Birdman
Active Member
Pure Chicago school dogma and headed for the dustbin of history.
Oil Prices
- Thread starter kikkthecat
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Pure Chicago school dogma and headed for the dustbin of history.
Birdman
Active Member
Yes, but look at the respective default rates. NR UK mortgage default rates were and are tiny an had no bearing on its collapse. It was the US sub-prime CDOs that caused the trouble.
hawk20
MB Enthusiast
No. It was British and American mortgage backed products that were not worth the full price due to the falling house prices in BOTH countries.
In addition nobody would lend to British banks -even other Brits would not. Everyone knew Northern Rock's mortgage base was not worth the claimed values, nor B and B's , nor HBOS's, etc etc
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Birdman
Active Member
Disagree.
Northern Rock viewed from the international perspective was no more than a bit of local embarrassment for the poor Brits: the UK housing market melt-down is a pure side-show, viewed from Wall Street.
The real toxicity lies in the trillions of dollars of US sub-prime CDOs that are already in massive default.
Worse, it's the Credit Default Swaps that the banks are really running scared about. The market for CDSs runs into several trillions of dollars and NOBODY knows where the buck will stop when the stop-loss policies are redeemed.
Some of the insurers will be made of straw. Ok so we lose some more hedge funds, who cares. Worse, some will be otherwise viable financial organisations (including banks) that go to the wall. Bricks-and-mortar businesses going under.
If anyone reading this has worries about:- their pension fund; the cost of heating; the money in their savings account; negative equity in their home; their children finding a job when they graduate; their own job security (particularly if they work in banking and the financial sector), then let them take what solace they can from the knowledge this is simply the unfettered neo-liberal free markets working out the excesses of a few very rich but misguided traders and their associated banks, advisors, hedge funds and mortgage brokers. Roll on the next boom. And bust.
Northern Rock viewed from the international perspective was no more than a bit of local embarrassment for the poor Brits: the UK housing market melt-down is a pure side-show, viewed from Wall Street.
The real toxicity lies in the trillions of dollars of US sub-prime CDOs that are already in massive default.
Worse, it's the Credit Default Swaps that the banks are really running scared about. The market for CDSs runs into several trillions of dollars and NOBODY knows where the buck will stop when the stop-loss policies are redeemed.
Some of the insurers will be made of straw. Ok so we lose some more hedge funds, who cares. Worse, some will be otherwise viable financial organisations (including banks) that go to the wall. Bricks-and-mortar businesses going under.
If anyone reading this has worries about:- their pension fund; the cost of heating; the money in their savings account; negative equity in their home; their children finding a job when they graduate; their own job security (particularly if they work in banking and the financial sector), then let them take what solace they can from the knowledge this is simply the unfettered neo-liberal free markets working out the excesses of a few very rich but misguided traders and their associated banks, advisors, hedge funds and mortgage brokers. Roll on the next boom. And bust.
glojo
Hardcore MB Enthusiast
I hope your right but I did say OPEC would reduce their flow of oil.
This organisation has muscle and it needs to be disbanded
Oil is to be cut back by 1.5m barrels per day.
Remember how I said producers control the flow of oil? Guess what?
John
OPEC members are not taking much notice of their current quota, they exceed it.
It's not what they say that counts it's what they do.
What was the market reaction to this? The price of oil dropped.
glojo
Hardcore MB Enthusiast
It has only just happened?? Has the price dropped
They want the price to go up to at least $80. I am totally against this and am on your side. I desperately want you to be right.regards
John
glojo
Hardcore MB Enthusiast
Political leaders. These countries usually only have one product...... Oil
but to debate this would be political
John
The price dropped today more on the back of a strong dollar and concerns about global downturn / recession than reaction to OPEC.
OPEC is not as powerful as it used to be.
It embraces countries with very diverse economies and hence needs. Some can afford a reduction in oil income, others cannot. Those that cannot will, in the end, act in their own interests.
As previously noted, wishing for a low oil price is pretty much the same thing as wishing for a recession with all the rather nasty things that implies.
OPEC is not as powerful as it used to be.
