Bits Bucket for December 20, 2014
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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Will housing come back after the Souper Bowl?
Oh it’s gonna come back allright. All those houses bought by hedge funds and larger investors will “come back” on the market.
This is where the competition part of the free market finally screws them all. They have to race each other to get out the door first with what profits they can and also the new home builders who are lowering prices and profitable at lower than current market prices.
Musical chairs on the way down.
The big boyz will be the first to the exits, while Mom-and-pop Genius investors will be the bagholders, just like last time.
I’m not banking on a rush to the exits sort of thing, because I never even believed in the ability of the Fed to actually run prices back into a massive bubble but they did. So, a market which remains on a permanently high plateau seems fitting. You know, to fawk all the people who least deserve it.
crater
Did you manage to catch the week’s dead cat bounce in energy stock prices?
Nobody could have seen it coming!
Oil’s Slide Shakes up the Junk-Bond Market
NEW YORK — Dec 19, 2014, 3:16 PM ET
By STEVE ROTHWELL AP Markets Writer
Associated Press
Oil’s slump didn’t just hit the stock market, it’s shaken up the junk-bond market, too.
High-yield bonds are on track for their worst drop in a year and a half after investors dumped risky securities issued by energy companies. Those bonds make up about 13 percent of the category.
The Barclays U.S. high-yield corporate bond index, a benchmark for the securities, has dropped 2.5 percent this month, after a 1.4 percent drop in November. If the index were to end December at that level, it would mark the biggest two-month slump since June 2013.
By comparison, a broader Barclays index tracking the entire bond market, which includes corporate bonds with better credit ratings and Treasurys, is largely unchanged over the same period.
Junk bonds pay higher interest rates than U.S. government bonds and other kinds of corporate debt because they are considered at greater risk of defaulting on their debt. That’s because the companies that sell them generally have high amounts of debt in comparison to their income.
The debt has been a favorite for investors who wanted higher levels of income. For energy companies trying to rapidly expand during the U.S. oil and gas boom, the junk-bond market had offered a way to bankroll their operations, even if they had weak credit.
Investors are now worried that a near 50-percent fall in oil prices will make it harder, if not impossible, for these companies to generate enough earnings to repay their debts. The market, which had an extremely low rate of defaults when oil traded around $100 a barrel earlier this year, is now looking much riskier with prices below $60.
It’s not just energy company bonds that are falling. The slump in those bonds has made investors re-evaluate their other holdings of other high-yield bonds.
“You are starting to see energy and energy-related companies that have really re-priced in the last month, and that has weighed down on the market,” said James Keenan, head of Americas credit at BlackRock. In the past week, you’ve seen “more pressure on other parts of the market.”
…
“This is not primarily government debt, it’s corporate debt. But it’s still huge, and it has not just kept emerging economies alive since 2008, it’s given them the aura of growth. Which was temporary, and illusionary, all along. Just like in the rest of the world, Japan, EU, US. And, since countries can’t – or won’t – let their major companies fail, down the line it becomes public debt.”
“This is not primarily government debt, it’s corporate debt. But it’s still huge, and it has not just kept emerging economies alive since 2008, it’s given them the aura of growth. Which was temporary, and illusionary, all along. Just like in the rest of the world, Japan, EU, US. And, since countries can’t – or won’t – let their major companies fail, down the line it becomes public debt.”
All collapsing, too-big-to-fail, highly-levered gambles eventually become government debt in the bailout era.
The market is already raising rates:
‘The high-yield sell-off this month has been so severe that about one third of high-yield energy bonds are now trading at “distressed” levels, according to Martin Fridson, Chief Investment Officer at Lehmann Livian Fridson Advisors LLC. That means that investors are demanding these companies pay them a yield that is at least 10 percent higher than the yield on a relatively safe U.S. Treasury as compensation for the risk.’
Some one should mention the dangers of a prolonged mis-pricing of risk, yadda. Like one guy said recently, “What now, Ms Yellen you jackass?”
“Some one should mention the dangers of a prolonged mis-pricing of risk, yadda.”
Oh, they did, although perhaps the word choice failed to promote understanding among the masses:
‘The high-yield sell-off this month has been so severe that about one third of high-yield energy bonds are now trading at “distressed” levels, according to Martin Fridson, Chief Investment Officer at Lehmann Livian Fridson Advisors LLC. That means that investors are demanding these companies pay them a yield that is at least 10 percent higher than the yield on a relatively safe U.S. Treasury as compensation for the risk.’
10% higher than 3% is 3.3%. Unless the default risk is very low, that doesn’t sound like adequate compensation for the extra risk of fracking junk bond ownership.
Knife catchers, like the guy who bought 106 Phoenix houses this week for $50k off each one.
It is when you are expecting an imminent rebound in oil.
Mistaking a dead cat bounce for a permanent price rebound is a classic investing error.
missing a rebound completely is your classic mistake.
No mistake here. We’ve got no stake.
Remember…. Falling prices of all items is positively bullish and good for the economy.
Pimping a rebound in an asset class where you are personally invested is your classic mistake.
There’s a difference between risk taking and gambling.
While doing errands listening to the BBC, it was said that 12 million barrels of world oil production per day is now unprofitable. To put this into perspective the alleged glut is one million barrels per day. However, that number assumes the growth in US production per day of one million barrels which will not occur at prices anywhere near their present prices. 2/3 of the drilling is just to replace the rapid decline in production So we are exactly in balance just with the above facts.
