Oil is worth $120,000 per barrel. Not a typo.

Helicopter money will stimulate all the wrong things

To re-stimulate the economy from the effects of the corona virus, governments and central banks will shower people with helicopter money, so named because it is like dropping cash on the population from helicopters.

This is the height of stupidity. We have the corona virus because of rampant growth. China grew so fast that natural systems were stressed to the limit.

Now, in the name of preserving a failed system and a few billionaires, money will be pushed to the bottom and create a little flurry of activity as it rushes back to the top.

It's time to recognize that growth should not be the goal. We should take advantage of the lesson nature is teaching us with the virus, and seek out gentle degrowth.

To help victims of economic shock. Make public transit, healthcare, and education free. Reform housing laws and end homelessness.

Is the Federal Reserve the main problem?

If only we could stop the Federal Reserve printing money and get back to real economy, things will be better. Is that true?

Cheap oil is over, and what is left in the ground is leveraged and re-hypothecated. The real economy is overwhelmed. It will contract one way or another.

Official world debt is over $250 Trillion. But that amount is trivial compared to the debt we owe the biosphere, a debt that cannot be paid in money.

The purpose of the money printing is to try to push the suffering onto the weak.

Right now, not on cable news, but in real life, wars for energy mean poor people are being tortured, murdered, bombed, and herded into refugee camps, and then the camps are bombed. Local economies are being drained by high interest rates. Ethnic tensions are being stoked, and massacres allowed.

Meanwhile, energy is subsidized and wasted on cars and sprawl.

The best way to reduce the pain is to undo sprawl as rapidly as possible.

Expensive tight oil has peaked, debts defaulting, demand sagging, second correction overdue

The plateauing of conventional crude oil production in January 2005 was one of the triggers of events leading to the 2008 global financial crash, according to the report. As debt built-up in the subprime mortgage sector, the crude oil plateau drove up the underlying energy costs for the entire economy making that debt more difficult to repay—and eventually resulting in catastrophic defaults. The report warns that “unresolved” dynamics in the global energy system were only temporarily relieved due to "Quantitative Easing"—the creation of new money by central banks. A correction is now overdue, it warns.

https://www.vice.com/en_us/article/8848g5/government-agency-warns-global-oil-industry-is-on-the-brink-of-a-meltdown 

Bankers face defaults as oil demand falls, increase attack on #freepublictransport

The big banks sit on top of the world economy, extracting interest and draining its life. Now they have impoverished people to the extent that the world economy is sagging badly. No one can afford the oil-tax that is baked into every economic activity, but oil producers can not afford to produce at lower prices.

There is no near-term solution to this paradox except debt default.

To cut their losses, the bankers are mounting a troll attack on the campaign for free public transport. They are setting up straw men, such a claiming that free public transport advocates say that it is a solution to everything.

They are especially concerned about Luxembourg. They are trying to make it all about traffic congestion, and six months in to free transport there, they will have a "study" and declare it a failure.

People will fight back, because they can't afford to get to work, school, shopping, or doctor.

What's so scary about #freepublictransit?

Why is fare-free public transit/transport treated differently from other public goods? Why must there be a user-fee?

The answer lies in understanding autosprawl. Trillions of dollars have been sunk into everything from cul-de-sacs and DIY stores, to ocean tankers and refineries. The web of liquid-fuel fixed infrastructure covers human developed habitat, and controls the flow of the entire economy.

The whole thing is leveraged in debt far beyond recovery.

When oil was cheap, too much was borrowed against the future. Now, cheap oil is draining fast. Every day it takes more joules to get a joule. So now we have super-borrowing to "pay the mortgage."

When people discover the benefits of fare-free public transit, they demand more, and then they discover the subsidy to autos and sprawl. They will reject that subsidy, and demand more fare-free public transit.

This is what has the banks and bondholders shaking in their suites.

Banks cause oil wars to keep away debt default

As the US uses SWIFT and Federal Reserve as weapons, it should be more obvious to all the link between oil wars and debt.

The world has $255 Trillion in debt outstanding. This a bet on future growth and earnings which depend on resources and labor being available. But one resource, oil, is much more important than the others because without oil, no transport, without transport, no economy. Every drop of oil still in the ground has debt against it, leveraged and rehypothecated many times.

