On Sat, 26 Apr 2008 07:18:08 -0700, zzbunker wrote:
> On Apr 21, 6:23 am, "V-for-Vendicar"
> <Just...@[EMAIL PROTECTED]
> wrote:
>> "(David P.)" <imb...@[EMAIL PROTECTED]
> wrote in message
>>
>>
news:62620a3d-5dd7-44d1-97ef-31e53d9790f0@[EMAIL PROTECTED]
>>
>> Op-Ed Columnist
>> Running Out of Planet to Exploit
>>
>> By PAUL KRUGMAN
>> Published: April 21, 2008
>>
>> Nine years ago The Economist ran a big
>> story on oil, which was then selling for
>> $10 a barrel. The magazine warned that
>> this might not last. Instead, it suggested,
>> oil might well fall to $5 a barrel.
>
> But the only truely interesting question about oil and economics
> is why do economists and speculators even spectulate
> about the future of idiot fossil fuels, partulcuarly oil anymore.
Because they are actually speculating on the demise of fiat money.
> Since the intelligent money in science, engineering, and
> technology,
> pulled out of the fossil fuels markets almost 60 years ago now.
They lost.
> Partuclary since the only thing idiot magazine publishers
> even seem to know about oil is the Wal-Mart warehousing price,
> rather than the cost.
At last! A valid point.
>
>> In any case, The Economist asserted,
>> the world faced "the prospect of cheap,
>> plentiful oil for the foreseeable future."
>>
>> Last week, oil hit $117.
>>
>> It's not just oil that has defied the com-
>> placency of a few years back. Food
>> prices have also soared, as have the
>> prices of basic metals. And the global
>> surge in commodity prices is reviving
>> a question we haven't heard much since
>> the 1970s: Will limited supplies of natural
>> resources pose an obstacle to future
>> world economic growth?
(snicker) Why would anyone attempt to measure value in dollars? This is
not to say that population growth has not increased real costs. But the
use of the word "real" by latter day neoconomists is inappropriate.
>> How you answer this question depends
>> largely on what you believe is driving the
>> rise in resource prices. Broadly speaking,
>> there are three competing views.
>>
>> The first is that it's mainly speculation -
>> that investors, looking for high returns at
>> a time of low interest rates, have piled
>> into commodity futures, driving up prices.
>> On this view, someday soon the bubble
>> will burst and high resource prices will
>> go the way of Pets.com.
There is some actual some reality to this point.
>> The second view is that soaring resource
>> prices do, in fact, have a basis in funda-
>> mentals - especially rapidly growing
>> demand from newly meat-eating, car-
>> driving Chinese - but that given time
>> we'll drill more wells, plant more acres,
>> and increased supply will push prices
>> right back down again.
This is not a reality in that there are real limits to the environment
past which population cannot rise without destroying the ecosystem. I do
not imply that we are there yet, but we are probably getting close.
>> The third view is that the era of cheap
>> resources is over for good - that we're
>> running out of oil, running out of land to
>> expand food production and generally
>> running out of planet to exploit.
Good points all.
>> I find myself somewhere between the
>> second and third views.
Then you have missed the primary cause of price escalations in that the
demise of fiat currencies is that primary. The dollar leads this demise
but the other currencies must follow or their economies will collapse.
All the REAL stuff is therefore much higher priced when measured in fiat
currencies. At the same time the cost of labor has declined keeping
the price of PRODUCED goods lower than would have otherwise been the case.
These are the real reasons for the apparent and relative increases in
commodity prices.
>> There are some very smart people -
>> not least, George Soros - who believe
>> that we're in a commodities bubble
>> (although Mr. Soros says that the bubble
>> is still in its "growth phase"). My problem
>> with this view, however, is this:
>> Where are the inventories?
You are discussing the smaller of the contributors to perceived price
escalation of commodities.
>> Normally, speculation drives up commodity
>> prices by promoting hoarding. Yet there's
>> no sign of resource hoarding in the data:
>> inventories of food and metals are at or
>> near historic lows, while oil inventories
>> are only normal.
The amount of fiat money in the world system has grown enormously. Why do
you not understand that the value of that money has declined dramatically
and is expected to decline even further. This decline and the speculation
on further decline is primarily what you are seeing when you look at the
apparent rise in commodity prices?
>> The best argument for the second view,
>> that the resource crunch is real but tem-
>> ****ary, is the strong resemblance between
>> what we're seeing now and the resource
>> crisis of the 1970s.
What "resource crises of the 1970's"? there was massive inflation in the
70's; massive devaluation of the value of dollars especially when measured
against oil and land.
>> What Americans mostly remember about
>> the 1970s are soaring oil prices and lines
>> at gas stations. But there was also a
>> severe global food crisis, which caused
>> a lot of pain at the supermarket checkout
>> line - I remember 1974 as the year of
>> Hamburger Helper - and, much more
>> im****tant, helped cause devastating
>> famines in poorer countries.
Did you bother to look at the INFLATION of the 70's? Did you consider the
falling value of the dollar in the 70's and the im****t duties?
>> In retrospect, the commodity boom of
>> 1972-75 was probably the result of rapid
>> world economic growth that outpaced
>> supplies, combined with the effects of bad
>> weather and Middle Eastern conflict.
Horse****. It was due to inflation.
>> Eventually, the bad luck came to an end,
>> new land was placed under cultivation,
>> new sources of oil were found in the
>> Gulf of Mexico and the North Sea, and
>> resources got cheap again.
Nope. Paul Volcker destroyed the economy of the Unites States so as to
kill the inflation dragon and restore the value of the "God Almighty
Dollar".
>> But this time may be different: concerns
>> about what happens when an ever-growing
>> world economy pushes up against the limits
>> of a finite planet ring truer now than they
>> did in the 1970s.
That is the conclusion of "climate change" folks and it is not all wrong.
>> For one thing, I don't expect growth in
>> China to slow sharply anytime soon.
>> That's a big contrast with what happened
>> in the 1970s, when growth in Japan and
>> Europe, the emerging economies of the
>> time, down****fted - and thereby took a
>> lot of pressure off the world's resources.
Those economies "down****fted" because the American middle class was busted
by lack of employment op****tunities. The producing countries had less
market for their produce.
>> Meanwhile, resources are getting harder
>> to find. Big oil discoveries, in particular,
>> have become few and far between, and
>> in the last few years oil production from
>> new sources has been barely enough to
>> offset declining production from
>> established sources.
>>
>> And the bad weather hitting agricultural
>> production this time is starting to look
>> more fundamental and permanent than
>> El Niņo and La Niņa, which disrupted
>> crops 35 years ago. Australia, in particular,
>> is now in the 10th year of a drought that
>> looks more and more like a long-term
>> manifestation of climate change.
>>
>> Suppose that we really are running up
>> against global limits. What does it mean?
>>
>> Even if it turns out that we're really at or
>> near peak world oil production, that
>> doesn't mean that one day we'll say,
>> "Oh my God! We just ran out of oil!" and
>> watch civilization collapse into "Mad Max"
>> anarchy.
>>
>> But rich countries will face steady
>> pressure on their economies from rising
>> resource prices, making it harder to raise
>> their standard of living. And some poor
>> countries will find themselves living
>> dangerously close to the edge - or over it.
>>
>> Don't look now, but the good times may
>> have just stopped rolling.
Not a bad conclusion considering all the misunderstandings.
--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org/extend
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