DrumBeat: August 24, 2007
Posted by Leanan on August 24, 2007 - 9:08am
Pemex to Begin Restoring Oil and Gas Production August 24 (PDF)
Mexico’s Dos Bocas and Coatzacoalcos oil export terminals reopened to shipping on August 23 after closing due to Hurricane Dean since August 21. The Cayo Arcas terminal remained shut on the morning of August 23 due to strong winds. According to Pemex, it is too early to say how quickly normal oil exports will resume. The company said in an August 22 press release that it had an inventory of 10.5 million barrels of crude oil that it would load onto tankers once ports reopen. The release also said that company has begun returning workers to offshore platforms in the Campeche Sound, and would begin restoring 2.65 million b/d of oil production and 2.23 Bcf/d of natural gas production on August 24. Barring major damage, Pemex hopes to restore 80 percent of production by early next week and reach to full production later in the week. Pemex began inspecting platforms in the afternoon on August 22 but has not yet reported any damage.
Climate change is certainly changing people's lives in the Arctic. The rising temperatures in the spring and summer months have resulted in an astonishing demand for air conditioners. "The day Arctic people buy air conditioners, you go, 'Something's wrong here!'" She explains that Arctic homes and offices are designed for the cold and therefore do not lose the heat. "Two springs ago, temperatures hit 35C near my home town. Inuit elders had to wet their sheets with cold water in order to help them sleep because it was so hard to breathe." As a child, Watt-Cloutier does not recall wearing shorts or T-shirts in the summer or bathing in the river. "Today, we can go weeks on end at 25 to 30C when the community swim in the river in bathing suits."
Preparing Australian Agriculture for Rising Energy Costs and Water Insecurity
Conventional agriculture has evolved to the assumption that oil and gas will always be cheap. Large amounts of energy are used in food production making agriculture the third largest energy consuming sector globally. Most people would be aware of the diesel fuel requirement to power the machinery used in crop production. What they would not be aware of is that diesel use is only a small component of the total energy demand in primary production. It is in fact through the manufacture of nitrogen fertilizers used to fuel crop growth where the largest energy liability accrues. To put it into visual perspective, it takes the energy from roughly one litre of oil to produce one kilogram of urea, the most widely used nitrogen fertilizer. To grow wheat in Australia, the energy equivalent from roughly 150 litres of crude oil per hectare is required just to account for nitrogen demand. Then of course there are the petrochemicals and energy required for herbicide and pesticide manufacture.
Myanmar's junta continues arresting protesters, but makes concession on bus fares
Anti-government demonstrators in Myanmar faced more arrests and intimidation Friday, but their protests against economic hardships achieved some success as the government ordered a rollback of bus fares that had been hiked along with fuel prices.
More Bearish Economic Trend Negatively Impact Oil Demand
Despite the calls to open taps, OPEC continues to tread a cautious course. With the world oil demand projections put forward by various stake holders falling into a still more widening range, global economic woes coming to surface finally and the crude prices falling, uncertainty in the market seems steering the OPEC to maintain the status quo.Global markets are definitely in a spin, with some hinting at a recession down the road. Doubts about the global crude demand growth are now being circulated.
LATE IN HIS presidency, George Bush finally brought himself to lament the nation's addiction to oil. But neither he nor leading Democratic politicians have ever rallied the country to break its addiction to a more lethal form of energy: coal, which supplies half the nation's electricity.
Industrial Agrofuels Have No Future; Does Food?
Advocates claim that cellulosic ethanol has a positive energy return – that is, the magnitude of energy required for biomass production and conversion is smaller than the magnitude of energy displaced by the ethanol produced. And this claim has been carefully crafted to convey the idea that (a) cellulosic ethanol can replace fossil fuels, and that (b) we should be happy with this new technology, because cellulosic ethanol is an energy-positive fuel and therefore, the more we drive the more we save.This is clearly not the case. The positive energy return proposition assumes that fossil fuels alone are the limiting factor in the production of an agrofuel, and that all other factors are limitless, and therefore irrelevant.
GM tests engine that could raise fuel economy
General Motors Corp. says it is testing a new combustion process that could increase fuel economy in conventional engines by up to 15 percent.The announcement comes as fuel economy has become a increasingly important issue as gasoline prices have risen. Foreign automakers have captured a bigger share of the U.S. market in part by emphasizing fuel efficiency.
The World's Sole Superpower in Fast Decline
Yet there are other explanations -- unrelated to Washington's glaring misadventures -- for the current transformation in international affairs. These include, above all, the tightening market in oil and natural gas, which has enhanced the power of hydrocarbon-rich nations as never before; the rapid economic expansion of the mega-nations China and India; the transformation of China into the globe's leading manufacturing base; and the end of the Anglo-American duopoly in international television news.
Pitt envisions day when energy bills will be ‘useless'
Brad Pitt wants to make energy bills go away, and he doesn’t think that’s an outlandish pipe dream. In the second part of an exclusive one-on-one interview with TODAY’s Ann Curry, he showed how the new houses he’s helping to build in New Orleans will make a giant stride toward that goal.
Priority changes on green policies
"Congress is putting its money where its mouth is," said Lowell Ungar, senior policy analyst at the Alliance to Save Energy, a Washington coalition of business, consumer, environmental and government leaders. "They are devoting real resources to trying to address the problem of climate change."
Changes in human behavior blamed for new ills
A ballooning world population, intensive farming practices and changes in sexual behavior have provided a breeding ground for an unprecedented number of emerging diseases, the U.N. health agency said Thursday.
BP says it won't increase pollution
BP backed down Thursday from its plans to dump more pollution into Lake Michigan, but critics want the oil giant to ensure its promises are legally binding.Responding to a month of unrelenting criticism from politicians and the public, BP pledged it will not invoke provisions of a new permit that allows the largest oil refinery in the Midwest to release significantly more ammonia and suspended solids into the lake.
Aramco sells fuel oil at record high
"The strike price was quite shocking, to say the least. I don't think we have ever quite seen A961 done at premium levels before. It was quite keenly contested this time and Koch managed to pip everyone because I think they have some freight advantage," a Singapore-based Asian trader said.
Myanmar cracks down as protests spread
Myanmar’s military government quashed a new protest on Friday by pro-democracy supporters in downtown Yangon, as activists said the demonstrations had spread to other parts of the country.A group of 20 demonstrators, mainly women, had gathered near Yangon’s city hall to rally against a massive hike in fuel prices that has sparked the most sustained protests against the junta in at least nine years.
“They were arrested before they could do anything. They had just started walking,” said an activist who witnessed the incident.
ASEAN energy ministers gear up for ASEAN power grid
To battle the global energy price crisis, Southeast Asian energy ministers have agreed to form a regional ASEAN power grid and to work closely with the Organisation of Petroleum Exporting Countries (OPEC) to keep costs manageable.
German Biodiesel Industry Peaks, Trouble Ahead
Germany's biodiesel production capacity is set to rise to a record 5 million tons in 2007, but analysts have warned that the boom in the country's biodiesel industry is coming to an end after the industry failed to block the government from rolling back a key tax relief scheme in court this July.
An Israeli company drills for oil in algae
There may be a revolution blowing our way: The Israeli company Seambiotic has found a way to produce biofuel by channeling smokestack carbon dioxide emissions through pools of algae that clean it. The growing algae thrives on the added nutrients, and become a useful biofuel.
Innovation needed to replace aging bridges, reduce traffic congestion
We know that building new roads isn't the answer - there's no place to put them, for one thing. And there is no single solution that will reverse the growth in our local traffic congestion - this is going to take some fresh thinking and innovative ideas. Fortunately, San Francisco has no shortage of those.
Lukoil reportedly cuts oil supplies to Germany by one third
Talking to Dow Jones Newswires, Grigorev later confirmed that the shortfall was from Lukoil and several smaller oil companies, adding that it was not linked to any repair of the pipeline through which the oil is exported to Germany."Maybe they're looking for another market," Grigorev said.
A Lukoil spokesman declined to comment, but said a statement would be released in the coming days.
Sprawl exceeds reach of hydrants
When Robert and Tammy Weber bought their dream home in 2004, they didn't give a thought to the fact that the nearest fire hydrant was more than a mile away."Having the entire house burn down is one of those things you don't ever think is going to happen to you," Robert Weber says.
On July 17, that's exactly what happened. Three tankers of water couldn't put the fire out in their late 1990s subdivision house.
Is it more sustainable to live in the middle of a city or in the middle of the countryside?
This year, for the first time in human history, according to the UN, there will be more people on the planet living in cities than in rural settings. It is true that city dwellers have a much greater opportunity to reduce their transport emissions, say, by benefiting from better public transport networks. But is this cancelled out by the increased need of city folk to use, say, air conditioning in high summer? And what about all the food that needs to be imported?
Rule to Expand Mountaintop Coal Mining
The Bush administration is set to issue a regulation on Friday that would enshrine the coal mining practice of mountaintop removal. The technique involves blasting off the tops of mountains and dumping the rubble into valleys and streams.
Japan Seeks to Share Oil Reserves with Neighbors in Emergencies
Japan aims to implement a program that will allow countries in East Asia to share oil reserves when disaster strikes, The Nikkei learned Wednesday.As a first step, the Japanese government will begin negotiations for such a program with New Zealand. The Ministry of Economy, Trade and Industry believes that an emergency-oil-sharing program in East Asia, where demand for oil continues to soar, will help stabilize oil prices and the region's economies when shortages hit.
South Korean carmakers facing tough times, Hyundai says
South Korea's auto industry is facing increasingly tough times due to the strong won, high oil prices and sluggish domestic consumption, an executive of the biggest carmaker said Friday.
There is no road to a sustained, desirable human future that does not include enlightened self-sacrifice and voluntary simplicity as we learn to live well and sustainably in a post-modern age. The obstacles include vile talking heads such as Rush Limbaugh and Sean Hannity; that as evil incarnate stupidly and in an ill-informed manner defend a system careening towards planetary self-immolation. And in my opinion only slightly less damaging to long-term planetary prospects are Madonna, Al Gore and Leonardo DiCaprio -- knowing there is an urgent crisis, using their formidable skills to communicate it to others, but showing unwillingness to lead by example and check their own opulent conspicuous consumption.
Renewable energy can save East Asia two trillion US dollars in fuel costs
Shifting to renewable energy could save countries in East Asia as much as two trillion US dollars in fuel costs over the next 23 years, or more than 80 billion dollars annually, environmental group Greenpeace said Thursday.A shift from oil and coal could also reduce carbon dioxide emissions by 22 percent in the same period, it said in a report released to coincide with a meeting of Association of Southeast Asian Nations (ASEAN) energy ministers here.
Urgency and Global Warming: An Interview with Martin I. Hoffert
There will always be those who challenge disturbing facts no matter how good the science. Many Americans don’t believe in evolution; some geologists don’t accept plate tectonics, and some think the NASA Moon missions were a hoax. Self-interest can also create cogitative dissonance between what one wants to believe and what is. Some smokers kept insisting smoking doesn’t cause cancer or heart disease after the Surgeon General’s Report. An African leader who perhaps can’t afford proper drugs holds that the HIV virus doesn’t cause AIDS. Should people die from disinformation and delusions? So what if some don’t believe in global warming? They’re wrong. Survival of high tech civilization is at stake. Time to stop dithering and get serious about policies that could make a difference.
Bush climate meeting must stay within UN fold: official
The UN's top climate change official said Thursday it was crucial for George W. Bush to keep efforts to curb global warming within a UN framework, as the US president prepared to host a meeting of the world's top carbon polluters."It is important that the United States is bringing together the group of major emitters to talk about the kind of reductions they can commit to," said Yvo de Boer, head of the United Nations' Framework Convention on Climate Change (UNFCCC).
"But what is even more important is the US indication that ultimately their intention is to bring this back to the UN process," he said in an interview with AFP.
Climate fight must be won in developing nations: UN
More than two thirds of cuts in greenhouse gas emissions needed by 2030 to fight climate change will have to come from developing countries, the United Nation's climate change secretariat said on Thursday.
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A new Round-Up has been posted at TOD:Canada.
With arctic sovereignty increasingly in dispute due to potential oil and gas discoveries in a warmer world, the various interested parties seem almost desperate to stake their claim (and some are apparently more desperate than others). Meanwhile sovereignty debates continue further south at the Montebello SPP summit.
Danny Williams (one scary poker player), finally suceeds in securing a deal on the Hebron field after calling the oil companies' bluff. They said they had plenty of other opportunities if Newfoundland wouldn't play ball, but in a peak oil world Williams said they'd come back to the table, and they did.
As for the developing credit crunch, risk appears less and less contained over time, as international concern grows over the highy-rated 'assets' derived from the American mortgage market. Even money market funds are beginning to experience a flight to quality.
Russian arctic images 'from Titanic'
The lunar landing conspiracy theorists are going to have a ball with this. I'll bet they are all huddled around their Buck Rogers tapes looking for clues right now. LOL
this concept of drilling the north pole demonstrates just how bizzar our consumption has become.
.......buy, consume, marry and reproduce.... do not question authority move to a vinyl sided house in the burbs........ drive an suv consume...... c o n s u m e..... c o n s u m e
Re: Russia cuts exports to Germany by 1/3
This may be the first big time real world confirmation of WesTexas's Export Land Theory. It may also signal that Russia will shortly be unable to export much at all.
Bob Ebersole
I believe you are right Bob. I would like to add that if Russia does have excess oil capicity to export, they will probably use it to supply consuming members of the SCO, not members of NATO. More political 'above ground' effects showing up. This practice will not effect WTs ELM overall numbers but could increase political and economic tensions dramatically between members of the SCO and Nato.
River,
Considering the horror and distruction cause by the German invasion of the Soviet Union 64 years ago, I wouldn't doubt there is a little lingering resentment making it easier to cut the Germans first.
That's why the Iraq war is going to be our Achille's heel going forward. With the two million deaths attributed to the US/UN embargo in the 1990s and the deaths attributable to this war, as soon as the troops leave we'll never get another drop of Iraqi oil.They'll just choose to do business with the Chinese or Pakistani's first.
The world energy dynamic has totally changed as we peak in production of liquid hydrocarbons. Demand has begun to exceed supply for the last couple of years, oil prices trending up without a big fall just proves the point. If there were a cheap substitute news of the substitute would already be circulating in the crowd that hangs out at TOD. Of course absence of news or a rumor isn't scientific proof, but its a damn good indicator.
Somehow the military industrial complex cheerleaders don't recognise that our past and ongoing behaviour counts. If I were a Moslem in the Middle East I'd be forced to conclude that the US hates Islam. We unswervingly support the most agressive elements of Israeli foreign policy and commit what can only be discribed as genocide, and that's not going to count in our business dealings with them? For the first time in our history except the extermination of our Indian tribes we openly support and encourage torture and they're not supposed to notice?
Once our Army leaves Iraq I expect an embargo. Its the only way the world can defang the US military. That's why we have to start mitigation now, and its going to have to be on a personal basis because our government is so deceptive, paralised and disfuntional. Bob Ebersole
Glad to see Americans coming around to this perspective.
American unilateralism and the misguided attempt to export the American way of life at the end of a rifle does nothing more than eliminate any last vestige of sympathy for America and her problems.
After 9-11 a French newspaper declared "we are all Americans now." America's response was ridicule and rejection.
The current headlines should read "we are all Venzeluan's now." Better that then suffer the fate of the Iraqui people at the hands of Saddham Bush: 60,000 lives and still counting.
A lot of Americans are dismayed at what the bastards are doing. I thought of leaving the country when Bush was reelected, but I decided it would be better to stay here and work to defeat the scumbags.
Dear New Account -
I don't know where you live, presumably outside the U.S. To me, your comment seems typical of people who don't realize how much deeply felt opposition there is to this Administration and it's policies.
Problem is, the Bush Administration and their supporters have perfected the "shout louder" strategy of so-called public discourse. That has made it exceedingly difficult for dissent to be seen and heard.
I have never heard that expression before, but it is very appropriate!
...60,000 lives and still counting.
Were it only so. You are missing a zero at the very minimum.
The Bush administration is an embarrassment to every American, with the exception of our disloyal Christian Right. Please don't imagine he speaks for us - 75% of us would like him out of office next Monday if not sooner.
9/11 was a terrible event brought on by the Bush administration's stupidity at the very least and perhaps studied indifference to the deaths of a few of the "little people" in order to further their ends.
We had a golden chance to declare a new age on 9/12/2001. Instead we set the clock back a hundred years so George could have his chance at the so called "Great Game".
The character the Bush administration has displayed is more appropriate for a rickety west African kleptocracy than the world's last surviving super power.
Please forgive us ...
Absolutely Bob, when a government fails to act in the best interests of 98% of its constituents, how can it claim legitimacy? As far as I can tell our government is now serving the interests of the American elite (2%) and the multinational corporations...one and the same thing. To make matters worse the opinion of ex-cia analyst Ray Mcgovern is that Rove stepped down because he doesnt want to be around to explain why we invaded Iran. Tony Snow is reportedly leaving for the same reason. Seems that Cheney is going to get his way once again.
http://www.antiwar.com/mcgovern/?articleid=11481
River,
The other explanation is that Rove was thrown off the sleigh to the following pack of wolves. They may think he's about to get indicted for the CIA leak.
I don't know what we're going to do. Its too late for an impeachment, if you recall, Watergate took more than a year and those crazies are talking about tactical nukes in Iran now. In my more paranoid moments I think the want to declare martial law and stop the election, because they'll be called to justice for war crimes, and nukeing Iran would give them the justification.
I just hope we didn't permanently loose the Republic when Gore failed to contest the Florida vote.
Bob Ebersole
"Its too late for an impeachment..."
This sentiment gets such a pass. We let him walk away, and all the transgressions he has committed become precident.
They say the next congress will get nothing done in the busy election season. Hogwash. Turn up the dial on investigations regarding anything he has done innaapropriatly and for gawd's sake, please get into writing the exact powers and authorities of the Vice President's office.
I don't care if the investigations and possible trials last well into Shrub's retirement. Pull him back from Paraguay or wherever the hell he slinks off to and ride his ass as long as it takes to clear his mess up.
It's not too late for impeachment. Impeachment takes precedence over all other business in Congress. And shutting down all other business in Congress would be better than continuing Business As Usual - a nice side benefit. The real reason we won't get impeachment is that Democrats fundamentally agree with Republicans in the defacto class warfare/coup that is going on.
I just purchased some solar PV today and had the pleasure of myself and the vendor being run through a terrorist database as part of the process. It's my @#$% money - why does the bank have to play informant? Because both Democrats and Republicans in the last days of this empire agree on the clampdown; it's required for the transition to serious tyranny where no transactions will be allowed except between approved entities.
We won't get impeachment because Democrats would have to appear like they were serious about it when they are serious about not doing it because they want the powers. Time is not the problem.
cfm in Gray, ME
You can impeach officeholders after they leave office. The purpose is to allow criminal prosecution for actions taken under the color of authority.
Exactly right, good for you. This is yet one more thing about our constitution that has been conveniently left untaught and ignored, so most Americans don't know about it.
Rove's potential indictment hinges on some small game played in Alabama over a House seat if I recall correctly. I do so hope that is what is happening, and now if the Democrats would only find the nerve to do what is needed with the rest of them.
If the current crop of Congresscritters were in charge in 1944 our soldiers would never have climbed those cliffs at Normandy ... "Too dangerous!" "We'll take casualties!" "Maybe the Nazis will get nicer as their regime ages!"
"maybe the neocons will get nicer as their regime ages " !
Interesting, this pretty much confirms my assumptions. This also confirms that a high quality aggregator of open source + expert analysis like The Oil Drum is a pretty good resource indeed.
I've written a dozen letters to my Senators about this over the last six months and still the war preparations continue.
Our inevitable war with Iran will ride in on the back of a false flag operation in the continental United States. Yes, the Bush administration is low enough to kill some of our own and blame it on outsiders so we can attack the Iranians.
We fought fascism to its death in 1945 ... only to take up the mantle ourselves sixty years later.
I think that government in Russia sees WW2 as Nazi invasion. Currently Germany is a major economic partner for Russia (probably the biggest economic partner). Putin's relation with previous German chancellor were best ever. I do not think there is any resentment toward Germany.