However, since that estimate 650,000 barrels of production has shutdown in Libya due to Islamic rebels. (thanks Hillary and Susan Rice), thus we are now in deficit. Also, due to the low prices China has decided to put more oil in its strategic reserve, reasonable estimate is 200,000 barrels a day. So at these price levels we have a deficit of about 850,000 barrels a day, betting on a price rise is mild risk taking and not a gamble.
Yes, oil is recovering nicely downward towards its fundamental price. Somewhere around $30 per barrel seems sustainable.
“So at these price levels we have a deficit of about 850,000 barrels a day, betting on a price rise is mild risk taking and not a gamble.”
Glad to hear some folks are still taking the long bet, based on narrow consideration of production data without respect to weak demand plus high risk bets that oil prices will always go up, thanks to Peak Oil.
My hunch is that there is more carnage to come due to unraveling of leveraged junk bond financing.
“Yes, oil is recovering nicely downward towards its fundamental price. Somewhere around $30 per barrel seems sustainable.”
That sounds about right.
http://www.michaelcovel.com/images/98.gif
Falling down the stairs is painful for some.
Your graph is cut off on the right so you can’t see the bailout bounce.
Realtors are like slinkies. They serve no useful purpose, but it’s fun to push them down the stairs.
Any thoughts on how long from now gasoline will once again sell for under $2/gallon?
I have so much money left over after filling my gas tank each week that I can drink a Starbux latte every day with the savings!
I paid $1.99 in Dallas this morning.
And if you were buying a house this morning, you’d be paying alot less for that too. Sit tight and you’ll pay far less later.
I am noticing a couple of nice houses for rent in my OC neighborhood. My rent would be $1,000 per month higher though. I will have to see if the new company I work for is going to give me a decent raise…
I’m thinking two car garage, quieter neighborhood (far away from the busy parkway), a backyard to enjoy the outdoors, all good things.
$1.94 in ABQ at Costco but I know it will last as long as water in the Sahara after a rain storm.
Right. Just because prices pretty much stayed between $10-$20/bbl from the early-1980s crash through 2000 or so doesn’t mean that every future time oil crashes, it won’t rocket right back up to the same level again.
“Did you manage to catch the week’s dead cat bounce in energy stock prices?”
Who could have missed a 6.17% rise in crude oil IN A FEW HOURS?
Realtors are liars.
“Realtors are liars.”
And their clients are gullible fools. And this makes for an interesting AND profitable - a VERY profitable - mix.
Profitable for the lying realtors and profitable - VERY profitable - for those who get to lend out the money - money that belongs to somebody else.
“You can’t lose with the stuff I use.” - Reverend Ike
Helping poorer buyers “achieve the American dream” is very profitable as well.
Not for the buyers of course, as they are merely cannon fodder, but for everyone else involved.
Everyone else except the taxpayers, that is…
There are still new developments STARTING in the southeast region of Phoenix. Just now starting, WTF?
“…WTF?”
One a minute.
In an environment of collapsing demand at 20 year lows and 25 million excess empty and default houses.
Priceless.
If you’re not on the inside, you’re on the outside.
- Gordon Gekko
#BuyNowOrBePricedOutForever
Have you been out to Queen Creek lately?
“Have you been out to Queen Creek lately?”
Bahahahaha … despite thousands of acres of vacant DESERT land that could be tapped in Arizona houses are built all scrunched up together.
http://www.phoenixazproperty.com/Pages/QueenCreekRealEstate.aspx
From their home page: “Prospective homeowners looking for a bargain may be interested in short sales, foreclosures or houses owned by a bank.”
Not past the Target and the Big 5 sporting goods. I’m sure they are throwing them up there also. One problem with this area though is that the 1 hour commute to downtown barrier limits the desirability of places like QC.
Is this around Ray Rd and 46th in Ahwatukee area? I don’t know where they’d be built in that area. Seems all built up already.
I hear Fudgie The Clown is actually a realtor.
Fudgie The Realtor?
http://www.fudgietclown.com/
Bahahaha … people are smart.
School Takes Away Blind Boy’s Cane As Punishment For Acting Up …
… and replaces it with a pool noodle.
https://gma.yahoo.com/school-takes-away-blind-boys-cane-punishment-acting-063600522–abc-news-topstories.html
A nation of fools.
“School Takes Away Blind Boy’s Cane…”
Ca-Ching!
You HBB pukes should call up Amy and ask her about buying a house that looks like a rock.
http://news.yahoo.com/blogs/trending-now/this-boulder-in-the-swiss-alps-is-actually-a-tiny–hidden-home-194214728.html
“Can’t we all just get along?” - Rodney King
http://news.yahoo.com/one-man-terrorizing-neighbors-hostile-holiday-decoration-display-165658608–abc-news-topstories.html
A nation of fools.
Does the 1st Amendment protect this?
Hanging Mickey Mouse violate the Disney Amendent for sure.
Seattle, WA Sale Prices Crater 13% YoY; Plunge 8% MoM And 8% QoQ As Housing Supply Balloons
http://www.zillow.com/seattle-wa-98109/home-values/
Arcadia, CA Sale Prices Crater 20% YoY As Excess Empty Inventory Escalates
http://www.zillow.com/arcadia-ca/home-values/
Medford, OR Sale Prices Dive 12% QoQ; Fall 3% YoY As Housing Sinks To 20 Year Low
http://www.zillow.com/medford-or/home-values/
Boston Metro Sale Prices Plunge 17% YoY; Crater 25% QoQ As Price Declines Accelerate Nationally
http://www.zillow.com/ma/home-values/
Colleyville(Dallas/FortWorth), TX Sale Prices Fall 6% YoY As Housing Meltdown Resumes; Sellers Slashing
http://www.zillow.com/colleyville-tx/home-values/
Strafford County, NH Sale Prices Sink 4% YoY As Housing Price Declines Spread
http://www.zillow.com/nh/home-values/
After 5 years of stock gains have all the bears thrown in the towel and jumped on board yet?
