PetroChina Company Limited (ADR) (PTR)

idchucky (< 20) Submitted: 6/17/08 2:29 PM

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Depression more like economic collapse.

80s Saving and loans bubble busted.
90s dot coms bubble busted
00s sub prime mortgages bubble busted, devaluing of house market, devaluing of wages continues.
10s Oil prices reach $240 to $260 a barrel, peoples personnel bubble popped.

Can anyone say for sure that oil prices will not double within the decade again??

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sid1138 (< 20) Submitted: 6/25/08 8:36 AM

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I always find it interesting when people point to today's ecomony and declare economic collapse or Depression like disaster. The reality is far from disaster.

Lets start at the bottom and work our way up, shall we. First, while oil prices rise, alternative energy becomes viable. It takes a while, but it becomes viable. So, this will ultimately put a cap on oil prices. While we may see $200 per barrel, long term it will subside to $100. Next, oil may be 3-4 times what it was in the late 70's and early 80's, but then again cars get 3-4 times the gas milage. Not to mention that houses tend to be 3-4 times better insulated, appliances tend to be 2-3 times more efficient, and public transportation is better. Add in the fact that people earn about 2 times more today then in 1979 and the net result is energy costs are not that devasting to the economy (at least compared to 1979).

Next - sub prime bubble burst, devaluing house market, devaluing wages. So, sub-prime burst - it was way over due. This had a bit of a ripple effect, but relatively minor. The housing market went down - it does that occassionally. The fact that it went down a small amount after an historically long run up is amazing. If this was the stock market, the drop in housing would be called a correction, not even a bear market. Yet, this drop has allowed some to buy houses that could not before, has reduced rents in many areas, and reduced valuation for tax purposes. So, except for those people who like to flip houses or who bought at the peak and financed at 100%, this down turn has little overall economic affect. Of course, the media hype is having an emotional affect and that is a bad thing - but that is the media not the economy.

Now, if we compare the current economy to what happen in the dot com bust, we see that the dot com bust removed over 2.5 TRILLION in paper profits from the investing community. Now that has a serious impact to the economy - much more serious than some people upside down in their adjustable rate mortgage. Way more of a problem than anything happening today.

And the Savings and Loan debacle - again TRILLIONS of dollars of impact. Let's see, we had over 2,000 institutions going belly up because they could not get cash in. We had millions of people with 12-14% mortgages unable to pay because unemployment was at 14%. We had inflation hitting at time 18%, wiping out savings. We had a stock market that was flat for nearly 15 years, meaning that retirement funds invested in the stock market were losing 10-15% per year every year. In short, we had millions of people seeing their standard of living erode at an extremely fast rate.

And you worry about our economy today. An ecomony where REAL earnings grow at almost 2% per year. Where unemployment, at 5%, is near historical LOWS (not highs). Where inflation, despite high oil prices, is at under 5%. People complain about the weak dollar, but our exports are up. Speaking of which, because of huge globalization, we have two billion more potential customers for our goods and services today than we did 20 years ago. And those customers are buying as fast as they can.

While I agree we are seeing a major shift and upheavel in our economy, the economy is not dropping in a chasm. In fact, it is just taking a breather before making that sprint up the mountain.

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