- The dramatic declines in the costs of oil production will be boosting supply at the very moment that demand is falling.
- Over the past decade I’ve addressed what I call Head-Fakes in the cost of oil/fossil fuel: even though we know the cost of extracting and processing oil will rise over time as the easy-to-get oil is depleted, oil occasionally plummets to such low prices that we’re fooled into thinking it will remain cheap for a long time to come.
- This drop in price is a head-fake, because over time the depletion of the cheap-to-extract oil will push global prices higher.
- Why does this matter? Economists have noted for decades that spikes in energy costs tend to trigger recessions for the obvious reason: the more households and businesses spend on energy, the less they have to spend on goods and services.
Read more at:Is Another Oil Head-Fake Brewing?
- Two days ago, we were the first to point out that in a striking case of data revisionism, the Bureau of Economic Analysis, in an attempt to retroactively boost GDP, revised historical personal incomes lower, while adjusting its estimates of personal spending much higher, resulting in a sharp decline in personal savings, which as a result, was slashed from 5.5% according to the pre-revised data, to just 3.8%, in one excel calculation wiping out 30% of America’s “savings”, and cutting them by a quarter trillion dollars in the process, from $791 billion to $546 billion, a level last seen just before the last US recession.
- Today, SocGen’s grouchy bear Albert Edwards, commented on this drastic revision which disclosed that contrary to previous conventional wisdom that US consumers had been hunkering down in recent years and saving up for a rainy day, the surge in spending in late 2016 may have been the only catalyst that prevented the US from collapsing into outright contraction. Edwards also reminds us that such a dramatic savings slump last occurred in 2007, just before all hell broke loose.
Read more at:Albert Edwards: “The Last Time This Happened Was In January 2008”
- “While the US and the UK have been mired in political chaos this year, the EU has enjoyed improved economic conditions and some political windfalls. The question now is whether this good news will inspire long-needed EU and eurozone reforms, or merely fuel complacency – and thus set the stage for another crisis down the road.”
- Philippe Legrain, Project Syndicate
- This week The Institutional Risk Analyst takes a look a the recent reports out of the EU regarding a proposal to “freeze” the retail accounts of failing European banks. The original story in Reuters suggests that our friends in Europe actually think that telling the public that they will not have access to their funds, even funds covered by official deposit insurance schemes..
Read more at:Europe’s Banking Dysfunction Worsens
- For decades, in discussing the ever-increasing hegemony of the world’s principal governments (US, EU, et al.), I’ve been asked repeatedly, “When will the governments understand that this obsession they have to become all-powerful is not in the interests of the people?”
- The answer to this question has also remained the same for decades: never.
- Although most all thinking people will readily admit that they regard their government (and governments in general) to be both overreaching and corrupt, they somehow attribute political leaders with a desire to serve the people. This is almost never true.
- In my own experience in working with (and against) political leaders in multiple jurisdictions, I’ve found them to be remarkably similar to each other in their tendency to be shortsighted, self-aggrandising, and almost totally indifferent to the well-being of their constituents.
Read more at:The Race Against Time