DrumBeat: September 30, 2008

Oil Drops Most in 17 Years in Quarter on Economy Woes

(Bloomberg) -- Crude oil futures plunged 28 percent in the third quarter, their biggest decline since 1991, amid concern that slowing economic growth will curtail global demand and as the dollar advanced.

Oil traded within a $56 range in the quarter, reaching a record $147.27 a barrel on July 11 and retreating to as low as $90.51 a barrel on Sept. 16, as long-term supply concerns gave way to forecasts a recession would cause fuel use to drop. The dollar is having its best quarterly gain against the euro.

``It's been one of the wildest quarters I've ever seen,'' said Peter Beutel, president of Cameron Hanover Inc. in Stamford, Connecticut, who has been watching the oil market for 25 years.

Crude oil for November delivery fell $39.36 in the three months ended today to settle at $100.64 a barrel at 2:51 p.m. in New York Mercantile Exchange trading. It was the first decline in seven quarters. Futures moved 5 percent or more on a quarter of the trading days. Oil rose $4.27, or 4.4 percent, today.

Mexico refining talks break down in Senate

MEXICO CITY (Reuters) - Talks have broken down between Mexico's ruling party and key centrist lawmakers over how to boost oil refining and cut costly fuel imports, senators said.

Exxon Mobil, Total, Eni Said to Face EU Fines in Cartel Probe

(Bloomberg) -- Exxon Mobil Corp.,Total SA and Eni SpA will be fined by European Union regulators over claims they fixed the price of paraffin wax used in candles and waxed paper, four people with knowledge of the EU investigation said.

The European Commission in Brussels will levy the penalties as soon as tomorrow, said the people, who can't be identified because the decision isn't yet public.

Gas Pipeline To Atlanta Running At 100 Percent Capacity

ATLANTA -- The pipeline that brings gas to Atlanta from the Gulf Coast is back to 100 percent capacity, Energy Department officials said Tuesday.

In addition, 13 of the 15 refineries knocked off line by Hurricanes Ike and Gustav are up and running again.

The bad news for metro Atlanta drivers is that even with the Colonial Pipeline running at full steam it will be one to two weeks before supplies across metro Atlanta return to normal.

Motorists are rising before dawn so they can be at filling stations when the delivery truck arrives. Some are skipping work or telecommuting. Others are taking the extreme step -- for Atlanta -- of switching to public transportation.

We are heading for a global environmental credit crunch

Credit crunches occur when investment capital is difficult to obtain due to a shrinking credit supply or a willingness to lend. This usually falls in concordance to a recession, and some are worried Canada may soon see a similar fate.

Although this credit crunch may pose a legitimate threat to many livelihoods and pensions, there is another crunch we have much greater reason to fear. We are in the midst of a credit crunch that threatens not only the economy of every country, but also the fate of thousands, if not millions of species, including our own. Our actions, largely driven by the capitalist market, are depleting Earth’s resource bank at unprecedented rates, causing a shrinking supply of Earth’s resource capital: a global environmental credit crunch.

Hybrids trick out, plug in

While drivers of conventional gasoline-powered vehicles complain about higher fuel prices, clients of the San Francisco garage are investing big bucks to make their green cars even greener.

That's being done through plug-in conversions and adding more powerful batteries to currently available gasoline/electric hybrid cars, such as the Toyota Prius.

College students adapt to high gas prices

Just like the rest of Americans, students are mulling whether to use public transportation. Nationwide, ridership has been on an upswing. This year, public transportation ridership soared to over 2.8 billion trips in the second quarter of 2008 – an increase of about 140 million rides compared with trips taken in 2007, according to the American Public Transportation Association (APTA). Of these riders, some 10.7 percent of public transit riders are students, according to a May 2007 study by the APTA.

But it's not always easy to make the switch.

"Many people tell me to take the subway to school or work in order to save money on gas," says Cara Lipper, a senior at the University of Massachusetts, Boston.

But the closest train station is a 15-minute drive from her house and a 20-minute commute on the train, she says, compared with a 20-minute drive into Boston.

Instead, she's looked into buying a hybrid car.

"Also, I carpool more than I used to," she wrote in an e-mail. "I will use public transportation to go to some places, even though I hate it. And I go for joyrides far less often."

