Saturday Haiku and An Oil Quiz   (May 10, 2008)


Longtime contributor Jed H. rose to last week's haiku challenge with these thought-provoking lines:

Two black swans landed
Housing and credit markets
Next: dollar, stocks, bonds

What I mean to say and foresee by this Haiku is that ....The Crashes in both Housing (in USA & global), plus the related Crash in the credit / mortgages/ hedge fund/ derivatives markets are but 2 of 3 "Black Swans" which have landed and come home to the pond.

Although I can not explain just "Why", it is my perception that ... the third and last Black Swan shall be the collapse of the US Dollar, which will take with it K- Wave (~ once a century) Collapses of the US Bond & Stock markets. When the derivatives markets unravel & unwind, hedge insurers are belly up, there is not enough $$ ( $350 + Trln) money even in "Ben's Bag" for fixing this debacle. US T- paper , will be a cursed anathema .... US "Toilet - Paper" !!

Frequent contributor Michael S. submitted a sobering haiku and two on-the-ground reports on the economy:

I met someone working hard in the upper Midwest trying to "make it big" with an ice cream store and was told, with a scared look: "my 'home equity' financed this dream and things are tougher than I ever imagined."

The Greek Restaurant near my home ended its daily special today and made plans to raise prices because "nobody's coming." Of course, as we know, the supply/demand curve isn't kind under these circumstances!

A Haiku To The Distressed

If sunset happened
and darkness lingers tonight,
sad days are ahead.

Thank you, Jed and Michael. These haiku certainly challenge the official propaganda that the U.S. is not in recession and that this is a temporary "slowdown." Given the current perfection of propaganda ("some are more equal than others"), I wonder what the coming Depression will be labeled: "a persistent slowdown"?

Here's our Saturday Quiz:

Q: How much oil would the world consume every day if the global population's energy useage/density matched that of low-income (non-oil-exporting) African nations?

A: 3.5 million barrels a day. The U.S. currently consumes about 21 million barrels a day while total world consumption is about 85 million barrels a day.

Current world oil demand trends extend down from 25.6 barrels per capita per year (bcy) for the USA to well below 0.2 bcy in rural areas of low income developing countries (LDCs). While it is totally impossible that this could happen, the world’s current 6.35 Bn population consuming oil at US per capita rates would generate a demand of around 445 Million barrels/day (Mbd). At the other extreme, at 0.2 bcy world total oil demand would be telescoped to under 3.5 Mbd.

The current 4.5 bcy world average is around one-third the average in European Union countries, but more than 4 times per capita average consumption in India, and over 3 times that of China - which will soon become the world’s biggest industrial economy.

source:

OIL SHOCK AND ENERGY TRANSITION

Here is the conclusion of yesterday's post Oil: One Last Head-Fake?:

What I am suggesting is a gigantic head-fake in which global recession causes oil demand and price to plummet for a brief period. This will feed a resurgent complacency about Peak Oil, setting the world up for an unprecedented shock when the global economy and demand recovers. Here is a chart illustrating the thesis:




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