PowerSwitch

If the global loss of banks' confidence in the credibility of the deals they've made
is founded on a recognition of PO's inevitable erosion of society's economic growth,
then no sums of taxpayers' money can restore that confidence and so resolve the issue.

OTOH, if this is just a fluke downturn due to banks' recognition of the absurdity of unregulated capitalism,
then vast sums injected, plus an end to the unhelpful Thascist banditry-doctrine, might be effective.

Given the unprecedented run-up of oil prices this decade, and the time-lagged bursting of the US housing bubble,
which initiated the global banking crisis,
there must surely be a case to be made for the former explanation.

So can anyone provide a graphic description on the lines of:
the sequence of oil prices, mortgage foreclosures, and, perhaps, the Libor (or some better indicator) ?

That could be a really informative graph.

Regards,

Billhook

Correlation does not prove causation

Agreed.

But, since we're dealing with an issue of confidence here,
it is surely worth assembling the components of that potential correlation, and testing them ?.

I rarely see a political policy decision that is other than a matter of judgement, rather than simply reflecting absolute proof.

Regards,

Billhook

A good starting point for the entirely possible connection between depletion of cheap energy and the current economic 'crisis' could be a graph of global fossil energy extraction compared with total energy required (from any source) to extract that energy, over time. The two lines are presumably converging.

Has anyone done such a graph, perhaps at The Oil Drum? It's not a site I know my way around, maybe someone here can help. Maybe the figures are unobtainable.

Emordnilap -

the stunning wonders of 'G Brown's' solution to the financial crises seem to have worn off.
The 3 European & 2 US exchanges were down by an average of 7.26% today.

Given that they were falling from an extremely low base - perhaps 65% of Oct 07 (?)
the idea that the falls are simply due to expectation of recession seems rather simplistic.

The idea that the financial system remains disfunctional and has novel intractable problems still to be unveiled,
makes far more sense to me.

My interest in identifying an oil-depletion trigger to these events stems from a conversation with a banker last year.
His view was that as soon as PO became potentially credible as an event, rather than just a future prospect,
its looming energy-price hikes made a recession inevitable, at which point the housing market would slump.
And with foreknowledge of that slump, the loan-books were then reviewed and the flow of new money curtailed,
thus triggering the start of that slump and, subsequently, the intensifying loss of systemic confidence.

In this sense, the start of a plateau of global oil production in 05 was sufficient information to trigger the end of the economic boom.

However, proving such a thing, with a view to re-orienting efforts at economic stabilization,
is certainly beyond my capacities, or my free time for that matter.

Your suggestions as to a starting point for research may well be right -
I just hope there's someone willing and able to carry out the work.

Regards,

Billhook

Billhook wrote:In this sense, the start of a plateau of global oil production in 05 was sufficient information to trigger the end of the economic boom.

That's remarkably like a conversation I had with a senior exec of the one of the biggest shipping brokers in May 2005, who surprised me by saying that Peak Oil was right then. In terms of rate of oil movement in tankers, his line of business, he was spot on. He retired that year, knowing it was best to quit at the peak.

If the global loss of banks' confidence in the credibility of the deals they've made is founded on a recognition of PO's inevitable erosion of society's economic growth,
I dont think it is. They're looking at their lies about their own potential liabilities and crapping their pants at the thought of what everybody else must be holding. I don't think 'oil' has entered their thoughts for a second.

then no sums of taxpayers' money can restore that confidence and so resolve the issue.
Your conclusion is I think correct, even if your premise isn't

OTOH, if this is just a fluke downturn due to banks' recognition of the absurdity of unregulated capitalism,
The American IB's (and I suspect most other banks) were until their recent demise quite happy with 'unregulated capitalism' I think they saw it more as a 'nice little earner' than 'absurd', having been heavily involved in achieving that deregulation in the first place. They would, I'm sure, love another unregulated bubble as a get out of jail card - at least till the next bust.

then vast sums injected, plus an end to the unhelpful Thascist banditry-doctrine, might be effective.
I doubt it. The central banks have been providing huge blood transfusions for a cancer victim. Wrong treatment. What's actually needed is radical surgery. The rot has to be excised before it completely consumes the victim, as it has been since last August. Unfortunately nobody has he political stomach for that course of action.

Given the unprecedented run-up of oil prices this decade, and the time-lagged bursting of the US housing bubble, which initiated the global banking crisis,
Thats the proximate cause. I've got a reasonable line of argument which goes back to the cost of the Vietnam war, and unreasonably speculative but quite amusing one back to Thomas Jefferson and Alexander Hamilton.

there must surely be a case to be made for the former explanation.
Ha! I've lost track now. Must be time to go to bed.

