Do We Bring Hard Economic Times Upon Ourselves?

[Adam's Apple]

I don't buy the premise of this thread, the rich still support their own and very well. Anyone here know the cost of the major universities? And they are full, with parents footing the bill for many? It is the lower middle class and the working poor who are having a hard time keeping up.

If you're going to respond, read the article first. It's a stretch to think this article is simply about the rich vs. the poor.

 

[Toro]

No, he's only modestly..."right" He makes two assumptions that are either categorically WRONG or in now proven.

One -- That China and India's growth is driving the oil demand based crisis. Of the roughly 83M a day or so of world wide oil consumption the US consumes about 25M of it. That's about 28%. China and India COMBINED are only a FRACTION of that. Japan, and Europe consume another 35%. Their growth RATE is much larger than anyone else but their RAW GROWTH is still DRAWFED by the US, Europe and Japan. And most will finally come to realize that since the first of the year US consumption is down almost 5% from a year ago and for 2008 may decline as much as 10%. That's 2.5M barrels a day. And wha-la, guess what, Europe and Japan are following suite down a solid 5% as well. china and india will still see consumption growth but at a MUCH SLOWER RATE and vastly overshadowed by declining consumption, mostlyu in the US. And that US slowdown in oil consumption is likely PERMANENT as the US permanently changes it's habits and rapidly transitions to hybrids and electrics and baby boomers age and stop driving as they enter retirement.

China, India and other emerging markets certainly are the biggest factors in the The developed economies are the largest consumers of energy, but it is not they who have been the largest drivers of marginal growth. Prices are set by the marginal buyer. And the marginal buyer has been China and India. The rate of growth in emerging markets is what has been driving prices higher. I would expect the rate of growth in emerging markets to slow as the developed markets slow, but there is no reason to assume that once the recession works its way through, that emerging market demand will no longer be significant.

In America, demand has fallen - I think the DOE said it was ~3% - but that has more to do with the slowing economy brought about mainly by the credit crunch. Economic growth is anemic right now, so you would expect the demand for energy to stagnate or even fall.

The effect of high prices on incomes has been mis-understood. Currently, consumers are spending about 7%-8% of their income on energy. That is up from 6% a few years ago and 4.5% five years ago, but it is still lower than 9%-10% in the 1970s.

It appears that current price levels of gasoline are having an effect on demand, for at some point, higher prices will whack demand. But at the beginning of the decade, most of economists would have said that $100 oil would have lead to a serious recession, and that has not happened, or at least not because of oil. Maybe oil will top out here, I don't know, but it isn't going back to $20 any time soon.

Hybrids are an insignificant factor, at least so far.

 

[Zoomie1980]

China, India and other emerging markets certainly are the biggest factors in the The developed economies are the largest consumers of energy, but it is not they who have been the largest drivers of marginal growth. Prices are set by the marginal buyer. And the marginal buyer has been China and India. The rate of growth in emerging markets is what has been driving prices higher. I would expect the rate of growth in emerging markets to slow as the developed markets slow, but there is no reason to assume that once the recession works its way through, that emerging market demand will no longer be significant.

In America, demand has fallen - I think the DOE said it was ~3% - but that has more to do with the slowing economy brought about mainly by the credit crunch. Economic growth is anemic right now, so you would expect the demand for energy to stagnate or even fall.

The effect of high prices on incomes has been mis-understood. Currently, consumers are spending about 7%-8% of their income on energy. That is up from 6% a few years ago and 4.5% five years ago, but it is still lower than 9%-10% in the 1970s.

It appears that current price levels of gasoline are having an effect on demand, for at some point, higher prices will whack demand. But at the beginning of the decade, most of economists would have said that $100 oil would have lead to a serious recession, and that has not happened, or at least not because of oil. Maybe oil will top out here, I don't know, but it isn't going back to $20 any time soon.

Hybrids are an insignificant factor, at least so far.

My main point here is that if China and India are marginal buyers, they are also marginal CONSUMERS. There seems to be this fundamental notion among the speculators that Chinese and Indian consumers just don't feel the pain of rising energy prices for some reason. Part of that is justified because these are fascist economies much like Nazi Germany and Imperial Japan of the 1930's, so the government somewhat forces their populace to a level of "immunity".

But believe me they are feeling the pain MUCH MORE than we are and simply cannot help but PULL BACK in a rather major way. I have a very well placed professional contact in Chunking and another in Goa in India. The mopeds and cars have been PARKED and going to remain PARKED for a while. Bicycles are back in fashion again.....