I think I will take my chances in Vegas.
#WallStreetCasino
Why would anyone want to buy stocks now, realizing you are going to see your gains flushed down the toilet the minute the Fed gets serious about returning interest rates to normalcy?
That would seem rather foolish.
It will be man years before interest rates normalize.
Demand will continue to crater irrespective of rates. And prices follows as usual.
5 years 10 months
Denver County, CO Price Gains Evaporate; Housing Demand Plummets As Sellers Slash Prices
http://www.zillow.com/denver-county-co/home-values/
Upper East Side Manhattan Sale Prices Crater 18%
http://www.zillow.com/new-york-ny-10075/home-values/
“And although U.S. consumers are now enjoying the benefits of lower fuel costs, which will help spark consumer demand, the threat to the U.S. energy industry should not be overlooked. U.S. oil companies have invested heavily in horizontal oil drilling and so-called fracking to increase well yields. U.S. domestic oil production has risen significantly over the past five years and now approaches 8 million barrels per day based on data from the U.S. Energy Information Administration (EIA). However, much of this investment was made on the basis of $100 oil. If the price stays below $70 for long, the continued viability of some smaller U.S. oil companies might be threatened, particularly in Texas and South Dakota. Citigroup Inc.’s recent forecast that the U.S. would pump 14.2 million barrels per day by 2020 could prove illusive and result in job losses.”
Interesting, isn’t it, how horizontal oil drilling precedes vertical downward oil price movement?
And lack of drilling causes a parabolic rise in price?
Why drill more when existing capacity already exceeds demand?
Because demand is rising and the existing wells have a sharp decline rate.
Perhaps the move to affordable gasoline prices is gaining traction? Leaving consumers with a fat wad of cash in their wallets after their weekly visits to the local Costco gas station sounds like a great plan to get the American middle class back on its feet!
Existing well capacity exceeds demand.
a great plan to get the American middle class back on its feet!
BWAHAHAHAHAHA! As if.
A projected increase from 8 million barrels per day in 2014 to 14.2 million barrels per day by 2020 hardly sounds like a lack of drilling.
Do your independent projections disagree with the Citigroup Inc.’s recent forecast?
at what price are they putting oil in their projections?
“The real costs of Obama’s dropping the U.S.’s 68-year friendship with Saudi Arabia in favor of Iran are becoming increasingly apparent. If Saudi Arabia is forced closer to China, taking with her other Arab Gulf States (OAPEC), the long-range implications could be extremely serious for America and Europe.”
Saudi will be oil free in the long term.
In the short term(next 200 years) they sit on the largest reserves on the planet.
Russia has more oil reserves than Saudi does.
Plenty of oil. See that?
Who gives a frack about reserves beyond 200 years, anyway? For one, we’ll all be dead by then. Secondly, there may be an entirely new energy base by then, reducing the value of petroleum reserves to $0.
What are folks paying for whale oil these days?
they sit on the largest reserves on the planet.
AFAIIC, all ‘reserves’ are imaginary unless & until they enter a pipeline or a barrel. Very much like promised pension benefits.
I actually have the largest reserve in the planet, in my backyard. Pay me a $trillion in gold, and it’s yours, all yours!
“…all ‘reserves’ are imaginary…”
Sounds like home equity gains.
Sounds like home equity gains.
I found a penny on my living room floor. I give you that today for a quintillion tomorrow.
“So if it’s not supply and demand, what could it be? First, there are technical factors. There was a widespread concern going into 2014 that the recovery would bring with it higher oil prices. This may explain the surge in speculative “long” contracts in crude oil futures seen in 2014. These positions, in which investors sought to make a levered bet on rising oil prices, peaked around July at 4 million contracts, nearly four times as high as 2010. With so much money anticipating an increase, a small pullback in crude could have caused a wave of selling to close out losing positions. If that is the case, in an over-levered market, this could lead to a domino effect that pushes prices far lower than market levels. But as these positions get unwound, markets eventually return to normal. If that happens, we could see a significant rally in oil.”
“… With so much money anticipating an increase, a small pullback in crude could have caused a wave of selling to close out losing positions. If that is the case, in an over-levered market, this could lead to a domino effect that pushes prices far lower than market levels. …”
Luckily that never came to pass!
azdude, I think that this goes to my theory that this is just a paper glut. Moreover, I think that the US seeing this in balance forced the selling by selling contracts and justified it on national security grounds. However, it was more on Democratic senator security grounds unfortunately for them most of the fall occurred after the election since the Chinese bought up so much of the physical market. But yes we are going to see a significant rally in oil for reasons that I just explained in a post above.
Why does the distinction matter, so long as the paper can be traded at favorable rates of exchange for cars, houses, gold, gunz and oil, to name a few?
“The recovery is over because it never was. The Fed is now kamikaze and stuck on this course, having painted itself into a smaller and smaller corner in which to operate. Their only hope is that their confidence turns into your confidence, but credit and funding markets are impenetrable at this moment to such utter nonsense. For many places, it is already “look out below.”