The Trump administration warned Iraq this week that it risks losing access to a critical government bank account if Baghdad kicks out American forces following the U.S. airstrike that killed a top Iranian general, according to Iraqi officials.

https://www.wsj.com/articles/u-s-warns-iraq-it-risks-losing-access-to-key-bank-account-if-troops-told-to-leave-11578759629 

Collapse of the #autosprawl system

Households in the US owe over $13 trillion in debt. World-wide official debt is at $255 trillion.

Let's imagine that debt were to be eliminated magically by a few mistaken keystrokes. What would happen. Well a lot of rich and middle-class people would lose money. On the other hand, consumers would suddenly have much more to spend. Governments, with no more debt-service could provide much more social service.

But there is another debt that is not so easily addressed. That is the money sunk into autosprawl. The world has many $trillions invested in cars, highways, roads, suburbs, refineries, tankers, military, and much more, to support the system of autos and sprawl. These are hard assets, which depend on oil, and are not easily replaced. This investment was never sustainable, and now it is collapsing.

WARNING - Prepare for counter attack against #freepublictransit

Production of US oil has been burning through borrowed money. World-wide sagging economies are putting downward pressure on oil price. For banks, this is a very serious situation. Every drop of oil in the ground is leveraged out many times.

A mass conversion to fare-free urban public transport is a threat to oil creditors. They will surely mobilize their trolls and attack viciously.

In addition there are millions of people who depend on sprawl subsidy for their profits. Cement, natural gas, appliances, DIY stores, home construction, and many more depend on sprawl and growth. They will strike back hard to keep their subsidies and profits.

As soon as the Kansas City success euphoria cools, they will surely start attacking.

Official world debt is $255 Trillion, falling oil demand a huge fear

Since 2005 there has not been a good price for oil. Any price is too high for consumers or too low for producers. Oil is NOT a commodity. It runs through every transaction in the economy. Without oil, there is no transport, without transport there is no economy.

All oil in the ground is borrowed against, and in many cases re-hyphothecated. Shale in the US is collapsing after running negative cash-flow for ten years. Why so much debt? Because the oil industry is more than rigs and tankers, it is roads, highways, suburbs, cul-de-sacs, DIY stores, ... in other words, sprawl. There is no quick way to get out of this commitment to hard assets.

Hard assets can not be allowed to run at a low percentage. They have to keep pumping and burning or else take huge losses.

Oil industry now is desperate for customers.

Private Equity vultures already feeding on shale corpse

PE is seeking to take advantage of depressed or under-appreciated asset valuations in a buyer’s market where, for strategic reasons, sellers are looking to release capital.

https://www.woodmac.com/news/the-edge/private-equity--big-buyers-of-oil-and-gas-in-the-downturn/ 

US Car-loan debt at $1.2 Trillion, more payments being missed

"Some of the loans that are being given out are given out to people who probably can't afford to take out that loan," Rusch said. "[They] will not be able to repay that loan over time."
The U.S. Federal Reserve Board says the number of families missing car payments is rising, and "...there are now more subprime auto loan borrowers than ever, and thus a larger group of borrowers at high risk of delinquency."

https://www.nbcbayarea.com/news/local/Driving-Into-Debt-Americans-Owe-12-Trillion-on-Auto-Loans-513456481.html

Piñera suspends the rise in the price of the subway and the Army decrees curfew for Santiago

The president of Chile recalls after an unprecedented wave of violence in the capital and the rest of the country. The Army has decreed curfew for the Chilean capital...

...The military that took control of Santiago de Chile this morning has failed to stop the violent protests in different areas of the city, which over time have spread to different regions of the country. Twenty-one hours after decreeing the state of emergency for the capital, which restricts citizens the freedom of transfer and assembly for 15 days...

Look. See how important this is to the elites? They need us to buy and burn oil. They can't stand it when we use public transportation. This is because banks are leveraged out too far on oil. They want to raise fares -- -NOT TO GET MONEY --- but to reduce ridership and get more people driving.


Link to story: https://elpais.com/internacional/2019/10/19/actualidad/1571506476_320721.amp.html?

Oil and debt

Why has Chile declared a state of emergency to enforce a fare hike?

