DrumBeat: August 9, 2007
Posted by Leanan on August 9, 2007 - 9:11am
Jeremy Rifkin: The crisis under the ice
While governments and oil giants are hoping the melting ice will allow them access to the world's last treasure trove of oil and gas, climatologists are deeply worried about something else buried under the ice that, if unearthed, could wreak havoc on the biosphere, with dire consequences for human life.Much of the Siberian sub-Arctic region, an area the size of France and Germany combined, is a vast, frozen peat bog. Before the most recent Ice Age, the area was mostly grassland, teeming with wildlife. The coming of the glaciers entombed the organic matter below the permafrost, where it has remained ever since. Although the surface of Siberia is largely barren, there is as much organic matter buried underneath the permafrost as there is in all of the world's tropical rain forests.
Now the permafrost is thawing on land and along the seabeds. If it occurs in the presence of oxygen on land, the decomposing of organic matter leads to the production of CO2. If the permafrost thaws along lake shelves, in the absence of oxygen, the decomposing matter releases methane. Methane is the most potent of the greenhouse gases, with a greenhouse effect 23 times that of CO2.
Canadian PM vows to defend Arctic
Canada's prime minister has begun a three-day trip to the Arctic in an effort to assert sovereignty over the region a week after Russia symbolically staked a claim to the North Pole by sending submarines...."The Russians sent a submarine to drop a small flag at the bottom of the ocean. We're sending our prime minister to reassert Canadian sovereignty," a senior government official told The Associated Press on condition of anonymity because his language was undiplomatic.
Bridge Disaster Could Mean Gas-Tax Hike
Frank Moretti of TRIP, a national transportation research group, said continuing to oppose higher gasoline taxes could become politically untenable.The bridge collapse "is going to create a fundamental shift," Moretti said. The public would rather pay more taxes "than have to face the consequences of a crumbling infrastructure."
Bush rejects raising gas tax for now
President Bush dismissed Thursday raising the federal gasoline tax to repair the nation’s bridges at least until Congress changes the way it spends highway money.“The way it seems to have worked is that each member on that (Transportation) committee gets to set his or her own priorities first,” Bush said. “That’s not the right way to prioritize the people’s money. Before we raise taxes, which could affect economic growth, I would strongly urge the Congress to examine how they set priorities.”
The “Plunge Protection Team” Working Overtime to Save US Stock Market
US light crude oil briefly shot-up to a new record high of $78.77 per barrel, and the DJI-30 sank further to 13,150. It was looking pretty grim for Wall Street bulls, with PPT chief Paulson, situated far away in Beijing, trying to head-off a trade war between the US Congress and China next year. And when the cat's away, the mice will play. Was the mythical PPT was asleep at the switch while Wall Street burned?But then it happened! At around 3:20 pm EST on August 1st, the DJI-30 began to move up strongly and without hesitation. By the closing bell at 4:00 pm, the DJI-30 had skyrocketed by 230-points above its lows, to close 150-points higher on the day. The mainstream media pointed to the possibility of computer buy programs, which kicked into high gear, after the S&P 500 held above its 200-day moving average.
Biofuels give us food for thought
At first sight, these renewable fuels seem a great idea, cutting the use of the depleting fossil fuel stocks, but the downside is that pressure on land use drives up food costs across the globe.
Sri Lanka Petroleum Minister pledges not to increase fuel price again this year
Sri Lanka Minister of Petroleum and Petroleum Resources Development A.H.M. Fowzie today pledged not to raise the petroleum prices again within this year.The Minister participating in the cabinet press briefing said that the Ceylon Petroleum Corporation (CPC) was not losing now. However, the CPC loses 20% from the fuel supplied to the Ceylon Electricity Board (CEB) at a subsidized rate.
Car rental outfits head in a green direction
Faced with sluggish rentals of sport utility vehicles and eco-conscious consumers demanding cars with higher gas mileage, auto rental companies have scrambled in recent months to stock their fleets with more fuel-efficient vehicles -- including cutting-edge hybrid vehicles and flex-fuel cars that run mainly on ethanol.
Electricity Deregulation: Taking the Next Step
The North American Electric Reliability Corporation projects a 19 percent growth in peak summer demand for electricity within 10 years - whereas the amount of available power is projected to grow only 6 percent, according to FERC. Available power can be rationed by allowing the market to set prices, or it will be rationed by blackouts and brownouts. However, many consumers will be able to avoid huge price hikes, or at least slow the growth in their energy bills, by using smart technology to manage their electricity use.
John Michael Greer: Cities in the deindustrial future
Go further back and you’ll find the same thing in every secular millennialist movement the United States has seen since the dawn of the 20th century. Whether the apocalypse du jour is nuclear war, pandemic disease, racial conflict, Communist takeover, fascist police state takeover, the imminent arrival of Antichrist, or what have you, the accepted way to deal with it is to flee to some isolated location in the mountains and wait for the rubble to stop bouncing. I’ve tried to challenge the kneejerk application of this same way of thinking to the consequences of peak oil in a number of previous posts, but there’s another side to the picture – the widespread notion that cities in the aftermath of peak oil will be deathtraps by definition.
Are Rising Oil Prices Good For The Economy?
However, as soon as the price of Oil begins to head higher, economists become very nervous and fears of an inflationary shock ala 1973 resurface. Recent history has shown that a near 8 fold increase in the price of oil has not resulted in an outbreak of inflation, a recession or stock market collapse. In fact the stock market has surged higher during this same period which begs the question, are rising Oil prices good for the economy?
Measure targets fatty fuel tax break
The legislation, which passed the Democratic-controlled House easily, doesn't mention ConocoPhillips or Tyson by name.But on page 46, under Sec. 203. Extension and Modification of Credits for Biodiesel and Renewable Diesel, paragraph (b), subparagraph (1), the bill would strike language from the Energy Policy Act of 2005 that reads "using a thermal depolymerization process."
And that reference — oblique as it may be — could prove a painful blow to the two companies.
Nigeria records drop in crude oil production in 2006, says CBN
Aggregate crude oil production declined from an average of 2.53 million barrels per day in 2005 to 2.23 million barrels per day (mbd) in 2006, the Central Bank of Nigeria (CBN) has said.
Russia vs. Canada at the North Pole
Canada and Russia are now at unlikely loggerheads, disputing territory that was out of the question for resource harvests just a few decades ago.But while Canada looks just below the Arctic - to the fabled Northwest Passage now opening between the ice sheets of the country's majority mass, and the bountiful oil sands of Alberta that rocketed Canada up just behind Saudi Arabia in estimated oil reserve rankings - its ultimate goal seems to be the northernmost climes of the Great White North. Canada has promised to build six to eight new patrol ships to monitor the Northwest Passage, though the United States says Canada has no territorial claim. These waters are as diplomatically murky as they are frigid.
Ministry: Moscow Court Okays Seizure of Russneft
All of the shares of Russian oil firm Russneft have been seized as part of a criminal probe into tax evasion and "illegal business practices", the interior ministry said today.On July 31, Moscow's Lefortovo "approved the request to arrest 100 percent of the shares of this company. The shares have now been seized," the ministry said in a statement.
LUKoil unperturbed over possible loss of its American filling stations
Green Oil sustained losses from skyrocketing prices of oil and oil products. The winners in this situation - just as always - are large oil companies that have producing and refining assets, including the three defendants in the current suit.However, the claim that LUKoil, Aramco and PdVSA conspired to raise prices of oil and oil products sounds ridiculous to me, as many other companies could be accused of the same sin.
But is reducing food miles necessarily good for the environment? Researchers at Lincoln University in New Zealand, no doubt responding to Europe’s push for “food miles labeling,” recently published a study challenging the premise that more food miles automatically mean greater fossil fuel consumption. Other scientific studies have undertaken similar investigations. According to this peer-reviewed research, compelling evidence suggests that there is more — or less — to food miles than meets the eye.
Growing Our Own And More On The Bullseye Diet
It was mainly Peak Oil that drove me out into my garden with a new mission; no longer just to grow a few tomatoes for fun each summer, but in an effort to grow the majority of the food my family eats. I set out a goal of producing more calories than I consume on my own property and within 5 years. I called my project “Growing My Own.” But there were others factors tugging at me, entreating me to take personal responsibility for the needs of my diet.
Editorial: Urban farming's time has come
Paula Sobie and Martin Scaia started City Harvest in February, advertising on the Internet for people who wanted to use all or part of their property for an urban garden.In return, the homeowner would receive a portion of the organic vegetables, while the couple would sell the rest at markets, to restaurants and through the Small Potatoes Urban Delivery (SPUD) program.
But the couple ran afoul of an Oak Bay bylaw that forbids growing plants for sale, introduced in 2001 after the Beach Drive estate "Riffington" was given farm status because the owners sold more than $2,500 of plants annually from the property's gardens. Farm status meant the property tax bill was slashed; Oak Bay council quickly moved to restrict urban farming and protect its tax base.
Marijuana crops also bad for environment
Come September, marijuana growers who have labored for five months in some of California's most remote country will abandon their secret gardens, taking their multimillion-dollar crops.What will they leave behind? Irrigation tubes that snake for a mile or more over forested ridges. Pesticides that have drained into creeks and entered the food chain, sickening wildlife. Piles of trash and human waste in the most rugged and bucolic drainages.
Sustainable Living: Getting ahead on renewable energy
...Donovan also points out "solar panels feed energy back into the grid during the hottest part of the day, when electricity usage is highest." Common sense would say that electric utilities would love to have help meeting the peak energy demand."NOT SO," said solar homeowner Thurston. "Ever since we divorced the delivery of electricity from the generating of it, utilities no longer have a vested interest in green energy. We've created a disincentive for utilities to net-meter solar energy."
Primary '07: Attack of the Jean Godden Clones
We much prefer Al Runte, the former UW historian who, despite his dismissal in certain other local media venues as "The Nutty Professor," reminds us for many a good reason of Charlie Chong, the glorious gadfly (rest his soul) who shook up the council in the late 1990s with his healthy hostility towards both the infamous "Seattle Way" and the public-private partnerships then festering in City Hall. Runte similarly has expressed a healthy contempt for the influence that developers have had in the City Council's decision-making process in recent years. He also has a strong progressive agenda, including and especially impact fees for new development as part of the solution to creeping gentrification. Crucially for us, Runte is apparently the only council candidate who considers Peak Oil to be a credible sustainability issue; he wants to see a heavy emphasis on hydro and electric power in future local transportation initiatives, to prepare Seattle for a low-carbon future. Call that "nutty" if you must; we prefer to call it "independent thinking"--in other words, leadership.
Snazzy parking meter upgrades show a Catch-22 in transit funding
And in a city that officials like to tout as bike friendly and getting in gear for a carless Peak Oil world, the meter upgrades also represent more than the Portland Office of Transportation wants to spend on bicycle safety improvements—$300,000—in the next fiscal year.
Opec 'need not boost output in September'
Opec does not need to raise oil output at a meeting on September 11, despite calls from consumers for more crude to lower prices from near a record high, an Opec delegate said yesterday.The comments are the latest indication that Opec, source of more than a third of the world’s oil, is holding firm in the face of calls from the US and the International Energy Agency for higher oil output.
US should consider gas tax: Ford chief
The United States should consider imposing a European-style gasoline tax if it hopes to improve energy security and tackle global warming, the head of Ford Motor Co. said Wednesday."The way to get at is to make an economic decision just like in Europe where the fuel prices are seven or eight dollars a gallon," Ford chief executive officer Allan Mulally said. "Then our behavior would change dramatically."
Seoul to invest billions for energy resources
South Korea will spend 10 trillion won in the next decade to compete with China and India to secure oil and natural gas supplies as an expanding global economy lifts energy prices.
Russia hardens EU resolve to seek new energy supply
Renewed tension between Russia and Belarus has yet to disrupt energy flows, but still it has sharpened Western Europe's desire to curb dependency on Moscow if it possibly can.
Malaysia defies doubts, history with pipeline plan
Some analysts say it remains cheaper and potentially quicker to sail around Singapore than to unload a super-tanker at Yan, pipe the crude to Bachok and put it on another tanker.OSK Research cited the cost to ship oil from the Gulf to the Far East using a very large crude carrier at $2.28 per barrel, and using the pipeline at $2.92.
Russia has eyes for Iraq's oil (audio)
Iraq might be ready to do some big-time oil trading with Russia to make good on old debts. But first the two nations would have to figure out the not-small issue of security in Iraq.
Nigeria captors free Briton, Bulgarian
Kidnappers released a British and a Bulgarian hostage in Nigeria's restive southern oil region Wednesday, while the young son of a local legislator was seized in a separate incident and gunbattles raged for a third day.
Oil drilling off Alaska: Cheney's ill-advised crusade
On June 29 the Bush administration quietly approved a keystone of Vice President Dick Cheney's energy policy: furthering our addiction to oil through the 5-Year Outer Continental Shelf Oil and Gas Leasing Program. The program governs the sale of all offshore oil and gas leases in federal waters over the next five years and anticipates the drilling of more than 10 billion barrels of oil and more than 45 trillion cubic feet of natural gas in some of our most pristine and sensitive marine habitats.
Nigeria: Solar Energy And Competitive Advantage
Solar electric power systems are an effective energy conservation programme because they conserve costly conventional power for urban areas and town market centres including industrial, commercial and private uses. This will allow for decentralised solar generated power for lighting and satisfying basic electrical needs.
Biofuels shift seen to put major squeeze on food prices
A global shift toward renewable energy could jack up food prices by up to 80 percent as crops and farmland are diverted to producing biofuels, an international agricultural think-tank warned Thursday.
Japan looks to turn straw into biofuel amid price crunch
Japan will study turning inedible crops, such as straw, into biofuel to run cars amid concern that the growing popularity of ethanol is inflating food prices, an official said Friday.
Smaller, Cheaper Biofuel Reactors
Researchers at the University of Minnesota have developed a fast way to convert sawdust and waste biomass directly into a mixture of gases that can be burned to generate electricity or made into liquid fuels such as diesel. If the process can be scaled up, it could be a more energy-efficient method for making biofuels by allowing for small, fast reactors located close to biomass sources.
Data centers suck down energy, mostly for AC
The extremely air-conditioned computer farms known as data centers are the gas-guzzling jalopies of the technology world. Some require 40 or 50 times more power than comparably sized office space.So with energy costs high and environmental friendliness making for good public relations, more tech companies are touting ways they are "greening" data centers, which serve up Web pages, swap Internet traffic, and process and store business information.
But it's a lot easier to put out a news release than to build a data center with a significantly smaller environmental footprint. Even as efficiency improvements are reducing the energy gulped by many kinds of hardware, the industry's overall electricity consumption could double from 2006 to 2011 as demand grows.
Contact
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Wow! Bloodbath out there
ECB Offers Unlimited Cash as Bank Lending Costs Soar
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3BgW.MHBVfE&refer=home
Triumvirate of collapse - Economy, Ecosystem, Energy
Unfortunately, once market psychology has shifted from complacency to fear, that sort of move can easily end up being interpreted as desperation, and therefore cause even more money to be taken off the table. Fear can remove liquidity faster than central banks can pump it in.
Fear is extremely catching because we have evolved to react to each other's state of alarm - just like deer which 'run first and ask questions later' if one of their number flashes the white underside of its tail, or beavers which all dive if one of their number slaps its tail on the water to warn of danger. Markets are not rational at the best of times (as most participants have very little real information and therefore tend to follow momentum as a herd), and are even less so than usual when in the grip of an extreme of greed or fear.
Edit:
Stocks Plunge on Rising Credit Anxiety
You are entirely correct about the power of fear and panic to remove liquidity faster than central banks can pump it in. However, one of the main jobs of central banks is to prevent panic, and for the past sixty years they have been pretty darn good at doing that. I recall what happened in October 1987, when Alan Greenspan stepped off an airplane to find that the Dow Jones Industrial Average had fallen almost twenty-five percent in one day: He called a news conferance to reassure financial markets that the Fed would do whatever it took to keep markets liquid and functioning. His statement worked; it was Greenspan's finest hour.
There is nowhere near the panic in the market now that there was that day in 1987, and there is no need for Ben to call a special news conferance. But when the time comes it will come down to a contest of fear and panic on the one side versus soothing words (and appropriate actions) on the part of the Fed.
As I've stated earlier, my twenty cents worth is betting on the power of the Fed to jawbone the situation and also to inject liquidity when and where and in whatever amounts when the time comes. In the space of one hour, the Fed has the power to increase bank reserves by any number of hundreds of billions dollars; all it has to do is to buy T-Bills and other U.S. government securities in the open market. Everybody knows this. And I think people in the financial world have confidence that the Fed will monetize the deficit before it allows debt deflation.
It is all about perceptions and expectations.
We live in interesting times, and I think we'll see if I'm correct within a matter of months--and possibly much sooner.
I agree that we aren't seeing real panic yet, or consequently a fully developed credit crunch. It just looks like panic because IMO people have forgotten - over the years of easy money, low risk, and extreme complacency - what a real panic looks like. Ordinary people haven't even noticed yet.
You have far more faith in the Fed than I do and I hope you're right. I agree that we won't have long to wait to see which way this will play out.
What everyone so far has overlooked and failed to address is why the ECB has chosen to make their money injection such a public spectacle. Normally these guys operate far from media scrutiny, after all.
That reason is precisely what Stoneleigh mentioned earlier though: fear and panic. By looking for headlines in the world's main media, the ECB tries to prevent a panic. It also gives off a signal, though, that it's afraid such a panic might ensue.
BNP is France's largest bank. If it reneges on obligations, there will be many a French nerve that starts twisting. Two German banks are in trouble since a few days, and a little-known Dutch investment bank cut short a substantial funding bid. All is not well that side of the Atlantic.
My guess is that European holdings of US securities are much higher than they're telling us. We'll soon start to see what pension funds, mutual funds and insurance companies have in their portfolio. A lot of it will be found to be way past its fit-for-consumption date. Something rottten in the state of Denmark, so to speak.
$100 billion doesn't seem nearly enough to turn anything around. There are many $trillions at stake here.
That's exactly the issue - emergency liquidty injections are very much a double-edged sword. They play out differently depending on the mood of the market. (See the quote I added to my comment second from the top on the reaction of the market today.)
And these two quotes from the Bloomberg article are scary:
Triumvirate of collapse - Economy, Ecosystem, Energy
'Black Friday' as Asian Markets Plunge Deep into the Red
http://www.news.com.au/story/0,23599,22220587-2,00.html?from=public_rss
"News that the Bank of Japan had pumped cash into the financial system to try to ease a liquidity squeeze failed to staunch the losses."
