Wednesday, December 10, 2014

Economy

OPEC plans production cuts in 2015. So much for yesterday's story about OPEC being finished. This article references that claim. I had labeled by prediction about this wrong, but it may ultimately be right, just a month or two later than I expected. I still think Obama's war on Syria is why OPEC let the price fall so low.

David Stockman warns of a shale bubble bigger than the housing bubble.
"In short, as the oil market price takes its next leg down into the $50s/bbl. bracket, much of the  fracking patch will become a losing proposition. Moreover, given the faltering state of the global economy and the huge overhang of excess supply, it is likely that the current crude oil crash will be more like 1986, which was long-lasting, than 2008-09, which was artificially resuscitated by the raging money printers at the world’s central banks."
Uh-oh.
"Obviously, what we have here is another massive deformation of capital markets and the related flow of economic activity. The so-called “shale miracle” was not made in Houston with some technology help from Silicon Valley. The technology of horizontal drilling and well fracking with chemicals has been around for decades. What changed were the economics, and those  were made in the Eccles Building with some help from Wall Street."
So much for my trust in the entrepreneurs I thought powered this boom. I should have known better.

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