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Discussion Starter #1
After the thread that I started (Oil's Not Well) got shut down because of irresponsible and unwelcome comments from somebody, here's an update on how the oil fared from last week:

Went down to $136.00/bbl. After the Photoshopped pics of Iran's supposedly "successful" missile test, it went up to $145.00. It closed today at $138.00, pulling down the Toronto Stock Exchange by 383 points. Today's oil drop is the biggest one day drop for oil at 4.4%

I think the upward trend of the price of oil has lost steam, only to be artificially propped up by unusual events related to oil. I hope the downward trend would continue until the price of oil reaches its true level.

On the other hand, 90 banks are on the watchlist after two huge banks suffered bank runs.

Let's focus on the price of oil, how to cope with the situation and not derail this thread by making racist and irresponsible comments.
 

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I have never seen the picture of the missiles but was it really confirmed that is was photoshopped?

I do hope it goes below $135 so that the weekly fuel price increase would stop!
 

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Wow I have to say that was a cheap shot by the Iranians to do that :wow:

Anyways, Looks like the whole world is on panick mode because the US might or is entering into a recession. The biggest market in the world will stop buying. Lots of markets dropping now - - a bitter pill that has to be taken :frown:

You guys think demand for oil, steel and other vital materials would drop after the Olympics. Hopefully China would give development a rest.

IF all these happens and oil dose drop - I hope the speculators get burned :steamed:
 

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"Hopefully China would give development a rest. "


The leaders of the Chinese government cannot give development a rest. There are more Chinese laborers than the entire populations of the USA and europe combined. These people have to have jobs or they will starve and riot. Think of the riots.

And the Chinese middle class are just now starting to buy cars in quantity (the road infrastructure and bridge infrastructure plans are humongously ambitious and long-term ), and refrigerators, and modern homes/apartments, and all the creature comforts that people in the West have. I have been to the Beijing Railway Station and mama mia it's like being inside the intestines of God.

As a famous investment guru said a few years ago : "For the next 20 years be long whatever China needs". China needs a LOT of oil and personally I don't see any return to cheap (less than $100) oil. It's China and India and developing countries like those Catholic countries in South America that don't use condoms so pump out millions of unsupportable babies like we do in the Philippines, which account for most of the growth in the demand for oil.

Learn Chinese, you young guys. You won't be sorry.
 

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"Hopefully China would give development a rest. "


The leaders of the Chinese government cannot give development a rest. There are more Chinese laborers than the entire populations of the USA and europe combined. These people have to have jobs or they will starve and riot. Think of the riots.

And the Chinese middle class are just now starting to buy cars in quantity (the road infrastructure and bridge infrastructure plans are humongously ambitious and long-term ), and refrigerators, and modern homes/apartments, and all the creature comforts that people in the West have. I have been to the Beijing Railway Station and mama mia it's like being inside the intestines of God.

As a famous investment guru said a few years ago : "For the next 20 years be long whatever China needs". China needs a LOT of oil and personally I don't see any return to cheap (less than $100) oil. It's China and India and developing countries like those Catholic countries in South America that don't use condoms so pump out millions of unsupportable babies like we do in the Philippines, which account for most of the growth in the demand for oil.

Learn Chinese, you young guys. You won't be sorry.
Well then they shouldn't subsidize fuel. Fuel's price in China is supported by the gov't - let them (the people) suffer like the whole world is suffering. As I tell people - if China can just copy and produce fake oil then they would do it :). I agree oil would never go down to below $100. But this should be an incentive for China, India and other big users to come up with devices to use alternative fuel like solar, wind and geothermal to lower cost and dependence to oil. (well maybe they are doing it already and we would see it in3-4 years time)

Regarding pop growth - after that 20 years of China power then it would be our turn. In fact I read a study that we are one of the few countries with positive growth. All first world countries including China and other newly developed countries have negative growth. We should just turn our population to a positive force. I won't be surprised if in 5 years we will hear of Filipinos or people with Fil lineage running a country or something to that effect
 

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In 29 yrs China has grown enormously (since Deng took over in 1979). Cheap labor is their backbone and economic asset. A natural resource they can tap like no other. Their need for oil will only go as more Chinese gets to own cars and motor vehicles. Theres no end in sight.

And now they have more Ph Ds graduating in foreign schools.