Asian Markets in a Bloodbath
Sydney off near 4%, Rest of Asia off over 3%
http://news.bbc.co.uk/2/hi/business/6939757.stm
Not a Liquidity Problem, A Credit/Insolvency Problem
"Thus, while the Fed and the ECB had no option today but to provide massive liquidity in the presence of a most severe liquidity crunch and run, they should not delude themselves that this liquidity injections can resolve the deep insolvency problems of many overstretched borrowers: households, financial institutions, corporates. Insolvency/credit crises lead to financial and economic distress – hard landing of economies – and cannot be resolved with liquidity injections by a lender of last resort. And now the vicious circle of a weakening US economy – with a housing recession getting worse and a fatigued consumer being at the tipping point - and a generalized credit crunch sharply has increased the probability that the US economy will experience a hard landing. We are indeed at a "Minsky Moment" and this recent financial turmoil is the beginning of a much more serious and protracted US and global credit crunch. The risks of a systemic crisis are rising: liquidity injections and lender of last resort bail out of insolvent borrowers - however necessary and unavoidable during a liquidity panic- will not work; they will only pospone and exacerbate the eventual and unavoidable insolvencies."
http://www.rgemonitor.com/blog/roubini
http://business.guardian.co.uk/story/0,,2145760,00.html?gusrc=rss&feed=24
Countrywide in Trouble
Countrywide's biggest problem is that they are being forced to eat their own bad loans as the secondary market has stopped buying.
"Countrywide said it was no longer trying to sell $1 billion of subprime mortgage loans and would instead hold them as investments."
"Shares of Countrywide, which have lost a third of their value this year, fell to $25 in late trading from $28.66 at yesterday's close in New York Stock Exchange composite trading."
``We are experiencing home price depreciation almost like never before, with the exception of the Great Depression,'' Countrywide Chief Executive Officer Angelo Mozilo said during a conference call with investors"
http://quote.bloomberg.com/apps/news?pid=20601087&sid=awWmNtGguiq0
The business model of making bad loans and dumping them in someone else's lap is no longer viable.
European Markets open 2% lower
http://www.cnn.com/2007/BUSINESS/08/10/global.markets.reut/index.html?se...
Markets now down over 3% across Europe
There is nowhere near the panic in the market now that there was that day in 1987 Not yet anyway!
I think the Fed better step up to the plate and show the markets what its made of pretty soon. Looks like the whole pack of cards is beginning to collapse. The Fed will probably only get one shot at this.
Luminent Mortgage Says Lenders Sent Default Notices
http://www.bloomberg.com/apps/news?pid=20601103&sid=aAr.a3qiNLrw&refer=us
Triumvirate of collapse - Economy, Ecosystem, Energy
But...but...they told us the subprime crisis was contained...that means...[sniff]...they weren't being 100% honest?
Hahahaha!
Just yesterday with the DOW back up to 13,600 CNBC was celebrating BAU with those pesky subprime problems behind us. "The stock market has gotten beyond them now".
The bull market sentiment still has a long way to go though. The PTB have instilled a very deep sense that things will always get better again. So all this noise about credit and liquidity problems is nothing but a buying opportunity.
-Don
I have a very naive question about money, especially the electronic kind.
So we have a number of mortgages that were set up based on inflated house prices that have rates too high for the borrower. These loans are not being paid back causing a liquidity crunch to the institutions that created the money for the loan.
So in my simple mind, as these properties go into default and devalue, some of the money just evaporated. This is just the reverse of how the money was created in the first place, it was blinked into existence via the mortgage loan process.
The fall out of this is that the currency that was created on paper is not being paid back in reality, or at least not enough of it is getting back to the bank to maintain a positive cash flow. Ultimately this means the properties will lose value and not all of the money created will get back to the lender.
My question is this. Why can't the Fed and other central banks bail this out by giving enough cash directly to the lenders to cover their shortfalls of defaulting payments and allow them to rework their long term income stream back to a positive cash flow?
Some percentage of that mortgage created money is gone for good but the Fed can just create some new money to take its place that can be used for something other than originating mortgages.
I don't see it as a requirement that the Fed has to cover the entire defaulted value in 2007 (many of the loans must be 15 years or longer with interest accruing all the time), just keep the cash flow close to what was planned. Over time the housing stock will be revalued (but still retain value above $0) and allow everyone involved to cope with much lower profits than expected. My thinking is that all the new houses built did add assets to the economy just not nearly as much as the loan valuations projected.
I would think the goal of the Fed and Central banks is to get cash into the hands of these big originators but prevent them from using it to originate new risky loans going forward. This keeps the money circulating but gradually shrinks the risky debt back to a manageable small percentage. What's missing in my assessment of why this won't work?
Hopefully there are competing posts addressing this so I get a better scope of how the money supply works.
NC,
The Federal Reserve is restricted and cannot buy private securities (mortgage debt). This is the job of Fannie Mae and Freddie Mac -- gov't "sponsored" enterprises (originally) to help finance mortgages and promote homeownership which the government wanted to promote. Later they were "privatized" into companies.
There was a "rumor" printed in the Financial Times recently that Fannie and Freddie are going to be authorized to buy sub-prime (which they currently don't). Offically, I think, Fannie and Freddie are "private", but hardly anyone in finance thinks that they would remain strictly "private" in a mortgage debacle. I think they have their own regulator (OFHEO is it?).
Anyhow, the government/politicians will step in once people are shown on TV getting booted out of homes, re-federalize Fannie and Freddie (turn them back into "Federal National Mortgage and Federal Home Loan or whatever they were called"), and buy sub-prime mortgages, and eat the losses -- that's what the government is for! -- the ultimate bag holder! (note to libertarians: this is where libertarian policies go astray).
Thanks for the reply.
So I take it the closer the entity is to owning mortgages (as opposed to originally providing funds to those entities) the more the Feds hands are tied. I can see that the liquidity crunch will "appear" at the level of mortgage holders and can spread in both directions - down to people owning houses and up to investers - faster than the Fed can intervene.
"faster than the Fed can intervene"
...and faster than the politicians even.
Interestingly, as I've posted elsewhere, it appears that sub-prime CDO investments were sold primarily to European and Asian investors -- so that may be why more investment blow-ups are happening overseas (while only the creators / facilitators are having problems here in the US). The ECB is doing much more "stabilizing" right now than the Fed.
A funny anecdote recently is that a US hedge fund was suing a mortgage servicing bank for re-structuring delinquent loans in a portfolio of sub-primes (which is the bank's fiduciary responsibility) because the hedge fund was "short" the mortgages -- what this means is that the hedge fund, which already had a 90% profit on the short position, wanted the banks to default the loans so the hedgies could make more money. Can you image the trial? -- "We've made 90%, and the bank is preventing us from making more! Kick those squatters out!". Good luck with a jury on that one.
Well they just did;
Fed Adds $19 Billion in Funds by Buying Mortgage Debt (Update3)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ.cxsJa71xg&refer=home
So the federal government, which is running a deficit (aka debt) is using debt money to buy debt money which was probably chasing after debt money to begin with. And this is supposed to make people feel better? Right.
This is very reminiscent of some events that transpired during the crash of 1929. In that case it was the big banks who stepped in and loaned money. And Richard Whitney, vice-president of the NYSE made very public purchases of 20-30 $million worth of stock (probably as a representative of a banking consortium) , not chickenfeed in those days temporarily shoring up the market(the bankers slowly and surreptitiously liquidated over the next few days). So even if the Fed was holding back under the guise of 'fighting inflation' there was a large public display of big money confidence (emphasis on the 'con') in the market.
All of course was for naught and the crash continued to finally bottom out ca. 1932, three years later and the market took 25 years to fully recover.
I agree that we'll see if you "are correct within a matter of months -- possibly sooner."
I'll give a couple of arguments in the other direction:
1. There is at least $800bn worth of subprimes whose initial teaser rates expire in something like the next 10 to 16 months. This means an increase of as much as 6 points above the current rates. Lots of defaults now -- what happens then?
2. Any meaningful rescue moves by the Fed will weaken the dollar, and risks provoking foreign lenders into running instead of walking away from the dollar.
3. The US is losing in Iraq and Afghanistan, and yet the powers-that-be are quite determined not to lose. The public is losing stomach for the war here. Some Iraqi's join the National Guard at the high risk of death. Why? Unemployment is 60-70% and they have to feed their families. Solution for the elite here? Let the economy tank. There are already signs they are willing to do that if you listen to Bush and ilk.
The only thing is that this is happening a little too soon for the Bush crew, so they might be attempting to delay it slightly. There is more talk about another terrorist attack, more edicts boosting executive power in an emergency, etc. I believe we are headed for a perfect storm, economic and political.
Hitler had the advantage of using military buildup to bring Germany out of the Depression. The neocons don't have that -- they are conducting war in relative prosperity. But it doesn't work. The military buildup has to be made to appear as the solution, not the problem. It's a tricky maneuver: how does one evade responsibility? A terror attack is the trick they know. Will they try it again?
Only a small perspective based comment...who's to say the US is losing? Media?
Ha...the media.
What if it all is going according to plan...bases built, oil fields secured, greenzone beautiful, more than enough soldiers to subdue(or worse) the population if(when) the rules change.
It's the rules change part that worries me.
Exactly. Halliburton is certainly winning, and so are many other defense related contractors.
Ah but this is the economic and political reality of our system. But let's not change it. Let's not bother changing our society. We can just learn to conserve a little and use more solar/wind/nuclear and things will be much better!
"You can never solve a problem on the level on which it was created."
Albert Einstein
Don, doesn't monetize the deficit essentially mean "print up a lot more money" and dump it into the market? It would seem at some point that you will end up with hyper-inflation due to plunging value of the dollar. It already seems that China is getting less sanguine about sustaining endless US debt and their comments are actually making into the MSM. Eventually something "has to give". At some point the rest of the world is going to tire of keeping fat American asses comfortably ensconced in SUVs while their people make shirts for 10 cents an hour.
Whether we ever get to hyperinflation is anybody's guess. I do expect increasing inflation, at least to double digits over the next dozen years.
The easy way for the Fed to pump liquidity into the system is to buy massive amounts of Treasury bills (and notes and bonds) on the open market. Every time the Fed "writes a check" bank reserves (and hence liquidity) appear out of thin air.
If any major U.S. bank (say any of the twelve largest) gets into trouble, the Fed has (more or less officially) said that these banks are too large to be allowed to fail, and the Fed would lend directly to them to ease any problem from bad loans or a credit crunch.
As I've said before, the Fed is not going to twiddle its thumbs and allow the economy to go into a debt deflation. The Fed has the tools, it has the will, and it has the leadership needed to navigate rough waters.
Damn...I wish I owned a bank and could get all the free money I needed.
And so Don you describe my worst fear but also what I consider to be the most likely outcome - an inflationary cycle to destroy consumer and government debt.
Stoneleigh has often discussed deflation where holding cash makes sense - is it possible we see defaltion first followed by a mega-inflationary phase?
And during inflation what best to own? - I'm currently thinking land a real estate - and hang the fact they look over priced - you still own em and they are durable - so long as title is backed by a robust legal system like we have in the UK.
And how's the sailing going? You been over the pole yet?
is it possible we see defaltion first followed by a mega-inflationary phase?
That's what I see coming.
Like a diver on a high dive doing a cannonball or jackknife, First the water level gets sucked down with the diver, then it goes straight up in a water spout.
Waaaahoooosse.
Deflation while everyone liquidates and pays out bills etc.
Then Inflation when everyone figures out "What Is Of Value".
So Heavy Metal (Au/Ag) goes down while everyone sells off everything for liquidity, then up and away.
Land, Same thing.
You need money, too much of it even, to get inflation.
What money will cause that? Are we playing a game here, where some sort of sinus wave weaves a path through our wallets? Economic cycles? Like when, 60 years from now?
Sailing is going great. Now that I'm retired, teaching young beautiful wild women to sail is one of the main ways I spend my time. Though I have an MBA in finance and have written an economics textbook, I do not spend a lot of time looking at financial markets and am no longer interested in making money--because I have enough. Most of my extra funds I give away to the Nature Conservancy, and at my age I no longer have to save up for my old age, because it is here.
If you expect inflation to worsen, one of the best things you can have is a large fixed-rate mortgage on a desirable property. Because I expect inflation and not deflation, I am not afraid of low-interest long-term debt.
So far as investments go, I like TIPs, Treasury Inflation Protected securities, which are easy to purchase in certain mutual funds, e.g. Vanguard, which has very low fees.
Except for my Teachers Retirement Association pension fund, I have been out of the stock market for years.
In an inflationary scenario, would China start selling off USD? Earlier this week, in the Telegraph, a high ranking Chinese politician and an academic suggested that:
Don, it's clear that the Fed (and the ECB) has the power to inject whatever amount of liquidity they wish into the market and thus prevent deflation and more generally achieve the level of inflation they wish. What's not clear to me is the wisdom of doing that this time.
In 1987 (and still in 2001, though to a much lesser extent) the world economy was far from any physical "limit to growth", so it made sense (at least for the short run, the only timescale that matters for Keynesians, because in the long run...) to assure the markets that financial conditions would not be allowed to put a brake to economic growth.
But now, according to the IEA, the world is definitely about to bump against one such "limit", namely stagnant oil production rate. Specifically, the June report predicted Q4 stocks withdrawals of 2.1 Mbpd and the July report predicts Q4 stocks withdrawals of 2.3 Mbpd. That's unprecedented and would send the oil price skyward. They also stated in the recent Medium Term OMR: "it is abundantly clear that if the path of demand does not change on its own, it may well be driven to change by higher prices." Therefore we are now in a fundamentally different position from that of 1987 or 2001: while letting the credit crunch proceed would reduce oil demand and economic activity in general by way of recession, injecting monetary stimulus would send the oil price higher which in turn would also curb demand and economic activity.
Using the car analogy, it might make sense to press the brake when you have little fuel left, so as to better control where, when and how the car stops.
But there is a much more powerful reason to allow the credit crunch to proceed: viewed from Hubbert's Peak, a substantial part of American economic activity - and probably the most sensitive to tight financial conditions - is not positive or even neutral: as often stated by Kunstler, by way of suburban construction the US is just digging itself into an ever deepening hole, what with the loss of farmland becoming a critical issue due to biofuels. So if a credit crunch is the only way to stop suburban construction, LET IT BE.
Using the Easter Island case as a model for today's economy, if tight monetary conditions will play the trick of stopping the extremely unwise activity of statue carving, transporting and setting up, just don't loosen them.
So, while a bit of research may show up an old post of mine where I stated my view that "the Fed will follow a path that will ensure that existing debts will be gradually melted away by inflation, so as not to add insult to injury to the majority of the American population who is in debt and will already be feeling the painful effects of the decline in oil and gas production", with a better understanding I now hope that will not be the case, for the same reason you should not give money to an addict.
Thus, while I agree that the Fed (and the ECB) has "the tools" to keep the ship going full steam, I hope it will not have "the will", because such flat-earth-economics-enlightened "leadership" would be ruinous. The wise way to navigate rough waters is to slow down when you have an iceberg in front.
Don,
Haven't you only presented half the picture here (from which people here are only seeing the inflation side)? The Fed is buying gov't instruments, but still expects payments on those instruments. If there is no default, then might taxes be raised to make the payments, which is deflationary. And once the crisis is abated, the Fed may liquidate some of its holdings, etc. This picture is much more complicated than just "printing money" out of thin air. The new money often ends up getting un-printed in short order.
There's something I don't understand: with this massive injection of hundreds of billions dollars, it must have an effect on the dollar's value or somewhere else in the economy, musn't it?
Very fair and accurate comment, Don, and likely how it will be. But there will be one day, sometime, when confidence fails and despite all the jawboning and liquidity petrol on the fire it snaps, inevitably.
We are nearing (within 20 years, probably within 5 years) one of those seismic shifts in global economics and geopolitics, they are inevitably messy. In hindsight the bullet should have been bit near 6 years ago, there are no sensible ways out now.
Not panic yet, but pants were wet.
I remember seeing a developer a few years ago selling housing where if you read the fine print, the estimated monthly cost was based on the buyer getting a loan from the developer's preferred lender that offered an interest rate based on LIBOR and adjusted monthly. If anyone actually took those loans and haven't already defaulted, this certainly isn't going to help.
I can't imagine having a mortgage that adjusts monthly. It didn't even sound like something that would be legal to offer, though I'm not sure why not since all the terms are laid out ahead of time. Who would want to offer such a loan that almost guarantees a default? I understand these loans get bundled together and sold to investors but what investor thought a package filled with LIBOR based monthly adjusted mortgages would be a good bet? Or maybe the originators knew they'd blow up, along with the buyers in the first rounds of trades but since they knew they wouldn't have the hot potato at the end, who cares? Kind of like buying dot com stocks when it was obvious everything was over valued but as long as you timed to market right, that would be someone else's problem.
Closing the ramble tag...
I'm confused - loans that "adjust monthly" sound rather a lot like what are known as "variable rate interest loans" down here.
Pretty much all mortgages in Australia are variable rate (and have been for as long as I can remember - fixed rate loans are a relatively recent innovation here).
The problem with all this subprime stuff isn't that the rate is variable - its that a low initial rate was used to lend money to people with bad credit records and who can't pay when the rate is reset to a higher (and floating) value.
A few years ago (before I started ranting about peak oil) I used to bemoan the insanity of the real estate market - on both the buyer and lender sides.
That said, I suspect the current "meltdown" will mostly punish those who were asking for it- there are plenty of healthy sectors out there...
A: "Where's the Fed?"
B: "The Fed?"
A: "Yeah, the Fed that is supposed to dump beaucoup bucks into the economy to prevent a deflationary crash?"
B: "I've got no idea but they sure aren't awake, are they?"
Funny how this continues to look like a deflationary episode trying to take hold and how the Fed is still asleep at the switch.
"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone
I'm thinking the fed is too busy setting up dummy hedge funds to buy all the paper. They have all the money, and hedge funds are impenetrable by regulated disclosure.
Bob Ebersole
All this talk about the Fed what they can and can't do, The view of Economists about Peak Oil and it's effect, and all the rest made me think of this analogy.
These financial people remind me of the Polish Army marching out to meet the German Army. Thinking it's the same as the last war. Going out with their horses and cavalry to meet the Panzer divisions.
They cannot understand that the world has changed.
john
1) ECB injects nearly 95B Euros into money markets after credit jitters. (CNBC this morning)
2) Fed adds $12B.
*) Background from last week (Financial Times, pg 1, Aug 2)
As I pointed out in a post here (a month ago?), apparently sub-prime CDO was sold primarily to Asian and European institutions.
ECB to borrow helicopters that Bernanke isn’t using?
;-)
Dave Cohen
I really enjoyed your article this week in the Energy Bulletin on the inflation in drilling costs in the upstream oil and gas industry. One of the most important points about peak oil that we need to get out is that the era of cheap oil has passed. Can you get this distributed to other places?
I don't know your deal with ASPO, but this would make a great press release with a link to the ASPO Conference October 17-20th at the Hilton Americas in Houston.