Richard Heinberg's Museletter: Various Musings

As oil crosses $100 on its way south, not even a hurricane in the Gulf of Mexico and a statement from OPEC that the cartel will cut production by over 500,000 barrels per day seems capable of halting the bloodletting. In response, the Financial Post features an article (Sept. 11) titled ("Peak Oil peak,") quoting this writer out of context; compare this with my commentary, which was the source of the quote: Hurricane destroys oil infrastructure; oil price falls). Wasn't the price of oil supposed to rise endlessly? Wasn't the world supposed to end by now? What happened? What does it all mean?

First, why did the price of oil rise this summer to nearly $150? On this there is little agreement among the mavens. A new report by hedge fund managers Michael Masters and Adam White (released Sept. 10 by Sens. Byron Dorgan, D-N.D., and Maria Cantwell, D-Wash.) chalks it all up to speculation (Oil speculation blamed for rise in energy prices). Pension funds, college endowments, and other institutional investors bought heavily into commodity index funds earlier this year, and that sent the price of crude to the moon. Recently the same investors have taken their money out of oil futures, and this accounts for petroleum plunging back to earth. Move along, folks, nothing to see here.

Schlumberger -- too soon to predict energy demand

HOUSTON (Reuters) - The chief executive officer of Schlumberger Ltd, the world's largest oilfield services company, said on Tuesday it is too early to determine how the financial market meltdown will affect energy demand.

"It is also impossible at this stage to predict to what extent turmoil in financial markets is going to affect demand through a slowdown in the overall economy," Schlumberger CEO Andrew Gould told investors.

Gulf of Mexico operators reboarding platforms and rigs

Offshore oil and gas operators in the Gulf of Mexico are reboarding platforms and rigs and restoring production following both Hurricane Gustav and Hurricane Ike. The Minerals Management Service is monitoring activities for both hurricanes through its Continuity of Operations Plan team. This team will be activated until operations return to normal.

Ike, Gustav to cost Entergy at least $1 billion

NEW ORLEANS - Utility giant Entergy Corp. estimated Tuesday that damage from hurricanes Ike and Gustav cost the power provider $1 billion to $1.2 billion.

Nigeria arrests more than 400 suspected militants

PORT HARCOURT, Nigeria — Nigeria's military has arrested more than 400 suspected militants following a spate of attacks in the restive southern oil region, an official said today.

The 443 suspects were detained during a week of military raids in the area surrounding the oil hub, Port Harcourt, said regional military spokesman Lt. Col. Sagir Musa. He said the raids were prompted by intelligence reports that the militants were launching a recruitment drive to replace heavy losses suffered in their recent six-day campaign.

Chevron: Green is good for oil business

Chevron Corp. is pumping resources into its energy efficiency campaign web site, adding tools that allow users to calculate ways to decrease their energy and gasoline use and to build their ideal city with alternative energy sources.

The effort of the world’s fifth-largest non-government oil and gas company to cut use of its main products might seem odd.

“The reality is, as the world’s economies grow, the demand for energy grows along with it,” said Jim Davis, president and CEO of Chevron Energy Solutions, the oil giant’s alternative energy subsidiary. “(Energy efficiency) has to be part of the equation to stretch those limited resources.”

An Exhausting War on Emissions

In 1991, Norway became one of the first countries in the world to impose a stiff tax on harmful greenhouse gas emissions. Since then, the country's emissions should have dropped. Instead, they have risen by 15%.

Although the tax forced Norway's oil and gas sector to become among the greenest in the world, soaring energy prices led to a boom in offshore production, which in turn boosted overall emissions. So did drivers. Norwegians, who already pay nearly $10 a gallon, took the tax in stride, buying more cars and driving them more. And numerous industries won exemptions from the tax, carrying on unchanged.

Severe fuel shortage grips parts of US southeast

The effects on motorists have been dramatic. Most service stations in Atlanta are out of gas, with plastic bags placed over the pumps or signs saying "out".

As a result, drivers are cruising the city hunting for gas -- often with a fuel meter needle hovering close to empty. When they find gas, it's often above $4 a gallon.

Traffic is lighter on the city's streets and highways as some residents share rides and limit their journeys.

Lines and elaborate queuing systems have developed at gas stations on days when oil companies deliver fuel. Motorists report showing up at gas stations before dawn to beat the line only to find dozens of cars ahead of them.

"It's been very tough," said Rhonda Forrest, 45, who said she slipped out of work on Monday to fill up her tank when she learned that a gas station in the city's upmarket Buckhead district was open.

The shortage has also had a psychological impact. Like many U.S. cities, Atlanta is car dependent and residents say they had until now taken refueling for granted.

