View Full Version : Think things are bad now....
Too Late to Buy Gold?
It’s hard to be bullish on gold when there’s so much bad news in the world.
After all, gold offers a refuge against bad times ahead. Like all good insurance, it’s best bought before trouble arrives — not during or after.
And just how much worse can the news get from here?
1. The Dow’s on track to close out its worst June since the Great Depression, down almost 10 percent for the month.
2. GM’s stock is trading at a 54-year low, taking it right back to when CEO Charles Wilson declared “what was good for the country was good for General Motors and vice versa.”
3. U.S. Dollars — the bedrock of world forex reserves — now buy one-third less against the rest of the world’s money compared with 2002.
4. The price of crude oil has risen more than five times over since U.S. and U.K. troops liberated the oil fields of Iraq in 2003.
5. Libya is threatening to cut its oil production in protest at U.S. anti-terrorism laws; Tehran just pulled $75bn worth of investments from Europe to avoid sanctions against Iran’s nuclear program.
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6. Global inflation has risen from three percent last June to more than 5.2 percent per year today; analysts at Barclays Capital believe U.S. inflation will hit 5.5 percent by August.
7. Real estate prices have turned sharply lower in the U.S. (down 15 percent year-on-year), Ireland (down 13 percent) and the U.K. (down 3.6 percent) as well as in Spain, Australia, South Africa and the emerging economies of east-central Europe. Price in Riga, Latvia dumped 38 percent in the year to May.
8. Western consumer confidence has sunk to multi-year lows; emerging-market consumers face the worst rates of inflation in more than two decades, rising 25 percent year-on-year in Vietnam and more than 13 percent in India; surging fuel and food prices have sparked protests and riots in Asia and now unionized strikes across Europe.
9. Investment and lending banks are being forced to take back “securitized” debt onto their balance sheets, destroying their capital adequacy ratios and halting new lending as pension & insurance funds try to flee risk. In the U.K. alone, new lending fell 95 percent in May after allowing for such “de-securitization.”
Watch out below! It’s every man for himself — women and children included! Or so the financial pundits now claim.
Makes you wonder where they’ve been during the bull market in gold starting in 2001. But with inflation surging and new credit shrinking, “we’re in a nasty environment,” said Tim Bond, head equity strategist at Barclays bank in London, this week.
Above all, “there is an inflation shock underway,” he said in Barclays’ latest Global Outlook. “This is going to be very negative for financial assets. [So] we are going into tortoise mood and are retreating into our shell.
“Investors will do well if they can preserve their wealth.” And investors who choose to buy gold are usually looking to achieve just that.
Indestructible, un-inflatable, and instantly priced in the world’s only true globalized market, gold bullion stands apart from all of those boom-time investments. Stocks, bonds, securitized debt, real estate...you can keep ‘em when the end of the world strikes.
These happy assets promise to pay you income. They also rise in value as the economy grows. Whereas gold, in sharp contrast, just sits there — neither smiling nor frowning, and never paying an income. Its value comes from, well, from its gold-ness alone.
And as the spike above $1,000 an ounce showed in mid-March — just as Bear Stearns collapsed — you need the end of the world to make buying gold worthwhile.
Right?
Well, perhaps not.
Because the value put upon gold should also be expected to benefit from sub-zero real rates of interest. War and terror be damned! <b>The only sure push that gold prices need is low interest rates colliding with rising inflation. This is what I have been saying to you guys for two years now)</b>
~~~~~~~~~~~~~Special~~~~~~~~~~~~~
More Financial Gloom
We’ve gotten used to reading bad news about our economy recently, but the worst is still to come. There are five more super shocks coming and these could force an all out stock market “apocalypse.”
Click here to find out what’s coming and what you can do to protect yourself…
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
And right now the world’s got that in spades.
“Figure 8,” notes Michael Lewis of Deutsche Bank in a recent paper for the London Bullion Market Association (LBMA), “illustrates the strong performance in gold returns as US real interest rates decline. We find that when real interest rates in the U.S. move below -3 percent, gold returns have tended to be significant.”
Listen up at the back! Because the Federal Reserve’s key interest rates stands at just 2.0 percent, scarcely half the rate of U.S. consumer-price inflation. And with a real return paid to cash of minus 200-basis points, you really should doubt the Fed’s true intent toward the value of money from here.
