SLL: The Shape Of Things To Come

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A look at the natural gas market as foreshadowing the broader economy.

Go long yardbirds and potable water.

20 responses to “SLL: The Shape Of Things To Come

  1. Centurion_Cornelius

    HELP WANTED: Inquire Within
    Bankers, crooks, con-artists, shysters, Congress Critters, black-robed Pharisees, POTUS, the Fed, IMF, BIS, and assorted camp-followers:

  2. Centurion_Cornelius

    Whoops! wrong image that: fixed:

  3. I work in the oil and gas industry and it’s very ugly right now with regards to employment in both the producers and services companies. Many are taking transfers overseas just to keep their jobs. While gas and diesel prices are great for the pocket book, it’s taking its toll on the workforce. And it doesn’t look good in the foreseeable future.

    • Detroit the True 3%

      You guys lived high on the hog for a while. Time for a reversion to the mean.

    • You guys? Go ahead and believe that bullshit, 3%…

      Target that crap towards the O & G producers. Those in the service industry struggle during the rough era’s and cycles as best as they can. It is one of the most rewarding employment opportunities in the region but not everyone are pumping millions in their checking accounts and likely in high on the hog.

      • Oh, do I hear that. “Reversion to the mean”…yeah right, that’s what it is. Not. Almost kills me that he’s from Detroit; very atypical for Detroiters of the mind…and there have been zillions of those over the years.

  4. I would like to draw your attention back to the bigger picture:

    https://en.wikipedia.org/wiki/List_of_largest_banks

    The top banks are now owned by China. Let that sink in before you read and digest the following:

    http://www.cfr.org/financial-crises/media-call-global-fallout-chinas-market-volatility/p36950

    “First, what has been happening in the Chinese stock market by itself does not really matter so much to the Chinese society or to the world economy, mainly because the stock market there has been a sideshow, not only to the economy but also to the financial system. You know, more than 80 percent of the financial resources are really in the banks in China. So as long as the banking system is OK, whatever happens to the stock market is more or less not as relevant to the Chinese economy.
    ….
    As Chen pointed out, it won’t be allowed to collapse because it is underwritten by the government, but it won’t be a source of great funding strength. There is excess capacity and a pathetically low rate of return on capital expenditure, right? Invest 50 percent of GDP and get, even in the official data, 7 percent growth. The true data is probably something closer to 4 ½ percent or less. So it is an economy that, I think, is sliding into recession.
    ….
    So why it matters is that the competence of the Chinese authorities as managers of the macro economy is really in question—the messing around with monetary policy, the hinting on doing things on the fiscal side through the policy banks. But I think the only thing that is likely to stop China from going into, I think, recession—which is, you know, 4 percent growth on the official data, the mendacious official data, for a year or so—is a large consumption-oriented fiscal stimulus, funded through the central government and preferably monetized by the People’s Bank of China.

    Well, they’re not ready for that yet. Despite, I think, the economy crying out for it, the Chinese leadership is not ready for this. So I think they will respond, but they will respond too late to avoid a recession, and which is likely to drag the global economy with it down to a global growth rate below 2 percent, which is my definition of a global recession. Not every country needs go into recession. The U.S. might well avoid it. But everybody will be adversely affected.

    The stock market, I think, itself is a sideshow. Consumption effects, you know, wealth effects, minor. Almost no capex in China is funded through share issue. And so it is a symbol of the policy failure rather than intrinsically economically important.
    ….
    Because, as we know, when there—when there are problems coming up, the Chinese government will increase liquidity through money printing and so on. And then, at the same time, investment opportunities are very limited; there are not as many, you know, good investment opportunities there in China. So as a result of the increase in liquidity supply in China, more capital will flow out of China, and the U.S. will be among the first economies to really benefit.

    I have been away from Yale on—have been on leave from Yale for a year, and then now I’m back here. And then, talking to people in New York, then, I’ve been so impressed by how many new deals—new purchases of real estate and businesses that have happened over the last one year in New York and outside New York. So I think this trend will get even more clear, more sort of stronger if there are more challenges and more turbulences within the Chinese stock market and the real estate market and the economy there. So I think capital outflow will speed up as a result of the troubles there in China.”

    Your new landlord is a anti-gun nominal communist who is part of a global oligarchy.

    A lot like your old landlord.

    Enjoy.

  5. i see this preiod as the time parallel to the ong depression of 1873 to 1879 and also the great depression of 1873 to 1896, i suspect much like then, the world will mudle thru with wages and economic growth laying on the boottom until some kind of next panic that resolves the debt issues much like the panic of 1893 and then some return to normalcy if world war 3 has started and everyones job hadnt been replaced by robots.

  6. Alfred E. Neuman

    Reblogged this on The Lynler Report.

  7. Camacho2016!

    CA, Tesla’s Kid provides the another side of the coin on the low natural gas prices in a Lord Of The Rings-length comment over at SLL. Enjoy.

  8. The TBTFs should have been allowed to fail back in 2007. Massive pain of course but we might be on recovery by now. As it is we are following Japan and they have been in an economic malaise for 20+ years. Almost an entire generation.

  9. It’s not just Fracking/gas. The Coal Industry is ruined. Of course that was the plan not so much because it’s “dirty”.
    Soros and company are snapping the fields up on the cheap,knowing the billions of profits that are there. Hell where I’m at in NE Pa,there’s enough coal in the mountain I live on alone to heat like,every home in the Country for a hundred plus years.
    It’s deep mines though. Even the Bootleggers are finished…..
    CIII

  10. They don’t call it Dr. Copper for nothing. There is no better indicator than copper for global economic activity. Oil is vital. as well, but like gold and silver, more prone to gaming by the wise guys. Dr. Copper is telling us that a global depression is a done deal.

    As far as banking is concerned, large or small, size has nothing to do with the price of tea in China (pun intended). All banks are, in reality, insolvent. Leverage on capital is enormous – as large, if not larger, than hedge funds. Collateral for loans is dubious, if not outright fictitious, and largely inflated by lax monetary stimulus. Loans are valuated by mark-to-fantasy, as far more are non-performing than reported. In other words, liars poker.

    The elephant in the living room is the unregulated shadow banking system, whereby collateral is re-hypothecated over and over again, such that any asset value decline and credit contraction will cause a daisy chain of counter-party defaults, which I suspect, is happening in China, now. The unwind will be biblical, in it’s financial destruction.

    All monetary and fiscal stimulus from here on out, will be ineffective other than to effectively destroy all fiat currency, since they will start helicoptering money to Main Street, a la Weimer Germany.

    This is a process that will take many more months to unfold, although much more rapidly than it took to get to this point.

    There are many excesses that have to be expunged before we return to a sustainable path, economically, socially, and environmentally. This will take, at least, a generation, in my opinion.

  11. I think Barnhardt had it right on the Commode-ittys markets. Shits been rigged and gigged so much that no one can figure out which way is up. Tesla Kid comment and the article were good. Thanks.