The historic opportunity of the emerging cash crunch & gas crunch

  • TPGS wrote: I followed the trail of bread crumbs in your article [about the cash crunch / gas crunch] , but found it led me no where [as in what to do, what is the updated forecast, etc], as there was no summation . So whats on the horizon ?
    Gas is presently $ 3.14 a gallon here in the Tampa area .TheHouseing market here in the Tampa Area is still in deplorable shape , no matter what the papers here state .
    Whenyouloose half of what your house is valued at , and then gain back a lousy 4% of the loss back , that’s not a healthy economy . The overwhelming glut of foreclosed houses were taken off the market and turned into rentals , so as to give a ” False – Positive ” in regard to the housing market ” UP – SWING ” .
    The BIG Commercial Real Estate loans will be due come the fall of 2016 , that’s when the other shoe will drop .All Blessings

  • J R Fibonacci Hunn The horizon may be somewhat scary, which may be why even after 11 years of frequently repeating it, people who have been hearing me talk about these same issues for the whole time are in many cases demonstrating a level of responsiveness approaching paralysis. I tell people that if they are truly scared, then they should be scared enough to learn about the risks and opportunities present now, and then alter their practices.However, perhaps because of the effectiveness of mainstream propaganda, complacency is extremely popular. The mainstream paranoia (the fear of displaying fear, admitting naivete, etc) is paralyzing. The media feeds people hysterias of many kinds to distract them from logic and personal responsibility.

  • J R Fibonacci Hunn Anyway, in the absence of some technological change (or some error in the scientific presumptions of “peak oil”), the industrial age is ending. That could take a century though, plus, many people report that there is plenty of “suppressed technology” (like the patents stolen from Tesla) available for the elite to use to further subdue the masses. The idea there is that the elite would eventually have total exclusive control of all energy (and thus transportation, electricity, etc) while the global pool of human resources would be reduced to “citizens.”The masses would have no economic discretion. It would be worse than modern Cuba.

  • J R Fibonacci Hunn In the relatively short term, back to the emerging economic situation, we can expect a continuing rise in demand for oil (and other fuels) along with a steeper and steeper decline in global production (as shown in the chart above). The natural result of that would be gasoline passing $15 per gallon, then $150 per gallon, etc….However, the “optimistic” view would be that rising fuel prices would provoke innovation and mass revolt from fossil fuels (like toward biodiesel and solar etc). Of course, the scale of the logistical issues are “rather large.” Note that it is not just oil extraction rates that are peaking, but coal, natural gas, and so on.

     

  • J R Fibonacci Hunn However, it is notable that gasoline prices are radically different based on demand and supply. In many parts of the middle east, there is a huge concentration of wealth in the oligarchy and not all that much economic capacity in the lower classes. So, gasoline may be under $1 per gallon. They have lots of oil and very few people can afford a car, so fuel prices are low.
  • J R Fibonacci Hunn http://www.globalpetrolprices.com/gasoline_prices/I did not verify any of this data, but I do know that gasoline prices in Venezuela have beenunder20cents a gallon for as long as I have been researching the issue (2004). Prices there may now be as low as 4 cents a gallon.In Syria, it would about to be closer to20cents currently. You can see the huge regional fluctuations in that link.

  • J R Fibonacci Hunn Anyway, back to my article and my forecast, I have been explaining how there can be a huge increase in demand for cash (such as the US Dollar), along with a collapse of the global lending market. Gas prices are only part of the picture, too.There is much more, including the retiring of the baby boomers (which is not just an issue in the US, but in many of the developed countries that participated activitely in WW2. Keep in mind that Britain and Germany were bombing each other’s cities, similar to the US bombing of civilians in Japan. In the places where civilian casualties were highest, the demograpic imbalance is quite severe. Japan’s social security program has something like 2.5 people of working age for each retiree. In the absence of major reforms in the tax system, that trend of more and more retirees per worker appears unsustainable.

  • J R Fibonacci Hunn Back to a huge surge of demand for cash (like in the event of a massive wave of insolvencies), that means that prices of low-priority investments like stocks would fall hard. Real estate (because of so much dependency on financed mortgages) would fall much harder than stocks, but there is NO inherent demand for owning stocks (it is 100% speculation) while there is an inherent demand for having somewhere to live or do business.Consider that the economy in the US is far superior to many parts of the world. Consider that housing prices in recent years were grossly inflated and they are now returning toward “fair value.” Same for US stocks.In 1929-1932, stocks fells 90%. This should be more severe than that, plus much longer.nikkei 225 from 1989 - 2014
    As an example, in 1989, Japan’s stock market was near 40,000 Yen [shown above]. It has been 25 years now and it is currently at 15,032. It was 7,021 in early 2009.The idea of one region having a permanent economic boom is preposterous. Empires come and go.

  • J R Fibonacci Hunn So, if you are still with me, the other side of the emerging sudden transfer of wealth is “the opportunity side.” It is also historic. Basically, we are not talking about a hurricane destroying 1000s of homes. That is an economic crisis (a crisis in regard to no housing).
    We are only talking about ownership changing hands. This is a mere financial crisis. There will be lots of houses still. There will just be a much smaller concentration of people who own that same total inventory.
    As for the global distribution of wealth, it will also shift. The US has 4.5% of the global population and much more of a share of the wealth. That will drop.
    However, individuals within the US not only can move elsewhere, but can profit from the boom in the areas profiting from change. In the case of the 1200% increase in oil prices from 1999-2008, the places that profited included Alaska, Alberta (Canada), and the Arabian peninsula.This is only a financial crisis. In the absence of world war or anebola scare, there will not be an economic crisis on a global level, but only a huge increase in financial disasters for the masses who worship the media.You can see what I mean if you look at the last 25 years in Japan or the Great Depression in the US and Europe. A hurricane or a war is an economic crisis. Again, this is just a finanical crisis.

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