World Finance Watch

Re: World Finance Watch

Good points all Bubbu. Let me give you my take on things from some of your post.

Right now, we are ripe for a major financial crisis. All the FED would have to do is raise the prime lending rate to 10% and Half of the Country will be foreclosed on. I don't see this happening unless a non-Yale grad. gets elected president or something. And who ever has heard of that happening in the last 20 years or so. Conversely, if the FED drops rates, then foreclosures will go down. I don't think they want to pop the bubble just yet because they have too much going on with the Land and Oil Grab in the middle east. ?

Yes, "we", as in the world economy, are ripe for a financial crisis like the world has never seen. If the Fed raises the discount rate to something like 5% (currently 2.25%) a good percentage of "homeowners" are screwed. Something like 35% of all new mortgages over the last 3 years are adjustable rate mortgages (ARM's). This doesn't take into account the home equity lines of credit (HELOC's) that are at historic proportions. ARM's and HELOC's are ALL adjustable rate loans. As the Fed raises rates, the rates on these loans goes up. Most mortgage rates are set by 10 yr. Treasury bond rates, which are set by the market, not the Fed. As you stated, the majority of the available Treas. debt is held by foreigners. They start getting antsie about the US's ability to repay its debt and 10 yr. Treasury yields will spike, despite what the Fed tries to do. They're already getting antsie. Russia, China, So. Korea, India and a number of So. American foreign central banks have already made public declarations about "diversifying out of 'dollar assets'" That means they're slowly dumping dollars in their reserves and Treasury debt. The Fed is not in control anymore and they know it. They're prayin' and hopin' they can hold this house of cards together while waiting on a miracle. Miracles do happen, so anything is possible. The dollar appears to be in a multi-month oversold bounce. The next BIG move will be to the downside HARD. That's when the herding impulse kicks in and everybody heads for the exit door at the same time. Flush goes the mortgage, bond, real estate and stock markets. Some decent sized player defaults in the derivatives market and its TEOTWAWKI (the end of the world as we know it). Greenspan himself has testified before Congress on several occasions that a "serious dislocation" in the derivatives market could seize up the world financial and banking systems in a matter of hours. The Congressional panel yawned and moved on to the next question. Of course Greenspan reassured Congress that the derivatives market was "well disciplined" a week before the LTCM debacle in 1998, where the world financial system was on the brink of seizing up. If he hadn't pulled off a bail out with 7 of Wall St.'s biggest players at the time, it would have happened. Enough about derivatives, but the series of bubbles out there could all collapse at the same time now. They're almost too interconnected not to. But we're "sitting on a corn flake, waiting for the van to come" (my shameless Beatles reference to lyrics from "I am the Walrus").

The are forcing the US through the Oil Gouging which will cause inflation of prices by its self. It will kill Detroit and SUVs. Thus Michigan is starting to feel the pinch. But they will keep rates down to stop run away inflation. People will begin to foreclose because of cost of goods going up not intrest rates. They will have to drop rates so people can get loans to buy goods like food. The Raise in oil will also deflate the bubble because those on the lower income end will be forced out of the market. ?

The price of crude is a matter of supply and demand. China, India and the "developing countries" are buying oil like it won't be here tomorrow. Well, not tomorrow, but in the next few years. Demand is up, supply is maxed out. $40/bbl will look cheap in the years ahead. "Detroit" as in US automakers is on its death bed. GM and Ford especially. I've had people look at me like I was certifiable two to three years ago, when I said that these companies probably wouldn't make it to 2010. They'll go through the airline Chapter 11 dance for a while, but eventually one or both will be liquidated or have to move all operations to China. Foreclosures will happen because of a credit crunch in a debt collapse. Lenders won't want to lend, and credit worthy borrowers won't want to borrow. The only people looking to borrow will be those desperate enough to try in an attempt to pull off a financial miracle of salvation. Interest rates for borrowers will skyrocket despite the efforts of the Fed. A lot more than low income people will be "forced out."

