Iron ore (toilet):
Iron ore collapse has pushed producers to brink of survival, Rio Tinto CEO says https://t.co/B492ugnFxg pic.twitter.com/Ij75TCqF0r
— Bloomberg Business (@business) December 15, 2015Nat Gas (toilet):
U.S. natural gas at lowest intraday level in nearly 14 years https://t.co/6ipaHOXYaH pic.twitter.com/BKFYIn0kra
— Bloomberg Business (@business) December 14, 2015Oil (toilet):
#Oil price in free fall on fears over supply glut. Brent crude plunges by almost 5% to $37.83/bbl, lowest since 2008 pic.twitter.com/3l6aYCso8s
— Holger Zschaepitz (@Schuldensuehner) December 11, 2015
14 comments:
So the question is, when are the bankruptcies going to start happening? Surely somebody must run out of cash as some point - or are the commodity producers going to get bailed out like the banks did?
I would think that secured creditors will become the new owners of the real assets Neil... unsecured creditors will be out of luck...
I doubt the banks are meaningfully exposed perhaps some hedge funds etc... seems to me the banks have been being VERY cautious since 2008...
Came across this wrt to oil business, they keep ratcheting down the IRRs YoY which they use to determine 'profitablity' of the wells so productivity increases eventually work into their cost structure but it takes the accounting year to roll over then they use the new cost numbers from then on... so who knows how low it can go and the wells could still be profitable... iow it looks like they use the current year prices to project the costs for next year's operations then when productivity increases happen, THEN they revise the operational cost structure , ie they have the price of their own product IN their own cost projections for next year which is probably kind of unique...
https://rbnenergy.com/if-i-could-turn-back-production-impact-of-crushed-oil-and-gas-prices-on-production-economics
Then the Iron Ore probably trades off the oil and gas...
One thing for sure, prices dont have anything to do with "printing money!" ie 'its about price not quantity...'
The paradox of the businessman is that when faced with lower prices, instead of reducing supply like your sophomore economics professor claimed, businesses may instead try to compensate for the lower profit margin by increasing volume. This may continue right up to the point where the business's checks bounce and the utility company shuts off the power.
I have been doing this myself in my own business, and have observed other small businesses do it. Last I heard Australia is still planning to increase iron ore production, prices be damned. Your sophomore economics professor was wrong. The law of survival trumps the law of supply and demand.
It's too bad that Mr. Franko is either to lazy or otherwise to understand Austrian Business Cycle Theory. The very very Austrian David Stockman has been warning of a commodity price collapse for several years now.
http://davidstockmanscontracorner.com/deflation-alert-chinas-producer-price-index-yoy-falls-5-9-down-for-45-consecutive-months/
Bob-
Why on Earth would I ever take someone seriously who says something like this on their freaking home page:
"A government shutdown would force Congress to address fiscal issues before they reach unmanageable levels, a former Reagan administration official contended Wednesday. “We’re on the fiscal Titanic and we’re going to hit something hard and immovable one of these days,” said David Stockman, director of the Office of Management and Budget from 1981 to 1985"
You have got to be fucking kidding me. How unbelievably ignorant and stupid does somebody have to be to make a comment like this especially since they are supposedly a budget expert.
You mean "gold is going through the roof" David Stockman (http://kingworldnews.com/david-stockman-on-monetary-breakdown-skyrocketing-gold/)? A gold shill scam artist is your authority?
For every "Austrian Economist" predicting deflation there are ten predicting "muh hyperinflation" From Von Mises onwards, no Austrian have never correctly predicted anything. All they do is shill gold scam because the Austrian school was founded as Jewish marketing scam and remains so.
The Austrian Business Cycle is absolute nonsense based on a non-existent "natural rate of interest" which can be anything based on the whim of "Austrian economist" cause it can't be mathematically defined or quantified in anyway cause Austrians economics ain't so good with math or data modeling cause of "muh praxeology" autistic retardation and so the "theory" can predict nothing and everything. It is transparently bullshit and a child could understand that it is sophistry and nonsense of the highest order.
Keep on shilling gold (fake money) and bitcoin (even faker money) hucksters and "muh hyperinflation".