Related link: http://chronicle.com/news/article/4...sities-take-the-lead-in-earning-american-phds
 

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From Phil Star.

Oil tumbles again; prices fall over $10 in 2 days

Thursday, July 17, 2008 04:18 AM

NEW YORK (AP) - Oil prices settled sharply lower for the second time in a row yesterday, leaving crude more than $10 cheaper in just two days of frenzied trading and prompting speculation that the hard-charging market may be running out of steam.

Light, sweet crude for August delivery fell $4.14 to settle at $134.60 a barrel on the New York Mercantile Exchange, after earlier sinking as low as $132. The drop follows a $6.44 sell-off Tuesday, crude's biggest since the Gulf War.

The two-day slide of $10.58 a barrel marks a dramatic turnaround in crude prices, which as recently as Friday traded at record highs above $147 a barrel. But even with this week's sell-off, prices remain about 80 percent above where they were a year ago and up about 40 percent from the start of the year.
 

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"While demand is falling in the United States and Western Europe, oil consumption is still expected to rise this year, because of growth in China, India, and the Middle East. That growth, which should reach about a million barrels a day this year, provides a floor for oil prices." - New York Times


Yup. And don't forget the non-condom-using Catholic developing (always developing) countries, like those in South America. The oil problem is here to stay.

Re: pop growth - the population of India is increasing by 1 million people PER MONTH. It will overtake China's population by around 2025 or somewhere around there.

China's population is INCREASING, not decreasing - it's just increasing at a slower rate than before, because of the one-child policy (imperfectly observed because all Chinese families want sons) and because of urbanization. But it's increasing.

As is the population of most developing countries.

We should differentiate a slowing growth rate from an actual negative growth rate - a really decreasing population - which is true mainly for some european countries and Japan. But the decreases are far overwhelmed by the increases in China, India, South America, smaller places like the Philippines, and Africa.

Re: Filipinos "taking over" - our OFWs are not the only ones out there - there are three times as many Indians in the Middle East as there are Filipinos for instance, there are plenty of Sri Lankans etc. laborers and domestics who are cheaper than ours, some countries like Japan simply don't want foreign workers, and well, there are so many illegal job-seeking migrants from so many countries. We will not take over the world.
 

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Let China Float their Currency and let us see what happens.
My point exactly! There is too much intervention from the government. From currency to fuel and other commodities. They should level the playing field.

Once the middle class would hunger for more material goods then labor won't be that cheap in China too.

BTW, I also don't believe or support subsidy that our government is doing. I believe that it is a waste of money and would make people lazy. They should instead use that money for education and income generating means. Like use it in infra or other projects. Give people jobs and at the same time let other people benefit from their labor so that they can create more opportunities also
 

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"While demand is falling in the United

<snip>

Re: pop growth - the population of India is increasing by 1 million people PER MONTH. It will overtake China's population by around 2025 or somewhere around there.

China's population is INCREASING, not decreasing - it's just increasing at a slower rate than before, because of the one-child policy (imperfectly observed because all Chinese families want sons) and because of urbanization. But it's increasing.

As is the population of most developing countries.

We should differentiate a slowing growth rate from an actual negative growth rate - a really decreasing population - which is true mainly for some european countries and Japan. But the decreases are far overwhelmed by the increases in China, India, South America, smaller places like the Philippines, and Africa.

Re: Filipinos "taking over" - our OFWs are not the only ones out there - there are three times as many Indians in the Middle East as there are Filipinos for instance, there are plenty of Sri Lankans etc. laborers and domestics who are cheaper than ours, some countries like Japan simply don't want foreign workers, and well, there are so many illegal job-seeking migrants from so many countries. We will not take over the world.
You may have a point about the Sri Lankans and Indians - I think those are the few countries with positive growth. I'm sorry that I can't substantiate my claim but if I'm not mistaken China has neg growth. Once again no data to back this up but I think net effect around the world is negative growth. Hmmm.... I will try to dig up some data.
 

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http://www.google.com/search?sourceid=gmail&q=population growth rate+china

China's population growth rate is over .6%. It's positive.

And no, frankly not just a "few" countries in the world have positive growth rates. Most do.

You may be confusing a population growth rate that has been declining in magnitude- but is still a positive growth rate - with an actual negative growth rate, which means that the population is actually shrinking. Those two situations are not the same.