It's simply an economic actions. I doubt there is any politics or personal feelings involved.
Germany is not doing a thing for Russia that China cannot do more cheaply. Replacing Germany as a major trading partner with China would not be a real big deal. China is willing to sign long term oil/gas deals with Russia...the same deals that Germany and the remainder of Western Europe are complaining about.
I do not think that engineering in China is comparable to German, but that's just an opinion.
Russia is selling it's energy to both Germany and China now. At this point the party that pays the highest price will get the energy and goods will be bought from the company/country that has the lowest price. But say in case of trains I do not think that China can currently compete with Siemens. For subway building Russia buys some specialized machinery from Germany (I presume becasue it's the best equipment for the money). And so on.
My only point was that the discussed action was not political but economical.
Perhaps we should agree to disagree... :)
But maybe Russia needs to consider its relationship with Germany in light of Germany's power in the EU and NATO. If the US is really engaged in an imperialist scheme to encircle Russia, then Germany must cooperate with the US on everything everywhere. Obviously this is not quite the case right now, and the establishment of a permanent EU dependence on Russian energy, facilitated by Germany, can threaten the viability of a US-run NATO, which really should have been retired when the Cold War ended.
Putin speaks fluent german and has spent several years as KGB agent in former East Germany.
Does anybody know how many pipelines go from Russia to the EU? The pipeline which is now delivering less is probably a larger one.
cheers, mr
Only if SCO members will pay more then members of NATO. Oil companies owners are way too greedy to subsidize other countries.
hifisoftware,
82% of the world's oil production is supplied by national oil companies, not big oil companies. And if you think that the 75% of consumption in the world that is supplied by refining that oil can be replaced or substituted overnight, then you've been smoking unrepentantcowboy's products.
While you are at it, you might as well check out the ownership of the big multinational oil companies. You will find that they are 3/4ths owned by institutional investors, i.e. pension funds, mutual funds,and hedge funds. That's the greedy bastards you just criticised, all of us. Its really easy for people to scapegoat and demonise other people instead of looking in the mirror.
Go right ahead and keep on your merry, self deluding track. But don't say I didn't warn you.
Bob Ebersole
You are making the mistake of assuming that the people running the NOCs are not as greedy as those running the IOCs. OK, in economic terms it is not called greed but "persuing-self-interest-that-brings-to-common-good", same thing.
The difference in ownership is only relevant from political perspective - a NOC serves as a guarantee that the pie is shared within a certain economic and political circle. Essentially NOCs are the way poorer countries protect their resources by being taken over by IOCs on the Wall Street. All IOCs are based in the same countries that also control the world financial markets... Hardly a coincidence IMO.
ARAMCO,
the worlds largest producer and the home company of the Saudi Kings is a National Oil Company. So is Lukoil, the Russian oil company and the world's second largest producer. Royal Dutch Shell is owned 25% by the British Royals, and 25% by the Dutch Royals. PDVSA is the oil company of Venezuela, the country with the second highest reserves after the Saudis, is a national oil company.SINOPAK, the China Company that sells all of the Chinese oil products, is a national oil company. AEGIP is the Italian national oil company.
In US refining, CITGO is owned by PDVSA. Motiva and Excelron, are 25% owned by the Saudis. You seem to forget that the Saudi's owned 1/2 of Texaco's Refining at the time of the merger with Chevron.
LevinK, you are talking through your hat. Free markets don't exist in world oil except in the US, Canada and parts of Western Europe like the North Sea. Like I said, its over 4/5ths National Oil Companies, and 3/4ths of the "free market" oil companies are owned by mutual funds and pension funds. If you want to scapegoat someone, go look in the mirror.
Bob Ebersole
I have no idea what caused the tone of your response. Neither where you got the idea I'm "scapegoating" someone. The funny thing is that you are not arguing me and essentially we are saying the same things.
LevinK
I guess that I consider labeling behaviour as greedy to be a moral criticism, part of the eternal self righteousness that says a hardware store can mark up a screw from a penny cost to a nickle sales price, but that oil producers can't make a profit when they take enormous risks.
I don't work for big oil companies and I am far from their greatest fan, yet I get tarred and feathered with the same brush and sack of feathers.
Bob Ebersole
This is a complex discussion. On one hand yes, anybody (not just the oil companies) should be allowed to be rewarded for the risks they take.
On the other hand there are those lines that don't need to be crossed. And we are supposed to have mechanisms to counter it when people/corporations are crossing the lines - when they are harming the common good for their self-interest.
My "greed" labeling is based on a thing I consider a major flaw of conventional economic theories... They always assume that "normal" greed is good and that the players will play by the written and non-written rules and all will be happy and well. While in practice this rarely happens so... What happens in reality is that by uncritically endorsing the "normal" greed we have created a very weak ethics in which millions of people are encouraged to cross millions of visible and invisible lines every day... Should we be surprised by the outcomes?
Now if I am asked to say whether the national or private oil Co's are harming the common good, I'm more inclined to say yes than no:
1) First they are (a vital) part of the common establishment which is currently running the empire we live in and is slowly turning it into a fully functional police state
2) As energy companies they should be the first to ring the bells of oil depletion and the externalities FFs are causing... I know it takes quite a moral strength to do that, but it is in fact their duty to inform the public about what the product they are selling will/may cause to the society. And no, couple of ads on the TV don't do it; it will take the only thing that works in this country - lobbying and some serious money spent so that we can fix these problems. And they know it.
Of course they should be ringing the alarm bells. But big oil companies are made up of people, and most people do not have the wit to understand the situation.And of the ones that do, probably 3/4ths are either in denial or lack moral fiber. I'd like you to consider that M.King Hubbert did his work on Shell's payroll. A number of the people here work in the oil and gas business, and a number who are a lot more influential than I are doing some pretty loud ringing-I'm talking about gentlemen like Matt Simmons and Boone Pickens, who spread the message every day, or Robert Rapier who is the go to guy now for the media on cellusitic ethanol, or WesTexas who has gotten on TV and the radio a number of times, Euan Mearns, SeismoBob, oilrigmedic, mudlogger-and Im sure I'm leaving plenty off.
And we're not all greedy,either.Yesterday on Drumbeat I gave away 3 excellent tertiary development prospects, and I did it for a reason. I want some geologists around here to go get them and start making some more. If they want to hire me as a land consultant and pay me a little override, I sure wouldn't turn it down and can save them months (hint,hint) but, they aren't B.S. they are in the middle of what has been the best producing area of the U.S. and that's where you should look for real tertiary development deals. But, a major oil company can't make money on those kind of deals, too much overhead, and an independent can get really fat. but, the other reason I did it is I am very serious about the alarm I'm trying to raise, if we don't get domestic production up, and consumption down, the US as we know it is doomed. And if we don't get climate change in hand, the world is doomed.
When you trash mouth the oil business you are trashing the people who have brought you gasoline for years at less than the price of bottled water at the same convenience store. People who have made it possible for the modern world to have a population problem. And as Robert has said before, most of them are good, community minded, hard working and try to be patriotic and good citizens of the world. Yes, we have some sociopaths and arrogant fools that manipulate the political process.
Wouldn't you rather have the oil business people on your side? I suspect most of them will be if you don't alienate them and threaten them with unjust taxes and impossible to meet environmental objections. For example, the three projects I mentioned are very well suited for CO2 tertiary development. The Houston area is the biggest concentration of CO2 producing industry in the world. Is Gaia trying to whisper a little in your ear? How about a little synergy and synchronisity people!
Come to the ASPO-USA Conference October 17-20th in Houston. Jim Baldauf, the President of ASPO, and an old enviromental activist is in the oil business. He's been working hard to get industry coverage and participation. But please don't blow it with the angry accusations of greed or malice. That kind of stuff doesnt work-look at Greenpeace. Come, be open minded and lets see what we can actually accomplish.
O.K., Rant Over. Bob Ebersole
Again I don't know why you thought that I was picking on the oilcos. I suspect I hit an open wound with the greed remark, but mind you if I was trying to pick on them I would have been way more specific, and much more expressive too.
Like I said I raised the greed question just to point out that sometimes maximizing the self-interest turns into pure greed, and what is even worse - sometimes people are unable to see how this happens.
Personally I don't think that oil companies are worse or any different for that matter than any other companies in this country. The overwhelming majority of the people working in them are good people doing their job with good intentions with a justified dignity they are helping the society.
And here lies the beginning of the problem I think - even though most people in a organisation may mean well in their own world, on a systematic level their actions may lead to adverse effects. The road to hell is paved with good intentions they say... Here are some chains of unintended consequences:
1) Oil people doing their job well -> US becoming a major oil producing country -> US building Suburbia and getting stuck in it -> Climate Change and Oil Wars ahead
or,
2) People wanting affordable houses -> Banks giving easier and easier loans -> Credit crunch/recession/inflation ahead
3) People chasing American Dream and free enterprise -> First comers getting rich -> US building Corpotocracy -> US maintaing Corpotocracy and its supporting Empire by exploiting the Third World and trashing the environment
All of these chains of events had "good intentions" at their initial step. But somewhere in the chain of events it turned in the wrong direction. The people at the top who are supposed to see the big picture, and saw what was happening were supposed to "ring the bell" and stop it. Did they?
I hope you see my point. You and the people around you are doing what you can, but at the higher levels things obviously are rotten... and the higher you go the more it smells. The funny thing is that I believe to huge extent even those at the higher levels like CEOs are stuck with the status quo - you know shareholders, expensive wives etc. :)
LevinK,
Of course good intentions turn bad, often. The problem is that we as humans are meant to examine our own behavior and the effects we have on the world, and judge ourselves. If you want to consider that the will of God, fine or just some quirk in our software.But, the unexamined life is not woth living...and where did I hear that before?
Do you think that Osama Ben Laden started out wishing to be a monster? And the answer is of course not. He was an idealistic young man who thought he found some kind of easy answer in the Quran so he could live his life following Allah's will. Unfortunately, he had enough money and attracted enough syncopants that he ended up with his horrible ideas enforced as well as the good ones. He wanted to help his fellows free themselves from the Russian invasion, and when they were whipped decided to go after the Western countries who were destroying the purity and strenghth of following God's will (That's the meaning of Islam) and the next thing you know, he's a monster. But have you looked at the joy and happiness in his eyes on the tapes?
Of course he's an extreme example, but we see others all the time. Confucious said that we need to examine our lives by the effect we have on others, and most no shit spiritual leaders rather than monsters say the same thing. I'm pretty much a true agnostic-without knowledge-but I've studied this kind of thing for many years, 12 hours of theology and 15 of philosophy at a Catholic Liberal Arts University, plus read a whole bunch and prayed a whole bunch. As I said, I've concluded I'm without knowledge, But what happened to Ben Ladin happens to others, and the very bright Type A young men who grow up to become board members and CEO's of major corporations are no different. They are mostly surrounded by syncopants (thats ass kissers in Texan) who reenforce their bad ideas as well as their good ones. This happens to political leaders,too. Dick Cheney didn't wake up and say "I'm going to be out of control and threaten the whole world while destroying the United States." But by his failure in self-examination in light of the effect he has on others, that's whats happened.
One thing about shocking events, and we have several in the course of any human life-is that its a wake-up call to examine our own behaviour and a call to change. That's global warming and the peak. And one of the strands that I've tried to separate and reweave is that I need to change my behaviour first, to try to conserve personally. And another is that I'm supposed to try to really hear what someone else is saying and try to act accordingly. That no matter the cause of conflict, I'm wrong when I engage in it. That's why I make these pleas to listen to each other, to try to see our commonality and work together.
This is an open website, and we've got people visiting here for all kinds of reason. From the people who just want to figure out the next stock play, to people who just want to sell you something, to people who want to convert others to a point of view and others who want knowledge or actually have a good solution or two. The bright ones often hang out, and I have real hopes we can find a solution so that the human race can live another few minutes for the next crisis. i do hope we can all be courteous, but i can be baited into reacting too, as you probably noticed on this thread. I apologise for being a little sensitive. But i'd like an apology for stereotyping oil business people.
Bob Ebersole
Bob, I'm sorry that I took a cheap shot by associating oil businessmen with greed. I can assure you that I did not mean it being directed against oil people in particular, just a general rant against the status quo and all those little compromises paving the road to hell... And noone is insured against taking that road - be it an oil company executive, politician or a burger flipper. Even I myself am currently participating in a goverment project which I can easily see is wasting millions of taxpayer's money (like, unfortunately most of our gov projects do for a whole complex of reasons). I am not exactly proud of it but I can only hope that by doing my little part right I could at least reduce the damage, if not make things right.
With all the rest you said I can only agree and have little to add. If only we had not slept through all the self-examination classes of life we'd be living in a much different world now.
In all of your examples, the real problem is that the government didn't do its job. It is the government that is supposed to step in and limit the harm when the "invisible hand" fails to keep things in check as it is magically supposed to.
The reason why we didn't get effective government intervention is because the US is in thrall to an anti-government ideology. We as a society systematically devalue public goods and overvalue private goods. The corporations bear a lot of blame for this, but media, education and even the arts and religion are also complicit. It is pervasive and systematic, and as a result we have now a horribly dysfunctional government.
To point out what I mean, just consider that to advocate public policies that would be considered mainstream in many European countries (e.g.: high gasoline taxes, subsidized development of rail transport, universal health care) would put one well outside the mainstream of both major parties. Indeed, one advocating such policies could hardly even get a hearing, you are dismissed as being a leftie extremist.
The thing is, in many other countries, that's not the leftie extremist position, that's the CENTRIST position. The real lefties go quite a bit farther than that.
Most Americans have no idea how extremist their country has really become over the past few decades.
SNAAARRRRRLLLL!!!!
Tosh. Schtuff Und Nonsenz. Bull-poo. Bob, I've been amused & enlightened by your postings on the US Independent sector, but I'm not letting you get away with this. Please post a link to some documentary evidence, or retract (or at least refrain from propagating this silliness). And don't go all sly and coy and surely you aren't naive enough to believe that silly old 20-F - they're all in it together, the Dutch and British Royals and Big Oil and the SEC, CIA, FBI, NSA, KGB, MI5, in fact everything from AAA to ZZZ, oh yes and... and... and... the Aluminum Bavariati and the TimeDwarfs from Zeta Reticuli and the Justified Ancients of MuMu, I tell you... on me.
My evidence here >>> http://www.shell.com/static/investor-en/downloads/publications/20f/2006_... page 76 (page 82 of the PDF).
PUD
Plucky Underdog, I don't have documentation on Shell ownership. I think I got carried away on that one. I'm not a conspiracy theorist, either. I think most people can't keep secrets well enough for big conspiracies. I don't think that there large groups of people huddled together very often.
This argument I've had on this thread is a good example, I don't think there are large groups of people trying to organise with the specific agenda of destroying big oil companies. Sure, there are some real antagonists in a lot of different groups, but its not a conspiracy. I think a lot of the blame comes out of a cultural bias and people not modifying their views as the facts and circumstances change.
In 1960 the Major Oil Companies, the Seven Sisters really did control world oil markets and prices, and they did it through controling the Rail Road Commission of Texas and therefore the production policies of the world's swing producer, Texas. And they were just aas heavily involved in Democratic party politics as they are now with the Republicans. Here's an interesting fact-Joe Kennedy, father of Jack, Bobby and Teddy Kennedy was a big investor in the projects of L.E. Modisette of Houston, a Wildcatter. He owned half the stock in his company, Mokene Oil and the families owned a thousand acre ranch in Rockport together. There's nothing wrong with that, it was an above board deal, but it's influence. The way I know it was my youngest sister was close friends with one of Modisette's granddaughters and visited there a lot, but that was 20 years after the period. And I think that's one of the reasons that Senator Lyndon B. Johnson was picked for Vice President, the good ol' boy system.
But times have really changed. The world growth in oil use is phenominal, and governments all over started oil companies. But, this is below the horizon of most people in the US, and the multinationals haven't really tried to tell what's happened. I think a lot of them relish the idea that they have a lot of power and influence, and don't want to admit that its declined since the 1950's
But, times have changed. People in the U.S. haven't looked much at the real ownership now, and the whole oil business is called greedy ripoff's and sinister, and as I noted, we're all getting tarred and feathered with the same brush and sack of feathers.
Bob Ebersole
hifisoftware, do not be misled. Russian oil production might be nominally in 'corporate hands' but in reality Russian oil goes where the Russian Government wants it to go. The purpose of the SCO is to created a mulitpolar world and if the use of oil is what it takes to create that world then the SCO members that are oil producers will use oil to get it done.
To me Russian government is one big corporation. It's goal is to sell goods at the highest price. So oil flow where prices are highest. It worth noting that Russia was always willing to sell it's energy to anybody (regardless of state of relations) but have always worked hard to get maximum price (as any company does).
Owners of independent companies or top managers at state companies (or government officials at any level) depend on good profitability to increase their wealth. None of them would be interested in say having a fight with their wife becasue they can't afford to buy another house in France or yacht, because they decided or were forced to sell oil at lower price. Its all about money. Russian government is also run by people with the goal to make the most amount of money. Money is what drives everything now in Russia, be it government or corporations.
In any case China (SCO member) is rich enough to pay for oil at market price. There will never be shortage of oil, just as there is no shortage of say huge diamonds. It's the price that will price consumption out of the picture.
So it's greedy to sell your product to the highest bidder? I suppose that given the choice between two identical jobs, you would take the one with lower pay? Or If you were selling your home, you would take the lowest bid instead of the highest? I don't think so. Replace greedy with rational, and your sentence would make a lot more sense.
If you equate rational with financial, you are correct. But you might want to consider whether or not that formula (rational = financial) isn't what got us into this mess in the first place.
I do not see anything wrong with being greedy. Economy sometimes is described as a fight between greed and fear. I agree with you that asking the highest price is the rational thing to do.
There's plenty wrong with being greedy, but it's probably useful to understand what is meant when someone uses that word. In my view, the difference between greed and self-interest is that greed is purely based on acquisitiveness and immediate material gains, those being frequently equated with security or success. I don't feel it's wrong to make money, set yourself up, but when it's done as the solitary goal, either for an individual or a business, without a broader view for the needs and balances that keep the overall system or environment functioning, then you get an incomplete person or company whose ambition acts as a leech on the system, not a boon.
It's no surprise to see gluttony so championed in the business sector, since we've risen through decades of cheap energy and slave-labor, making someone's monetary schemes look like it was magically 'generating its own power'... who was the fat kid in Charlie and the Chocolate Factory? The oompa-loompa song about him would fit nicely here..
Bob
greed is good.
Someone had to do it.
What oil company owners are you talking about? No 'oil company' in Russia will do anything that is not approved by the Kremlin. Read the link below to find out what happens to owners of Russian oil companies that fall out of favor with Putin. Oil is a weapon in the era of PO and Putin is a very savy leader...He intends to use oil to bend Western Europe to Russias, and the SCOs, ends. Did you miss the speach that Cheney made accusing Putin of exactly what I have said?
http://www.washingtonpost.com/wp-dyn/articles/A44182-2005Apr11.html
I absolutely do not buy your statement that "bend Western Europe to Russias". But have you really used Cheney statement as a proof of something? I have never seen more spineless, lying, selfish person (and so on and on) in position of power.
In any case Putin can only be in power if owners of large companies support him. There is no way a single man can lead in the direction that is not aligned with the direction that richest people want to follow. And these people quite often live outside of Russia and definitely do not care much for "bend Western Europe to Russias". It's all about the money, not ideology. It also the same with Cheney by the way. Cheney could not care less for stuff like democracy, but he would kill for a buck.
I believe that ultimately it's not about money or ideology; it's about power (to risk sounding Nietzschean). Russian leadership is not that interested in making a quick buck, or rouble. What they want is a position of power, and with their energy resources they know that time is on their side, as long as they play their cards wisely. And it seems to me that many Europeans are beginning to realise that.
Finlandization is starting to look more and more like a viable foreign policy choice to many countries.
Of course it is for power, but why do they need this power?
What it really is, is to have the power to get equal treatment and a fair share of the pie. Just like in life - everyone is fighting for his/her place under the sun. Everyone is doing it - the Russians, the Chinese, you name it. The key here remains what a "fair share" means. For the OECD countries fair may mean 20% of the world population using 2/3s of its resources, while the Russians or Chinese may have different opinion about this.