Bob Ebersole
Glad you liked the article, Bob. It's an important subject.
Wider distribution is not my department, but thanks for your suggestion. Naturally, any writer wants his stories to be widely read.
Thanks for fixing the center tag, Everett.
DAve,
love the caption!
FWIW,
I'm stocking up big time, as much as finances permit, at this time. Obviously I hope the "PTB" figure out a way to keep the party going for a good while longer but I think the time to stock up is NOW.
Yes, yes, I know stocking up is NOT a long term survival strategy. but if the trucks stop pulling into safeway for even a few days you're going to be damn glad you did or or damn upset you didnt.
What are other people thinking on this level?
I've thought about the Big BJs Run myself....
Anybody who has the room to store it, and doesn't have a year's worth of non-perishable food, necessary meds and antibiotics, and the wherwithal to purify drinking water for that period independent of externalities, is just lazy. It's the cheapest insurance you can buy.
Of course the PTB will keep dumping more bubbleicious liquidity into the punch bowl, even as it spouts leaks and they get hit with a few gut wrenching hay makers from the hosed revelers! They hosted this party on us and tho it's gotten more rowdy of late they are very afraid to staunch the libations and send us all home for the wicked hangover -- better to crack open a few more cases to try and calm down those on the ledge threatening suicide.
As for "stocking up", I've got plenty of popcorn to munch on while this party unwinds! So far all all we've seen are some frantic kleptomanics get a few roller-coaster nose bleeds! This blood-letting show is far from over; wait until this thing really jumps the tracks!
Dave - is that a hydrogen powered or electric helicpoter? And is there sleeping room in the back? I gotta get to Houston some how and do not yet have accomodation arranged.
Top picture looks like me without my toupe - fat, vacant looking.... :-)
And is 3% a lot?
ECB Shovels Euros into the Market to Prevent Crash
"The European Central Bank took emergency action on Thursday to stabilise money markets amid broadening fears of a liquidity crunch.
It injected EUR94.8bn as part of an unlimited cash offer to borrowers at its main lending rate of 4 per cent after overnight rates shot up to 4.7 per cent, their highest in nearly six years.
Earlier on Thursday BNP Paribas, the French bank, closed three investment funds because of a deterioration in the levels of liquidity.
The French bank said in a statement that the decision to suspend Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia funds followed the 'complete evaporation' of liquidity."
http://www.ft.com/cms/s/a8c5829a-466e-11dc-a3be-0000779fd2ac.html
Dow Futures off 2%, expect to open a couple hundred points lower
http://www.baynews9.com/content/9/2007/8/9/278882.html?title=U.S.%20Stoc...
Quick...where's Cramer? We need more outrage from the rich around the globe!!! RESCUE US...PLEEEAAASEEE!
Like I said before the fed meeting. There is no way the fed can lower rates because of foreign investors return on declining dollar valued debt.
Cramer can scream all he wants. Helicopter Ben cannot lower rates.
I think he will lower rates, but too little and too late for the reasons you mention. With China threatening to dump the dollar, his freedom of action is limited for the time being. As I have said before, a flight to quality in the debt markets (ie the widening of credit spreads) should benefit the dollar and take the pressure off, allowing him to cut later. However, I very much doubt that longer term rates will follow Bernanke's lead as investors will demand a high risk premium. IMO the days of easy money are ending.
I don't have a link but I think it was WT who posted a chart of various countries debt with the US being the leader. I am confused as to how and what circumstances he could lower rates.
I know he will need to inflate - just how do you do that into the hands of the people who will spend it? Lowering rates and more debt will work internally (maybe, or have we used that option up?).
I have a hard time seeing clearly how he will inject cash with the housing/debt problem. Mortgage bailout via tax credits?
I would say the option to inflate by increasing the debt load has indeed been used up. I don't think he will be able to inflate that way because IMO a debt-serviceability limit has been reached. I would expect some kind of bailout attempt (of lenders, not borrowers), but I would expect it to fail in calming the markets or increasing liquidity, especially if it is interpreted as a sign of desperation. My guess is that any money injected into the system will end up being taken off the table by whomever is in a position to do so, just like when the IMF tries to stabilize a third world coutry hopelessly mired in debt (think Argentina for a recent example).
Whatever Bernanke does, I don't see him being able to prevent deflation.
Cramer was on John Stewart last night, and Joe Biden was interviewed too. Jim Cramer was talking about his prediction of 7 million foreclosures. they always seem to rerun that show, but this may be available at www.comedycentral.com
Bob Ebersole
http://www.ifilm.com/episode/18037
There ya go Bob :)
could someone please explain "complete evaporation of liquidity" in laymen terms?
I know "liquid assets" generally means cash in hand that people can spend freely... but not sure of the context here.
Basically, the loans all dried up. Those that need to borrow money to pay the interest on their leveraged debt or to hide their losses, couldn't. Rather than having all the skeletons coming out of their closets, ECB thought it best to be the loaner of last resort.
I see... so all the banks were looking for money to cover all these mortgages that they have going.... but there is no one left to lend them money to do so. So the ECB and Fed have stepped in and provided that money.
Now I see mention of "14 days" and "overnight"... how long do these loans last? I suppose now we're going into the ugly nitty gritty of how banks do business with each other.
Large institutions and certain large investors :-) are allowed to keep margin money in overnight and short term gov't instruments -- to collect a little interest rather than being in "cash". Normally, you can sell these during the day into very liquid markets, but if EVERYONE needs a little cash then the buyer of last resort is the ECB/Fed.
A little more specifically:
LIBOR markets in dollars and euros are the big 'money markets' where the largest banks lend to each other.
The rate for overnight (shortest term) lending in dollars shot up by 50 basis points (0.5%) in one day for dollars and a smaller but still significant move in euros, which is truly shocking in the absence of any government change in its interest rates.
The corresponding government bond rates (t-bills, etc) did not change like that.
What does this mean?
1) sudden need for cash instantaneously by banks or clients, now.
2) the 'credit risk' of the big banks, which was generally seen to be negligible for loans for overnight or a month or so was suddenly perceived to be far higher, literally overnight.
The Fed generally doesn't buy and sell securities other than government bonds, but it can make loans to banks, backed by "other collateral", at higher rates in some circumstances I believe. This is the lesser-used "discount window".
And there is "emergency credit" available:
Emergency Credit
In unusual and exigent circumstances, the Board of Governors may authorize a Reserve Bank to provide emergency credit to individuals, partnerships, and corporations that are not depository institutions. Reserve Banks currently do not establish an interest rate for emergency credit, but Regulation A specifies that such a rate would be above the highest rate in effect for advances to depository institutions. Such lending may occur only when, in the judgment of the Reserve Bank, credit is not available from other sources and failure to provide credit would adversely affect the economy. When not secured by U.S. government or agency securities, loans of this type would require the affirmative vote of at least five members of the Board of Governors of the Federal Reserve System. (If fewer than five but at least two Board members are available, the available members may approve an extension of emergency credit by unanimous vote, subject to the conditions set forth in section 11(r)(2) of the Federal Reserve Act.) Emergency credit loans have not been made since the mid-1930s.
Ironically if I get out of gov't repos to make a margin by noon then the FCM will be buying repos in the afternoon with my money (and pay me no interest on my "cash" margin).
gold dropped 2% instantly upon the markets opening.
the big banks are also probably liquidating into cash. all precious metals had this happen.
good time to buy?
dunno, the G/oil ratio is 9.5 now, with oil going down and gold going down as well, i bought at 8.5, but both gold and oil have dropped in price.
The oil drop is due to backwardation, the gold drop is due to banks/big hedges making sure they have enough bucks to pay off everyone. All pms dropped big!
purchase at the end of aug, before labour day monday, opec meeting is the week after that.
If gold continues to fall into labour day, and the opec meeting(the opec meeting will be about "voluntary cuts", or by negligable chance, "no more oil") i would buy up some more.
Using the buy sept, sell may, you can do quite well.
Try long shorting everything into the oct futures (except for grains).
Every headline has print more money as an answer.
-Minnesota bridge collapse/ infrastructure,,just need $$
-stock market collapse,,Fed needs to lower rates,,inject liquidity
-Iraq war,,Trillions spent
Kudlow is on CNBC now saying the US economy is strong,,absolute BS,,GDP is negative if inflation is taken into account
,,I'm dollar cost averaging out of the US$ into:
-arable farmland
-investment grade diamonds
-gold
-silver
-swiss francs
diamonds are bad to buy, worthless in reality.
i say worthless because a cartel (debeers) controls the diamond mines, production, evaluation, dealers, and the resale market. Diamond production from mines has been exactly constant at 25,000 carats or so a year for the past 40 years. Not something which is possible in a free market. Debeers buys up free diamonds and diamond mines to put them out of business , which is unfair competition, because it reduces the consumer surplus, and the value to society.
get real precious jems such as sapphire or ruby, they will dull a little more than diamond, but they are actually much more rare in geological terms.
I avoid sterile assets, in part for moral reasons. I want my investments to help in a small way.
And given the uncertainty of the future, an earning asset is likely to hold value more than a sterile one.
Assuming Switzerland stays a capitalist society (perhaps the last one), Swiss hydroelectric utilities are likely to retain some value no matter what. And pay dividends.
Best Hopes,
Alan
Alan, I'm in your camp about investments. Sometimes its worth a little return to use your capital for a good purpose. So, if a person wants to do both-get a good return and do positive things in the world, they really need to research their investments.
One of the most useful things about this site is its collective wisdom, plus the altruistic purpose educating people about energy and the choices we make with our lives.
I'd never invest in a utility thats building coal plants, for example, even if they have alternative energy energy investments. TXU is a good example of this type, they've built more coal plants than anyone in Texas and are permitting more, yet they own more wind turbines than any other company in Texas.
I've just inherited some ExxonMobil, although the estate hasn't settled and won't for a few months yet. Its averaged a 40% return this year, though I haven't checked today. Because of their active disinformation about peak oil, and their distructive manipulation of the political process and climate change information, I'm planning to sell it and use the money to get some leases with a great workover prospect in an old, shallow field.
I wish companies understood that many people watch this sort of thing in their investments. ExxonMobil has been hovering around 10 times earnings for a long time, and I'm sure that its because many people have started to view them as having the morality of a tobacco company, and to be at extreme risk for a break-up because people are looking for a scapegoat, and big oil is "it".
This is a type of investment risk that many people don't understand, its not covered in the financial press, except very occassionaly and disparagingly.
Bob Ebersole
"gold dropped 2% instantly upon the markets opening."
As I recall, gold went down with stocks in the 1987 crash, and recovered when stocks did -- providing essentially no hedge against the crash.
Banks are required to maintain a certain reserve. In order to make loans beyond their reserve level, they can borrow from the overnight window in order to maintain their reserve level. This keeps the banks from "running out of money".
Normally markets have a "bid" and an "ask". Example, 200 shares at $23.75 bid and 300 shares at $23.78 ask. If you want to sell, you sell to the highest bidder. If you want to buy, you buy at the ask price.
If there are no bidders then the market is not "liquid". This is a very unusual condition in certain credit markets.
If a central bank steps in on the bid side, they normally disclose this (at then end of the day?) in their "market operations" type reports. Since a central bank has an essentially infinite supply of money/credit this adds liquidity, "new money", to the market.
There was a period last night when the pound/yen sell/buy price reversed. I have never seen anything like that, and can't even figure out how that could happen. If you could move fast enough, you could make instant profits.
I am not sure what you are talking about here, but it appears you are saying that there was a time when the bid was higher than the asked price. If so then it had to be a misprint of some kind because that is absolutely impossible. It is all done electronically. Since there is no commission on the FOREX, the banks make their money by the spread between the bid and asked price. The banks would have lost billions in moments if that had happened and it would be all over the news today. The headlines would be:
FOREX Computer Screws Up Costing Banks Billions!
Check it out at Real Time FOREX quotes.
ron Patterson
It was probably my broker that could not keep up with volume of trading. But it definitely happened. I would sell the pound, and my order would be placed with a 15 pip instant profit (instead of the normal 7-15 pip spread loss). If I had had the guts, and could buy and sell fast enough, I could have made amazing amounts of money just off the spread.
Based on a forum I belong to, it was happening to a lot of people.
It must have been your broker that screwed up because as I said, it is impossible for that to happen in real time on the FOREX exchange.
By the way, you should not use a broker to trade currencies. The FOREX is set up to do everything electronically, right from your computer. You could buy one second and sell the next second if you so choose. And there is no commission. The banks make money by pocketing the difference between the bid and ask price.
I checked this morning and the difference between the bid and ask between the EUR/USD was oscillating between one and two basis points. A basis point is one cent on one hundred dollars or 1/10,000th. That ain't much and that is all it cost you to trade. The difference between the bid and ask on the the GBP/JPY was averageing around eight basis points. That is a lot more. And if you must pay a broker's commission on top of that, you are paying way, way too much to trade.
The greater the volume between any two currencies, the less difference between the bid and ask price. The EUR/USD is, by far, the most traded currencies. The GBP/USD is averaging around four basis points between bid and asked.
http://www.forex-markets.com/quotes.htm
So if you are trading currencies, shuck the broker and start trading electronically. Why pay commissions when it is not necessary to do so?
Ron Patterson
I do trade online, and only pay the spread. Unless you are one of the really big boys, you have to use one of the online forex dealers like FXCM. They buy and sell internally with their clients, and they purchase from the banks. You have a slightly larger spread, but the transactions are instantaneous, just like dealing with the bank.
GBP/JPY has the largest spread of any major currency pair, but it is also the most variable of the currencies pairs. It dropped 400 pips last night. At a 200:1 margin, a $50 purchase made you about $340 profit. Of course, if you were on the wrong side, you lost just as much.
OK, this gives me a chance to ask what I have asked before and got no answer:
How come you, or even worse, your smarter computer, can sit there doing nothing but hitting keys to suck REAL VALUE out of me and other hard working people who create real value for real, when you give me back NOTHING, NOTHING, NOTHING in return???
Huh? Tell me why I shouldn't start thinking of some sort of pesticide?
You're probably not going to like this response, but the allocation / movement of capital to and from investments is the basis for growing the world's economy -- i.e. making everyone richer. In other words, the "emergent" property of capitalism is to make everyone richer even though that goal is not the specific goal of any individual participant. A system of greedy capitalists is good for the world (notwithstanding nasty resource limitations and other caveats, etc).
There is a book called "Emergence" that has examples of systems which show properties for which no component of the system is designed or directed. Ant colonies are one example.
OK, thanks for even responding at all to this crabby gripe. You are right, I don't like it.
What I do is invent things that do stuff that people don't like to do or can't do.
So here's an invention, probably thought up a million times before by smarter people.
Simple. Get some geeky kid to program a computer to substitute for all those greedy capitalists hitting buttons and pushing trillions between each others pockets. The computer does it free of charge, takes nothing for itself except for a trivial electric diet of a few watts, which I will personally pay for myself as a gift to humanity.
Then, as a result of all this free greed from the computer, we-uns get the benefit of all that emergent stuff without having to buy yachts and babes for the far less efficient and far more repulsive greedy capitalists we presently support.
I thank you for your kind attention, and now back to that gasifier and that solar energy converter that somehow the emergent good has missed supporting for the last half a century.------------goddamit.
"invent things that do stuff"
And when you finish, and need to scale up manufacturing will you not go to the capital markets and/or find investors?
"program a computer to substitute for all those greedy capitalists"
Most individuals who trade don't know what they are doing -- i.e. they have no demonstrable "advantage" in the market, e.g. gamblers versus casino. Try not to worry about them, data strongly suggests they lose money (despite what they will claim).
Additionally, about 95%+ of mutual fund managers are no better than this. Most money "made" by these button pushers is actually fees, commissions, and riskless arbitrage. Further, it appears, innovations in the financial sector are slowly reducing or eliminating fees, commissions, and arbitrage. In the long run I believe investors will only be able to make money by taking on actual risk -- such as by investing in new inventions like the ones that you may be producing.
Almost no one will dispute that the financial sector plays a role, and deserves some compensation. However, almost everyone will agree that it claims a disproportionally large part of the rewards, and a disporportionally small amount of the risk involved in the economy.
Most of the financial sector has grown over decades mostly due to its usefulness in providing desirable products -- insurance, mortgages, business financing, and credit cards (notice how Warren Buffet is invested in each of these). I don't believe there is anything wrong with this. These products are very competitive. If it's so disproportionate, why not buy their stocks then?
The rest of the financial sector, hedge funds and whatnot, are small compared to the above chunk -- but receives disproportionate attention in the media, despite the fact that very few hedge funds and whatnot make any risk adjusted returns and have very high failure rates.
The old capitalist adage: we make money, therefore we must be useful. If the private nurse of a billionaire is paid three times as much as a nurse in a hospital, mainly for poking up his pillow, are her services worth three times as much?
My guess is that the nurse is either 1) really easy on the eyes, 2) very trustworthy, 3) pleasant company, or 4) the friend of somebody in the family. People pay for intangibles.
Think about this: homeowners insurance is an industry where average people 1) send money to often very wealthy people (e.g. Warren Buffet), 2) never expect or want to get the money back (i.e. only if your house burns down), and 3) derive about 90% of the benefit from that money that they no longer own!
This is how capitalism destroyed communism.
From the Housing Bubble Blog:
Yikes, we're closing on our little house tomorrow. Looks like just in time, too.
In this cynical layman's terms, it means you can't take out anymore loans that you took to pay of the loans that you took to pay off the loans, etc. etc. ....... picture a house of cards with the bottom card coming loose.
Wasn't this called "kiting" once?
Can I put in a word for caution? Let's please remember that the present potential for a banking crisis is not demonstratively evidence that a peak oil induced collapse is upon us. This could just be another part of the business cycle, bad as it may look.
Or it could be both. We may have seen both Peak Debt and Peak Oil/Peak Exports in 2005.
My thought is that the collapse will occur when the US and Britain exit Iraq. The Persian gulf nations will probably embargo the US, because the US military is defanged with no oil. At that point the military will confiscate all the domestic crude, and since we import 68% of our oil now and our currency appears to be collapsing, the hard times start.
And just think, I'm a Pollyana !
Bob Ebersole
Heard part of a conversation on CNBC. Someone--Peter Schiff?--said that he was renting his house, short on the dollar, long on gold, and he was doing great. Paraphrased comments by Peter(?): The question is, what will the dollar be worth in the future. It might not be worth anything.
BTW, in regard to the question that I have been asking on and off for some time--does it make sense to own any non-agricultural real estate?--it sure does look like the answer is "No."
