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Oil Hits Two Year High As Analysts Predict $100 A Barrel In 2011

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http://www.telegraph.co.uk/finance/financetopics/oilprices/8113846/Oil-hits-two-year-high-as-analysts-predict-100-a-barrel-in-2011.html

Brent crude, traded in London, hit $88.80 before falling back to $88, which is slightly below highs seen in the spring. But New York prices topped their highest in two years, touching $87.22 per barrel at one point, before retreating on a stronger dollar in late trading.

Analysts have begun to forecast that the price of crude will reach $90 before the year is out and top $100 per barrel in 2011.

This week, JP Morgan raised its average 2011 forecast for New York-traded crude to $89.75 a barrel from $82.50, after the US Federal reserve said it would continue with quantitative easing.

"It is still the Fed's decision of Wednesday which is boosting oil price," said analysts from Commerzbank. "The additional liquidity pumped into the markets by the Fed's treasury purchases should also reach commodity markets and is thus leading to increasing oil prices. What is more, the higher price level reflects the weaker US dollar which is a direct consequence of the ultra-expansive US monetary policy."

Global oil demand has grown to 1m barrels per day in 2010 – increasing by an amount more than double previous forecasts. Prices were boosted this week when Ali al-Naimi, the Saudi Arabian oil minister, predicted prices of $70 to $90 rather than his previous estimate of $70 to $80. Libya, another member of the Opec, the oil cartel, has forecast $100 oil by the year end.

Food prices up, oil going up Bernanke's free money is already creating a massive boom.....

Problem is I can remember reading various reports that predicted oil at around $100 will trigger a recession.... We are clearly at a different time point now and the trigger price may have moved, what the effect of QE has on the recession trigger price is unknown. However we may be about to find out what price level is needed to trigger a recession.

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It was $80 would cause a recession and $90 would cause a depression if memory serves me right.

Presumably now $2,000 a barrel given the vomiting of fresh toilet paper.

On the upside, there will be less cars on the roads.

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On the upside, there will be less cars on the roads.

And lower rents and house prices as people struggle to pay for basic necessities.

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No chance.We're a long way from struggling to pay for basic necessities, a very long way indeed. No need to worry though, sterling is on an opposite track to the dollar

And lower rents and house prices as people struggle to pay for basic necessities.

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No chance.We're a long way from struggling to pay for basic necessities, a very long way indeed. No need to worry though, sterling is on an opposite track to the dollar

From personal observations and some of the data I read, we are much much closer than you imagine. For some segments of the middle class population we are already there actually.

For the rest, it's not a question of how far we are from it but how long it takes us which is a direct function of the printing speed of CBs. And from what I see ... they are one mightily enthusiastic bunch, they do want to get on with the job :)

Isn't it this week or last that a report came out about 2-3 million people stopping contributions to their pensions this year? And what are houses best for? Double whammy! :)

Edited by _w_

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Money going to the producers.. aka the hardy men out on the North Sea, the geologists and engineers working for the oil companies, the shipyards making the rigs.

Big money coming in investing with a chance at making real return, investing in real capital. Aka not speculating on something that already exists.

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From personal experience and some of the data I see, we are much much closer than you imagine. For some segments of the middle class population we are already there actually.

For the rest, it's not a question of how far we are from it but how long it takes us which is a direct function of the printing speed of CBs. And from what I see ... they are one mightily enthusiastic bunch, they do want to get on with the job :)

Completely agree

Between an inflated money supply (that we, the plebs, aint gonna get our mits on) and a deflating commodity supply due to growing raw resource constraints (in particular, energy), the price of essential goods and services are going only one way and it isn't south.

Between a rock and a hard place.

Edited by tallguy

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From personal experience and some of the data I see, we are much much closer than you imagine. For some segments of the middle class population we are already there actually.

I very much agree with this. The oil price spike may prove to be the Achilles heel of the world economy, and sadly it is largely the result of pumping too much liquidity to the system. I just don't see how Bernanke's plan will succeed and he may drive the world into a position of serious conflict.

It's good for the Arabian Gulf Region though.

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I very much agree with this. The oil price spike may prove to be the Achilles heel of the world economy, and sadly it is largely the result of pumping too much liquidity to the system. I just don't see how Bernanke's plan will succeed and he may drive the world into a position of serious conflict.

It's good for the Arabian Gulf Region though.

