A picture speaks a thousand words, and the photo above shows that oil still eclipses the sun when it comes to providing energy for 21st century humankind. That's just the way it is and that's why oil keeps breaking records on the way to $200-a-barrel.
The higher the price, the bigger the bubble, the greater the danger. So says conventional wisdom, and it might be absolutely true with artificially stimulated or highly leveraged investments such as real estate or stocks. But does that also apply to the titans of global commodities, oil and gold?
James West, the author of The Midas Letter
http://www.midasletter.com/ has some fascinating comments on this topic that makes one stop and think, especially with all the talk about $200 oil and the $2,000 gold.
"In the cases of the last three bubbles that we’ve witnessed the implosion of this decade, all three suffered from an excess of supply in the face of diminishing demand. The internet technologies of 2000 were over-invested in to the point where broadband was selling for less than it cost to run.
The real estate bubble and the credit bubble, inextricably linked, more or less collapsed together. The excess of credit caused an excess of supply real estate-wise, the fallout from which we are still only starting to feel the pain of, rosy forecasts from the mainstream notwithstanding. When the derivative possibilities of every credit configuration imaginable had been spit shined and rolled out among dopy institutional investors, the jig was up, and internet pages with the words “food riots” have multiplied by a factor of at least a million.
Currently, a second feeding frenzy is developing, as these opportunistic groups circle the growing pools of distressed assets now flooding the market, making ready to swoop in and scoop them up when the bottom is perceived.
During the first quarter of 2008, 650,000 U.S. families saw the initiation of foreclosure proceedings on their homes. That’s 1 in every 194 U.S. households!
One in every 54 Nevada households received a foreclosure filing during the first quarter, the highest foreclosure rate among the states and 3.6 times the national average. Foreclosure filings were reported on 19,595 Nevada properties during the quarter, up 3 percent from the previous quarter and up 137 percent from the first quarter of 2007.
