Financial News

[NorthSideSox72]

That's not alternative energy. It's petrol based therefore it's still fossil fuel/oil.

 

It's more efficient yes...but it's not alternative.

Its also more polluting.

 

But, in general, people going over to more fuel efficient cars can be a big part of the short range solution. Less fuel consumption, and more drive for innovation from American car companies.

 

[Y2HH]

Its also more polluting.

 

But, in general, people going over to more fuel efficient cars can be a big part of the short range solution. Less fuel consumption, and more drive for innovation from American car companies.

 

I think this has already taken place, especially in light of the recent cash for clunkers where you trade up to a more fuel efficient model and receive a tax refund...the fact that people went through every cent of that shows that a LOT of people did update their cars. Even if they're only getting a few more miles per gallon, that adds up with everyone that took advantage of the program.

[NorthSideSox72]

I think this has already taken place, especially in light of the recent cash for clunkers where you trade up to a more fuel efficient model and receive a tax refund...the fact that people went through every cent of that shows that a LOT of people did update their cars. Even if they're only getting a few more miles per gallon, that adds up with everyone that took advantage of the program.

Definitely, and that trend will continue. We're solidly over $3 here now, and all indications are its likely we'll be paying $4 or even $5 in the next couple years.

 

[Balta1701]

Definitely, and that trend will continue. We're solidly over $3 here now, and all indications are its likely we'll be paying $4 or even $5 in the next couple years.

Here's the question though...how high does it need to go before it re-does all the damage to the global economy that the last price spike provoked?

 

Because if $4/gallon does what it did last time, then it'll drop back to $2 before it gets to $5. There's still more than enough instability, especially in Europe, that a gas price spike could easily resume the global bank runs.

[NorthSideSox72]

Here's the question though...how high does it need to go before it re-does all the damage to the global economy that the last price spike provoked?

 

Because if $4/gallon does what it did last time, then it'll drop back to $2 before it gets to $5. There's still more than enough instability, especially in Europe, that a gas price spike could easily resume the global bank runs.

I think you are missing the overall trend here. It spiked from like $2 to $4, then back to like $2.50, and is $3 now. If it spikes to $4, you may see a pull-back, but the economic conditions are different so probably not as much so. So, maybe you go to $3.50, then back up towards $5. Its an overall upwardly moving trend, which pretty much everyone agrees is the direction we are going.

 

Buy up them DBO shares now, folks.

 

[Balta1701]

I think you are missing the overall trend here. It spiked from like $2 to $4, then back to like $2.50, and is $3 now. If it spikes to $4, you may see a pull-back, but the economic conditions are different so probably not as much so. So, maybe you go to $3.50, then back up towards $5. Its an overall upwardly moving trend, which pretty much everyone agrees is the direction we are going.

 

Buy up them DBO shares now, folks.

The bolded is where I disagree.

 

The gas price spike in this country was associated with the final bursting of our real estate bubble and the collapse of the banking system.

 

Right now, there's every reason to believe that China is sitting on a monster of a real estate bubble of its own. Europe, meanwhile, is 1 bailout away from running out of bailout moneys, with 3-4 possible candidates still sitting there.

 

And in this country, the only place that has genuinely expanded is the same place that imploded last time; the financial sector and the stock market.

 

No reason at all to think that conditions are more stable than they were before the US housing bubble burst.

[NorthSideSox72]

The bolded is where I disagree.

 

The gas price spike in this country was associated with the final bursting of our real estate bubble and the collapse of the banking system.

 

Right now, there's every reason to believe that China is sitting on a monster of a real estate bubble of its own. Europe, meanwhile, is 1 bailout away from running out of bailout moneys, with 3-4 possible candidates still sitting there.

 

And in this country, the only place that has genuinely expanded is the same place that imploded last time; the financial sector and the stock market.

 

No reason at all to think that conditions are more stable than they were before the US housing bubble burst.

There is no compairson, the conditions are vastly different. You think the real estate market is headed for another 40% tumble? Not even the biggest doomsayers are on that line. You think we're going to have a markets collapse, toxic unwind, and firm collapses like we had in 2007-2008 again in 2011? Incredibly unlikely. You think the Chinese housing market bubble would have anything like the effect the US one did? Not even a remote chance. You think we're going to nearly double unemployment again next year? To 20%/35%? When every economic indicator shows growth in 2011?

 

Europe's debt crisis is the only one that has a similarity. Everything else is vastly different.

