Market Watch: Bank Failures to Surge in Coming Years

He'd built a new home by a lake in Texas, bought a boat and was working
on his golf game. While taking on some part-time work, Holloway also
traveled for months across the U.S. with his wife, catching up with old
friends and family. That life of leisure abruptly changed about six weeks
ago when Holloway got a phone call from his former employer, the Federal
Deposit Insurance Corp., or FDIC, which regulates U.S. banks and insures
deposits. Holloway, a 30-year FDIC veteran, had worked extensively with
failed lenders in Houston during the savings and loan crisis in the late 1980s
and early 1990s, when thousands of thrifts collapsed. Earlier this year, the
FDIC began trying to lure 25 retirees like Holloway back to work . . .

James Howard Kunstler: "This is orders of magnitude worse than 1933"

In the background of these practical problems is a crisis of capital orders
of magnitude worse than the one faced by Franklin Roosevelt in 1933. For,
behind the "liquidity" (i.e. insolvency) issues faced by the big institutions
lurks the Godzilla of the derivatives trade, which has evolved into a black
hole capable of sucking all notional "money" into oblivion. That "money,"
which represents the aggregate value of our society, also amounts to the
emperor's new clothes . . . As the black hole of derivatives sucks away
these "new clothes," America will stand naked against the elements of fate.

Wall Street Journal: Lost Opportunities Haunt Last Days of Bear Stearns

Mr. Schwartz, already dressed in his business suit, trudged into the locker
room, Alan Mintz, still in his sweaty gym clothes, made a beeline for the
boss. "How could this happen to 14,000 employees?" demanded the 46
-year-old senior trader, thrusting his face uncomfortably close to Mr.
Schwartz's. "Look in my eyes, and tell me how this happened!" Two and a
half months later, Mr. Schwartz still isn't quite sure. To Mr. Mintz and
others, he has blamed a market tsunami he didn't see coming. He told a
Senate committee last month: "I just have not been able to come up with
anything, even in hindsight, that would have made a difference."

Washington Post: New York Fed Dispatches MIB to Wall Street Banks

. . . the Federal Reserve has built on the fly a new system of monitoring
investment banks, radically redefining the central bank's role overseeing
Wall Street. New York Fed employees are working inside major investment
banks every day, alongside the Securities and Exchange Commission staff
members who are the firms' main regulators. The Fed employees are
trying to gather information the central bank can use to make sure the
billions of dollars it is lending the investment firms, through a special
emergency loan program are not being put at undue risk.

NY Times: Abandoned Houses Are Keeping Contractors Busy

The two men have seen far worse as they go from one deserted house to
another in northern Florida, where the foreclosure crisis has struck
particularly hard. Mortgage companies hire contractors like these men to
inspect and maintain houses that once-proud owners can no longer afford
and no one else wants. These days, business is brisk. These contractors
and thousands like them see first hand the detritus of the subprime era:
peeling paint, gutted interiors, family dogs left behind to starve . . .

NY Times: Auto Industry Side Swiped by Credit Crisis

Auto lenders and banks, closing their wallets, have prevented hundreds of
thousands of consumers from obtaining the financing for a car. Home
equity loans, which had been used in at least one of every nine deals, when
lenders were more generous, are no longer a source of easy money for
many prospective buyers. And used-car prices have fallen nearly 6% as
repossessed cars and gas-guzzling trucks and S.U.V.’s flood auction lots.

NY Times: Soaring Fuel Prices Take a Toll on Truckers

The squeeze on truckers’ profits from rising fuel costs is compounded by
the slowing economy, which is reducing freight traffic. Truckers say they
find it hard to impose fuel surcharges, in part because their industry has
suffered for years from over-capacity as deregulation drew thousands of
small operators into trucking.

Der Spiegel: The American Way of Life is In Serious Danger

The dollar is in a tailspin, the trade deficit is growing and a recession is on
the horizon. The American way of life is in serious danger. But the head of
the Federal Reserve keeps on pumping easy credit into the system -- a
crazy policy that will worsen the crisis. Devalued stocks, bad mortgage
loans and the diving dollar are damaging millions of investors and savers.
It's as if the tiger has leapt off the stage and is mauling the audience.

NY Times: Anxiety Rises as Paychecks Trail Inflation

Relinked at reader request:

Going back to the 1970’s, the single best predictor of the nation’s mood has
been its collective paycheck. For all the other things that affect public
opinion, like a war or a scandal, the power of wages jumps out at you when
you look at broad polling data over the last 30 years. When pay has been
steadily increasing, as it was in the 1980’s and late 90’s, optimism has
surged. But when pay stagnates, pessimism inevitably takes over.