Even with the Euro trading above $1.57 on the foreign exchange markets, however — and even with the European Central Bank (ECB) promising to raise interest rates to defeat inflation next week — the Eurozone’s 320 million consumers are also suffering a 12-year record rate of wealth destruction. Here in the United Kingdom, after inflation and tax since the middle of 2003, the real returns paid to cash savings have stuck right on zero since mid-2003.
The fast-growing economy of India, meanwhile, offers negative real interest rates of 3 percent and worse. Taiwan’s real interest rates sit slap bang on zero after a rate-hike this week. And Chinese cash savers are way under water with inflation running at seven percent.
Any wonder “the number of credit cards in circulation jumped 93 percent in the year ending March 31 to 104.7 million,” as the Asia Times quotes the People’s Bank of China this week? Central banks everywhere want you to spend money, not save it, forcing the issue by destroying the value of money itself.
So any wonder that the world bid for gold — a tangible asset that can’t be inflated and can’t be destroyed — just keeps rising higher? “The purpose of money is to be a store of value,” said Dr. Marc Faber — the infamous fund manager behind the Gloom, Boom & Doom letter — to CNBC today.
(He kept laughing for some reason. No doubt he’s long gold...)
“When interest rates are negative, it destroys the wealth of honest depositors who have their money in the bank and don’t want to speculate,” Faber went on. “Now what people should do, basically, is to invest in gold. Because when it comes to action, the Fed shows no concern about inflation...
“The policies pursued by Mr.Bernanke have damaged the American public enormously by pushing commodity prices — specifically food and oil prices — much higher. And so real incomes are going down and discretionary spending is being hurt very badly.”
Gold represents wealth, in a word. Just remember that it won’t actually grow wealth, because it’s not a productive asset. Whatever else you might want from a metal, wealth preservation is the gold buyer’s best hope.
And that might prove all investors can ask if the news on inflation and rates, stocks, bonds and jobs, doesn’t start getting better.
Regards,
Adrian Ash
BullionVault
Greg’s Endnote: Inflation remains a chief concern for our current economy, but it may be even more important when it comes to the price of gold. If current inflationary measures are taken, we can expect the value of our currency to drop even further while the price of gold shoots up yet again. And how high could the price become? Read this free report to find out…
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Investing in Exchange Traded Funds
The Real Story Behind the True Gold Bull Market
OK so don't say anything....
Spider
06-30-2008, 08:56 PM
OK so don't say anything....
:wiggle:
Today, we’ll keep it short and sweet.
The Dow managed only a piddling 32-point rise yesterday; still no recovery from last week’s big losses.
Oil rose another $1.30 – to close over $141. Gold jumped $16; it will now cost you $944 to buy an ounce.
“Caught between a fragile economy and banking system and rising inflation,” writes James Saft, “Bernanke and other Fed policy makers seem to have arrived on a strategy of jawboning the dollar higher and inflation lower.
“But talk is only effective if your audience judges that you have the means and willingness to follow through.”
Based on the last few days’ trading results, Team Bernanke might as well have kept their mouths shut. Gold and oil are acting as though they expect higher rates of inflation, not lower rates. And the dollar loses value daily – though it still has not collapsed completely.
The last part of that phrase might be worth a thought or two. The dollar has fallen against other major currencies. Against the euro, for example, it is worth barely half what it was at its high, which was reached shortly after the euro was launched 10 years ago. Against gold, it is worth only about a third of what it was worth 10 years ago. And against oil...the loss has been even greater – it’s down about 80%.
Yet, the dollar still hasn’t “collapsed.”
To give you an idea of what a collapse looks like, we look out the window. The English housing market seemed to defy the California trendsetters. As U.S. houses fell in value, U.K. prices stubbornly held up.
“It’s a small island,” explained the analysts. “We have a lot of immigration from overseas,” they went on. “We like owning our own houses,” was the verdict. Said a woman in the office when we enquired: “Housing always goes up in Britain.”
It goes up until it goes down. Now, it is going down, say the London papers. And the house builders are collapsing. Comes news this morning that the U.K.’s largest house-builder, Taylor Wimpey, was cut in half yesterday after it failed to raise the money it was looking for. This morning, the shares are still falling.
Another English builder has already collapsed. Its shares are selling for less than one times trailing earnings.
You want to see collapse? Just look at what has happened to Wall Street this year. In the last 6 months, Citigroup has lost 43% of its value. Merrill Lynch is down 40%. And Lehman Bros. has fallen 68%. The Wall Street Journal says banking stocks are beginning to look like the dotcoms in 2000. The big question is whether these are just temporary corrections – caused by panic over subprime losses and a credit crunch. Or whether it is a case of another dotcom-style bubble popping; if so, the Wall Street firms have further to fall and will not recover for many, many years.
