Generational Dynamics World View

[David Horn]

(04-21-2020, 10:00 AM)John J. Xenakis Wrote: ** 21-Apr-2020 World View: Price of oil

I just heard that the price of oil is $10 per barrel in the June contract.  Even at $20, there will be lots of bankruptcies among oil producers, and lots of losses among banks and hedge funds.  Tens of thousands of people will lose their jobs.

I just heard a news report that the prices of used cars are plummeting.  This is all because of the economic shutdown.  Even if some of the lockdowns end, these price collapses will continue for many months.  This is a classic deflationary spiral, like the 1930sb.

That aligns well with the thinking others of all political stripes, that see things happening that haven't in a long time.  Neil Irwin wrote about this in the NY Times. Here's a short excerpt:

Quote:"The economic result of the pandemic is, more than anything, a sudden stop of demand. There may be a few products in which shortages are an issue, including medical equipment, personal protective gear and disinfectant wipes. But the overall picture is that a huge share of potential economic output is simply on hold.

That includes obvious candidates like restaurants, airlines and sports arenas, which are sitting empty. It includes the 22 million workers who have filed for unemployment insurance benefits, with many more likely to come. It includes less obvious candidates like the auto industry, which has temporarily shuttered factories. And, we now see, it includes the energy industry, with more capacity to pump oil out of the ground than there is demand for at present, and inadequate storage capacity.

All of that points to a deflationary collapse — a glut of supply of goods and services, and consequently falling prices — that surpasses anything seen in most people’s lifetimes."

The rest of the article is similar in temperament.