Understanding The New Price Of Oil

Submitted by Tyler Durden: 

Submitted by ChrisMartenson guest contributor Gregor Macdonald

Understanding The New Price Of Oil

In the Spring of 2011, when Libyan oil production -- over 1 million barrels a day (mpd) -- was suddenly taken offline, the world received its first real-time test of the global pricing system for oil since the crash lows of 2009.

Oil prices, already at the $85 level for WTIC, bolted above $100, and eventually hit a high near $115 over the following two months.

More importantly, however, is that -- save for a brief eight week period in the autumn -- oil prices have stubbornly remained over the $85 pre-Libya level ever since. Even as the debt crisis in Europe has flared.

As usual, the mainstream view on the world’s ability to make up for the loss has been wrong. How could the removal of “only” 1.3% of total global production affect the oil price in any prolonged way?, was the universal view of “experts.”

Answering that question requires that we modernize, effectively, our understanding of how oil's numerous price discovery mechanisms now operate. The past decade has seen a number of enormous shifts, not only in supply and demand, but in market perceptions about spare capacity. All these were very much at play last year.

And, they are at play right now as oil prices rise once again as the global economy tries to strengthen.

Ron Paul: No Money for Undeclared Wars + + +

Ice Age Park? Russian, S.Korean scientists to clone woolly mammoth

A Siberian research institute has joined forces with the world’s most controversial geneticist to clone the woolly mammoth – a species that is said to have been extinct for thousands of years. Vasily Vasilyev, vice rector of North-Eastern Federal University of the Sakha Republic and Hwang Woo-Suk of South Korea's Sooam Biotech Research Foundation have signed an agreement, and say they hope to produce a living mammoth within six years.

Japan's Debt Disaster and China’s Non-Rebalancing Act: Economic Toxic Brew Portends Currency Crisis

Every country in the world understands the need for global trade rebalancing. Yet, politicians have done nothing but take stances that mathematically cannot work.

 
Mathematical Impossibilities 


1. Germany wants the rest of Europe to raise exports and become more competitive while simultaneously protecting its export machine and imposing numerous austerity measures on the rest of Europe. Mathematically, it cannot happen.

2. China wants to wean itself off an export model but does not want the pain associated with  measures that would actually increase domestic demand. Mathematically, it cannot happen.

3. Japan wants to raise taxes, increase consumer spending, and protect its export model, all at the same time. Mathematically,  it cannot happen.

4. The US needs to reduce its budget deficit, rein in pension promises, and fix various structural problems (many associated with public unions - the same as in Greece and Spain), but lacks the political will to do so. Mathematically, U.S. deficit spending is not sustainable.

In all four situations above, I have described situations that are mathematically impossible, not just unlikely.

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Japan's lost libido and America's asexual future

A Japanese government study that should have shaken the psychology profession to its shoelaces went through the news media with a mild degree of titillation last month. Almost a third of Japanese boys aged 16-10 and three-fifths of girls say that they have no interest in sex. That is daunting, for all the world's cultures have believed that women enjoy sex more than men, as the Greek seer Tiresias told the gods according to Ovid.

The hormones of late adolescence evidently rage in vain against some cultural barrier that makes young Japanese "despise" sexual relations, according to the Japan Family Planning Association's report [1]. The whole edifice of liberal social policy should have tumbled upon the news, which refutes Freud's premise that libido is the driving force in human character. For 60years, the sexual revolution insisted that repressed desire is the root of all evil. It turns out that the ultimate victim of sexual revolution is sex itself.

Guy Who Rented All 94 Rooms of Aspen Hotel for Party Scores Awesome New Goldman Job

Matt Taibbi: Remember the story about the Wall Street guy who rented out all 94 rooms of an Aspen hotel for three days for his daughter's Bat Mitzvah?

The main character in that tale was an individual named Jeffrey Verschleiser, a former Bear Stearns executive who was instrumental in helping blow up that venerable firm. Verschleiser among other things was reportedly involved with an elaborate Wall Street version of a merchandise return scam, only instead of taking the proceeds from returned TVs and stereos, his unit was pocketing the cash from crap mortgages sold back to banks on behalf of investors.

Verschleiser also made a bundle burning Bear's bond insurers, whom he bet against after inducing them to insure his crappy mortgage bonds, nicknamed "Sack of Shit" bonds by one of the funny dudes in his department. Verschleiser reportedly bragged that he made $55 million shorting his own bond insurers in the space of three weeks. Those interested in the whole sorry story should check out reporter Teri Buhl's excellent Atlantic magazine piece entitled, "E-mails Suggest Bear Stearns Cheated Clients Out of Billions."

Fed Unveils Doomsday Scenario for Banks

The Federal Reserve  released its "worst-case scenario" bank stress test criteria Monday and said it will release full results Thursday at 4:30 p.m. ET.

Former CIA Officer Michael Scheuer on the Economics of War with Iran - Capital Account

Does the US imperial machine manufacture weapons in order to confront new threats, or does it manufacture threats in order to sell new weapons? We try to answer that questions and more on today's Capital Account with ex-CIA agent Michael Scheuer as the UN security council votes to extend its mission in libya, and as America's oldest active duty warship leaves for its last deployment to Iran and Syria. We look at the economics of war and ask Michael Scheuer what he thinks is at stake for America if it were to attack Iran and what he thinks is really driving the policy to bomb that country. What are the malign interests at work here, and who really stands to benefit from an attack on Iran? What is Israel's role in all of this, and what is the likelihood that an attack would put the US at greater risk of a terrorist attack?

Why It's Mathematically Impossible To Avoid Infringing On Software Patents

from the scalability-problems dept

In 2008 James Bessen and Michael Meurer came out with a truly excellent book, Patent Failure. It's chock full of excellent information and a pretty wide survey of the research showing just how much patents harm innovation. While I don't necessarily agree with the "solutions" proposed, the key thesis of the book makes a tremendous amount of sense: to have a functioning market, you need property with clear borders. If the borders aren't clear at all, the end result is that no one knows when they're trespassing or even what they're buying, and the benefits of a market collapse, and instead you get mired down in legal disputes. That's exactly what we're seeing with patents today. Of course, one of the key reasons for this -- as we've been explaining for years -- is that patents are not property -- and thus the attempt to force property-like rules on something that is naturally abundant is going to make it impossible to creates reasonable boundaries.

Buy Gold Because A Currency Crisis Is Coming

"All currencies are toilet paper but the dollar is double ply."

How to Meet Rational Women, and My Son Is in Prison!

The Freedomain Radio Call in Show

Bailiff vs Barricaded Gunman Homeowner Standoff In Northwest Detroit

The homeowner was less than receptive. He pointed a rifle at the bailiff and refused to come down from the porch. We’re told the bailiff then called police. When the homeowner saw SWAT trucks approaching, he locked himself in the home.