But, back to the dollar.
In the vaults of various central banks around the world lies $4.8 trillion worth of foreign currency reserves – the fruit of selling oil and widgets, mainly to U.S. consumers. And like oranges or papayas...these dollars have a limited shelf life.
We have not been invited to peek into these vaults, but we have no doubt what we would find: huge stacks of green money, with the faces of dead U.S. presidents on the notes. Americans have been the world’s biggest spenders of the last 20 years. Naturally, it is their money that makes up the bulk of those foreign currency reserves. It is their money, too, that now poses the biggest problem – not only for the people who shipped it overseas, but also for those who have it in their vaults.
By our very rough calculation the total of these reserves will hit $5 trillion before the end of this calendar year. Then, we will be talking about real money. But that is the trouble; we are not really talking about real money at all, are we?
We should have said: $5 trillion is a lot of money; too bad it isn’t real. These are dollars, remember, the faith-based currency. The same dollars that have lost approximately 97% of their value over the last hundred years...and, according to the statisticians on the government payroll...now loses value at about 4% per year.
If we take the government’s number goons at their word, and presume that the entire $5 trillion were invested in 91-day U.S. Treasury bills, currently yielding 1.63%, the holders of all this dough are losing about $120 billion per year. The fruit is starting to smell a little rich, in other words.
But it could be a lot worse. If the euro, gold, oil, or commodities rise sharply, foreign dollar holders will feel like chumps. A few may give up on the dollar and dump it on the world market in large quantities. This could cause a sudden drop in the value of the greenback...leading other holders to rush for the exits. The dollar’s collapse would bring down the whole post-’71 monetary system...and pitch the world into a much more serious problem.
Already, many dollar holders are getting itchy. Many are looking to lighten up their loads. Some are trading dollars for food...
(“Hoarding nations drive food costs ever higher,” says the New York Times .)
A few have helped recapitalize the banks. And Abu Dhabi just traded $900 million for the Empire State Building. Only about $4.7 trillion left to go.
By comparison, the entire world’s stock of gold – above ground – is only worth about $4.2 trillion.
*** What the candidates will never tell you...
As we keep saying, democracy is fine, as long as you don’t take it seriously. The candidates for the White House job are eager to show voters that they are patriotic, religious and right-thinking men. What they don’t want to do is trouble the voters with real problems.
What kind of problems?
In our view, there are three major challenges facing the United States.
1) The country is going broke.
2) The military is out of control.
3) Standards of living are falling.
What? You haven’t heard the Democrats mention these things? How about the Republicans? Nope...?
As to the first, the country is going into a recession with its finances in the worst shape ever. In fact, if you believe Eli Broad, founder of Kaufman & Broad, the big building firm, this is the worst period in U.S. economic life since World War II. In his entire life, he says he’s never seen anything like it. And he’s 75 years old.
But here, we’re not talking about the economy itself. We do that every day. Here we’re referring to public finances.
Typically, in a recession, the government tries to “lean into the wind” to counterbalance the effect of an economic slowdown. Business stops investing so much. Consumers stop spending so much. The government – according to classic Keynesian economics – tries to take up the slack by spending more.
But where does it get the money? The feds already have a deficit of about $500 billion. And a “financing gap” of $57 trillion. In the coming recession, predicts Bill Gross of the PIMCO fund, the federal deficit will go to $1 trillion. Obama will likely be the next president. He’ll be tagged with the first TRILLION DOLLAR DEFICIT. But what can he do?
Obama says he’s going to cut spending. But every economist in the nation is going to tell him not to do it – not during a recession. It will only make the recession worse, they’ll say. Instead, they’ll urge him to spend more money. They’ll remind him that the Japanese used fiscal stimulus on a massive scale – equal to 10% of GDP – and it still wasn’t enough to light a fire under their economy. A similar fiscal stimulant in the United States would mean a deficit of $1.7 trillion!
Our old friend John Mauldin is sure we will “muddle through” somehow. “We always do,” he says. And it’s true; we muddle through most things. But a man does not muddle through a hanging; nor does an economy muddle through when its government goes broke.
More on these major problems tomorrow...
*** Starbucks says it will close 6,000 stores...and lay off 12,000 employees.
*** Yesterday, we reported that revenues were down at Nevada’s brothels. Today, The Wall Street Journal reports that revenues are down at the casinos too.
