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AFP

France Yellow Vests Protests: Act IX

Violence between the State and the People is escalating
Monday, January 14, 2019, 6:29 PM

This past Saturday (1/12/19) more Yellow Vest protests in France broke out.  The protests always happen on Saturday, and because this was the ninth one it's being called “Act IX.”

More violence occurred, and the police are becoming more and more draconian and brutal in their responses.  Many injuries have happened among the protestors, a lot of them quite serious. Tempers are fraying all around. » Read more

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A Bust For The Ages

Much less oil than expected = much less Everything
Friday, January 11, 2019, 7:48 PM

Executive Summary

  • In short, we've been lied to about the production potential of America's shale wells
  • Huge decisions have been made based on the (faulty) assumptions we've swallowed
  • When it's finally clear than much less is going to be available (and at a higher price) all hell will break loose
  • The choices we make right now will determine how bad the reckoning will be

If you have not yet read Part 1: The Shale Oil 'Revolution' Actually Reflects a Nation in Decline, available free to all readers, please click here to read it first.

The reason I keep bringing us all back around to the energy situation is because it’s so critical to, well... Everything

To make good decisions, you have to be armed with good information.  That’s not easy to find these days, especially in the US where we are saddled with a massive propaganda campaign when it comes to energy.

It’s aim seems to be to convince everyone that there’s nothing to worry about. It's a near-constant barrage of these sorts of talking points and ideas:

  • The US is the new Saudi Arabia
  • The US is hitting new production records each month
  • The US is now a net exporter of oil for the first time in 75 years
  • Technology has improved so much that shale wells can now break even at $40/bbl oil prices.

And so on.

The problem with this sort of messaging is that the statements all need a couple of giant asterisks next to them, with some heavy explaining attached to add critical missing context.  They're misleading, at best. And collectively inaccurate.

If you buy into these stories, you'll probably make the wrong choices.  When, not if, but when the US enters the next phase of the oil story, it will all be over.  There aren’t any new source rocks to go after. 

I think we’re just a few years away from that decline phase, which means we don’t have a lot of time to prepare for what is certain to be an ugly period of adjustment. 

As I wrote in Part I, the WSJ has finally managed to run some basic numbers and discover that the shale story has been over-hyped by the operators.  It’s quite a fascinating tale, one that we are quite familiar with at Peak Prosperity.

These companies committed quite a few frauds along the way, each of which contributed to over-estimating how much oil (referred to in the industry as the "EUR") that would come out of an average well, which include:

  • Claiming much lower than observed rates of decline (5% vs ~15%)
  • Using a tiny cluster of highly prolific wells to represent the entire play
  • Excluding really crappy wells entirely from the calculations for the “average”
  • Using ridiculously long estimates of well life (50 years when there are already wells tapped out after 10 years in some cases)

These are way beyond simple analytical differences and amount to overt fraud.  Okay, fine, caveat emptor to the investors, right?

Well, the problem here is that the US generally, and major corporations as well as individuals specifically, have bought the story hook-line and sinker and made big, long-term decisions based on these frauds.  Ford dropped selling sedans in North America to focus on selling trucks and SUVs, the US government rolled back plans on fuel standards, and individuals bought pickup trucks and/or SUVs under the theory that gasoline would always be cheap.

At a minimum, you should not be invested in.... » Read more

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Off The Cuff: A Matter Of Desperation

The Powers That Be are out of options that work
Friday, January 11, 2019, 1:59 AM

In this week's Off The Cuff podcast, Chris and James Howard Kunstler discuss:

  • Zig-Zag Markets
    • There's a war going to keep prices propped up
  • A Matter Of Desperation
    • The central planners are out of tricks
  • The Masses Are Getting Angry
    • And are turning their ire on those in control
  • Our Broken Political System
    • Furiously focusing on all the wrong issues

Jim Kunstler returns to share his views on what's ahead in 2019. Like Peak Prosperity, he sees the coming year as one when the forces of reality start to re-exert themselves after a decade of magical thinking.