Governor Sonny Perdue's economic illiteracy

Rising costs will curtail not only the consumption of gasoline at the pump, but also the ability of the entire chain of suppliers to supply gasoline. If you have paid attention to local news reports from around the country, you might be aware that gas stations have been going under for many months now. What is happening in Georgia is a manifestation of diminishing inventories.

Americans may want to take note of what is happening in the Southeast. It is my prediction that this is going to become a creeping problem throughout the country, and then in other sectors of the economy - e.g., food supplies. Unless dramatic changes are made to revalue the Dollar and abate government spending, we will see the same thing that is happening to gas stations happen with grocery stores.

The chaotic gas shortage

As someone who lives in New York City and doesn’t even own a car or worry much about gas prices, it’s both humbling and terrifying to witness 50 cars piled up for a tank of gas, a now-expensive necessity that tops most residents’ concerns. Gas goes for over $4 in Atlanta, and doesn’t show any signs of getting cheaper, but the main concern here now is not the cost, but being able to get it at all.

Olens: Georgia needs to move to odd-even gas rationing

Sam Olens, the chairman of the Cobb County Commission and a prospective candidate for governor in 2010, offers some implied criticism of Gov. Sonny Perdue this morning with a suggestion that the state ration gasoline on an odd-even basis.

DOT works to stabilize gas supply

ALBANY — The U.S. Department of Transportation is taking action to help with the fuel crisis in Georgia by extending the hours-of-service requirements for fuel carriers in the Southern portion of the United States, a news release from Sen. Saxby Chambliss, R-Moultrie, said.

Ohio: Local Speedways might feel pinch of gas production problems

NEWARK -- Speedway SuperAmerica, owned by Marathon, might temporarily run out of gasoline at some local stations, according to a company spokeswoman who said production has not fully recovered from hurricanes Gustav and Ike.

The station at 737 Church St., at the corner of Church and North 21st streets, had yellow bags over all its gas pump nozzles at 1 p.m. Monday, and an employee there would not say if the station had any gas later in the day.

Shell's President Tempers Optimism on Lifting of Drilling Ban

The head of Royal Dutch Shell's U.S. operations is taking a realistic perspective on the lifting of the federal ban on drilling in the Outer Continental Shelf.

Shell Oil Co. President Marvin Odum said Friday that while he's optimistic drilling activity could take place off the Atlantic and Pacific coasts in the years ahead, there are still major challenges ahead that could prevent new production, including another Congressional moratorium.

Russia ready to work on oil prices

MOSCOW. (RIA Novosti economic commentator Oleg Mityaev) - Russia's Energy Minister Sergei Shmatko said on September 25 that it is time for Russia to start working on world oil prices.

Russia is the world's second largest oil producing country. But oil prices now depend on two factors: one is whether Saudi Arabia, the largest oil producer in the world, will open or turn off the oil tap, and the other is how world oil market players will behave. The question is, how in this situation the Russian energy minister is going to influence world oil prices and why Russia needs this at the moment?

UK: Meals on Wheels under threat

WRVS office manager Christine Baehr said the recent fuel hikes might also impact on the vital service.

..."Our drivers are paid 40 pence per mile but this is something that I will be taking up with the finance manager as I believe our allowance should keep up with raising costs of fuel and drivers should be recompensed."

Pakistan announces agriculture measure to boost ailing economy

"We (the government) will buy the wheat if in any part of Pakistan the wheat is sold less than the minimum purchase price," Prime Minister Yousuf Reza Gilani briefed newsmen after the cabinet's meeting in capital Islamabad.

Gilani also announced providing special credit cards to small farmers so that they could easily afford essential items such as seeds, fertilizers, pesticides and agriculture machinery at low interest rates.

The only way is up for vertical farms

Urban indoor farms might sound like something from the pages of a sci-fi novel, but, as Danny Bradbury discovers, some scientists believe it could provide the best means of feeding a growing population while curbing carbon emissions.

Biofuels surge slows in Southeast

Grain prices are good, and look to stay up for a while, but the main cause most widely attributed to these prices — biofuels — is just not happening in the Southeast.

Plans for a number of destination plants, which are designed to be built to bring in grain for the energy source, and for the final fuel product to be shipped to large, nearby markets, have fallen by the wayside.

France, India sign major nuclear deal

PARIS (AFP) — France and India on Tuesday signed a landmark nuclear cooperation pact which opens the way for the sale of French nuclear reactors to New Delhi.

