Monday, April 13, 2015

It's harder to tell which one is stupider than the next.

This many years into the recession I'm convinced that most people don't actually know how the economy works. Still. Even people who are paid to know! I hate that I even have to know, and I'm not even paid to know this crap. But having two houses deeply underwater during the worst makes you learn a lot of crap you didn't think you would need to learn.

Take this moronic analyst. The economy has given the Fed an 'epic, historic window' to raise interest rates. When I read this article I ran right over to see what interest rates were doing today. Because the bottom line is that if things were getting better - interest rates would be rising. Not falling. Rates today were pretty firmly back in the 3.62-ish range. They'd been creeping up to the 4% range.

Last night I was reading through my twitter stream and started seeing that the UK is expected to fall into actual deflation (not just disinflation) for the first time in 60 years. I still see layoffs almost every single day from Canada. China is slowing dramatically. Russia is probably in recession. Some parts of Europe are still in negative interest rates. And these idiots think the Fed is going to raise rates. I still think there is a very good chance the Fed will start printing at some point. When all the other major economies are in such bad shape - that makes our dollar stronger relative to their currencies. This creates a lot of earnings problems for US companies. I was stunned this morning I read an article that said this is all priced in.

Everyone keeps saying that deflation will be very temporary. But I think that is a lie. I think it will probably last the rest of this administration. A strong dollar combined with caving economies tell me that oil is going to keep building. Cushing has to be very nearly full. Oil will take another leg down, and prices will respond accordingly. I mean, now I see people applauding that oil might reach 70 bucks  a barrel by years end. When you have that much inventory, you don't just work through it right away. It can take a couple of years.

The previous Cushing build took until 2013 to resolve itself. In 2008 Cushing stood at 13,421 thousand barrels. The begging of 2013 was the previous high at 51,862. That took 5 years. It obviously didn't pile up in a straight line. Unlike our current situation.

At the end of 2014 Cushing stood at 17,899 million barrels. We are currently at 60,175. Which is actually even higher than when I checked late last week. It took us three months shy of a year to get this much oil. I will again give the link to the Cushing site so everyone can see for themselves. Here.

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