It embraces countries with very diverse economies and hence needs. Some can afford a reduction in oil income, others cannot. Those that cannot will, in the end, act in their own interests.
As previously noted, wishing for a low oil price is pretty much the same thing as wishing for a recession with all the rather nasty things that implies.
Which political leaders? If sovereign countries want to form an organisation who is going to stop them?
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hawk20
MB Enthusiast
Nobody can. Any more than they can stop us being in the EU. Another club organised to bend the rules to suit the members.
We can influence them and can try to have world trade agreements though those are proving difficult to get at present.
Fortunately OPEC are only 40% of world oil production (and Saudi are about a quarter of the OPEC total and very sympathetic to the West).
Fortunately too, there has been a tad of oversupply (about 83.5 mn barrels per day compared with demand of about 82.5 mn barrels per day). So a cut of 1.5 mn barrels per day won't leave much of a shortage and demand is likely to drop due to worldwide recession.
They must be scared, too, that if they harm our economies too much we shall just go faster and faster to more and more nuclear plants and become more and more independent. (plus some wind and wave stuff ).
glojo
Hardcore MB Enthusiast
Not the time or place but how many countries use our military to train theirs? My list could be very long but this is not the place and the influence we and other powerfuls countries have is highly relevant.
John
hawk20
MB Enthusiast
Well of course they do just as teacup producers control the flow of teacups and carmakers control the output of cars. That is the supply side. Then there is the demand side (adding up all the amounts different countries want) and the two together control the price.
As one Alfred Marshall said (approx): - 'It is as useless to argue whether it is supply or demand which controls the price of goods as it is to argue whether it is the upper or the lower blade of a pair of scissors which cuts a piece of paper. In truth, it is both.'
glojo
Hardcore MB Enthusiast
When I suggested the flow is highly controllable I took a lot of flak, but like you I disagreed
glojo
Hardcore MB Enthusiast
Latest take on oil prices 
Contrary to what folks are trying to make us believe the oil producers ARE making HUGE profits from oil extraction.
OPEC is a fairly united organisation that has agreed to cut back oil production
BUT
A few months ago our experts assured us that oil was running out and we would NEVER see oil selling for as low as $100 per barrel.
I said tosh, there was an abundance of oil and it was just plain greed on behave of anyone and everyone involved in this sordid blackmail of road users.
My take
There are now very educated experts that are stating that there is shed loads of oil and it will definitely NOT be in short supply for at the very least another generation.
Buyers are now being sensible and realise there is so much oil available, OPEC can do or say what they want. Venezuela, Brazil, Russia and lots of other manufacturers will simply produce as much oil as they want.
I accept some experts will once more disagree with my take on this and I respect they are the experts, but if they go back through my posts and see how I strongly disagreed with their reasoning on why oil was so expensive and how I believed there was not a shortage, they will see I have stayed consistent even though everyone was saying we were totally wrong.
N
I wonder if gas guzzlers will still be punished on the pretext of OIL IS RUNNING OUT!!!
I was wrong when I thought OPEC would bring about a rise in oil prices, but that is solely because of the amount of oil other producers are putting onto the market and not because OPEC were not going to reduce the supply.
I still maintain that it would be nice to see OPEC break up and to me it is still a possibility. 
Oh and before the doom merchants say that oil prices have dropped because the US summer has finished...........................
Don't bother because I will say that is tosh.
There is oil, oil, oil and more oil all waiting to be extracted and sold. We have been conned, deceived and ripped off.
John
Contrary to what folks are trying to make us believe the oil producers ARE making HUGE profits from oil extraction.
OPEC is a fairly united organisation that has agreed to cut back oil production
BUT
A few months ago our experts assured us that oil was running out and we would NEVER see oil selling for as low as $100 per barrel.
I said tosh, there was an abundance of oil and it was just plain greed on behave of anyone and everyone involved in this sordid blackmail of road users.
My take
There are now very educated experts that are stating that there is shed loads of oil and it will definitely NOT be in short supply for at the very least another generation.
Buyers are now being sensible and realise there is so much oil available, OPEC can do or say what they want. Venezuela, Brazil, Russia and lots of other manufacturers will simply produce as much oil as they want.