"India and France welcome the signature of a bilateral accord for civil nuclear cooperation which will form the basis of enlarged bilateral cooperation in the fields of energy and research," a French presidency statement said.

The green bubble bursts: Amid the energy crisis, Democrats are losing the high ground on the environment to a GOP that is pushing oil drilling

As the election enters its endgame, Democrats and their environmental allies face a political challenge they could hardly have imagined just a few months ago. America's growing dependence on fossil fuels, once viewed as a Democratic trump card held alongside the Iraq war and the deflating economy, has become a lodestone instead. Republicans stole the energy issue from Democrats by proposing expanded drilling -- particularly lifting bans on offshore oil drilling -- to bring down gasoline prices. Whereas Barack Obama told Americans to properly inflate their tires, Republicans at their convention gleefully chanted "Drill, baby, drill!" Obama's point on conservation and efficiency was lost on an electorate eager for a solution to what they perceive as a supply crisis.

Keep the Grid Going and Reap Rewards

U.S. banks are among the largest commercial consumers of electrical power. They're in for a shock, too, as they open their utility bills in the months ahead: electricity rates, already high, are rising fast and poised to soar even higher.

While spiraling electricity costs are driven in part by increasing prices of resources such as coal and natural gas, lack of new generation capacity is also a major culprit. The June 30th issue of Forbes reported, "By as early as next year our demand for electricity will exceed reliable supply in New England, Texas and the West and, by 2011, in New York and the mid-Atlantic region." As a result, the article cautioned, "...get ready for spiking electricity rates, brownouts and even blackouts..."

Seniors most vulnerable in times of economic crisis

In the wake of the energy crisis - which will likely be exacerbated by fallout from the failing financial markets on Wall Street - cutting expenses is fast becoming a way of life for just about everyone.

But senior citizens are particularly vulnerable, say some area experts. "Seniors are cutting back on their food and medications. And when the heating season comes the situation is going to get worse. Their health is going to suffer," said Cindy Rieker of Home Instead Senior Care in Saratoga Springs.

Energy, manufacturing: Bring 'em back home

Solving America's energy crisis requires a strong commitment, sans lobbyists and special interests, using virtually all the means at our disposal. The U.S. sends almost $2 billion for imported oil and goods each day to nations that may not share our values. This is ludicrous, and must be changed.

First, we must accept that oil will be the primary energy source in the near term and aggressively drill for it, in an environmentally safe manner, wherever it may be found. Concurrently, we should encourage use of alternate forms of energy such as hydrogen, wind, solar, and nuclear, coupled with new conservation measures. Over time, their cost will decrease and our use of imported oil will decrease. These alternate forms should not emphasize corn-based ethanol production, which has increased consumer food costs and is a major source of ground-water pollution due to the increased need for fertilizers.

The second indicator, restoring America's manufacturing sector, is much more contentious as it requires that the whole notion of free trade be re-evaluated. In this century, Americans were promised that manufacturing jobs, long the path to middle-class status, were to be replaced by good-paying service industry positions, only to see those jobs outsourced.

Nigeria: Experts to Meet on Energy Crisis

Experts as well as professionals in the energy sector will meet next month in Abuja, the Federal Capital Territory (FCT), to deliberate on the ways out of the current energy crisis in the country.

The discussions which would be organised by the Energy Commission of Nigeria, Rural Electrification Agency and BAS Associates Consulting, will focus on how to create awareness about other sources of alternative energy that could be tapped by millions of Nigerians as well as other Africans.

Tanzania: Impending Power Crisis

TANZANIA Electric Supply Company (TANESCO) says it won’t rule out the possibility of entering into a new contract with the controversial Dowans Holdings Company or buy its Dar es Salaam-based power plant in the wake of the latest national energy crisis.

Kenya: Industry feels heat of energy costs

The grim picture of what Kenyans face in the wake of the energy crisis is now emerging.

On the list are massive job losses, lower revenues to the Government and economic slump and stagnation.

Zimbabwe: Power cuts, prices affect construction firms

THE construction industry has been hit by a shortage of cement after the country’s main producers scaled down production due to power outages and a wrangle with the National Incomes and Pricing Commission over prices, Business Chronicle has learnt.

Coal and the Campaign Trail

Neither Democrat Barack Obama nor Republican John McCain will risk alienating voters in Appalachia and other coal regions by talking about putting limits on coal. In fact, both candidates favor continued if not expanded reliance on coal.