Yes, it is looking grimmer and grimmer.
Until tomorrow,
alkemical
07-02-2008, 12:28 PM
Baja,
You aren't using mexican labor to get this gold to sell, are ya? :)
Hotrod
07-02-2008, 12:55 PM
I'm still buying a new boat........economy be damn'd
L.A. BRONCOS FAN
07-02-2008, 07:29 PM
I'm still buying a new boat........economy be damn'd
Named it yet?
How 'bout "Titanic?" :D
BroncoBuff
07-02-2008, 08:44 PM
The 10 Shocking Reasons for China's Pollution Problem
Gotta link on any of this baja?
Don't know if I'm supposed to post this but here you go Buff...
http://www.whiskeyandgunpowder.com/ChinaPollution.html
http://www.isecureonline.com/Reports/OST/EOSTJ602/?o=1510160&u=16297364&l=1582896
http://www.whiskeyandgunpowder.com/Report/goldcarry.html
http://www.whiskeyandgunpowder.com/Report/geothermalenergy.html
Hotrod
07-03-2008, 09:43 AM
Named it yet?
How 'bout "Titanic?" :D
LOL
I'm thinking of "The X's Replacement" :)
This thread has done quite poorly.
A reflection of the denial that plagues America today?
Hotrod
07-03-2008, 10:02 AM
This thread has done quite poorly.
A reflection of the denial that plagues America today?
Might as well have a beer and enjoy the show.
That's a good plan but some ass covering is not a bad idea as well.
I say get prepared and than enjoy the show...
alkemical
07-03-2008, 10:31 AM
That's a good plan but some ass covering is not a bad idea as well.
I say get prepared and than enjoy the show...
What do you think the beer is for?
Baja - Look man - there's only so much one can do. I realized that most people don't want and don't care. So i do for me and "mine" - what is it...."god helps those that help themselves"..... exactly....
Dudeskey
07-03-2008, 11:25 AM
What do you think the beer is for?
Baja - Look man - there's only so much one can do. I realized that most people don't want and don't care. So i do for me and "mine" - what is it...."god helps those that help themselves"..... exactly....
well.. the price of beer is going up... ;D
alkemical
07-03-2008, 11:28 AM
lol
What do you think the beer is for?
Baja - Look man - there's only so much one can do. I realized that most people don't want and don't care. So i do for me and "mine" - what is it...."god helps those that help themselves"..... exactly....
Nothing wrong with a little knowledge. I know if I walked off into the wilderness tomorrow I would survive quite nicely and that is a good feeling.
Oh and you can have my share of beer
What do you think the beer is for?
Baja - Look man - there's only so much one can do. I realized that most people don't want and don't care. So i do for me and "mine" - what is it...."god helps those that help themselves"..... exactly....
BTW didn't you make a thread devoted to solutions?
Here's one;
http://youtube.com/watch?v=gyjTU3IwU6c
Hotrod
07-03-2008, 12:07 PM
Nothing wrong with a little knowledge. I know if I walked off into the wilderness tomorrow I would survive quite nicely and that is a good feeling.
Oh and you can have my share of beer
Thats Bull **** I had dibs on your beer.
alkemical
07-03-2008, 12:19 PM
Thats Bull **** I had dibs on your beer.
LOL - i got my own beer. Baja will have corona or something. I want something that doubles as a meal. Something stoudty or doublebochy -
alkemical
07-03-2008, 12:20 PM
BTW didn't you make a thread devoted to solutions?
Here's one;
http://youtube.com/watch?v=gyjTU3IwU6c
Yes baja - and people have to "help themselves" for the solutions.
Thats Bull **** I had dibs on your beer.
OK how about I give you tequila ration.
BroncoBuff
07-03-2008, 01:14 PM
Don't know if I'm supposed to post this but here you go Buff...
http://www.whiskeyandgunpowder.com/ChinaPollution.html
Why not post links ???
The China air pollution thing is not good ... when I was in L.A. last, I read that some large "parts per million" of L.A. County's air can be directly traced to China. It's not a health threat yet, but it will be pretty soon.
L.A. BRONCOS FAN
07-03-2008, 07:14 PM
Why not post links ???
The China air pollution thing is not good ... when I was in L.A. last, I read that some large "parts per million" of L.A. County's air can be directly traced to China. It's not a health threat yet, but it will be pretty soon.
