Oil Prices Raise Double-Dip Recession Risk

" Is there -- 100%. Chance we are going to revert into a double dip recession well history says may be -- want to show you something. But by the way came courtesy of front -- at the global macro investor out in Spain showing. Basically oil prices and recession we're going to get more -- economy just the second. But take a look at this snappy thought I was negative before -- can really say it for cake is here you go this -- back in nineteen. Seventy what we've got that's it let's focus in. Blind the goal I know that's why said the gold line is the price of oil the gray streaks. Those are recessionary. Periods okay gold oil great recession here's what we know. Every time since 1970 the price of oil has doubled. In a twelve month period. We have had a recession. There you go so back here you've got actually had this is actually doubling back in the early seventies when you're not. And of course you have the I 75 spike yet to 79 spike yet a spike back here in the mid eighties yet a spike actually in the late ninety's. And every time we've had a doubling of oil in a year period a twelve month calendar period we have had a recession now. I know we're just coming off a low price but it's. The price of oil 32 bucks a barrel back in December of 2008. We are right under eighty now in other words if we get to December. And the price of oil -- 64 and change. That would be a doubling and history sex we have a 100%. Chance of recession. --"

" But boils up in part because the dollar is weak this year does that help offset."

" The impact on the economy of higher oil price I don't think anybody in America cares about why price equals higher I think that if you gotta fill your gas tank and it's now back to 350 places like California. It's the economic hit to oil how vital it now history could be wrong we've got to. Very smart person on set the talk was more about this Lindsay gigs of FT and financial capital markets who didn't even know that was going to break up that graphic. I didn't is it is a box."

" While I'm going to have to do a little more now society determine whether or not there's exact 100% causality there. Well we are seeing today in point is that there is a big concern about the viability of the dollar we're seeing the government run up deficits. And we're seeing that the value of the dollar continue to deteriorate now. Couple that with the idea that oil was price obviously in terms of dollars and overseas governments in attempt to hedge against dollar assets. Are stockpiling commodities you're having this earth crisis life I don't care why it is -- back up -- actually seeing that in several cases. We saw quite that they are -- going to rise but not necessarily to that 100% line. CC back in the early eighties when you highlight the whole thing. We're hitting right near that double level -- move over one more where there's not a recession here. -- ago. So again there are cases where oil prices will double and we're not going to necessarily fall back into negative territory. But it will certainly put pressure on the recovery. Now that's been the argument all along whether or not this."

" Is going to be V shaped recovery or simply in an L shape during U shaped door and are shaped recovery. Then what are American businesses and even consumers may be a little bit better. Equipped to handle a move back up an oil which we've seen this year book calls the spike that we had last year. So you see -- 140 plus dollars a barrel. And gas prices north of four dollars so maybe people didn't change their behavior back to the old ways. Of freely that you free spending use in freewheeling use of fuel that's the point too we also see a shift in the trend of the consumer overall we see cutbacks being made in nearly. All areas of the economy and so your right there is there is an additional question that we could face."

" Now the glory days. They read my -- I'm just about ready to bring up consumer confidence that's what troubles me go to the -- and if you look and again we should have charted if you track consumer confidence with the unemployment. Consumer confidence tends to lead because -- consumers are actually business owners as well is that -- more concerning chart for the price of oil."

" This is one of the most concerning charts that I think people aren't talking about enough may concede it we've come off of that Armageddon scenarios set back in the first quarter. But we're still very normal recessionary -- the consumer is very concerned about their income their job opportunities. And and what we're seeing is not only economic uncertainty a political uncertainty till. There's a lot of back and forth on capital hill right now in consumers don't know what their tax policies are going to be their health care policy if and again we're not seeing any pro growth scenarios coming out of the government right now to marry all."

" Those things the consumer confidence the job market and what Washington is doing. The Senate passing what would be 99 weeks up to 99 weeks of unemployment benefits in some states for people is that really the right solution. And what is that what is it the opposite impact of keeping people. Not encouraging people to go out there actively look for work and earn money but keep them on unemployment that all of the questions to you get this diminishing margin of return when you start to extend benefits beyond the the needed level we've gone from 26 weeks to well over ninety in some industry. And rather than going out and seeking potential job opportunities people are writing out these extended."

" And that's our senior economist to mark Lieberman for tomorrow to put together took a what are what the stimulative effect is of unemployment benefits we know food stamps are the most -- that it. Right for the dollar you give a dollar 73 spent. I I would imagine every dollar unemployment benefits goes right back into the economy -- the job you're going to probably spend every dime that you get in the benefits because you're gonna need that money. Quickly going back to be out to the consumer confidence chart when -- Listen obviously you know you talk about that Armageddon scenario right and that and that was this big drop that we had from 07 to 08 my we've had a small recovery consumer confidence. Which one of those matters more than that that the -- beginning -- recovery or the fact we're still."

" Soul far off where we were a few years ago. Well it I think that what we need to see -- if you take that chart back to a longer historical time period -- very much in line -- where consumer confidence falls. During recessionary period so -- we look at that Armageddon scenario back in the first quarter that's when we had this unprecedented pressure on the banking system. Main street wasn't sure Wall Street was going to blow up we also have the president coming on -- television telling us. That things were much worse off than you originally anticipated so we have all this additional pressure on top of the economic scenarios that consumers are looking -- We are expecting to see a much better jobs picture on Friday were continuing to see the decline that. Move away into positive territory now we're still a ways away from positive job creation. Over losing jobs and much slower pace a monthly basis."

" put that chart up on my blog by the way so everybody out there can see you know selected I'm not say we have a 100% chance recession. I'm saying that history. Has said going back to 1970 that there will be a 100% chance of recession. But every other we have every right included in that -- now out there I thank you Lindsay think. --"