Not if they are being paid in dollars and Bernanke owns the presses. Unless, of course, they decide to be paid in some other currency.

However, we all saw what happended to Saddam when he tried that one.

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I just don't see how Bernanke's plan will succeed and he may drive the world into a position of serious conflict.

Bernanke's plan _is_ succeeding. You have to remember how CBs function: they use cattle prods on us to change our behaviour. And it usually works.

What's his only hope now: that incomes (personal, corporate and tax) rise. And how does he do that: by inflicting plain on households and companies. Companies are _forced_ to raise their prices eventually; people, cowered as they are by employers, are _forced_ to demand/protest/strike/harass/beg/etc. for pay rises and partially succeed.

Over a few year the incomes to debt ratios rise and the economy can restart with huge winners and losers. On to another cycle. Unless people lose complete faith in their respective currencies.

P.S. For a clue, just look at how much Ben is covering his backside; he knows some serious sh*t is going to hit the fan because of his actions:-)

Edited by _w_

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Bernanke's plan _is_ succeeding. You have to remember how CBs function: they use cattle prods on us to change our behaviour. And it usually works.

What's his only hope now: that incomes (personal, corporate and tax) rise. And how does he do that: by inflicting plain on households and companies. Companies are _forced_ to raise their prices eventually; people, cowered as they are by employers, are _forced_ to demand/protest/strike/harass/etc. for pay rises and partially succeed.

Over a few year the incomes to debt ratios rise and the economy can restart with huge winners and losers. On to another cycle. Unless people lose complete faith in their respective currencies.

I can understand your point and believe your thrust is correct but with a globalised labour force I just don't think that wage inflation will occur for the majority. I believe instead that this is going to lead to the destruction of society and wealth as we know it. Bernanke and those around him including politicians will become as hated as Hitler; History will reflect this fact.

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I can understand your point and believe your thrust is correct but with a globalised labour force I just don't think that wage inflation will occur for the majority. I believe instead that this is going to lead to the destruction of society and wealth as we know it. Bernanke and those around him including politicians will become as hated as Hitler; History will reflect this fact.

Destruction only if there is a complete loss of faith in the currency, but otherwise as you say, changes with mostly losers (such as our beloved BTL investors among many others) and some winners.

Ultimately, costs of production have to align between 'emerging' and western countries so there will be pain no matter what. It can happen via deflation or inflation with different winners and losers in each case. As far as I can see, beneficiaries of inflation are overwhelmingly in control.

Edited by _w_

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Destruction only if there is a complete loss of faith in the currency, but otherwise as you say, changes with mostly losers (such as our beloved BTL investors among many others) and some winners.

Ultimately, costs of production have to align between 'emerging' and western countries so there will be pain no matter what. It can happen via deflation or inflation with different winners and losers in each case. As far as I can see, beneficiaries of inflation are overwhelmingly in control.

I don't think it has anything to do with the currency. It has to do with mass unemployment, deflating asset values and rising prices of basic consumer items, There is no way that wages can begin to keep up with the rise in the price of goods that is on the horizon. Bernanke is hollowing out the entire asset base of the average citizen, and giving it to the wealthiest of our society. The end game of this strategy is complete political disintegration at the grass roots level. The consequences will be extreme.

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You have to look at things in real terms:

It has to do with mass unemployment

No, if wages in real terms rise more slowly than offshore wages and other costs of production then you encourage employment. That's after the bit where corporate margins get crushed though (sic) but eventually you get there, after lots of pain.

deflating asset values

Not in nominal prices so we keep up appearances, very acceptable politically, even if investors in those deflating assets (in real terms) are crushed.

rising prices of basic consumer items

Absolutely! That's what we need more of (I'm being devil's advocate here obviously). And wait until those asses in Korea, Brazil, etc. impose capital controls to keep their currencies devalued: that will make commodities rise even more!

There is no way that wages can begin to keep up with the rise in the price of goods that is on the horizon.

That's the whole point:

- The middle class' standard of living drops dramatically to match that of the rest of the world.

- Debts are wiped out in real terms, just what the doctor ordered.

IMO the middle class has already been destroyed; they just don't know it yet.