Or rather on “clean coal,” a phrase concocted by coal industry public relations specialists to make the dirtiest of all fossil fuels sound publicly pleasing.

U.S. Senate to consider Brazil energy cooperation pact

A bill designed to strengthen energy cooperation in the Western Hemisphere was approved by the U.S. Senate Foreign Relations Committee Sept. 23. It was placed on the legislative calendar. According to the Brazilian Sugarcane Industry Association, the bill is a positive step towards expanding ongoing efforts by Brazil and the United States to promote the production and use of sustainable biofuels, such as sugarcane-based ethanol, throughout Latin America.

Russia may boost OPEC clout, raise oil risk premium

DUBAI (Reuters) - Closer cooperation between OPEC and Russia, which between them supply half the world's oil, could see a bigger political risk premium priced into oil and add more muscle to the producer group's output policy.

Russia's desire for deeper cooperation with OPEC comes as its relations with the West have deteriorated over issues such as the conflict in Georgia. Moscow has already forged closer ties with OPEC price hawks and U.S. foes Venezuela and Iran.

The biggest potential effect on prices would come if Russia joined any move by the Organization of the Petroleum Exporting Countries to cut supplies, an unlikely step with oil trading near $100 a barrel.

But in comments raising the prospect of Russia actively managing supplies, Energy Minister Sergei Shmatko said on Thursday Moscow wanted to influence prices by publishing output forecasts and delaying the development of fields.

"It's certainly not the sort of thing consumers want to hear coming out of a major producer," said Julian Lee, analyst at the London-based Center for Global Energy Studies. "It will raise concern about the future of Russian production."

Oil prices rebound after 10% plunge

LONDON (AFP) - Oil prices rose Tuesday on bargain-hunting after slumping 10 percent a day earlier when US lawmakers rejected a multi-billion-dollar rescue package for ailing American banks, traders said.

New York's main contract, light sweet crude for November delivery, climbed 1.18 dollars to 97.51 dollars a barrel in electronic trading.

'In over 35 years, I cannot recall a day more miserable, its climax more chilling'

THE US banking crisis has been likened to a heart attack. Last night saw a convulsion that will be felt by everyone round the world. Recession is no longer a threat. It is a fact. And the drama in markets yesterday point to it being as deep, as painful and as prolonged as anyone can remember.

Look at what happened to the oil price on news of the Congress vote: it dropped $10 in an instant. We will not be needing "peak oil" for quite a time. Industrial metals plummeted, with three-month copper plunging $335 at $6,440 per tonne, falling even lower after hours. This vote by Congress is a stunning, reckless gamble with the world's biggest economy and the livelihoods of millions. But it reflects, too, the disgust even the most free-market-sympathetic democracy in the world has come to feel at the greed and incompetence of Wall Street's investment banks and the salaries and bonuses creamed off by those at the top.

Navigating The Meltdown

Wall Street's persistent greed, the outrageously expensive war in Iraq and unbridled oil speculation have pummeled the U.S. economy into a corner. The impact of all three will be felt across corporate America, where cost-cutting likely will be the next--and only--big strategic initiative.

If this were a game of chess, you'd be tempted to call checkmate. In tough times, governments borrow, raise taxes or print more money, but none of those options are available now. The U.S. has gone from a $230 billion surplus in 2000 to a $407 billion deficit this year.

Russian Stocks Extend Drop, Led by Gazprom, as Trading Resumes

(Bloomberg) -- Russia's Micex Index fell the most in two weeks, extending the worst quarterly loss for equities in the country since its 1998 debt default, after a two-hour trading suspension was lifted.

OAO Gazprom, Russia's biggest company, and OAO Sberbank, its largest bank, led the decline.

Oil patch sucked into vortex

CALGARY - Rejection of the proposed US$700-billion bailout package in Washington yesterday whiplashed Canada's oil-and-gas sector, the destination of the country's largest capital investments, into a deep fall.

The sector, which until recently has been able to fend off troubles afflicting Wall Street, is now finding itself pulled into the liquidity vortex.

Japan Energy to Raise Oil Processing 4% Next Quarter

(Bloomberg) -- Japan Energy Corp., the refining unit of Nippon Mining Holdings Inc., plans to process 4 percent more crude oil in the October-to-December period from a year ago after starting a new plant at its Kashima refinery this year.