I accept some experts will once more disagree with my take on this and I respect they are the experts, but if they go back through my posts and see how I strongly disagreed with their reasoning on why oil was so expensive and how I believed there was not a shortage, they will see I have stayed consistent even though everyone was saying we were totally wrong.
N
I wonder if gas guzzlers will still be punished on the pretext of OIL IS RUNNING OUT!!!
I was wrong when I thought OPEC would bring about a rise in oil prices, but that is solely because of the amount of oil other producers are putting onto the market and not because OPEC were not going to reduce the supply.
I still maintain that it would be nice to see OPEC break up and to me it is still a possibility.
Oh and before the doom merchants say that oil prices have dropped because the US summer has finished...........................
Don't bother because I will say that is tosh.
There is oil, oil, oil and more oil all waiting to be extracted and sold. We have been conned, deceived and ripped off.
John
pammy
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http://news.bbc.co.uk/1/hi/business/7694508.stm
So BP still manage to make increased profits when petrol sales were down during the price hike - hmmmmmmmmmm
So BP still manage to make increased profits when petrol sales were down during the price hike - hmmmmmmmmmm
hawk20
MB Enthusiast
If you held stocks of an asset that doubled in price in under a year you would make nice profits too.
The price of oil depends on quite delicate balances in Supply and Demand. Just recently demand has been about 1 million barrels a day less than the supply and speculators have not been buying oil. Excess supply, so prices fell. Had it been the other way round with demand above supply and then prices would have risen.
It is not that there is plenty of oil long term that has helped prices fall but a really large impending recession. If China and the Far East economies had not slowed down, and the US, and us, and Europe, prices would now be rising instead of falling.
The price of oil depends on quite delicate balances in Supply and Demand. Just recently demand has been about 1 million barrels a day less than the supply and speculators have not been buying oil. Excess supply, so prices fell. Had it been the other way round with demand above supply and then prices would have risen.
It is not that there is plenty of oil long term that has helped prices fall but a really large impending recession. If China and the Far East economies had not slowed down, and the US, and us, and Europe, prices would now be rising instead of falling.
As always, these numbers need unpicking and the big headlines are misleading when it comes to examining petrol prices. Fuel sales are within the Refining and Marketing business (see my posts above for explanation of why this must be treated separately). On a replacement cost basis BP made $1.9bn in the quarter in this segment. However, that replacement cost number strips out the effects of stock price movements. If you put that back in to arrive at the historic cost profit (i.e. what most government/tax authorities view as the taxable profit) they actually made a loss in the quarter of $823m. In other words, a very tight but profitable quarter was destroyed in historic profit terms by a massive stock loss of about $2.8bn. Why do I call it very tight? Well, the total revenues (turnover) for the R&M was $92billion for the quarter - so even before the effects of stock price movements BP only made a profit of about 2% in the R&M sector (before tax and interest). Far tighter than most business models would call viable. And that's for the quarter that saw the record high pump prices that everyone was moaning about. Not exactly profiteering, is it?
glojo
Hardcore MB Enthusiast
If I didn't know any better I would say you were connected with the financial market?
There is far, far more oil left in the North Sea than has been extracted and that is NOT taking into account the vast areas that are still to be explored. If all the south American oil fields went on line and went up to maximum production. then their would easily compare to all the Middle East resources. China is a major buyer of oil and I would guess they are now buying far more oil than what the deficit is between summer and winter importing in the US?
The USA has vast areas of the sea bed that they have made conservation areas, if these were opened to the oil producers then that would add even more oil into the market. The African continent is way to volatile and its vast reserves of oil are there for the taking IF it was safe to build and operate the oil wells.
It is the financial moguls of the oil companies and of course governments that keep these prices inflated NOT the end user.
I have CONTINUALLY heard how oil companies do not make a profit from petrol, they said this when it was over £1.30p oer litre and they are saying it now but they MUST have been lying when they made their first claim or they are now giving the stuff away at a loss!! Ten years ago oil was $10 barrel, what has changed? What has made it more expensive?
John