And on oil.... Oil prices in terms of Euros is only up marginally, less than 2%. Right now, if the dollar were where it was 18 months ago, oil would be sitting at about $81 not $117....and gas would still be about $2.70 a gallon....

 

[Toro]

My main point here is that if China and India are marginal buyers, they are also marginal CONSUMERS. There seems to be this fundamental notion among the speculators that Chinese and Indian consumers just don't feel the pain of rising energy prices for some reason. Part of that is justified because these are fascist economies much like Nazi Germany and Imperial Japan of the 1930's, so the government somewhat forces their populace to a level of "immunity".

But believe me they are feeling the pain MUCH MORE than we are and simply cannot help but PULL BACK in a rather major way. I have a very well placed professional contact in Chunking and another in Goa in India. The mopeds and cars have been PARKED and going to remain PARKED for a while. Bicycles are back in fashion again.....

And on oil.... Oil prices in terms of Euros is only up marginally, less than 2%. Right now, if the dollar were where it was 18 months ago, oil would be sitting at about $81 not $117....and gas would still be about $2.70 a gallon....

No, its not that they don't feel any pain. Rather, its that the creation of wealth is greater than the costs of energy to drive growth in the emerging markets. For the first time ever, demand from emerging markets will be greater than demand from the US.

Article.

http://paul.kedrosky.com/archives/2008/04/22/emerging_countr.html

A big picture.

http://www.bloomberg.com/apps/data?pid=avimage&iid=ixZPcCUBayBM

I'm not sure what you mean when you say oil is up 2% in euros. Do you mean over the past year? The price of oil in euros is up several fold since oil bottomed a decade ago.

At some point, the price of oil will lower demand, that is certainly true. That's how its supposed to work. It may be happening now.

 

[Zoomie1980]

No, its not that they don't feel any pain. Rather, its that the creation of wealth is greater than the costs of energy to drive growth in the emerging markets. For the first time ever, demand from emerging markets will be greater than demand from the US.

Article.

http://paul.kedrosky.com/archives/2008/04/22/emerging_countr.html

A big picture.

http://www.bloomberg.com/apps/data?pid=avimage&iid=ixZPcCUBayBM

I'm not sure what you mean when you say oil is up 2% in euros. Do you mean over the past year? The price of oil in euros is up several fold since oil bottomed a decade ago.

At some point, the price of oil will lower demand, that is certainly true. That's how its supposed to work. It may be happening now.

That's an assumption I'm simply not ready to buy yet, that energy demand from emerging markets will exceed that of the "first world". I simply do not see that at all. In fact, it's not even close...at least yet, but for some reason, speculators believe it, even though it's not even remotely close to reality. Maybe in 10 years but certainly not now.

In terms of Euros and oil I'm talking the past year....not 10. I never believed in $18 oil and I believe in $117 oil even less than $18 oil.... at least for the next several years. We are still producing about 2M barrels a day more than we consume and will through 2009. After that it starts to be a problem. By 2012 at current consumption trends it borders on disaster and becomes inevitable Armageddon by 2015.

But the assumption there is "at current demand curves"...which is, of course, and completely INVALID assumption.

 

[Toro]

That's an assumption I'm simply not ready to buy yet, that energy demand from emerging markets will exceed that of the "first world". I simply do not see that at all. In fact, it's not even close...at least yet, but for some reason, speculators believe it, even though it's not even remotely close to reality. Maybe in 10 years but certainly not now.

I didn't say emerging market demand will soon exceed first world demand. I said that right now, several developing nations for the very first time consume more oil than is consumed in the US.

As for not believing $117 oil, over the long term, neither do I. But over the near term, oil could get to $150 or $200. I'm not saying it will, but it wouldn't surprise me.

 

[Care4all]

I know I have mentioned this before and I thought I saw someone else like Jeff or Paul or someone else mention this....but, China is primarily growing leaps and bounds because of what we buy from them....if we go in to a prolonged recession, then our demand for China Products will go down....thus reducing China's oil needs too, no?

Care

 

[RetiredGySgt]

I know I have mentioned this before and I thought I saw someone else like Jeff or Paul or someone else mention this....but, China is primarily growing leaps and bounds because of what we buy from them....if we go in to a prolonged recession, then our demand for China Products will go down....thus reducing China's oil needs too, no?

Care

No.

 

[Care4all]

I didn't say emerging market demand will soon exceed first world demand. I said that right now, several developing nations for the very first time consume more oil than is consumed in the US.

As for not believing $117 oil, over the long term, neither do I. But over the near term, oil could get to $150 or $200. I'm not saying it will, but it wouldn't surprise me.

