Goldman Sachs & Barclays Capital: Peak cheap oil is an incontrovertible fact

Peak cheap oil is an incontrovertible fact

Comment: Mr. Evans-Pritchard is clueless that 'Peak Oil' means 'the end of cheap oil'; which is shocking ignorance. Energy Return on Energy Invested (EROI) explains how and why there can be ten trillion barrels deep under the ground, but if it requires more than one barrel of oil, to dig up another barrel of oil; there is no return on investment/i.e. it is an energy sink: fucking pointless!

Ambrose Evans-Pritchard | Telegraph | 26 Aug 2012

Brent crude jumped to $115 a barrel last week. Petrol costs in Germany and across much of Europe are now at record levels in local currencies.

Diesel is above the political pain threshold of $4 a gallon in the US, hence reports circulating last week that the International Energy Agency (IEA) is preparing to release strategic reserves.

Barclays Capital expects a “monster” effect this quarter as the crude market tightens by 2.4m barrels a day (bpd), with little extra supply in sight.

Goldman Sachs said the industry is chronically incapable of meeting global needs. “It is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand,” said its oil guru David Greely.

This is a remarkable state of affairs given the world economy is close to a double-dip slump right now, the latest relapse in our contained global depression.

Britain, the eurozone, and parts of Eastern Europe are in outright recession. China has “hard-landed”, the result of a monetary shock and real M1 contraction last winter. The HSBC manufacturing index fell deeper into contraction in July.

The Real Inconvenient Truth: End of Economic Growth

Austrian Economist Peter Schiff Was Right || Peter Schiff: “Why the Meltdown Should Have Surprised No One!”

Austrian Economist Peter Schiff Was Right

Clips from 2006 - 2007 Predicting Current Economic Events

Why the Meltdown Should Have Surprised No One

Mises Daily by Peter Schiff

Posted on 6/12/2009 12:00:00 AM

[Henry Hazlitt Memorial Lecture, Austrian Scholars Conference, March 13, 2009. An MP3 audio version of this lecture is available for download. You can also watch the video. Transcript provided by Jennifer Lewis.]


Introduction by Joseph Salerno

It is my great and distinct pleasure to introduce the Henry Hazlitt Lecturer, Peter Schiff.

Schiff, president of Euro Pacific Capital, is familiar to everyone who has watched financial coverage in the last year. He is famed for being the most vocal financial economist to have perfectly predicted the crash.

Austrian Economics :: The Austrian School & the Meltdown || The Austrians Were Right

The Austrian School and the Meltdown

by Ron Paul | Lew Rockwell.com

September 26, 2008

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy – all the capital misallocation, all the malinvestment – and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over – not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments – investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Austrian Economics :: Why Austrian Economics Matters

Austrian Economic Theory: Why Austrian Economics Matters

by Llewellyn H. Rockwell, Jr. | Lew Rockwell.com

Economics, wrote Joseph Schumpeter, is "a big omnibus which contains many passengers of incommensurable interests and abilities." That is, economists are an incoherent and ineffectual lot, and their reputation reflects it. Yet it need not be so, for the economist attempts to answer the most profound question regarding the material world.

Pretend you know nothing about the market, and ask yourself this question: how can society's entire deposit of scarce physical and intellectual resources be assembled so as to minimize cost; make use of the talents of every individual; provide for the needs and tastes of every consumer; encourage technical innovation, creativity, and social development; and do all this in a way that can be sustained?

This question is worthy of scholarly effort, and those who struggle with the answer are surely deserving of respect. The trouble is this: the methods used by much of mainstream economists have little to do with acting people, and so these methods do not yield conclusions that have the ring of truth. This does not have to be the case.

The central questions of economics have concerned the greatest thinkers since ancient Greece. And today, economic thinking is broken into many schools of thought: the Keynesians, the Post Keynesians, the New-Keynesians, the Classicals, the New Classicals (or Rational Expectations School), the Monetarists, the Chicago Public Choicers, the Virginia Public Choicers, the Experimentalists, the Game Theorists, the varying branches of Supply Sideism, and on and on it goes.

Austrian Economics :: The Austrian Cure for Economic Illness

The Austrian Cure for Economic Illness

by Donald W. Miller, Jr., MD | LewRockwell.com

June 2, 2008

An ill person may have diabetes or an infection. When an economy becomes ill people lose their jobs and watch the value of their homes and stock portfolios fall.

A doctor evaluates symptoms and signs (physical findings), orders laboratory tests, and makes a diagnosis. Having determined the cause of the illness and its pathophysiology (how the disease alters bodily functions), the physician prescribes treatment and gives a prognosis, predicting how the patient will progress under the treatment and the likelihood of recovery.

Government officials and their financial advisors approach economic illness the same way – they diagnose the trouble, institute treatment, and provide a reassuring prognosis.

As in medicine, with its opposing schools of allopathic (pharmaceutically oriented) medicine and homeopathy, there are two diametrically opposed schools of economics: the Keynesian one and the Austrian School of economic thought. Based on the ideas of the John Maynard Keynes (1883–1946), a British economist, Keynesian economics is the one government officials, academic experts, pundits, journalists, editors, and establishment economists follow. Employing mathematical models, this school evaluates the economy from a macroeconomic perspective – as a whole. The Keynesian prescription for treating economic illness is more government spending, along with fiscal and monetary policies designed to achieve full employment and price stability.

Austrian economics focuses on the individual. Taking a microeconomic approach, this school studies the actions of individuals in the marketplace, where people act to achieve their chosen ends, governed by one’s perceived needs and wants. It eschews mathematical models. Instead, Austrian Economics addresses such subjects as marginal utility, the subjective theory of value, economic calculation, scarcity and choice, capital malinvestment, moral hazard, and the importance of free markets and a stable currency for setting prices.