When you live in a nation of fools you get to see a lot of stupid videos such as this one:
“Three ways to stop feeling broke all the time”.
http://finance.yahoo.com/news/money-minute–3-ways-to-stop-feeling-broke-all-the-time—193414019.html
Bahahahahahaha … how about just one simple way to stop feeling broke all the time and this simple way is STOP SPENDING MORE MONEY THAN WHAT YOU MAKE!
This is my way, my rule, and I am SO GLAD this rule in not shared by everyone.
“Three ways to stop feeling broke all the time”
Haha! Mandy has never paid for her Friday/Saturday drinks.
“If you have to borrow for 15 or 30 years, you can’t afford it nor is it affordable.”
Exactly.
Wrong!
You are but one dotted line away from making all your dreams come true.
KEEEEEEEEEEEEEEEEEEEEYRAAAAAAAAAAAAAAAAAAAAAASH!</i
WTF was that?!!
That was the sound of housing prices and demand blowing a donkey crater in the ground in your neighborhood.
“… donkey crater …”
Here are some images for Donkey Crater …
https://www.google.com/search?q=donkey+crater&biw=1600&bih=775&tbm=isch&tbo=u&source=univ&sa=X&ei=65CVVMKBHpTioASqyIC4Ag&ved=0CCEQsAQ
Visit Amy today and she will help you MAKE IT HAPPEN!
Amy Hoax: “We can do this!”
That’s a beaut! Hello Donk!
Almost a year ago, just after Christmas 2013, the Baltic Dry Index crashed harder than any post holiday time in the last 30 years. it continued its recession procession all year and there is no preholiday spike this year.
The signs have been there all year for anyone who cared to pull their head out of the sand. Even the clueless should know now when they fill their gas tank. The Great Expansion has turned the corner and now we get to watch something else. It’s balloons in the sky turned to anvils, which will drop squarely on the backs of the indebted.
Dry Ships (DRYS) is a bulk carrier and here’s what the dude who runs the company once said:
“Because Americans are the dumbest investors around, and there’s lots of liquidity in the market.”
You pukes can go here and read it yourself if you want to, or you can continue to remain ignorant forever:
http://caps.fool.com/Blogs/drybulk-shipping/54833
If you really and truly want to get rich then you should forget about buying stocks and go visit you local bank branch instead and politely and humbly ask your banker about his Dotted Line Special.
Yep — the BDI is back in crash mode.
“Housing prices have resumed their decline. It’s spreading and it cannot be contained. Falling housing prices is a net positive for the economy.”
BINGO
38 posts and 15 are rubbish from the same poster…
Stick with the data Dave.
Install the Joshua Tree extension.
That’s right.
Coming soon to a Fed-debased currency near you.
http://america.aljazeera.com/articles/2014/12/20/people-suffer-russianruble.html
As trust in Russian financial institutions erodes, the first real signs of panic are emerging in Moscow. People across the capital are embarking on last-minute shopping sprees, racing to buy up luxury items such as electronics and cars to beat further price increases.
Baltic Dry Index (a REAL economic indicator, since it measures goods coming into the US) just had the biggest post-Thanksgiving crash since record-keeping began 28 years ago. NOT bullish….
http://www.zerohedge.com/news/2014-12-19/baltic-dry-index-has-never-crashed-fast-post-thanksgiving
since it measures goods coming into the US ??
Not bullish for whom ?? Cause, if we ain’t buying it then nobody is…Sounds like deflation…
Russian financial crisis far from contained.
http://www.businessinsider.com/things-could-get-much-worse-for-russia-2014-12
The ruble is stabilizing and the interesting part of your chart is that Brazil has had a larger decline in the same time period and we never read about it:
http://www.reuters.com/article/2014/12/19/us-russia-crisis-markets-idUSKBN0JX0OS20141219
Brazil has had a larger decline in the same time period and we never read about it ??
Brazil does not have Nukes, thats why…
They haven’t invaded any neighboring countries, either.
California Housing Demand Plummets 13% YoY; Down Every Year Since 2010
http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv
Ah, poor boomers. Not only did they wreck the country for future generations, now their own financial irresponsibility is causing them to get hounded by debt collectors. Cry me a river….
http://www.nbcnews.com/business/retirement/debt-collectors-hound-millions-retired-americans-n270931
And why does this dying demographic have nothing? It’s simple.
They paid a grossly inflated price for a depreciating asset. And then threw more good money after bad and by pimping out these run down shacks with junk trendy materials at massively inflated prices.
This should be a lesson for everyone reading. If you pay too much for shelter, regardless if you rent it or buy it, you’re never going to recover financially. The cold hard truth is that houses depreciate rapidly and they never put a dollar in your wallet.
The Boomers broke the cardinal generational rule: don’t leave your messes for your children to clean up. However, being the most feckless, self-absorbed, myopic generation in human history, when they do their final fade from the scene (can’t happen quick enough) they are leaving a ruined country in their wake. Karma is going to ba a bitch in this life and the next.
That isn’t even logical. The Karma will be for you, no?
That isn’t even logical ??
Which really then means that the post is just mindless ramble now doesn’t it…
No Dave. Ray is quite right.
Stick data.
“Nofziger told NBC News that some people pay off debts just to stop the calls, even though they don’t believe they truly owe the money.”
And I bet their name will immediately make its way onto a sucker list.
Oh the irony! Pay off one hounder in order to stop the phone from ringing and ten more immediately start calling.
Bahahahahaha … always remember, people are smart.
“And I bet their name will immediately make its way onto a sucker list.”
FWIW, I once paid-off a San Francisco parking ticket that I know wasn’t mine, but I couldn’t re-register my truck because of it, and I’m sure my driver’s license was next. I simply didn’t have the time or energy to fight the fight.
