Oil and energy expert Byron King says the current market climate is like Napoleon’s retreat from Moscow: there’s no relief from the suffering.

Assets across the board are deflating. The world wants it’s money back and is selling hard.

Should you join the rush to the exists? Not necessarily, says Byron.

First, it’s important to learn how the world economy got into the situation it’s in now.This from Penny Sleuth:

It’s easy to wish that you sold your stocks six months ago. But you didn’t. Neither did I — at least not all of them. Why didn’t we sell? Were we focusing too much on the long term? Did we miss some sell signal? Where’s that bell that they’re supposed to ring at the top of the market? What the hell were we thinking, that we’re bulletproof or something? Well, before we get too far ahead, let’s look back and see how we got here.

Looking Back at a Weak Dollar and Expensive Oil

From the end of 2006 to July 2008, oil steadily increased in price:   

 

Also, between late 2006 and July 2008, the U.S. dollar declined in value, particularly against the euro. This chart shows the Euro’s rise against the U.S. dollar:

 

Both run-ups — in the price of oil and the value of the euro against the dollar — were too much, too fast. The apparent strength in both oil and the euro (and the weakness of the dollar) masked the fact that the trading numbers were outrunning the pure economic fundamentals.

Here’s the key set of points. The eurozone economy was not that good last year. The dollar and the U.S. economy were just not that bad. Oil was just not worth that much. Despite the Peak Oil thesis — in which I believe strongly — the world really wasn’t coming to an end last summer. (And it didn’t.)

So by this past July, oil was too expensive and the dollar was too cheap. I said so both in writing and on Fox Business News and other media. As you can see from the charts, by the second week of last July, oil was selling at $147 per barrel and the euro was over 1.6 relative to the dollar. Too much.

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More on this topic (What's this?)

The Oil Industry: We’re a Few Months Away From $100 Oil, Here Are Three Ways to Profit (Investment U, 11/13/09)

Oil Demand Is Dropping Significantly (Shocked Investor, 11/18/09)

The Outlook for Oil Prices (Energy and Capital, 11/14/09)

Read more on Oil, Euro (EUR), Energy at Wikinvest

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