just to keep the widget making going and replacing inventory.
Now the loans have gone bad, the banks are facing the risk of borrowers defaulting on that $1T. So the FED prints up another $1T to make banks whole. Now there are two $2T ($1T already in the hands of the widget makers for having sold their widgets, plus the newly minted $1T) chasing the same amount of raw material in the market.
What would you do if you were the widget maker? Before the new $1T fully dilute your existing money, try to spend the first $1T as quickly as possible, right? That's exactly what's going on. India, China, Japan, Russia and Brazil are buying real goods to preserve the purchasing power of their foreign exchange reserves. The Wall Street firms are just trying to front-run them all.
typo in previous post, should be:
Jan 2010: gold peak at $5000 (not $500)/ozt;
March/April 2010: oil peak at $500/bbl;
The oil prices while painful are a great thing for the US. In the short run it will discourage everyone from buying SUVs to keep up with their neighbors. All of the VC money being invested in alternate energy sources will help America in the long run (unfortunately all the VC investment is keeping bay area housing prices very high).
Oil is bubble:
http://hsgac.senate.gov/public/_files/052008Masters.pdf
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