Indian Oil's Crude, Funding Costs Rise; Add to Losses

(Bloomberg) -- Indian Oil Corp., the nation's biggest refiner, said its oil import costs may climb as much as 70 percent to $45 billion this year, adding to increased borrowings and revenue losses from selling fuel below cost.

Energy agency says oil output capacity growing thin

Global oil production capacity will be insufficient within six years, according to Nobuo Tanaka, executive director of the International Energy Agency.

Pertamina Cuts Fuel Prices for Factories, Miners By Up to 13%

(Bloomberg) -- PT Pertamina, Indonesia's state oil company, cut the prices of oil-based fuels sold to factories and mining companies by as much as 13 percent from its last revision on Sept. 15.

South Korea: We Must Succeed in Securing Energy

Korea almost missed the boat in terms of the race among Northeast Asian countries in securing energy resources. Since 2000, Japan poured 1 trillion yen into crude pipeline businesses in eastern Siberia. In 2005, China acquired a 25 percent stake in an oil field in Sakhalin to form a long-term supply deal with Russia.

The very existence of a country in the 21st century is said to hinge on stable access to energy sources. Previous South Korean administrations, going way back, have noisily mentioned “Sakhalin oil projects” and “far east Russian oil,” but nothing had been cemented in terms of deals. The government must come up with detailed follow-up to ensure the smooth flow of natural gas following this summit agreement.

Amid oil worries, natural gas boom is a ‘bright spot’

Crisis. What crisis?

Lost amid persistent worries about the price of crude oil and gasoline is a little-understood reality: There is more natural gas under our feet than we know what to do with.

Indeed, natural-gas production is growing at such a rapid rate in this country that it’s threatening to outrun demand — driving down prices and prompting producers to ponder capping wells or exporting the excess to Asia.

‘Bad Money’ details harmful precedents for current financial practices

Railing about the federal debt is a favorite pastime of politicians and the citizenry alike. “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism” by Kevin Phillips focuses, however, on a different kind of debt that, despite its links to the current financial upheaval, most still prefer to ignore. This is the debt the United States is privately generating. Phillips believes that this debt, given its magnitude, is a far more serious threat to our economic leadership in the world than federal budget deficits, notwithstanding the extent to which much of the global economy is coupled to our own. The current financial sector upheaval and growing specter of peak oil prompted Phillips, a White House strategist in the Nixon first-term presidency and now a prolific and acclaimed author, to write “Bad Money.” In this book, he extends arguments he presented in parts one and three of his most recent New York Times best-seller, “American Theocracy.”

Phillips argues that past leading economic powers (Hapsburg Spain, maritime Holland and the British Empire) fell into economic decline partly because they turned to a strategy of increasing indebtedness by “financializing” their economies so they could continue pursuing their various aspirations. Phillips believes the United States is now following that same path.

Credit crisis may delay biofuels development

LONDON (Reuters) - A global pull-back from bank lending may dent the commercialisation of biofuel technologies to replace conventional gasoline, said the chief executive of U.S. cellulosic ethanol firm BlueFire Ethanol.

A credit crisis which claimed more bank victims on Monday has raised project finance costs and made ambitious targets to replace replace fossil fuels with renewable energy sources look less achievable.

People near nuke plants don't mind new ones: study

LONDON (Reuters) - People living near nuclear power stations in Britain tend to support construction of new plants in their communities, according to findings presented on Tuesday which could ease the government's plan for new facilities.

But much of the support comes with reservations, making it crucial for the government and energy companies to engage local communities, according to a survey presented to Britain's Royal Society.

Ocean "dead zones" spread, fish more at risk: study

OSLO (Reuters) - The number of polluted "dead zones" in the world's oceans is rising fast and coastal fish stocks are more vulnerable to collapse than previously feared, scientists said on Monday.

The spread of "dead zones" -- areas of oxygen-starved water -- "is emerging as a major threat to coastal ecosystems globally," the scientists wrote in the journal Proceedings of the National Academy of Sciences.

Such zones are found from the Gulf of Mexico to the Baltic Sea in areas where algae bloom and suck oxygen from the water, feeding on fertilizers washed from fields, sewage, animal wastes and pollutants from the burning of fossil fuels.

FarmAde a success

Rushmere hopes that events like FarmAde will show citizens how media misrepresentations like the Lees Report (describing the farm as a pristine division between cultivated land and a condominium and shopping complex) threaten the Farm’s future. Pitting the Farm against student housing in order to bolster a case for development while simultaneously undercutting the Farm’s project as an educational tool by claiming the Farm does not produce enough food to feed UBC students.

