Wall Street suffers Epileptic Fit, Global Markets suffer seizures too

NVDL: We are living in interesting times. Records are being broken in every area. From ice cap melts, to oil prices, to incredible world shattering performances in the pool and athletics track. The most important of all these is the energy that underlies all our activities.

I could not believe that oil plunged through $100. It simply doesn't make sense given that 5mbpd is being shut in for weeks in the Gulf. In other words, supply has been severely curtailed after Gustav and Ike. I have predicted for months now that oil will be $150 by Christmas. A friend in banking queried this assertion when oil broke through $90 - under, not over. My explanation for the $150 prediction - because I still believe oil is going up was this:

"Demand may be slowing. It may even be slowing a lot. But supply is slowing at a much faster rate, and also at a permanent rate of decline. Even if you factor in demand slowing down, you have to look at the absolute fundamental of demand and what is that? Population growth. Globally spaceship earth is growing at 1.3% a year. All of those new passengers want to eat food, want electricity to keep themselves warm or have ice cubes in their summer cool drinks. They're also going to want to be driven to school. How do you meet this sort of intractable demand when your core energy is going into long term, chronic, permanent depletion? The answer is, you can't. And the situation you're faced with is population overshoot.

So fundamentally, oil becomes more and more precious as the reality of the resource - that it is finite - becomes more and more abundantly clear. Even if we suffer a Greater Depression, oil will remain an increasingly precious resource. It will punish economies, and to a lesser extent economies (stock markets anyway) will try to prop themselves up on the one resource that is increasing in value.

In the end, if energy prices increase beyond a certain point, the mere idea of growth becomes delusional. Think of it like this. You have a baby, and you realise you don't have enough food to keep that baby alive past it's 5th birthday. Do you think you can expect the baby to have a long and healthy life? Do you think stock markets and economies can seriously pretend they can weather the energy prices over the medium and longer term? Fuggedaboudit. Crash, Boom, Bang!

clipped from news.yahoo.com "People are scared to death," said Bill Stone, chief investment strategist for PNC Wealth Management. "Who would have imagined that AIG would have gotten into this position?" NVDL: Errr...anyone who did imagine this scenario was labelled 'negative', or a doomsayer. A minority have imagined this scenario but no one wanted to listen to anything else but 'positive spin'. How critical is thinking and reasoning when all you do is filter the stuff you want to hear, the stuff that coincides with words like 'growth, profits, more, expand.' "No one's going to be believing anybody now because AIG said they were OK along with everybody else," Stone said. Gold for December delivery shot up as much as $90.40, or 11.6 percent, to $870.90 an ounce in after-hours trading on the New York Mercantile Exchange after jumping $70 to settle at $850.50 in the regular session; that was its largest ever one-day gain in dollar terms. Crude oil that had also skidded lower amid a slowing economy rebounded $6.01 to settle at $97.16 a barrel on the Nymex after the government reported a drop in domestic crude and gas inventories.