I simply didn’t have the time or energy to fight the fight ??
As it is with many agencies…It cost you more in your time to fight it then it is worth so you pay and make it go away…
The sad thing is the agencies are there to help the “little” men. LOL
Will the next systemic global financial crisis come out of Russia?
http://www.telegraph.co.uk/finance/economics/11305146/The-week-the-dam-broke-in-Russia-and-ended-Putins-dreams.html
Gallows humour is back in Moscow. Asked what he would do to stop the rouble spiralling out of control, the former governor of Russia’s central bank replied: “I would pick up a pistol and shoot myself.”
This was the week when the country’s long-festering crisis turned virulent. A last-ditch attempt to defend the exchange rate by raising interest rates to 17pc failed within hours, yet the shock is surely enough to set off a chain of corporate failures and push banks over the edge.
“… and push banks over the edge.”
Whoa, this cannot be allowed to happen!
Who would be there to care for the children?
The crisis is coming out of China. The closest satellites are popping first.
The dumb money that piled into junk bonds in a greed-fueled search for yield (thank you, ZIRP) is starting to get spooked.
http://wolfstreet.com/2014/12/20/the-dumb-money-abandons-junk-debt-market-quakes/
The carnage in junk bonds when the Fed ultimately follows through on its repeated rate increase warnings is sure to be epic.
It isn’t about interest rates. It’s about default because the borrowed money went to unproductive assets and expenses. The money is gone. It was grow or die and now grow is out of the picture.
Exactly but you’re leaving out the other half of the picture. Not only is it borrowed money at an inflated price, it was spent on depreciating assets that are evaporating by the day.
The carnage in junk bonds when the Fed ultimately follows through on its repeated rate increase warnings is sure to be epic ??
I disagree Pbear…Barring a massive spike in inflation, the rate increases will be methodically slow and small..We will be raising rates while ever other developing economy in the world has cut to zero and now entering or have already entered QE…Thats is except for the countries in a currency crisis like Russia…
I suspect we will not have any rate increases at all in 2016 due to the presidential election…
Something else to consider is real interest rates. As the commodity bubble fizzes out, cash is harder to come by and is in more demand to pay back debts. Even low interest rates are painfully high when the loans are in dollars, which most of them are. The Fed is now in a corner maybe. We’ll see what stupid thing they try next.
From the New York Times yesterday, the same story over and over oil that cannot be produce at less than $70 a barrel:
If Brent crude, the North Sea benchmark, remains around $60 to $70, at least 85 percent of new British offshore oil and gas resources now in the planning stages are at risk of being dropped, according to the industry consultants Wood Mackenzie.
So the NY Times is your field development estimate?
You go Dan.
No but I bet we use similar primary source.
No no.. You Dan.
‘the same story over and over oil that cannot be produce at less than $70 a barrel’
Maybe if you repeat it enough it will come true. Funny how something can be produced cheaper in one place than another. And that some market participants are willing to take lower or no profits to shake out other producers. I clearly remember watching oil go down and down in the 80’s. Finally hitting $8/barrel. The oil industry almost disappeared.
The motivation here is interesting, targeting Russian or north American producers. If I were trying to kill off competitors, why stop at 50, or 40 $ per barrel? Take it really low, destroy these companies and their financiers sooner rather than latter.
Totally agree. The oil producing countries with the most interest in pounding enough nails in the fracking industry’s coffin to permanently shut the lid appear to also be among those best situated to maintain production over a sustained period of time at far lower prices than today’s. If this is the strategy and it is feasible, what’s to stop them from executing?
Rising demand and the problem documented in Twilight in the Desert”, old tired fields past peak and maintained with extensive water flooding.
They may have the motivation but remember they are losing money that they could be making with the low prices and the Saudi fields are tired and old and long past their peak. The primary motivation is political not economic, if the Saudis can get a Sunni running Syria they will abandon this war and leave Obama to fight Putin alone. BTW, US demand for oil hit a seven year high in November:
http://www.api.org/news-and-media/news/newsitems/2014/dec-2014/november-petroleum-demand-reaches-7-year-high
One conclusion based on many moving parts. If you are wrong about any one of them, well, you get the idea.
Three obvious ones come to mind.
“…you get the idea.”
Rasmussen poll numbers?
“US demand for oil hit a seven year high in November.”
The distinction between demand and consumption is covered in Econ 1 class, but many economics commentators routinely fail to grasp it.
The article is talking about consumption, not demand per se, as Americans below the 1% are broke and demand for consumer goods is flat on its back. ‘Total deliveries’ is not a reliable estimator of demand when the price has recently fallen off by 40%.
Then we have from eia web site
In 2013, about 134.51 billion gallons (or 3.20 billion barrels) of gasoline were consumed in the United States, a daily average of about 368.51 million gallons (or 8.77 million barrels). This was about 6% less than the record high of about 142.35 billion gallons (or 3.39 billion barrels) consumed in 2007.
So we are likely importing oil refining it and sending it somewhere else.
It’s unlikely heating oil use increased given the crash in nat gas so I think the oil demand figures are due to importing refining and shipping. ?
The bottom line is that oil companies stock price ceo bonuses and opec power are all tied to their predictions of how much oil they have. Thus you can be certain that despite our recent technological announcements there is a lot less oil in the ground than people think.
Bill south of Irvine = WIN!
Numerical fluency improves the odds of a richer retirement
Published: Dec 17, 2014 5:00 a.m. ET
Don’t pick the goat.