Those in control of the system have juiced it as hard as they could for as long as they could, and now the limits to that 'extend-and-pretend' era are quickly becoming visible. And the bottom 99% is beginning to realize that not only was the "prosperity" of the post-GFC recovery largely fraudlent, but what there was of it went as spoils to the elites. Expect further social outrage like we're currently seeing in France to boil over into many other countries in the coming months.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more

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The 8 Systemic Failure Points Of The Global Economy

The macroeconomic fault lines to monitor closely
Friday, January 4, 2019, 10:01 PM

Executive Summary

  • The 8 Systemic Failure Points Of The Global Economy
  • Why The US May Weather The Next Collapse Better Than The Rest Of The World
  • The Fed's Long Game
  • Why Allowing Recession Now May Be A Policy Goal

If you have not yet read Part 1: Is This Downturn a Repeat of 2008?, available free to all readers, please click here to read it first.

In Part 1, we concluded the current global downturn isn’t a repeat of the 2008 global crisis; rather, it has characteristics of three types of recession: liquidity/currency mismatches, the popping of credit-asset bubbles and a business-cycle exhaustion of credit impulse, what I call a credit-demand exhaustion.

Let’s add a potential fourth recessionary impulse: energy. Right now the world’s oil importers are feasting on a 40% decline in the cost of oil, but as Chris and other analysts (Gail Tverberg, Richard Heinberg, and Nate Hagens) have explained, we’re approaching a point where the cost of extracting, processing and distributing oil is rising as the cheap oil has been consumed.  Producers need high prices or they will stop producing. But consumers, the vast majority of whom have stagnant incomes, can’t afford high energy costs.  Beyond a rather low price point, higher energy costs trigger a recession.

This may not be driving the current downturn, but it looms large in the background.  I see the current collapse in oil prices as a head-fake: the sharp drop makes it appear oil is abundant, but this abundance is temporary, not permanent.

Moreover, we aren’t privy to the opinions and machinations within the world’s major central banks, but it’s clear that the U.S. Federal Reserve is diverging from other central banks, which remain accommodative while the Fed raises rates and reduces its balance sheet by $30 billion a month.

Of the four primary central banks—the European Central Bank, the Bank of Japan, the Bank of China and the Fed—why is the Fed the one bank diverging from the other three, despite the appeals of the ECB to remain accommodative?

I see several reasons, and the first is... » Read more

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InformOverload

2019: The Beginning Of The End

What will happen next & what to do now
Friday, December 28, 2018, 8:04 PM

Executive Summary

  • What's causing the whipsaw gyrations in the markets right now
  • Why turning conventional wisdom on its head makes great sense when it comes to saving money
  • Why the 10-year "unstoppable" bull market is now dead, and what that will mean in 2019
  • What will happen next & what to do now

If you have not yet read Part 1: The Ghost Of Christmas Future, available free to all readers, please click here to read it first.

After ten long years of steadily rising equity markets, or ““markets”” as we like to call them to denote their fictitious and often fraudulent nature, something approximating volatility has returned here very late in 2018.

As we head into 2019, we’re expecting to see a lot more volatility and even more losses as reality once again steps back into vogue.  It never really left, of course, only was kept away for a while with monetary Botox administered by self-delusional bankers and politicians unable to face their many failures directly.

Every recovery eventually ends. And this one is no different.

In our view, however, any recovery built on a foundation of cheap credit will not only end, but end badly.

What’s the plan from here?  Continue to pile up debt at a faster pace than economic growth forever?  What about the idea that economic growth has slowed of late and cannot grow forever for resource related reasons?  Is anybody in power paying even the slightest bit of attention?

Most importantly, what happens when ~40 years of excessive debt accumulation comes to an end?  Do financial systems and institutions even function anymore?

Nobody has a good answer to these questions, which is why the Federal Reserve, et al., are terrified to find out what happens when their grand debt bubble experiment comes to an end.  Mad max is not out of the question folks.  A lot of things very suddenly no longer work when the credit not only dries up, but goes in reverse.  Very basic things like food and gasoline distribution networks and public safety payrolls become difficult to maintain.  Just ask Venezuela.

