[Marxism] "Peak Oil": the US-China Economic Downturns Factored In?

[Yoshie Furuhashi <furuhashi.1@xxxxxxx>]

Jon posted:

> "The following is an abridged version of the address given to the
> 60th UN General Assembly on September 15 by Hugo Chavez,
> Venezuela's revolutionary socialist president."
>
> excerpted from http://www.greenleft.org.au/back/2005/644/644p28.htm
>
> "Ladies and gentlemen, we are facing an unprecedented energy crisis
> in which an unstoppable increase of energy [consumption] is
> perilously reaching record highs, as well as the incapacity to
> increase oil supply and the perspective of a decline in the proven
> reserves of fuel worldwide. Oil is starting to become exhausted.
>
> For the year 2020 the daily demand for oil will be 120 million
> barrels. Such demand, even without counting future increments,
> would consume in 20 years what humanity has used up to now.

Have those who speak of "peak oil" factored in the likely economic
downturns in the United States and China -- the two largest oil
consumers -- in the very near future -- certainly before 2020 -- in
their calculations of oil consumption trends?

Doug Henwood posted the following to LBO-talk:

> <http://www.federalreserve.gov/pubs/feds/2005/200541/200541abs.html>
>
> Estimates of Home Mortgage Originations, Repayments, and Debt on
> One-to-Four-Family Residences
> Alan Greenspan and James Kennedy
> 2005-41
>
> Abstract: Since 1997, when the Department of Housing and Urban
> Development discontinued its quarterly gross mortgage flow system,
> there has been no systematic attempt to disaggregate the net change
> in outstanding home mortgage debt into its constituent gross flows.
> Using a different approach, we have developed a system that
> reconciles the change in regular home mortgage debt with mortgage
> flows. The latter includes home purchase and refinance originations,
> and mortgage purchases, sales, and repayments for five types of
> mortgage originators and six categories of other mortgagees. In the
> process, we derive the sources of equity extraction from homes
> financed by mortgages.
>
> ----
>
> Greenspan-cash from home values grew mortgage debt
> Mon Sep 26, 2005 04:08 PM ET
> By Mark Felsenthal
>
> WASHINGTON, Sept 26 (Reuters) - Federal Reserve Chairman Alan
> Greenspan said on Monday his own research reveals that 80 percent of
> the gain in U.S. mortgage debt is due to people taking cash out of
> the value of their homes.
>
> "Discretionary extraction of home equity accounts for about
> four-fifths of the rise in home mortgage debt," he said, describing
> the paper in a speech to the American Bankers' Association.
>
> The paper, "Estimates of Home Mortgage Originations, Repayments, and
> Debt on One-to-Four-Family Residences," was written with Fed staff
> member James Kennedy and posted to the Fed's website
> (http://www.federalreserve.gov/pubs/feds/2005/index.html).
>
> It is Greenspan's first study since one he co-authored in October
> 1996 entitled "Motor Vehicle Stocks, Scrappage, and Sales."
>
> U.S. homeowners had $7.96 trillion in home mortgage debt outstanding
> at the end of the second quarter of 2005, up from $4.82 trillion at
> the end of 2000, according to the Fed's most recent quarterly "Flow
> of Funds" report. The value of homeowners' real estate equity rose to
> $10.47 trillion from $6.58 trillion over the same period.
>
> Home equity extraction can take place through the profit from the
> sale of a home, taking cash out of the higher value of a home by
> refinancing a mortgage, or borrowing against the increased value of
> the home through a home equity loan, the Fed chairman said.
>
> Greenspan said 25 percent to 33 percent of the value of home equity
> loans and mortgage cash-outs finances personal consumption expenses
> directly.
>
> About 25 percent of that equity extraction is used to pay off other
> debt, he said. Some people use cash from home value gains as
> downpayments for a subsequent home, he added.
>
> One conclusion that can be drawn from his analysis is that the
> decline in the U.S. savings rate over the past decade -- long a
> concern for policy makers -- can be explained by the decline in
> interest rates and by the increase in overall household wealth -- not
> just homes but stocks, Greenspan said.
>
> As a result, if mortgage interest rates rise, home sales and
> refinancing would likely slow, and growth in consumption would also
> ease. Greenspan said. The personal savings rate, accordingly, would
> rise.
>
> Taking the hypothesis a step further, the Fed chair said greater
> savings would dampen imports of goods into the United States, and
> that the U.S. trade deficit would shrink.

The Fed may be gearing up to engineer a big recession (by continuing
to raise interest rates and eventually deflating the housing bubble)
in an attempt to bring the trade deficit under control.  Even without
the Fed's design, the US real estate markets must be peaking anyhow.
When the US housing markets go down, so will US consumption and
Chinese export-driven development, dampening demand for oil
considerably.  That needs to be taken into account in any discussion
of oil demand and supply.

Yoshie Furuhashi
<http://montages.blogspot.com>
<http://monthlyreview.org>
<http://mrzine.org>
* Mahmoud Ahmadinejad: <http://montages.blogspot.com/2005/07/mahmoud-
ahmadinejads-face.html>;  <http://montages.blogspot.com/2005/07/chvez-
congratulates-ahmadinejad.html>; <http://montages.blogspot.com/
2005/06/iranian-working-class-rejects.html>



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