Edited by _w_

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You have to look at things in real terms:

It has to do with mass unemployment

No, if wages in real terms rise more slowly than offshore wages and other costs of production then you encourage employment. That's after the bit where corporate margins get crushed though (sic) but eventually you get there, after lots of pain.

deflating asset values

Not in nominal prices so we keep up appearances, very acceptable politically, even if investors in those deflating assets (in real terms) are crushed.

rising prices of basic consumer items

Absolutely! That's what we need more of (I'm being devil's advocate here obviously). And wait until those asses in Korea, Brazil, etc. impose capital controls to keep their currencies devalued: that will make commodities rise even more!

That's the whole point:

- The middle class' standard of living drops dramatically to match that of the rest of the world.

- Debts are wiped out in real terms, just what the doctor ordered.

IMO the middle class has already been destroyed; they just don't know it yet.

So Bernankes grand plan is to introduce the world to another 1000 year dark age...

Instead of just letting the economy take its course, and extinguish the debt, let prices fall, so people can survive.

This is why he will be a hated man, a pariah for all history.

Edited by Toto deVeer

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So Bernankes grand plan is to introduce the world to another 1000 year dark age...

No, our fate was sealed a long time ago: in the 80s when our dear leaders voted for GATT, and also as generation after generation of people voted for politicians that promised (and delivered) inflation.

Instead of just letting the economy take its course, and extinguish the debt, let prices fall, so people can survive.

It is not acceptable to those in charge so it won't happen if they can do anything about it, and I think they can.

I have not spent too much time looking at detailed implications of a deflationary bust but I think you do not appreciate the full extent of damage and suffering that would be caused by a deflationary outcome: the nation is bust, the western world is bust, a vast majority of people are insolvent, all banks are bust and to follow deflation would pulverise all of them. And _you_ would have to pay for the damage anyway, not mentioning the fact that wage balancing between us and emerging economies would still keep going anyway. As I wrote above, the damage was done long ago, all we can do now is mitigate it but there is no coming out of this unscathed.

This is why he will be a hated man, a pariah for all history.

I think you are right but really, who cares about the little prat. I think all of us will be better off focusing on more important things.

Edited by _w_

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No, our fate was sealed a long time ago: in the 80s when our dear leaders voted for GATT, and also as generation after generation of people voted for politicians that promised (and delivered) inflation.

I agree with your thrust, but not that our fate is sealed.

It is not acceptable to those in charge so it won't happen if they can do anything about it, and I think they can.

I have not spent too much time looking at detailed implications of a deflationary bust but I think you do not appreciate the full extent of damage and suffering that would be caused by a deflationary outcome: the nation is bust, the western world is bust, a vast majority of people are insolvent, all banks are bust and to follow deflation would pulverise all of them. And _you_ would have to pay for the damage anyway, not mentioning the fact that wage balancing between us and emerging economies would still keep going anyway. As I wrote above, the damage was done long ago, all we can do now is mitigate it but there is no coming out of this unscathed.

The accountability that is associated with failure, involving both sides of a transaction, and the ability to extinguish this failure, is at the very core of a healthy, functioning, civilized society.

I do not agree that the suffering will be any worse under deflation than what is facing humanity under our current trajectory. At least with a deflationary cycle the money that people possess can be relied upon in terms of purchasing power, and the value from a person's labour 10 or 20 years ago will be just as valuable today, perhaps more so. And the compensation for that labour can used when it is earned, or in 50 years hence, and can be relied upon. Thus we would see the formation of capital, over the long term, which is the essence of a stable capitalist system.

This is in fact the situation that existed in the United States during the period of post civil war to the creation of the Federal Reserve. A loaf of bread cost roughly 50 cents during that entire period.

The dark place where we are headed is going to destroy all notion of the value of human labour. This, _w_, is the cross-roads that we face.

I think you are right but really, who cares about the little prat. I think all of us will be better off focusing on more important things.

There is the view that there are others who would follow a different path. However, perhaps the repercussions of his actions will lead to the complete demise of the Federal Reserve and central banking as we know it. But that is a dream, not a reality, in my opinion.

Edited by Toto deVeer

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I very much agree with this. The oil price spike may prove to be the Achilles heel of the world economy, and sadly it is largely the result of pumping too much liquidity to the system. I just don't see how Bernanke's plan will succeed and he may drive the world into a position of serious conflict.

It's good for the Arabian Gulf Region though.

And who has the aircraft carriers and weapons?

Winner takes all?

Still at least no one dies in global conflicts...

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  • 200 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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