Financial topics

[Higgenbotham]

OPEC will stand by its decision not to cut crude output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, the United Arab Emirates’ energy minister said.

http://www.bloomberg.com/news/2014-12-1 ... to-40.html

John, I think you might say this is what deflation looks like. It is an attitude.

[Higgenbotham]

Higgenbotham -- it is even more complicated --- Look at MBA's -- they take over a successful company, use theories and bean counting, pay little attention or have little understanding of the core business and are concerned about their "pay" --- the business goes under -- look at what is going on at Sears. --- MBA's are a deadly plague.

What I'm really saying is people look at the surface, what is obvious and say, oh, if it wasn't for those fraudsters at the top like Eddie Lambert everything would be OK. Vultures like Eddie Lambert can only exist in a system that is fraudulent from top to bottom.

Meanwhile, under the surface, the fraud is pervasive, like termites or cockroaches. I think there's a saying - for every cockroach you see there are 100 more you can't see. I think of it like Gen Xers work relentlessly, tirelessly, pervasively, 24 hours a day, 7 days a week, 365 days a year, for years and years, millions and millions of them, conducting fraud. Eventually the system collapses in a dead heap like the foundation of a house that is eaten out by termites.

If anybody thinks 20% or 50% of the large companies in America are reporting fraudulent numbers they can't be looking in the right place. There can't be a large company in America anywhere that is reporting their true condition. Not even one. The only question is how much are the profits being overstated. As I have said many times, they are being overstated infinitely because this entire system is operating at a loss.

The debt is making up the difference and when the debt stops growing the entire sytem will collapse, all the losses will be exposed and the stock market will be shut down before it goes to its intrinisic value, which is zero.

[gerald]

Higgenbotham -- it is even more complicated --- Look at MBA's -- they take over a successful company, use theories and bean counting, pay little attention or have little understanding of the core business and are concerned about their "pay" --- the business goes under -- look at what is going on at Sears. --- MBA's are a deadly plague.

What I'm really saying is people look at the surface, what is obvious and say, oh, if it wasn't for those fraudsters at the top like Eddie Lambert everything would be OK. Vultures like Eddie Lambert can only exist in a system that is fraudulent from top to bottom.

Meanwhile, under the surface, the fraud is pervasive, like termites or cockroaches. I think there's a saying - for every cockroach you see there are 100 more you can't see. I think of it like Gen Xers work relentlessly, tirelessly, pervasively, 24 hours a day, 7 days a week, 365 days a year, for years and years, millions and millions of them, conducting fraud. Eventually the system collapses in a dead heap like the foundation of a house that is eaten out by termites.

If anybody thinks 20% or 50% of the large companies in America are reporting fraudulent numbers they can't be looking in the right place. There can't be a large company in America anywhere that is reporting their true condition. Not even one. The only question is how much are the profits being overstated. As I have said many times, they are being overstated infinitely because this entire system is operating at a loss.

The debt is making up the difference and when the debt stops growing the entire sytem will collapse, all the losses will be exposed and the stock market will be shut down before it goes to its intrinisic value, which is zero.

My comment about MBA's is in the context of today's environment. ( I do not want to knock education, though there is much wrong in education. ) The issue or maybe it is the general attitude of using an MBA and not just MBA's but degrees to maximize personal return and the heck with principles, honesty and long term consequences. --- From personal experience principles and honesty can be costly in the short run but very beneficial in the long run.


The FOUNDERS of many successful companies had guiding principles that were to the benefit of customers and hence they were successful. This attitude seems a bit rare today.

cheers

[John]

> OPEC will stand by its decision not to cut crude output even if
> oil prices fall as low as $40 a barrel and will wait at least
> three months before considering an emergency meeting, the United
> Arab Emirates’ energy minister said.

> http://www.bloomberg.com/news/2014-12-1 ... to-40.html

> John, I think you might say this is what deflation looks like. It
> is an attitude.

This morning I was reading an analysis of the US fracking industry
that may shed some light on what's going on.

Even though the price of oil is plummeting, US fracking production is
going to continue increasing, though perhaps slightly less rapidly than
has been previously predicted.

The reason that there's any decrease at all is because the fall in prices
make it uneconomic to invest in new wells. These wells wouldn't come online
until next year anyway, so that explains why there's any reduction at all
in the forecasts for future production.

But the existing wells are backed by hedge funds and junk bonds that are
now in distress because of the fall in prices. As a result, production
in the existing wells will actually be increased as much as physically
possible, to generate revenue at low oil prices to make margin calls for
these junk bonds.

It occurs to me that the Saudis may be in a similar situation. They may
also have shaky investments backing up their oil wells, and so they too
would have to keep production as high as possible to pay off their own
margin calls.



