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Author Topic: the Final Pump & Dump
Babbler # 11105

posted 09 January 2006 05:55 PM      Profile for Abdul_Maria     Send New Private Message      Edit/Delete Post
i don't remember if it was a graduate finance class or an undergraduate economics class, but i do remember one little something from my education - the definition of a stock price is, the present value of the future earnings stream of a company. (divided by the number of shares)

as we have recently seen, demand for gasoline is very "inelastic". that means that, when demand slightly exceeds supply, prices rise quickly.

some more facts -
* Ghawar, Saudi Arabia's biggest oil-field, is on the decline, in terms of output.
* the North Sea output declined 8 or more percent during 2005.
* Burgan, the biggest oil-field in Kuwait, is on the decline.
* Same for Canterell, the biggest oil-field in Mexico.

the Energy Industry news is full of such details, such as brick companies that have stopped making bricks because natural gas is too expensive - and farmers that have stopped making food because petroleum based fertilizer and gasoline for the farm equipment are making farming un-profitable.

what happens to corporate profits when gas is $3 a gallon ? $4 a gallon ?

what happens to consumer demand when gas is $3 a gallon ? $4 a gallon ?

infinite growth is on a collision course with finite energy.

i'm not saying that energy is finite - we have boatloads of wind energy and solar energy.

it's liquid fuels that are especially finite.

what happens to airline profits - and stock prices - when gas is $3 a gallon ? $4 a gallon ?

take out oil company revenues, and adjust the real estate numbers to reflect square feet, not just sale prices, and we don't have such a rollicking booming economy.

and for half the companies in the Dow, were the truth told about their future earnings streams, their stock valuations would be Zip - Zero - Zilch.

one other thing - the Fed will stop publishing M3 (money supply) numbers sometime in 2006.

mean-while, the Fed also has something called the Plunge Protection Team, who was one of the primary players when the US stock market started back up after 9-11.

last time the Dow was 11,000, the exchange rate was $1.60 Canadian.

today, the exchange rate is $1.15 Canadian per American dollar.

one other, other thing.

the US government plans to borrow about $1.8 Trillion from the rest of the world during the next 2 years. (the Canadian government runs a surplus.)

Now, if you can look at this, and see a steady structure, you might be looking at the Canadian economy.

i'm looking at the American economy, and I see a House of Cards.

of course, if it's all Monopoly Money, then maybe Wired Magazine is right - we could have a 40,000 Dow.

From: San Fran | Registered: Nov 2005  |  IP: Logged
Babbler # 5594

posted 09 January 2006 06:42 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post
You guys in San Fran need to buy you's some smaller damned cars. One time I needed a frickin can opener to get into the drivers side of my rental down by the wharf. And it was raining that day, too!. Yas might look forward to not having as many dings in your car doors, too.
From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
Babbler # 11105

posted 09 January 2006 07:51 PM      Profile for Abdul_Maria     Send New Private Message      Edit/Delete Post
i had a friendly divorce from my truck the Wednesday before Hurricane Katrina.

i still sleep in the back sometimes. (that's why i say, friendly divorce).

but i stopped driving it, that day. no more driving to Starpuke's at 6 AM for coffee.

G*d, i had blisters for a while. no, not from Herpes. on my FEET.

From: San Fran | Registered: Nov 2005  |  IP: Logged
Babbler # 490

posted 09 January 2006 10:00 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Why no more M3 numbers? As I recall, M3 shot up alarmingly in the late 1990s, and people who paid attention to this suggested a link between this and the stock-price run-up.

Are you suggesting that Bush is pushing the Fed to loosen credit in preparation for another round of speculative excess?

From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Babbler # 11105

posted 09 January 2006 11:58 PM      Profile for Abdul_Maria     Send New Private Message      Edit/Delete Post

what i'm saying is that "transparency" is no longer, at some point in 2006, an adjective that can be applied to the "US money supply".

as far as why they're doing this, i can guess, based on known facts.

i would like to see a break-out separating oil and real estate, in terms of looking at the economic numbers.

people re-fi-ing their houses has been a major "income" source for a lot of American households. including me.

that income source is drying up. interest rates are going up.

rising liquid fuel and natural gas costs are showing up everywhere in the US economy.

the dollar has fallen about 40% since the last time the Dow was 11K. gold has risen about 67%. those dollars are not worth as much, and the US is losing its ability to pay down the debt.

the debt is $8 trillion & climbing, with 4%+ interest rates. that means debt service is $320 billion plus a year.

meanwhile, the US is going around the world killing people and spreading depleted uranium.

then going to the rest of the world and saying, "please loan us more money" - which will be used to seize the oil.

at some point, nations like China will say, "uh, no". in fact, China is diversifying their US $ holdings, i.e., rotating OUT of the dollar.

so WHO will provide the 1.8 $Trillion that the US is planning to borrow next year ?

these are Weimar Republic numbers (that's a reference to hyper-inflation).

if you measure by the price of oranges, or razors, or rent, or gas for the car, inflation is just a tad above the official 4% (and unemployment is "just a tad" above the official 5.6%)

in short, the US economy is a House of Cards. it is a very complex system that is poised for a fall.

yes, the Fed can (and does) manipulate the market. heck, the banks create money every time they do a re-fi with a cash-out (i did 3 of these before i sold my condo - you should hear what the banker had to say about the economy during my last re-fi in november 2003.)

i would like to see Canada and the rest of the world develop their trade, so that a US collapse does not hurt the rest of the world, so much.

there is still a huge amount of strength in america - loads of experienced engineers that have the hands-on skills to build the work-around solutions associated with a widespread liquid fuels and natural gas shortage.

however, until the US is smart enough to build railroads - instead of tearing them down, which is the INSANE policy being pursued (ref. Amtrak) - and other large public works projects (like Europe, for example), America is basically a country with a big army and a nasty foreign policy and a big smiley face.

meanwhile, Sweden, for example, is quietly preparing for 100% petroleum independence by 2020.

i like free enterprise.

i detest the organized crime that passes for "free enterprise" in America. "privatize the profits, socialize the costs" -- this is the mantra of a lot of American business. It is also the mantra of psychopaths.

and i've had ENOUGH of them.

the unfortunate thing is, during such times, it is primarily the poor and the middle class that run around with extremely heightened anxiety levels, that get hurt.

maybe it's good that the bubble is maintained as it is.

the "soft landing" that is predicted by a lot of energy experts is a 1930's style recession. (soft landing, as America transitions away from petroleum addiction.)

if you look at the history of the american CIA, it is inextricably inter-twined with the petroleum industry.

we saw the american response to the situation on 9-11. we see it today in iraq.

if you want to read about the energy industry

in short, all around me i see the signs of a culture in decay - pretending that everything is AOK.

my MBA brother says "the only thing that matters is U.S. $ profits".

americans have trouble understanding that one of the primary purposes of free enterprise is to provide good jobs, where "good jobs" is defined according to humanitarian/humanistic principles, say by Naomi Klein or Michael Moore.

From: San Fran | Registered: Nov 2005  |  IP: Logged
Babbler # 490

posted 10 January 2006 05:43 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Well, what I was getting at is that a lot of the money in M1 is generally spent on consumer goods and the like, while that in M2 and M3 tends to go into the "paper economy". This is why the rise in M3 was correlated with the run-up in the stock market and why I ask if the obscuring of the M3 numbers is a way to avoid unpleasant questions about the degree to which the government is deliberately fuelling asset inflation.

Any government that said it was deliberately printing money with no checks on the rate at which it was printed would justifiably be pilloried for driving an inflationary spiral in consumer goods.

From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged

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