28 Mar Hey, remember this?
“‘The Oil Bubble: Set to Burst?’ That was the headline of an October 2004 article in National Review, which argued that oil prices, then $50 a barrel, would soon collapse.
Ten months later, oil was selling for $70 a barrel. ‘It’s a huge bubble,’ declared Steve Forbes, the publisher, who warned that the coming crash in oil prices would make the popping of the technology bubble ‘look like a picnic.’
All through oil’s five-year price surge, which has taken it from $25 a barrel to last week’s close above $125, there have been many voices declaring that it’s all a bubble, unsupported by the fundamentals of supply and demand.” -Paul Krugman, “The Oil Nonbubble” published on May 12, 2008. (https://www.nytimes.com/2008/05/12/opinion/12krugman.html)
So . . . did that age well LOL? But hey: I’m sure we should always and completely trust economists who win Nobel Prizes. I mean, clearly, they know, like, way better than the common person, right? 😆
For me, it has the same ring of, “Inflation is transitory. The banking system is sound. The labor market is red hot. Go back to sleep, little baby, and let the overlords handle it all.”
“Oil industry executives and the Saudi government said that the prices did not reflect real economy forces. Jeroen van der Veer, chief executive of Royal Dutch Shell, remarked, ‘The fundamentals are no problem. They are the same as they were when oil was selling for $60 a barrel.” Some even went as far as to use the ‘B’ word, as in ‘bubble.’ In fact, the increase in oil prices as of early June, with a high of $139.12 on the New York Mercantile Exchange, exceeded that of NASDAQ stocks through the peak of the dot-com frenzy. Yet economists were almost universally opposed to the idea that speculation was playing much of a role in the oil price spike. A Wall Street Journal survey found that 89%, as close as you ever come to unanimity in most polls, saw the increase in commodity prices, including oil, as the result of fundamental forces. Nobel Prize winner Paul Krugman argued the case forcefully in a series of The New York Times op-eds and blog posts with titles like, ‘The Oil Non-Bubble,’ ‘Fuel on the Hill,’ and ‘Speculative Nonsense, Once Again.’ Krugman’s presence in this camp lent credibility to the ‘oil prices are warranted’ view.” -Yves Smith, Econned (https://www.amazon.com/ECONned-Unenlightened-Undermined-Democracy-Capitalism/dp/0230114563)
Some of y’all gonna follow these pied pipers right off a damn cliff if you’re not careful.
But, but: economist! Nobel Prize!
So effing what. So what. You’ll know the tree by the fruit it bears.
“Imagine that Joe Shmoe and Harriet Who, neither of whom has any direct involvement in the production of oil, make a bet: Joe says oil is going to $150, Harriet says it won’t. What direct effect does this have on the spot price of oil — the actual price people pay to have a barrel of black gunk delivered?
The answer, surely, is none. Who cares what bets people not involved in buying or selling the stuff make? And if there are 10 million Joe Shmoes, it still doesn’t make any difference.
Well, a futures contract is a bet about the future price. It has no, zero, nada direct effect on the spot price. And that’s true no matter how many Joe Shmoes there are, that is, no matter how big the positions are.” -Paul Krugman, “Speculative nonsense, once again” published on June 23, 2008 (https://archive.nytimes.com/krugman.blogs.nytimes.com/2008/06/23/speculative-nonsense-once-again/)
Yeah, but that’s the thing, Paul. 10 million “Joe Shmoes” weren’t the ones making speculative bets on oil and f**king up the market, but nice try, I guess. 😒
“So Krugman, although sensitive to the notion that speculation can distort prices, nevertheless fell in with the argument that oil prices were the result of real-world buying and selling. Yet that belief was spectacularly incorrect. Oil peaked at $147 a barrel in July and fell even more dramatically than it had risen. … Why were economists unable to read the information correctly, and so inclined to dismiss the views of experts and participants in the energy markets who were saying that prices were out of whack with what they saw on the ground? The short answer… is that they had undue faith in their models.” -Yves Smith, Ibid.
That seems a rosy interpretation to me. I’m more cynical, more salty. I think some of these “experts” are PAID SHILLS. Someone is pulling the strings to push whatever narrative they want John & Jane Q. Public to swallow and they’ll throw money where they need to. Maybe some are sincere and using flawed data and models. Sure. But I’d be willing to bet, no pun intended, that more than a few are simply bought and paid for by Corpo America and its cronies.