Great Depression of 2016

[rufus]

Bloomberg shows west Texas Intermediate at $53.39 this morning. Brent, the north sea oil, is at $57.10. For some reason, it always is about three or four dollars higher than what we produce.

 

[WooingWyandotte]

very interesting thread.

Even though I don't disagree with much  of what y'all are saying, I do believe that God is bigger than the future, and that he will  be with those that trust and honor Him. Anyone else feel the same way?

I agree. I don't find this thread very interesting, however. Maybe it'd be more catching if there was less quoting and more articulation on the subject they're discussing.

 

[coppercloud]

 

[hemet dennis]

Bloomberg shows west Texas Intermediate at $53.39 this morning. Brent, the north sea oil, is at $57.10. For some reason, it always is about three or four dollars higher than what we produce.

Maybe you should research why that is and let us know.

I'll let you know if you get it right.

 

[hemet dennis]

Dennis, I just read that the Russian Ruble has lost half of its purchasing power in the last year. http://nypost.com/2014/12/18/russias-wealthiest-lose-46-to-rubles-plummeting-value/

But just last January, almost a year ago, I read this: http://rt.com/business/russia-ruble-dollar-down-241/

So, it looks like they are going to the printing press to pay their bills. And now that oil prices have fallen, I guess that will accentuate the process.

It doesn't look good.

Half of it's purchasing power where ?
The value of the Ruble is only effected when buying imports, the Russian people don't buy a lot of imports.
Russia exports a lot of oil for Euro's and Dollars, so they are getting twice as many Rubles for every dollar they earn with exports.
They also have about $400 billion in currency reserves.

Remember I told you that a strong Dollar makes our exports more expensive and makes imports cheaper. That cheaper imports hurt domestic manufacturing. Well a weak Ruble does just the opposite for Russia.
Don't start crying for Russia just yet.

 

[rufus]

Maybe you should research why that is and let us know.

I'll let you know if you get it right.

Well Dennis, I am sorry for being slow to respond. I have been under the weather lately.

The shale revolution has really boosted out put. That produced in the US is of the light, sweet type. But deep drilling and fracking is occurring all around the world now.

Countries like Saudi Arabia and other gulf countries have created a society dependent upon that oil revenue. They are essentially one product nations. They need to fund the social welfare systems they have created. To not do so would mean the end of the current regimes. They need that money, and if the price of the product falls, they will just pump more. It is a spiral.

It is hard to go back to the camel and burro after one has had a Mercedes. Sadly, those countries did not diversify their economies when times were good.

At the same time, those producers would like to make production in the US too expensive to stay in business. This occurred previously in the 1980's when oil sank to about ten dollars a barrel. They were up against increased supply from the north sea and Alaska. I had some wells that were plugged and abandoned back then.

How this all will play out is yet to be seen. A lot of the exploration and production companies are funded by the junk bond market. When these companies start to default, we may see some real bad times.

I am sure you probably have another take on the situation. I would like to hear it.

 

[rufus]

Half of it's purchasing power where ?
The value of the Ruble is only effected when buying imports, the Russian people don't buy a lot of imports.
Russia exports a lot of oil for Euro's and Dollars, so they are getting twice as many Rubles for every dollar they earn with exports.
They also have about $400 billion in currency reserves.

Remember I told you that a strong Dollar makes our exports more expensive and makes imports cheaper. That cheaper imports hurt domestic manufacturing. Well a weak Ruble does just the opposite for Russia.
Don't start crying for Russia just yet.

Yes Dennis, there is a big difference between what governments say and what they do. Russia was supposed to dump dollars on the world market, but now we see an even stronger dollar.

The Soviets and now Russia have the ability to overcome all sorts of obstacles. They can restrict the importation of foreign goods, postpone payments and even cancel bonds. In dire cases, they even can sacrifice segments of their population. Remember the starvation in the Ukraine? Remember the fate of the Kulaks?

It seems like everyone in Russia raises potatoes and beet in their backyard. They can endure a lot.

They also have the valve to cut off gas to western Europe. That however would affect their revenue stream.

 

[hemet dennis]

Quote:
You didn't seem to put anything about why Brent is priced higher then WTI.

 

[hemet dennis]

Quote:
Where do you get that Russia was supposed to dump dollars ?
I think I told you about reading those conspiracy sites.

How is that hyper inflation we were supposed to have for the last few years working out ?

 

[rufus]

You didn't seem to put anything about why Brent is priced higher then WTI.

I suspect that is because it comes from the north sea and is closer to the European market.