There have been reports of toxic chemicals and contaminants from China washing up on the shores of the Pacific Northwest also - saw something about it on the national news awhile back.
L.A. BRONCOS FAN
07-03-2008, 11:49 PM
<center> http://www.bartcop.com/flooding-everything.jpg
</center>
This is from an investment service I subscribe to;
Dear Daily Reckoning Reader,
They’ve known it for years...and they’ve purposely kept it from everyday people like you and me.
You see, we’ve been told time and again about the world’s supposedly massive abundance of oil. That if the United States was to run out completely...it wouldn’t truly matter because Saudi Arabia would have enough to keep us in healthy supply.
Think that’s true?
Well, dear reader, after months of research we’ve gotten to the bottom of it all.
In the report below, you’ll discover one of the biggest cover-ups of the last quarter-century...and how you could make a fortune because of it. Please keep reading for all the details.
Sincerely,
Kate Incontrera
Managing Editor, The Daily Reckoning
Dear Reader,
Those Saudi Arabians, you've gotta love 'em. First, 15 out of 19 hijackers on Sept. 11 were Saudis, but Saudi Arabia had NOTHING to do with it, or so we're told. They love us!
Now Saudi Arabia is about to drop another bombshell on us, and this one will make Sept. 11 look like small potatoes.
I never thought I'd say anything could make Sept. 11 look like small potatoes. But this does, at least when it comes to the economy.
Sept. 11 shut the markets down for a few days. When the next crisis hits, you'll wish the markets would shut down so you wouldn't have to watch the carnage.
What Bush learned behind closed doors
If some well-informed experts are right, Saudi Arabia's oil reserves are a fraction of what they've been telling us.
Why does it matter? Because everyone has believed for decades that Saudi Arabia's oil supply is virtually unlimited. That's what the Saudis have said over and over again for more than 30 years.
If an oil shortage threatens to cause a recession or a market crash, we can count on the Saudis to come through. So people think.
But in a private briefing, one of America's top oil experts told President George Bush exactly what I'm telling you. In fact, this same man was a consultant to the secretive task force that drew up Vice President Dick Cheney's energy plan in 2001.
In other words, the guy is a heavy hitter who knows the energy business.
He warned Bush that the Saudis don't have anything near the oil reserves they claim. They already pump less oil than most "experts" think, and here's the real kicker...
Saudi oil production is about to drop sharply. And it will keep going down for good.
Other experts have analyzed the numbers and come to the same conclusions. If the charges are true — and I believe they are — we could be facing...
Oil at $150 per barrel and gasoline at $8 a gallon or more
The oil is running out. It's as simple as that.
But that's not what you hear from so-called experts. If you ask government officials, our intelligence agencies and even powerful Wall Street financiers, they tell you the opposite.
They say the Saudis could quickly double their oil production from the current level if they wanted to. And given a few years, they think the Saudis could produce four times as much oil as they do now.
This is like the Iraqi WMDs all over again
The intelligence agencies and the conventional "experts" are dead wrong. The oil isn't there.
Why should you pay attention to what I think? Let me give you a good reason, and then you decide. My name is Byron King, and I'm the co-editor of Outstanding Investments.
My publication had the best track record over a five-year period of any investment newsletter in the country in 2005 and again in 2006. You can check it out at MarketWatch and its independent rating service, the Hulbert Financial Digest.
Readers who followed Outstanding Investments are up an average 25% so far in 2008 and averaged 79% last year. What's more, we did it all with stocks, not options, and I recommended very few trades. So it's worth your time to spend a few minutes and let me tell you...
Why 2007 was a year of crisis
The oil and gas shortages we've seen lately are nothing compared with what's on the way.
When the truth comes out, it will send shock waves through the world economy. Everyone will find out too late — when gasoline soars to $5 or $6 or more per gallon. I'm writing today to give you a heads-up.
The next few pages show you how to protect yourself and get rich off energy sources and technologies the world will scramble to buy at any price.
Don't be surprised if certain commodities and resource stocks soar three, five or even 10 times over.
Here are a few things you'll discover in the next
few minutes...
The most important fact — not an opinion, but a fact — that should guide your whole investment strategy.
A "minor" sector of the energy market is set to grow 17 times over. I give you the best ways to play it.
A "little" oil company owns reserves the size of Alaska's Prudhoe Bay. It's not even on your radar screen, yet the stock is already up 1,000%, and readers who listened to me are currently up about half that gain — 694%. Even bigger gains are on the way.