I hope I don't come across as lecturing, but I've been accused of as much. LOL Just trying to show people what's coming, and it can't be "fixed" by the Fed, the tooth fairy, Santa Claus, or the Easter Bunny. A great book to read about our current and future situation is "Conquer the Crash" by Robert Prechter, Jr. He published it in 2002, and has a 2004 update to it. Some of it is a little technical, but it's written for the layman to understand. If you read that, you'll see a lot of what I'm trying to get across and then some. I'm not the best writer or conveyor of what's happening. Prechter does an outstanding job. The last time we had something this "bad" economically was the 60+ yr. depression of the the 1700's. Google "South Sea Bubble" and "John Law". Basically bankrupted France and England. Sir Issac Newton lost 1 million pounds sterling in the South Sea Bubble. That'd be like Bill Gates losing into the billions. Yeah, it's gonna be that bad.

Man, all I got to say is thanks to everyone participating in this thread. I can't tell you what a release it is for me to be talking about all this. I've been like "a crazy man screaming in the desert" (wife's assessment) for the last several years. Most people don't want to hear the "bad news." Disrupts their "happy, shiney people" outlook being fostered by the Fed, the govt., and the bubble heads on CNBC. At the bottom, you'll see corporate and Wall St. scandal exposed like never before. Accusations and recriminations will be widespread. Lots of folks will go to jail. The current "crime wave" on Wall St. and corporate board rooms will pale in comparison. Here's a prediction, and it isn't all that prophetic. Next big "crime wave" this year will involve AIG (American Int'l Group) and the GSE's (Fannie, Freddie and the FHLB's). Gonna be some major jail bird action and "perp walks" going down just with those two. Herb Greenburg (AIG) and Franklin Raines (Fannie Mae) will garner a lot of the limelight.

Okay, I'll shut up here. Thanks again.

Cary
 
Re: World Finance Watch

Man, I wish I had a loud voice in the world, that resounded all across America.

I think their pants would turn brown if they heard half of this.

Keep posting, this sh1t is interesting.
 
Re: World Finance Watch

<div class='quotetop'>QUOTE(\"PyRo99\")</div>
Man, I wish I had a loud voice in the world, that resounded all across America.

I think their pants would turn brown if they heard half of this. ?

Keep posting, this sh1t is interesting.[/b]

Yes, IF people were willing to listen, they'd be scared, but no one WANTS to hear about this. The thing you got to appreciate Pyro is that what's being posted here is no big secret. It's widely available. But watch the finger pointing, lawsuits, new legislation, resignations, criminal indictments, Congressional hearings, etc., etc. when the SHTF. "How could this have happened, and why didn't somebody warn us about it?" will be repeated over and over again. It's like "Somebody should have done something. Anyone could have done it, but No one did. Everybody can see now how this all happened, and somebody will get the blame. No one cared before, but everybody is upset and mad now." My paraphrase of a similar little ditty.

I've had a few people ask me "how bad could it get?" Pretty damn bad is the easiest answer. But that really doesn't personalize what's coming. The other problem is most people think it will be "the other guy" that will suffer in a financial collapse. The truth is WE'LL ALL SUFFER in a massive financial and economic collapse. It will be a matter of degrees. Probably starting with a noticable reduction in lifestyle at the top, to death from disease, starvation, or murder/homicide at the bottom. I know it sounds unreal. How can we go from the highest standard of living in the world to something on the bad side of drastic? I found an article written by a Canadian that puts a perspective on "how bad it can get" I only copied sections of the article, as some of it is some analysis on precious metals. Anyway, have a read. This will probably look "prophetic" in a couple of years.

Cary

http://www.financialsense.com/fsu/editoria.../2005/0408.html



[font=Verdana,Arial,Helvetica]And did I ? ? ? ? mention the famine coming? The real one?[/font]

?​
 
Re: World Finance Watch

CaryP, Zoomerz, and Bubbu -

Thank you for this thread. You make finance and economics easy to understand. I'm in debt to you three ;)

Mom
 
Re: World Finance Watch

<div class='quotetop'>QUOTE(\"sosuemetoo\")</div>
CaryP, Zoomerz, and Bubbu -

Thank you for this thread. ?You make finance and economics easy to understand. ?I'm in debt to you three ;)

Mom[/b]
Sue; I'm a student much in the same stage of knowing that most of us are here. Cary is the "knower", if you will, and Bubbu has been watching the elitist movements and banking cartels for a long long time. I'm sure there are others here with valuable input as well.