“UBC Farm isn’t about feeding campus,” Rushmere concluded. “In the midst of the food crisis and peak oil, it’s about teaching a sustainable food system.”

First U.S. CO2 auction brings in $38.5 million

ALBANY, N.Y. - The owners of Northeastern fossil fuel-burning power plants, which are now required to buy credits to cover the carbon they emit, spent nearly $40 million in the first cap-and-trade greenhouse gas auction in the United States.

The auction, the results of which were released Monday, raised money that will be spent by the 10 Northeast states on renewable and energy-efficient technologies.

France proposes phasing in CO2 curbs for cars

BRUSSELS (Reuters) - The European Union's French presidency proposed on Tuesday watering down plans to curb greenhouse gas emissions from cars by phasing in limits up to 2015, with lower fines for narrowly missing the target.

Diesel cars 'better than hybrids'

After researching a range of hybrid cars, the magazine's road-test editor Ian Thorp said diesel cars could offer motorists better value when it came to fuel efficiency.

Hybrid car manufacturers' fuel-efficiency claims were often not correct when it came to real-life driving outside of laboratory conditions, Thorp said.

"Hybrid cars have low emissions in government tests, so they look very good on paper, but what we have found in reality is that they are not as efficient as a good diesel engine car," he told ABC radio.

Global Warming Fix? Carbon Dioxide Captured Directly From Air With Simple Machine

University of Calgary climate change scientist David Keith and his team are working to efficiently capture the greenhouse gas carbon dioxide directly from the air, using near-commercial technology.

The carbon tax has come back to haunt B.C.'s Liberals

VANCOUVER — The idea of a carbon tax to reduce greenhouse gas emissions is dying politically in the place where it was born: British Columbia.

The provincial tax's growing unpopularity is threatening Liberal Premier Gordon Campbell's grip on power, while the very notion of a federal carbon tax, even if offset by lower personal income taxes, is crippling the federal Liberal Party in the province.

Meat rationing 'vital' to combating climate change

PEOPLE must be rationed to just four portions of meat and one litre of milk a week if a climate change catastrophe is to be avoided, warns an influential new report.

The report from the Food Climate Research Network reiterates the warning that consumption of livestock products is a major contributor to greenhouse gasses and calls on Government to take swift action to stem the industry’s emissions.

Researchers found that, with demand for meat increasing in developing countries, wealthier nations such as the UK would need to dramatically reduce consumption to avoid climate change spiralling out of control.

In case anyone is really interested in alternative energy, the House and Senate apparently can't agree on extending the credit for Renewable Energy systems.

Lawmakers at Impasse on Incentives for Renewable Energy

E. Swanson

Black_Dog -

Some people want everything. How are we going to help pay for the Big Bailout if we extend the renewable energy credits?

Of course, not extending the credits will immediately kill many proposed wind farm projects, such as the one to be built off the Delaware coast, a project that only got the go-ahead after an incredibly drawn out and convoluted political fight.

Credits? We don't got no stinkin credits!!

Of course, not extending the credits will immediately kill many proposed wind farm projects, such as the one to be built off the Delaware coast, a project that only got the go-ahead after an incredibly drawn out and convoluted political fight.

Sounds like great news to me. As long as wind energy is just a means to greenwash natural gas and coal it deserves no credits.

Instead of pissing that money away on subsidizing production of intermittent electrical energy(much of which is eaten away by the inefficiency of single cycle gas turbines, the cost of keeping coal plants spinning and the production of power when no one needs it) it should go towards grid energy storage research. Cheap, large scale storage is absolutely essential if wind energy is ever to become useful.

I don't understand this kind of logic. It gives me a feeling the priorities are set wrong.

We have a long emergency to address. It will take decades to build adequate infrastructures. The greatest problem is to unlock the resources to do it. If someone can unlock money to build a power generation facility that won't kill us with global warming, please don't argue the technology limitations. Just let him build it. There won't be time to do it later if we wait for all the issues to be fixed.

Once the oil dries out, there will be such a thirst for energy that the electricity will not be let go to waste. Someone will find out how to use it regardless of the time of day it is generated. Besides if you put wind mills and solar panels in the field, you create the market for small residential power storage devices. It is harder to cost effectively solve the storage issue without having a market.

We have a long emergency to address. It will take decades to build adequate infrastructures.

