This is a message I sent to Xen in November 2008. Still freaks me out how acurate this guy's book is about stuff
:|
quote:
I've been banging on about this book for what seems like ages now, but I've been re-reading some parts of it today and came across this passage. Book was written 2 years ago roughly, and this reads more like a history of the last 18 months rather than conjecture on what could happen if oil production peaks.
Do you know much/read much about 'peak oil'? It's a pretty interesting topic, but it's hard to know what to take seriously in all the poo that's out there.
quote: The Last Oil Shock
[talking about realisation in the markets that oil only needs to peak, not run out, to cause chaos]
But the moment the money men get it, the price of oil and other energy assets will soar, and almost everything else will go into meltdown.
A major spike in oil price is recessionary not only because of its direct effects on the global economy, but also because it is likely to cause stock markets around the world to crash, further reinforcing the recessionary pressures. This in turn will lead to second order effects, such as the deepening insolvency of many pension funds, which hold the bulk of their investments in stocks and shares. This fallout is likely to be particularly bloody in Britain, where the Pensions Regulator is monitoring 300 major occupational schemes that are already in danger of going bust.
...
The value of endowment policies will collapse too, with devastating effect on the borrowers who were counting on them to repay their mortgage, and the housing market as a whole. The banking sector will act as a multiplier: since so much lending is ‘secured’ against future economic growth, as the outlook worsens lending will fall, leading to further contraction. [my emphasisisisis]