Friday, February 12, 2016

SAR #16043

The End Is In Slight: One of the main reasons that low prices have not dried up the production of profitless petroleum is simple – many if not most fracking operations operate on borrowed money – not on capital raised from equities. And borrowed money has to be paid back from cashflow if there is no capital to tap. Thus they keep pumping so they can keep paying and hopefully hang on until prices rise. A very few may survive, but the simple math suggests most will not. They will eventually fail and default on their loans. Then the question becomes how badly will these bankruptcies impact the banking system?
The Money Quote: “Who wants billionaire Michael Bloomberg to run for president? People like Michael Bloomberg.”
Publicity Stunted: Germany has opened a TAFTA/TTIP Reading Room to give German legislators access to the text of the treaty. They have 2 hours to read the 300 page document (on a computer assigned by the secret-keepers), which is available only in English and is full of typos like “annd” for 'and' and 'teh' for 'the' and allowis any copying of the text be traced back to a specific person. You'd almost think that the public and its representatives don't have the right to know what their corporate overlords are up to, and you'd be right.
Interpretation: A 40-year longitudinal study has found that defiant children are more likely to succeed as adults than more compliant suck-ups. This does not mean they are nicer or better people; maybe their success reflects psychopathy.
Motto: We kill because we can.
Truth In Packaging: Obama wants to stop decades of hypocrisy and explicitly exempt Egypt from having to meet the human rights conditions required under US law for countries receiving US aid.
And Call Me In The Morning: Willem Buiter, Citi’s global chief economist, told investors that it is ‘likely’ that a global recession is underway, and that the current weak economic growth is not enough to avoid a serious global recession.
Links: The CDC has found physical evidence linking the Zika virus to microcephaly in four Brazilian cases, strengthening the suggestive but non-proven statistical correlation.
Firedwall: Members of the Congressional Black Caucus are insisting that the endorsement of Hillary Clinton by the Congressional Black Caucus PAC does not constitute an endorsement by the caucus itself and was done without input from the CBC membership.
Water Is Wet: S&P finds that “the low interest rates and quantitative easing used to rescue the economy after the 2008 crash have handed extra wealth to the richest households by propping up stock markets and supporting booming house prices.”
Porn O'Graph: Don't bank on it.
The Parting Shot:


George Anderson said...

If being a quadrillion, er, units [although it's safe to use $ because they are the world's 'reserve currency'] out of whack didn't sink the 'global economy' it's a pretty safe bet that a collapse will be a deliberate thing, somewhat akin to what they did in Zimbabwe.

Is anyone else disturbed by chillingly accurate description of the capitalist game plan seen in the Rocket Mortgage commercials by Quicken? [Sort of redefines the term 'check writing software'...]

It is the perfect (albeit simplified) explanation of how life under capitalism is supposed to work...but it leaves out the income part of the puzzle. In order to borrow the way Quicken wants you to you have to have a lot more disposable income than you have at the moment.

More alarming are the prices being bandied about by the 'Home Improvement Shows that anchor HGTV. Wrecked/dated homes are selling for a half a million dollars and will cost another quarter of a million to rehab.

Considering the 50% point of the wage scale is STILL hovering around $25k a year, who can afford this?

Short answer, nobody...but we can forgive them because, after all, it's television. A place where everybody lives in homes the rest of us can only dream of.

Turning back for a moment to today's headline (rhetorical if you didn't live through what has gone before) it seems HillBilly is the gift that just keeps giving.

Take one of the youngest presidents ever and plant him at the head of the faux opposition and they've had what, 30 years of 'wagging the dog'?

No irony should be lost on the fact that they're still around, long after their 'sell by' date. One would think they had to promise them a lot considering how effectively they dismantled the New Deal for the oligarchs...and now the shadow masters must be regretting their decision...but the future co-operation (of the young and gullible) depends on using this pair as an 'example'.

McMike said...

Re fracking. The economics are one-part ponzi scheme and one-part subprime lending boom. If they stop moving forward they will sink.

In addition, the big money is presumably made by the principals in the initial stages, after which it's moved to syndicated investment trusts to be foisted off on pension funds and retirees, Glengarry Glen Ross style.

So, they will indeed keep drilling as long as they can scrape together the capital and vendor financing to do so. And when it collapses, well, don't blink.