I just felt, since we are a community, in addition to speculating and theorizing on TT, we could benefit greatly by keeping abreast of money issues. Certainly a most important thing to understand.

Z-
 
Re: World Finance Watch

<div class='quotetop'>QUOTE(\"Zoomerz\")</div>
I just felt, since we are a community, in addition to speculating and theorizing on TT, we could benefit greatly by keeping abreast of money issues. Certainly a most important thing to understand.[/b]

It is. And it seems more and more important in our daily lives.

I'd like to pose a question to you three. I'm a news junkie and listen to a lot of Rush, Sean Hannity and "Money Talk." Thanks to Cary, these days I scream at Rush, but that's another story.

Why are the gas prices so high?

I feel like I'm not getting the truth from Fox or the mainstream media. I've heard the following:

1. Price per barrel of oil has gone up, but it's going down, but it's going to double.

2. The refineries are all at least 20 years old, and not running to capacity, but they are running fine and they're running at 100%

3. We are not drilling to capacity in Alaska, we are drilling to capacity in Alaska.

4. The state tax is too high, the state tax has nothing to do with it and is just a few cents a gallon.

5. The supply of oil is too high, the supply of oil is low and we are using our reserves.

6. The demand for oil/gas has gone up, no it's gone down.

7. We're going to run out of drillable oil next year, We're going to have oil forever.

I know this all sounds extreme. Maybe I'm listening to extreme media. But everybody is saying something different, calling the otherside fools and extremists.

Further, for anyone that says "just reduce your consumption" and you'll be fine. I cannot ride my bike to work and neither can many of the people I know. Living in a rural community you cannot just quit your job and find something close to home because the jobs aren't out there. You cannot just say "I'll take the bus or the subway or carpool." So, you have to pay the price at the pump so you can make money to pay the price at the pump!

Mom had to pay $2.32 a gallon in Central Illinois, a total price of $28.00 to fill the tank on her midsized sedan. Last summer, it was $20 a fill per week. $8/wk, $32/mo may not sound much to some... but it effects us.

I don't want to know what to do ... I just want to know why. :)
 
Re: World Finance Watch

<div class='quotetop'>QUOTE(\"sosuemetoo\")</div>
It is. ?And it seems more and more important in our daily lives.

I'd like to pose a question to you three. ?I'm a news junkie and listen to a lot of Rush, Sean Hannity and \"Money Talk.\" ?Thanks to Cary, these days I scream at Rush, but that's another story.

Why are the gas prices so high?

I feel like I'm not getting the truth from Fox or the mainstream media. ?I've heard the following:

1. ?Price per barrel of oil has gone up, but it's going down, but it's going to double.

2. ?The refineries are all at least 20 years old, and not running to capacity, but they are running fine and they're running at 100%

3. ?We are not drilling to capacity in Alaska, we are drilling to capacity in Alaska.

4. ?The state tax is too high, the state tax has nothing to do with it and is just a few cents a gallon.

5. ?The supply of oil is too high, the supply of oil is low and we are using our reserves.

6. ?The demand for oil/gas has gone up, no it's gone down.

7. ?We're going to run out of drillable oil next year, We're going to have oil forever.

I know this all sounds extreme. ?Maybe I'm listening to extreme media. ?But everybody is saying something different, calling the otherside fools and extremists.

Further, for anyone that says \"just reduce your consumption\" and you'll be fine. ?I cannot ride my bike to work and neither can many of the people I know. ?Living in a rural community you cannot just quit your job and find something close to home because the jobs aren't out there. ?You cannot just say \"I'll take the bus or the subway or carpool.\" ?So, you have to pay the price at the pump so you can make money to pay the price at the pump!

Mom had to pay $2.32 a gallon in Central Illinois, a total price of $28.00 to fill the tank on her midsized sedan. ?Last summer, it was $20 a fill per week. ?$8/wk, $32/mo may not sound much to some... but it effects us. ?

I don't want to know what to do ... I just want to know why. ?:) ?
[/b]

Well, first off, unless you're just out for amusement, I would discontinue listening to any of those 3 you mentioned. Hannity and Rush both are bought and paid for. I'm not sure who Hannity is aligned with, but Rush is most certainly a mouthpiece for the GOP. At least if you're going to listen to them, listen to opposing views like NPR to gain some balance. Michael Savage is just a blithering idiot (MHO) who flies by the seat of his pants, spouting his opinion (which depends primarily on how he's feeling at that given moment) without a shred of investigation.