And when a population is very large, like India's approx. 1 billion , even a relatively small growth rate percentage - all population growth rates are small anyway - mostly from some fraction of 1% to about 2.5%- will mean a very large number of more people in the population every year in ABSOLUTE terms. On the other hand, a thinly-populated place like Iceland could have a relatively very high population groth rate of 3%, and it would not matter to the world.
 

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http://www.google.com/search?sourceid=gmail&q=population growth rate+china

China's population growth rate is over .6%. It's positive.

And no, frankly not just a "few" countries in the world have positive growth rates. Most do.

You may be confusing a population growth rate that has been declining in magnitude- but is still a positive growth rate - with an actual negative growth rate, which means that the population is actually shrinking. Those two situations are not the same.

And when a population is very large, like India's approx. 1 billion , even a relatively small growth rate percentage - all population growth rates are small anyway - mostly from some fraction of 1% to about 2.5%- will mean a very large number of more people in the population every year in ABSOLUTE terms. On the other hand, a thinly-populated place like Iceland could have a relatively very high population groth rate of 3%, and it would not matter to the world.
OK you got me :) - The CIA link for info is pretty cool - thanks for the links
 

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Discussion Starter #15
Oil closed at $134.60 today. Down $10.58 in two days. Same as what happened last week before the Photoshopped pics came out.

There was a massive sellout of energy stocks today. The Toronto Stock Exchange and the Dow went up because of the expected return of consumer confidence brought about by the drop in oil prices.
 

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"OK you got me "

Nah, edtf. I didn't get you. Nobody wins over anybody on this thread. We just help each other.

The GDP growth rate for the second quarter in China has just been released and it is 10.4%. That sounds high, and is about double the Philippine GDP growth rate at this time, but China's growth rate is actually down significantly from the previous 12%.

It appears that economic activity in the world, even in China, is slowing down. Inflation will do that.

Wealth just keeps getting transferred to those Arabs. When billions of people pay through the nose, all that additional cash goes somewhere - to the oil exporters, and the Arabs are way up there in oil exports, and they have small populations and just oodles and oodles of cash which they in fact have a hard time spending and investing. They have been bailing out- buying at low prices- chunks of Citigroup equity and part-ownership in other prominent Western financial institutions. They have so much money they are putting up the tallest building in the world in Dubai, plus those unbelieveable World Island, Palm island, etc. stupendous developments.

Transfer of Wealth, on a scale never seen in the history of the world .
 

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They say that there is already pressure for China. Given that they have been the cheaper alternative manufacturer of the world for sometime, the requirement to improve quality and better manufacturing procedures from western countries has resulted to push costs up. Whats the prognosis - is China's economy nearly overheating?
 

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Just to add to the tremors in the US, there are major concerns that the two major mortgage finance firms in the United States backed by the Federal government, Fannie Mae and Freddie Mac, could require a Federal bailout. Reacting to the growing concerns the Federal Reserve Chairman indicated the extension of credit facilities to investment banks could last beyond this year well into 2009, which signals that the mortgage meltdown is far from over. This will affect the greenback as well as oil benchmarked against the USD
 

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Oh absolutely, Jimbullet; the crisis is by no means over.

I am a professor and here are some excerpts from an article by a professor (at the NYU Stern School of Business) called Nuriel Roubini. Over the years, I have generally had opinions similar to his. He tells it straight :

RGE Monitor MEDIA ALERT: Nouriel Roubini predicts the worst financial crisis since the Great Depression and the worst U.S. Recession in the last few decades.

New York, July 15, 2008-
In a series of recent writings on the RGE Monitor Nouriel Roubini &#8211; Chairman of RGE Monitor and Professor of Economics at the NYU Stern School of Business - has argued that the U.S. is experiencing its worst financial crisis since the Great Depression and will undergo its worst recession in the last few decades. His analysis leads to the following conclusions:

This is by far the worst financial crisis since the Great Depression.

Hundreds of small banks with massive exposure to real estate (the average small bank has 67% of its assets in real estate) will go bust
Dozens of large regional/national banks (a' la IndyMac) are also bankrupt given their extreme exposure to real estate and will also go bust
Some major money center banks are also semi-insolvent and while they are deemed too big to fail their rescue with FDIC money will be extremely costly.