So far the West has been successful in getting disproportional share of the world resources with the help of the following:
1) It's monopoly over the world financial system, giving it enormous capital leverage
2) It's monopoly over military power and when/where to use it
PO threatens to destroy 1) by shifting wealth to developing countries... I hope we do not resort to military power trying to maintain it.
Russia is not the US. Your statements are true for Bush/Cheney but they don't apply over there.
Read Anna Politkovskaya's last book "A Russian Diary" which was released after she was murdered on Putin's birthday.
Wealth does not equal power in Russia the way it does over here. Mikhail Khodorkovsky's wealth was no protection. Real power comes from controlling the military, the police, the secret police, the judicial system, ... I doubt there are many Russian businessmen still willing to oppose Putin. If they do they will be arrested or killed.
Although our media still portrays Russia as a democracy, it has almost fully reverted to a totalitarian system.
maybe our preparation for a post peak world should be to learn how to live like a commie instead of how to grow our own food.
We shouldn't assume that all poor countries are unable to pay for their oil. China is relatively poor, but it's got vast amounts of cash. It may not be how rich your country is, but how productive your workers are. The productivity of a barrel of oil shipped to China is large enough to make it worth bidding high, because the Chinese are willing to make that sacrifice to keep expanding their factories and taking over more world markets - even though we are told that barrel in China is used less efficiently than in America, where it goes to driving debt-ridden Americans to artificially-valued activities. Now imagine that same process occurring in Mongolia, Kazakhstan, Tajikistan, etc., as Chinese investment pours in. The productivity of the workers there will explode, and they will function as extensions of China, Inc. That's worth some oil. And hey, China can always lend them the bucks in exchange for future considerations...
I posted this story just at the end of the previous Drumbeat.
I think there is a potentiel big news behind this curtailment..
The way I read it...
It sounds like there is a reduction to ONE refinery and that refinery has approx. 10% of the capacity for Germany.
Still not great news, but not as shocking as the headline would suggest.
Did I read it wrong?
The Lower 48 post-peak decline in production was similar to a commercial airliner gradually descending for a landing.
An oil export crash--especially in regard to Russia (given their advanced state of depletion)--is more akin to a terrifying near vertical dive into the ground, e.g., the 60% annual decline rate in net exports that the UK showed from 2000 to 2005.
Based on HL:
All three countries, accounting for about 40% of total world net oil exports in 2005, showed 5% + increases in consumption from 2005 to 2006.
The amazing thing to me is that declining net oil export capacity is not the #1 story in the world.
"Cut thy spending and get thee to the non-discretionary side of the economy."
Two stories that I posted yesterday (I assume that the 6.7% decline in Russian exports refers to exports to China, I never could find the full article):
Sinopec Seeks Middle East Oil as Russian Supplies Run Dry
The Moscow Times, Russia - Aug 8, 2007
I wonder if higher Russian oil export duties serve a twofold purpose: (1) To raise more money from recently declining oil exports and (2) To serve as an excuse for lower exports.
http://www.themoscowtimes.com/stories/2007/08/23/042.html
Rosneft Buys Local Crude Oil
The Moscow Times, Russia
The article states:
That would make no sense at all. They already have a pipeline. Why would they look for a more expensive way to ship the oil, via tanker, to someone else? If they are shipping less oil through the pipeline, the most likely reason is that they have less oil to ship.
But one third is a really hefty cut. It is unlikely that production has dropped that much, that fast. I guess we will have to keep guessing until the promised statement is released in "coming days". And we may have to keep guessing even after that.
Ron Patterson
I guess we will have to keep guessing until the promised statement is released in "coming days"
I predict that we will be guessing after the promised statement as well.
Best Hopes for Honest PR (and World Peace, Nuclear Fusion, Interstellar Travel, a trash free Mardi Gras and free sarcanol),
Alan
Actually it can make sense. Russia oil is usually sold at discount. Recently there have been some activity to remove that discount. The first I saw this I immediately though that Russian oil companies are possibly looking (or already found) another buyer willing to pay a price closer to the price for other grades of oil. To me it's clear that it can't be related to depletion (depletion does not happen so fast as to drop by a significant fraction in just few days), so there must be something else at play here.
And they have to pay transit charges to Poland and Belarus. Earlier this year the pipeline was shut down for about three days because of a dispute over the fees with Belarus.
But it’s not the fist time Russia did not fulfil it’s contracts, just look at Russian gas exports to Italy earlier this year. (Sorry no link)
hifi, quit making sense on here ;)
UK net exports, from 2000 to 2005, declined at about 5% per month.
If, as I expect, Russia soon starts showing a 10% annual decline rate in production and if their consumption continues to increase at about 5% per year (at least for a while, as oil prices rise faster than net exports drop), Russia's net exports would drop by about 25% per year over a five year period.
Note that the model suggests that the decline rate in net exports accelerates from year to year, as the decline progresses. So the decline rate would be less than 25% per year at first, more than 25% per year later, during the five year period.
Edit:
Just got an e-mail from a European e-mail correspondent who indicated that monthly year over year Russian oil exports to virtually all non-CIS countries are down 5.5% (7/07 versus 7/06), with more reductions in oil exports to come.
Note that when Russia talks about year over year builds in exports, they talk about cumulative (seven months production) year to date comparisons.
If Russia showed an average annual production decline of 10% and a 5% rate of increase in consumption, their first year decline in net exports would be 9%, with the decline rate accelerating with time.
Door #1: We can have an infinite rate of increase in the consumption of a finite energy resource base.
Door #2: We cannot have an infinite rate of increase in the consumption of a finite energy resource base.
Take your pick.
I wonder how many times my ELP advice that people should live on half or less of their income has been criticized by the infinite growth crowd.
As I have said before, while the net oil export crash will be dangerous and probably deadly, it will be vastly entertaining (as long as the Formerly Well Offs are not shooting at me)--as the infinite growth crowd confronts the reality of finite resources.
I think that we can take the five stages of grief and simplify it into a three step Peak Oil process: DAA--Denial; Acceptance; Action.
Actually it´s DNN - Denial, No acceptance, No action :-)
Dear Jeffrey,
ELP is probably the best thing that ever happened to me. Yeah, ELP just happens! (besides beating cancer; otherwise I'd have been dead, obviously)
I'm pretty confident that my family will make it through Bob Shaws' bottleneck, thanks to ELP. It will not be easy, though, but we're much better prepaired than the other 16.5 million inhabitants of The Netherlands. Now, one problem remains: where to get a gun?
What good is a gun - to be safe in such times you need a like minded community ... perhaps with guns.
I have a bunny gun and that is all ... being a seed crystal of information and material for the needed change is better positioning than being the neighborhood marksman.
In this article, they say it is 50kbpd down, not so much in fact.
Russia cuts oil to Germany amid LUKOIL trading row
http://asia.news.yahoo.com/070824/3/36w5y.html
Good link. I like this quote:
There are lots of reports about problems with Russian exports over the past 60 to 90 days, see the article about Russian exports to China "running dry."
I think that we are seeing the early warning signs of a system under stress. They are having trouble trying to keep their exports up, and declines are popping up in various areas.
An excerpt from a 6/24/07 post that I made:
The Alfa Bank Report on Russian production (July, 2007):
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news...
http://www.themoscowtimes.com/stories/2007/07/10/042.html
Tuesday, July 10, 2007. Issue 3695. Page 5.
The Moscow Times: Alfa Report Sees Trouble Looming in Russian Oil Sector
By Anatoly Medetsky
Staff Writer
Russia's production has probably started to collapse.
Hello PaulusP,
...and it doesn't help that increased military activity is occurring too:
http://news.yahoo.com/s/nm/20070824/ts_nm/georgia_russia_airplane_dc
-----------------------
Georgia says it fired at Russian plane this week
------------------------
Recall my earlier posting on the Russian minister wanting to basically reform the Soviet Union. I think this desire is motivated by the Russian recognition of Peakoil and the inevitable shrinking of spiderwebs. Based upon sensible watershed/habitat geo-boundaries, farmland, mineral resources for NPK, and other biosolar essentials, plus the inevitable localization of depleting FFs [WT's ELM] forms the basis for this new confederation.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
It's interesting when you put three recent headlines together:
Sinopec Seeks Middle East Oil as Russian Supplies Run Dry
The Moscow Times, Russia - Aug 8, 2007
Total Russian crude exports, including a small portion of seaborne shipment, were down 6.7 percent in the first half of 2007 versus a year ago.
Rosneft Buys Local Crude Oil
The Moscow Times, Russia - Aug 22, 2007
"In the current environment, it is more profitable to sell crude on the local market than to channel it for exports," said a trader with a Russian company.
Lukoil blamed for drop in Russian oil supplies to Germany
International Herald Tribune, France - Aug 24, 2007
MOSCOW: Russian oil supplies to Germany have dropped by as much as one-third in recent weeks, Russian and German officials said Friday, sharply pinching supplies at two major German refineries.
Actually, this is probably all part and parcel of the continuing hissy fit that Russia has been having wrt the anti-missile system in E Europe. Last week it was resuming the long distance bomber flights, a few weeks before that it was pulling out of an arms treaty. Putin may have decided that he is going to keep on sending a little "message" each week until it gets received.
Good point.
Both the Czech and Polish majority is against this missilesheet, by the way. So if the people have a voice, this is not going to be realized, right?
BTW, I know nine-eleven is not be the focus on this site, but once and for all, please allow me: www.oilempire.us
PaulusP,
Yes, when you fit Peak Oil into that
equation it all comes clear.
In a horrible, monstrous sort of way.
Last time I looked, 2/3 of the American people want this stupid war to end. So where's our voice?
The neocons have been infiltrating European politics for years and imposing the Rove method. They've gotten sophisticated in creating American puppets who run parties that never give their constituents what they want. The Polish twins have some really US-connected neocons around them. The game has just started.
Here is an interesting article about how the fed will handle the current problems:
http://www.itulip.com/forums/showthread.php?p=14679#post14679
I definitely am not a econ/finance type, nor do I normally read itulip, but I would be interested in hearing from the pros if this appears plausible. It is quoting a “Federal Reserve Bank of New York Staff Reports “.
Excerpt:
“Now we appear to have our answer, or at least a good part of it. What the Bernanke Fed has for the past few weeks been trying to do is prevent a runaway asset price deflation, keep the banking system whole, and at the same time not create a moral hazard by bailing out speculators who should be allowed to fail, all without producing excess liquidity that will lead to another set of asset bubbles. “
“Mechanically, here's how it works. The Fed will only do business directly with banks that maintained good loan practices and are the most credit-worthy. Lenders of various flavors such as investment banks and hedge funds that took on a lot of bad loans can only deal with the banks that deal directly with the Fed. They do not have access to the new and improved discount window on their own. The credit-worthy banks can use the weak creditors' assets as collateral to borrow from the Fed. “
So rather than tossing money out of helicopters himself, Bernanke will just deliver helicopters full of money to the nations leading banks to do the job instead. More decorum that way.
This still seems like a bail out. The important question is, do we want to prevent this kind of loose lending behavior in the future? Apparently not. The game was just too lucrative for too many people, especially the wealthy and the super wealthy. If one is going to engage in bad behavior, ensure that said behavior poses an extreme risk for the entire economy, especially the financial community. Even with the bubble bursting, there will be millions who will still have benefited hugely.
From the buy side, the bursting of this bubble seems like an awfully good thing. For those seeking to buy homes now with cash or good credit, the bubble is a benefit, not a disaster.
More banks are borrowing from the Fed Discount Window at 5.75%, this is quite a high interest rate and has to be more than a "symbolic gesture".
http://www.msnbc.com/id/20414147/
It isn't a symbolic gesture. This is the route the Fed is taking to get money (liquidity) to the smaller banks/funds. The big boys don't like to use the Fed window. It is pretty clear there have been some high level phone calls and they have been told to get the money out there.
Many banks are NOT borrowing from the window. Just 4. They did it all together to avoid the stigmatism of using it.
The 4 banks that borrowed the money, JPM, BoA, Citi, (?),
Each borrowed 500Mill each. 2Billion.
Bank of America just "Infused" 2 billion into Countrywide. :-)
If BoA's move keeps CFC afloat there is a chance that they may get some some money back for the underwater mortagages, If CFC goes under, they lost everything.
Read this one for example by Mish
Countrywide Bailed Out by Bank of America?
http://globaleconomicanalysis.blogspot.com/
There was almost a Run on CFC, that's what they ALL are trying to head off.
If your money doesn't hurt when you drop it on your toe, you have the wrong type of money right now.
I have some 100 ounce silver bars that would do serious damage to your toe.
Yes, that's what I meant.
Batten down people.
Top Swiss Banker: US Lending Standards "Unbelievable"
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/20/bcnswi...
"Stockmarket historian David Schwartz warned investors not be fooled by signs of recovery. "The truth is no-one knows how serious the financial problem in the US is, nor how it will unfold. We do know central banks are scared out of their minds," he said."
Those weak assets that are being used as collateral do get discounted. First they must be marked-to-market or to-model. Then they get a "haircut." About another 10% discount.
The loans are relatively short duration but there are provisions for renewal. What will be interesting to see is whether or not the smaller banks/hedge funds simply leave the collateral with the Fed and walk away. That would, in effect, be a tax payer bailout.
There are $550B worth of commercial paper coming due in the next 90 days. It is hard to imagine the Fed will be willing to swallow all of it. We'll see.
In the meantime, the Bank of America has ended "garbage" loans as of end of close of business today. You can bet the farm that will include Countrywide as well.
I know someone who bought a zero down 80/20 ARM $430,000 house one year ago. She'll be calling the movers next year.
If I could dedicate 200 hours income to this place it would be paid off. Fingers crossed for a slow motion implosion in the U.S. market ...
Henry CK Liu has an interesting if somewhat long essay, published yesterday in ATOl. Mr Liu points out the problems with the Feds 'new and improved' discount window and how the Feds recent actions will provide only a short respite and probably lead to an even bigger disaster down the road.
http://www.atimes.com/atimes/Global_Economy/IH24Dj02.html
'After months of adamant official denial of any potential threat of the subprime mortgage meltdown spreading to the global financial system, the US Federal Reserve (Fed) last Friday, a mere 10 days after declaring market fundamentals as strong and inflation as its main concern, took radical steps to try to halt financial market contagion worldwide that had become undeniable.
The Wall Street Journal (WSJ) reports that the emergency measures - lowering the discount rate - were hastily taken to promote what the Fed publicly referred to as "the restoration of orderly conditions in financial markets". The telling words were "restoration of orderly conditions" in a market that had failed to function orderly. The Fed let the market know that it has shifted to panic mode...snip...
Chairman Bernanke has now summoned his own clean-up team into action. The Fed hopes that by assuring banks that they can now access cash on less punitive terms from the Fed discount window, collateralized by the full "marked to model" face value of mortgage-backed securities, rather than the true distressed value as "marked to market", for which they could find no buyers at any price in recent weeks as the market for such securities has seized up, it can jumpstart market seizure for mortgage-backed commercial paper and securities...snip...
Financial health will continue to decline in the entire system until the risk appetite virus works its natural cycle. Excess liquidity is like a drug addition. It cannot be cured with another stronger additive drug by adding more liquidity. What the Fed is trying to do is not merely to restore market liquidity, but to preserve excess liquidity in the market. It is trying to avoid a crisis by setting the stage for a bigger future crisis...snip...
But the time has long passed when central banks adding liquidity to the financial system could help a liquidity crisis in the market. When the Fed injects funds directly into the money market through the repo window, banks and thrifts and other non-bank financial institutions that need funds can participate. With the daily volume of transactions in the hundreds of trillions of dollars in notional value of over-the-counter derivatives, the Fed would have to inject funds at a much more massive scale to affect the market. Such massive injection would mean immediate and sharp inflation. Worse yet, it would cause a collapse of the dollar...snip...
But just because banks are able to make loans at low interest rates does not mean banks can find borrowers with credit ratings to justify the low rates. John Maynard Keynes' concept of a liquidity trap is that market preference for cash positions can outweigh interest rate considerations. In a financial crisis, there may simple not be enough credit-worthy borrowers at any interest rate level and the number of sellers stays stubbornly larger than the number of buyers because sellers need to sell precisely because they do not have credit worthiness to borrow, even at low interest rates, and buyers stay on the sideline waiting for even lower prices...snip...
Even when the Fed lowers the discount rate, banks will only see their threat of insolvency reduced. Banks will still be sitting on piles of idle cash that they cannot lend. This is known as banks pushing on a credit string. Keynes insightfully observed that the market can stay irrational longer than most participants can stay liquid...snip...
After all, what is market liquidity? Economists refer frequently to liquidity in the abstract, yet in reality, liquidity is difficult to define and even more difficult to measure and almost impossible to restore because it is hard to know where the weak links are...snip...
However, the usual indicators typically capture only a single dimension of market liquidity and none of them were forward-looking in nature, making it difficult to draw any conclusions as to how long-term future liquidity conditions were being shaped by responses to current liquidity stress. Bubbles are the bastard children of liquidity overshoots...snip...
This is a debt economy fed by a liquidity boom. When the liquidity boom turns to bust, all the strong fundamental indicators such as corporate earnings will wilt from a debt crisis. Asset value cannot be held up by simply adding excess liquidity forever without creating hyper inflation. Also, some liquidity problems, such as those caused by a loss of market confidence, cannot be solved by merely injecting money into the financial system, which in fact will only add to the problem. Restoring market confidence requires a rational restructuring of the economy to absorb excess liquidity...snip...
Price is a function of liquidity which can be quite detached from normal value. Liquidity conditions offer a new paradigm as the key to understanding why and how the markets move. Liquidity is consistently a reliable indicator on which to base the timing of trading and investment decisions. Liquidity is the key determinant of the direction of the stock market, but it does not inform on fundamental value.
The aggregate capitalization of any market or market sector, whether stocks, real estate, precious metals, commodities, debt instruments etc is a function primarily of liquidity, with the economic value having only secondary impacts except when liquidity is neither excessive nor scarce. The total value of any market is impacted by its current liquidity trend, as technical analysts know...snip...
For an economy subject to business cycles, the lower the present rate of interest, the larger, ceteris paribus, would be a future rise, the larger the expected capital loss on securities, and the higher, therefore, the preference for liquid cash balances. As an extreme possibility, Keynes envisaged the case in which even the smallest decline in interest rates would produce a sizable switch into cash balances, which would make the demand curve for cash balances virtually horizontal. This limiting case became known as a liquidity trap.
In his two-asset world of cash and government bonds, Keynes argues that a liquidity trap would arise if market participants believed that interest rates had bottomed out at a "critical" interest rate level, and that rates should subsequently rise, leading to capital losses on bond holdings. The inelasticity of interest rate expectations at a critical rate would imply that the demand for money would become highly or perfectly elastic at this point, implying both a horizontal money-demand function and LM (liquidity preference/money supply) curve. The monetary authority, then, would not be able to reduce interest rates below the critical rate, as any subsequent monetary expansion would lead investors to increase their demand for liquidity and become net sellers of government bonds. Money-demand growth, then, should accelerate when interest rates reach the critical level...snip...
Liquidity is the ability to monetize assets without causing prices to fall. Liquidity thus depends on more than just the availability of cash. It depends also on the availability of demand for assets, ie willing buyers. A liquidity crunch can develop even if there is plenty of zero-interest rate cash in buyers' pockets but every buyer is waiting for lower prices, causing assets to be illiquid, ie unable to be monetized without lowering prices.
It can also develop if buyers lose confidence in the future of the economy. Distressed assets cannot exit to cut losses at any price and they bring down prices of even otherwise good assets. This is what causes contagion which can start a downward spiral of self-fulfilling fear...snip...
However, the Fed's actions reflected a shift of the focus of concern from hedge funds towards banks who loaned the hedge funds money to trade with leverage. Banks are also exposed to the problem of having committed credit lines to financial institutions with subprime exposure, such as mortgage lenders or specialist investment vehicles.
