re: What is really IRONIC...............
What is really ironic to me:
Is that one of the pillars of the Bullish-Oil arguement is that Oil is a much smaller factor (BOE:GDP)in today's economy than it was 20 years ago.
2 thoughts:
While we do not have as much direct exposure to Oil/Gasoline Prices...we have as much, if not more indirect exposure due to the power required to run Technology, the inflationary effect of Oil upon a broad range of Commodities and Chemicals and transportation is still a huge direct cost as we still have a Trucking / Transport based Economy....and the biggest "Irony" is that you never see mentioned in the old vs new economy arguement by the Oil Bulls, is what is best shown by those 3 pacbell charts:
2. The US Consumer now has a "0" Savings Rate vs. 10-12% on average in the "old" economy.
home.pacbell.net
- The US Consumer now has 50% less equity in their Homes than they did in the "old" economy.
home.pacbell.net
The US Consumer is in reality; as, if not even more affected by Oil today, than in the old economy.But even MORE importantly; is historically strapped in being able to absorb ANY additional Oil related costs, as today's Debt & Credit supported Economy & Consumer is more levered to an Oil Shock/Inflation levered Recession than at any time in the past.
- The US Government & the Fed have fewer stimulative options left given the Deficits and we have a "Weak US Dollar" environment which will continue to make Oil more expensive in "real" vs. old economy dollars.
* also, this chart shows that there was no slow down in Government Spending during the Clinton years by the way...
home.pacbell.net
Sadly; neither Republicans, nor Democrats seem capable of controlling spending...THIS must ultimately be solved by the "people" at the ballot box...but imho; that ultimately will come much too late... probably at USD .40-.60 to the Euro ~ when we realize that Warren Buffett's prolific prediction of America becoming a "Sharecropper Society" along with the realization that a Gold is Money/Gold Standard vs. pure Fiat has become reality.
Of note: SLB today slipped in a little verbage about all bets being off if a "recession" should arrive.
HMMMM !?!?!?
...you think they see that flattening Yield Curve heading towards becoming Inverted into an Environment of the Fed hiking rates directly into an Oil/Gasoline Spike (which has ALWAYS created a Recession by the way... ALWAYS) where the US Consumer has a historic Debt & Credit load, has tapped out his Home Equity, has no job, or wage growth and most importantly - has a "0" SAVING RATE in which to absorb these cost - might signal when, not if for RECESSION ?
- whodathunkit ? |
