Wednesday, 10 December 2014

Oil


Oil prices dropped again this morning.
This is not due to the discovery and exploitation of some super-giant oilfield, but rather demand-destruction. Businesses on the edge are cutting back on driving, people are using car pools and public transit, planning trips, buying more fuel-efficient cars, or just not going out to buy stuff.
That makes fracking operations and tar-sands exploitation uneconomical, even with the backwards subsidies of tax breaks.
Most fracking companies have really appeared to be solvent only through sale of junk bonds, not sale of actual product. A large number will go under unless the price goes way back up, and if that happens, they will fail, but they will also destroy the whole Ponzi scheme derivative market, exactly the way he .com boom became the .com bomb, the housing bubble burst in 2008 (from which the real economy never  recovered). You can tell it's close by how shrill and incessant the economic analysts in the mainstream media are insisting that everything is OK.
When that happens, and in early December 2014, I, like a great many other watchers on the fringe, who look at metrics other than the narrow range favoured by the elite experts cheerleaders, are seeing every sign that the crash is imminent.
Happy Yule.
I hope.

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