Bob, Want to bet on when we leave Iraq? The bases we are building (have built) in Iraq. are permanent. We will never leave Iraq as long as we need the oil from the persian gulf region. Rebublican or Democrat, the answer will be the same. All the hoopla about winning or losing, staying or leaving, is just posturing for political expediency. In the minds of our fearless leaders, the life of the country is at stake.
treeman,
I can't make a bet. But what if the Chinese, who want Saudi Crude, amake a deal with the Saudi's to crash the US economy with their $1.3 Trillion if the US doesn't withdraw? It seems to have worked on the Iran invasion plan.
I think this threat is the reason Hillary Clinton hasn't taken a peace in Iraq promise pledge. I've been a peacenik since I was 15, and this idea may make me reconsider her as a Presidential candidate. It seems to me this is the worst threat to the US since the Cuban missle crisis in 1962 or so.
Bob Ebersole
We might not leave but we can certainly get thrown out. Our army is on the ragged edge - too much equipment lost, too many guys who can just barely keep it together after traumatic brain injury. It is only a matter of time before the carefully executed troop snatches move from taking one of a pair of humvees parked too far apart to the taking of a platoon or company sized unit. The American people don't notice a hundred dead a month but a hundred dead overnight will get their attention.
Could be. But that is my caution. Let's not make the assumption that it is. At least not with some more evidence. I'm probably more of a champion of the positive side of collapse than most here, so please don't try to get my hopes up. (My suspicion is that we have one more "expansion" in this economy before growth truly comes to an end.)
I see the following cycle:
Is it a correct interpretation?
In general I'd say yes; with the following caveats:
1) The higher oil price to inflationary pressure step has historically taken ~2 years to feed through.
2) If the dollar declines during that time then the effects can be localised in the US (which is where most of the demand destruction needs to come from).
3) The rate of decline of supply can outstrip the decline in the demand due to economic slowdown - look to history for the maximum rate.
4) At some point, a politician will squeak at the rise in interest rates and housing bubble burst stages, saying that higher inflation is good for devaluing the debt and home owners shouldn't suffer. Expect a run on the dollar about 48 hours later, or 10 second after it becomes public, whichever is sooner.
There are some that propose that (or rather propose the gist of that while skipping over the explanation leading to economic slowdown), and IMO it has a pretty good chance of occurring. What will really get you scratching your head is something Dave Cohen (I think..) said about a week ago, and I paraphrase here quite a bit: If the price of oil drops (due to oversupply by economic recession), the companies' ability to produce it may drop even further. Which is a real twist. So that is to say: if the price drops to $50/bbl because no one can afford it for a spell, all of that $80/bbl oil that's supposed to be coming online will dry up exacerbating the situation further and possibly leading to a feedback loop.
I have heard the following two arguments:
1. high oil prices will push investment in alternatives (or we have not run out of $70 oil yet)
2. high oil prices will soften demand at best or an economic recession at worst.
Problem is that 2) will create large volatility in prices which is not good at all for 1) unless we have subsidies.
I question whether oil prices will go down as a result of a recession in the U.S. We live in a global market, and even if U.S. consumption were to go down one percent, there is engough growing demand world-wide to take up this slack.
Of course there will be great volatility; in regard to volatility, "I don't think we've seen nothin' yet." But I doubt whether any economic downturn in the U.S. will be severe enough to cut gasoline and diesel purchases by more than one percent. Of course, I'm betting on stagflation rather than an exceptionally severe downtick in real GDP.
Thus, I look for higher oil prices, then much higher oil prices, but with great volatility in our future. For what my opinion is worth (not much), I think the chances of oil at less than fifty dollars a barrel for any length of time are remote. Indeed, my guess is that we'll see oil at $100 before we see it at $50, and if and when the price plunges, I think such softness will be quite brief.
The fundamentals are that oil supply is not increasing, while globally the tendency is for demand to increase. I do not think we are going to have a severe global recession, and I do think that that is what it would take to knock oil prices down much and keep them down.
Suppose that $100 oil does induce a recession (which it probably will). If the Fed responds with extreme monetary ease (which I expect), then expectations will be of increasing inflation, and in such an environment I see much more room for increasing oil prices (above $100) than I do for movement below $50.
I don't think so.
The link between Peak Oil and Peak Money is mostly misinterpreted. People didn't start buying homes because of oil price induced higher inflationary pressure, derivatives markets didn't develop cancerous growth for those reasons, and the Bank of Japan and the Fed didn't lower their interest rates to the bottom because of all this.
The credit frenzy developed independent of Peak Oil, starting two decades ago with the Asian crises, and only now are the two coming together.
I agree, I don't think there is a link between PO and PM either. What I'm saying is that there is probably a link between high oil prices for a significant period of time and the end of the cheap credit bubble.
Now, my knowledge in economy is very limited.
Here is a good book to bring you up to speed on economics, and the price is right!
http://www.textbookx.com/exchange_detail.php?isbn=9780538853033
Is that the Sailorman?
No.
Must be another Millman who sails then.
http://www.mndaily.com/articles/2005/06/01/64607
That's odd. In this post Don said he did write it.
Yes, I am the Don Millman who wrote "Economics: Making Good Choices," a most excellent introduction to economics.
I'm not the one who posted the reference to it, however. Sorry for the misunderstanding.
Sailorman,
I wouldn't want to admit to being discounted that much either(I'm teasing).
From what I heard, textbook writing can be a very profitable endeavor. how often do you have to update to keep a book current? As i remember from my college texts, it seemed to be a new addition every four or five years, I guess to cut down on used book sales.
Do you have a text updated to include the peak? It seems like the peak is getting to be discussed more and more in mainstream media we've moved past the being attacked as a bunch of cultists, yet there seems to be not much offered in our schools so that micro economic principles can be analised. Has anybody started teaching in the MBA courses or offering professionals short courses?
People with great communication skills and an understanding of the peak should do very well . I bet Gail The Actuary hits a real home run with her booklet, the timing is right. And it could make a good home business for a bunch of TOD regulars.
Bob Ebersole
I think Gail the Actuary is on to a very good thing. She is one of my very favorite people on The Oil Drum and has her head screwed on right.
I write fiction now (mainly for fun, money would be nice though) and have no plans to revise my textbook.
The time I could put into revising the textbook is better spent in teaching wild women to sail. Although my textbook was published in 1996, there is not anything that really needs to be updated. I've got some good stuff in there about how inelastic is both the short-run supply and the short-run demand for gasoline. I saw Peak Oil coming quite a while ago.
It's late at night where I'm writing, so just one anecdote. Back in 1965 when I was taking a course in business cycles and forecasting my prof, Sherman Maisel, was appointed by LBJ to be one of the governors of the Federal Reserve System. As a going-away present his colleagues chipped in to buy a toy printing press for him, as an emblem of office.
The symbolism was appropriate: The Fed will "print" as much money as necessary to stave off deflation.
Khebab,
I think Peak Credit didn't need any help to go berserk, just as some crazies don't need chemicals to go nuts. But there is little doubt that Peak Oil will make it all a lot worse.
Just as we need additional money for the harder-to-extract oil, or to mitigate in whatever way is preferred, we will find we don't have the funds to do it. It doesn't matter if oil prices rise, the cash and credit for the initial investments won't be available. We find this hard to imagine, there was always more rolling of the Fed presses. But it can be very real.
And as memmel suggested, that will likely make the peak that much sharper. Tar sands upgraders at $54 billion a pop will look intensely insane if this credit crunch starts showing what it's really made of.
I seem to remember reading that a good deal of recessions are corrolated with increasing energy prices -and usually occur something like 18 months after the price hike.
I also seem to remember reading that there has been very little theoretical economic analysis existing on what happens during a period of sustained energy crunch -i.e. the next 30 years.
Can we look to the past to indicate what the future holds? Perhaps during the early 'peak-lite' / plataeu phase, this article is worth a read and talks about the 1973 'Credit Crunch' -perhaps a reflection of what is now happening:
http://www.prudentbear.com/articles/show/2083
I think the FED is treading a razors edge. If things start getting bad in the housing market / economy and there are calls for action (lower rates) then the dollar will fall like a stone and oil prices will rise as imports become more expensive. In turn this will create its own set of problems...
On the other hand if they resist and hold their nerve it might just blow over.
I dunno, guess we'll have to wait and see...
More input needed!
From your link:
Interesting, same buzzwords.
It appears you are trying to tie the current banking crisis to peak oil. Is that so? If it is, here are where I find the problems (not that your logic chain isn't appropriate, just maybe not what's happening now).
Peak Oil or Peak Lite -> while we have seen a recent peak in production, we can't say with certainty that this is "the" peak. There have been periods in the past when it has taken years for us to surpass a previous "peak." Not saying we haven't passed "the" peak, only that we don't know yet.
oil demand outstrip supply -> not clear that this is happening, except as a result of price
higher oil prices -> Let's remember that from an historical perspective we aren't at the highest prices yet.
inflationary pressure -> Clearly it's there, but we haven't seen the kind of inflation that is truly damaging.
central banks raise interest rates -> interest rates remain, on an historical comparison, modest.
cheap credit over -> cheap or absurdly easy? interest rates remain, on an historical comparison, modest.
housing bubble burst -> where do we measure from? sales started tumbling a year ago or more.
economic slow down -> remains to be seen. Initial estimates for GDP growth last quarter were pretty robust.
less oil demand -> not yet.
lower oil prices -> not yet.
I don't think the original intention of the credit bubble was to protect against high commodity prices but once they happened I think the bubble was continued to try and stave off the effects of high commodity prices along of course with the resulting equity bubble. As long as the debt built up we could handle high commodity prices i.e with a HELOC the Hummer
driver did not care about the cost of gasoline. But this is changing. It was fun while it lasted. But now I think you will see high commodity prices especially oil really begin to weigh on the economy with the pop of the credit bubble which unmasks in a sense how sorry our real economy is. What it does is puts a high floor on how low prices can go before companies go bankrupt.
I think it's correct up until somewhere in the transition from housing bubble burst -> economic slowdown -> less oil demand.
There's an overwhelming amount of infrastructure and lifestyle dependent on petroleum. Some infrastructure demand is highly inelastic: asphalt is necessary for road maintenance. Some way-of-life demand is highly elastic: the family of five will share a TV or computer, or do without.
And with a population that seeks to continue growing, the physical demands on resources and energy keep growing.
So I would think it would unfold something like:
bubble burst
-> temporary economic slowdown
-> temporary demand destruction and oil price fall PLUS more resource tensions
-> temporary economic upturn as war machines are engaged
-> oil demand rises
-> oil price rises farther than before
-> longer or more severe economic downturn
-> temporary oil price fall PLUS escalating resource tensions
-> war escalation
And somewhere in there, we need to add in further inflationary pressure from an expanding money supply.
ECB injection now EUR130bn. They are still shoveling.
You sure that's not just the USD amount for the initial injection?
By the way, The Fed gets a bit more serious as the day progresses:
Bank of Canada
http://www.cbc.ca/money/story/2007/08/09/centralbanks.html
I wish we could afford the life we are living.
So much for the invisible hand of the marketplace.
I think the invisible hand is giving us the invisible finger right about now...
Well, now everyone at work thinks I'm nuts (more than usual) because I just started laughing after reading that comment.
No.
Soon the invisible hand is going to get the invisible finger.
So, when does the invisible fisting start?
Forgive me if this has already been discussed. I am fairly naive and ignorant of a lot to do with financial markets. I have noticed that over the last week, Oil and Gold have been somewhat volatile and tending downward. Based upon all of the financial woes and news stories and weekly petroleum updates, this would seem to be a bit counter-intuitive. For example, Oil production is not increasing, consumption is not decreasing, why would the price go down? Why is Gold down $12 just today?
My speculation is that prices reflect near term futures. Perhaps some of the major players are developing liquidity problems and with credit tightening they are dumping positions in other sectors, even if at a loss to cover credit payments associated with things like mortgage fallout. So for the short term we are seeing a glut of oil future and gold futures which are outpacing the demand and sending prices down. Alternatively, folks looking to purchase may have a hard time getting access to credit which is curtailing the demand rather than increasing the supply side?
Is any of this reasonable or am I completely out to lunch? Like my Granddaddy always told me, "I am fairly ignorant my self, but I got a lot of intelligent help"
Respectfully
ej
I think your pretty much 'on the ball', oil and Gold have been skirting historic highs of late and the market is short term orientated and represent very short term thinking. If you go to get fish today and there's less fish in the market you have to pay a higher price, etc...
Peak oil is more like an analysis that the whole sea is becoming depleted based on analysing incoming trawler catches and estimating overall sea potential. [sorry that's probably a poor analogy]
Therefore we see Chinese year of the pig Gold demand to inflated levels (ripe for a bit of short term profit taking), general economic activity pushing up oil/ other commodity prices then "Captain Crunch" appears 'out of nowhere' and the market runs for the exits on all these assets.
The secret to making huge wads of cash -if you wish- is to have a conviction and stick with it like Buffet. In addition:
1. Most marketeers/investors look at relatively short term trends, oil is way above its long term trend, therefore they assume that oil is just another commodity that is 'overbought' and headed back to its long term trendline -something like <$50 barrel. On average oil has finished +30% greater than the average prediction for the last five years -how can they be so wrong?? (The 'shock and awe' of PO is not even on their radar yet.) One day soon we will hear about someone who has made billions betting oil will rise like Sorros did with currencies...
2. Reflect on (1) for a whole suit of commodities that depend on energy for their extraction, counter this with a demise in demand due to demand destruction.
3. Reflect on (1) for renewables and the Trillions of upcoming government 'Manhattan Project' amounts of cash that will be injected to 'find a solution' to "our most pressing crisis in a century" (my words but feel free to purgurise Mr Brown/Hillary C.)
4. Short term selling of Gold is probably just to cover positions lost in the credit crunch sweeping the markets
5. Stock PEs are high -in a recession I expect even good quality renewable technology stocks to decline. IMO this represents the best BUY opportunity we are likely to get in the next couple of years.
6. Likewise if pressure becomes too great rates may fall, time to lock in debt repayment levels long-term and let the ensuing inflation "Eat My Hairy Debt"... (Any comments on this strategy?)
7. Gold is a bit like Hydrogen. It is not a source of Energy/wealth, it is a value storage mechanism for when TSHTF.
Regards, Nick.
P.S. If you can let me know on a Post Card what BOE rates will be in 2017 I would be much appreciative :o)
One day soon we will hear about someone who has made billions betting oil will rise like Sorros did with currencies...
We already have:
Full article here
"Oil production is not increasing, consumption is not decreasing, why would the price go down?"
As printed in the Financial Times (a few days ago) there was record long speculative interest in crude futures reported by the CFTC COT report on July 31 -- i.e. record bets that the price would go up. So the price setback is probably a reflection of the liquidation of that speculative interest.
Mortgage Delinquencies Growing - AIG
http://www.earthtimes.org/articles/show/91812.html
"Go back to sleep honey, we have AIG"
And the implode o meter is going statospheric:
http://ml-implode.com/
They have a new Hedge fund implode o meter.
(also they are being sued off the internet! Wonder why?)
Marco
Next will be the "Central Bank" implode-o-meter!
Since there seems to be some questioning about Saudi Arabia's ability to function as the world's swing producer, I would expect Aramco to increase production somewhat (say 400kbpd) for at least a few months (we told ya' we could) as their current production looks to me to be constrained in part as a choice to protect the long-term productivity of their fields.
If Saudi Arabia (I mean OPEC) doesn't even make a symbolic effort to up production, then it would be more circumstantial evidence that they are having major issues with their fields.
Re: make a symbolic effort to up production
To satisfy who? The Oil Drum?
OPEC will not raise production because the Kingdom (and Kuwait, and the UAE, and ...) is still taking its payments in increasingly worthless dollars. They say their actual revenues are down from last year. Other reasons they might concoct for keeping production steady are nonsense.
It's always something though, isn't it?
While the dollar is on a downer, the increase in the price of oil since, say, 1999 has more than made up that diff. It's hard to imagine that just eight years ago the stuff was $10 a barrel. But you are correct that revenues are down for SA if you look back no further than last year.
I still think that SA will make a token or symbolic increase in production of around 400kbpd, which won't add up to much with the expected increase in globad demand of over 2% (according to the IEA mid term report).
Dave--
I think their claims as to revenue being down may be accurate. If you take OPEC's claimed production times the basket price times the value of the dollar against the Euro, they seem to be down for the year (this shows total production versus exports, but the general idea is the same).
2006
Jan 1,352,561 (value in thousands of Euros)
Feb 1,325,875
Mar 1,339,694
Apr 1,467,553
May 1,407,232
Jun 1,403,391
Jul 1,493,606
Aug 1,496,059
Sep 1,285,479
Oct 1,198,279
Nov 1,158,264
Dec 1,175,008
2007
Jan 1,043,515
Feb 1,101,172
Mar 1,164,100
Apr 1,240,404
May 1,257,099
Jun 1,318,107
They may come up with a new argument: lowering price by increasing production isn't going to save the Western economies anyway since they are self-destructing because of lending issues so there is no benefit to OPEC's increasing production.
But as always, remember: "The market is well-supplied with oil and the recent prices do not reflect market fundamentals."
OPEC was up by 360 to 450 thousand barrels per day in July, depending on whose estimate you are looking at. The EIA Short Term Energy Outlook, Table 3a has OPEC C+C production up by 360 kb/d in July. Those that were up, in thousands of barrels per day, were:
Kuwait.. 80
Libya... 20
Nigeria 130
Qatar.. 60
Angola. 20
Iraq..... 50
No other countries were up and none were down. Angola and Iraq are not subject to OPEC cuts and Nigeria, due to the violence, is already producing well below their quota. Nigeria simply managed to clear up some shut in production And I would say that Kuwait, Libya and Qatar are producing flat out and managed to increase production, this month anyway, due to very high prices.
Sidebar: The dollar is up across the board today. No idea why but that is the way of currencies. No matter what has happened in the past you can never predict what will happen tomorrow. That is because the expected decline or increase in that currency or commodity is already priced into the market.
Ron Patterson
>Sidebar: The dollar is up across the board today. No idea why but that is the way of currencies. No matter what has happened in the past you can never predict what will happen tomorrow. That is because the expected decline or increase in that currency or commodity is already priced into the market.
Its likely there was a big flight to safety. Treasury yields across the board dropped like a rock. The 1 Month Treasury drop 35 bps today. This leads me to believe that investors are liquiditing investments and depositing them in treasuries will the lending crisis shakes out.
What a racket. America creates messes around the world, and the world sends its money to America for safety. No wonder the neocons are so sure they can't lose.
Boring factoid for the day.
China hold $1.2 T dollar reserve.
at 5MBD imports, China have enough green
for 8yrs of oil at $80 Bl.
Call it 3yrs worth of oil after $death/oil price appreciation/increased imports.
Marco.
It appears things may be really ready for the dollar to start dumping big time. Is there ANYWHERE that you guys think might be a safe haven for the next six months for someone sitting on a little $? Forex?