The FDIC that has already depleted 10% of its funds in the rescue of IndyMac alone will run out of funds and will have to be recapitalized by Congress as its insurance premia were woefully insufficient to cover the hole from the biggest banking crisis since the Great Depression

Fannie and Freddie are insolvent and the Treasury bailout plan (the mother of all moral hazard bailout) is socialism for the rich, the well connected and Wall Street; it is the continuation of a corrupt system where profits are privatized and losses are socialized. Instead of wiping out shareholders of the two GSEs, replacing corrupt and incompetent managers and forcing a haircut on the claims of the creditors/bondholders such a plan bails out shareholders, managers and creditors at a massive cost to U.S. taxpayers.
This financial crisis will imply credit losses of at least $1 trillion and more likely $2 trillion.

This is not just a subprime mortgage crisis; this is the crisis of an entire subprime financial system: losses are spreading from subprime to near prime and prime mortgages; to commercial real estate; to unsecured consumer credit (credit cards, student loans, auto loans); to leveraged loans that financed reckless debt-laden LBOs; to muni bonds that will go bust as hundred of municipalities will go bust; to industrial and commercial loans; to corporate bonds whose default rate will jump from close to 0% to over 10%; to CDSs where $62 trillion of nominal protection sits on top an outstanding stock of only $6 trillion of bonds and where counterparty risk &#8211; and the collapse of many counterparties &#8211; will lead to a systemic collapse of this market.

This will be the most severe U.S. recession in decades with the U.S. consumer being on the ropes and faltering big time as soon as the temporary effect of the tax rebates will fade out by mid-summer (July). This U.S. consumer is shopped out, saving less, debt burdened and being hammered by falling home prices, falling equity prices, falling jobs and incomes, rising inflation and rising oil and energy prices. This will be a long, ugly and nasty U-shaped recession lasting 12 to 18 months, not the mild 6 month V-shaped recession that the delusional consensus expects.

Equity prices in the US and abroad will go much deeper in bear territory. In a typical US recession equity prices fall by an average of 28% relative to the peak. But this is not a typical US recession; it is rather a severe one associated with a severe financial crisis. Thus, equity prices will fall by about 40% relative to their peak. So, we are only barely mid-way in the meltdown of stock markets.

The rest of the world will not decouple from the US recession and from the US financial meltdown; it will re-couple big time. Already 12 major economies are on the way to a recessionary hard landing; while the rest of the world will experience a severe growth slowdown only one step removed from a global recession. Given this sharp global economic slowdown oil, energy and commodity prices will fall 20 to 30% from their recent bubbly peaks.

The current U.S recession and sharp global economic slowdown is combining the worst of the oil shocks of the 1970s with the worst of the asset/credit bust shocks (and ensuing credit crunch and investment busts) of 1990-91 and 2001: like in 1973 and 1979 we are facing a stagflationary shock to oil, energy and other commodity prices that by itself may tip many oil importing countries into a sharp slowdown or an outright recession. Also, like 1990-91 and 2001 we are now facing another asset bubble and credit bubble gone bust big time: the housing and overall household credit boom of the last seven years has now gone bust in the same way as the 1980s housing bubble and 1990s tech bubble went bust in 1990 and in 2000 triggering recessions. And a similar housing/asset/credit bubble is going bust in other countries &#8211; U.K., Spain, Ireland, Italy, Portugal, etc. &#8211; leading to a risk of a hard landing in these economies.

But over time inflation will be the last problem that the Fed will have to face as a severe US recession and global slowdown will lead to a sharp reduction in inflationary pressures in the U.S.: slack in goods markets with demand falling below supply will reduce pricing power of firms; slack in labor markets with unemployment rising will reduce wage pressures and labor costs pressures; a fall in commodity prices of the order of 20-30% will further reduce inflationary pressure. The Fed will have to cut the Fed Funds rate much more &#8211; as severe downside risks to growth and to financial stability will dominate any short-term upward inflationary pressures. Leaving aside the risk of a collapse of the US dollar given this easier monetary policy the Fed Funds rate may end up being closer to 0% than 1% by the end of this financial disaster and severe recession cycle.

The Bretton Woods 2 regime of fixed exchange rates to the US dollar and/or heavily managed exchange will unravel &#8211; as the first Bretton Woods regimes did in the early 1970s &#8211; as US twin deficits, recession, financial crisis and rising commodity and goods inflation in emerging market economies will destroy the basis for it existence.
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Have a nice day.
 
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