Banks have also arranged loans to risky firms such as buy-out groups, which they had planned to sell into a debt market that had evaporated overnight. An estimated $300 billion of unsold loans is sitting on bank balance sheets, gobbling up funds and pushing up reserve requirements. Banks themselves are facing problems raising funding in the money markets where investors are very nervous about lending money to anybody who might be potentially exposed to subprime losses.
And since it is hard to know who is holding subprime exposure, because these securities have been scattered around, banks are being blackballed in an indiscriminate fashion. This is a confidence problem that the Fed cannot do much about, short of offering to buy worthless securities that even a liquidity boost cannot restore fully.
Politicians are talking about taking measures to help households suffering from the subprime crisis to prevent as many as 3 million largely low-income households from losing their homes. However, that will not solve the crisis in the financial markets. In fact it may add to it.
But with the central banks pumping in money to help banks from failing, while families are evicted from their homes, is very bad politics in a election year. The central banks are giving financial institutions whose credit rating and cash flow are not much better than families with subprime mortgages, free credit cards with a subsidized interest rate and no spending limit for as long as needed, while these very same institutions are foreclosing on the homes of their customers.
This crisis will likely build to a crescendo just before the presidential elections. It's going to be a very interesting election. Will the credit crisis of 2007 usher in an age of popularism in US politics?'
Good article. But the issue is not confined to low-income households. Given the way house prices have risen faster than incomes, the only way Mr & Mrs Middle Class could afford a new house was through a lowering of lending standards. This resulted in bidding up the price of houses which attracted more buyers (buy now before houses get more expensive) and made lenders more willing to relax standards ( apparent asset appreciation offered collateral security). The house price appreciation boom is the outcome of this cycle.
What the article does not address is that the loans were then securitized and resold, not once but several times. This was done to increase leverage and juice returns. The problem is that leverage of 80 to 1 means that there is now one dollar of asset supporting a pyramid of 80 derivative dollars.
On top of this, that one dollar of asset (the collateral) is subject to market pricing. If there is no owner equity in the property then the all lender(s) in the derivative pyramid are exposed to significant risk. Even worse, if that dollar of asset value is subject to decline (and prices in some jurisdictions are declining at 20% a year) then this further compounds the problems for the holders of those derivatives.
Look on the bright side - the best is yet to come.
Thanks for your response. Mr Liu did address your comments but I edited out portions of the five page essay. I assumed (bad idea) that most readers were aware of the huge leveraging that took place before and after the mortages were bundled. If you read the entire essay you will see that the problems are even more scary than most of us thought exactly because of the leverage. I think we have seen only the beginning of this disaster. Last week hedge funds were unloading good stocks to cover their exposures, this week things have calmed in the stock markets a bit so people assume that the worst is past us. I dont believe that.
Agree with the above. I don't think the Fed, the MSM, the government, or any other key player has any interest whatsoever in communicating the scale of the problem and the associated downside.
Long Term Capital Management was leveraged 100:1 when it almost brought down the financial system. The Fed orchestrated the bail out.
My understanding is that today's hedge funds are leveraged something more like 5 to 10 to 1. But, there are about 8,000 of them.
Your understanding is wrong. Countrywide is dying while 1.04% of their loans are defaulting. Hedge funds, 99% of them, are leveraged far more deeply than Countrywide. No hedge fund, in fact, would have any business just being alive at those rates.
But ok, leave the hedge funds alone for a moment, and understand that Countryside is far bigger than LTCM. That might make it clearer. What's happened in the past 10 years is unparalleled, and completely insane. The entire US economy has turned into a pyramid scheme.
Countrywide is, of course, not a hedge fund.
From a 2005 report by the European Central Bank on hedge funds.
But here we do agree.
This is the perfect example of how we are killing ourselves through mindset. Society is a contract, not an entity. Nature's species survive when they cooperate with their environment and each other to create more usefulness than they consume in resources. The disconnect between city and rural is only in the minds of people who are looking for a fight (and those that thrive on selling a fight). In reality, neither can survive without the other (long term), and it would be best if we all just learned to look for ways to improve that relationship, rather than building a wall of useless suburban subdivisions in between. The farms should reach right up to the skyscrapers. The idea of having some little piece of paradise by destroying cropland just shows our disrespect for ourselves as an integral species of the planet. The next thing the Mall builders will be telling us is that city people are from Venus, and Rural people are from Mars. Modern humans need some specialized groups (urbania) to provide scientific research, risk management services, etc., while we need clean, nutritious food from rural generalists who are willing to live less rigid, more naturally in order to know the needs of the land and bring forth it's products. Suburbia is the no-man's land of consumption and isolation, presenting everything in partial satisfaction to keep people demanding more of all the things they can never really fully achieve. A 1/4 acre lot will never be an 'estate', a minivan will never be a Touring Car, and a television will never be Theatre. A pair of jetskis is not a yacht, a bush is not a hedgerow, and an illegal immigrant living over the garage is not a 'staff', no matter what the television commercials will get you to believe and no matter how powerful you feel when you close on that sub-prime debt contract.
Imagine spending a month on a rented lake somewhere every year instead of buying all that plastic junk to put into storage and paying for cable television.
Further proof that peak oil becoming part of the public consciousness:
That is from the most popular of the "One Deal a Day" shopping sites. Sure, it is hard to tell if they're mocking peak oil or the deniers of peak oil but the fact that they assume that the public knows what peak oil is, to me is a good sign.
What ever that guy is one I hope he has a lot of it!
I think he's referring to the HP ad campaign. It is quite bizarre. All about children using mind control on their parents to make them buy them computers, or something like that. It's really, really weird.
On, I meant to say on
Re: The HYDRANT story above
What CITY builds subdivisions without hydrants? NONE?!
Therefore, they must have been rural...this is one of those city folk versus country folk things.
Sprawl and long range commuting made some people think they were still in the *CITY* envelope. Oops.
Ambulance service can be a trick RURALLY as well. 45 minutes for an ambulance to arrive isn't uncommon. (and we are only 15mins outside of a major city)
Hmmm..is that the next story. Gee...I didn't know I could die in the country.
Bah...its not Monday is it?.
PeakTO
In Houston, and I expect a lot of growing sunbelt cities, the expansion has taken in a lot of areas which were rural 50 years ago, suburban 20 years ago and inner city now. If the city service growth is slow enough, a lot of that kind of thing (no hydrants for fire fighters) can survive.
Here's an example. Just west of I45 and Little York is a subdivision where all the houses have water wells in the yards, they have never got city water in the 40 years or so since they were annexed. The houses are owned by working class black families, and there's still plenty of institutional racism in the south. For people not from the Houston area, Little York is about 3 miles north of I610, and about 5 miles south of the exit road to Bush Intercontinental Airport, about 7 or 8 miles inside the official Houston city limits. Bob Ebersole
Several Links above talk about the need for climate Chaos issues to be handled as a global civilization. For some strange reason I am feeling that maybe we have noticed all this stuff after we have no control on changing it.
In a Science Fiction story of mine, written 20 years ago, set around the 1990 to 2060 range of human event timeline. Solutions to problems that we have today were found with the help of forward thinking men and women who pushed for a sustainable system on earth. Albeit that a lot of things I created for the story were fiction, most of them were based on the science of the day and things that if done on massive scales, in example everyone saved rainwater, every new house being built worldwide was of a sustainable energy nature, Solar collection, geothermal energy collection, growing home gardens in the new sustainable villages set up for as many people as needed homes.
A lot of folks that read TOD have been doing their own things to get into a better FFF Fossil Fuel Free, life style.
Globally I think we have the means to get there, but do we have the WILL to get there?
CEOjr, off topic but are you familiar with 'Dahlgren' by S. Delany? I dont read si fi often but Dahlgren got my attention. Its an oldie but because of its lack of plot and changing physics and time it will never be dated.
CEO,jr. I'll second that recommendation, its beautifully written and a great timeless novel. Look for it at a used book store, it'll be one of the best fifty cents you ever spent.Bob Ebersole
That is my sister's favorite SF book. I could never really interest her in other SF, but she loved that one. (She's an academic conehead, but not a stuffy one. She claims the most authentic Arthurian movie ever made is Monty Python and the Holy Grail.)
Leanan, your sis has good taste...imho.
Does she live in Washington DC and observe the political process ?
Why are CEO's trying to tell the Fed how to do their job? Isn't this a bit unusual? I always thought the Fed was in bed with large corp CEO's. Something don't jive here...
Ford chief urges Fed action
CEO Alan Mulally says economic growth is a higher priority than inflation right now, paper reports.
http://money.cnn.com/2007/08/24/news/companies/ford_fed/index.htm?postve...
Countrywide’s CEO sees housing-led recession
Mozilo tells CNBC that credit market turmoil will take time to work through
http://www.msnbc.msn.com/id/20405745/
For as long as I can remember, many in the business community have been urging the Fed toward easier money--and I have a long memory;-)
The Fed has eased, and the evidence to date suggests that a credit crunch has been averted, though there has been a liquidity squeeze and some turmoil in the financial markets. The Fed is on a tightrope:
1. Keep credit tight and restrain inflation--but risk financial collapse vs.
2. Send the helicopters, lower the Fed funds rate, ease up aggressively and reignite inflation through unceasing buying of Treasury securities via open market operations.
Despite all the criticisms of Bernanke, in my opinion he is doing a good job of walking the tightrope, and with each passing day the probability of panic and a credit crunch diminish. In a year or two we may see some inflationary impact from recent actions to ease up in credit and money markets, but so far nothing major is indicated.
When Peak Oil hits with a vengeance (not many years from now), then I expect Bernanke to leap off the tightrope in the direction of easing money to accommodate burgeoning federal deficits. In my opinion, the odds of worsening inflation versus deflation are about nine to one.
Don Sailorman,
what you're saying makes a lot of sense. And the urging towards easing of the money supply predates the invention of the Fed or the change from specie to paper money, the credit easing lobbying sounds like the William Jennings Bryan Free Silver movement.
Bob Ebersole
You should really stop spouting this nonsense here. You have no clue what you're talking about, and it gets to be too stupid now.
A credit crunch that built up over 7 years has been averted in 7 days. Right.
Are you implying that you know better than the investors that boosted the U.S. stock market this week?
I recall the same argument being made to explain away a housing bbble.
Questionable analogy. The rising stock market reflects confidence in financial markets. For there to be a credit crunch there must be a lack of confidence in financial markets as a necessary prerequisite.
The housing bubble was created by easy credit and predatory lending to unqualified borrowers--who generally lacked any financial sophistication at all.
Either an awful lot of sophisticated investors and speculators are wrong--or the rising stock market shows that there ain't gonna be no credit crunch and certainly no deflation.
>Either an awful lot of sophisticated investors and speculators are wrong...
Yes, they're wrong (just like they're wrong about peak oil, btw). This is how it always happens. They're right right up until they're wrong. No one but you is using the argument that "the behavior of the stock market proves X". It's a very silly argument to make. What the stock market is doing right now proves nothing about what it will do next month, proves nothing about how many foreclosures will happen next month, proves nothing about how many lenders will go under next month, how many hedge funds, how many builders, etc.
You are correct that the behavioir of the stock market this week tells us nothing about what the behavior of the market will be next week. My assertion has to do with levels of confidence shown in the financial markets during the past week; the rising stock market reflects increasing confidence in financial and economic conditions. One of the prerequisites for a credit crunch is a lack of confidence--indeed, a certain amount of panic.
What I am pointing out is that the turmoil earlier in August seems to have been resolved successfully, in large part through appropriate actions by the Fed. Credit crunches and financial panics have a logic of their own, and they feed on themselves. When confidence is restored, then the threat of a crunch goes away. The Fed has acted decisively to prevent a subprime crisis from spreading into a general panic/crunch.
If we approach panic/crunch conditions again, we'll see a dropping stock market--the barometer that to some extent makes its own weather.
This whole argument is about the future. The reasoning goes something like this: a certain default rate up till now has caused X number of lenders to go under and Y number of hedge funds to fold. It's also caused Z number of job layoffs. It's caused interest rates to go up. It seemed to require nearly half a trillion dollars of emergency liquidity to be added worldwide to stem panic.
That's up till now. The situation of loan defaults and foreclosures and ARM resets is only going to be worse for the next 18 months (looking at ARM reset schedules). Given that, it seems unreasonable to be saying that currently there appears to be confidence and so I see no credit crunch. You seem to be arguing there is no risk going forward, everything is ok. Others are saying, holy crap, things could get extremely bad.
From my POV, your argument that everything will be ok because everything on the surface currently seems ok doesn't hold up.
I do not think "everything will be O.K." I foresee hard times ahead due to Peak Oil--but I do not think there will be a credit crunch, nor do I think deflation is in the cards. Why?
Because the Fed has an inflationary bias. Since the creation of the Fed in 1913 the dollar has lost about 95% of its value, according to official statistics. What evidence is there that this inflationary tendency will reverse?
There are some problem loans--in fact, there are lots of problem loans. In the absence of effective action by the Fed, these problems could have snowballed into a credit crunch and perhaps a debt-deflation caused by cascading defaults. But the Fed stepped up to the plate, took its best swing and--so far as I can see at this point--the ball is going, going, . . . gone for a home run.
Bernanke has said that the Fed will not stand by and permit a deflation. I believe him, and I also believe that the evidence shows that the Fed has the power to avert deflation. To date there is no evidence of a liquidity trap.
Down the road I see pain, major pain, but I think it will be inflationary, not deflationary. As John Maynard Keynes pointed out, the debtor class has superior political influence compared to the creditor class. As the price of oil soars, I expect the general price level to soar also.
In my opinion, those who forecast deflation do not understand the powers of the Federal Reserve System--or possibly do not believe in their ironclad determnation to prevent a liquidity squeeze from developing into a credit crunch that could lead to a cascade of defaults.
A little while back Krugman hinted in a column at the Fed having some additional arcane and rather powerful tools in its arsenal but he didn't elaborate. What is there other than the discount rate and the fed funds target?
For all intents and purposes, the Fed can lend as much as it feels like to practically anybody. The Fed has never used these powers, but they are there in its charter. Thus the Fed has the power directly to bail out nonfinancial corporations and nonbank financial organizations. The Fed goes to great lengths not to use these powers, but they are there, as Krugman well knows. The Fed believes in the power of its traditional tools, and so far these tools have served them well--no need for "arcane" powers.
Don, the thing that kinda bugs me about what you say is how you seem so comfortable with all this...the Fed doing whatever it can to keep the markets calm.
Here are the problems I have with this:
1 - It becomes less of a free market with more and more Fed intervention.
2 - The Fed tends to bail out the big guys and leaves the little guys holding the empty bag. It reeks of exclusivity.
3 - It removes the chance of market upheaval. Why is this good? Well, why is a hurricane good for the Gulf of Mexico ecosystem? It mixes things up. It stirs the sediments. It destroys old growth and allows new growth to emerge. It oxygenates the water and disperses pollutants.
If the market is never allowed to crash on occasion, the old growth just keeps piling up. It keeps the old players playing the same old games. It removes the chance for new challenges, new ideas on how to run businesses and economies.
I would rather see natural cycles of nature and business play themselves out...with occasional storms shaking things up...and evening the playing field.
You raise some good points. Depressions have the advantage that they get physical capital and labor out of old industries and thereby free up resources for new uses. However, what I'd like to see happen doesn't have much to do with what I think probably will happen.
Mainly I'm concerned with the consequences of Peak Oil--very concerned, because all the fiscal and monetary policy in the world is not going to help with the fundamental problem. As usual, the poorest and weakest members of society will bear the main costs of change. Do I like this? Hell no!
That real estate prices are (at last) falling, and that these falling prices may trigger a recession does not bother me. We've had recessions before; we'll have them again. For many of the beneficial "cleansing" aspects of an economic downturn you don't need a full-fledged depression; no, a garden-variety recession will do just fine.
What upsets me is the lack of foresight on the part of both governmental and corporate leaders, and while I'm at it, let me throw a few brickbats at most academic economists. At this point there should be full recognition of the problems of Peak Oil; we should be running in circles screaming and shouting, "Danger ahead!" and implementing Alan Drake's proposals. Nobody is going to reduce speed on the Titanic so long as the captain refuses to take seriously the sightings of ice that are reported. Hardly anybody is going to take Peak Oil seriously so long as CERA and major oil companies point to a peak decades in the future. I am disgusted by the presidential candidates in Iowa leaping on the corn-ethanol bandwagon--but I understand the politics of it. Ethanol is worse than useless, because it diverts attention from fundamental issues and provides false hope for the innumerate.
While I'm grumbling on a Friday evening, let me say that while governmental leaders are not blameless, they are to a large extent prisonors of their staff advisors. These "experts" listen to other mainstream "experts," and along with the infamous mainstream media these opinion makers are not going to call for pain now (e.g. a stiff and rising gasoline tax) to mitigate far more serious pain later. It is going to take a major economic downturn produced by high oil prices to get the attention of the media, the academics, the corporate leaders, and our government leaders.
The Fed has some good answers on how to prevent a debt deflation. Nobody has any idea of how to get those who have power in our society to take Peak Oil seriously--in the absence of substantially higher oil prices.
Don...totally agreed on all your points. I was just starting to get concerned that you were arguing for the position of the Fed using its tools to bail out the market. Now I can see you were just telling us how it really is. It is sobering, I guess, because it delays all the eventualitites of preparation we need to go through to survive what the future could rain down upon our heads.
You people who favor gas taxes are just plain wrong.
Posters on this site are already seeing the impact of high oil prices and its products in the poor countries of Asia and Africa.
Despite this you want to artificially raise the price?
Just the ticket for pushing our own poor off the cliff.
Maybe the revenue gained from such a tax could go to help pay for the swelling ranks of welfare recipients that will undoubtedly follow such a foolish, knee jerk move.
Not one of you pro taxers have thought this through enough to envision the consequences of a gas tax.
Among other things, the poor folks in Africa, etc would do a lot better if we got rid of the indirect subsidies which keep gas ridiculously cheap in the USA and encourage rampant overconsumption.
And a tax, the revenues of which could be directed, would give the poorer people of the USA about their only chance of not falling off a cliff.
Bet you'd like it if gasoline was a nickel a gallon, right? Or free? Since you've done a lot of thinking on this, unlike a pro-taxer like me, maybe you could trot out your better solution, Mr. Spaceman.
(But don't worry, most everyone else thinks like you do and the odds of a gas tax are low indeed, so "doing nothing" is an acceptable answer!)
Best hopes for keeping ice cream off your forehead.
Why are you worried about "indirect subsidies”? Don’t the "direct" subsidies, the U.S. Air force, Army, Navy and Marines concern you? Which are 100% tax funded by the way.
Tax revenues will be directed or rather, misdirected, right into the maw of the War machine or the pockets of our feckless legislators, whom I'm beginning to suspect post frequently here since they obviously have better things to do than run the country.
You got me on this next one, as I sure do wish gas was a nickel a gallon, that way the MONTHLY ALLOTMENT of 30gallons I receive wouldn't break the bank plus any surplus RATION COUPONS I had could be sold on E Bay should I need the cash more than the gas.
Of course I don't need to drive all that much since my community has joined the federally sponsored HYBRID BUS plan that makes use of the existing roadway infrastructure while the LIGHT and HEAVY RAIL system in this country is being rebuilt and extended.
The THREE DAY WORK WEEK helps as does the SEVERE REGULATION of the COMMERCIAL TRUCKING industry meaning that even at the STRICTLY ENFORCED, LEGAL SPEED LIMIT of 60mph the roads are less congested and much safer too, even the air is cleaner since there is no longer much semi traffic.
Of course my 50mpg Chevy sips gas after Congress passed TOUGH NEW C.A.F.E. STANDARDS across the board with HIGH TARRIFFS on automakers that don't supply their workers with full health insurance and pensions giving domestic auto companies a chance to compete.
All of this(why not since I'm dreaming anyway) wouldn't have been possible of course, until the day the government PUBLICALLY ANNOUNCED the IMMINANCE of PEAK OIL and its MITIGATION PLAN as the response to great the PUBLIC OUTCRY that SWEPT ALL INCUMBENTS from office. Largely fomented by groups such as those at TOD whose members SPOKE WITH ONE VOICE.
So I'll put in words that even you, Mr. Greenish, might understand: CONSERVATION is the ONLY way to counter the effects of Peak Oil.
