market appreciation week
We're freaking doomed, dude
Debt problems worsened, of course, but only to the usual degree of the average monthly increases in that particular bad news category (BNC), such as outstanding consumer credit increasing by $5.5 billion in March, which means that the consumer's debt load is rising at an annual rate of somewhere between 3% to 4.5% or so, and is already at $2.12 trillion, which is a tidy $15,193 per every freaking worker in this whole freaking country (140 million of them) who has a damn job. And the interest rate is rising on that debt, or is getting ready to rise, because interest rates are rising. And if lenders DON'T start raising their interest rates on credit balances, then their own bottom line (which is where profits would be found, if any) will suffer
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That things are heading for doom was even at the meeting of the Berkshire Hathaway people in Omaha, which produced this memorable quote from Buffett's sidekick, Munger, who said "The present era has no comparable referent in the past history of capitalism. We have a higher percentage of the intelligentsia engaged in buying and selling pieces of paper and promoting trading activity than in any past era. A lot of what I see now reminds me of Sodom and Gomorrah. You get activity feeding on itself, envy and imitation. It has happened in the past that there came bad consequences."
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And since we are talking about oil, let me give you the Mogambo Investment Tip Of The Day (MITOTD). I smile as I gently and confidently forecast that the current fall in the price of oil is a big chance for you to buy oil-related stocks, and oil futures if you have the inclination, because there is not one instance in all of history when a rising demand, a falling supply, coupled with the devaluation of the currency, resulted in lower-priced oil for that stupid country that so debased its currency. Never. And it never will happen, either. Ever.
Speaking of smelling the coffee, the markets bear watching this week. They've been swinging up and down, like a a seesaw for the past few weeks.
With oil having nowhere to go but up, the markets will be continually buffetted by reality.
So bury some gold under your flowers. This isn't Y2K.
posted by JMS @ 12:49 AM
6 comments
6 Comments:
So the inexorable rise in the oil price is the silver lining to peak oil that alleviates the suffering I'm doing on the markets lately ?
At the moment I feel like I have the worst of both worlds - a sense of impending doom coupled with actual financial losses (well, notional ones in the recent term anyway) based on the doom not having arrived yet...
Well, a lot of people are being misled by people who should know better. I've been reading through the 2004 IEA World Energy Outlook, (I guess 2005 is not yet available) and it posits 124 million barrels of oil a day in 2030.
That would be fabulous, global warming aside.
gav - well, historically gold and silver will explode when oil prices do - so if you want a silver lining, you may have to by it!
I expect non-commodities market to be toasted and buttered before the year is up.
Steve Forbes is kinda right. Without the US driven expansion, oil demand would not be as high, even from China and India. But maybe he hasn't been to China lately, they have been on an unbelievable building spree in the past 5 years.
Note also that Berkshire Hathaway has a huge amount of cash, as they await a buying opportunity.
Cash and oil, the way to go?
Maybe.
mh497 - yep and also forbes is right about the fed printing too much money... Oil companies had to raise prices to make up for the devaluation of the dollar. To me the really extraordinarily interesting thing is how unsustainable oil production and unsustainable credit are converging.
I'm not into any doomsday scenarios, at least not for the next 20 years or so, because their is plenty of oil to keep people fed.
I do worry about an economy predicated on growth that won't be able to grow much after 2006.
Thus, when I suggest people buy gold, I am not joking, but even to my ears, it sounds like a joke.
Howdy: 42! May I inquire as to how you came across my blog? I am truly curious.
Yeah - I've never understood the gold (or silver) standard though - they aren't that useful as metals, and basing your monetary system on them seems like a bizarre and arbitrary decision.
I'm no gold bug unfortunately - but if people want to make gold super valuable, they have my blessing - there is no shortage of gold mines down here willing to dig the stuff up so we can become rich due to a random act of fate. Ah - the lucky country !
Fantasies aside though, I'm believing the "money represents energy" theory - which means I'm only holding oil and gas stocks and otherwise cash. The rest of the market makes me shudder - if anything I'm tempted to short airlines and toll road companies...
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