cont'd...

Another typo. The correct spelling is - Uppsala.
Sorry Bazz.

Ah yes Lexi, I keep getting it mixed up Uppsala & Upsalla.
I just had to go and look at Prof Kjell Acklett's (ASPO President) blog to check.

Belly, the linkage between oil price and the GFC is pretty direct.
I notice in the last year that many more economists are making that
connection in their comments.
In case anyone is interested here is the drill;

Oil production we now know peaked in 2006 and crude + all liquids
peaked in July 2008.
In 2007 oil & coal prices were rising and the economy was struggling
particualy in the US, but as it now seems the Europeans were stacking up debts.
Further into 2008 mortgage defaults were increasing fast.
Why, well the sub prime house loans were sitting there like a roadside bomb.
The food was getting dearer due to diverting corn into ethanol.
People drive to work in the US.
So they had a choice, buy food or buy petrol or pay the mortgage.
They did not pay their mortgage and Collateral Default Swaps were triggered.
The cost of oil went to $147 a barrel and the fuel cost in the US
went over 4% of GDP in July 2008 and it went BOOM in August 2008.
Economists have since decided that oil more than 4 to 5 % of GDP
will cause a recession. As GDP falls and energy costs rise, well ?

And the rest is history.

Bazz yabby I enjoy your company, always.
And yabby you may well be surprised, but if reading my posts not.
I know, not think, public servants, state federal local government,wast far too much.
I condemn privatization always.
And know if often costs even more, yabby it SOME TIMES sees former public servants, winning the contract, at a higher rate, rather than reforming the crimson place.
Bazz sorry oil has cost even more not long ago.
I fear not the shortages, not the impending end of it.
I fear it has become the tax gatherer, that governments unfairly and unwisely burden us with its costs.
If we OLO poster are Representative, are we?
I fear those who truly bought about the GFC will sneak away in the fog of miss information.

Now here is a very interesting point.
As some of you are aware the prediction of oil depletion was made in
1956 by M K Hubbard. He made two predictions one for US peak in 1970
and world peak in 2008 to 2010.
However it turns out there was a third prediction that the people
would have trouble accepting that growth could not continue after peak.

http://www.energybulletin.net/stories/2011-11-09/hubberts-third-prophecy

All these many years later he was spot on.
They laughed him off stage at conferences in 1956 and later but it
turned out he was right. Now they are still laughing.
Yet it looks like he is right again !

Actually Bazz, Hubbert did get a few things wrong.

In 2010 US production was 4 times higher then Hubbert had
predicted, 5.9 million barrels a day, versus his 1971
estimate of 1.5 million barrel a day.

Hubbert was imaginative and innovative in his use of
mathematics, but he left out two key elements, technological
progress and price.

Bazz yabbys point is well worth your attention.
We have other ways to fuel this world, maybe not yet but soon.
Back to the real reason for the GFC/and this thread,expand that to the EC,s troubles.
Money was first made by people like kings, we trusted the paper and coins would be changed for something of worth.
After all it is unless gold or silver only paper or near worthless metals.
Credit, lending in return for promise to pay, lending in return for getting more back, drives our economy's.
Growth. productivity, profit, small words, but a drug.
You and I in our youth knew, or soon learned, to live within our budgets.
Those offers of credit card got short shift on the way to the rubbish bin.
Not in Europe,both lender/sellers and borrowers forgot it has to be paid back.
Constant growth can not be sustained but is a requirement of so much of our lifestyle.
Fuel has little to do with GFC.