Its too bad so few people actually think at all, especially those who parrot the pro tax agenda and scam other posters "Best Hopes" slogans.
Check.
And in places where they have high gas taxes, there's better gas conservation. Europe, fer'instance. In the USA with negligible gas tax, there is less conservation.
Otherwise for life of me I can't tell WTF you're going on about. Glad you believe in conservation, right on! (as I nervously back slowly away).
Keep backing up.
You asked for solutions, you got em.
As for Europe, THINK man!(or whatever you are)
How do they so conveniently get around high gas taxes?
With increased diesel consumption perhaps?
Thats a great solution!
Lets just substitute one FF for another :P
Last time I checked Europe was a much smaller(and smellier) place than the USA with an in place rail system.
Those conditions do not exist here and slapping a $3 gas tax should be enough to toast our WHOLE economy, not just the poor.
So enough with this "European" argument, they have an alternative to travel and geographic advantages, we do not.
The pro tax posters I've encountered on this site seem to think nothing of the consequences of such a tax with their "pain now rather than pain later" or my favorite "it will cut consumption" arguments.
A few well placed nuclear weapons would cut consumption too, a huge gas tax will have the same effect economically speaking.
I guess this is my problem with this discussion: I don't care if you call it "deflation" or "inflation". Both, in extreme cases, are bad, and have the same bottom-line result: my standard of living falls steeply.
If I read you right, you have basically been saying, we'd be headed for 1930's-style depression except the fed is saving us by bailing left and right. Now, if that's right, then I'm not in the least bit comforted, and I don't find your statements like "to date there is no evidence of a liquidity trap" to be credible. If, minus dramatic fed intervention, we would have significant deflation, then that constitutes pretty good evidence. And if, as you say, the fed can inflate away any liquidity threats, and thereby cause painful inflation, then big deal. The result is the same: irrationally exuberant borrowing and extensions of credit is going to come crashing down (deflationarily or inflationarily, who cares which) with painful consequences for many.
And then, like you say, peak oil awaits, a connected but also wholly separate issue.
Between peak oil and global warming and population you can be pretty certain we will be in a global depression within 20 years. Even given infinite resources the rate at which we can increase utilization of the resources can't keep up with demand. So only the most dense cornucopians would fail to recognize that we are hitting the limits of growth.
The argument is not that we are not dead. The argument is over how and when we die. The last time around only one major economy was able to destroy itself with hyperinflation the rest succumbed to deflation. I'm of the opinion that the Fed cannot successfully destroy the US economy via hyperinflatation and deflation will win. The Fed has been inflating like mad ever since 2000 and deflation has just been delayed so far.
.
In my opinion, those who forecast deflation do not understand the powers of the Federal Reserve System--or possibly do not believe in their ironclad determnation to prevent a liquidity squeeze from developing into a credit crunch that could lead to a cascade of defaults.
Don, I respect your opinions and you are a very smart guy.
But.
You're wrong. They can exert influence over short term ups and downs, but they WILL NOT stop the tides.
The game now is way way over their heads now and they know it. The money inflow into 3 Month Tbill rates and their rates tell you that the smart money doesn't even trust banks anymore. Did you see the 3 mos Tbill %? NO ONE has EVER seen that movement before in just days.
We are watching history unfold folks.
Sept will be a very bad month. For many reasons. The resets of the ARMs hasn't even crested yet. Momentum is against them and the CB's.
Believe me, Banks are shaking in their boots. When they close their books this year end, There will be many institutions that will not reopen. Including a good number of BIG banks.
They are Mickey Mouse with the sorcerer's wand and there is NO wizard to come and set things right.
imho
"The rising stock market reflects confidence in financial markets. For there to be a credit crunch there must be a lack of confidence in financial markets as a necessary prerequisite."
Is this another one of those "perception overrides fundamentals" arguments. That's just plain foolish. The emperor was found to be skinny dipping when the tide went out.(to mix metaphors) The big banks were saved by the fed. They are not about to bail out anyone else, even if they could. The Banks are not about to make the same mistake again. The sh*t is gonna be allowed to hit the fan so we can get this over as quickly as possible. The Sh*t is gonna have to be eaten by someone, better the ones that created it in the first place. Let the chips fall where they lie and we will pick up the pieces later. (Also, there will be NO rate cut. In your dreams.) In order to avoid a prolonged recession we have to take the big hit now and get it over with. You drag this out, we will be in a prolonged recession. Once we baseline, we can start over. There is no avoiding the pain. Our choice is big quick pain or enduring never ending pain. I'll choose the first.
Another truth respecting the vigilance with which a free people should guard their liberty, that deserves to be carefully observed, is this--that a real tyranny may prevail in a state, while the forms of a free constitution remain.
The Housing Sector index which is completely tradeable by retail investors (in one form or another ) topped out in mid 2005.
http://finance.yahoo.com/q/bc?s=%5EHGX&t=5y
Not a bad call for the market.
Personally, I'll believe the current credit turmoil is over if the broader market --- the S & P 500 say --- makes a new high.
So in your exegesis of the 1929 crash, the investors who propelled it to a market top knew better than anyone else?
And Jesse Livermore, who was selling at the top in both 1907 and 1929, was a know nothing fool?
Does the word tautology enter your vocabulary?
Maybe it had something to do with securities sales personnel getting pushed hard this week to bring in more money. I got two calls in three days from my broker practically begging me to put more money into my stock portfolio because (paraphrasing) "the panic is over and there is a good chance of excellent short term returns."
The guy in the office next to mine got a similar call from his rep, different company. Another friend told me his son's best friend, who sell securities, says that the entire sales force of his company is under a hard push to bring in more money immediately.
The suggestion, (never a promise as that would be illegal) that the DJIA will soon be back to 14,000 or higher, thus delivering 7% or more returns in at most a few months, could be hard to resist.
Interesting. Suggests that the liquidity crisis has not yet passed and that the major players are tap dancing like crazy to keep the Titanic afloat. Markets represent psychology not any intrinsic value. You have to ask "if future prospects are so rosy, why are the sellers selling?" and why did they all seek the safety of T-Bills on Monday in an unprecedented move?
Contagion contained?.....shiny shop window cracking?
http://money.cnn.com/2007/08/24/magazines/fortune/eavis_citigroup.fortun...
http://www.tickerforum.org/cgi-ticker/akcs-www?post=5001
Records
Great links, thanks.
The letters from the Fed answers the question why we have heard nothing from American banks on their exposure to derivatives while we have heard from French, German, Canadian and Chinese banks. If you look at the letters to Citi and Bank America you see that they are dated Monday August 20th. If these had been made public during the week do you think the DJIA would have ended up for the week?
Don't let Don S. put you to sleep. This is a significant financial crisis, the financial equivalent of PO. The money-wells just ran dry and the moneywigs are trying to figure out how to get the system flowing again before the little folks notice.
Went looking for online reaction to your links. Not much; but that was the intent of releasing this news on a Friday. Did find this however:
Credit card terms are also tightening. The bubble is beginning to deflate, the rivets on the financial Titanic are popping and water is starting to pour aboard. The problem is that no one yet knows how many compartments have been breeched but the following gives a sense of the size of the problem:
So there are $800 fantasy derivative dollars dependent on each actual dollar of world GDP. Quite the pyramid. Don, do you really believe Ben B can enlarge the money supply to deal with this? I have no doubt he may try. Since others will be coming to the same conclusion, I think you are going to see foreign users of dollars starting to edge for the exit.
'Weapons of Mass Destruction'- Warren Buffet
5 US operating banks with the largest derivatives contracts are:
JPM: $65 trillion
BAC $26 trillion
C $25 trillion
WB $$5 trillion
HSBC $4 trillion.
These banks are in a bit of a hole. Everybody now knows this massively leveraged 'asset' backed debt is dirt (the governments and central banks orchestrated the market pump, as an antidote to the last dot com bubble/9/11 crashes. This credit bubble, the last bubble of the infinite growth world economic model, over inflated reality with rates of interest, discounted risk, stripped regulation, and monstrous asset valuations to unsustainable proportions on a round earth, until the magic merry go round, could nolonger be kept spinning, the ever increasing debt burden, dislocated from real wealth generation, inevitably lead to default, and unwind, as risk aversion prevented the usual medicine of more debt curing the terminal patient. And still the banks only have the same answer to the problems, more debt, to keep the economic body alive without enough resources to feed it, increasing debt circulation, in the absence of growth balanced exchange of real goods). Nobody, or country, wants to buy dirt. The FED (private bank) licensing its brethren 'in the public interest' to dig deeper, three times as deep 'temporarily', temporarily postpones a permanant painful reset to a sustainable world model. The pain of a return to real world limits, will be born by all, especially those who lived for today.
Some of the US bank accounts have FDIC, depositors insurance cover nominallly safeguarding individuals up to 100,000USD against bank failure. Should the latest FED issued license to excess not have the desired outcome of risk results be less than favourable, this insurance scheme could well be found wanting, it is only backed by 50billion USD.
I'm merely implying that your statement "... the evidence to date suggests that a credit crunch has been averted.." is false, there is no such evidence, which once more shows your by now familiar lack of knowledge and insight.
The problem is that you mislead those people who believe what you say because you pose as some kind of economist.
ilargi,
Do you think gratuitously insulting Don Sailorman makes you superior? He is an economic professor and has written a text book.
What are you, a gold salesman? Or are you a speculator shorting financials that hopes to profit from stirring up other's fears? Or possibly just a sadistic asshole that wants to gloat over other's fears? I'm certain you are at the least a rude jerk Its pretty easy to hide behind the annonimnity of an internet website and prey on others fears.
I really get tired of trolls who try to flame others.
Bob Ebersole
Bob, you're one of the worst offenders. I told you before - lighten up.
Leanan, I apologise. I am a horse's ass sometimes.
Bob Ebersole
Man there has to be something blowing in the wind - my SacredCowTipper at DailyKos got banned earlier today ... everyone is actin' all nasty.
The internet needs a Midol, methinks. No more for me - I'm going to go get my water bottle and resume training those barn cats to stay off the back porch.
Fail to parrot the party line sufficiently, did you?
Being an Independent is pretty lonely these days, but at least you don't get headaches trying to squeeze your brain into a narrow box.
This form of argument is known as an "appeal to authority" and Don will himself tell you that it is the weakest form of argument possible.
This is known as shooting oneself in the foot after having put one's foot in one's mouth.
Cheers!
Greenspan and Bernanke try to sell the same argument.
What's good for their private club isn't necessarily good for the people.
I'm sure some in Iraq believed "Baghdad Bob".
Bob,
Don makes statements, all the time, that have no connection to reality. I can choose to let that all go, but I choose not to.
There are people here that know so little about finance that they will believe him. And that would not be a good thing. His statement: "... the evidence to date suggests that a credit crunch has been averted..", is simple nonsense.
He has no such evidence, and neither does anyone else. It makes no difference how many books he's written, or on what subject. Don has no clue what is going on, and he makes no effort to find out, either.
The rest of your words deserve no reply. Other than: I hope you will refrain from such language in the future. Believe me, I'm much sicker of Don than you are of me. But I still don't put that in those terms.
Dons a very smart guy but I don't think he cares to much about the short term and he is comfortably retired. I actually think he has a much better handle on what the Fed can do then most people. However I question the effectiveness of the Fed today.
And the data point towards the Fed not being in control.
Btw I think the key thing that Don is missing is a lot of the recent growth was caused by selling pigs with red lipstick worldwide. So this is a global problem trying to narrow it to a US problem is mistaken.
Consider that if the US touches off a global recession the other housing bubbles currently in process world wide will pop. The Fed cannot fix this.
Why would he Fed want to fix a recession in other countries? The Fed is ONLY concerned that the US of A come out on top. In their opinion, if other countries were stupid enough to buy our junk, then to hell with them. They will let the rest of the world burn down.
Who has the balls enough to truly threaten us...that is their perspective?
ilargi,
I was out of line, I apologise. I can be a jerk on occasion.
For what its worth, I've got a substantial amount of money in an estate, and I wanted my share in cash over a month ago. And that probably colors my objectivity about the whole deal. I'm very frustrated with the Executrix, who is a financial ninny. I need the money to finish assembling a prospect I'm working on, and I'd really like Don to be right, at least for a few months. I'm not going to sue the executrix, she's family. And I'd really like to get the money raised to buy my leaseblock before everything collapses, I've got a lot of money and time in it.
So, as I said, I put my foot in my mouth and you have my apology. Bob Ebersole
The evidence above suggests that the credit crunch is still to come. That drop in buyer confidence will result in a drop in sales. This will lead to a greater supply of inventory which will put downward pressure on prices. In a declining market the buyers will wait for the even better deal sure to be available tomorrow; the price level will further spiral down.
All of these houses represent collateral for loans that have been repackaged and leveraged anywhere from 10 to 1 to 80 to 1. As the value of the pledged collateral falls the risk associated with the derivative bet increases to the point that the entire credit structure sinks below the surface of the sea.
It is interesting that it is foreign banks in Germany, France, Canada, and China that are the ones stating their exposure to derivative credit risk. American financial institutions are strangely silent on this point. They either do not know, or they do not want you to know.
Don is painting these circumstances in the best possible light; ilargi claims he is wrong. The available evidence supports ilargi.
It follows that the view on Wall Street is vastly different from the view on Main Street.
Some on Wall Street have never set foot on Main Street and those few that have realize that their very financial survival depends on being able to sell the Wall Street view to Main Street.
Many in the silent majority of people they like to call Joe Sixpack are a lot smarter then they think, and one day they will come to realize that there is such a thing as 4th generation passive resistance.
Gee Don just ran across this, and you going about disguised as someone who knows stuff. Shit even I know that investors are rabble who will chase a buck like a cat chases a cat toy. If one wants to get a picture of the economy or what is coming down the pipe the last place I would look is what the investors are boosting. We are experiencing catenulating devils, plagues and poisons and you concern yourself with the superficial and erratic animal the investor. Pshwah Don, your ship is aground and you flounder like a fish out of its element.
Gee and you just get better and better,
I don't know where you were as a sophisticated whatever during the dot com but I was telling my broker/adviser that I was getting really bad feelings,in a rising market, about 8 months before it started to unwind. I kept getting the reassurance of his 'sophisticated advise' backed up by his large firms 'sophisticated analysis gurus' till I dropped a very large amount of hard earned moneys (6 figures), intended for retirement, that before firing him.
I personally am out of this market and depending on what happens in the next year may not return at all. There is just too much happening below the surface for investors. There is a difference between risk and particularly in this case great uncertainty. As a speculator I would revel in these times and I might even take a flyer or two but not with any confidence in this market holding up.
This comment is precisely why I find TOD such an enlightening place to be. Incisive analysis like this is not to be missed!
Except that Don is dismissive of currency exchange rates and the position of the dollar as the worlds reserve currency/petrodollar status is in danger. I'm sorry but I think this is just as important if not more important the the health of the American economy. A flight from the dollar will destroy us. Any strong moves by the fed to ease interest rates could easily topple the dollar.
Don correct that the dollar is too strong but we should have solved the reasons for this mainly dollar peg and virtual pegs by the Asian nations while the economy was strong. Now in my opinion its too late and the Fed is dammed if it does and dammed if it doesn't. I guess the big issue is we have a global economy now and the Fed cannot act only to solve American economic problems without impacting the global economy. I wish Don would expand his answers to address this since his partial answers look good but he is in effect ignoring a few big issues. In my opinion in this case incomplete answers are as good as wrong since we have to consider globalization issues.
I leave out many big issues in my comments because I try to keep them focused on Peak Oil and likely consequences of Peak Oil to the economy of the United States (and to a lesser extent other countries). International finance is an intriguing topic, but in my opinion what happens to the dollar versus other currencies is less important than what happens to the dollar in terms of domestic purchasing power.
Deflation (of the dollar) implies that the dollar becomes more valuable and will purchase more goods and services. Some who post or comment on The Oil Drum believe that a credit crunch will lead to deflation, but the way I read the data this scenario is extremely unlikely (though possible).
Because the dollar is overvalued compared to other currencies, I expect exchange rates to change eventually to reduce (or even eliminate) this overvaluation, but I do not know when or how this adjustment will happen. I do not think the Fed will defend the dollar if such defense (raising interest rates) increases the probability of a recession. Thus I think the Fed will focus on the effects of its policies on the domestic macroeconomy and let the exchange rates fall where they may.
Thats fine but since we import so much stuff from china letting the dollar fall will force China to unpeg and cause some pretty hefty price inflation on imported goods. This includes oil. And of course you get regular old inflation from
the approach your suggesting.
And the biggest issue of all why would salaries increase. They haven't in years despite inflation. The highly inflationary approach your suggesting would effectively impoverish a lot of middle class Americans god knows what would happen to the poor. If anything this approach will tank the American economy faster than letting it go into deflation.
I repeat the critical issue is we won't get wage adjustments to keep track with this attempt to inflate. Most businesses will probably move everything they can overseas. Businesses like home construction that can't move will see price markup across a wide range of products imported to build homes. Very little outside of the wood and concrete and a few bulky goods are made in the US. Next all the consumer goods including furniture is generally imported.
So for a while the best move the Feds can make is to simply do nothing and let this bubble unwind until the economy is sane again. At that point which is years from now if needed interest rates can be adjusted. If anything they need to be higher to "toughen" the economy for peak oil.
So considering the above all lowering interest rates will do is drive the consumer deeper into debt as the price of imported goods increase. Look under the hood of your "American made" car and you will find a lot of Chinese and Mexican manufactured parts. So the so called American cars won't decrease in price all that much if at all vs imported cars which are often assembled here anyway. The reaction since real wages will be falling is to defer purchases of expensive items regardless of who makes them.
To respond to other posters I'm not attacking Don what he is saying is actually the time honored approach and it worked in 2000 but even in 2000 we did not import what we do today.
By not considering the "new global economy" I think Don is getting the wrong answer.
Btw I think the Fed actually understands this problem thats why they are so resistant to dropping interest rates.
They are going to use the tools at their disposal but I think they realize the situation is far less stable then Don thinks but they don't really want people to realize that they are effectively powerless to prevent a major recession.
In short I see dropping interest rates in a attempt to stimulate the economy buying at best a few months then we have a even bigger problem since it will just decrease consumer purchasing power. Which is exactly the problem your trying to solve.
To prove this wrong you have to show wage gains along with or better above inflation if not above this and this has not happened in almost ten years. Not to mention the shift in employment to the lower paying service sector thats very sensitive to economic problems.
We are in the frying pan and any move on the part of the Fed will just and fuel to the fire. At best the Fed can try and ensure a orderly contraction good luck.
Peak oil will cause real wages to fall. Nominal wages will increase, as they have been increasing along with the inflation rate. But Peak Oil will cause lower living standards through:
1. Great increases in unemployment, and
2. Real wages declining as the inflation rate exceeds the rate of nominal wage increase.
By no means am I a Polyanna. I see pain ahead on the scale of the Great Depression with falling living standards for almost everybody. Where I differ from some is that I believe our future to be one of worsening inflation rather than a future of deflation. Take the stagflation of the nineteen seventies and early nineteen eighties, then multiply by ten or twenty: I think that is roughly what our future looks like--a misery index of 50 or more.
(The misery index adds together rates of unemployment and rates of inflation. There is no upper limit to the misery index, because inflation rates can become indefinitely large.)
Don even using bogus government inflation numbers wages have not kept up.
http://money.cnn.com/2006/08/28/news/economy/real_wages/index.htm
This is fairly well known. If you have evidence to the contrary I'd like to see it.
http://en.wikipedia.org/wiki/Household_income_in_the_United_States
Now the fact that wages have remained basically flat since oil peaked I agree with.
My point is this is not going to change so attempt at monetary inflation will only further decrease real wages.
I agree that the Fed might try to inflate but it will backfire.
We have a choice of Deflation or Hyperinflation in both
cases the economy will stall.
And I agree that peak oil is the real culprit along of course with globalization keeping real wages from increasing. So show me why real wages could increase.
I say they can't so inflation is not and option.
Deflation is coming I concede we may have a brief and disastrous attempt to inflate. But it can't and won't prevent deflation.
