Thursday, August 30, 2007

coming economic gut punch?

The government said this morning that the U.S. economy grew at a rate of 4% in the second quarter of 2007. However, there’s an awful lot of interesting talk from less official sources. I have to agree with John Michael Greer- that we have wasted our eleventh hour and we might be about to experience some of the painful consequences of our dependence on oil.

Does this mean that we’re finally, for real, at the eleventh hour? That’s the richest and most bitter irony of all. As Robert Hirsch and his colleagues pointed out not long ago in a crucial study, the only way to respond effectively to Peak Oil on a national scale, and stave off massive economic and social disruptions, is to start preparations twenty years before the arrival of peak petroleum production. The eleventh hour, in other words, came and went in 1986, and no amount of pressure, protest, or wishful thinking can make up for the opportunity that was missed then. Listen carefully today and you can hear the sound of the clock tolling twelve, reminding us that the eleventh hour is gone for good.

Here’s a quick round up of charts and articles that all point towards a swift punch in the stomach for the U.S. economy.

Peak Oil is real and in the rearview mirror.

charts from The Oil Drum

Of course that means trouble for automotive America.

chart from Gas Buddy

Why would someone bet a huge amount of $ against the $ system?

From Money Morning,

Insiders trade when they know something. They’re not supposed to, but they do anyway. It’s just a fact of life.

Most of the time, it’s pretty petty-ante stuff, but occasionally a trade comes along that makes even jaded professionals like me sit up and take notice.

Just such a trade surfaced last Wednesday when anonymous parties agreed to buy and sell 120,000 SPY September call options using deep-in the-money strikes ranging from 60 to 95…

Any way you cut it, this is a monster trade because it controls 12,000,000 SPY shares. In fact, at a blended price of $7,500 per option, this works out to a $900 million bet that will play out by Sept. 21, when these options expire…

In essence, this trade potentially suggests that a very large player has effectively sold his or her SPY holdings for cash, without pressuring the market downward. If this is true, whoever placed this trade is essentially betting that the SPY – and, by extension, the broader market – will lose anywhere from 35% to 55% of its value in the next three weeks.

And there’s the current level of instability in the economy.

From Financial Sense,

As we move into September we must keep in mind that historically it is the worst month of the year for the stock markets. Years ending in 7 are particularly nasty as outlined in the July 15th edition of the “Crack up boom” series. With the events this year, it would argue for more turmoil. As outlined in the previous edition of ‘Fingers of Instability’, we are waiting for the cockroaches to emerge into the headlines and in this missive we will put a few “fingers” on them. The turmoil unfolding in the financial sectors of banks and prime brokers has a lot further to run before it will be safe to play on the long side. On the short side however, opportunities would appear to abound.

And this last one sure doesn’t exactly make me want to go out and spend money.

chart from George Ure

Perhaps the U.S. economy (and by default the global economy) will keep chugging along just fine. Maybe I’m just being silly. There is after all plenty to be happy about as the GDP surged ahead this spring… said the Commerce Department.

‘Hug me till you drug me, honey;
Kiss me till I'm in a coma:
Hug me, honey, snuggly bunny;
Love's as good as soma.’

-Aldous Huxley

1 comment:

Generic Viagra said...

yeah that was a good year, the problem is that in the next years, economu go to hell, and the last year was the worst economy fall since 1920.