Tracking oil’s swan song

While Wall St. and traders are preoccupied with daily crude support levels, the real story is the growing race by producers to cash out before ‘black gold’ goes the way of coal and the 8-track.

In years previous, articles about the quaint idea of using solar and wind as a primary energy source were only seen in propeller-hat magazines, the likes of Popular Mechanics and Scientific American. Today we have YouTube videos of gear-heads (combustion engine car enthusiasts) slack-jawed at the raw torque and power of these ‘Tesla cars’ as they clean-up the drag strip with quarter-mile-times that can’t fail to impress. We’re moving from carburetors to capacitors fast, and if the adoption curve is anything like other technology curves (“S…like the Model S”), it will be a revolutionary change in record time.

Why is this happening? Not because we say it is, or that we are “believers”, but because open minds can see it makes so much better efficiency and financial sense. Yes Elon, without a doubt, has been a huge leader of this transformation, but he isn’t the whole story. There have been countless others tinkering in their garages for decades on new types of batteries, super-capacitors and energy systems.  Musk just happened to have been there at the right time, with the right skills and a fat enough wallet to push through the other side.  For that many are thankful and many more will come to realize the importance of his single-minded focus.  The innovations that have come and will continue to be pushed by Tesla and many others, have finally gone mainstream.

Take for example this news flow from recent months:

Hummer factory to switch production to EV factory.

new UK bill requires gas stations install EV charging

Mercedes union workers win concession to convert Germany’s largest engine manufacturing facility to a 100% EV focus.

VW pulls plug on diesel in US:  It’s time to focus on EV’s

Audi CEO warns dealers to prepare for market dominated by EV’s, this is happening.

So reflecting back on the production of oil and its price, if you were a Saudi competitor (think Norway), knowing the product you sell is becoming worth less and less with every innovation (think Dr. Goodenough the inventor of the original lithium battery and now a new solid state battery 3x current energy density) would you wait for your biggest competitor’s IPO date to increase production?  Or would you increase your production to take market share now, hoping the price of oil can stay elevated because Wall St. has instructed the Saudis to talk it up to try and maximize their planned Aramco IPO value?

Even regardless of the 2018 IPO, Prince Salman has already announced the Saudi plan to diversify away from oil (whether it’s $30 or $70) and create a sovereign wealth fund for new tech and related GDP drivers, like Norway’s sovereign fund, only much bigger.  Yes, this is happening.

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Central banks are architects of global stagnation and insolvency

For the past 20 years, the world has careened from one greater and greater insolvency shock to another. Each time, central banks have been summoned to the ‘rescue’ deploying increasingly more aggressive monetary magic. But after 9 years at near zero rates and trillions in asset buying to extend and pretend the appearance of economic prosperity, reality is dawning once more as the global economy slows and liquidity retreats to reveal even larger debt and sustainability problems.

We have long noted that business and market media propaganda are dominated by “America’s most wanted” financial experts and policy advisors. In truth these people are “The world’s most wanted”, and in the coming cyclical bear market/recession and secular reset, financial loss and social upheaval will confirm the mind boggling extent of the harm they have wrought.

Although many individuals have also too readily abdicated personal responsibility and gone along for the ride of money for nothing and spend your way to prosperity, in the end ‘financial experts’ who have been unduly elevated, praised and paid in the great debt fueled-asset-inflation-Ponzi, will be obvious and deserving targets of public anger. Their job and fiduciary duty was to help protect the security and stability of the financial system.  In that, they have failed utterly.  Here they are in a recent mug group shot.  See Albert Edwards:  Central banks are the next sacrificial lambs to throw to the wolves’ of populist rage.

Greed and self-delusion have no doubt played a role, but also hubris and wilful blindness (still a culpable state of mind in law). It is unlikely these folks will see (or ever admit) the catastrophic error of their ways.  For others however, recovery to a brighter more sustainable future will require the usual steps:  admit, repent and reform.

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Drone video of solar and powerpacks fueling Kauai

The silent power of these installations is truly awesome to behold. Very exciting time to be alive.

There are other larger Powerpack projects, like the 80 MWh Powerpack station with Southern California Edison, but the fact that this one helps the whole island run almost entirely on renewable energy makes it an especially interesting showcase. See:  An incredible drone video of Tesla’s solar and power packs project fueling Kauai.   Here is a direct video link.

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Danielle on The Financial Survival Network

Danielle was a guest with Kerry Lutz on The Financial Survival Network, talking about recent developments in the world economy and markets.  Here is a direct video link.

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The cost of pushing assets up

Important points covered in this segment.  “Fed up” author, and former Dallas Fed insider, Danielle Dimartino Booth explains the harm done by central bank policies that have incented mal-investment for individuals and corporations, leaving households and the economy weakened and risk exposed heading into the next correction.

Here is a direct video link.

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Well earned trouble ‘Down Under’

Australia is a beautiful country full of great people now entering the payback period for a decade of financially suicidal decisions. Et tu, Canada? See Avocado Toast looks a better bet than Australian housing:

Some are waking up to the potential trouble ahead, with Australia’s household debt now nearing 200% of disposable income. Moody’s downgraded 12 Australian banks and their affiliates Monday, citing rising risks associated with the housing market, following a similar move by Standard & Poor’s last month. The country’s four biggest banks alone have a $1.1 trillion exposure to Australian housing loans, making up 55% of their total portfolios, according to Morgan Stanley .

Worse still, nearly 40% of home loans now are interest-only, meaning borrowers don’t need to repay the principal for a certain period, usually five years. Such loans work fine when house prices keep rising. The worry now is that prices will start falling as Chinese buying interest wanes: Meanwhile, homeowners who have only had to pay interest on mortgages could see a rise in payments as the interest-only period on their loans expires.

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