The coal revolution is here. It's always been cheap and plentiful. Now it's going to be clean, and soon it will even be liquid. It's also going to cause a massive shift in world power. Two American companies will profit big time.
What car will you drive in 2015? Keep reading to discover a "secret play" on the winning car technology of the future. Hint: It may run on coal. MORE: Why the Prius will be a loser. And another surprise: The car makers are NOT the ones who will reap big profits from the super-car.
Discover the fastest-growing energy source in the world. Also the cleanest and safest. America may miss out, but you can still profit.
A natural gas company offers more income than CDs do. It will probably give you a 100% capital gain to boot. But you have to know about a hidden pitfall. Keep reading...
Three wild cards could send oil well over $150 in one day. One of these events may have happened by the time you read this.
I urge you to keep reading and at least consider the steps I recommend to protect yourself. Because you need to ask...
Will Americans have to read by candlelight and bike
to work?
We will if the country dodges crucial energy choices — and time is running out. It may be too late to avoid a deep recession. It's definitely too late to avoid $100 oil, thanks to...
Saudi Secrets and Funny Math
The cupboard is bare and nobody knows it
Americans used to run Aramco, the huge oil company that manages the Saudi fields. But in 1979, the Saudis booted us out and took over.
And then a funny thing happened...
The Saudis started keeping everything a secret.
No one knows for sure how much oil they've got in the ground, or how much they produce each year or how much they could produce if they wanted to push it to the max.
It's all secret. Experts try to figure out how much oil the Saudis sell by monitoring tanker traffic in and out of the world's ports. That's how little we know for sure.
But wait, it gets worse!
After the Saudis took over, an even funnier thing happened...
Their figures for proven reserves kept going up and up and up — even though they didn't find any major new oil fields!
In 1979, the Saudis adjusted proven reserves upward by 50 billion barrels. Then eight years after that, their proven reserves magically grew by another 100 billion barrels.
Their estimated reserves increased by 150% in nine years — to a total of 260 billion barrels. And they didn't find a single major new oil field!
And here's the funniest thing of all...
For the last 17 years, they've claimed they own 260 billion barrels of proven oil in the ground. The figure never goes down, even though they pumped out 46 billion barrels during that period.
Let me see...260 minus 46 equals 260. Saudi math!
Based on these bogus figures, the Saudis claim they can produce as much oil as the world wants for the next 50 years. As recently as 2004, they claimed their reserve estimates are actually conservative.
That's why most of the world's governments and intelligence services believe the Saudis could pump 20 million barrels of oil a day if they wanted to. Trouble is, we've got no proof except their say-so.
If it were true, we wouldn't have a thing to worry about. But it's not.
It's horse hockey
Before Aramco's American owners were shown the door in 1979, they told Congress that Saudi Arabia had proven reserves of 110 billion barrels. There have been no major new discoveries, so 110 billion barrels was probably about right. And since then, about half of that has been used up.
So why do the Saudis insist everything is just fine and they have 260 billion barrels of reserves?
One reason is they wanted to discourage non-OPEC nations from looking for more oil or switching to alternatives.
It was a devious plan, and it worked perfectly.
But that wasn't the only reason the Saudis lied about their reserves. They did it because everyone does it! Everyone in OPEC, that is.
The Biggest Lie of All: OPEC's Imaginary Oil
In the 1980s, OPEC's claim of total reserves magically leaped from 353 to 643 billion barrels without a single major discovery. Industry experts call it the quota war.
You see, OPEC had to limit how much oil each member could sell, because prices were too low. The quotas were based on... each member's oil reserves!
That's right: The amount of oil OPEC would let a member pump depended on how much that member had in the ground. So it paid for OPEC members to claim the biggest reserves they could. And that's what they did.
The Saudis alone jacked up their estimate by about 100 billion. Kuwait added 50% to its reserves in one year, 1985. Venezuela doubled its reserves in 1987. Iraq and Iran doubled their estimates, too.
What's more, OPEC members did like the Saudis and kept their reserve estimates the same year after year, as if no oil were being pumped out and sold.
Everyone claimed to have a bottomless well.
Now, if you're like me, you prefer to base your financial decisions on the real world, not on a fantasy.
Meck77
07-04-2008, 01:14 PM
The panic of some is creating opportunities for others.........
That is true right now, question is how 'bad' will it get.
L.A. BRONCOS FAN
07-04-2008, 07:30 PM
The panic of some is creating opportunities for others.........
