- Capitalism and Alternatives -

No man is an island; entire of himself...

Posted by: Gideon Hallett ( UK ) on November 25, 1999 at 13:00:56:

In Reply to: Bubble vs. Glass of Water Ratio posted by Stuart Gort on November 25, 1999 at 12:25:44:

: Yeah, there is a bubble. The question is; how overpriced is the market? Once that question is answered, a follow up is; what is the inflated value difference expressed as a percentage of our economy. There aren't too many who put that above 10% - Mr. Artus notwithstanding. A prudent investor looks long term rides out the bubble pops. The crash of '29 was not due to overvalued stocks. It was due to the system not having any mechanism to deal with human irrationality - namely panic. Those mechanisms are now in place and preclude an event of that magnitude from ever occurring again.

Well, we're about to find out, Stuart.

Oil price forecasts show a predicted near-doubling in the price of oil over the next 18 months; world oil prices are set to rise about 3% before the end of the year.

The market value of Brent Crude is currently $25.72 per barrel; up 11 cents on yesterday; and up 14 dollars per barrel since February 1999.

As I pointed out in July, the OPEC countries will be producing over a third of the world's oil within the next 16 months; something they haven't done since the early 1970s.

The Saudi royal family is extremely strapped for cash at the moment, since they have been spending money like water on luxuries. The Iraqis have also turned off their oil supplies in protest at the West's continued refusal to life sanctions. Demand has never been higher; and supply has never been lower.

The world is currently consuming four times as much oil as it is extracting.

There is no real reason to suppose that the OPEC countries won't use the increasing scarcity of non-OPEC oil to gut the West of as much money as they can; creating another fuel crisis.

It's on the horizon. Now, if you're correct, the mechanisms you claim to be in place should stop a repetition of the 1970s. If you're not, the entire economy of the US is about to crash.

Oil makes plastics; oil runs cars; if the price of either goes up significantly, it's going to hit all Americans who use either. This means you.

: It won't bother me - I'll keep my savings in the finest, most consistent, and safest markets on the planet. Even after that drop I'll be up 283% since '90.

Which will put you in exactly the same place as an investor in 1969; when the market crashes, your part of it crashes too.


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