Inflation can happen after deflation as MMT predicts as well any standard school of economics that destroying the real economy with constant deflation will eventually cause shortages and thus price inflation but seriously our production capacity is so high and under used you are going to have to wait for peak oil. There is nothing profound about this and only so-called "Austrian economics" is dumb enough think that "private" central monetary policy was the cause rather than the government fiscal policy. The one time the government is actually entirely at fault is when you lolbertarian idiots turn around and blame the "independent" sector because that is how retarded your are when come to economics.
So Bob continue with you "rocks are money" school of Anti-Thought and continue to help Schlomo pimp his gold.
A "rational" prepper doesn't listen to David Stockmen and buy gold. He buys canned foods, water filters and and lots of ammo cause even Schizoid paranoid Alex Jones cultist are more rational than Stockman and Von Mises cultists.
Bob,
I predict it will snow in the upper peninsula within "several years" !
Auburn again we see the metaphor used immediately with these false people... "like the Titanic!" there is your tip-off every time...
Sept LOL: "help Schlomo pimp his gold" but seriously watch this tendency to "blame it on the Jews!" type of approach imo this thing spans ALL mankind... and there is scriptural accounts of Jews going to war against this thing in Genesis (where Moses and Aaron get these metal-lovers to reveal themselves and then they enlist the Levites to go thru the camps to exterminate them all...) and then in Paul's (Jew) first letter to Timothy (Jew) Paul specifically cautions Timothy against 'philargurion' or 'fondness for silver' (which Christendumb of course commonly translates as "love of money!") as a root of all the evils which is where I (non-Jew) receive it loud and clear... iow I get my knowledge of the dangers of this stuff actually FROM Jews... so this thing is all across and throughout mankind... a BIG f-ing problem...
Sorry meant Exodus wrt Moses & Aaron (wtf...):
http://mikenormaneconomics.blogspot.com/2013/01/moses-came-down-from-mountain.html
(FD: doesnt mean we should advocate for exterminating these people today...)
They are already defaulting on junk bonds, I agree with Matt exposure from banks this time isn't large. It will accelerate now they cannot afford to roll over the hedges as the old ones expiry. The financial impact should be relatively contained to non-banks in financial sector, some investment funds PE etc. but I don't think anyone bar few investors should be extremely exposed (should take an other hit on their performance though).
The drea,m to make off the USA an other petrostate (really really sad that they want to lift the export ban, geez so much stupidity in this world) is fading though with oil going lower and lower.
Auburn Parks: Are you are suggesting that Stockman is “stupid and ignorant” because he does not believe that the problems of scarcity and $200 trillion in unfunded government obligations have been or can be solved because the government can create funny money at will and can thus (allegedly) buy and/or spend whatever it wants? I fail to see how MMT solves those problems at all and I’ve asked for an explanation from MMTers in these comments and elsewhere repeatedly since 2011 to no avail.
Also, just because certain money-making bloggers or politicians always warn about hyper-inflation or the collapse of the dollar, how does that impact me and my analysis of Austrian theory? In 2009, I expected that the Fed would have significant problems re-inflating the various collapsed bubbles in the short run. No hyper-inflation worries from me. Ron Paul’s warnings do not impact my analysis in the least. Further, Austrian theory per se says nothing about how much price inflation will result from a particular increase in the money supply. The fundamental Austrian insights concern economic calculation and mis-calculation plus Cantillion Effects and how artificial credit creation leads to false and unsustainable prices. If artificially high prices are UNSUSTAINABLE, they will eventually FALL.
BTW, as I recall, in 2006, Peter Schiff predicted a significant FALL in housing prices within the near future.
Finally, as I constantly repeat, when MMTers constantly beat this "Austrian Economics = Hyper-inflation" drum, it only further demonstrates that no one but Austrians understand (or wants to understand) Austrian analysis.
This post is so awesome that it deserves a permanent screen shot:
From Von Mises onwards, no Austrian have never correctly predicted anything. All they do is shill gold scam because THE AUSTRIAN SCHOOL WAS FOUNDED AS JEWISH MARKETING SCAM AND REMAINS SO.
Plus, I keep good track of such goodies.
https://mises.org/library/hayek-meet-press
Libertarians give Austrians a bad name, while Progressives look on and laugh. There's your headline.
There's not a "progressive" in the galaxy that understands either Austrian analysis or the fundamental concept of libertarianism, the no-aggression principle. There's something to write in the sky over the Super Bowl.
"it only further demonstrates that no one but Austrians understand (or wants to understand) Austrian analysis"
Could be the words from someone into mysticism like the The Fourth Way…
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