By George Sisti
Mathematics is the language of investing. Like any language, fluency requires study and frequent use. In my experience, few investors are “numerically fluent.” Consequently, they are susceptible to sales pitches that play fast and loose with numbers.
Here’s a short numerical fluency quiz:
Your New Year’s resolution is to invest $1,000 a month into a $20-per-share stock fund. Unfortunately, the fund’s price declines 50 cents each month and by year-end 2015 the fund is worth $14 per share. Pessimistic reports about the U.S. economy fill the media and demoralized investors flee to bonds. You ignore Wall Street and stick with your investment strategy. The market rebounds in 2016 and the fund rises 50 cents per share a month, ending 2016 exactly where it started 2015 — $20 per share. The two year average annual return of the fund was 0%. What was your rate of return?
By investing a fixed amount each month, you bought more shares when prices were low and fewer shares when prices were high. The fund’s average monthly share price for the two years was $17. Your average purchase price was $16.82. By year-end 2016, your $24,000 investment will be worth $28,538 — an annualized rate of return of 17.6%.
…
Yup.
Vanguard quarterly dividend time too. Today was a great day to convert my 2014 nondeductible traditional IRA to Roth. The year contributions are tax free, no matter what income. I get taxed on the $600 gain.
Anyone who does this better discuss it with their tax advisor. Because your total tradional IRAs, including rollover IRAs are calculated on the conversion and you could end up unexpectedly paying a huge tax. Fidelity tried to convince me that I could keep a rollover IRA and it would not count for the backdoor conversion. I did not believe them, fortunately. They just did not want me to leave Fidelity. I rolled it into my Schwab 401k. Ironically that got switched to Fidelity but my fund choices are far better.
You have very little to lose by converting to Roth (if you know what you are doing)
As the NSA collects almost every communication on the globe, it’s good to know the government never gets hacked:
‘The Office of Personnel Management is alerting more than 48,000 federal employees their personal information may have been exposed following a breach at KeyPoint Government Solutions, which conducts background investigations of federal employees seeking security clearances.’
‘Background investigators conduct interviews with employees or applicants seeking security clearances, as well as their family members, neighbors and former employers. Investigators also compile police and court records on interview subjects. Their reports are used by federal officials to determine potential employees’ suitability to hold security clearances and are a treasure trove of personal information.’
‘It’s the second time this year hackers have targeted a private background-check company. Over the summer, USIS, once the government’s largest provider of checks, revealed its systems had been breached, potentially exposing information on 25,000 employees. OPM subsequently temporarily suspended work with the company in the wake of that breach and later severed ties altogether.’
‘A month before the USIS hack, OPM’s own networks were breached, with news reports indicating Chinese hackers had infiltrated OPM’s databases, potentially in pursuit of the personnel files of security clearance holders.’
Good thing the NSA is spending all that time and money tracking Americans.
Fewer US-Born Americans Have Jobs Now Than In 2007
Neil Munro
White House Correspondent
12:21 PM 12/19/2014
Fewer Americans born in the U.S. have jobs now than were employed to November 2007, despite a working-age population growth of 11 million.
Almost one in every two jobs added since 2009 have gone to foreign-born workers.
“All of the net gain in employment since 2007 has gone to immigrants (legal and illegal). … Native employment has still not returned to pre-recession levels, while immigrant employment already exceeds pre-recession level,” said a Dec. 19 statement from the group.
The job transfer from Americans to immigrants has accelerated since the economy bottomed out in mid-2009.
Since January 2010, 5.4 million foreign-born people have gained jobs in the recovery.
That’s almost equal to the 6.9 million Americans who gained jobs since January 2010, even though the U.S-born working age population is five times larger than the immigration population.
dailycaller.com/2014/12/19/fewer-us-born-americans-have-jobs-now-than-in-2007/ - 94k -
“Almost one in every two jobs added since 2009 have gone to foreign-born workers.”
Q. So, Mr. Banker, what do you think of this claim?
A. I think it is a good beginning, but much, much more progress needs to be made in this direction.
“From each according to his ability, to each according to his need.” - Carl Marx
I totally subscribe to this philosophy. The multitudes have the abilities, and I have the needs.
They work, I reap.
God’s Plan.
“From each according to his ability, to each according to his need.”
My blood pressure rises whenever I see that quote.
There’s two parts here, which part is it that raises your blood pressure?
Part 1 is my favorite part: “From each according to his ability.”
The greater the ability to earn the greater the ability to spend. The greater the ability to spend the greater grow the desires for things to buy. Common sense says it shouldn’t be this way but, hey, we’re talking about human beings here.
Enter into the discussion the magic of signing a dotted line, a dotted line that amplifies the ability to spend, which in turn amplifies the desires for things to buy.
And the best part: A signed dotted line not only allows a schmuck to get what he wants, it also allows me to get what I want.
Before the signing of the dotted line I was nowhere in the picture; After the signing of the dotted line there I am, not only in the picture but (if I manage events correctly) right in the middle of the picture - in the middle of the picture and DOMANATING the picture.
Bahahaha … so now what? Back to the original statement: “From each according to his ability”. Which means the schmuck will have to either:
1. Expand his ability, or
2. Get out of the picture - a picture that used to be entirely his but now just may be come entirely mine.
Before the signing of the dotted line what was earned “according to his ability” remained his. After the signing of the dotted line he learned that he had to share what his ability allowed him to earn, share the wealth, share with me according to my need, which brings up part 2.
Part 1: The schmuck earns according to his ability to earn.