Typical republican spin. :oyvey:
http://www.bartcop.com/oil-bast-champagne.jpg
I can't spend my days worrying to death about the end of it all. To much doom and gloom for me. The kitchen is full of food, fridge full of cold beer, money in the bank and FOOTBALL season is almost here. Enjoy!
If the people of this country wanted to truly change things they would elect true fiscal conservatives. Obviously they don't so times will get tough until we clean it up. So be it. I'm going to enjoy myself as much as possible in the mean time.
I can't spend my days worrying to death about the end of it all. To much doom and gloom for me. The kitchen is full of food, fridge full of cold beer, money in the bank and FOOTBALL season is almost here. Enjoy!
If the people of this country wanted to truly change things they would elect true fiscal conservatives. Obviously they don't so times will get tough until we clean it up. So be it. I'm going to enjoy myself as much as possible in the mean time.
ya know you can assess the situation as glum and still enjoy the day. I don't know why so many here think if one has a dismal outlook they automatically are bummed out all the time, it's not the case.
Meck77
07-05-2008, 02:09 AM
I can't spend my days worrying to death about the end of it all. To much doom and gloom for me. The kitchen is full of food, fridge full of cold beer, money in the bank and FOOTBALL season is almost here. Enjoy!
Amen. :)
Joel Bowman, reporting from Dubai in the Persian Gulf...
No longer is the inflation virus merely a mild cough concentrated in countries with weak economic immune systems. Over the last few months, the ailment has spread throughout the globe, infecting more peoples than not. In many cases, the prognosis is more than just bleak...and for some, the outbreak may be terminal.
The pathogens - let's call them U.S. dollars - have multiplied at a rate that has surprised most doctors and, now that they have attacked the host's bloodstream – we'll call that oil – the rate of contagion has increased exponentially.
Oil's temperature boiled over $146 this week for the first time ever, exasperating the symptoms around the world. According to a report by Morgan Stanley, "The percentage of the world's population living under double-digit inflation is 42 per cent. Six out of the 10 most populous countries have inflation running at more than 10 per cent as rising food and fuel make up the largest share of the population's spending."
Here in the Middle East, the left ventricle that delivers oil to the globe's circulatory system through the Strait of Hormuz, the infection has reached alarming levels. In Saudi Arabia, Qatar and the UAE, figures are running at multi-decade highs...and that's just the official numbers.
High energy prices affect everything from the cost of getting your lettuce to the grocery store to the total on your home heating bill. From surcharges on flights to shipping and handling costs, from rice in China to bananas in Australia, everything is more expensive when priced in a measure of shrinking value.
While Mr. Market rests on this Independence Day, we thought it might be interesting to offer some "boots-on-ground" commentary from the Rude readership regarding the severity of the situation in your own backyard. Read on for the details...
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Reader Nicole Paluszek, reporting from Hawaii...
Regular gasoline: $ 4.52
Propane: I don't have the exact figure at hand but it recently shot up so violently that most people now go and refill their tanks only halfway, not having enough cash on hand to fill them right up.
Store brand milk: (luckily the cheapest is the best because it's from local, grass-fed cows) $ 4.99
Any bread fit for consumption: over $ 5.00
Rice is up 50-100% from same time last year.
A positive side effect is that fresh local produce has become a lot more competitive vs. the stuff imported from the mainland with its high input and transportation costs.
The real estate market, which was booming until end 2006, is stagnant but the prices are still relatively slow to come down due to many owners simply refusing to face reality. Weekly closings can be counted on one hand. When the prices finally do collapse I hope to be ready to scoop up some land.
I only keep enough cash for basic expenses, every spare penny goes into productive assets - tools, machinery, water purification and solar energy equipment, etc. and precious metals. I expect to be wiping my a** with dollar bills by the end of the year, as being cheaper than buying toilet paper.
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Reader Joe Miller, reporting from Alberta, Canada...
I am an avid and voracious reader of all things financial. I recently upgraded my membership and am now a member of the Agora Financial Reserve. Since you asked in your newsletter for information regarding housing prices and increasing prices for commodities, I thought I would let you know how things are going in your northern neighbor, Canada.
I'm a born and bred Albertan with my residence in Edmonton, Alberta. I am writing this from my office up at CNRL, our latest oilsands plant soon to be producing synthetic crude (September – best guess). I am only in Edmonton for a few days every month, but I have noticed, every time I get back, that gas prices are climbing higher and higher. Right now regular gas (I have to burn premium in my BMW) is $1.40/liter. Just last fall it was 78 cents/liter.
