Monday, April 27, 2015

It Will All be Gone!

Yesterday at a birthday party I did again try to air the view of Gail Tverberg that with the next financial crash it will all be gone. The reaction was as expected, wide open eyes and fierce denial. They didn't give me the opportunity to explain that Tverberg is the one who best understood and predicted the last financial crises, and so very likely could be the one who would best understand the next one.
It depends on how quickly the failure of banks brings the whole system down. I think the most likely scenario is that the next big crash is the last one. We had a big crash in 2008, and were temporarily saved from it. The next one seems likely to be much bigger, and thus to be much harder to avoid the consequences of.

My expectation is that oil prices will go lower than they are now, and that debt defaults will start hitting the system. Some of these defaults will relate to derivative bets gone wrong. This will start hitting in the next few months. We should be feeling the effects by late in 2015 or early 2016. Oil production will start going down in 2015, and we won’t be able to get it back up again.

I don’t see prices bouncing back up again much, expect perhaps briefly in the next few months (and probably to less than $100 barrel), as people speculate that our problems are temporary. I don’t think shale drillers will be able to qualify for more debt, and this will prevent production from increasing again. There will be similar problems with new oil sands investment. - Gail Tverberg
It's interesting to note the reaction of the customers in the video, they are paralyzed and understand nothing. When the next financial crisis hits us, when it's all gone, I guess peoples reaction will become the same. They will just stand there with wide open eyes, to understand nothing.

If you want to avoid becoming one of them, to understand what's going on and not to be taken by surprize, but be ready for action or at least face the unavoidable with some calm and dignity, I strongly encourage to read Gail Tverberg's Our Finite World.

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