Yes, we're already past Peak Real Household Income, and probably will soon be past Peak Per-Capita Real GDP as well. The Great Decline will bring us down to a permanently lower level, maybe around 25% or so of where we are at now -- IF we are lucky. That 25% level is a potentially sustainable economy, the economy we have now is not, so we've got to decline to that level in any case - it is inevitable.
Going back in history, what year would 25% of today's GNP be for the USA ?
1950 ?
I remember that per capita GNP, inflation adjusted, was about 10% of today in 1910.
Best Hopes for mid-century America,
Alan
25% of todays GDP
Real GDP (adjusted using GDP deflator) 1962
Real per capita GDP 1942 (includes military expenditures)
http://eh.net/hmit/gdp/
Using real GDP per capita, indexed to 2000, the answer is 1941.
http://eh.net/hmit/gdp/
Imagine what life was like just coming out of the Great Depression and just before the US entry into WWII.
Back in those days, one could take a passenger train almost anywhere. Air travel was very expensive and only for the wealthy. Quite a few people had cars, but many of them were quite old -- there were still quite a few Model Ts running, even. Even though gasoline was cheap, people didn't necessarilly drive all that much. Taking a long trip by automobile was still a big adventure. Many people never traveled farther than the nearest big city. Of course, many people didn't even own cars. Hitchhiking was quite common and quite safe. There was a lot more walking back then, too.
Houses were smaller, and given the typically larger (and extended) families, the square footage per person was MUCH smaller. Usually only one bathroom per house, too. Needless to say, there was very little of what we now call suburbia; a few outlying settlements on passenger rail lines were all, Levittown wouldn't be for another 5-6 years. Far more people lived on the farm in those days, or in small towns. The cities were smaller and more compact.
A lot of the frugality from the depression days was still the norm for a lot of people: Raising your own food, sewing and mending your own clothes, etc. If you were a teenager and were taking your date out to the diner for a meal, what you might get was what we today would consider to be a tiny hamberger, a very small order of fries, and a very small glass of soda pop -- smaller and fewer calories than what you even get in the typical fast food "children's meal" today. Most people ate most meals at home, however, and cooked them from scratch.
The entertainment options available were mostly pretty inexpensive, because people still couldn't afford anything extravagant. People would listen to the radio, of course, or maybe walk to the public library or catch a film at the local cinema. There would be dances and fairs and festivals in town, and of course amateur sports like baseball. Watching professional baseball in the cities was an affordable proposition in those days, because pro athletes were paid very little.
Taxes were unbelievably low in those days as well. Government was a lot smaller before the wartime budget kicked in.
You sometimes see a lot of nostalgia for the 1930s, but the reality was that those were very hard times for a lot of people; no sane, well-informed person would really want to re-live them. You also sometimes see a lot of nostalgia for the WWII years, but that was a horrible, brutal war and many millions were killed. It also resulted in the transformation of the US from a federal republic to an empire, and in a huge and permanent bloating of the government and entrenchment of the military-industrial complex. No sane, well-informed person would really want to re-live those days either. That year just before Pearl Harbor, though, looks like a pretty good year in retrospect. Life in America had its problems, of course. (Polio was a dreaded and all-to-common disease, for example.) Nevertheless, if one had to pick one year that we could "re-set" to, that one wouldn't be a very bad choice.
It's a completely irrelevant difference. In both cases, both sides are pointing out the fed's impotence to prevent pain. Whether the pain comes from deflation or inflation is only something economists would care about.
Good grief!! Deflation vs inflation is frequently debated here and for a good reason.
Perhaps you have no net worth (or big fixed rate debts). If you did, you would soon realize it makes all the difference in the world.
My grandmother was fond of saying, "The Depression wasn't that bad, as long as you had money. Of course, hardly anybody had money."
Hyperinflation and the rise of dictatorships are historically connected. While in general during deflation the power structure remains the same with everyone getting poorer at about the same rate. The pyramid gets smaller but the shape is constant. In a hyper inflationary collapse on the the richest survive. Which generally leads to a fascist dictatorship.
So inflation ---> fascism/super elite
Deflation ---> status quo except everyone is poorer.
The thing everyone needs to understand is that both hyperinflation and deflation can occur during an economic decline. They are just different ways of politically dealing with the fact. Deflation is arguably the more "honest" and "natural" way; in a declining economy, the money supply SHOULD contract (unless you know that the decline is only temporary and can be reversed through an expansionary policy - but that's not the scenario we are discussing here). Of course, the winners and losers that result from a deflationary monetary regime may be politically unacceptable. Hyperinflation will usually lead to a different set of winners and losers. It also has the political "benefit" of disguising the true nature of what is really happening with an economy. This is why governments are so tempted to reach for the hyperinflation tool when their economies take a plunge.
If you ask me what will occur in the US, I think that short term the institutional and cultural bias against deflation is so strong, and the political system has become so cynical and manipulative, that I see no chance that the US would for very long allow a deflationary monetary regime. The odds in favor of hyperinflation are thus much higher.
Longer term, I am not so sure. As the Great Decline continues and the US economy contracts hugely, I am doubtful that our present political and economic institutions can survive unchanged. Hyperinflations historically have only been able to be sustained for a few years, and are worthless as a tool to manage a long term, permanent economic decline. Thus, it is quite possible that what we might actually see is an initial episode of hyperinflation, followed by a much longer period of deflation.
Don, what I don't understand about your point of view is the assertion that the financial markets are essentially decoupled from the real economy and have little effect on the real economy. I realize that there are still major disagreements among the most knowledgeable economists and historians about what caused the Great Depression. I tend to place a certain amount of credence in Galbraith's thesis that the crash of 1929 was a major cause of the ensuing depression because of the drying up of credit (among many other factors, dust bowl, dropping productive capacity, etc.) But the point is that the financial markets can and do have a real effect on the 'real' economy.
I don't see how one can blithely state that all the hedge funds could disappear without major effect on the real economy, especially given the kinds of economic dislocations that would cause the implosion of many hedge funds at once.
I respect your point of view, but this view of financial markets being essentially a big casino that doesn't affect anything else doesn't make sense to me.
Don,
I've been thinking recently. I know, a bad habit and there are cures, but hear me out ...
We, as a society, are totally focused on that little DJIA number. Is the number up? We're happy. Down? We're sad or scared.
You mention the misery index and that is pretty well recognized. Is it time for a ... post peak oil index of human sensibility? Thats a mouthful, it needs a good name, and it needs some metrics ... ones that are more human centered.
Does such a thing already exist and its just not well publicized???
-SCT
I think that two good numbers to watch are real per-capita GDP and real household income. They would be better if the stats were more reliable, refer to ShadowStats for adjustment:
http://www.shadowstats.com
The gyrations of the DJIA et al are just a distraction, and intentionally so.
I've taken to calling it "The Great Decline". Different template than the Great Depression, because there is no Emerald City awaiting at the end of the road, just something more like perpetual Hoovervilles.
I don't have any problem with that. And what you do by calling on Don to address certain issues, is not only fair, it actually raises the level of the whole discussion.
Unfortunately there are some here who believe that ad hominem attacks and simple negation are ways to win a debate. Those don't get us anywhere.
Sailormon wrote:
I have directly in front on me, on my desk, 350000 Turkish lira. Ohhhh do I ever feel flush.
The Turks recently introduced a new currency: the New Turkish Lira. I think it trades at roughly 1.5 to the dollar.
My huge hoard can be converted into the new stuff any time before 2015. But wait a minute, lets check the conversion rate: 1,000,000 to 1. Do I even have bus fare?
My lovely lady's grandfather just recently gave her a collection of postage stamps from Wiemar days. Letter mail: one million reichmarks!
Leanan believes the US is unique in that it has the Chinese to discipline it. In addition to the Bernanke Put on the stock market, I guess we now have the Beijing Put on the currency. Hmmmm.... I think I'll keep hedging a little in gold.
Because in the free market they supposedly advocate, professionally speaking they are dead men walking.
Shortcut to Export Land:
How dare they leave OUR oil in the ground
They had better insist on getting that indemnity up front (preferably in gold) rather than as an annuity (especially in nominal US$)
[BP pledged it will not invoke provisions of a new permit that allows the largest oil refinery in the Midwest to release significantly more ammonia and suspended solids into the lake.]
Wow, I feel reassured now. I assume this isn't the same BP that had the leaking pipeline and the refinery troubles; oh wait, yes it is. If BP is really so willing to forego their ability to dump ammonia and suspended solids, they should be very happy to agree to an amendment to the permit to "encourage" their compliance with their otherwise meaningless pledge.
Re: Brad Pitt
Better hope he's building on high ground. Regardless of why the disaster in New Orleans happened, the fact remains that New Orleans remains a city that is sinking.
People forget that Katrina passed east of New Orleans, meaning that the city was on the weak side of a category 3 hurricane. It could have been so much worse (water rose slowly, allowing people to escape. Might not be so lucky next time.)
There are many reasons not to rebuild New Orleans.
For history on how it got to this point, read Rising Tide.
I did inhale.
And FAR more reasons to rebuild New Orleans.
Unfortunately, I do not have time to debate this with people of your nature (of the Drumbeat 2 days ago) ATM.
Alan
Alan,
We had that conversation a while back. I've been paying attention since then and it seems that in addition to the concerns which I voiced, and the economic stuff you covered that I didn't know, there are a bunch of pipelines and oil facilities that are exposed now, too. I recall seeing that 230 square miles of coast just washed away during Katrina and the annual rate without a big storm is a significant fraction of this.
How in the world can we undo the harm caused by nutria, stabilize the coast, rebuild or protect the infrastructure, etc. It seems like too much for the money/time/environment in which we have to work.
-SCT
And you're still hallucinating, UnrepentantCowboy, when the levee's broke the water rose 6 ft to 12ft. in an hour.
As I've noted before, we are going to have a city where the water transport from at least 1/2 of the farming and industry meets the ocean, and where 6 out of 7 of the major US railways meet the ocean. And its a heck of a lot cheaper to build decent levees and raise the grade pumping in sand than it is to replace the buildings in a city of half a million.
Besides that, there's a basic social contract for any society to help out other parts of that society. Just because the neocons want to deny it doesn't mean it doesn't exist, just as the denial of evolution doesn't make evolution a debateable myth. If you want to deny that it exists, the deannex New Orleans from the Union and let them charge tolls the way mideaval city-states did to let the shipping and freight pass.
Bob Ebersole
He's not saying not to help. Just not to subsidize rebuilding in the same place.
Next time, there may not be resources available for rebuilding or relocating.
Yesterday the US Army Corps of Engineers came out with their plan to give us 100 Year Flood protection (as originally promised in 1968, the same level the Dutch give to farmland, small towns get better (250 years) and Amsterdam & Rotterdam get 10,000 year protection).
Price tag $7.5 billion, a bit over $1 billion from local sources.
That is about the cost (I earlier asked Leanan for a professional SWAG) to replace the Huey Long railroad bridge, recently the busiest RR bridge in the world. Dual tracks, unlimited weight, modest grades on the approaches.
Just ONE piece of infrastructure that would need replacing.
http://en.wikipedia.org/wiki/Huey_P._Long_Bridge_%28Jefferson_Parish%29
Perhaps Leanan could come up with a reasonable guesstimate of the replacement cost (plus RR approaches for six railroads) in LaPlace (same soil & river conditions) ?
It is her field of expertise.
Alan
I don't think we should be thinking about cost at this point. Cost is meaningless, if half of what we discuss here comes to pass.
We should be thinking about resilience. Failure modes. If New Orleans (or any other port) is that critical, that's all the more reason to reduce dependence on it.
We need a high volume bridge across the southern Mississippi River, preferably one without weight limits and with good access to major Railroads. The next one upriver that meets those specs is in St. Louis (the Memphis bridge is problematic I understand).
You want to relocate New Orleans (and destroy it's culture as a side effect). That means building a replacement bridge to the Huey Long Bridge built by the City of New Orleans (along with about a trillion dollars more of other stuff).
The bridge serves the port and is integral to it's operation, but is also key in shipping from California to Alabama, etc.
There is a fundamental need (as shown by stats of use, which will grow significantly as we shift from truck to rail) for a high volume, unlimited weight two track RR bridge "down here".
I have asked you a question that is related to your professional expertise, how much to replace this bridge and relocate 6 railroads to LaPlace (the nearest possible choice) or, if you prefer, Gonzales ?
A number of specifications are given in the attached link.
I would like a SWAG #.
Thanks,
Alan
Sorry, I don't do SWAGs. At least not for free. It's too much like work.
And I see no point to it, because it has absolutely no bearing on the issue, at least as I see it.
New Orleans is doomed. We are either going to have to replace that bridge anyway, or learn to live without it. Either now, or years or at most a few decades in the future. If we wait, we are likely to have far fewer resources with which to solve it.
It is *FAR* cheaper to save New Orleans, even with a couple of meters of sea level rise, than to relocate the infrastructure.
By at least one and probably two orders of magnitude for those "that know the price of everything and the value of nothing".
The risk is from Lake Pontchartrain, which can be filled in for minimal cost (perhaps $200 million) but at significant ecological cost. The MS River levees (memory) are designed for 21 ft above MSL spring floods.
Got to go,
Alan
And I said before, I don't think cost is the issue. Our disagreement is not based on cost. It's on whether New Orleans can be saved, at any cost.
The way I see it, the Titanic has hit the iceberg, and is going down. I'm saying, "Time to abandon ship." You're saying, "No, we can't leave it. Do you know how much money we spent on those deck chairs?"
My guess is it's not even whether or not New Orleans can be saved or rebuilt. The Feds have clearly shown they will not (or cannot), regardless of the heroic efforts of the locals. My guess is New Orleans will remain a festering sore until the next hurricane and the next do it in. After all, it's not like we don't have many other cities every one of which has been systematically defunded since the Reagan revolution.
cfm in Gray, ME
Dryki,
Do you actually believe that its allright for the neocons to not hold up their end of the contract between a government and its people? It really is an unspoken agreement that people in the US help each others with disasters and that one of the reasons they can collect taxes is for the feds to provide that help. They provided that help to their cronies in Mississippi, but are denying it to the people in NOLA , because they vote Democratic aand have a lot of poor people. And you want to make excuses for them. All I have to say to you and Leanan and unrepententpothead is shame.
Leanan, the reason you won't give us an estimate is because you know it highlights the truth, that its cheaper to build good levees and fill in low areas than to move a vital city. You are refusing to admit you are wrong and therefore validating the kleptocracy cutting taxes on rich people. I am ashamed for you. Bob Ebersole
Bob--
You're switching arguments. Is your argument that 1) there is a social contract for the government to help members of society regardless of the cost; 2) that the alleged social contract is irrelevant and NOLA should be rebuilt because it is cheaper to build proper levees than to rebuild the infrastructure elsewhere; or 3) that the feds should rebuild NOLA because they rebuilt the areas filled with their friends/constituents, and they shouldn't be allowed to play favorites?
Rick
Actually, VT Farmer I believe they are all logical arguments and I'll add a fourth, irrational one; I love New Orleans, its culture and people, and don't wish to see it destroyed.
I don't think the social contract is irrelevant. Since at least the second half of the 19th century, the Federal government has stepped in to help the people of the United States. Southern Louisiana has always paid it taxes and done its share in rebuiding after floods and building levees that protect the river bottom upstream, as well as earthquake damage and tornados and Hurricanes along the rest of America. I think its one of the functions of government to act as insurer of last resort. this doesn't mean it should be totally free, but my flood and windstorm insurance fairly charge for the risk on my property as I explained in a post a couple of day's back.
Building good levees and floodgates for Lake Ponchetrain like the Dutch do to protect Rotterdam makes good economic sense too. To buy out and move the 250,000 currently living in NOLA will certainly cost at least $100K per person or $25 billion, the proposed levees and gates are projected to cost less than a third of that figure. And thats not counting all the human misery of moving the people from their homes and the trauma to the American psyche. It might even be worth adding in any appropriations bill a provision that this is the last time, thats what FEMA does before it buys out houses in a flood plain. If we do that though, we might just consider the cost of buying all the oceanfront and bayfront property from Maine to Mexico and about 1/2 of the state of Florida.
And lastly, Bushites found the money for rebuilding for the rich white Republicans that own the Alabama-Misssssippi coast and the "gaming industry." Haley Barber's friends and contributors, but won't find the money thats 70% black and solidly Democratic. I find that very significant. The government of the 2%, by the 2%, but paid for by all of the people. Sounds like they have diferent ideas about a republic than I have . Bob Ebersole
Bob--
I agree that there is a logic to all of those arguments; however, I do think there are significant counter-arguments.
I do not think there is a social contract to help all people regardless of the cost because obviously that is impossible. A government has finite resources and must choose how it will allocate them. Whatever moneys are committed to rebuilding NOLA are then not available for other pressing needs. It becomes an issue of determining which need is more important. And your point about buying out all oceanfront property from Maine to Mexico highlights the point. Why should the people of NOLA get bailed out and every beachfront property owner doesn't? Should the government build a sea wall from Maine to Mexico to protect those property owners? Your argument seems to say yes.
Weighing the cost of moving the infrastructure depends on what infrastructure you include. Yes, if you include buying out all of the people, it is very expensive. However, if people chose to live in an untenable area, be it a floodplain, earthquake zone, or NOLA, then it is questionable whether the government should bail them out of that choice. (You can parallel this with any bail out of hedge funds--traders made conscious decisions to invest/participate in risky activities, should the government bail them out?) Now, the issue of people choosing to live in NOLA and the risks associated with that is made more difficult by the government's construction of levees. Can the people claim they detrimentally relied on an implied government promise that the government would maintain the levees? Did the government fail to do so?
The issue of the government bailing out its buddies/contributors and leaving non-cronies alone can be more easily handled by the government not bailing out its buddies (though I won't hold my breath on that happening).
I hate slippery slope arguments, but I may have to invoke one regarding the government being an insurer of last resort. I don't see how you stop it from becoming an insurer of first resort for the people who can't afford flood insurance. You personally may be able to pay high insurance rates; others may not and probably simply end up being uninsured. Can the government then ignore them and pay only those people who carried a certain level of insurance?
Did you even read my posts? I've laid out my arguments, and explained why I think cost doesn't matter. The estimate could be 100 times the GDP of the world, and it wouldn't change my argument. Just like those deck chairs on the Titanic could be made of solid gold, but that doesn't mean you shouldn't abandon ship.
OTOH...maybe I am refusing to admit I am wrong because I'm not wrong. Maybe you're the one who won't admit you're wrong, because you own property near the coast, and you're afraid you'll lose money. And you don't care if thousands of people drown because they're encouraged to live in harm's way, as long as your property values hold up.
No, I don't really believe that. I'm trying to point out how silly it is to argue on the basis of the imagined motives of the other person. It's possible for reasonable, intelligent, and well-meaning people to disagree. It doesn't mean one of them is evil, a troll, or intentionally trying to annoy you. Don't take everything so personally. Stomp ideas all you want, but please try to avoid personal attacks. They don't add to the discussion, y'know?
The social contract isn't between the government and Mr X on 123 Elm St.
The contract with the people is to do what is best for society in general. Wasting resources on lost causes would actually go against the interest of the people.
Hmm, I'm with Alan on New Orleans. Fill in MRGO, allow the river to flood south of the city, strengthen the levees, and the sliver by the river should be here quite a while. I can believe that many other place names in the US are living on borrowed time for any number of reasons, as may we be all. I support an intelligent plan to retain New Orleans on, at the very least, its original historic footprint. Actually, I think it should be a national obsession. In the long run, we're all doomed. Live the gusto of life--that's the gift that New Orleans seems to keep on giving, like no other place.
Bob, reread what I wrote. I didn't write that it was OK and I'm not making any excuses. I was observing what the government was actually doing. Too many write what the government should do, when they are not watching what it does do.
Sure, people help each other. New Orleans would have been a complete mess were it not for the individuals that went - and the many who still remain. But it seems to me that one of the big lessons from New Orleans for any community is that the Feds cannot be trusted to come through for that community. [Talking regular citizens - if you hold hedge funds in your portfolio along with a few Congresscritters, yes, it will come through.] NOLA should be a wake up call; this government is losing legitimacy because it no longer serves the interests of the governed.