Our house prices have not suffered quite as badly as some of the American states, at least not in Alberta. There are no mass defaults, and the Canadian banks have not granted loans for property that has not been appraised by a government-regulated appraiser, who are usually stingy in their assessments.
My own home was appraised at $362,000 in July 2007, and this year is appraised at $280,000, so there was a brief spike in housing prices where many people took advantage of the spike to sell, and a few adventurous souls thought it wise to speculate and purchased unfinished homes, condos, etc. expecting to sell for massive profits. As all good things come to an end, so did the spike in housing prices throughout most of the province. There are now many more sellers than buyers, and housing prices have dropped to a more reasonable level. Except for housing in Fort McMurray, that is. Homes up here continue to increase at unreal rates, due to the severe shortage of accommodations. A house trailer (modular home) on a rented lot is at minimum $225,000, if you can find one. An actual house is selling for $400,000 to $800,000 depending upon age, etc.
Keep in mind; these are not mansions but just regular homes from 1100 to 2400 square feet. Studio condos are available for $340,000, but you have to buy through CNRL to get one. If you want a new 3 bedroom home here, $750,000 is what it costs, and once again, you have to be employed by CNRL to get one in their new development. There is a slight advantage, as if you purchase a home while an employee, they provide a subsidy of $1500/month for up to 5 years.
I can't comment on food prices, although I have noticed the price of meat seems to be considerably higher than last year. My room and board are primarily company supplied, so I don't buy groceries all that often, except for weekend BBQ's on my infrequent days off.
Well good investing to you, and happy Canada Day!
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Reader Damon Daigle, reporting from Houma, Louisiana...
Down here in Cajun country it is just crazy. We are the ones down here in south Louisiana that supply the rest of the country with 20% of their energy needs. We are the roughnecks, drillers and roustabouts and everyone else who makes the oil and gas come out of the ground.
We are sort of counter-cyclical to the rest of the nation. In 1998 we were pretty bad off with oil being so low. 50,000 people lost their jobs. Now, however it is crazy. Homes prices are skyrocketing. People can jump job to job and get hired on the spot. Pay increases happen several times a year.
In the oil patch, there simply not enough equipment and trained personnel to do what all the oil companies want to do. Oilfield jobs generally pay quite well. A new hire or "worm", roustabout will work half the year on a rig, and expect to make $40,000 starting off.
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Reader Lee, reporting from along the Tennessee River...
One of the blessings we've become complaisant about in the Tennessee River valley has been an abundance of cheap energy courtesy of the TVA. Yet many of my friends and neighbors have not adjusted to the three recent rate hikes and the next one coming this July.
Some members of the local county planning commission scoff that future power availability is even a concern. This attitude prevails despite the warnings from our local rural electrical co-operative and the fact that TVA had to shut-down the Browns Ferry nuclear reactor for a couple of weeks last summer due to environmental concerns (the Tennessee river water temperature was too warm to allow discharge of water after it had been run thru the cooling towers. No cooling – no power generation!)
As for me, some of my economic rebate paid for a little more insulation in the attic. And with the recent mild night temperatures, I've thrown the windows wide open to flood the house with that 60 degree (F) cool mountain air and then watched the thermometer each morning to decide when to close up the house.
Home prices aren't falling much here but sales are stagnant. And more folks are growing a garden – or a bigger garden this year.
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And From Reader Gary, reporting from Anytown, U.S.A....
If Americans would take some of what they spend on eating out, shopping for pleasure, and other discretionary expenses (how did we ever get along without cell phones, HDTV, 7 year payments for new cars) and buy one or two oil contracts, they could at least hold their own inflation wise. Hell, they can even have used the home equity loans they took out and tripled their money so far.
So many people are great at whining about conditions but dense as lead when it comes to thinking for themselves beyond the moment. They would rather cry in the dark than light a candle.
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[Rude Endnote : Your junior editor (perhaps mistakenly) scored a ticket to Vienna for the weekend to attend the inaugural meeting of the Society for Austrian Economic Thought. We'll be sure to pass on the highlights from the discussions when we report from the city next week.
Until then, enjoy your 4th of July holiday and, if you're celebrating along the Chesapeake, enjoy a Maryland blue crab for us.
Cheers,
Joel Bowman
P.S. Oh, and just remember, applications for membership to the Agora Financial Reserve close on Monday night. If you're interested in the program, it might be a good idea to get in early and avoid the holiday weekend rush. Details here