One of the greater challenges in the financial and economic arena is to sift through the illusion and see the realities of the day. Those in power want to create perceptions that perpetuate their agenda even though the facts and/or history support the opposite. This is the basis of fraud. However, if you have power over the law, you can circumvent the law by using its weaknesses, caveats, and loopholes unfamiliar to the listener.
“10 Million Barrels short by 2015”
The U.S. Military High Command reported this reality. However, the Media fails to report this expected shortfall of oil supply. The EIA reported in 2009 that there would be a 43 million barrel a day gap in supply versus demand by 2035. Why do you think BP drilled in 5,000 ft. water? There have been several reports by credible sources reporting this problem but governments are operating under the illusion that “all is well”.
With the BP oil spill, the President has effectively reduced the production in the Gulf by 500,000 barrels per day. This means we will import this amount from other countries and increase our balance-of-payment deficit. 15 to 17 supertankers will be added to transport this new demand.
China is building 20 nuclear power plants (with 54 in the planning stages), the U.S. is building 1. Green renewal power is not going to fill the gap. The illusion of unlimited power has the American public asleep and in denial. What are we going to do with the waste?
The U.S. needs to spend $100 billion per year on rail. The U.S. trucking industry will not be able to pay the increased fuel costs coming soon. China’s increased demand for oil will offset any U.S. reduction thus causing a price floor to some degree. The days of cheap oil are over unless a global depression wipes out demand.
The G20 countries have been meeting to sort out the global debt contagion. The solution is simple: spend less, save more, reduce entitlements. This will not happen on a voluntary basis. After spending like a drunken sailor (my apology to the sailor), moving towards austerity is extremely difficult. Six week vacations by Europeans and long lunch hours for Spaniards is so ingrained in the culture of entitlement, there may be only one solution- depression with extreme prejudice.
Illusion serves only to provide temporary emotional comfort and delay of pain. Delay of pain only insures more intense pain.