As far as gas prices. The most recent increases are "market reactions" to the price of oil/brl. This time last year, the nominal (avg) price/brl was in the $30 - $35 range. Now it is $55, with speculation that it will briefly spike at over $100/brl within the next few months. Doesn't take much of a math wiz to figure that one out. The reason for your confusion, and so much *disinformation* being put out is (MHO) the U.S. oil companies attempt to camoflage their greed. Plain and simple, if a gas station attendant stubs his toe and sues the station owner, you could probably expect gas in that area to go up 3c/gal the following week. All propoganda and price gauging. At the current moment, they don't need to *artificially* manipulate it, as the world oil market is doing it for them.

As to the reasons why the price has increased so drastically in such a short period of time, Cary provided that answer earlier in this thread, and I'll just reiterate it here. The worldwide supply is being heavily taxed by steadily increasing demand in the industrializing nations (CHINA!). When demand is high, and supply is stretched thin, the price will be higher. Don't look for this to change anytime soon either, as China continues to increase their energy needs at an alarming rate.... (oh, and guess who's helping them?)

Cary can do a much better job of explaining things, so I'll leave it at that. Hope it helps some.

Z-
 
Re: World Finance Watch

<div class='quotetop'>QUOTE(\"Zoomerz\")</div>
Well, first off, unless you're just out for amusement, I would discontinue listening to any of those 3 you mentioned.[/b]

I'd hardly call it amusement anymore. I know I need to switch, because I end up screaming back at Rush. When I'm not screaming, it's just background noise. I'll try to find a local NPR and begin listening to them. Thank you for that recommendation.

The most recent increases are \"market reactions\" to the price of oil/brl. This time last year, the nominal (avg) price/brl was in the $30 - $35 range. Now it is $55, with speculation that it will briefly spike at over $100/brl within the next few months.

This is crap! I'm paying today for something that may happen in 6 months! I'm paying for gasoline at a rate of $100/brl of oil that it might have cost them at the time it was refined at $35/brl of oil! When you get into this cycle, it can never go down! And I flunked economics (obviously), but I do run a business. I just know you can never take a loss and stay in business. Greed? I call this armed robbery at the pumps. If I told my clients that I have changed my per/hr rate from $13 to $39 because I'm anticipating a price hike on Windex, Scrubbing Bubbles and vaccuum cleaner bags, I would lose clients!

The worldwide supply is being heavily taxed by steadily increasing demand in the industrializing nations (CHINA!). When demand is high, and supply is stretched thin, the price will be higher. Don't look for this to change anytime soon either, as China continues to increase their energy needs at an alarming rate.... (oh, and guess who's helping them?)

Okay, so I am paying more at the gas pumps because China needs more oil than I do. I'm paying more because my country is outsourcing jobs to China to make my wigits that are cheaper to make in China than the US because employees there are willing to work 15 hours a day, 7 days a week for $2/hr and no health insurance. (Sounds like my current rate of pay self-employed, but that's another matter)

What about telling these countries that we are buying oil from to take a hike? We have off shore drilling, there's oil in Alaska. Could we become self-sufficient by just drilling more? If we did, the price of gas would go down, the cost of transporting wigits would go down, therefore the cost for a wigit would also decrease? Further, I wouldn't need more money per hour to pay for gas and to buy a wigit. Oh, and we wouldn't have to outsource jobs to China for our wigits, because it would be cheaper to make here.

Sorry if these questions seem so basic and elementary. I almost feel like I'm ruining your thread. Maybe a World Finance for Dummies thread is warranted ;)

Mom
 
Re: World Finance Watch

Hi Sue,

I'll put my answers in bold underneath your questions.

Why are the gas prices so high?

I feel like I'm not getting the truth from Fox or the mainstream media. I've heard the following:

1. Price per barrel of oil has gone up, but it's going down, but it's going to double.

Yes, global demand has been rising, while production has been maxed out. Despite claims by OPEC countries of increasing their production, they are maxed out. They can not pump any more per day. The faster they pump it, the faster it will run out, and the less they'll get out of the ground. As I said before $40/bbl will look cheap in the future.

