A random distribution looks "clumpy" and irregular to the human mind. The mind seeks order. So we see constellations in random distributions of stars. Politicians have less influence than people think.

OTOH I am listening to CNBC right now and am more down than ever on central banks pulling their levers. These guys spend as much time on guessing what central banks will do than working out who's creating the things that will be valuable to the economy a few years from now.

People would do technical analysis and momentum speculation even if there were no central bank, but my goodness. We put together this monetary system, and it just motivates people to spend their time trying to get inside its head instead of getting stuff done.

I keep thinking of straightlinelogic said: try to think about what money would be if you'd never heard of the modern monetary system.

I remember in 08 pundits saying things wouldn't get that bad cause it was an election year. Maybe crashes in election years is the new normal.

Yep, or bend down and grab the hoop and PULL!

It is funny he is in exactly the same position Bush Jr was in his Presidency...why do we have to be repeat offenders?

Obama is in the last year of a 2 term Presidency. He still has support among the ideologues but the masses, IMHO, will blame him if things crash on his watch. I just hope we can ride this out.

That has to come to an end sometime. Fasten your seat belts, this could get crazy.

Doc, I am not so sure they are doing much warefare at this point. I saw a chart that places SA at the bottom for costs, then Iran. With Iran in the mix now (much to the SA disappointment, they wanted them left on the sidelines under a leash, as they know they will renege on any agreement, continue to build a bomb, and may use it on them and Israel) Iran can further undermine the price and drive SA deeper into financial distress, as they have a pretty socialist state (they give everyone money, based on political favor). The greater the distress, the better their chance of getting an Islamic revolution going against SA by those that get cut off from the free money.

Several things in paly here, the fracking, the Middle East politics, the consumers and Dumbocraps wanting to watch it blow so they can say " We will save you" like 8 years ago. Wait for "Change" to get rolled out.

There is some question that some Arab states may collapse with low prices. Saudi Arabia was looking at 80 a barrel as a stable point, it is funny that Iran (who can sell it for cost at this point just for cash) is trying to dump it as fast as they can. That may trigger conditions for the revolution in SA that they want.

Rich, I saw an article that stated they have been doing QE for 4 years now to keep their "growth" up and hide the real issue from their billion or so. They are desperately afraid the people who did not do the "move to the city" thing will revolt when they find out they cannot buy a box of rice. Graham Summers says they have been running close to a billion a day in dollars to keep their system afloat in December, which is why he has been forecasting our market drop for almost a year now, which was staved off by the Fed.

Indeed, the unending manipulations of the government (both right and left) has created a monster that will blow up at the slightest nudge. The fact that oil is also a manipulated commodity that is bought and sold in ways to make that manipulation, makes just pegging low price to reduced costs and therefore increased output/value, suspect. Remember when Bush released a few million barrels from the SOR? Gas was near 5 bucks and it dropped quite a bit, and it was all because Katrina had damaged a bunch of platforms. The amount was inconsequential to the overall volume, but still had an effect. There are layers of layers of "derivatives" based on oil (an just about anything else today) that can be manipulated one way or the other that have nothing to do with the actual commodity. That is where the whole economic system breaks down, you can't have a system that bets for and against and both sides win, which is what happens. In addition, we have the tar sands and fracking that added extra supply on top of Iran now, so there is a glut, and with China reeling, the demand is just not there. So goes the price...

Exactly! Right on the money! :)

Ha...you might be joking but you may very well be on the mark.

These creatures seem to ignore everything in reality...good or bad. Maybe their on an LSD trip.

An interesting idea, but I wonder which nation is going to absorb the costs of their currency manipulations. The US can pawn off our QE on the rest of the world due to our economy and the dollar's status as the world reserve currency.

I guess time will tell...

The stronger US energy companies are diversified as to source, the global market being what it is, and some have shares of the Saudi supply. Those companies will survive, and may in fact be using the Saudis to drive their competition out of business. Well capping is an old practice to reserve added supply for when demand rises.

Most analytical tools are barely valid anymore - back when the bottom fell out of everything in 2008, I could see it coming, and on a gut reaction told my broker to "pull me out of this poker game". Came out OK - unlike a lot of folk. This one is charged to follow suit - you just have to know when to pull the trigger. And being blindfolded, with a hair trigger, and people around you yelling "Fire" at random... well...

Part of the fun!

So, they are selling at a 'loss leader' price? Is that the $13 per barrel price? Does that price include the cost of transporting it to the US, or is that added on depending on where it is shipped?

So, one of the articles I read pointed out that fracking can act as a buffer in a solution: you can turn it on or off relatively quickly. If that is so, then 'turn fracking off' and let the Saudi's loss leader dismantle OPEC and Russian oil. Then we 'turn it back on'.

It seems to me that this sort of price war is in the best traditions of capitalism...I just want us to 'win'.

Jan, not unbiased

Things could get very ugly. I just read an article that examined how accurate predictions on the S&P are. The conclusion was that analysts were no better than flipping a coin.

Not sure about the energy sector. I read once that 50% of the cigarettes sold in New York City are black market sales. States have huge pension funding problems and if they keep raising taxes to deal with it I would expect these black markets to grow. Locally we have "farmers markets" that I think are designed to avoid taxes and fees. As a retailer I hate having to compete against that.

The Saudis are conducting economic warfare on the U.S. because they know the Obama administration is too weak-minded to take retaliatory action. They're running a much bigger risk with Russia, but Russia is the ally of their enemy, Iran. Part of this may be out of anger at Obama for making a deal with Iran.

Great comments. I always get an education in the Gulch. What about the underground cash economy? In Ukraine and other former Soviet Union Countries much of the economy is cash based to avoid paying taxes. I suspect the same in the US - especially for services in the small business sector. Any data on the subject?

The Saudis aren't "selling at their best price." Their budgets were scaled at a higher price per barrel, and they're now spending out of their reserve accounts heavily. They're gambling that they can drive their Russian and American competitors out of business before they go deeply in debt. They're killing their compatriots in OPEC, who don't have the economic depth of even Russia, and it may mean the destruction of that organization.

They are the sheep that have been wearing blinders, and only listening to the bleating of the other sheep around them, not to the howling of the wolves that's been going on in the distance for a loooong time now. When the down went over 10K... I knew the "correction" would be coming. They forgot the lesson of the 1920's and 30's... so they are repeating it.