Juggling Dynamite

Amid perennial hopes that an output freeze might boost prices in time to rescue over-levered producers and their investors/speculators, the reality is that with so many countries desperate for cash, output agreements are hard to reach.  Even where they are, cheating is a long established tradition.  And a freeze at record output levels amid falling world demand, is unlikely to buoy prices for long.

While oil prices have jumped more than 10 percent since early August amid speculation that Saudi Arabia and Russia can marshal a production freeze, their actions point in a different direction. Riyadh is pumping the most crude on record, while Russian oil output climbed above 11 million barrels a day for the first time since at least 1991, according to data published on the website of Energy Ministry’s CDU-TEK unit for start of September. See Biggest oil traders see another year of pain as glut persists. Here is a direct video link.

All the financial hubris, reckless leverage/derivatives and European trade imbalances of the past decade are reflected in the chart of Germany’s late great Deutsche Bank.  From $125 in May 2007, the stock lost 85% of its value to bounce at $19.30 in January 2009. Since then it has fallen a further 25%, to $14.54 today. In recent months, its CEO has been warning that the ECB’s reckless rate policies are killing Deutsche’s viability. After all, his stock-based compensation is getting crushed here, so he really is frustrated now.

This firm is an integral counter-party to derivative contracts that link all the largest global banks. This is a big problem.  And it’s not getting better, even if delirious markets and participants are presently whistling past the grave yard of other major institutions that have collapsed before it.  See  The epic collapse of Deutche Bank:

If the deaths of Lehman Brothers and Bear Stearns were quick and painless, the coming demise of Deutsche Bank has been long, drawn out, and painful…

Stimulating discussion and historical context for the angst and opportunity of our time.

Chris Kutarna’s, Age of Discovery: Navigating the Risks and Rewards of our New Renaissance, takes a look at some of the massive forces disrupting our current age, and puts these turbulent times into historical context.
Here is a direct audio link to part 1 of his interview.

Here is a direct audio link to part 2 of his interview.

This is an incredible statistic that Kutarna cites:  in 1990 about 1/2 of the adult population in the world were illiterate.  Today thanks to the internet, approximately just 1/7th are illiterate.  We now have about 3 billion more literate brains in the world than we did 26 years ago.  No small feat.  The potential for human enlightenment has never been larger.