Part 2: The schmuck hands over to me large chunks of what he earns which enables me to fill my needs.
Bottom line: He works, I reap.
Not exactly what Karl Marx had in mind but …
Perhaps one should view this at a higher level, maybe view it as part of God’s Plan.
Our oligarch overlords would rather import wage slaves than pay living wages.
“Our oligarch overlords would rather import wage slaves than pay living wages.”
Wrong! We oligarch overlords, as you choose to call us, do not import wage slaves. What we do is import wage earners.
It’s only after these wage earners are here and all settled in that they convince themselves - CONVINCE THEMSELVES - that they should become wage slaves.
The wage-slave dotted lines await and these wage earners willingly - WILLINGLY - line up to sign them.
Bahahaha … and few people are amazed at this; Most people consider jumping at a chance to become a wage slave as normal.
What we do is import low wage earners.
Fixed it for you, no charge.
But beware, Mr. Banker, these new wage earners might stiff you.
“But beware, Mr. Banker, these new wage earners might stiff you.”
Not a problem as long as the old wage earners will be there as a backstop. As they were the last time. And the time before that. And the time before that time … etc.
Bahahaha … again and again and again I have to say this:
You cannot lose with the stuff I use.
Comment by phony scandals
2014-12-20 10:08:59
Fewer US-Born Americans Have Jobs Now Than In 2007
dailycaller.com/2014/12/19/fewer-us-born-americans-have-jobs-now-than-in-2007/
Russian Ruble Crisis Spreads Across US, Emerging Markets And BRIC Nations
By Jessica Menton
December 17 2014 4:48 PM
The Russian ruble soared 10 percent Wednesday, after tumbling to a 16-year low Tuesday, as the Russian Central Bank announced a series of new measures to pump money into banks in 2015. Reuters/Maxim Zmeyev
The ruble soared 10 percent Wednesday, boosted by the Russian central bank’s announcement that it is prepared to pump money into banks in 2015 and adopt a series of measures to “maintain the stability of the Russian financial sector.” But even as the currency appeared to rebound after a sharp decline earlier in the week, the ripple effects of crisis in the world’s sixth-largest economy will be felt far and wide.
“The currency has collapsed, and it’s possible that the economy could also collapse. They’ve become a wild card at this point, it’s a very dangerous situation,” said Stephen Guilfoyle, chief economist at Sarge986.com.
Russia’s $3.5 trillion economy depends heavily on exports, and oil accounts for roughly half of government revenue. As a result, the country is reeling from the combination of trade sanctions resulting from its invasion of Ukraine and Crimea, and the precipitous recent drop in global oil prices. And the meltdown will be a “headache” for the U.S., according to Ariel Cohen, director of the Center for Energy, National Resources and Geopolitics at the Institute for the Analysis of Global Security in Washington, D.C.
“We do not know and cannot predict the political ramifications of this economic crisis,” said Cohen. “Russian leaders didn’t realize how fragile the economy was and what the macroeconomic implications from the conflict in Ukraine would be.”
The ruble had previously tumbled over 20 percent against the dollar to 58 rubles per dollar on Tuesday, a record low. That came after Russia made a surprise move and hiked interest rates to 17 percent from 10 percent. In afternoon trading Wednesday, the ruble jumped over 10 percent to 62.04 rubles per dollar.
Meanwhile, the U.S. is benefiting from the 40 percent drop in global oil prices in the last six months. The country is also enjoying a stronger dollar compared to other major currencies. At the same time, global investors—especially Russians seeking a safe haven to park assets—are channeling funds into U.S. treasuries.
…
It would be so utterly trivial for Russians to engineer an unfortunate series of events in the middle Eastern Oil Patch. Do not mention this to anyone, let’s just keep it between us, K?
ft dot com > Comment >
The Big Read
December 19, 2014 7:03 pm
Through the looking glass: the Kremlin struggles to restore calm
Kathrin Hille, Courtney Weaver and Jack Farchy
Moscow is facing its biggest economic crisis since 1998
At a lengthy news conference in Moscow on Thursday, Vladimir Putin fielded a question about his status as Russia’s most eligible bachelor. Dressed in a crisp suit and purple tie, the poker-faced president and former KGB agent assured his audience that he loved someone and someone loved him.
In a week when the rouble collapsed in daylight hours and the central bank raised interest rates in the middle of the night, Mr Putin gave similarly vague responses about how he proposed to extract Russia from its worst economic turmoil since 1998.
He warned the Russian people to brace themselves for two years of hardship and suggested that, after 15 years in the Kremlin, he might finally diversify the Russian economy from its reliance on energy, raw materials and military industries.
But Mr Putin was light on specifics — and he remained fiery and defiant, blaming Russia’s economic problems partly on US and EU sanctions, and attributing the Ukraine crisis to Nato attempts to declaw the Russian bear.
“Sometimes I think maybe it would be better for our bear to sit quiet, rather than chasing around the forest after piglets — to sit eating berries and honey instead. Maybe they will leave it in peace,” Mr Putin said. “They will not. Because they will always try to put him on a chain and, as soon as they succeed in doing so, they tear out his fangs and his claws.”
Behind the vivid imagery of the Siberian forest, the mood of Mr Putin’s entourage was sombre. The rouble’s collapse forced a sobering acknowledgment of reality in his administration and across Moscow almost overnight.
“The finance ministry was calculating which rouble exchange rate would drive the budget into the red. We have started guessing what rouble exchange rate will spell the end of Vladimir Vladimirovich [Putin],” said a family member of someone close to the president.