Beyond that, it's not clear to me that it can. Perhaps you interpreted that as an excuse and I wasn't clear. It's a Tainter argument: natural resources are depleting, we have hit the limits, costs rise, the overall pie is shrinking and the government's response is to wage war (Iraq/Iran/780+ bases) and increase complexity (DHS/RealID/SPP/Fusion Law Enforcement Centers). Costs up, resources down. Ooops.
One of the side effects of this gordion knot seems to be increased kleptocracy - though that might only be precurser to widespread banditry. But don't worry too much, before we get to resemble Nigeria or Iraq we'll have to pass through the El Salvador phase - right wing paramilitaries and so forth.
cfm in Gray, ME
Add Miami to the list of cities that are doomed by GW. PO and GW will cause crushingly sad losses to humanity's accumulated capital, this is just the beginning. Rational triage will mandate that no more good money be thrown after bad, regardless of emotional attachment to a given place. Denial is the first stage of the grieving process; I believe "bargaining" is next.
PLAN, PLANt, PLANet
Errol in Miami
Alan wrote: It is *FAR* cheaper to save New Orleans, even with a couple of meters of sea level rise, than to relocate the infrastructure.
A couple a days ago I weighed in to argue alongside you that federal programs like Social Security are safe for a long time.
But this is different. You have to consider not the cost of relocating the infrastructure, but the low cost of abandoning it. ie. People leave and use existing infrastructure elsewhere which lots of folks are already doing.
I don't believe New Orleans is necessarily doomed. But it's become high risk with the outlook being poorer as time goes on.
Everybody with money, including the Federal government will become more cautious. For New Orleans to flourish as much as it once did will require people to act on non-monetary considerations. That is a possibility. But their accountants and risk analysts will be frowning the whole time.
Here we go again. To support a railroad bridge, an interstate highway bridge, and a railroad junction, we need what, some dozens of people most of the time? After all, the Mackinac Straits Bridge does a fine job of existing without need of a huge nearby conurbation. For heavy maintenance and the like, outsiders come in, and they leave when they are done, no permanent horde required. We don't even need a horde to support a seaport. It's not 1920 any more.
If we check with the Bureau of Labor Statistics here, we find that 7.4% of the New Orleans population is employed at "transportation and material moving". And yet supposedly this huge horde of 600,000 people has to be there, many living full-time well below sea level at Federal expense, or the USA will die of transport starvation. Right.
If we check a city like Madison, Wisconsin, which is a university town with no claim whatsoever to any kind of significant transportation hub status - just a regional airport - we find 5.9% employed at transportation and materials moving.
So the difference between Giant Hub, and No Hub At All, is a whopping 1.5%. I'll take that as SWAG on an upper limit of the number of people really needed for the NOLA port, i.e. around 9000. Only about 4500 are identifiable in the NOLA table as involved in marine occupations, but I'm assuming that some crane operators and the like are buried elsewhere in the numbers. Now, 9000 people, or even twice 9000 people, or even four times 9000 people, can easily live someplace safer - some miles inland on higher ground - and commute to the port and railroad facilities, and in probably not much more time than many of them spend now. It would take only a rather small train or tram service, and/or a minor four-lane highway that's probably already there.
It just seems to be an insane place to locate a city, and it seems inevitable that sooner or later there will not be a city there. The cryosphere data, for example, are not encouraging.
Sooner or later, what little is left of the "culture" is simply going to have to relocate, or else die. Much of it is already gone, replaced by tourist-trap kitsch utterly unworthy of massive Federal subsidy. And all of that put together is a minor part of the area. Most places outside the tourist quarter, one could be pretty much anywhere in a warm climate, and never know the difference.
Now, if the locals insist on it, they're perfectly welcome to impose on themselves the kind of taxes that folks in The Netherlands impose on themselves, to pay for the cited 10,000 year levees (which exist only in some places; the Rhine floods a few years ago revealed glaring weaknesses.) They can start with a 19% local sales tax, to correspond to Dutch VAT, plus a swingeing local income tax to bring total income tax up to Dutch levels. But right now, the Federal taxpayer is paying the freight - although the locals are apparently too inept and corrupt to distribute the largess at more than 10% of the rate at which surrounding states have done - and in the light of changing conditions, once is enough to discharge any reasonable promises.
Those who willfully and unnecessarily choose to live in expensive places ought to pay their own bills, or else move. And yes, that goes just as well for the entire population of the barrier islands from Texas all the way to Cape Cod. But we're Americans, so we feel obligated to subsidize foolish, stupid, improvident behavior to the hilt. Alas, Leanan's right, we will have a disorderly withdrawal from coastal areas that shouldn't be permanently populated in the first place.
Don't forget the cities perched on top of major faults, beneath or on volcanoes, in the bullseye of tornadoes, blizzards, river flood zones, tsunami's, in the middle of a bone dry desert, and the ever present threat of a giant meteor strike. Gee, maybe we shouldn't be on this planet atall, y'all. ;)
I think we're going to find a lot of cities are in the wrong place, or built the wrong way for their location.
And climate change is only going to make it worse.
Judging from the archeological and anthropological evidence I'd say that's a foregone conclusion. We've "Been there, done that" and got an old raggetyass T-shirt to show for it. :) I reckon we're just slow learners.
"Gee, maybe we shouldn't be on this planet atall, y'all. ;)"
Or maybe just not in such crazy numbers, concentrated into such crazy places.
The opposite of "the city as we know it pretty much sucks" is not "humans totally suck".
;-)
So M U C H BS, so little time !
I am 4 blocks from the Norwegian Seaman's Church. Besides serving seamen, it is also the Norwegian Gov'ts outreach to the over 1,000 Norwegians living in New Orleans (down to just over 1,000 post-Katrina according to a staff member). At least one Norwegian I know is part of the local Jazz scene, but the overwhelming majority are involved in shipping. Add some Swedes, Danes and Finns (all flags flying in front of the church and local newspapers & magazines inside).
The local Greek Orthodox church serves a comparable role for the Greek community here.
I also know the local Greek seamans bar, and the working girls that work there (I suspect they were missed by the data collectors).
Add barge cleaning crews (barges do need to be cleaned when the cargoes change, hard, dirty but very well paid work).
You grossly underestimate the railroad employment here. On the East Bank, Norfolk Southern, CSX and Canadian National exchange freight with Union Pacific, Burlington Northern-Santa Fe and Kansas City Southern on the West Bank over the Huey Long Bridge. Extensive marshaling yards are required to sort rail cars for this 3 to 3 transfer.
And at least two railroad maintenance companies are based in New Orleans, as well as an Amtrak maintenance depot and crew station.
A couple of days ago you made the erroneous assumption that most freight was containerized. New Orleans handles a large # of containers, but it is one of the least containerized major ports (LA/Long Beach the most containerized).
The Nashville Avenue wharf is always the busiest steel handling port in the USA and often the busiest in the world. A very robust (and expensive) infrastructure with a skilled workforce is required to pull mixed steel cargoes (I beams, rolled steel, plate, 500 ton forgings for nukes and other heavy industry, etc.) out of ships and safely load them on trucks, rail and barges. When Bush limited steel imports in his first year, it was estimated to cost New Orleans "over 1,000 jobs".
Frozen poultry exports also require special handling and support (and we are a center for those).
We are one of three world wide copper depots in the world, with security required for that.
Specialty chemicals (those shipped in less than shipload quantities) require individual attention and chemical specific handling and cleaning. Something that we do routinely.
And so many other specialty cargoes requiring special handling; fruit, coffee, trucks, machine tools, metals, etc.
The crewmen from visiting ships & barges require dental and medical care (and want other care), the ships & barges require chandlers and repairs, pilots and much more.
All of the port workers have spouses, children and elderly parents (and extended families in New Orleans) and all require postal workers, police & fire, streets, plumbers, schools, medical care, water & sewer services, and all else.
Much of it is already gone, replaced by tourist-trap kitsch utterly unworthy of massive Federal subsidy
ABSOLUTE AND COMPLETE BS !!
If I thought you a decent human being, I would invite you to Donna's on a Monday night (a hole in wall jazz club where 6 to 10 musicians in the audience get up and do part of a set), or to follow a Mardi Gras Indian tribe as they parade, or to join in a second line parade behind a jazz funeral (New Orleans puts the fun into funeral :-), or enjoy the food in a thousand restaurants, or see our architecture and daily way of life and how we talk to each other, or read "The Confederacy of Dunces" or dozens of other great works of art from here, visit several of the innumerable showings by local artists, ride the world's oldest operating fleet of streetcars (built 1923-24) on the world's oldest Urban rail line (open 1834-35) with people going to work or to visit friends or catch a performance.
But you seem not to have wondered even one block from Bourbon Street onto Royal Street.
And since you are former Dutchman and live on the 53 latitude (i.e. outside the USA) what right to you have to make judgments ? And other than misanthropic emotions, what interest do you have ?
More if I have Time Later,
Alan
I'm with you Alan, although I'm not an american. It is too sad to lose New Orleans, and to build what instead? A fresh souless, anonymous brand new city?? In the middle of nowhere?
That fact is, it seems that some other fellow citizens won't give you a hand, you NO inhabitants. So you have to prepare, from now on, to finance LOCALLY the whole earth-moving work s.
To rely only on yourself is sometimes the best way.
The suspicion on my part, Leanan, is that if your replacement city is built, it will have no black people in it. Blacks own property in the current city, but they can't afford insurance on it. So they will use their votes to stop you from getting your way. They are doomed no matter whose side wins. So do you believe that there is a value in having communities of black homeowners - that in fact the black community of New Orleans has created vastly more of value to the United States than it has consumed over the last 200 years and is not just a liberal welfare scam? Because you know damn well the reason black homeowners are historically stuck on land nobody else wants. There's a whole lot of black folks living on a whole lot of toxic waste dumps all over this great country who are waiting to hear if the Peak Oil crowd thinks they're expendable due to their "foolishness".
My sister worries that blacks will be pushed out of New Orleans. She thinks rich whites will sweep in and buy up the property from homeowners who are desperate for anything they can get.
Why? What I am in favor of is giving property owners enough money to resettle. Sort of like eminent domain. At least as practiced around here now, where fair value is offered. (I understand there have been abuses in the past.)
If that's true, then it really doesn't matter, does it? This factor is a wash, and other things should be used to make the decision.
I have done a small bit.
I lent one black man with family $34,000 to raise and buy materials to fix up a flooded home (he got owner financing for the purchase price of $38,000). After over a year of sweat equity, appraised value $245,000 and he was going to finance 74% with the $ to pay off the two loans (original owner & me) and balance going to start-up a small hardware store with partner.
Deal fell through last week with mortgage problems, looking for another company now.
I have another smaller deal lined up with a black single man when this one pays out. I have also helped out whites as well.
I have meet only one white New Orleanian that does not want the city to be at least half black. We would lose too much of our culture without them.
Best Hopes for Rebuilding,
Alan
New Orleans is Doomed
A definitive statement without explanation, conditionals, modification or time frame.
This appears to be an article of faith and emotional belief rather a reasoned engineering judgment, for you have never engaged in any sort of debate on this conclusion or article of faith of yours. You simply restate your mantra.
Chicago is doomed
One day advancing glaciers will grind away every work of man from the surface on the south end of what was Lake Michigan. But the time frame is such that this future fact should not impact public policy.
When “New Orleans is doomed” is not specified, and hence is in some indefinite future that may or may not be soon enough to impact current public policy. And how soon “certain doom” would need to be to affect current public policy is also subject to debate.
The Mississippi River will change course
http://pubs.usgs.gov/circ/circ1133/geosetting.html
There WAS a natural tendency for the river to go down the Atchafalaya Basin & River, but this has been ameliorated and will be reversed. The energy to make this change has been extracted from the environment and put into our electrical grid by the Louisiana Hydroelectric Plant. And a third to a fourth of the annual water flow is allowed to go down the Atchafalaya, which is expanding the Atchafalaya Delta. “As the mouth advances southward and the river lengthens, the gradient declines, the current slows, and sediment builds up the bed” is already occurring in the Atchafalaya (the design creates a very slow moving and broad “river” for maximum silt deposit).
By contrast, the hydraulic gradient down the current course of the Mississippi River is unnaturally steep. Three 750’ wide navigation channels over 100’ (30 m) deep at New Orleans today so the natural process of “the current slows, and sediment builds up the bed” is just not happening. So, even today, the lowest energy solution for the river is to stay in it’s current course and this delta between the deltas (Mississippi & Atchafalaya) will only increase with time as the Atchafalaya delta grows.
Rising Sea levels will Destroy New Orleans
This is highly questionable for several reasons. If you and your ilk have your way, the odds will be dramatically increased by orders of magnitude, a self-fulfilling prophecy !
But it is not a particularly difficult or inordinately expensive to design a variety of solutions for defense in depth. As I have stated before, and you have apparently ignored, New Orleans has a unique advantage over every other coastal city, the Mississippi River and it’s annual silt load of 200 million tons (down by half since upriver dams were built, higher with a new Dust Bowl, down with widespread permaculture).
The current levees facing the Mississippi River are designed (from memory) for a 21’ (6+ m) spring flood, and than can be easily raised another couple of meters. Add a “pressure relief valve” for the extraordinarily rare (once or twice a millennium apparently) hurricane coming up the river and we are “good to go” for quite a bit of sea level rise on that front.
The highest and best use for the silt is to reclaim and rebuild former wetlands. Build diversions like the trial Caernarvon Freshwater diversion project.
http://www.mvn.usace.army.mil/prj/caernarvon/caernarvon.htm
Increased fisheries alone should pay for the cost of building diversions to spread the silt over the Mississippi River Delta. And as sea levels rise, so can the surrounding swamps.
And the risks from Lake Pontchartrain can be resolved in several ways. A gate such as the Dutch built across several estuaries across the entrance to Lake Pontchartrain seems best to me. We already have one 1920s era causeway, two Interstate Highway spans and two railroad bridges across that sound, so it is not beyond the skill and scope of humanity to build a surge gate there. Add railroad tracks on top for future access and dual use/efficient use of civil structures.
Raise and harden the lakefront levees,
Lake Pontchartrain can be kept shallow by periodic additions of silt from the Mississippi River via the 1930 era Bonne Carre Spillway.
The exact amount of sea level rise in the next century is still HIGHLY uncertain, and one major variable is what humanity chooses to do about it. New Orleans can, in my considered judgment, easily and at a reasonable economic price (far less than relocating infrastructure) adjust to a 1.5 m sea level rise. I simply have not looked beyond that level because it is such a remote possibility and not because it is an intractable problem.
And then there is the lesson already half taught that it is alright to abandon fellow citizens in moments of distress, a lesson that, if properly learned and implemented, is the quickest and most efficient way to destroy social cohesion and society itself.
Best Hopes for Reasoned Judgment and Cultural Values,
Alan
I am by no means an Ayn Rand fan, but it is interesting to recall that a key turning point in the plot of Atlas Shrugged was when the only railroad bridge across the Mississippi was destroyed (thus depriving the whole eastern US of western-produced food & energy).
Ironically after the last 7 years this seems far more likely to happen under a hyper-capitalist Republican government that, like Rand, refuses to accept the existence of public goods.
The permanent population needed to support even a high-volume bridge is very close to zero. Point not taken.
You'all miss the point about Brad. The most dangerous thing he said is that utility bill are a thing of the past. He thinks that if we would only embrace the renewable alternatives that we could get rid of BIG BAD energy companies etc.....I suppose he'll still be supporting corn to ethanol as he tours africa next time....
The most dangerous thing he said is that utility bill are a thing of the past. He thinks that if we would only embrace the renewable alternatives...
I am not sure if you were saying this after a bit of a nip of the ole sarcanol or not.
In any case, reducing electrical and natural gas demand by half in a dense walkable neighborhood can ONLY be a good thing ! I just wish that they aimed for 90% or 100+% (more conservation, more insulation).
And using collected rain water to flush toilets with and water gardens with is not bad either (less of a positive in New Orleans than elsewhere, due to our abundent and low energy water source, the Mississippi River but certainly not a negative).
Best Hopes for Energy Efficiency,
Alan
$7.5 billion? What is that...two, maybe three weeks of funding for the Iraqi war? Alan, its a no brainer. Get the levies replaced and call a time out for a few weeks in the war effort. Who in America would even notice, except the families of the troops, if the debacle in Iraq were suspended for a few weeks?
$7.5 billion...OR equivalent to one day of Central Banks/Fed bailing out hedge funds, banks, and mortgage companies.
Yup. 12 Bil a month. Louisiana needs it more than Iraq. Let's get it done. Maybe we could use the rest of the month to restore wetlands; call it something sexy like pre-emptive terraformation.
http://www.nationalpriorities.org/Cost-of-War/Cost-of-War-3.html
Rat
[there's a basic social contract for any society to help out other parts of that society]
But why is said social contract so selectively applied? If my house is destroyed by a tornado that leaves everyone else alone, I'm out of luck; if my house is destroyed by a tornado that wipes out my entire town, suddenly the feds are more than willing to come in and lend me money. I am just as bad off in either situation; why wouldn't the feds help in the first scenario?
A lot of those buildings have to be replaced anyway, and others will have to be if social disfunction continues and they burn or are stripped for copper by criminals.
Only question is whether to replace them in situ, or somewhere upstream and uphill. For things that don't absolutely have to be within reach of the Port of New Orleans, I'd opt for the latter.
The algae guys up top, might use the Carbon Dioxide once, but then they are making a fuel out of it, which means they are going to put it back into the air again. So where does this solve anything, but give us another Bio-fuel? Unless they can close the loop. Make the algae grow off the CO2 of burnt Algae-Bio-Fuel, and keep growing more Algae.
Also from the blog up top talking about what the world could be like in the future. Upon reading it, it seems like a great idea that has been talked about at length for the past 3000 years when we wanted to all live in a utopia.
My post earlier about my own Sci-Fi utopian vision, is still a pipe dream. His is too. But I do understand where his ideas come from. The need to fix the problems we see, we make the jump from problem to solution and hope others can just get on with it, it seems so simple to us that it is all so solvable. But I have found that Though I can see the solution to a problem, unless the person or persons that I am trying to help WANT to be helped, nothing I say or do will change them.
Most of us Here at TOD and other Energy Blogs know we have a problem, it is convincing the others that there is a problem. People see the news and read about how the town next door in State/Country X was flooded and then go about reading the rest of the news. Even when they are the ones Flooded, Changing their own live style is too hard of thing to do.
N.Y. utility scrapping ocean wind park
http://news.yahoo.com/s/ap/20070824/ap_on_bi_ge/li_wind_power;_ylt=Ats.1...
I have a feeling we're going to regret this one day.
PEAK WIND?
Wind, at least large wind farms of the type we have seen built over the last several years, may be near peak.
All indications are that the megawatts of commercial wind power (that is, wind power intended for sale or to go to the grid) construction may soon begin to flatten, and then drop off. Why?
If you put the phrase "Opposition to wind farm" in the Google search bar, you will get 1.69 million hits, including such links pages as
http://www.aweo.org/
(Note the similarity to the http://www.awea.org link, which is the big pro wind energy association in the U.S.)
Wind power is a marginal proposition under normal circumstances, but with growing green/preservationist/environmental opposition to it, it has little chance of surviving as a commercial enterprise. Wind power is now almost without friends, except for a handful of visionaries in the wind energy business, now under attack from the entrenched energy industry, and from what would have once been it's friends and supporters in the preservationist/green/environmental movements.
I do not want to go long here, so I will leave it at this: Alternative energy is now in the beginning period of "weeding out". The alternatives are now in contest more with each other than with the entrenched fossil fuel industry.
The weakest alternatives, for whatever reason will begin to lose support from the financial community, from technicains and inventors, and in the case of wind and ethanol, from most of the environmental community who once to at least to some level supported them.
The alternatives with a future will have to do the near impossible: Produce large volumes of energy, and at the same time be virtually invisible, silent and with near NO output of carbon/pollution.
It's a tall order. The question is, can it be done on a time scale that will mitigate the world energy situation and avoid major economic/humanitarian distress? Only time will tell. The challenges being thrown in the path of alternatives are daunting. On the other hand, I am reluctant to bet against the technicians and developers. The challenges are driving them to efficiencies and a level of cleanliness/transparency/invisibility that would be truly revolutionary IF it can be done at all.