 

[kapkomet]

They are letting the price of oil go up again - weak dollar (i.e. printing more and more and more and more and more money for "stimulus") = higher oil prices, forget every other factor you all want to argue about. It's inflating the cost, and our government knows this full well.

 

[Balta1701]

There is no compairson, the conditions are vastly different. You think the real estate market is headed for another 40% tumble? Not even the biggest doomsayers are on that line. You think we're going to have a markets collapse, toxic unwind, and firm collapses like we had in 2007-2008 again in 2011? Incredibly unlikely. You think the Chinese housing market bubble would have anything like the effect the US one did? Not even a remote chance. You think we're going to nearly double unemployment again next year? To 20%/35%? When every economic indicator shows growth in 2011?

 

Europe's debt crisis is the only one that has a similarity. Everything else is vastly different.

I think that the real key in all of those is that you're starting from a weaker spot. In 1998, the Asian Economic crisis could have spread more widely, but it didn't because the U.S. was in a strong position and the Fed stepped in to make sure it didn't cascade here. It cut rates aggressively and bailed out LTCM so that it wouldn't expand here. Got Greenspan onto the cover of Time.

 

If, however, China's market were to burst, the Fed has zero room to prevent its impacts from cascading here. It can't cut rates, and we've already seen how well bailouts go.

 

The U.S. real estate market likely is in store for at least a 10% tumble in prices, on average, over the next 2 years, even if nothing goes wrong, because of the sheer volume of housing now hitting the market. The piece I posted earlier today argued for ~20%, and that's perfectly believable.

 

Throw in the weak European position, and yes, I think there's just as much systemic risk right now as in 2008...because you wouldn't need as large of a shock to do the same level of damage.

[Iwritecode]

It can be instant and it's already here.

 

Two Words

 

Clean Diesel (TDI)

http://en.wikipedia.org/wiki/Turbocharged_Direct_Injection

 

My wife and I each have a TDI car. (She's got the Audi A3 and I've got the VW Jetta) Both have averaged between 37-40mpg since we got them. That includes driving in the winter here in Chicago (horrible mpg) and highway driving (where we get 40-42mpg consistently)

 

Does it end fossil fuel usage? Of course not. Can it significantly slow down its usage and need. Absolutely.

 

Does that extra mileage make up for the extra 20-30 cents/gallon you have to pay for diesel fuel compared to regular unleaded?

[Balta1701]

They are letting the price of oil go up again - weak dollar (i.e. printing more and more and more and more and more money for "stimulus") = higher oil prices, forget every other factor you all want to argue about. It's inflating the cost, and our government knows this full well.

Seriously Kap, you're going to argue something this weak? If that were the case, that oil price changes were driven by currency price valuations and not based on general supply/demand issues, then oil prices should strongly correlate with international currency fluctuations, whereas instead, it tends to follow the exact same trend regardless of what the currency is doing. If it was solely the weak dollar, then oil would be spiking only in our currency right now, when it simply isn't. Long term, currency valuations have a weak effect, but the short term behavior is dominated by the actual supply/demand/storage/availablilyt issues.

 

Here's a couple year old summary of the actual argument/data that I found with some easy googling.

[jasonxctf]

Does that extra mileage make up for the extra 20-30 cents/gallon you have to pay for diesel fuel compared to regular unleaded?

 

absolutely. i just did this comparison for someone the other day.

 

Let's say 87 is $3.00 gallon. And Diesel is $3.20.

 

My Jetta, non-TDI, would get approx 27mpg. Which means that $3.00/27= 11.11 cents/mile

My Jetta, TDI, gets approx 38mpg. Which means that $3.20/38= 8.42 cents/mile

 

I drive approx 15,000 miles per year. 15,000 miles x 2.69 cents/mile savings= $403.50/yr savings.

Not to mention the $750 Tax Credit I get this year and my wife got $1,300 last year.

[jasonxctf]

Its also more polluting.

 

If you are suggesting Clean Diesel is more polluting then standard fuel cars, I'd debate that all day long. If you're saying that Clean Diesel is more polluting than alternative energy cars, then you are correct.

 

http://www.greencar.com/articles/audi-a3-t...esel-reigns.php

[kapkomet]

Seriously Kap, you're going to argue something this weak? If that were the case, that oil price changes were driven by currency price valuations and not based on general supply/demand issues, then oil prices should strongly correlate with international currency fluctuations, whereas instead, it tends to follow the exact same trend regardless of what the currency is doing. If it was solely the weak dollar, then oil would be spiking only in our currency right now, when it simply isn't. Long term, currency valuations have a weak effect, but the short term behavior is dominated by the actual supply/demand/storage/availablilyt issues.