Specifically, what we see coming is... » Read more

Insider

Off The Cuff: The Times Are A-Changin

Trend changes are suddenly erupting all over
Thursday, December 20, 2018, 12:36 PM

In this week's Off The Cuff podcast, Chris speaks on:

  • Reflections From Costa Rica
    • A reminder of what it means to be in Nature
  • The Public Is Hitting Its Limits For Oppression
    • France's Yellow Jacket protests are a sign of what's to come
  • Market Crash Alert
    • Things are getting weaker by the day
  • It's All About Power
    • The 1% will cling to their advantage as long as they can

As Bob Dylan sang: The times, they are a changin'. From ecosystem collapse to social unrest in Europe, to faltering financial markets -- change appears to be breaking out everywhere right now. A recent trip to the rainforests of Costa Rica has given Chris a little rest, rejuvenation and arm's-length perspective on things, which he shares in detail in this wide-ranging podcast

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more

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Shutterstock

Pop!!!

The market outlook is deteriorating fast
Monday, December 17, 2018, 8:36 PM

The US equity indexes took another big dive today. They're now flirting with February's lows. Nearly all of the gains from 2018 have been wiped out.

Maybe they get rescued from here with an 11th hour Santa Claus rally. Who knows?

But what I do know is that until and unless the central banks reverse course and resuming printing up a boatload of new 'thin air' money, asset prices are going to continue falling.

At this point such a reversal doesn't seem likely in the near term. So: Watch out below! » Read more

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cointelegraph.com

Off The Cuff: Whipsaw!

Trade talk uncertainty pits bull against bear
Tuesday, December 11, 2018, 11:22 PM

In this week's Off The Cuff podcast, Chris and Mish Shedlock discuss:

  • Whipsaw!
    • Trade talk uncertainty is running the markets ragged
  • Flattening Yield Curve
    • The market, not the Fed, is driving the long end of the curve
  • France Burning
    • The Yellow Jacket protests are a glimpse into the future
  • Brexit Woes
    • The process has metasticized into a snarled, farcical mess

As the markets now gyrate wildly on a daily (heck, hourly) basis, Mish explains that the bull/bear tug-of-war right now is not the big picture to focus on. Instead, it's the growing probability of recession ahead in 2019

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more

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Shutterstock

The People Rise

Understanding the 'Yellow Vest' protests
Monday, December 10, 2018, 4:17 PM

The protests in France are extraordinary for their breadth of popular support among the people of France (roughly 75% at the last poll). And for their emotional intensity.

The people of France are pissed off.

This is exactly the sort of social unrest that will erupt more and more frequently around the world if the economic and political elites continue to behave as they have. Wealth and power have been stripped from the public and been concentrated into the hands of fewer and fewer people.

The imbalances are extreme and obscene. The elites, living in their own bubbles of exclusion, seem to be utterly clueless about the effects their actions are having on the psyches of the billions who outnumber them.

In other words, history is repeating itself. » Read more

Insider

What To Do Now That The Big One Is Here

Bubble pop AND recession? Huge risks ahead.
Friday, December 7, 2018, 6:07 PM

Executive Summary

  • The warnings signs that have our full attention & why
  • What the yield curve is telling us about the next recession
  • What indicators to watch for in the markets over the next few weeks/months
  • The steps to take right now to prepare

If you have not yet read Part 1: Bubble, Meet Pin, available free to all readers, please click here to read it first.

The simple and sad truth is that it’s not different this time.  Everything that was wildly over valued will drop in price - just as with every previous bubble bust in history. The appearance of economic health that was expensively and lavishly placed on the national credit card will evaporate as the bills come due.

The long-awaited correction has arrived.

We're confident in saying this now because there are too many recession indicators to ignore, the major central banks are not positioned to resume additional QE measures, and political and geopolitical tensions are rising that handicap the sort of well-coordinated sovereign partnerships necessary to rescue things from here.

In other words, there’s nowhere for the financial markets to go besides down.

Sure, they'll gyrate along the way; but following a long series of lower highs and lower lows. If we’re lucky.

If we’re not, we could see the sudden kind of dislocation that closes markets, borders, and distribution systems.

Because you’re reading this, you're among the few who can hear this message. More will wake up to it once the panic starts, but for now it’s still a tiny crew who can manage to hold this information in their minds and still move on with purpose through the world.

Now looking towards the immediate future, Who typically gets slammed first and most severely when a credit cycle ends? The answer is clear: it's the... » Read more