The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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From: gregor_us	7/1/2009 10:06:03 AM
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I see risk of an Oil and Dollar conflagration. I have just completed my June newsletter, "The Scholarship of Collapse", and while the bulk of this month's research is on the topic of various collapse models, what's also now becoming clear is that 1. not a drop of new demand can currently be fed from current production. It will have to be fed through inventories and the turn in inventories is underway. 2. the lagged effect of cancelled projects means that non-OPEC will not be able to respond to any rise in demand until 2H 2010 at the earliest. 3. Yes, there is supposedly about 2 Mb/day of spare OPEC capacity though there are some disturbing trends that I see across the Gulf: a) there is presently a rush among Arab states to lease gargantuan tracts of land in Africa to grow food. b) alot of the large scale engineering and "new city" projects in places like Saudi have continued apace. b) I grant that the current structure of Iraq and its Oil is very political and less geological but even a supply perma-bear like myself was shocked at this week's IEA call that Iraq's oilfield situation was so horrifically bad that it would be 5 years before they could provide any net new supply to the world--and they see Iraq supply actually dipping some more before that would happen. Meanwhile, while I'm not willing to go as far as Orlov in his latest piece, The Slop of Dysfunction, he does have a point: industrial collapse would in theory destroy the industrially driven oil extraction complex, and leave the world hungry for energy but with no credit or money system to extract it: cluborlov.blogspot.com Orlov's view is quite extreme, and dystopic. Worth a read. But, not really necessary imo to make the case for my real concern which is a dollar-oil problem dead ahead. I think the best way to think about this is that currencies can move fast, geo-politics can move fast, and demand and hoarding can move fast. But supply is glacial. G

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