2. The refineries are all at least 20 years old, and not running to capacity, but they are running fine and they're running at 100%

One of the problems is that our refineries are old. No one wants a new refinery near them, the NIMBY (not in my back yard) phenomenon. They are running at or near capacity, and there have been periods where refineries along the Gulf Coast almost ran out of producable crude, most of which is imported from Venezuela. Hugo Chavez, the Marxist that hates us, remember him? He's the leader there. So no favors from them.

3. We are not drilling to capacity in Alaska, we are drilling to capacity in Alaska.

The ANWR (Artic National Wildlife Refuge) can now be drilled. Analysis I have read shows that at maximum withdrawal of all available known oil there would take care of current U.S. demands for 18 mos. Under typical conditions, where some some of the oil is left in the ground, we get about 10 mos. of U.S. energy. So, while the ANWR drilling is good for politicians wanting to appear as though they're doing something, it's just B.S. Nope, ANWR is no solution. And it will take about 7 years to get whatever oil they do find on line. Not gonna be helping us anytime soon. There have been no major / significant oil field discoveries with major proven reserves in a good number of years. Cuba supposedly found a "sizable" field off their coast recently, but reserves are yet to be proven. Bottom line, the world is running out of "cheap" oil and gas. I didn't say out of ALL oil and gas, just the cheap variety we're spoiled on. There will still be oil and gas, but it gets more expensive from here.

4. The state tax is too high, the state tax has nothing to do with it and is just a few cents a gallon.

I don't know what the state gasoline tax is in your area. The last spot price I saw for gasoline this past week was $1.74, while the pump price here was $2.15. The latest statistics that I've seen show the Federal gas tax is 18.4 cents/gallon. The difference is the state gasoline tax. That leaves about 23 cents per gallon for Louisiana gas tax.

5. The supply of oil is too high, the supply of oil is low and we are using our reserves.

At any given point, the inventory of crude oil can be up or down. There is a weekly report of inventory levels for crude oil, disstilates, gasoline, etc. It's not so much how much inventory is on hand at a particular point in time. It has more to do with trends in demand vs. trends in production. As far as I know, the Strategic Petroleum Reserves (SPR) have not been touched under the Bush admin. They were being filled, and I don't know if that was ever completed, or if the program is still underway.

6. The demand for oil/gas has gone up, no it's gone down.

Demand has gone through the roof. The US has not reduced it's demand for energy, while China, India and "developing" nations have increased their demand significantly. A few years ago I saw a comparison of how much energy the U.S. consumes per barrel/ person/ year vs. Japan and developing countries. The U.S. at the time was consuming about 23 or so barrels of oil per year, per person. Japan was at about 18 barrels. China was less than 5. In 2000, the U.S. was consuming 25% of all energy produced in the world, while only having about 4% of total world populace. We're energy hogs. Demand has gone through the roof. China has gone from being energy self-sufficient just a few years ago, to being the second largest importer, behind the U.S. only. That's a huge jump in a relative "blink of an eye."

Cheap energy is over. Get used to it.


7. We're going to run out of drillable oil next year, We're going to have oil forever.

When you say "drillable" that's an entirely different context. There's "drillable" oil all over the planet, but at what cost is the problem. The models today are based on recovery costs (cost of getting oil out of the ground) at $9 to $11 per barrel. Let's say that recovery costs go to $35 per barrel because of the depth that a well would have to be drilled, technology involved, environmental concerns, etc. You got a major cost hike. Like I said, the "cheap" energy is over. There will be energy available, but it will become increasingly more expensive. Read up on Hubbert's Peak or Peak Oil. It appears we've hit the downside of that wall.

I know this all sounds extreme. Maybe I'm listening to extreme media. But everybody is saying something different, calling the otherside fools and extremists.

You're not listening to extreme media. It's just the propaganda machine that has a lot to do with confusing, misdirecting and confounding the general populace. Instead of just being honest, the PTB keep the sheeple in the dark with sound bites and pseudo reality. The thought is that most sheeple would panic and can't handle the truth. Maybe the PTB are right on that one.

