No matter which camp you fall into with respect to the Peak Oil issue, you must admit that the current high oil prices could spell economic doom for
It has been reported here
that the price of oil has reached yet another new high today
of over $43 a barrel. The BBC reports the same story here
and points out that there is
little to no spare capacity to help ease prices. Even before Yukos? problems, the price of oil was hovering around $40 a barrel. (P.S. I also
recommend you do some research on Matthew Simmons, a Key advisor to the Bush Administration, Vice President Cheney's 2001 Energy Task Force and the
Council on Foreign Relations. An energy investment banker, Simmons is the CEO of Simmons and Co. International, handling an investment portfolio of
approximately $56 billion.)
There is an excellent article titled "This Is As Good As It Gets
summing up the current economic situation in the US. Near the end of the article is a graph relating to DEBT. There are two very large peaks on the
graph. One is right now. I'll give you one guess when the other one was (hint: look at thread title).
I believe that there is an end-game in play. The beginning of the peak oil crisis is keeping prices over $40 per barrel. That kind of price creates
INFLATION and the FED is responding with interest rate hikes. I don't see the price of oil easing anytime soon, certainly not under $30 where it
needs to be long-term to sustain our current economy.
So when inflation starts to take its toll and interest rates spike, there is going to be a major debt crisis.
With the cost of living going up, and interest rates preventing borrowing, cash strapped consumers cease to buy big ticket items. As the crisis
deepens there will be massive defaults and bankruptcies leading to a banking crisis.
And for those who believe that China?s white-hot economy will help keep the world?s economy going know this:
China is also in trouble. Even though it is the fastest growing economy right now, they will not be able to maintain that for much longer.
discusses the pressure China is putting on world oil prices as it tries to increase
reserves and avoid an acute energy shortage.
China's economic growth has become more and more dependent on crude oil in recent years, and its energy shortage is acute.
The economy is still growing but at a slower pace (7% projected) from last year's 9.7%
). Despite this, the Chinese government is trying to slow growth even further since the
economy is in serious danger of overheating (source
China is also facing a large real estate bubble leading to distortions in the market (banking in particular). The speculative investment money flowing
into the country is causing the bubble as well as a land grab for industrial space, forcing China to rent land from Vietnam to feed its people
Finally, the call from the central government for a cooler economy is not being heeded
What happened is that, with energy and transportation sectors already bursting at the seams under the deluge of investment in industries such
as steel, cement and real estate, and with bad debts piling higher on banks' books, Beijing tried to rein in the runaway enthusiasm, issuing a
moratorium on further investment in those key industries. The central state's decree fell on deaf ears. Local governments kept pouring money into
these booming sectors.
It is doubtful that China can control its runaway growth that is causing distortions, a real estate bubble and a speculation bubble all about to meet
up with an energy crunch.
The impending energy driven meltdown will be worldwide and no economy, no matter how seemingly strong at the moment, will escape it effects.
The emotion I feel in the face of all of this is despair with too many zombies in our society just going along for the ride, not questioning, and
rampant anti-intellectualism. Nothing will be solved until we hit the wall (peak oil, climate change, collapse of economic system etc.).
The only thing to do is prepare yourself mentally for the outcome. Move beyond fear and towards acceptance/preparation.
Right now the economy is a revved up sports car heading for a brick wall, and the passengers are arguing about which radio station to listen to.
Heads up! There's trouble ahead. Get out of DEBT as FAST as you can!
What do you think? Can a new worldwide DEPRESSION caused by tight energy supplies be averted?
edit: title tweak
[edit on 10/20/2004 by Gools]
edit 2: fixed expired link
[edit on 10/20/2005 by Gools]