I thought it was just China and India combined now, exceeds us? Or was it China, India, and Brazil combined beats the usa now?

 

[Care4all]

No.

Why not ret sgt?

 

[RetiredGySgt]

Why not ret sgt?

They are not just selling to us and their growth is not just related to us. Now if the whole western economy drops that may effect their growth, but they like us do things besides just sell to others.

They are modernizing all aspects of their military, society and economy. They will continue to need more oil as they continue to increase the modernization to the over the 1 BILLION people in their country.

 

[Care4all]

They are not just selling to us and their growth is not just related to us.

Now if the whole western economy drops that may effect their growth, but they like us do things besides just sell to others.

They are modernizing all aspects of their military, society and economy. They will continue to need more oil as they continue to increase the modernization to the over the 1 BILLION people in their country.

Aren't we BY FAR their biggest customer? If we are, then we will affect them.

And the whole world IS INVOLVED in our recession, we ARE already a global economy. And yes, the EU's realestate market is getting ready to bust too, from what I hear.... and the Sub prime mess here has affected the world banks too....?

So, I think your second senario is more feasible than you think.

The modernization will slow for China as their own job market slows, with having to make less goods for us and others in the world....

This gives the people of China less expendable income...reducing demand....for the cars etc...imho.

Care

 

[Toro]

I know I have mentioned this before and I thought I saw someone else like Jeff or Paul or someone else mention this....but, China is primarily growing leaps and bounds because of what we buy from them....if we go in to a prolonged recession, then our demand for China Products will go down....thus reducing China's oil needs too, no?

Care

Yes, I think this is true. One would expect growth to slow in China and India if growth in America slows, as it is now, then energy demand will also slow. Global demand for oil is slowing right now.

However, demand for energy from China and India will not go back to where it was even five years ago.

 

[Eleutherios]

Surely America’s recent economical decline has nothing to do with the war on drugs. Nearly every penny given to the law enforcement, judicial, branches is spent tracking, preventing, and punishing the sale of various narcotics. Many of our poorer class are so immersed in the drug war and its various 'casualties' that any sort of economic gain for them becomes impossible. And finally, high amounts of money are leaving the country because of the black market inaccessibility of drugs - money that could be otherwise spent improving our own economy, if said drugs were to be legalized. Why? Because with a legalized drug, our favorite little piggies would have to get REAL jobs, and because notions founded by uptight mothers seem to rule this world.

Legalize Cannabis, start growing it in the country, and I guarantee you our economic problems would dissipate.

 

[roomy]

Surely America’s recent economical decline has nothing to do with the war on drugs. Nearly every penny given to the law enforcement, judicial, branches is spent tracking, preventing, and punishing the sale of various narcotics. Many of our poorer class are so immersed in the drug war and its various 'casualties' that any sort of economic gain for them becomes impossible. And finally, high amounts of money are leaving the country because of the black market inaccessibility of drugs - money that could be otherwise spent improving our own economy, if said drugs were to be legalized. Why? Because with a legalized drug, our favorite little piggies would have to get REAL jobs, and because notions founded by uptight mothers seem to rule this world.

Legalize Cannabis, start growing it in the country, and I guarantee you our economic problems would dissipate.

Assuming you got your wish, which drug would you champion next?

 

[Eleutherios]

probably cocaine or heroine. Maybe bring back some morphine...you know.

Because the slippery slope argument is a good argument right?

 

[roomy]

probably cocaine or heroine. Maybe bring back some morphine...you know.

Because the slippery slope argument is a good argument right?

As I thought, you are a fucking trollish idiot...I can smell you a mile away

The applause is for me by the way

 

[Eleutherios]

Was that even a counter argument? Or were you just proving to everyone that you lost for me?

Either way if i DO smell like a...err... "trollish idiot" then you must love the scent because you've been e-stalking me since i got on

 

[roomy]

Was that even a counter argument? Or were you just proving to everyone that you lost for me?

Either way if i DO smell like a...err... "trollish idiot" then you must love the scent because you've been e-stalking me since i got on

It was an immediate attraction, ask anyone here, I am hardly ever wrong, besides, I am what you wished for when you registered here, tell me I am wrong and prove yourself a liar

 

[Eleutherios]

I wasn't aware of making any wishes upon registering at this board, but seeing as through...what has it been now? 30-45 minutes of written correspondence, you seem to think you are A. as infallible as the god i can very much see you criticizing, and B. more knowledgeable of my innermost desires and personality than me myself, please enlighten me upon when and to what purpose i wished this unwished wish.

p.s. Your grammar, at the very least, is appallingly wrong.