The forex market is like the stock market on steroids. The swings in currency are scary. You can make lots of money, but you will more than likely lose everything you put into it.
I would recommend go buy as much gold/silver as you are comfortable with and hide it in your house somewhere.
T, I would stock up on Hostess Twinkies. They never go bad.
It is cheaper and nutritionally equivalent to stock up on lard and sugar--both of which keep indefinitely. In fact, that is essentially all a Twinkie is, spun lard and spun sugar.
Spun sugar and lard... again? Seems like that's all we've been fed since the Iraq invasion. :(
The resale market for gold is probably a little better than it is for twinkies (or lard for that matter).
That will change when the markets realize that the era of cheap Twinkies is over.
OMG, you don't mean...
Peak Twinkies!
What clearer signal that the end of civilization is at hand could there be?
Peak Ding Dongs . a subset of all Peak Snack Foods - we may have 100 years of fruit pies left.
Ah, the fabled "bumpy plateau".
LOL
Actually, given mass dieoff, it represents exponentially increasing Snack Foods, as fewer people compete for the remaining snack foods, at least until the dieoff is done...
"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone
Unfortunately it is impossible to calculate a snack food peak without knowing the EROEI of a Moon Pie.
Look at Sabine Royalty Trust and Permian Basin Royalty Trust. They are selling at roughly 10 times earnings, and pay about 8%-9%. Since the shares are physical ownership of Oil and gas, and therefore inflation protected, they might represent a good safe harbor. Unlike gold or silver, they pay an income, and are easily liquid. But, check them out yourself.
Bob Ebersole
removed double post
Let's not forget Japan, still far ahead of China.
http://www.ustreas.gov/tic/mfh.txt
And I really want to know who are the
Carib Bnkng Ctrs
?????
>And I really want to know who are the
Carib Bnkng Ctrs
?????
Mostly from wealthly people living in the US, the EU where tax rates are high. This is money invested offshore as a tax shelter.
Maybe not, they could be mostly proxies working on behalf of central banks and their proxies. Some have said they are often Fed agents buying their own paper at arm's length.
>proxies. Some have said they are often Fed agents buying their own paper at arm's length.
Sorry, this is BS speculated by clueless people. The Fed doesn't need to offshore purchases. They can buy or sell what ever they want legally in the US. Google "Fed Repos". Why bother with some elaborate schem, when they can do it in the open and legally.
I have met several wealthly individuals and worked with corporations that use the Carribean banking system as a tax shelter. BTW, its not just american people and business using this tax shelter. Europeans, Russians, Asians all use Carribean banking for tax shelters. This is a huge operation.
TechGuy,
if you'll follow that Treasury link back, thecarib bankin centers are defined in note 4, they are the nations around the Carribean. its kind of interesting to note that they are the countries with super secret bank secrecy laws that are rumored to be the dope money laundering centers and drop box homes of corporations dodging taxes. Panama, Bermuda, the Bahamas, the Virgin Islands, the Windward islands, ect.
Bob Ebersole
>its kind of interesting to note that they are the countries with super secret bank secrecy laws that are rumored to be the dope money laundering centers and drop box homes of corporations dodging taxes
Yes, there is drug money and there are corporations using it as an offshore tax shelter. However, if the wealthy or corporations wish to spend that money in the US, they would have a tax liability on the money that they repatriate. Its not a true tax dodge. The only way people can avoid paying taxes is if they decide to retiree outside the US (carribean, south america). I can't be sure, but I believe if they tried to relocated to Europe thet would have to pay income taxes too. I am pretty sure that most south american countries will not tax wealth from foriegn tax shelters.
The one thing about Climate Chaos that was pointed out in resent days has been playing into all this. As we see more strange weather patterns over areas that used to be the farm belts, will we have the crops to make enough food and or ethanol to keep all of ourselves fed?
Last year the total harvests of grain gave us even less of a buffer, something like 54 days of world food grains in storage. So what is it going to be this year, with more people converting cropland to produce Bio-fuels and not food crops?
As our weather gets more wacky, when will we tip over the edge food wise? My bet is that all our talk about getting our energy base fixed, is going to go by the wayside when we figure out that our food supplies are crashing.
I do wonder what the extreme weather event of the month will be? Tornados in NYC? Or something nastier?
Yeah I am feeling gloomy today.
An interesting article on the impact of weather on food production (UK). Of particular concern is how much the weather has impacted Organic farmers and in particular how it has affected those trading within the local economy. Not good.
Counting the cost: Floods and foot-and-mouth have hit small food producers hardest of all
http://news.independent.co.uk/uk/this_britain/article2849288.ece
Even the FT is noticing the weather
Extreme weather the norm across globe
http://www.ft.com/cms/s/e083186c-4521-11dc-82f5-0000779fd2ac.html
And in Spain a different problem, but probably the same cause
Spain burns fields to kill voles
http://news.bbc.co.uk/2/hi/europe/6938247.stm
And whatever crops are left standing in Bulgaria after the heat wave are probably being finished off by the floods
5 dead, 4 missing in Bulgaria floods
http://www.upi.com/NewsTrack/Top_News/2007/08/07/5_dead_4_missing_in_bul...
Triumvirate of collapse - Economy, Ecosystem, Energy
Wheat went past $7 bu last nite on the cbot. A record. At $7.03 this morning. This is not financial melt related, but crop size.
On related note, more and more corn farmers are talking of getting out of corn, etoh and high corn prices be nixed. Esp in Kansas and drier parts of the plains, yields are too low this year to justify corn over wheat.
Should also mention yesterdays drumbeat article on Vancouver Island, BC. Real good pts on how corporate designed ag policy hurts small farmers, esp at the processing end, and effects on local supply.
http://www.pqbnews.com/portals-code/list.cgi?paper=50&cat=46&id=1039304&...
All this does is kill the people that want to go local and now can't because the local farmers are getting waxed by the weather.
We won't really know much till the fall gets here and the yeilds tell us how bad things have gotten.
As the BC article above makes clear, it's not weather, so much as regulations designed for corporate ag that are killing local food supply. It is just as true in the US-local food supply is hamstrung because of problems selling their products, so their land is idle.
And for weather, we've had plenty of "unusual". For July, official town high temps were in triple digits 17 days. Only 5 with normal highs in the 80's, with max at 111.7. This is a mountainous area near the Canadian border. No rain since early June, save the sweat of haying, but that is "normal". I readily understand all the Arctic icemelt this year.
Still, it's not as bad as the south with round the clock high temps and humidity. Nitely lows were usually in the low-mid 60's, so even without a/c, can function by closing the house up in the morning, and then opening it all up at night to cool it off.
I live in Arkansas, it is 80 at night, not good to let all that humid air in here, we are shaded some by trees on our south side.
I can see the trouble that big ag poses for some, but there is a big movement in this area for local farmers to produce for the food co-ops and the farmers markets, that is where I see weather hitting them badly.
I'd pose the idea that it is a combination of several factors all rolled into things getting more chaotic and nearer to the tipping point than just big ag, or weather being the one single thing going wrong.
doug fir,
"On related note, more and more corn farmers are talking of getting out of corn, etoh and high corn prices be nixed. Esp in Kansas and drier parts of the plains, yields are too low this year to justify corn over wheat."
This is good news and what I have been expecting for more than a year. Wheat makes much more sense in Kansas and Montana than corn. The problem has been not that corn prices are so high it is that wheat (and oats, barley, etc.) have been too low. It has taken awhile for the market to catch up but if you take wheat land out of production, to plant corn, than wheat prices should go up, and they are.
Agricultural commodity prices have been to low for a generation. Farmers haven't been able to hold onto the land without subsidies. Food prices in the store have little relation to what the farmer makes. Most of the price increase is between the elevator and the table.
NC,
I agree the on good news and what I too thought would happen, but not this fast. Remember, though, that wheat traded around $5 all winter, historically very good prices when folks were considering this spring's planting. It was on the low ppt fringe, I think, marginal corn land, that folks switched from wheat, gambling high yields from above ave ppt with corn, vs their wheat standby. In hindsight they realize they would have been better off with the low moisture wheat. This winter, the talk will center around what wheat will be-will the switch back to wheat flood the market, and most importantly, can we count on drought again in Europe, the main driver of today's price, to spike the price.
It's a see-saw, always has been. One year up, then everybody rush to that commodity, and the price falls. Difference now is the surplus is gone, so all prices in general should remain higher. Just like oil, to bring it around to TOD, there's real volatility.
"Food prices in the store have little relation to what the farmer makes."
Imagine going for your 20 minute oil change, engine check, blow air in the tires. $40? Now imagine a bushel basket of corn, shelled, that you grew. Want to trade 10 of those for that oil change? Or how about that $120 doctor visit when your kid has an earache. 30 bushels coming up.
Oil is volatile because there is no slack between demand and supply. Food is almost as tight. Biofuels - where food is substituted for oil - tightens up the slack even more. So food will be increasingly volatile, though I suspect the velocity of turnover is lower.
I've been working a lot in the garden and with ways to preserve food. Bulk storage I've overlooked.
cfm in Gray, ME
Interesting you should ask
The story in the NYT at http://www.nytimes.com/2007/08/09/nyregion/09storm.html?th=&emc=th&pagewanted=all
tells us about last night:
Sam Penny
the Prudent RVer
I still think something nastier is in store for us. Though my early prediction is that the hurricanes might not be what we would expect them to be. I have not checked the SST (Sea Surface Temps) lately, but upper level wind shear or just a change in the flow patterns could be limiting Atlantic Hurricanes some more than normal.
Just more strange Climate Chaos in store.
As I understand it the average American consumes something like 50% more calories than the worldwide average, while having a significantly less strenous lifestyle.
On that basis, America could easily lose 30% of its food production and still feed itself comfortably, and almost certainly far more healthily.
I liked John Michael Greer's article referenced above, but I was amused to read this blurb:
Now, there's an interesting pairing. Well, they are both capitols of southwestern states...
Santa Fe has its issues, but has no skyscrapers (except for a 12,000' mountain) and has been around for 500 years. Somehow, I think it will survive.
Phoenix, with 60 times Santa Fe's population, might fare less well (despite the name). But skyscrapers are not what come to mind--perhaps golf courses and gated retirement communities.
Albuquerque is incredibility old as well just like Santa Fe. But it will be interesting to see what happens.
Yes, very interesting. But they would not likely be tourists, they would more likely be survivors trying to eek out a living from the dry parched desert. People did live there before the arrival of Europeans you know.
Ron Patterson
It is not difficult to conceive that people a few generations hence would not know who had built the cities in which they were living. When the Greek historian Herodotus visited Egypt the Egyptians did not know who had built the Sphinx or the pyramids. A great deal can be lost in a few generations.
However, the modern world has so much stored information that it seems highly unlikely the same would apply today.
Sure, much of it is electronic, and if the infrastructure necessary to access it falls apart completely, it would be lost instantly, but even in that highly unlikely event, there is still no shortage of physically printed information. And yes, books might be burned out of desperation as other sources of heat run out, but you really are talking nuclear holocaust type scenario then.
The problem nowadays is finding useful stuff between the loads of ###. I've had to use the card catalogue of universitary libraries just before they were digitalized. The horror.. The great advantage of digital information is that you have electronic slaves to do the grunt work, so it doesn't really matter how much filler information there is. Even printed information is practically only accessible by electronic means today.
By analogy with the Middle Ages, I would say that the danger of losing information does not lie in losing the technical means, but in losing the will to do so, and the different interests of our descendants. There were plenty of copies of the Church Fathers, but few comedies in the monasteries.
"Canticle for Leibowitz". The Southwest when knowledge has been lost.
As far as card catalogs go, if you don't know exactly what you want and are browsing, I've always found them far superior to digital. One can just ruffle through a whole section and see what is interesting. Still, more than half the books I pull out of the library are specifically requested via interlibrary loan from all over the state of Maine; that won't happen with a card catalog.
But yeah, maybe they will get rid of the 10 copies of Steven King's latest and pick up one of Tainter's. I wonder if post peak libraries will increase in value?
cfm in Gray, ME
Card catalogs allow for more serendipity, that is true. But I was referring more to the retrieval of specific knowledge.
Libraries will increase in value if they have useful information, organized in a practical way. Fiction is important, but it doesn't require specific works to be useful. I expect quality educational texts to become more valued.
I find the whole notion of some (many)that one must 'flee' interesting
I feel my community of almost 200,000 would fare (relatively) well in any type of crisis, sudden or long evolving. I know my community very well. I think most do not know their own, or have any confidence in it based on the type of comments you see people making about fleeing somewhere else or burying themselves in a bunker. Unfortunately, the non-confidence the people have may be justified perhaps because there really is no community in those places.
There may be community, but they may not be connected to it, for various reasons.
Americans are more mobile than ever. We move often, and we live far from our families. But if TSHTF, that may no longer be a desirable situation. Maybe there's great community where you're living, but if all your family is somewhere else, you may want to "flee" to where they are.
Similarly, both the person who wanted to go to Puget Sound and the person who wanted to go to rural Alabama may have been right in their instincts. If you're, say, a liberal, gay, Asian atheist, rural Alabama may not be where you want to be when it's crunch time. But it may be a great place for a conservative white Christian.
Some good points. Where community exists, the 'right' community for a given individual may be different. Each area/community will have (does have) unique challenges. Although I think there are some things to look for in any place in terms of the social and political structure and maturity (ie, beyond important physical considerations like access to food, water, transportation, etc).
People (including me) tend to over-generalize based on their specific experience. I, for example have travelled quite a bit but always resided in the eastern parts of Virginia (making my way North gradually). Most of my family is here. I never saw any reason to live anywhere else, although the beer in Britain almost convinced me. But now we have cask-conditioned ale in my neighborhood pub, so I'm set.
>I feel my community of almost 200,000 would fare (relatively) well in any type of crisis, sudden or long evolving. I know my community very well. I think most do not know their own, or have any confidence in it based on the type of comments you see people making about fleeing somewhere else or burying themselves in a bunker.
Would a population of 200K be capable of feeding itself? I have serious doubts that will out access to fuel to drive the tractors and skilled workers able to locally maintance and manufacture required infrastructure that it would survive. For instance most modern equipement is controlled using computers and electronics. Its unlikely that any of this equipment can be repaired without access to new replacement parts. Since a relatively few regions have the capacity to manufacture advanced integrated electronics, they they will not be able to repair damaged equipment. Its just not electronics, but also basic stuff like nuts and bolts, or mechanical assemblies, that would be extremely difficult to manufacture locally without the proper equipment.
Too much knowledge of the past (how they did things before Fossil Fuels) has been lost. While much of this can be rediscovered, its going to take time, and time is something that people won't have. If they screw up even a single harvest in the first few years, its likely to bring famine and death. The odds that the majority of these small cities will do every right the first time, is highly improbable.
Before we even get there will likely endure a period of economic depression. Rather than mobilize into a community people are likely to be overly depressed about thier loses (job, homes, savings, lifestyles, etc). People will turn to drugs, alchol, violence and other factors that are likely to divide people apart rather than bring them together into a cohesive community. Perhaps some neighborhood will manage to pull together, but I doubt a city as large as 200K will ever get there.
FWIW: You only have one choice to get it right during a collapse. Choose wisely.
It took me the better part of a year to come to grips with what it really meant to believe Peak Oil was real. Reading TOD, if nothing else, has served the purpose that what you describe will not happen to me. It'll happen, I'll say "yup, this is what I was expecting", and off I'll go to deal with it as best I can.
Which may not be well, but at least I won't have that useless shock response.
By definition, a city is a proximate, cooperative collection of neighborhoods. So yes, the pulling together always occurs at the neighborhood level. Neighborhood reps peiodically meet at city-wide federation level to share news, coordinate etc. This is all just normal operating procedure for a cohesive city. But i believe it will be beneficial as crisis evolves as it always has been in the past. People thought internet neighborhood interaction would supplant the old fashioned face-to-face, but nothing subsitutes for that.
For "druids", a five story faux-adobe building is a skyscraper...
Richardson on the Record
An interview with Bill Richardson about his presidential platform on energy and the environment
By Amanda Griscom Little
06 Aug 2007
http://www.grist.org/news/maindish/2007/08/06/richardson/index.html
Where have all the loans gone?
Long time coming.
Where has all the credit gone?
The hedge funds have picked them ev'ry one.
Oh, Fed Reserve, when will you ever learn?
Where have all the homeowners gone?
Long time moving.
Where have all the hedge funds gone
They've filed Chapter 11, every one.
Oh, investors, when will you ever learn?
LOL!
Ethanol: Fuel of the Future?
I write a weekly rebuttal to JMG's Archdruid Report, because he doesn't allow much open discussion in his comments. This week's is especially in need of rebutting. It's terrible to see his misinformation getting so much attention when there's no other forum for rebuttal. But if you do read JMG's piece, please be aware that a rebuttal does exist: "Archdruid Watch: Cities in the Deindustrial Future"
Personaly, I think he generaly makes a lot of sense, this week in particular. People have been predicting the end of the world for at least three thousand years. The fact it hasn't happened is a pretty good argument against the whole idea of an apocalypse.
And his advice seems pretty sound, too. if things do get bad after the peak, a small city might be a much better place than a country hide-out.
As far as not publishing your rebuttal, a blog belongs to the blogger. Its not a democracy. So start your own.
No, it's a logical fallacy. People predicted the end of the world based on a tortured exegesis of Bronze Age poetry. That's a far cry from analyzing real data. There's only a few basic narratives the human brain really comes up with, and after that it's all the kinds of details JMG ignores. His narrative, that nothing ever changes, is even more popular than "apocalyptic," and has an even worse track record.
No, it really won't. Did you read the rebuttal? The soil fertility isn't there anymore, it was all used up the first time. We don't have naturally arable soil anymore, that's why the Green Revolution happened. You're not going to be able to feed cities, not even small ones.
I have one, that's what I pointed to. I just want to make sure people know that the response does exist. Actually, I had mine well before Greer started his, and it had already covered the ground he's on and moved on. Unfortunately, the easiest lie to sell is the one people want to hear, and for some reason, people don't want to hear that our agricultural past has consequences. You can't even pin it to the doom and gloom, because that actually means that life's about to get better. But generally, responding to a blog post is what comments are for. That's what they're for on mine, certainly. For Greer to get as much attention as he does, and then censor the comments so closely is just plain dishonest, in my opinion.
Why? Many bloggers do not permit comments at all.
It's the Internets. Don't like it, vote with your feet.
I think I'm with VTPeaknik on this. You and Greer seem to disagree only in the timing. He thinks it will be slow (catabolic collapse), you think we who are alive now may actually have front row seats to the Fall of Western Civilization.