(I say the above with greatest reservation. I myself have a website that was to be devoted to a wind energy idea that I still believe has technical merit. However, given the new level of opposition {in some cases, outright hatred} of what is now regarded as "the industrial development" of commercial wind, I now do not believe that my wind ideas are for that matter most wind project ideas, have a commercial future)
Thank you for your time
Roger Conner Jr.
Remember, we are only one cubic mile from freedom
Peak wind? I'm sure there's some humor there somewhere. :)
Peak Wind! :D You should write for the onion, hilarious.:D
the antidoomer says,
"Peak Wind! :D You should write for the onion, hilarious.:D"
No, not at all hilarious. Tragic. The "crimes" that the wind energy industry are being charged with are growing exponentially. But, if you are not keeping track of what is going on, I will give you time to do your own research. However, I will give you just a little sampler:
http://www.aweo.org/Sliwinski.html
“ Over the past nine days and 3,000 miles and seven wind farms, Sandy Swanson and I took many still shots, reams of video, and copious notes and conducted numerous interviews. What's happening is an absolute crime. Every single impact that is denied by developers has been confirmed again and again in wind farm after wind farm. Lovely rural communities are being turned into industrial freak shows. In some places people have just accepted their fate and live with it, not understanding how empowered they actually are by their situations . . . meaning that all they'd have to do is get noisy enough and the developers would stop ignoring them. One told us she's learned how to go outside in her garden and block everything from her mind . . . so as not to be disturbed and frustrated. She said once, on a quiet day (the turbines weren't moving), she heard what sounded like gunshots. She had been blocking everything as she had taught herself to do and suddenly realized the gunshot noises were really coming from the nearest turbine . . . probably contracting as the sun went down.
Scott Srnka from Lincoln Township, Wisconsin, is enduring such awful atrocities, it's very hard to believe they're true. I've even steered clear from his information over the past three years for fear of being accused of using scare tactics. But the guy is rock solid, and anyone who meets him and actually goes to his beautiful farm and sees his beautiful family knows he's the real deal. His neighbors know he's honorable and credible and that his troubles are real . . . it's those of us who hear about his dilemma long distance that doubt the truthfulness when we hear about his deformed cows, his family's health problems, etc. due to severe stray voltage. “
Another says that her little kids are terrified by the noise and can't fall asleep when conditions are bad, such as on rainy nights. Their nearest turbine is 1,000 feet from the bedroom window. Another older woman says, through tears, that her town, where she was born and raised and where her family farm still exists, has been ruined.
Story after story after story . . . .
And it is having an effect on legislation:
http://www.awea.org/newsroom/releases/Anti_Wind_Provision_in_Rahall_Bill...
Put this phrase in the Google search bar, “Anti Wind Legislation” and search for yourself.
I was going to do a longer post that included a discussion of the growing competitors to wind that do not suffer as yet from the virulent, slanderous and well organized attacks that wind power is coming under, and discuss the advantage of silent and low to the ground alternatives...etc, but then it occured to me, why waste my time?
The money will go to the alternatives with the least resistance, the least time in court, the least time fighting lawsuts, protests, and media slander.
Wind is now becoming anything but that.
Is it possible that someday on TOD we could engage in a forum of REAL WORLD challenges? These are issues that are not specifically limited to technical and bizarre and fantastical mathematical EROEI formulas, but what will have any chance of working IN THE REAL WORLD?
Well, it's always fun to dream.....
Roger Conner Jr.
Remember we are only one cubic mile from freedom
Humans are certainly boneheads.
When I was under 5, I complained like hell when it was time to go to the doctor to get my innoculations. I had no conception that it might save my life - it was unnatural, annoying, and briefly painful. I've since become quite thankful for their availability.
Since most people literally think the world runs on magic and will forever, of course they don't like change of any sort. Hell, even Walter Cronkite opposed a wind farm in neighborhood. And that's the way it is.
Similarly, the "environmentalists" in Hawaii here have successfully lobbied against geothermal energy expansion, preferring to ship oil tankers to the world's largest active volcano for "aesthetic and spiritual" reasons. As an actual environmentalist, this annoys the hell out of me.
Boneheads.
Unfortunately NIMBY and BANANA have taken over. Folks with money and attorneys (or backing of larger companies who see their benefit in people's gripes) pump up the volume. All it takes a some cash and a few self-righteous sound-bites and FOX news will pick it up. From there you get ton's of Google hits. What we are watching is the dark under belly of greed and selfish intent turning Democracy on its' head. Democracy assumes a bit of wisdom in the governed who can eventually sort out societal benefit from harm. But alas, we have devolved to our lower-common-denominator... a Democracy sinks or rises above the scum by the level of common education and self sufficiency in thinking and reason. IMHO we are doomed. Our basic assumptions about a nation "doing the right thing" are wrong. I love the G. Carlin quote on this site, to paraphrase: Americans can take either a good or bad idea and run either into the ground.
OK, time for me to take my next dose of Prozac, but occasionally it wears off...
Roger..... select appeals to emotional NIMBYism is not a strong approach to dealing with the issue. As you well know life is about trade-offs.... ask those people if they are willing to live without electricity and see if they change their tune.
One of my observations in Japan was the willingness the natives had to do things and live in places that many Americans simply don't. Example: living under railroad tracks. When I mean "under" I literally mean under, as in physically below the track by only a couple of meters. Sometimes the houses were physically connected to the tracks above them.
Wait until solar thermal gets underway... and the stories that will come out about the acres of mirrors popping up. Ranchers will bemoan that their cattle/sheep grazing will have been interfered with...
It seems to me that for the problems that wind energy has... other energy sources have even more.
Deformed cows from stray voltages? *ahem* Easily solved by fitting each cow with a tinfoil hat. Also protects them from mistakes by stupid hunters.
Methinks this information is a tad fringy.
Roger, we like wind in Texas, as I've gone over numerous times.And our decontrolled utility rates are so extortionate, its acually cheaper. I pay 0.15 a kilowatt/hr. Bob Ebersole
Next Tuesday, perhaps?
Wheat prices reach record level
http://news.bbc.co.uk/2/hi/business/6962211.stm
Wheat prices have hit record highs on global commodity markets, bringing the threat of rising bread prices.
Bad weather in key grain growing areas such as Canada and parts of Europe has limited supplies as demand has risen, sparking fears of a supply shortfall.
Surging prices are also expected to have widespread fallout for consumers.
While it will mean higher bread prices, it could also trigger an increase in meat and dairy prices as farmers battle to pass on rising feed costs.
Global wheat stockpiles will slip to their lowest levels in 26 years as a result, official US figures predicted earlier this month.
'Bad weather in key grain growing areas' ??? This will certainly cause beer prices to go up! If there is one thing that will get the attention of lots of Merkins, its an increase in beer prices.
River, one of the items on my ten year to-do list is to learn to grow barley and hops. Some things you don't leave to chance.
Relax. Washington, Oregon, and Idaho grow virtually all the hops for the US. And we'll be glad to keep exporting it after we secede.
Most of the barley comes from ND and Montana, but WA and ID probably grow enough for beer. Good wine, too.
The increase in the price of gasoline hasn't had much impact on Joe Sixpack. The real problem is still in the pipeline. Lester Brown pointed out back in 1995 that to provide every Chinese with a single extra bottle of beer would require an additional 370,000 tons of grain.
Brown wrote a book "Who will Feed China". Maybe Old Joe will learn to enjoy the local cheap wine instead of beer, as he will have lots of time to enjoy the thrills as China out bids the U.S. after Peak Oil...
E. Swanson
If China were to replace every deciduous tree with a fruit bearing tree and maintain them, they might have piles of dried apples, other fruit, and cider year round. Trees can be grown on terraced or gently sloping hills where plowing for grain would cause too much erosion. They have huge coal deposits and some oil and natural gas. They are the only nation I know of with a one child rule. If the first child is not a boy they give the couple a second chance. There is population growth as diet improves, people live longer and others cheat.
Anyhow their oil production is near flat to slightly increasing and their auto sales are up.
China July 2007 Auto Sales up 37% YOY
Reuters:
http://today.reuters.com/news/articleinvesting.aspx?view=CN&WTmodLOC=C3-...
You're a little late. The biggest threat to the North American apple industry, especially west coast, was the 1990's explosion of the Chinese pome fruit orchards. (Not incl. Alar also)
Unfortunately the one-child rule is collapsing. Hundreds of millions of Chinese are moving up right into the income range where people try to support more children, and only tens of millions are moving into the range where they are so self-absorbed and lazy that they can't bother to reproduce. I hear the workers really resent the exceptions to the rule, and the government just doesn't have the power to enforce that it once did.
Now here's a fun question: what happens when your population becomes over 60% male?
Lots of potential soldiers.
No, Peak Sadness.
Thousands and thousands and thousands of young and not so young men who can't find a wife. Potential soldiers is one outlet and social strife another.
Hrm ... Crusades in the Holy Land? And an oversupply of French males behind it ... what will the Chinese do?
Peak melamine?
Some blogs are reporting rumors that Fidel Castro has passed away. No confirmation from mainstream news sources yet that I've seen.
Nope - Skåne Norra is the source but its not trustworthy
I think as long as the freezer he's in is still powered, he's alive.
Hello TODers,
I was doing a little research on A123 batteries for the upcoming GM Volt PHEV. A123 talks about these batteries using nano-phosphate + lithium, but I couldn't find any info on how many pounds of each element will be required to construct these batteries [propietary info?]. Does anybody have the info?
Recall my earlier post on how Chile has 75% of the world's lithium supply and how the stock price of SQM has gone through the roof already. This is, of course, the normal economic 'receding horizon' for a depleting resource; the price rising to the Liebig Minimum like 1914 Potash [$10,500/ton in 2007 dollars] did until the New Mexico mine was discovered.
Since mined phosphates are the predominant source of P for growing food: if a significant % of P will be now be diverted to making PHEV batteries--> how much more will this leverage up NPK fertilizers prices and food prices? That is why I am curious how many pounds of P is required for these batteries.
I fear WT's ELM plus the depletion and pricing of NPK might happen so fast that it may soon be pointless for the building of personal-PHEVs-- we might be required to go straight to delivery truck-PHEVs for hauling the goods from the RR depots. Feel free to elaborate or dispute my speculative conjecture.
EDIT: Wild & Crazy Thought? Will one Volt PHEV require enough P to sentence 100,000 poor people to starvation? That could be a really shocking 'moral price tag' for someone trying to be environmentally conscientious. Do most radical environmentalists piss in their backyards like me?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
OPEC member Indonesia was exporting about 500,000 bpd (Total Liquids) in 2000. They were a net importer from at least 2004 on, a probable net export decline rate of 50%-75% per year, from 2000 to 2003.
Like Saudi Arabia, I guess that they are staying close to their OPEC “quota.”
BTW, what do you call the OPEC quota for a net importer? Don't we need some new terminology?
http://english.people.com.cn/90001/90777/6247435.html
Indonesia concerned over declining oil output
August 24, 2007
Two interesting IEA graphs:
Saudi Production Versus OPEC Quota
http://omrpublic.iea.org/supply/sa_cr_tg.pdf
Indonesia Production Versus OPEC Quota
http://omrpublic.iea.org/supply/in_cr_tg.pdf
WT--
The IEA graph is misleading. It stops its red line accurately at the end of October; however, the inference is that the quota continued at the same point. It did not. At the Consultative Meeting in Doha in October '06, OPEC lowered the quota 1.2 mbpd, effective Nov 1, of which KSA's share was a 380 kbpd decrease. In December in Abuja, OPEC again dropped the quota another 500 kbpd effective Feb 1. KSA's share of the decrease was 158 kbpd. So KSA's production is consistent with its quota. (This is not to say that OPEC isn't dropping the quota to mask the inability of KSA to maintain production, but as OPEC is fond of saying, "the markets are well-supplied with oil and the current prices do not reflect market fundamentals".)
Rick
I frequently post my "fake news" report of the Texas RRC announcing that "market conditions" are such that they are maintaining their 35 year policy of producing at "less than capacity."
However, it's really not that fake. I frequently quote the Texas State Geologist, who said that it was possible that we could reach peak production again in Texas.
From my "Net Oil Exports & Iron Triangle" article:
Well, technically, on a 'forward-looking' basis, every day is a new peak.
The litany of reasons OPEC gives is pretty amusing though. I really like their claim that the inability of our refineries to handle their increasingly heavy and sour crude is a 'refining bottleneck' and the market is well-supplied.
The most disingenuous claim was their Sept '05 offer to increase production by 2 mbpd if anyone asked them to (137th OPEC Conference), but then claimed no one asked for it because the market "is so well-supplied". (138th (Extraordinary) OPEC Meting) I also like that when prices rise, it's due to numerous external causes over which OPEC has no control, but when prices fall, it's due to OPEC's decisive action.
Hello TODers,
My thxs to Leanan for the topthread link, "Preparing Australian Agriculture for Rising Energy Costs and Water Insecurity".
http://en.wikipedia.org/wiki/Haber_process
---------------------------------------------
The Haber process now produces 100 million tons of nitrogen fertilizer per year, mostly in the form of anhydrous ammonia, ammonium nitrate, and urea. 1% of the world's annual energy supply is consumed in the Haber process.[1] That fertilizer is responsible for sustaining 40% of the Earth's population, as well as various deleterious environmental consequences. [citation needed].
----------------------------------------------
Most people are unaware of the fact that one percent of the world's energy supply is used in the Haber-Bosch process to convert natgas into nitrogen fertilizer. As natgas depletes globally: there will be a huge reward for the non-FF techno-fix that could make nitrogen fertilizer even cheaper than the Haber-Bosch Process.
No, suggesting the planting of legumes will not get you the cash. But if I was a chemist: the best and most energy-efficient method would be trillions of ping-pong ball sized catalytic mini-converters that could be planted in gardens or plowed into farmland. These could be the small houses for the bacterium: Rhizobium, which fixates nitrogen from the air. Then every few years you remove those balls for recycling/recharging, then plant new ones. But I have no idea how to accomplish this, just another wild & crazy idea from an ignorant city-boy. But maybe it will create an inventive brainstorm for some genius out there.
Until then, I would expect the price of ammonia and its derivatives to rise much faster than the price of FFs, especially as our population continues to grow and the amount of arable land declines.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Bob, ammonium nitrate is vital to surface mining of coal and minerals of every description. Few outside the mining industry have an clue about the quantity of explosives used. In West Virginia 314,000 TONS of ammonium nitrate are used for blasting each year. This usage is for just one state! I dont have the numbers on usage in the western states but I know from experience that a lot of mining and blasting is going on there. The quote from below is from an environmental protection group but I have seen another figure of 347,000 tons per yr for WV elsewhere. Without these huge quantities of explosives strip mining would be dead in most locations.
'Oh by the way, and with no correlation in any regard except for the amount of explosives used, the 314,000 tons used in West Virginia (90% in coal mining) is roughly equivalent to 1,000 Oklahoma City blasts per county per year. Perhaps a call to your legislator to suggest reasonable funding for the OEB would be appropriate.'
http://www.wvecouncil.org/green/green_1999_08.html
An unusual guest column for Forbes.com ("Investing for $100 oil")--it basically admits that we have peaked.
http://www.forbes.com/finance/2007/08/24/transocean-apache-valero-pf-ii-...
The guy wrote:
yeah, sure. It fell last year, though it was a growth year. In previous recessions, it fell or (rarely) flattened.
The guy is talking his book.
Asebius calls it exactly right.
Forbes is doing it's normal thing, promote the brokerages, promote the fossil fuel companies....did anyone notice that even in the face of $100 per barrel oil, the two things NOT talked about were reducing consumption and alternatives.
Right now, gasoline in my area is between $2.58 and 2.68 with crude oil over $70. If crude oil goes to $100, gee, that would put us back at the summertime price...(yawn) who would notice?
I know that is a simplistic extropolation, but my point holds....given the current inflation rate and incomes, I am not sure anyone but the constant complainers would notice oil at $100 (a female friend of mine recently said "gasoline is back to $2.52.....better, but that's still HORRIFIC!" What do you want to bet she wouldn't have said the same thing if it was $1.10 per gallon (like so many Americans)
RC
In the seventies, thru three recessions, oil never fell y/y (nominal.) What dropped the price of oil was new supplies from the north sea, north slope, and siberia.
Last summer, as price rose to 78, US stocks were already high when world production of total liquids did everything right, reaching a jul/aug peak and bringing about the crash in prices. Stocks are lower now even as iea is begging opec to produce more. US consumption is up 1.5%, china imports up 40%...
IMO oil is even more inelastic now. THis means that, in a recession, people
will cut back on every thing else before cutting oil.
We seem likely to be in recession by mid 08, maybe oil will pull back a bit from what I think will be a new recored. But consider; if we go from 3% growth to 3% recession (very severe), and if oil elasticity was the same as all other goods, then US consumption would decline 6%, reducing world consumption 1.5%, balancing out other increases. But, being inelastic, reduction in oil consumption will be much less than other goods, so overall world demand is likely to rise as supply continues to shrink.
BTW, the writer is a timer, and not even recommending big oil but, rather, recommending the smaller oils and service co's that I would prefer. IMO he is just saying what he thinks.
jkissing wrote:
Good grief, dude, that is actually what you wrote!!! The US goes into severe recession and the world trucks on like normal. Reality check: when people default on mortgages in Miami, hedge funds blow up in France and French stocks tumble.
If I didn't know better, I'd say you were a futures trader with a long position in oil, talking your book!
But I would point that you agree with me and disagree with the writer.
i.e. Domestic demand for oil will, in fact, fall if the US economy contracts.
Jeff Masters has more on the ICE CAP melting.
New images/plots of AUG 21st ICE CAP shrinkage...fully 1/3 NOW gone...WOW!
http://www.wunderground.com/blog/JeffMasters
Nansen Saleri has just retired from Saudi Aramco
www.saudiaramco.com - News Room tab
Reservoir Management Leader Saleri Says Farewell
DHAHRAN, August 22, 2007 -- Nansen G. Saleri, head of Reservoir Management, retired after 15 years at Saudi Aramco and 33 years in the upstream industry.
...
In 1999, he established the company’s Reservoir Management metrics and helped set its reservoir management practices as the global standard of excellence. He spearheaded deployment of maximum reservoir contact wells in 2000 at Shaybah - now a lynchpin for increased productivity and cost savings.
In 2003, he led the Best-in-Class Strategic Imperative Well Optimization initiative that introduced several new technologies, including “smart” wells, geosteering and water management. It was one of the main initiatives that established Saudi Aramco as an industry leader in upstream technologies.
Saleri also initiated the Ghawar Integrated and New Technologies project to better understand recovery processes, leading to the Ghawar Strategic Monitoring and Surveillance Master Plan which became a model for all active fields.
He directed reservoir-development plans for several major projects, including Shaybah, Hawiyah and Haradh gas plants, Haradh increments and many others.
...
He was one of the key technical spokesmen for Saudi Aramco’s reservoir management practices in international forums, most notably at the Center for Strategic and International Studies, Washington, D.C., in February 2004.
This was the 2004 presentation
http://www.saudi-us-relations.org/energy/saudi-energy-reserves.html
One third of it gone with three to five weeks of melting left. Yummy.
The hidden part is scary, too - this is the surface area loss, but underneath I recall reading that the average thickness has dropped from 10' to 6' since we began running nuclear subs under it during the 1950s.
Again I want to stress that in comparing the Oil based economy and the polar ice I felt that both systems had a lot of positive feedback loops and correlations that cannot be modeled. The arctic is in effect crashing. I see no reason that the oil based economy wont follow the same fast crash path. WT Export Land is just one of potentially millions of positive feedback loops of varying effect and sizes being activated as oil supplies tighten. Not to mention correlations. I just can't see how a system literally riddled with positive feedback like the oil economy post peak won't crash.
Check out the 30 day animations here:
http://arctic.atmos.uiuc.edu/cryosphere/
It's disappearing at 0.4 million km^2 per week! Even though this rate will slow down, the current ice loss will destroy the previous record. We will probably see a minimum of around 2.3 million km^2 before it starts recovering in late September.