financial crisis



Iraq Breaks Down, Oil Surges

The context underlying the growing crisis
Monday, June 16, 2014, 11:58 AM

The situation in Iraq is serious, and is probably going to get worse before it gets better. The potential for this recent action to morph into a regional conflict is very high. That that means that oil could go a lot higher, and if it does, we can expect the odds of a global economic recession and an attendant financial crisis to go up considerably from here. » Read more



Oil at Risk

Get ready for $150 per barrel oil?
Monday, June 16, 2014, 11:57 AM

Executive Summary

  • Why this Iraq crisis comes at a very vulnerable time for world oil markets
  • The three mostly likely outcomes to the current crisis, and the resulting oil price of each
    1. ISIS remains contained from here
    2. ISIS takes Bagdad and points south
    3. A more widespread Middle East conflict erupts
  • The growing risk to the global economy & financial markets
  • What concerned individuals should do now

If you have not yet read Iraq Breaks Down, Oil Surges, available free to all readers, please click here to read it first.

The biggest risk to the world economy from the developing Iraq situation is that the price of oil could spike higher, killing the sputtering economic 'recovery' and triggering both a new global Recession and financial crisis.

Now, here's the truly interesting part of where we are in this story.

The IEA (International Energy Agency) has recently called for OPEC to deliver more oil by year end, which I wrote about here, and especially called upon Saudi Arabia to do so because world oil supplies are incredibly tight right now.  OPEC is the only entity in the world with any identifiable 'swing production', as all of the non-OPEC nations are alrady producing at maximum capacity. At least, the hope is that OPEC has additional production capacity.

In the prior piece mentioned, I wrote that of the 12 OPEC members, 8 are in a sustained decline trend for a variety of geological or political reasons. Only 4 are not. Only 1 actually has shown a significant increase in oil production over the past few years -- and that was Iraqwhich had added 1.5 mbd recently:

Here's what's at risk if the ISIS rebels push further south:


The IEA is already calling on OPEC to deliver 1.2 mbd more by year end 2014. If Iraq's production is lost, then we can just add that amount to the 'needed total' that the IEA has requested be brought on line by Saudi Arabia, an amount that I already sincerely doubt they can meet. If even a portion of Iraq's production is lost, then we can just kiss $110 barrel good-bye and say hello to $150 per barrel oil. War is messy and it's never easy to predict what might happen, but we'd be foolish to not consider what might happen here.

The true game-changer for the world will come when... » Read more


Bruce Rolff/Shutterstock

When Every Country Wants to Sell, Who Buys?

The world is trapped in a quest for 'Demand'
Tuesday, April 22, 2014, 12:14 PM

Understandably for the US, which sustained a consumption supercycle for several decades, the post-financial crisis period has kicked off a new trend: Americans want to consume less, and make more.

Americans want to own less stuff, use less energy, and produce their own goods. In short, Americans want to sell» Read more


Off the Cuff: Trouble Brewing Everywhere

Signs of weakness are appearing on a number of fronts
Thursday, August 29, 2013, 7:00 PM

<p>In this week&#39;s&nbsp;<em>Off the Cuff&nbsp;</em>podcast, Chris and Adam discuss:</p>
    <li>Currency Chaos
            <li>Weaker currency markets are suddenly imploding</li>
    <li>From the Outside in
            <li>Economic distress is moving closer to the core</li>
    <li>Is a Financial Collapse Nigh?
            <li>Does Chris still expect declines of 40% or more?</li>
    <li>The Syria Curve Ball
            <li>How would an open conflict change the game?</li>
</ul> » Read more


The Periphery is Failing

The next big economic dislocation might be only weeks away
Tuesday, August 27, 2013, 3:04 PM

For years we've preached the From the Outside In principle of markets: When trouble starts, it nearly always does so out in the weaker periphery before creeping towards the core.

We saw this in the run-up to the housing bubble collapse, as sub-prime mortgages gave way before prime loans, and in Europe, as smaller economies like Greece, Ireland, and Cyprus have fallen first and hardest (so far).  We see this today in accelerating food stamp use among poorer U.S. households.  In each case, the weaker economic parties give way first before being followed, over time, by the stronger ones.

Using this framework, we can often get several weeks to several months of advance notice before trouble erupts in the next ring closer to the center.

Which makes today notable, as we're receiving a number of new warning signs.  The periphery is giving way. » Read more


The Fed Matters Much Less Than You Think

It can't control the real economy
Thursday, August 1, 2013, 12:18 AM

This lemming-like belief in the power of the Federal Reserve generates its own psychological force field, of course; the actual power of the Fed is superseded by the belief in its power. We can thus anticipate widespread disbelief at the discovery that the Fed is either irrelevant or an impediment to the non-asset-bubble parts of the economy. » Read more


Eric Sprott: Is the West Dishoarding Its Sovereign Treasure?