NY Times: Welcome to the Era of Downward Mobility

Relinked at reader request:

In all, median income for the under-65 group was $2,000 lower in 2005
than in 2001, when the last recession bottomed out. . . . the population
now in poverty — 12.6 percent — is still higher than at the trough of the
last recession, when it was 11.7 percent. And among the poor, 43% were
living below half the poverty line in 2005. That’s the highest percentage of
people in "deep poverty" since 1975 . . .

KansasCity.com: Buy a Car, Get a Gun

Any customer of Max Motors who buys a new or used car can opt for a
coupon for $250 in gas or a check for a local dealer good toward the
purchase of a gun with the requisite background check. The dealership’s
Web site, which boasts: "We are aware of the gasoline and crime problem
in America. Max Motors, wants to be part of the solution . . ."

James Howard Kunstler in the Washington Post: "Wake up America"

The public, and especially the mainstream media, misunderstands the
"peak oil" story. It's not about running out of oil. It's about the instabilities
that will shake the complex systems of daily life as soon as the global
demand for oil exceeds the global supply. As the world passes the all-time
oil production high and watches as the price of a barrel of oil busts another
record, as it did last week, these systems will run into trouble. Instability in
one sector will bleed into another. Shocks to the oil markets will hurt
trucking, which will slow commerce and food distribution, manufacturing
and the tourist industry in a chain of cascading effects. Problems in finance
will squeeze any enterprise that requires capital, including oil production"

SF Chronicle: Supply-Demand Imbalance Boosts Oil Price

Even as the cost of crude oil has soared in recent years, the amount
pumped from the ground hasn't. Worldwide oil production has barely
budged, despite record prices. Since the start of 2004, oil's price has gone
from $33 per barrel to $132. Production, meanwhile, has risen just 1.8
percent, to 84.6 million barrels per day. Faced with rising global demand
and record prices, the oil companies have a powerful incentive to find,
pump and sell as much crude as they can. Instead, they're having a hard
time keeping their output level, much less expanding it. Big, untapped oil
fields - called "elephants" in the industry - are harder and harder to find.

Mail & Guardian: The End of Oil is Nigh

This school of thought has enjoyed only fringe status until recently, but is
now fast moving to the mainstream as crude oil prices continue to break
new records. Oil was nudging $130 a barrel this week. If we have indeed
reached the halfway mark, this means that oil production has peaked and
will decline inexorably from now on until the last possible barrel of oil has
been taken from the ground. Under these conditions oil prices will continue
to behave just as they have in recent times: they will go up and up.

George Monbiot: An Open Letter to the King of Saudi Arabia

. . . you know and I do not is the extent to which the price of oil might
reflect an absolute shortage of global reserves. You and your advisers are
perhaps the only people who know the answer to this question. Your
published reserves are, of course, a political artefact unconnected to
geological reality. The production quotas assigned to its members by Opec,
the oil exporters' cartel, reflect the size of their stated reserves, which
means that you have an incentive to exaggerate them. How else could we
explain the fact that, despite two decades of pumping, your kingdom
posts the same reserves as it did in 1988?

CNN: Steepest Decline in Driving Ever Recorded in U.S.

At a time when gas prices are at an all-time high, Americans have curtailed
their driving at a historic rate. The Department of Transportation said
figures from March show the steepest decrease in driving ever recorded.
Compared with March a year earlier, Americans drove an estimated 4.3
percent less -- that's 11 billion fewer miles, the DOT's Federal Highway
Administration said Monday, calling it "the sharpest yearly drop for any
month in FHWA history." Records have been kept since 1942.

www.lifeaftertheoilcrash.net

 

Wow that is crazy. It seems like we are all facing impending doom.

 

oznium wered you get the spark notes for this shiz

 

How big is the problem? Multiplying production (barrels per year) times the oil price (dollars per barrel) gives a total cost in dollars per year. It's an enormous number; tens of trillions of dollars per year. To put a scale on it, the three thin curves on the graph show the oil cost in contrast to the total world domestic product; the annual value the goods and services added up for all the world's countries. The three curves show the oil cost at one percent, two and a half percent, and five percent of the total world economic output. At $130 this morning, we are at six and a half percent.

Oil production obviously cannot consume 100 percent of the world's income. My intuitive, uninformed guess is that it cannot go above 15 percent. If we see oil at $300 per barrel, we will be looking out over the smoldering ruins of the world's economy.

So while it is still impossible to answer the question of "How much time is left", we might be able to use the price of oil and gas as some rough indicators of where we're at. We're hovering around $125/barrel and $4/gallon right now and already seeing significant slowdowns. Shutdowns likely begin around $200/barrel and $8/gallon. At $300/barrel and $12/gallon everything stops.

If prices continue to rise at a pace even roughly resembling the trajectory of the past couple of years, this gives us anywhere between 6-24 months before total shutdown.