Greer has said that in a catabolic collapse, you crash back to a lower level of complexity than existed before the complex society arose or arrived. Which in our case, would be less complex than the pre-Columbian Native American cultures. This is because of the environmental degradation that goes with catabolic collapse. So it seems to me that he understands the problems with soil impoverishment, etc. He just doesn't think we'll crash back to pre-agriculture in our lifetimes. And I suspect he is right on that.
And if you turn off comments entirely, that's fine, but to allow comments only for those who agree with you is dishonest: it provides the illusion of a free discussion, but it's really anything but.
I don't think that's a good idea at all. We'd all do better to have our ideas challenged from time to time, and to have to defend them. But I think it's only fair that a reader should know that responses exist, and that's all I'm pointing out.
Greer & I absolutely agree on most things. I started out my rebuttal saying that. This week's article was practically a tour of the things we disagree on, though, and it comes to more than just timing. It comes down to what the future will look like, which changes drastically what we should do now. Frankly, I think a lot of people are going to die because of messages like Greer's, and that means I have a responsibility to try to get the other point of view out there to balance it.
I disagree. (Actually, Greer's written about agrarian communities even 400 years from now) We'd need soil fertility not to. I don't expect this to happen overnight, either, but catabolic collapse also builds on itself. I know he understands the problems of soil fertility, I'm just constantly frustrated by how he systematically ignores its consequences. But without oil inputs, very little arable land still exists. So you're not going to have a gradual fade back to pre-agricultural lifestyles as the soil gives way; the soil has already given way. You're going to have people trying to farm dead soil, pouring all their effort into land that will never produce the crops they need, because the soil won't support it.
I don't think anyone's that naive. Comments are usually moderated on any remotely popular blog or web site.
I think we will return to living within Malthusian limits. But it's not incompatible with agriculture. China has intensively farmed some areas for thousands of years. With a much lower population density than they currently have, of course. And not without a lot of famine, warfare, plague, and other dieoffs.
Moderation rarely extends to deleting on-topic responses that differ with the author's opinion, though.
They did, in the past. But it also meant fairly constant degradation of the soil. They finally reached the point where it could largely no longer be sustained, and that's when the Green Revolution began, precisely because the old methods no longer worked. That's the part being glossed over in this discussion. So when the Green Revolution fails, what makes us think that the patterns that failed before the Green Revolution will suddenly start working again?
Apparently, you never frequent political blogs or message boards. It's pretty much SOP on those.
Disagree. The way they handled resource limits before was via warfare and dieoff. What changed was contact with the west.
It's well-documented that desertification and massive deforestation were taking place in China well before the intervention of the West. Warfare and die-off (actually more to famine and plague than warfare, see Richard Manning's Against the Grain) were vital to keeping the balance, as well, but that doesn't mean there wasn't a good deal of environmental degradation, as well. I went through a lot of this evidence in "Oriental Myths."
And had been, probably ever since they started with agriculture. Yet they kept on. And probably still would be, if contact with the rest of the world had not occurred.
Agriculture can't support a constantly increasing population forever, but that's not what China had. They were basically flat, until new foods and new technology from contact with the rest of the world allowed them to climb above their historical Malthusian limit. They also suffered some pretty severe dieoffs, but did not lose agriculture or cities.
I doubt it. China was running up towards some clear limits for its agricultural system by 1900.
China did manage to stay pretty flat with its population, but there was still a fairly consistent erosion of its ecological base from year to year, in order to produce the agricultural output necessary to feed that population, even though it wasn't growing. Europe was similar in the Middle Ages, before Columbus introduced the "Age of Exuberance," to use Catton's term from Overshoot.
Long before that.
And yet they more or less kept their population and their societal complexity.
Sure, they were still eroding it, so it wasn't yet completely gone.
And it might have gone on for another five thousand years.
I doubt it; like I said, there were some clear signs that they were nearing the end of the line by 1900. Erosion, desertification and deforestation at that point were reaching levels where it was really starting to look like they couldn't keep on. Industrialization came largely in response to the first rumblings of ecological failure; massive uprisings undid the Qing Dynasty, and Mao's establishment of Communism also came from disgruntled, poor farmers who were losing their land. Most historical accounts simply take peasant unrest for a given, without digging deeper to see the ecological failures that were giving rise to the peasant unrest.
They'd had ecological failures lead to peasant unrest before, and survived.
And by 1900 they were well above the population levels they had supported before contact with the west. It's not representative of how it would have gone if such contact had never occurred.
>And yet they more or less kept their population and their societal complexity.
better than 90% of China's population remained as peasant farmers. In the US 10% of the population feeds 90% of the population. China was sustainable in the sense that 90% of its population was self-sustainable, and maintained the skill set necessary to remain self-sufficent. Today in the US probably far less than 1% practice self-sufficiency. Even today's farmers are totally dependant on modern infrastruction. Without access to fuel to run equiment and electricity (or fuel) to run well pumps for irrigation, they would likely have trouble feeding their own families.
Dont' bet on past events in China will resemble anything like our future. Thats like catergorizing rise and computer chips as the same thing.
I highly recommend this interview.
Listen to what Pan says.
Remember while you listen/read him is that all this is during the BOOM times, the GOOD times. Magnify his statements by 10-15 years from now. Post Peak.
What picture do you get then?
Der Spiegel Interview with China's Deputy Minister of the Environment
"The Chinese Miracle Will End Soon"
snip..
Pan: This miracle will end soon because the environment can no longer keep pace. Acid rain is falling on one third of the Chinese territory, half of the water in our seven largest rivers is completely useless, while one fourth of our citizens does not have access to clean drinking water. One third of the urban population is breathing polluted air, and less than 20 percent of the trash in cities is treated and processed in an environmentally sustainable manner. Finally, five of the ten most polluted cities worldwide are in China.
SPIEGEL: How great are the effects of this environmental degradation on the economy?
Pan: It's massive. Because air and water are polluted, we are losing between 8 and 15 percent of our gross domestic product. And that doesn't include the costs for health. Then there's the human suffering: In Bejing alone, 70 to 80 percent of all deadly cancer cases are related to the environment. Lung cancer has emerged as the No. 1 cause of death.
SPIEGEL: How is the population reacting to these health problems? Are people moving to healthier parts of the country?
Pan: Even now, the western regions of China and the country's ecologically stressed regions can no longer support the people already living there. In the future, we will need to resettle 186 million residents from 22 provinces and cities. However, the other provinces and cities can only absorb some 33 million people. That means China will have more than 150 million ecological migrants, or, if you like, environmental refugees.
http://www.spiegel.de/international/spiegel/0,1518,345694,00.html
If you're practicing a way of life that destroys your ecological base in a thousand years rather than 10 years, it's still not sustainable. Yes, China had survived peasant revolts before, but it's also clear that the revolts at the beginning of the twentieth century were being driven by ecological failure. China's system was never sustainable, it was only slightly less voracious in some ways.
I disagree that the green revolution began because we had depleted our soils; I think it began because we had the technology to create massive amounts of commercially produced fertilizer and we had a post-war world to feed.
There is no doubt soil fertility has been destroyed over the centuries we have occupied this country, but there is still good fertility left. And we have the knowledge now to help rebuild it naturally. However, we have also put blacktop and concrete over a substantial portion of our prime agriculture land, especially in the Central Valley of California.
But the collapse of agri-business may be extremely steep both because the energy that underpins all of it and the credit necessary for its annual cycle are disappearing or becoming prohibitively expensive. (I would expect government fuel rationing to give preferential treatment to agricultural uses so that may support agribusiness for awhile.)
Water is going to be a more immediate concern for agriculture. We depend heavily on irrigation for much of our fruit production and sizeable portions of our grain crops. We are dropping water tables and increasing soil salinity through deep-well irrigation. And the farmers are competing with cities for the water. Some farmers are recognizing they can make a more sure return on investment by selling their water to cities such as San Diego than by using it on crops.
Agribusiness will have to change in the near term. The question will be whether change can occur rapidly enough to continue to feed our population.
Interestingly, a lot of the Green Revolution technologies existed for decades beforehand, because they weren't necessary. The fact that we began farming some of the last arable land in 1960, just as the Green Revolution was taking off, is clearly more than coincidence.
That's a common assumption, but it's not true, that's exactly what I'm trying to say.
And what we know is that the techniques that will do so may be able to feed villages, but they will not scale up to feed cities.
1960. That was when we started farming the last arable land? The closing of the frontier (in US) is typically put at 1890, though infill would take a while. JFK and new frontier. I've been thinking - and the astronaut graphic at dieoff.org would suggest something similar - that "civilization" started to hit negative returns by 1970 as unsustainable efforts started to catch up. So where did new arable land in significant amounts up to 1960 come from?
We've gone through what, two doublings of population since then? And eaten up huge amounts of unreplaceable resources and sinks. The whole planet is already a big Easter Island.
cfm in Gray, ME
There's a big lag between the closing of the frontier, and actually cultivating all the land you've claimed. We weren't starting to actively cultivate it all for another century. See Richard Manning's Against the Grain.
Eat some humble pie. Lower your expectations. You'll feel a lot better, trust me.
Greer and "anthropik", I'd be surprised if more than a few mega churches worth of people combined really pay attention to anything you guys say (and hell, why not just add that doomer fests like TOD are pretty blacked out too--sure some exposure, but a few articles everyday and a string of news doesn't combat a 24/365 economy, media, or the history of the past century...) Read Ishmael lately? It's a pretty good book, although I'm not a big fan of telepathy. My point is, nobody really cares about Ishmael, or for that matter... You get my drift. I was on a plane once sitting in a window seat with a women next to me reading Ishmael--and her husband was on the aisle seat. Somehow I allowed myself to strike up a conversation with her. I usually try to avoid this because imho talking to people on airplanes may be even worse than internet banter (although internet banter clearly holds a dear place in my heart.) She and her husband had just went on a "safari" in Africa and I'm sure someone along the way told her to read Ishmael. Although I forget most of the conversation now, the gist of it is that talking about the book with her led me to mention the energy situation, which is really the underlying problem with agriculture and society--the massive amount of waste, and a system based on "infinite growth into a finite resource base". As we approached for landing (which I thought was tinged with hysterical irony) her husband wasn't having the "finite resource concept"--let alone the peaking of that finite resource--and could easily have been Yergin in disguise.
Either way, let the druids practice their magic while you primitivists tow the line over on your little mound of dirt. What's the big deal?
How kind of you to be worrying about the small minority of people that have some grasp of these issues--why does arguing over catabolic collapse matter? I mean, unless you need to pass the time... Which gets me thinking, I, um.....
Like I've said before, baseball... Baseball.
I'm all too acutely aware (as for Ishmael, funny you should mention that--I was a lector at my Catholic church before I read that book). But just because something's hard (or nigh on impossible), does that make it any less right? Sure, we're talking about a very tiny audience, but what else can I do? You do what you can. Worrying about how it isn't enough doesn't really help, I don't think.
The soil fertility isn't there anymore, it was all used up the first time
You vastly overstate the case. I suspect that you are not a professional agronomist.
After a few years, prime farmland will rebound to low fertilizer fertility (see organic farms that routinely make this transisition).
Sub-prime farmland has been returned to timber for several decades now, an ideal means to restore fertility. Vast swaths from Georgia to Texas have gone from farmland during WW II to pine plantations.
In addition, other lands have gone into wildlife refuges & national parks as well as "set aside" land, where farmers were paid not to farm.
My former grandfather's farm (now owned by my father & aunt) in the Bluegrass area of Kentucky is extremely fertile (see my father's garden) with over a foot of topsoil. But not suited to mechanized row crops (except tobacco on a 1 in 5 year rotation) due to the hand labor required to prevent erosion. Prime land to grow beans and tomatoes with hand labor and swathes of grass to contain the wash.
And this last weekend, I drove down the East bank of the Mississippi River on a whim (I went to see a flooded rebuild). Very fertile land with a few citrus orchards (satsumas for local consumption), soem cattle grazing and otherwise minimal agriculture. That it gets washed over by a hurricane every 40 years probably deters further development. But get a sturdy boat, tie it to a tall tree on the banks of the Mississippi and one can ride out anything. Excellent crops the other 39 years.
Best Hopes for Overlooked Fertile ground,
Alan
Abandoned and sub-prime farmland account for a tiny fraction of the available land, so we're still talking about isolated pockets of fertility, which I've always kept in mind for precisely the kinds of reasons you've mentioned here. But for the most part, everything that can be farmed, currently is being farmed. All of the examples you've mentioned sum up to just the slightest fraction of the land we're farming now, precisely what I meant by occasional and isolated pockets of fertility.
My cousin harvests huge yields of row crops on Southern Illinois soil that is better now (and deeper) than 50 or even 100 years ago.
Statistics on forested land shows significant increases, And one can drive from Slidell, Louisiana to Tuscaloosa, Alabama and hardly see more agriculture than a few cow pastures. Lots and lots of trees over what used to be cotton, corn and peanut farming.
BTW, orchard farming will likely be the best use for reclaimed suburbia. Leave most of the slabs in place. A decade plus to first small crop though.
Best Hopes,
Alan
Alan,
Decade a little long-expect first small harvest in 3-5 years, maybe less, with dwarf or semi dwarf rootstocks. But that would be alot of fruit from all reclaimed suburbia, depending on reclamation extent. And be much harder to work/maintain.
Now's the time for bud grafting-bark is slipping easily, though may be a little late in the south. I just finished up 20 this evening on a very strong semi-dwarf stock. (little longer to harvest, but more vigor in poorer soils).
Yes, you are right, especially about fruit. Even most nuts bear in 6 to 8 years.
I am awaiting the release of the blight resistant American Chestnut, which can fill a large niche in food supplies ( a low oil, high carbohydrate nut, produced in large volumes)
http://www.acf.org/About.htm
Managing an orchard (preferably mixed and not monoculture) planted in a former suburb will be labor intensive and a bit difficult but doable IMHO.
It should be FAR easier and more productive than row cropping that land though.
Best Hopes,
Alan
I can speak from personal experience, though: Trying to raise fruits is a considerably bigger challenge than raising vegetables. A few vegetables have a few insect problems, and one can deal with those with some non-toxic organic sprays. The bugs and fungus all go after fruits big time. Except for a few of the small berries that are pretty much left alone (except for birds, for which netting is sometimes required), many tree fruits (and grapes) need a much more intensive spraying schedule. I've still not really gotten the hang of it, and my experience has given me a very healthy respect for all orchardists, organic and non-organic.
A decade plus to first small crop, and it never scales up to the levels of grain agriculture. Orchards are great, but they really tend to fit more in with permaculture in a lot of ways (permaculture focuses on a lot of tree-growing usually). You're not going to scale up orchards to the nutritional density needed to replace a field of wheat or corn.
Mature American Chestnut forests did rival 1800s agriculture for yield/acre. And they generally dominated the higher elevations with poorer soil.
Alan
It's only a logical fallacy if you claim that "because all past apocalyptic predictions were wrong, the current one is wrong too". But that's not the point, the point is that it's very easy for people to become convinced that the end of the world is nigh, even based on what to them is perfectly rational and reasonable analysis, and history has shown them to be wrong every time.
Therefore you should be wary of any confidence you have that it really is the end of the world this time, based on your analysis of what you see around you.
Personally, the more reading (and thinking) I do the more convinced I become that P.O./Climate change/environmental degradation will not lead to a significant long-term collapse of human civilisation. In fact, I'm more confident we'll somehow sail magically through it will barely a blip (maybe a 2% chance) than I am that civilisation as we know it will collapse completely (1% chance at most).
No, not every time. The "world" has ended, many times. Rome, Maya, Easter Island, the Black Plague, to name a few examples. For the people who lived through these collapses, their world ended. It's not the end of humanity itself, nor literally the end of the earth, but 1/3 of the population dying would be absolutely horrific, and qualifies as "end of the world" stuff for most people, myself included.
Where are the writings of Roman philosophers from 150 AD correctly predicting the demise of the Roman empire, based on an "reasonable and rational analysis" of what they could see around them?
And a 1/3 of the population dies off all the time - over a certain period. At this point the deaths are more than offset by new births, but there's every indication that will turn around within the next 50 years. After that, I fully expect the human population to contract by as much as a 1/3 from maximum levels (~9 billion to 6 billion) within another 50 years or so. But it doesn't require anything truly horrific or civilisation-shattering.
Iraq is looking EXACTLY like the apocalypse these days.
Anybody with an understanding of oil issues, coupled with an understanding of the history of that region could have easily predicted this.
In fact, some Peak Oil doomsayers - Jay Hanson comes to mind - predicted EXACTLY this back 10 or more years ago. That once we got close to the peak, the friends of Bush would invade Iraq, depose Saddam and the place would plunge into chaos. But hey they probably have psychological problems or were falling prey to the Y2K fallacy or something . . .
It has come full circle now. If you believe Robb the US military now uses Sunni guerrillas as contractors.
http://globalguerrillas.typepad.com/globalguerrillas/2007/08/tribal-secu...
And what the logical response will be
http://globalguerrillas.typepad.com/globalguerrillas/2007/08/journal-dan...
'twas fun to read both JMG and JG. Jason: Your main point seems to be that we're doomed to starvation. Is it possible that Greer actually agrees with you? He's often written about de-population. He thinks it'll be a lot more gradual and complicated than a die-off in place, but a de-population nevertheless. I think he spends his CPU cycles thinking about what happens AFTER that. He seems to think that past patterns of gradual civilization-building will be repeated after the collapse.
Albeit this week's installment does claim to talk to peoples' current question, "where should I move to". The sustainability of small cities a century from now may not be relevant to survival in the next decade.
Absolutely not; my point is that large-scale settlements are doomed to fail. Permaculture/horticulture can support village life, and hunting and gathering is even more robust. But the end of the oil age ends a lot more than just the Industrial Revolution; it ends the patterns of expansion that have defined civilization over the past 10,000 years.
I suspect, ultimately, he does. Unfortunately, he's usually too busy trying to one-up me than listen to me, which is a shame.
Yes, that's something we've gone back and forth over, too. He's never really answered me about what those future cycles will have to eat, except to say that apocalyptic fantasies have been wrong in the past, which I don't see as a particularly strong argument, or even an answer at all.
From NYC, a small city is a step in the right direction. But Greer's saying it's a long-term, sustainable option. It's not.
Jason,
I'm sorry that Greer doesn't want to give you his blog. But, why are we wasting bandwidth on TOD continuing to discuss this? I don't plan to post any more about this, and I'm sorry I answered your post, have a nice day
Bob Ebersole
I actually like the Archdruid Report, by and large. It's the stifling of discussion I can't stand. But if you think that a response to an article posted is wasting bandwidth, I have to wonder why you even bother posting at all.
Small point of correction. His original assertion, "[the end of the world] hasn't happened yet", is flat-out wrong.
Yes, the world has ended, at least two human-specific endings that I can count off the top of my head. The falls of the Roman and Mayan civilizations. Oh, and the too-numerous-to-count Native American tribes that were decimated by the arrival of the Europeans, their worlds ended as well. Ditto the African tribes who ended up being used as slaves.
