Kunstler: Market meltdown just the beginning

It's too bad the current presidential candidates have been unable
to address the unfolding economic nightmare. Their collective silence
on the matter suggests that they don't have a clue what to say about
it. As the nightmare plays out and black swans flock in to blot out the
sun, and the hedge funds come a'tumbling down, and more big banks
blunder into black holes, and businesses big and small across the land
shutter up their operations, and the unemployment rolls swell, and
families are thrown out of their houses even when bailouts are supposed
to be saving them (but the bureaucracy can't get the paperwork done in
time) -- well now, they are going to be one pissed off bunch of people.
What will they do at the conventions? Our outside the conventions?


      In the deeper background of all this is the all-important oil
story that nobody in politics or the media wants to pay attention to.
Notice that in the fervid unloading of assets this past week, as
investors dumped their positions in the commodities markets, the price
of oil remained stubbornly above $100-a-barrel when it was all over on
Thursday afternoon. Well, maybe they'll ratchet down a little further
this week, but the trend line will prove to continue remorselessly upward
in the months ahead.


      Peak oil is for real. The supply can't keep up with global
demand, even if it dips in the USA. And more portentous sub-plots
develop in the story every month. Export rates are falling at a steeper
rate than depletion rates. The exporting nations are not only buying
more cars and running more air-conditioners, they also need to use more
energy to lift the oil they've got out of the ground.


      Another sub-plot is the fact that the equipment used world-wide
to drill for oil and recover oil and move oil around the planet -- all
that equipment is now so old and rusty that it can barely do the job,
and it is going to start failing altogether unless investments are made
to replace it, which nobody is making.


   By the way, Americans blame the familiar private oil companies for
all the trouble with oil in their lives -- Exxon-Mobil, Shell, et al --
but they don't seem to know that oil nationalism is in the driver's
seat now. The old private "majors" are only producing five percent of
the world's oil. The rest is coming from the national companies --
Aramco, Petrobras, Pemex, et blah blah -- and the very operations of
the oil markets are entering a phase of radical instability as they
move away from auctioning their stuff on the futures markets and start
making long-term favored customer contracts instead.