{"id":2200,"date":"2014-11-29T19:48:56","date_gmt":"2014-11-30T00:48:56","guid":{"rendered":"http:\/\/olduvai.ca\/?p=2200"},"modified":"2014-11-29T19:48:56","modified_gmt":"2014-11-30T00:48:56","slug":"opec-presents-q4-and-deflation-the-automatic-earth","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=2200","title":{"rendered":"OPEC Presents: Q4 and Deflation – The Automatic Earth"},"content":{"rendered":"

OPEC Presents: Q4 and Deflation – The Automatic Earth<\/a>.<\/p>\n

Thinking plummeting oil prices are good for the economy is a mistake. They instead, as I said only yesterday in\u00a0The Price Of Oil Exposes The True State Of The Economy<\/span><\/a>, point out how bad the global economy is doing. QE has been able to inflate stock prices way beyond anything remotely looking fundamental, but energy prices have now deflated instead of stocks. Something had to give at some point. Turns out, central banks weren\u2019t able to inflate oil prices on top of everything else. Stocks and bonds are much easier to artificially inflate than commodities are.<\/p>\n

The Fed and ECB and BOJ and PBoC may of course yet try to invest in oil, they\u2019re easily crazy enough to try, but it will be too late even if they did. In that sense, one might argue that OPEC \u2013 or rather Saudi Arabia \u2013 has gifted us QE4, but the blessings of the \u2018low oil price stimulus\u2019 will of necessity be both mixed and short-lived. Because while the lower prices may free some money for consumers, not nearly all of the freed up \u2018spending space\u2019 will end up actually being spent. So in the end that\u2019s a net loss as far as spending goes.<\/p>\n

The \u2018OPEC Q4\u2032 may also keep some companies from going belly up for a while longer due to falling energy costs, but the flipside is many other companies will go bust because of the lower prices, first among them energy industry firms. Moreover, as we\u2019re already seeing, those firms\u2019 market values are certain to plummet. And, see yesterday\u2019s essay linked above, many of eth really large investors, banks, equity funds et al are heavily invested in oil and gas and all that comes with it. And they are about to take some major hits as well. OPEC may have gifted us QE4, but it gave us another present at the same time: deflation in overdrive.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

OPEC Presents: Q4 and Deflation – The Automatic Earth. Thinking plummeting oil prices are good for the economy is a mistake. They instead, as I said only yesterday in\u00a0The Price Of Oil Exposes The True State Of The Economy, point out how bad the global economy is doing. QE has been able to inflate stock […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[246,592,600,661,662,1234],"class_list":["post-2200","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-economy","tag-oil-price","tag-opec","tag-qe","tag-quantitative-easing","tag-stimulus"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/2200","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2200"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/2200\/revisions"}],"predecessor-version":[{"id":2201,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/2200\/revisions\/2201"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2200"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2200"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2200"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}