Add the six previous major extinction events and then consider the seventh, the Holocene extinction, which is currently underway.
The "end of the world" refers to and end of a way of life, or the end of a species. And Homo sapiens is clearly vulnerable to both.
Not to nitpick: you may be right about the rest, but not about Rome. The fall of Rome spelt the disintegration of its political class, and that was pretty much it. For everyone else - the serfs who had the living sh*te taxed out of them, i.e. 90% of the Empire at least - life went on as it had always done, or in some cases even with some improvement (some of the barbarians were more reasonable landlords than the Roman senatorial class).
Don't forget also that by the time the Empire collapsed, many of its inhabitants were 'barbarians' by origin and culture, and to see the Roman overlords replaced by Germanic tribes would not have been in any sense a loss to those people.
(And no, they weren't all off enjoying the baths and the roads and the concrete and Roman law ... no one was, ever, throughout the entire history of the Empire, except for a very small percentage of the population).
The world did not end when Rome fell. Most ordinary people would not have even noticed or cared.
I'm a big Tainter fan. In my view, collapse always happens because it benefits most people. If Greer wants to call my view "apocalyptic" because I think civilization is soon to collapse because of too much complexity, then Rome would have to count as the end of the world, too, because what I'm saying is very much the same: dissolution for the ruling classes, but it happens precisely because most people will be better off for it.
jason,
Thanks for the link, and the rebuttals. I've been kind of scratching my head over the "Archdruid" since I noticed his stuff appearing regularly on Energy Bulletin and TOD a few months back.
Jason, you make some good points, but they are based upon two questionable premises:
1) You seem to presume that all agriculture is pretty much just a one-time mining of fertile soils. However, east Asian techniques were able to maintain soil fertility for forty centuries.
Which raises the question: How did that soil get to be fertile in the first place? Was it not a combination of: a) deposition of weathered minerals; b) accumulation of dead organic matter; and c) action of worms and other soil organisms? Organic gardening and farming techniques are explicitly designed to mimic these natural processes, and are built upon the practices that evolved in the Orient. So why shouldn't organic farming techniques lead to agricultural sustainability at some level?
2) You also seem to presume that soil fertility is a one way street; lose it, and it is gone forever.
Is it really true that it is not possible to restore soil to fertility? Is there really no combination of organic matter and mineral amendments and cover cropping and crop rotation that will not just maintain soil fertility, but gradually build it up?
If it were true that reclaiming soil fertility were impossible, then community gardens would also be almost impossible. Almost all of them come into being on vacant lots --- many of them "brownfields" -- that would be considered totally non-arable by any farmer. Yet, by applying organic techniques, they have been reclaimed and are now often producing large yields per acre. How, then, do you account for this?
Thus, if the suburbs do end up being largely vacated, can you really be certain that some of that suburban land cannot be reclaimed for the market gardens and dairy farms that used to ring city outskirts?
That's a point commonly made, but it's doesn't hold up very well. I wrote an article on that, titled, "Oriental Myths," and I also answered Greer making the same point in one of my first weekly rebuttals, "Glimpsing the Deindustrial Age." China's agriculture may well have begun global warming thousands of years ago, and has resulted in massive deforestation and desertification well before the 20th century.
Now, I do distinguish between agriculture and perma/horticulture, which appears to be sustainable, but that doesn't support cities; it supports villages.
I've noted that what's typically considered "organic farming" falls into one of two categories, generally: (1) not actually sustainable at all, but instead practices that simply slow the harm, and (2) genuinely sustainable, but not agricultural. These are things you find commonly in perma/horticulture, which absolutely does build up greater soil health. Unfortunately, the techniques included in 2 do not scale up to feed cities, and the techniques included in 1 are not actually sustainable.
As a side note, modern permaculture really owes more to tribal horticulturalists around the world, than to China.
No, but it does take time--centuries, usually. A gap like that is not something where a city's population can just try to wait it out.
There is, but those techniques feed villages, not cities. The time it would take to do that would be far too long for cities to just wait for the next shipment of food to come. It's a question of scale.
It could, but those things don't produce enough food to feed a city. They could feed a village (~150 people), but not a city (~5,000 people).
If it takes nature centuries to build up soil fertility without human assistance, then I am completely confident it could be built up at least 10 times the pace with human assistance. Technology and intelligent planning frequently has demonstrated the ability to enable us to accelerate the speed of otherwise natural processes by orders of magnitude.
Further, I don't understand why it makes any difference whether we live in villages vs cities as far as how much food we need. Sure, if we live further from where the food is grown, it will need to be transported further, but there will be no shortage of capacity to do that (given how awfully inefficiently it's done currently).
If the ability to produce food drops (and I suspect it may at some point), then all it means is that there's less food available for the same amount of people: i.e., we will have to eat less (a good thing, for many Western nations), and most certainly waste less (and enormous quantities of food get wasted). At worse, it means a return to a largely vegan, slightly undernourishing diet, at least until population starts to decline and technology and techniques to improve food production makes up the difference.
Before the Industrial Revolution, everyone ate locally. I think that's a fair assumption for the post-industrial world, too. Transporting food is largely taken out of the picture. So you need to look at nutritional density: not just how much food you can grow, but how far away it is. If you can grow lots of food but you can't get it to the city's market, then it doesn't do the city any good.
Village vs. city may not matter much if the question is whether we'll be able to feed people, but it matters a good deal if the question is whether there will be cities in the future, which was the original question.
There was food transport before the industrial revolution, by ship, by cart, by hooves. For example,
Yes. Notice, you're talking about Flanders, England and Sweden there. Not exactly great distances, and largely motivated by prestige goods rather than food. That's why cities weren't supported by long-distance, transported food until the Industrial Revolution; the majority of every city's food supply came from a hinterland of (WAG here) ~100 mi. radius. The exceptions--like the Egyptian grain that fed Rome--were the foundations of empires.
From the entire Baltic Sea, actually, and typically the trade was an exchange of manufactured luxuries for grains and raw materials etc. over a typical distance of 500 km by ship.
Duplessis, Transitions to capitalism in early modern Europe, 1997, p.90
We recently crossed the threshold of 50% urban population worldwide. Both the world now and Europe in 1500 were urban civilizations. As you can see, there is quite some slack in the definition.
Well, people die all the time. Cities have survived plagues, firestorms, sieges, floods, yes, even nuclear bombings with nary a dent in their growth patterns. Cities will shrink in surface, population size, functionality, prestige, etc. but mostly their function as a centralized group of services will remain. Just at a much lower level.
And now I've made a mistake: I didn't qualify. A century hence some cities will be abandoned. But there also will be new ones. They will mostly be much smaller, and the proportion of the population that lives in cities will be much, much smaller. Also, there will be regional difference due to local factors. Where currently the world marches in line, it will spread in all directions, in all paces without the energy to coordinate the march.
I also think you underestimate the savviness of the peasantry. In the European Middle Ages, an extensive body of regulations, traditions and practices was developed to maintain soil fertility. The prescriptions were a central part in every lease, including:
- keep all the manure on the farm
- add minerals to the soil
- collect fodder on the common land, and feed it to the animals on the farm.
- let the animals graze on the fields after the harvest.
- NEVER break the crop rotation.
Cities also become deserted ruins all the time. A lack of food means a lot more than a plague, firestorm, siege, flood, or even a nuclear bombing. Those things only kill a relatively small percentage of the population; the Black Death was horrific with a 33% mortality rate, but that still means more people survived than not. But if there just isn't enough food, those are the kinds of problems where people abandon cities, or starve to death.
Even a small city of, say, 5,000, cannot be sustained by its local carrying capacity under normal circumstances. It takes dense grain agriculture. Horticulture doesn't cut it; horticulture will only provide enough density for a village-level population density. To get an urban density, you need agriculture, grain agriculture.
The rules you've listed did help slow the devastation of the soil in Europe's Middle Ages, but it only slowed it, it didn't stop it, much less reverse it. When the colonists came to the New World and had some virgin soil to farm, they grew a full head taller than their European contemporaries: a reflection of the effects of centuries of European agriculture, reflected in human height. Sure, those are excellent rules to follow, but that obviously doesn't make the system sustainable, since they did greatly deplete the soil following those rules.
Surely agriculture exhausted many spore elements and minerals that are important to stay healthy, hence the difference in stature between the colonists and their European counterparts. But cities don't collapse from unpleasantness, or endemic disease. Prisoners survive on water and bread, too. It's not fun, and they won't get old, but they survive.
Cities will indeed collapse in there is no (not less, not much less, but NO) food. So do you really think that all forms of horticulture that will be tried will not leave any surplus, anywhere, ever to be traded at the nearest market?
Really had more to do with soil depletion: agriculture leaches out the minerals in the soil, which is where the nutrition in the plant comes from. Since then, the depletion of the soil has only accelerated. For North America, 85% of the minerals that were in the soil just a century ago are no longer there. While some isolated pockets of fertility may exist, by and large, a plant grown in today's soil will have about 85% less nutritional value than the same plant grown in the same soil a century ago. At that point, you're not talking about unpleasantness, you're talking about soil so impoverished that even if it does yield plants, those plants will be all but useless nutritionally. These are the kinds of levels where you could eat all day and still starve to death.
It's not a question of horticulture failing to produce a surplus for market, it's the levels to which they can scale. Horticulture can scale up to feed a village, but not a city. I wrote a recent article on Anthropik titled, "The Shape of Collapse #6: Cities." There, I argued that since horticulture provides the best hope for urban populations, you'll likely see neighborhood gardens turn neighborhoods into villages, giving us "life in cities, not city life," as the city becomes simply a group of villages that happen to be close together. Over time, since horticultural villages are naturally mobile, they'll diffuse and spread out. Today's cities could become the ancestors of clusters of related villages, like you find among the Yanamamo, for instance.
Plants generate their sugars by photosynthesis, they're not taken from the soil. And since agriculture is all about the caloric value and not complete nutrition, I don't see why it will continue, though it won't be the wiser choice probably.
The definition of a city is another matter, of course, but I think that we can agree that the gigantic blobs of concrete and steel, together with their inhabitants, are poised for the abyss.
Jason, I read your rebuttal and found it interesting and informative. Thanks.
From the John Michael Greer article:
Reminds me of my early days as a back-to-the-lander, ca. 1970 in the Western NC Appalachians. To some degree we were escaping what we thought was a real possibility of nuclear armageddon and the oil embargo added 'Peak Extra Lite' to the mix. Some of the first people we met were 'Jesus Freaks' who were waiting for their version of TEOTWAWKI.
Well, the end didn't come and we all had to find jobs....
Sobering and wisening experience at the time, humorous in retrospect. And also makes me skeptical of radical claims of all stripes.
But I think that a scientific consensus is emerging that the probability of seeing an infinite rate of increase in the consumption of a finite energy resource base is somewhat low.
That's just because the government-paid 'scientists' have not yet weighed in.
Maybe so, WT, but isn't it somewhere in the bible, I'm thinking Dueteronomy.
(sarcanol alert)
Bob Ebersole
Right. Now who wants to join me in my
survival bunkerapocalyptic doomsday culthippy communesustainable technology preservation society?| The problem will solve itself.
| But not in a nice way.
I don't know if anyone else saw this (not about oil - economy).
But it gave me a chuckle, in a twisted kinda way.
Jim Cramer CNBC losing his mind - Youtube
I found it thru Mogambo's latest piece.
Misdiagnosed Economic Insanity
Re: solar. I found the contrast between the two mentions above to be interesting:
In the USA: "solar panels feed energy back into the grid during the hottest part of the day, when electricity usage is highest" - meaning, I presume, air conditioning (AC).
In Nigeria: "Solar electric power systems ... will allow for decentralised solar generated power for lighting and satisfying basic electrical needs."
As a homeowner, I consider AC to be an energy-guzzling luxury, and to try and power it via PV (photovoltaic solar) panels a ludicrous proposition. It is much better to invest in insulation, shade trees, window fans overnight, etc. I would think that at a community level the same logic holds: whatever promise PV holds, AC is not part of it. I do realize that many people out there are using AC, and the utilities are struggling to keep up with the peak demand, but the results (paying high prices for PV power, and getting nothing for it other than ephemeral cooling) seem to be detrimental if one looks at the big picture.
I think the problem is much newer infrastructure is built to be air-conditioned. For example, computers don't work if it's too hot. Air-conditioning is needed for them, so offices are built with windows that don't open. A friend of mine bought a condo on the 30th floor in Honolulu. She never needed air conditioning before, and didn't expect to need it in her new place. But she did. Thirty stories is above the trade winds that keep Hawaii comfortable.
About 1/3 of Americans don't own their own homes, and I suspect that will only increase as the housing bubble unwinds. If you don't own your property, you can't invest in shades trees or insulation. And landlords, who often aren't the ones paying the power bill, don't have incentive to do it, either.
I don't think AC is sustainable long term, but it's something that people will try to hang on to for as long as possible. Even more than SUVs and cable TV, I suspect.
The trade winds are _stronger_ 30 floors up! But I guess no shade and perhaps no good openable windows?
Anyways, my main point was not the folly of AC, but the folly of trying to keep the AC going based on PV power. Which is what those "net metering" programs are actually doing in California and elsewhere. PV power is way too expensive to compete with other power sources at the moment, except if paid for at afternoon retail rates in places where they have time-of-day variable rates. E.g. 8 cents per KWH at night, 30+ in the afternoon. The real source of that payment is the people who are currently willing and able to pay those rates to keep their AC operating. I don't blame the PV owners for taking advantage of the situation, but perhaps public policy should be directed towards reducing peak demand instead?
In the future I think we'll have variable electricity supply (somewhat dependent on when the wind blows and the sun shines) and we'll be forced by whatever means work (variable rates, rolling blackouts, etc) to use the power when it is available. E.g., do your laundry late at night if you're heating the water on electricity. (And hang the laundry up the next morning to dry.)
That wasn't my experience. Her apartment should have had a nice cross breeze, but it didn't. Pleasantly breezy on the sidewalk, dead calm upstairs. And stifling.
In general, the trades should indeed be stronger higher since they're less obstructed - that's why one elevates windmills - and it is usually the case.
However, I don't doubt that the local effect in some Honolulu high-rises can be counter to that. There are enough other buildings that some might end up having air diverted away from them. I imagine that if surrounded by blacktop and cement that there might be thermal updrafts which would tend to interfere as well. Plus the whole city is downwind of the Koolau range so there could be 'dead spots'
A lot of those enclosed Honolulu high-rises are stifling. Once the oil tankers stop coming to feed the Kahe Point power plant, a lot of people may remove their glass one way or another: most of those places are concrete boxes with a lot of glass - a good approximation of a solar oven. There's talk of pumping in cold seawater to AC some of the taller buildings in downtown, but I'm betting it won't get done.
All you really need on this island is a roof to keep off the rain and screens to keep out the mosquitos; without the need to heat or cool the place, you can go for floor space and high ceilings with no significant energy cost. (I did - we'll see whether hurricane Flossie blows the roof off next week).
Now if there was a way to get Oahu past the "cannibalism due to no agriculture" thing, it would be a dandy place to hang out PPO. Unless they nuke it...
The older ones were built for no air conditioning. They're not too high. They're only one unit thick, with the hallway as an open lanai running along one side of the building. (It's a little weird having people walk past your windows, but you get used to it.) They're oriented to the breeze.
Yeah. Even the Outer Islands are massively overpopulated compared to their ancient populations, and they were up against Malthusian limits then.
Water is already something of a problem in Hawaii, and it's only going to get worse if they clear the land for agriculture. Kona used to be rain forest. Now it looks like Texas rangeland, because they cut down the trees.
Even in the best building, 30 floors gets the heat from below, No open windows will make any space hot over time.
But I have used a computer for the only heat source for a cold room, turn that around and it can up the heat in a warm room more than you think.
I used to work in a totally windowless building. Then again I also worked in a vault room, where the AC was there only to help keep the computers running, not to keep us comfortable. It is something to have to run the whole AC unit inside a room, because you are working in a vault.
No matter how far we go down the slope, if we have any type of Control and Command structure you will see people with AC still.
AC to be an energy-guzzling luxury, and to try and power it via PV (photovoltaic solar) panels a ludicrous proposition
My Friedrich heat pump (Model ys09j10b) 8,000 BTUs on about 670 watts and it is "cycling" with 96 F temperature outside ( just walked to grocery store & notary public and can confirm it is hot).
Bright sunny day, I would estimate that 1.5 to 2 kW solar PV should be able to balance my entire load in August.
If I were in a hyper-insulated home, I would export more than I would produce with just a 1 kW solar PV array IMHO.
I quoted the model # because it is the most efficient window a/c (cooling) and heat pump available.
Best Hopes for High Efficiency Air Conditioning (I would rather give up heating, as I did last year).
Alan
There is at least one clear answer to this - earth sheltered or subterranean homes. An earth sheltered home doesn't need AC to begin with. Add a set of cooling ducts buried sufficiently deep and you can keep it even cooler (and warmer) than outside temperatures. In fact you can easily lock in a base temperature near 60-65 degrees then adjust that upwards slightly by admitting external air or using solar heat. Then all of your PV electricity is used for appliances, not heating/cooling. Try Earthships for a starting point and branch out from there.
"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone
PV DC to battery to AC to air conditioner is silly. There have been articles about DC powered AC that'll run off two good sized solar panels (400 watts). They're $5,000 now and the panels and accessories add another $1,000 at least, but if the alternative is just being really hot that doesn't look so bad ... it would have been a good use of home equity, had people not pissed that all away on frivolous stuff.
Nanosolar plans to make paper-thin, flexible solar panels that can be made for 1/3 the cost of heavy, silicon-based solar panels. It's currently building the largest solar panel manufacturing plant in the U.S. and plans to begin production in 2008.
KQED has a video of a recently aired segment (7/3/07) on Nanosolar.
Curious that while all this economic chaos is happening, Russia and China decide to give the US the finger.
Russia sparks Cold War scramble
http://news.bbc.co.uk/2/hi/europe/6938856.stm
China threatens to trigger US dollar crash
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/08/cnchin...
Their way of telling the US its unipolar days are numbered?
Triumvirate of collapse - Economy, Ecosystem, Energy
I think the U.S. has been bipolar for a while now.
The U.S. isn't bipolar, it's Trilateral...
E. Swanson
I was thinking a monolith.. that's got a buzz going.
(If AC Clarke is to be believed, the buzz means a change is imminent)
Oh! And not to forget Iran of course, there's just no respect for authority these days
Iran urges US pull-out from Iraq
http://news.bbc.co.uk/2/hi/middle_east/6938740.stm
Triumvirate of collapse - Economy, Ecosystem, Energy
LMAO that these two articles aren't getting more traction in the PO sphere. "OMG, those crazed doomers might be right, better not draw too much attention to this . . ."