The same thing happened in 2008-2009:



From US Energy Information Administration (EIA)
WTI = West Texas Intermediate

http://investmentwatchblog.com/what-the ... tchBlog%29

http://www.eia.gov/todayinenergy/detail.cfm?id=19171

[Higgenbotham]

It occurs to me that the Saudis may be in a similar situation. They may
also have shaky investments backing up their oil wells, and so they too
would have to keep production as high as possible to pay off their own
margin calls.

I was trying to think about how that could be true because I think the Saudis can pump oil at $40 and still make a profit. I seriously doubt Saudi Aramco is in much debt, if any. But here's how it could be true. The Saudi empire consists of more than just their oil business. They have a restive population to take care of. They have built an infrastructure based on high oil prices and/or oil profits that has to be maintained to keep their empire afloat. But the Saudis and OPEC have made it clear that they think they can win a price war with Bernanke and Company. By that I mean Bernanke and Company floated a lot of bad debt at artificially low interest rates to cheapen the cost of production in the US fracking industry and hence create an unsustainable production bubble.

http://oilchangeproject.nationalsecurit ... ow-of-oil/

Saudi Oil Minister Ali al-Naimi remarked in 2008 that the cost of producing a barrel of Saudi oil was likely less than $2, compared with an average $10-$15 in the U.S. Meanwhile, the selling price has fluctuated from $80 to over $100 per barrel.

Obviously, these numbers are way too low but I think still a good benchmark for comparison.

http://qz.com/311179/the-real-reason-wh ... -us-shale/

Seems right.

[aedens]

In 2018 the book will reopen. Will they exist in 2018 at $40.

Nobody but a few listened when we forwarded way over 15 percent to much production. This was the noted when we listed it here when Dow was shot down over there
to provide assistance on fluid catalytic cracking. 1+1=2+3=5+8=13+23=

We are moving forward, no one here is surprized.

https://www.youtube.com/watch?v=KJH82SPhiZM

What you have said in the dark will be heard in the daylight, and what you have whispered in the ear in the inner rooms will be proclaimed from the roofs. lk12,3

10 kings, one hour

a from the grain colony

Mark 8:18
Ezekiel 12:2

[at99sy]

In regards to the fracking industry.
My brother and his wife got laid off three weeks ago. They were working outside of San Antonio. Their job was to maintain a gate to several frack sites and moved to new sites about every three to four months. All they did was record plate numbers and make sure that noone got onto the site that wasn't supposed to be there. They lived in their RV and it was a 24/7 job so not much free time. They are both retired more or less but not quite old enough to draw SS. They were getting paid $400 per day to raise a gate.
All of the fracking sites that were not yet producing have been shut down in the region. Once oil went under $70 it was tits up. word is they are not going to ramp up again until the price is sustained above $70 again.

For now they are on their property in AZ chilling and working on the homestead/bunker.

Interesting how the slide in oil started almost in lock step with the sanctions against Russia. now the Ruble is sinking faster than the O-trains popularity ratings.

Amazing how coincidental all this is. I seem to recall a few times in history where nations went to war while under economic distress. At least modern civilized society is above such barbarity. <sarcasm off>
Cheers

sy

[gerald]

In regards to the fracking industry.
My brother and his wife got laid off three weeks ago. They were working outside of San Antonio. Their job was to maintain a gate to several frack sites and moved to new sites about every three to four months. All they did was record plate numbers and make sure that noone got onto the site that wasn't supposed to be there. They lived in their RV and it was a 24/7 job so not much free time. They are both retired more or less but not quite old enough to draw SS. They were getting paid $400 per day to raise a gate.
All of the fracking sites that were not yet producing have been shut down in the region. Once oil went under $70 it was tits up. word is they are not going to ramp up again until the price is sustained above $70 again.

For now they are on their property in AZ chilling and working on the homestead/bunker.

Interesting how the slide in oil started almost in lock step with the sanctions against Russia. now the Ruble is sinking faster than the O-trains popularity ratings.

Amazing how coincidental all this is. I seem to recall a few times in history where nations went to war while under economic distress. At least modern civilized society is above such barbarity. <sarcasm off>
Cheers

sy

Many countries go to war because their leaders are sociopaths. Same as it ever was.

[aedens]

revenues up over 153%, stock degraded

http://calteches.library.caltech.edu/51/2/CargoCult.pdf

dislocations are pronounced - the comment they walk in and

get free money is correct

https://en.wikipedia.org/wiki/Junk_science

it will bite them in the ass

================================================

[aedens]

The principal questions before the convention became whether the states should remain sovereign, whether sovereignty should be transferred to the national government,
or whether a settlement should rest somewhere in between.

The question of nation builders cannot be a question anymore going forward. As warned in Daniel, any Ten Kings will only be given a Time upon his footstool.

There minds are corupt.