“There is no time. We need to act, and act radically,” said Vladimir Milov, a former deputy energy minister turned opposition politician, warning that Russia is stuck in a liquidity and debt crisis, a budget crisis and a crisis of investor confidence. “From a political point of view, a change in government and central bank leadership doesn’t help because all three crises are the work of one man — the current president, Putin,” he wrote in a blog post. “His resignation is indispensable to overcome these crises because, after 15 years in office, trust in him is gone.”
…
In this post a patriotic and law abiding Mr. Banker focuses his attention on the 13 Amendment to the U.S. Constitution:
“Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.”
Note the term “involuntary servitude”. Bahahaha … only a dummy would want to engage in involuntary servitude because then he would have to house and feed and clothe the poor involuntary servitude schmuck. No, involuntary servitude sucks - it sucks big time.
However … what about … what about … what about voluntary servitude? What about convincing someone to VOLUNTEER to become a slave … a special kind of slave … a DEBT slave? What does the Constitution have to say about that?
Bahahahaha … the Constitution has NOTHING to say about that which makes it so … so … so profitable and so … so … so easy to do, and … and … and SO MUCH FUN!
Bahahahahahaha … you cannot lose with the stuff I use.
I think the FISA Courts have ruled ( in secret ) that the Constitution is no longer to be enforced.
I think the FISA Courts have ruled ( in secret ) that the Constitution is no longer to be enforced.
The Constitution is for little people. The oligarchy lives by a different standard.
Even the mainsteam financial media can no longer ignore the 800-lb elephant in the room that is the unpayable pension promises made to public unions in return for voting for the Republicrat status quo.
http://www.businessinsider.com/public-pensions-americas-greece-2014-12
Leelanau County Michigan has property it isn’t just going to ‘give away’
TRAVERSE CITY — Leelanau County commissioners aren’t ready to
give awaycommit to an offer onextravagantly overpriceda long-vacant county-owned property in Leland after anlowballoffer came in well belowtheir wildest dreamsthe asking price.J. Peterson Homes made an $800,000 offer on the old courthouse property that’s listed for $1.4 million.
“He has
pipe dreamsa very good idea and it’d be great tosnag more taxpayers and milk them for all they’re worthget it back on the tax rolls, but we also have tosqueeze, wrench and grasp for the maximum possible pricebe fair to the county people that own it, so we don’t just give it away,” said county Commissioner Will Bunek.Commissioners on Dec. 16 did not accept the offer, but authorized Administrator Chet Janik to continue talks with the group. They hope they can get a better price, Bunek said.
Joel Peterson, the company’s principal, has a rough vision of a {insert RE buzzwords here} self-contained cottage community with {more buzzwords here} about 18 units, fewer than current zoning. The community likely would include {more buzzwords here} sidewalks, landscaping, a limited number of slips for residents who want boats on the included riverfront, a clubhouse, pool and community park space.
“The {insert RE buzzwords here} northern Michigan cottage look is what we’re going for,” Peterson said.
He sees the community as being made up of
trustfund babiesyoung familieswho either don’t want or can’t afford kidsandextremely wealthyretirees.Peterson said he’s already talked to Janik about the possibility of purchasing the main part of the property, and leaving a duplex and a nearby lot for the county to sell separately.
The county sold the 119,563-square-foot property in 2007 for $2.4 million
~$20/sq foot. The property reverted back to the county after thebroke-ass loserdevelopercame to his sensesdefaulted on payments.I just heard a story on news radio about how oil prices below a certain level will result in 160,000 lost jobs. Then I realized, wow, that sounds like the news reports about how essential a high-priced real estate market is to economic health. Then I realized oil and gas is an industry awash in cash (just like the biggest political contributor, the FIRE sector). And Congress is eager and ready to be receive private sector cash contributions.
So - what manipulations will the central bank and/or government engage in to support oil prices, after being suitably “motivated” by the oil and gas industry?
Perhaps a nice little war in the oil producing regions might do the trick?
Gee…. You didn’t happen to realize there are multiple wars there already and crude prices continue to crater?
Not in Saudi Arabia, Venezuela, and most other OPEC countries.
Perhaps you need a lesson in geography. Arabia and 6 other OPEC member nations are the mideast.
Wag the dog
The problem with unsustainable is contagion. It’s not just oil and real estate.
NYC protesters chant for dead cops - YouTube
http://www.youtube.com/watch?v=dj4ARsxrZh8 - 176k - Cached - Similar pages
Dec 13, 2014 … 12/13/2014 -
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I wonder if Al Sharpton will be attending the funerals?
2 NYPD cops shot dead ‘execution style’ as ‘revenge’ for Garner
by New York Post | December 20, 2014
Two uniformed NYPD officers were shot dead Saturday afternoon as they sat in their marked police car on a Brooklyn street corner — in what investigators believe was a crazed gunman’s execution-style mission to avenge Eric Garner and Michael Brown.
“It’s an execution,” one law enforcement source said of the 3 p.m. shooting of the two officers, whose names were being withheld pending family notification of their deaths.
The tragic heroes were working overtime as part of an anti-terrorism drill when they were shot point-blank in their heads by the lone gunman, who approached them on foot from the sidewalk at the corner of Myrtle and Tompkins avenues in Bed-Stuy.
“I’m Putting Wings on Pigs Today,” a person believed to be the gunman wrote on Instagram in a message posted just three hours before the officers were shot through their front passenger window.
I hope the cops decide to have a week of blue flu. Then you will see some appreciation for what they do.
#Idiots
phony scandals