The real capitulation

[blazespinnaker]

"Policy makers also should ``look very hard'' at how to minimize the creation of asset bubbles that damage the economy and financial system when they burst."

- Ben Bernanke, Oct '08

http://www.bloomberg.com/apps/news?p...wiA&refer=home

[Tulpen]

Re: The real capitulation

Right, it like Ghandi said: First they ignore you, then they laugh at you, then they fight you, then you win

[Chomsky]

Re: The real capitulation

I prefer Schopenhauer:

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.

[don]

Re: The real capitulation

Unfortunately, "Wash...Rinse...Repeat" will be added to the list.:mad:

[FRED]

Re: The real capitulation

This means there cannot be any more bubbles. The machine is broken for at least a generation. Clear confirmation of The Last Bubble.

[GRG55]

Re: The real capitulation

This means there cannot be any more bubbles. The machine is broken for at least a generation. Clear confirmation of The Last Bubble.

"Given the current state of our economy, the only thing worse than a new bubble would be its absence"

[sadsack]

Re: The real capitulation

"Given the current state of our economy, the only thing worse than a new bubble would be its absence"

I think you mean :eek: . . .

Time to break out the kevlar umbrellas, 'cause there's an awful lot of shite to be hitting the fan . . .

[Supercilious]

Re: The real capitulation



I know that probably Fred has already calculated the mean price of Dow, but still.... it's an interesting perspective.

[Tulpen]

Re: The real capitulation

I know that probably Fred has already calculated the mean price of Dow, but still.... it's an interesting perspective.

These graphs are all great but one could argue that the Dow Jones Industrial is not the best measure of long term trends. It's only 30 stocks, it is price weighted, frequently rebalanced and companies go in and out (slackers get replaced with stronger companies).

[GRG55]

Re: The real capitulation

These graphs are all great but one could argue that the Dow Jones Industrial is not the best measure of long term trends. It's only 30 stocks, it is price weighted, frequently rebalanced and companies go in and out (slackers get replaced with stronger companies).

...and, despite all these flaws, it'll probably still overshoot to the downside. :p

[jimmygu3]

Re: The real capitulation

This means there cannot be any more bubbles. The machine is broken for at least a generation. Clear confirmation of The Last Bubble.

Fred,

So the Alt Energy / Infrastructure bubble can't happen anymore? If this is the case, what circumstances changed that iTulip was not expecting? Seems like things are going according to your predictions.

Jimmy

[Spartacus]

Re: The real capitulation

iTulip has a list for the requirements for a bubble

1 tax incentives (and/or other governmental support)
2 free flowing credit
3 exuberance for a particular industry to suck credit there (sometimes this is just a story to cover for the above)
couple of others, but I think these were the important ones.

Eric is now saying that #2 will be gone for a generation

Fred,

So the Alt Energy / Infrastructure bubble can't happen anymore? If this is the case, what circumstances changed that iTulip was not expecting? Seems like things are going according to your predictions.

Jimmy

[Guest]

Re: The real capitulation

Funny how the peak in global oil production (2005-2010) has sort of quietly faded away as any sort of issue here, hm? USD says "hey oil, I don't want to play the inflate you game any more" and oil just packs up the circus tent and goes home. What a concept, the mighty US dollar taming the petroleum beast.

You guys think with the world in an economic contraction that date has been "cancelled" and the demographics will therefore fail to meet that appointment? I think it's safe to surmise anyone who's fallen unwittingly into that notion today will be proved flat wrong in a very short while. :p

Weak global industrial growth will arrive right on time and regardless, to that appointment, give or take the next two or three years! Just when everyone has gotten all comfy in their global deflation armchairs and broken out the popcorn to watch the grand deflation show, the channel will get flipped right back to that "poxy little oil supply thingy".

Is anyone aware that global net oil consumption is still drifting up this year, or does that idea sound preposterous?

Plenty of time meanwhile to let the "bubbly oil" and deflation pundits frolick around a little. Give them their allotted time rolling around in the disinflationary clover. After the channel flips, there will not be any more re-runs of softness in that particular market. Ditto anything mining related!

Ah, the comfort of temporary disinflation produced myopia is sweet. ... Humans project the next three months out for years in a reflexive attempt to project their future. Better look at the global production growth numbers in petroleum real closely fellas.

The notion of a persistently disinflationary world begins to look more like a hologram when you match up the global net consumption trend vs. the massive beginnings of decline wich global production maps out, plotted over the next five years - just a couple of years away now, before the gaps start becoming gapingly larger, and getting persistent.

[kelton56]

Re: The real capitulation

Funny how the peak in global oil production (2005-2010) has sort of quietly faded away as any sort of issue here, hm? USD says "hey oil, I don't want to play the inflate you game any more" and oil just packs up the circus tent and goes home. What a concept, the mighty US dollar taming the petroleum beast.

You guys think with the world in an economic contraction that date has been "cancelled" and the demographics will therefore fail to meet that appointment? I think it's safe to surmise anyone who's fallen unwittingly into that notion today will be proved flat wrong in a very short while.

Oil at $80 and NG under $7 now could result in supply destruction as drilling programs are scaled back or cancelled, and Alt-E loses its profit potential. Energy demand now is mistakenly perceived to be flat or declining, as we have seen, but easily can re-ramp up worldwide, and much faster than new supply sources can be restarted once ended.

The massive global liquidity/credit/solvency crisis also will make energy discovery and drilling programs more difficult to finance, further contributing to supply destruction.

[Supercilious]

Re: The real capitulation

Oil at $80 and NG under $7 now could result in supply destruction as drilling programs are scaled back or cancelled, and Alt-E loses its profit potential. Energy demand now is mistakenly perceived to be flat or declining, as we have seen, but easily can re-ramp up worldwide, and much faster than new supply sources can be restarted once ended.

The massive global liquidity/credit/solvency crisis also will make energy discovery and drilling programs more difficult to finance, further contributing to supply destruction.

The old story during oil busts is that resources producers sees their profits squeezed an being starved for cash the begin to extract more and more (cartel cheating becomes pretty common). I think GRG55 can explain this better than me.