06 January 2015

Early Adapters

No, that's not a typo. It's a pun. Here's the punch line.

The plummeting of oil shares, with the attendant fall in the price of crude, distillates, and such should give the quants, micros, and macros pause. Yet again.

The notion of an unfettered Rand-ian society rests on a basic assumption: that humans can adapt to any change before it's too late to avoid catastrophe. Yet, each time there's been a popping oil bubble, due to a miraculous (that's sarcasm, just so ya know) increase in supply, Mr. Market and his attendants go berserk within weeks, if not merely days. "We can't live with $X dollar oil!!! We need $Y dollar oil!!! We'll lose so much profit!!!" And so on. X < Y, of course. The same thing, in the other direction, happens whenever the Peak Oil Pundits appear to be right. Wealth share flows to the Oil Patches, just as now it is flowing to everybody else. The best thing that could happen for Apple, and such, all that more discretionary moolah in what's left of the middle class. All those Red States that have been living high on the hog for the last decade or so, not so much. Does it really make sense to pay some knucklehead in North Dakota tons of money to do brain dead manual labor? Of course, all those knuckleheads getting paid tons of money drives up the price of whatever it is they want to own. Localized inflation is a real phenomenon. Ask anyone's who's lived in the DC area. May be not Congresspeople and lobbyists, of course; they get to not only live high on the hog, but own most of them too.

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