Not that it matters. I mean I'm fucked too and winning a debate on the internet isn't much consoloation when there's nukes flying . . .
But yeah, China says "we're thinking of unleashing the financial nuclear option" followed up by a display of a new generation of ICBMs that can hit US cities:
http://www.spacewar.com/reports/China_Shows_Off_New_Military_Hardware_99...
But hey keep writing your congressmen kiddies!
Aren't getting much traction? Are you kidding? China's threat to the dollar is about all we've talked about for the past couple of days.
Yeah, but you haven't coupled it with the real nuclear option.
Yes, Bush and company are crazy enough to launch over this.
China and Russia know this, that's why they're buzzing US and UK airspace, showing off their new ICBMs, etc.
There's a reason the Pentagon is running massive nuclear attack simulations just at the same time as federal agencies are moving away from D.C.'s blast zones just as Bush has commissioned an entire new geneation of nuclear weapons, etc:
http://www.lifeaftertheoilcrash.net/Archives2007/Nuclear.html
It's not entirely a coincidence we're seeing this brinkmanship rachet back up now that oil produciton has peaked.
The assholes running things are to one degree or another all like Jim Cramer. If the markets tanks and their investments get shredded, they mentally process that as "the end of the world" since Wall Street is the only world/god they know. To you and me the risk plunging the world into a nuclear apocalypse over a market crash seems crazy. But to they who worship the markets as their Gods, it's not unreasonable at all. IF it wasn't, they wouldn't be spending billions preparing to do just that.
When Cheney said "the American way of life is non-negotiable" what that was code for was "we will go to nuclear war to protect the financial interests of our backers." Yes, yes, to you and me this is obviously crazy and counterproductive. But not to them since by any objective measure they do indeed worship the markets as their Gods.
I'm sitting here ordering as much freezed dried food and other supplies as I can. Of course none of my neighbors (except my immediate one*) are doing likewise so I can't help but to laugh at myself just a wee bit. But what else is one to do?
"But what else is one to do?"
Take one's medication, perhaps?
I yield to nobody in the cynicism department, but holy moly, I don't think even this administration is that demented.
Then why did they just commission an entire new generation of hydrogen bombs?
I've never been on any sort of medication, never done any drugs other than caffeine and am generally a very cheery fun person. (you'll just have to believe me) Perhaps it is my mental health - NOT lack thereof - that enables me to acknowledge what is going on.
It's not like you can't go verify what I'm pointing out for your damn self. Check the link I put up. I've got articles from all the MSM outlets with headlines like:
"Federal agencies moving away from DC blast zones"
"Pentagon running nuclear attack simulations"
"Bush commissioning a new generation of hydrogen bombs"
"DOE proposes billions for nuclear weapons upgrade"
"Then why did they just commission an entire new generation of hydrogen bombs?"
Well, since the existing ones are perfectly adequate, I'd have to say it was probably to give lucrative contracts to their buddies.
Actually, U.S. nuclear weapons were originally designed to last for just 20-25 years. Many of them are now quite a bit older than that. Here is a link to an article dealing with aging parts in nuclear weapons: http://www.lanl.gov/quarterly/q_w03/shelf_life.shtml
Perhaps we can use our own aging nuclear weapons as a source for nuclear fuel. I don't know that does much for our nuclear capability in the future, but I expect keeping the US functioning has at least as high a priority as nuclear weapons.
One reason I say this is there was an article in yesterday's Drumbeat about the fact that we are buy a lot of our enriched uranium from Russia, and that this source is likely to disappear after our agreement runs out in 2013. I think that there is a chance that this source could disappear even before then, if there is a severe energy crunch because of oil, and Russia finds it to its advantage not to sell us the uranium.
We need to be finding an alternate source of uranium, and our aging nuclear weapons would seem to be as good a source as any. Someone made a comment in the last few days to the effect that warfare is not possible without excess energy, and this may be an example. Maybe the need for fuel for our nuclear reactors will help prevent nuclear war.
You're kidding, right?
If that was the case, half our bridges and dams in the country wouldn't be on the verge of collapse.* And we'd be spending $300 million a day here in the U.S. not on Iraq.
(*I'm exagerrating just a bit but hopefully you get my point.)
Exactly! That's why they're preparing use nuclear weapons: more kill per kill-a-watt.
This is what I've been saying for ages now: once they lack the necessary excess energy to keep their markets growing by way of conventional military force, out will come the nuclear weapons.
NOw you may say "but if they do that then the whole game is over for everybody." Yes, that is the way you and I think. But these assholes honestly believe they can win a nuclear war. It's insane I know but that's what they believe.
Gail, you've got to get out of your own headspace. They're not thinking the way you and I do. If they did we would not be in this situation in the first place.
Things have not even gotten bad yet and they are already drastically scaling up their funding of nuclear weapons along with implementing a first strike policy. When do you supposse they're going to wise up?
A/ We need all learn, and fast, that the idea we've grown up with of what is the value of a human life, has always been a blatant lie. See Vietnam, see Baghdad, see Congo, see New Orleans, see what's left of the health care system. At least try to wake up. Your friends will drop like flies around you. Essential part of psychological preparation. We're not exactly the healthiest people/generation ever.
B/ There's plenty uranium in Canada to blow the entire solar system to smithereens. What up with that Russia in 2013 thing? A non-issue.
C/ Matt, you're right, 40-year canned foods are the best investment. You won't get that timeframe out of any of the girls you're looking at at present. Go with the cans. Better bang/buck ratio.
D/ Happiness is a warm gun. He wasn't lying.
E/ Still don't know where you're going? Too late now. Just stay put and enjoy the show.
Regarding C: what do you mean? I've bought a bunch of the MOuntain House cans. They're suppossed to be the ones that last 40 years.
Regarding E: yeah, I know. I may just pack a tent and camp out on Jason Bradford's property until the bombs drop. He's just north of here.
I mean your food stays well longer than your women, you blind bat
And did you really sell all those self-help books just to pitch a tent at Jason's?
That's hilarious. Like your spirit.
In this area, yeah. Prices for land and homes are outrageous.
Projection. That's why they think all the environmentalists are budding terrorists and why the typical oil drum denizen thinks they will do something that makes sense (to the denizen).
cfm in Gray, ME
Freeze-dried is good if you think you'll have to bug out with it, but for staying in one place it's hard to beat bags of white rice and canned goods. If you get good old-fashioned cans (not the pop-top kind) and control their humidity they'll keep a decade; and white rice will keep indefinitely. A fraction the cost of freeze-dried. My wife favors canned ravioli, though it's hard to keep enough for a decent apocalypse with her always eating down the supplies.
I've got lots of canned goods and am shopping around for bulk staples in buckets.
I'm trying to diversify my supply as much as I can as I don't know where I'll be going, if I'll be staying or moving before TSHTF, etc.
I'm a fan of the freeze dried cans from Mountain House as they're good for 40 years. (25 as advertised but 40 in real life) My thinking is what other investment can you make that will be as good 30 years from now as it is today?
The tolerances are too tight. An AK-47 pattern gun chambered for 5.56mmx45mm would be a much better choice over the long haul.
I have the opposite problem: I don't care for most canned foods, so it goes bad on me.
I should just donate it to the local food pantry every once in awhile, I guess.
The US consumes 25% of global oil production. Make the US dollar worthless, the US can no longer afford to purchase that oil, freeing up plenty for the rest of the world. I'm surprised the rest of the world hasn't just dumped all their US dollar reserves on the market. The benefit would far outweigh the pain. Wouldn't it be worth Trillions of US dollars to knock the US out of the oil market?
Would also put an end to US military adventurism.
There you go
http://exile.ru/transient/268/putinon_05.gif
I bet you started reading The Exile for the War Nerd columns. If not, do so immediately. Gary Brecher is, to me, the last American.
Pretty much.
I was stationed in Moscow for 4 years and developed a taste for russian humor and russian vodka.
LOL
Perhaps this was reviewed in the past, but I've just seen the first 10 minutes of a documentary on peak oil done by Journeyman Pictures. The video is at YouTube:
Video Link
It looks good, I wish I could see the rest. Has anybody seen it?
dave, it was on ABC australia. thanks for the link to journeyman pictures, there's a ton of good stuff on there.
Dave,
I haven't seen that documentary, or the preview, before. Thanks.
The full length version would be interesting, though they do seem to have the full transcript posted at Journeyman Pictures off this page.
Don't worry folks everything will be alright:
THE WORLD'S LEADING THINKERS SEE GOOD NEWS AHEAD
These are leading thinkers after all. Not like us dumb dumbs.
The Coming Tech Boom
And this is from a respected economics source. Not like the musings of us poor schmucks.
So you see, there's no reason to worry, no need to learn about apple trees, or freeze dried food stuffs. No reason at all.
"not like us dumb dumbs" . . . "the coming tech boom"
dude so totally lmao!
Yeah, I'm all like OMG!
But from that article:
Turn it around. 21st century man's ipod and Blackberry won't help him much in pre (post?) fossil fuel days.
Actually, an iPod or its equivalent, and a teeny solar panel, could enable a family to listen to hi-fi music for maybe another century. That might help a lot. Shootin' zombies could get depressing without the proper music on. MP3 players are a 'must have' survival item IMO.
A solar powered IPOD type of device, made of of titanium or something equally indestructable, might even be a reasaonablly decent way to preserve basic knowledge.
EMP shielded? :-)
"Freestyle" it's only 512 MB but it's waterproof and seems to be impact resistant...
http://www.youtube.com/watch?v=9-h0JMuStDo
yea, I expect the 19th century man would do a lot better in the late 21st century then the early 21st century man will.
The Motley Fool tells us about the Coming Tech Boom. I thought that's what we saw in the late 1990's! No, they tell us that iPods, camera phones and satellite radio are indications of great technological improvements. Sorry guys, those were toys for the kids and 20 somethings. They do mention the Chinese solar power company, Suntech Power. As if another successful high tech Chinese company is going to fix the problems in the good old (worn out) gas guzzling U.S.A!!
Did I miss the sarcasm alert?
E. Swanson
I think so.
Human Intelligence Can Be Increased, and Can Be Increased Dramatically
Further down
Our Ability As a Species to Respond To the Challenge Presented By Peak Oil
Which is, of course, conditional upon the former.
Asking the question, "what are you optimistic about?" has to be a bearish indicator.
The other day I was listening (radio) to a ‘great scientist’ - originally a geologist, also called a geochemist on wiki, Claude Allègre (France), recipient of many honors (see link), ex Min. of Education of France. (Err that might not be a recommendation, just to say he is respected.)
He was being questioned about Science in 2050. He trotted out the usual about advances in biotech, computing, new agri, etc. all very boring and predictable, though he himself sounded very involved and enthusiastic - he is that type of person. Not one word about energy. A geologist!
That kind of semi academic /gov. / publishing (this last in the US) career attracts shills and panderers. The PTB select them. All that happens smoothly, naturally. Much like TV shows run by the disc industry who set up contests for talented young people, thus feeding dreams in the public, exploiting the young ppl themselves, churning up a lot of media attention bought cheaply, creating a new temporary star, etc.
Allegre, wiki
Hello TODers,
Please recall my long ago speculative postings on Yucca Mountain never being used to store nuclear wastes, but is instead a taxpayer funded secure bunker for a select few and their essential goods for WTSHTF. In the meantime, I discount most newslinks' 'facts' as propaganda.
Please ask yourself why Yucca Mountain wants a secure water supply:
http://www.kesq.com/Global/story.asp?S=6859665&nav=menu191_2
--------------------------
Federal agency ignoring state ban on water use for Yucca Mountain
State officials complain the federal government is demonstrating bad faith and ignoring the rights of the state by stealing the water.
-----------------------------
Sadly, the return to the historical norm of the Wild, Wild West Water Wars will be incredibly violent once civil and legal negotiation breaks down. I wish I could afford to import a breeding herd of camels for future trading cameltrains plodding across the Southwest.
EDIT: latest drought monitor map:
http://www.drought.unl.edu/dm/monitor.html
IMO, the Governors of CA & AZ should asking all non-property owners to start migrating to Cascadia and other wetspot habitats NOW, while they still can personally afford it.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Bob, I like camels as much as anyone but cannot see a reason for them in the southwest after tshtf. A caravan to nowhere?
The federal government thinks it is OK to steal other people's oil, so why should anyone be surprised to discover that they also think it is OK to steal other people's water?
Kleptocracy: Third world yesterday, on your doorstep tomorrow.
For those whose acronymical skills are lacking, I have discovered acronymfinder.com. Also netlingo.com and thinkgeek.com.
Thus, with a few short keystrokes we can restore our confidence and feelings of temporal relevance, no longer humiliated by our lack of common knowledge.
We can now reaturn to whether the PPT can reflate the DJIA on a JIT basis. Or will the ECM, in its move over BNP, provoke TEOTDJIAAWKI? Stay tuned.
Funny how losing our money seems to temporarily override losing our oil.
Gadzeus!
AYBABTU
(All your base are belong to us)
VP
From the above linked commentary by Jeremy Rifkin. Where did he get this fact from? It's amazing how much this charlatan gets wrong.
Charlatan or not, IMHO he is right about the following: "A global tragedy of monumental proportions is unfolding at the top of the world, and the human race is all but oblivious to what's happening."
In line with today's LATimes Rifkin article on permafrost thawing, BostonGeologist in yesterday's DrumBeat brought to our attention the very dramatic change in Arctic sea ice coverage for this time of year.
No matter how one slices this particular drama it is all of piece with many other other alarming trends and signal extremes of droughts (in the Amazon, Australia, et al) and other ongoing ecological stresses that suggest we are approaching any number of tipping points from which we may very well not bounce back to norm.
At that point negative feedback loops and climate chaos will reign. Good luck with this SHTF.
"[T]here is no otherness to the insanity that threatens us now. The insanity is what we call normal, and it is all our own." -- Verlyn Klinkenborg, NYTimes 4.11.07
I continue to be amazed that predictions of 'undiscovered' natural resources are making news. The word 'undiscovered' means just that. How can anyone predict such a large amount of resources where little or no exploration has been done? I realise that the correct geological formations might be in place but that does not mean that they contain natural resources.
Right.
Another bizarre idea is that of a "Safe Place" post peak.
Faith that undiscovered resources will provide seems as meaningful as the belief that one can plan to live in a safe place for the future.
My guess is that even as some folks focus on such absurdities, the ecological tsunami will wash over and render both irrelevant.
I try to live the best way possible now, which does not include planning to be invulnerable in the future.
All along, living in a positive relationship to our planet has made sense. It always will.
Being drunk on excess energy has made that seem not to be the case for a while.
Even given complete climate chaos and awakened chthonic forces, my guess is that some will dance through such events, while most will not.
There will be some dancing like a butterfly, and some stinging like a bee, but nobody knows who will survive to discover more natural resources which are parhaps as yet unmade, let alone undiscovered.
Then again, maybe no one we would recognise will survive the giant eructations of the warming northern oceans.
Food for thought, if nothing else. We pass away so quickly -- like a breath, like a blink, like a wisp of smoke, like a .....banking firm overly exposed in the subprime market.....
Read the USGS's report of 2000, about where we were going to find all the OIL later. 25 to 35 Billion Barrels in Greenland alone. It's been a while since I have read it, but there was mention of the Poles as sources for more of the Black stuff.
Hello TODers,
My Thxs to all that responded to my rather long NPK posting:
http://www.theoildrum.com/node/2859/224251
I hope the importance of depleting minerals for the support of industrial agriculture quickly permeates into an additional 'critical mass' for the Peakoil Outreach mindset. This could greatly help the national urgency for Strategic Reserves of wheelbarrows and bicycles as we lifestyle shift into 60-75% of us laboring in the fields and urban gardens as we transition to relocalized permaculture.
IMO, Asimov's Foundation concepts of predictive collapse and directed decline for an Optimal Bottleneck Traverse will require that we do not burn every tree in sight in the pursuit of potash as was done in the olden pre-FFs days.
The temptation to reap the tremendous short-term economic profits will be very great when what we actually need to be doing is massive tree-planting to help these forests effectively migrate with the rate of climate change. We will need the forests to help prevent extinctions of critical flora & fauna; not to burn them down for the making of gunpowder:
http://www.americanheritage.com/articles/magazine/it/1990/2/1990_2_18.shtml
---------------------------
THE FIRST U S. PATENT
It saved what was then America’s leading export industry.
Samuel Hopkins, of Pittsford, Vermont, received Patent No. 1 on July 31, 1790, for an improvement “in the making of Pot ash and Pearl ash by a new Apparatus and Process.” The patent was signed by President George Washington, Attorney General Edmund Randolph, and Secretary of State Thomas Jefferson.
This process was widely promoted during the American Revolution to increase gunpowder supplies. Gunpowder required saltpeter (potassium nitrate), which was made from potash and nitrogen-rich dung, such as bat guano. By the post-Revolutionary period potash manufacture had become a standard part of New England farming, and it was a critical source of cash to pay taxes and buy necessities in the depression years that followed the war. Even a single tree could bring up to four dollars this way, via forty pounds of potash carried to market by backpack.
-------------------------------------------
Recall my earlier postings on ruthless Earthmarines to defend these trees for a very long time for the later building of wooden sailing ships. Also, the fewer people hunting with gunpowder weapons greatly increases the survivability chances of other species.
The eventual loss of FF-pesticides and organophosphate pesticides plus the northward climate change migration of trillions of additional tropical bugs should require our utmost effort to protect and expand bird and bat species to cull these mosquitos and other nasty little critters. As outlined in my speculative proposal of a Presidential National Directive in response to a National Biosolar Emergency would be a big plus IMO: the harvesting of the guano nationwide from millions of shelters could do much to minimize disease, starvation, machete' moshpits, and increase community cooperation.
I am not expert enough to know when trash is not picked up anymore if we should encourage lots of feral cats and dogs, plus coyotes in our urban areas to cull the rats, or if the rabies and plague risk is too high. It may be much safer to learn to eat the rats as the Chinese do.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
A couple must reads.
Worse than LTCM: Not Just a Liquidity Crisis; Rather a Credit Crisis and Crunch
http://www.rgemonitor.com/blog/roubini
GoldmanSuchs caught by the short hairs
Black Mesa hedge fund warns of massive portfolio liquidation
http://p088.ezboard.com/fdownstreamventurespetroleummarkets.showMessage?...
Central bank’s aggressive move stuns European markets
http://www.ft.com/cms/s/569c9418-46a0-11dc-a3be-0000779fd2ac.html
.
.
Northwest passage is ice free.
http://arctic.atmos.uiuc.edu/cryosphere/IMAGES/arctic.4.jpg
http://arctic.atmos.uiuc.edu/cryosphere/index.shade.html
Courtesy of BostonGeologist's alert yesterday in DrumBeat.