So can anyone provide a graphic description on the lines of:
the sequence of oil prices, mortgage foreclosures, and, perhaps, the Libor (or some better indicator) ?
God no! Far too much like hard work.

That could be a really informative graph.
or at the very least a useful item for idle but amusing speculation.

Regards,

Billhook

Hasta la proxima, Bill baby!

Surely we must beware of drawing any conclusions from the 'chaotic' stock markets.

Let's find other measures of the health of the doctrine of economic growth.

Historians, sociologists, statisticians might just reach a synthesis but economists? Surely not.

biffvernon wrote:

Billhook wrote:In this sense, the start of a plateau of global oil production in 05 was sufficient information to trigger the end of the economic boom.

That's remarkably like a conversation I had with a senior exec of the one of the biggest shipping brokers in May 2005, who surprised me by saying that Peak Oil was right then. In terms of rate of oil movement in tankers, his line of business, he was spot on. He retired that year, knowing it was best to quit at the peak.

Hey do you suppose you've stumbled on R**'s true identity ?

Billhook wrote:since we're dealing with an issue of confidence here,

This is an issue of Toxic Debt. The only things banks have lost confidence in is the ratio of Toxic / Non Toxic debt that their counterparts may be holding.

Pyramid schemes don't require an external threat (oil price spike, for example) to collapse of their own accord.

I doubt the bankers would even care about peak oil, that is, even IF they are aware of it.

GD wrote:

Billhook wrote:since we're dealing with an issue of confidence here,

This is an issue of Toxic Debt. The only things banks have lost confidence in is the ratio of Toxic / Non Toxic debt that their counterparts may be holding.

Pyramid schemes don't require an external threat (oil price spike, for example) to collapse of their own accord.

I doubt the bankers would even care about peak oil, that is, even IF they are aware of it.

It sounds from your sweeping generalisation about "the bankers" and their lack of concern for PO
as if you're opinion reflects prejudice toward, rather than personal contact with, people who are bankers.

Over the years I've got to know eight such individuals personally, ranging from some of the radical fringe, such as those behind Triodos,
through to very old money such as De Rothchilde and the Drummonds.

I've not found these people to be either stupid or ignorant, on the contrary, they've tended to be very well informed,
and a dynamic of the singular importance of PO is taken very seriously indeed.
Hence the information that I reported above.

And if that information doesn't fit with your preconceptions, well maybe they are in need a review ?

It may perhaps be worth adding a little background here: back in the '80s, two such people
were pivotal in the successful campaign to prevent the building of Fawley B, the largest coal-fired power station in Europe.
Without their diverse contributions, we'd probably have failed. These are people we're writing of, not cyphers.

You declare that a pyramid scheme can "collapse of its own accord "
and that the present collapse of confidence is merely "an issue of toxic debt", as if this settled the matter,
but some of those who are players within the banking industry say that the initial collapse of confidence in the housing bubble
was triggered by the recognition back in 2005 that PO might be occurring.

So do you have any more cogent argument to refute the detailed views of a professional merchant banker than "It was just a fluke" ?

It seems as if you wrongly assumed my post was making a generalized claim of PO's current sway,
and so overlooked the fact that the report describes PO's actual discrete destabilizing role.

That the information of PO is loose within the global financial industry seems very obvious -
For instance, see Shlessinger's remarks on "The Peakists have won."

What is in question is the extent to which that information already negates the possibility of confidence in the return of BAU economic growth
if it is assumed that the derivates fiasco can somehow be managed.

I note that Pickens is talking of $150/bbl returning within a year . . . .



Regards,

Billhook

Pablo -

I would concur with your conclusion that the stock markets are in a chaotic state,
but what is at issue is what brought them to that state,
and what is (fundamentally) hindering the possibility of the restoration of normalcy.

As an ideology of subjugation and exhaustion, I'm afraid I doubt that one can measure the health of the 'doctrine' economic growth.

Regards,

Billhook

Billhook wrote:Pablo -

As an ideology of subjugation and exhaustion, I'm afraid I doubt that one can measure the health of the 'doctrine' economic growth.

Regards,

Billhook

Well, one can pronounce it dead or at least in its death throes!

In case you happen to get a chance to apply it,
I feel I should pass on the fact that traditionally,
the stake that needs to be driven through the heart of this vile entity
to ensure its demise,
should be made of elm wood !

Regards,

Billhook

Elm wood!

The loss of Elms from our landscape happened before I had an interest in trees - how I would love to see them back!