And if so, what will happen once it's done?
Saturday, February 23, 2013, 9:10 AM

We are well into the financial crisis. Everyone’s trying to keep it together, even though it would appear from the reading of the economy things are not going well at all here. And everyone's ignoring things.

But I think, in their hearts, the Central Bankers must know what they’re doing is totally irresponsible. And the tell of that irresponsibility which is the debasing of the currencies is the fact that real things will go up in value. This should be reflected in the price of gold and silver.

So expresses Eric Sprott, CEO and founder of Sprott Asset Management, and one of the most experienced and vocal advocates for owning precious metals.

The past decade has validated Eric's thesis, as gold has risen considerably against all world fiat currencies. But what vexes him is that in recent years, when currency debasement has accelerated to extreme levels, precious metals prices have been clearly suppressed, particularly versus the U.S. dollar.

As the topic of price manipulation is nothing new, Eric finds his focus increasingly drawn to where the precious metals are going at these bargain prices - who is accumulating and who is dishoarding: » Read more


How Energy Woes Will Trigger Financial Crisis

The mortal pin that will pop our unsustainable system
Tuesday, January 15, 2013, 8:56 PM

Executive Summary

  • Petroleum is bumping along its global maximum plateau
  • Global demand (led by Asia) will soon far outstrip supply
  • Why oil is getting scarcer, but cheap oil is already non-existent
  • How insufficient net energy will be the mortal pin that pops our unsustainable financial system

If you have not yet read The Really, Really Big Picture, available free to all readers, please click here to read it first.

Global Supply

Where the U.S. shale plays have been getting an undue allotment of press compared to their current and projected flow rates, the major story remains that oil companies are spending more and more as oil becomes more difficult to find and challenging to produce.

What's interesting is that so many people hold the opposite view, perhaps shaped by the breathless manner in which new finds are announced, but rarely with an appropriate level of context or caution so that we can judge how significant or likely these finds actually are.

Here's a relatively recent example that captures this dynamic rather well.  Back in 2010, a very exciting discovery was splashed all across the news with some very heady claims:

McMoRan Exploration announced a potentially major natural gas discovery in its operated Davy Jones ultra-deep prospect drilled in the shallow waters of the Gulf of Mexico (commonly referred to as the "shelf"), just 10 miles off the Louisiana coast. 

Positive drilling results could be a huge boom for the company. McMoRan Exploration had proved oil and gas reserves at year-end 2009 totaling 271.9 Bcfe (billion cubic feet of natural gas equivalents), compared with 344.8 Bcfe in 2008.

Estimates of the size of the discovery range from 2 trillion to 6 trillion cubic feet of natural gas, rivaling the largest gas finds ever made in the Gulf. 


This is the nature of such press releases, as I now think of them.  Yes, it's exciting that billions of barrels could be discovered and that these finds might produce as much as 15 billion barrels of oil.  Unfortunately, a short euphoric sound bite like that is all of the story that every really gets transmitted to the casual reader.  I combat these perceptions constantly in my live Q&A sessions after speeches.

The full reality is contained within the context-free but vitally important statement that tapping this field requires drilling down to more than 28,000 feet (!).

Fast forward to 2012 and here's the reality of that find... » Read more


The Really, Really Big Picture

There isn't going to be enough net energy
Tuesday, January 15, 2013, 8:54 PM

[Many longtime followers of the Crash Course have asked Chris to update his forecasts for Peak Oil in light of the production increases in shale oil and gas over recent years. What started out as a modest effort at clarification morphed into a much more massive 3-report treatise as Chris sifted through mountains of new data that ultimately left him more convinced than ever we are facing a global net energy crisis despite misguided media efforts intended to convince us otherwise. His reports are being released in series over the next several weeks; the first installment is below.]

There has been a very strong and concerted public-relations effort to spin the recent shale energy plays of the U.S. as complete game-changers for the world energy outlook.  These efforts do not square up well with the data and are creating a vast misperception about the current risks and future opportunities among the general populace and energy organizations alike.  The world remains quite hopelessly addicted to petroleum, and the future will be shaped by scarcity – not abundance, as some have claimed.

This series of reports will assemble the relevant data into a simple and easy-to-understand story that has the appropriate context to provide a meaningful place to begin a conversation and make decisions. » Read more


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This chapter is the final integration of all the prior chapters and attempts to provide clarity around the question of, “What should I do?” Let me rephrase that. What should WE do? The changes that are potentially coming are not solvable alone.

Chapter 20 is not going to be a simple list of things to do. Instead, it will reflect my goal of each person assuming responsibility for their own actions.

Chapter 20 is going to provide a framework for action. This is a way of structuring all the myriad things you COULD do, into the prioritized list of things you WILL do. Consider it your personal risk-mitigation plan.

Our individual challenge is to accept the possibility that the future may be quite a departure from the present.

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