Further, for anyone that says "just reduce your consumption" and you'll be fine. I cannot ride my bike to work and neither can many of the people I know. Living in a rural community you cannot just quit your job and find something close to home because the jobs aren't out there. You cannot just say "I'll take the bus or the subway or carpool." So, you have to pay the price at the pump so you can make money to pay the price at the pump!

Mom had to pay $2.32 a gallon in Central Illinois, a total price of $28.00 to fill the tank on her midsized sedan. Last summer, it was $20 a fill per week. $8/wk, $32/mo may not sound much to some... but it effects us.

I don't want to know what to do ... I just want to know why.


I think you know why by now, eh Susan? It's just that's where we are in the history of the planet. It's a "new world" we're living in. We're just passed "life as we knew it" a few years ago. I hope this helps, even though the answers are not the "happy shiney" variety.

Cary
 
Re: World Finance Watch

Quoted posts are all by Sosuemetoo:

This is crap! I'm paying today for something that may happen in 6 months! I'm paying for gasoline at a rate of $100/brl of oil that it might have cost them at the time it was refined at $35/brl of oil! When you get into this cycle, it can never go down! And I flunked economics (obviously), but I do run a business. I just know you can never take a loss and stay in business. Greed? I call this armed robbery at the pumps. ?

No, you're paying for current crude prices, not anticipated at $105. Yes, there was some $35 crude that got processed and sold at say $50 prices (high end guess), but that inventory is long gone. And actually, when crude dropped to $11/ bbl. gasoline prices dropped with it. I'm not saying that the big energy conglomerates aren't out to maximize profits, which some will call greed, but that's their job. Yes, capitalism is about maximizing profits.


Okay, so I am paying more at the gas pumps because China needs more oil than I do. I'm paying more because my country is outsourcing jobs to China to make my wigits that are cheaper to make in China than the US because employees there are willing to work 15 hours a day, 7 days a week for $2/hr and no health insurance. ?

Yes, that sums it up. But don't blame China, India and other countries that have received jobs from the US and Europe. The global corps are just maximizing profits made available to them under the long term push of "globalization" from the last 5 presidents (Carter to Bush II). That's what globalization does, puts everything, including labor, on a more even playing field. Like an excerpt from the article I posted earlier said:

"Foreign industrial workers making $25 a week will hardly be expected to offer a lot of sympathy when \"honest, hardworking Americans\" can\'t find $800 a week jobs, or perhaps any jobs at all.\"

So if you want to "blame" someone. Blame all the politicians who've been pushing "globalization" for decades. They're on both sides of the aisle, and they tend to be "career" types. Ross Perot was right about that "loud sucking sound" of jobs being pulled out of our economy. And that just about NAFTA and jobs to Mexico. Under the WTO (World Trade Organization) even Mexico is bitching about jobs its losing to China.

What about telling these countries that we are buying oil from to take a hike? We have off shore drilling, there's oil in Alaska. Could we become self-sufficient by just drilling more? If we did, the price of gas would go down, the cost of transporting wigits would go down, therefore the cost for a wigit would also decrease? Further, I wouldn't need more money per hour to pay for gas and to buy a wigit. Oh, and we wouldn't have to outsource jobs to China for our wigits, because it would be cheaper to make here. ?

Careful what you wish for. The U.S. stopped being energy self sufficient a long time ago. Yes, there are some places we could start drilling (coast of California, ANWR, etc.), and we could drill much deeper than current technology allows. But you're talking years to decades of bringing all of that online for consumption AND at prices that are substantially higher than we have now. It's the old cut off your nose to spite your face dilema. Why aren't we using alternate sources of energy? Because they're more expensive (so far) that petroleum based energy is still cheapest. Your assumption about gas prices going down is based on the old paradigm that there's plenty of available oil at current recovery costs. That is over now. As for outsourcing jobs to China and other low cost providers. That will end when the cost of hiring Chinese employees is close to parody with hiring US employees. That means over time, Chinese wages will go up, and American wages will go down. So about the time the US is hitting third world status (my estimation is 2020) jobs won't be offshored anymore. Not a pleasant thought, but the forces at play are too big to stop or reverse now. Get used to a hardier lifestyle.


Cary
 

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