 

Here's a couple year old summary of the actual argument/data that I found with some easy googling.

 

Short term, you're right, but every time the spigot gets turned on and the dollar is PERCEIVED to lose value, we get higher prices.

 

There is a causation of this and a period of September and October and some graphs showing a period of time that can refute this isn't going to change that.

 

Damn speculators.

[Balta1701]

Short term, you're right, but every time the spigot gets turned on and the dollar is PERCEIVED to lose value, we get higher prices.

 

There is a causation of this and a period of September and October and some graphs showing a period of time that can refute this isn't going to change that.

 

Damn speculators.

You're still missing one part...the changes in the dollar are happening as a result of the forces acting on the general economy, which is exactly what is impacting the oil market as well.

 

This is a "Correlation not equalling causation" argument. The dollar value is changing because of the global economic picture, the price of oil is changing because of the global economic picture, therefore they're moving together.

[kapkomet]

You're still missing one part...the changes in the dollar are happening as a result of the forces acting on the general economy, which is exactly what is impacting the oil market as well.

 

This is a "Correlation not equalling causation" argument. The dollar value is changing because of the global economic picture, the price of oil is changing because of the global economic picture, therefore they're moving together.

 

 

Mmkay.

 

Of course... but we also have control of that economic picture and how we paint it... um, well, we used to. That's what I'm trying to get at here. They know that a weak dollar causes commodities to rise, and they keep throwing more money at the hopper... realizing all too well that the INTENDED consequences make people more dependant on the US govt. subsidies of how they want behaviors to go (i.e. $5 gas to make people get rid of their conventional cars - ain't nothing else gonna do it!).

 

I know, I know, you all think I think it's some conspiracy... because it is. They know what they're doing.

[Balta1701]

Mmkay.

 

Of course... but we also have control of that economic picture and how we paint it... um, well, we used to. That's what I'm trying to get at here. They know that a weak dollar causes commodities to rise, and they keep throwing more money at the hopper... realizing all too well that the INTENDED consequences make people more dependant on the US govt. subsidies of how they want behaviors to go (i.e. $5 gas to make people get rid of their conventional cars - ain't nothing else gonna do it!).

 

I know, I know, you all think I think it's some conspiracy... because it is. They know what they're doing.

That's not it at all, and you ought to know better than this. Really, I'm reminded of the argument that commodity prices were skyrocketing in 2008 because of speculation, rather than supply and demand.

 

The printing of money right now is trying to overcome the fact that we're in a huge output gap. Commodities are rising because it's starting to work; pumping out all that cash has in fact partially overcome the shock to the economy, and spending, particularly in the areas that weren't hit hard by bursting housing bubbles, has started to recover. Therefore, demand has started to recover for those commodities, and that's pushing prices right back up, because there isn't sufficient supply of cheap material to meet the demand.

[southsider2k5]

You're still missing one part...the changes in the dollar are happening as a result of the forces acting on the general economy, which is exactly what is impacting the oil market as well.

 

This is a "Correlation not equalling causation" argument. The dollar value is changing because of the global economic picture, the price of oil is changing because of the global economic picture, therefore they're moving together.

 

That "Forces" being QE2.

[Balta1701]

That "Forces" being QE2.

Yeah, a force towards economic expansion.

[southsider2k5]

Yeah, a force towards economic expansion.

 

Meaning that this is a deliberate action, with known results, and not some random forces of nature that can't be controlled. There is a big difference there.

[Balta1701]

If the rise in commodity prices were entirely due to the fall in the dollar, then the countries who's currency is rising compared to the dollar shouldn't see the same effect. That is incorrect. Even China, which mandates commodity prices at the government level, is seeing rising prices.

[Balta1701]

Meaning that this is a deliberate action, with known results, and not some random forces of nature that can't be controlled. There is a big difference there.

The way to control it though is to shrink the economy, globally.

[southsider2k5]

If the rise in commodity prices were entirely due to the fall in the dollar, then the countries who's currency is rising compared to the dollar shouldn't see the same effect. That is incorrect. Even China, which mandates commodity prices at the government level, is seeing rising prices.

 

Because their currency is tied to the dollar?

[NorthSideSox72]

Because their currency is tied to the dollar?

By the way, everyone in the modernized world wants China to release its currency from peg. And eventually, due to its own issues, they will have to. That alone will help the rest of the world.

 

[Balta1701]

Because their currency is tied to the dollar?

Please point me to the right currency to look at then, where oil and commodity prices are dropping substantially right now.