In 2005, conventional [easy-to-get] oil peaked. Every day the world's massive oil-dependent, fixed-asset, infrastructure depends more on difficult oil, expensive oil.

This infrastructure: highways, refineries, pipelines, suburbs, shipping, etc., is resting on huge amounts of debt that was created with the idea that oil would always be cheap.

Now the end of cheap oil has created a cul-de-sac. Oil price is too low for producers, but too high for consumers. But the oil-dependent infrastructure, if not fed, will bleed money.

They need people to use cars more and public transport less. So they raise fares.

They are literally beating up school girls to save the banking system.

End of cheap energy means no more profits

Price of energy too low for producers, too high for consumers. The gap has been filled by debt. But debt is a bet on future profits, but there is no more cheap energy, so there won't be any future profits.

Our problem is not just that oil prices that are too low. Prices are too low for practically every type of energy producer, and in many parts of the globe.
...
The world economy seems to be running out of truly productive uses for debt. There are investments available, but the rate of return is very low. The lack of investments with adequate return is a significant part of what is preventing the economy from being able to support higher interest rates.

https://ourfiniteworld.com/2019/09/12/our-energy-and-debt-predicament-in-2019/

The bankers installed Trump to "take the oil"

US makes another grab for Venezuela oil

The cheapest way to get oil is to steal it.

Except for Kirkuk, Iraq, there is basically no easy-to-get oil left in the ground.

Why is oil so precious? Isn't there a glut? No. US shale loses money on every barrel. It's subsidized by debt. Saudi oil is half water and going more and more for air conditioning every year.

The entire developed world, it's transport systems, manufacturing, farming, and military are dependent on liquid fuel. There is no substitute for oil. Whoever controls oil has great power.

The government of Venezuela is subservient to the bankers, but they have some leverage. But this is competition, not war. There will be no US/Russia war. They are rivals, not enemies. All major governments serve the banks.

When oil was cheap, debt was run up on the expectation that it would always be so. The world now has $250 trillion in debt. The banks will use government power against us, the common people, who work every day to pay the interest on the debt.

What to do. Make buses fare-free in your town. Move away from autos. Be resilient.

Physics controls economics which controls politics

The underlying energy problem represents a conflict between supply and demand, but not in the way most people expect. The world needs rising demand to support the rising cost of energy products, but this rising demand is, in fact, very difficult to produce. The way that this rising demand is normally produced is by adding increasing amounts of debt, at ever-lower interest rates. At some point, the debt bubble created to provide the necessary demand becomes overstretched. Now, we seem to be reaching a situation where the debt bubble may pop, at least in some parts of the world. This is a very concerning situation.

ourfiniteworld.com

Oil wars and oil glut, no contradiction

There has not been a good price for oil since conventional (easy-to-get) oil peaked in 2005. Any price is too high for consumers and too low for producers.

Oil still is the blood of capitalism. There is no easy substitute. Trillions of dollars of infrastructure and systems are dependent. Things like millions of square miles of sprawl can not be converted quickly enough.

The owners of this infrastructure have decided to squeeze it until the last dollar and if the biosphere goes down, oh well, too bad. They don't really have much choice given they are locked in a dog-eat-dog system of competition.

There is still some conventional oil in Iraq, under Kirkuk. So war is raging over that. All the profits have been borrowed-against, but the oil is needed just to keep the whole debt-ridden system working for another decade.

It's no longer about profit, it's about interest on debt -- survival of the billionaires.

Don't be fooled by oil 'glut,' #peakoil is real

Cheap oil peaked in 2005. Since then, a re-definition of oil to 'liquid fuel' magically increased world production by 10 million bpd. Then massive debt-fueled investment raised "production" a little bit more. Now, we are in the falling net-energy trap for oil. Every day it costs more joules to get a joule. If all the externalities of oil are included net-energy is likely negative, especially in tarsands.

Negative net-energy means that it costs more than 1 joule to get 1 joule. How is that economic? Well, it's not. But transportation, and hence the developed economy, needs liquid fuel. So debt and oilwars will increase.

Currently there is a glut because of three things.

• price war for market share
• debt-fueled production in difficult areas
• weak economies in developed countries

The industry is stuck in the fallacy of composition. Each producer must maximize to keep cash flow and avoid default, or to avoid losing market share. All the agreements to cut back have failed and will continue to fail.