Monday, May 16, 2005

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
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."
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.


At 5:25 AM, May 16, 2005, Blogger Big Gav said...

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...

At 6:31 AM, May 16, 2005, Blogger odograph said...

"The personal savings rate in the US is about 1% of disposable income. In China, the personal savings rate exceeds 40% of disposable income." link

It's hard to think what those people will do, if we hit any kind of bump.

(I say "those people" because I inherited a bit of a Great Depression mentality from my dad, or it was in the genes.)

At 6:53 AM, May 16, 2005, Blogger odograph said...

Maybe it isn't surprising that Steve Forbes has a polar opposite view, including this reason for the oil run-up:

Oil became expensive because the Fed has been printing too much money. Don't blame India, China or, even, misbegotten environmentalists. China has been on a tear since 1978, each year buying significantly more oil than it did the year before. Like the U.S., China now imports at least half of its needed oil. Why has this nearly three-decades-old trend suddenly sent oil prices hurtling upward in the past 15 months? This just doesn't compute.

I think it is kind of suspicious for anyone to imply that China has had linear growth for the last 30 years ... but maybe that's just me.

At 10:39 AM, May 16, 2005, Blogger monkeygrinder said...

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.

At 10:41 AM, May 16, 2005, Blogger monkeygrinder said...

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.

At 7:52 PM, May 16, 2005, Blogger mh497 said...

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?


At 8:33 PM, May 16, 2005, Blogger 'Thought & Humor' said...

You have a riveting web log
and undoubtedly must have
atypical & quiescent potential
for your intended readership.
May I suggest that you do
everything in your power to
honor your Designer/Architect
as well as your audience.

Please remember to never
restrict anyone's opportunities
for ascertaining uninterrupted
existence for their quintessence.

There is a time for everything,
a season for every activity
under heaven. A time to be
born and a time to die. A
time to plant and a time to
harvest. A time to kill and
a time to heal. A time to
tear down and a time to
rebuild. A time to cry and
a time to laugh. A time to
grieve and a time to dance.
A time to scatter stones
and a time to gather stones.
A time to embrace and a
time to turn away. A time to
search and a time to lose. A
time to keep and a time to
throw away. A time to tear
and a time to mend. A time
to be quiet and a time to
speak up. A time to love
and a time to hate. A time
for war and a time for peace.

Best wishes for continued ascendancy,

'Thought & Humor'
Cyber-Humor & Cyber-Thought
Harvard Humor Club

At 9:29 PM, May 16, 2005, Blogger monkeygrinder said...

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.

At 5:21 AM, May 17, 2005, Blogger Big Gav said...

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...


Post a Comment

<< Home