Sipping On Gin

I’m back in the swing of my usual day, after spending most of the weekend in western New York, attending a funeral service.

Weddings in the summer…funerals in the winter…that about sums up my years.

Now, for whatever reason, oil markets are cascading down, bowing to reason. I don’t know if this will be the lead up to the big plunge, or if it’s just another head fake before more pain. But what I do know is that oil prices right now are completely unrealistic. Oil should be in the $80’s, at most.

The Iran embargo is only better for oil prices. There’s more than enough oil for the major economies, but we fight over every barrel produced. The embargo is a de facto division of the planet’s oil; Iran and some others go to China; the rest of the Middle East is Europe’s; and China and Europe in turn butt out of American oil.

This simple restructuring could allow prices to plummet, as you can bet supply will not be affected by this act. However, demand will be controlled, artificially, by non-compete agreements. We’re making a buyer’s market here, but you are all too busy crying in a corner to see the big picture.

Finally, Europe remains a train wreck. The issue at hand is not a Greek default, although it’s proven very funny watching the talking heads go from dismissing a Greek default to declaring it imminent but dismissing any real consequences.

You lot are nuts; the big looming issue is that Europe, in net, needs to either default on a trillion euros this year, or print them, because private markets are not in the least interested in investing in countries with 100%+ GDP and swelling incompetent windbags for leadership.

If (When) Europe continues to break down, the repercussion is going to be U.S. exports that crumble. That will crush U.S. growth as U.S. multinational conglomerates, plus half of emerging markets, are going to see earnings get slaughtered from exchange rate dependent “one-time” line items…indefinitely.