As it stands wind power is at most a way to save a small quantity of natural gas and coal.

The price you pay for this is greenwashing the use of fossil fuels, deepening the dependence on fossil fuels, it makes it seem like something is being done and allows people to shut off their brains and think the problem has been solved. Unless you've got vast quantities of hydro peaking capacity(e.g. Scandinavia) it won't solve anything, it's a trap.

Without a miraculous power storage medium that's cheap, easy to scale up and uses abundant materials this can't change.

Once the oil dries out, there will be such a thirst for energy that the electricity will not be let go to waste. Someone will find out how to use it regardless of the time of day it is generated.

That's suicide; you don't have time to invent a seat belt seconds before a head on collision.

The scope of this problem is enormous and can't be glossed over. There's always been an enormous profit incentive for producing a cheap, reliable storage medium for electrical power and countless people have tried, but the best we've managed to come up with is the lead-acid battery(dating from 1859) and pumped hydro(circa 1890's).

I think my representitive, Steny Hoyer, is really pushing to have everything in tax policy balance because he is very worried about all the defict spending we are doing. The popularity of the tax credit extentions makes them a place where his push to at least stabilize the deficit spending can get some attention. It is worth noting that originally the savings were taken in energy by reducing oil company subsidies but have now been shifted to closing some loop holes in corporate taxes that the corporations say need closing.

The republicans claim that the need to pay for tax policy shouldn't be applied to something that continues a tax credit that has been on going. This is a little silly because the whole point of putting a time limit on such credits is to evaluate periodically if they are still needed. When the sector in booming, it is going to pay for all its early credits is abundance. So, the credits are an investment which should pay off big time. We know that the credits will end and at that time they will be used as an offset in the opposite direction. In fact, renewable energy generation will undoubtably be taxed in the future because it is going to be so cheap that it won't hurt the economy to milk it a little. We want to get to that point sooner which is why we have credits now.

Perhaps the solution is to take a page from the republican playbook and recast all of this as an insurance program. All energy companies would pay a premium to ensure future energy supplies and renewables would get payments based on the fact that they will be there in the future. Once the whole system is renewable, the premiums and the payments all fall on renewables so there is not a lot of reason to retain the system. None of it is done on the tax books, just like the insurance idea for the financial bailout. This would pretty much automatically reduce the "subsidy" for renewables at the point when it is no longer needed. This is pretty much the way we fund the future availability of bank deposits through FDIC insurance so it might have some appeal. Perhaps renewables are too important to be left to tax policy?


While I like your idea, Chris, and in fact support taxing all domestic oil/gas production to support the extending of renewables, if, as and when the "bailout" happens, it is going to suck all of the cash out of all of the systems which the government can reach. I am more concerned right now about being able to operate in two months than how much I, or anyone else can get in the way of credits. I am truly concerned about a potential overall collapse - everywhere - than I am about anything else. When the Chinese, the Saudis and the Europeans all realize that not only do we just have a paper currency, it is being printed in our house of cards (I think that the Canadians and Mexicans already know how weak our economy is), they will also panic. Although stocks and oil are both up today, tomorrow and Thursday will extend the domestic panic.

(Maybe we can use the proceeds from the liquidation of the toxic assets to fund the renewables program ?)

I will also say that I think that most domestic oil and gas producers already know that we need to make other arrangements (like renewables), we also know that we cannot drill ourselves out of this mess, and we don't like being treated like we should be outcasts. Collaboration between the renewables industries and oil and gas producers could be had, IMHO, and we could all do a better job of seeking out that cooperation and collaboration.

A business climate where you can't make payroll until your latest accounts are received is going to be a problem for everyone.

The thing that I am thinking when I say renewables are too important to leave to tax policy is akin to saying the FDIC program should not be renewed each year.


Regarding the credit crunch, I've gotta wonder how this will affect farmers. As I understand it, before planting begins, they lock in a price for their harvest in order to get the credit necessary to begin planting. With costs going up and commodities going down, what's a poor farmer to do? Will the credit even be available?

Credit and the farmer?

Most all farmer/operators I know are way way way heavily into CREDIT!!!

They simply cannot..repeat cannot...operate without very large lines of credit.Period. Exclamation point..etc.

So what will happen? I think its already starting to happen with the commodities market being the first portent of whats to come.

Right now the farmers around here have a huge amount of credit taken out to plant this crop. If the prices fall then they will be in a huge bind.
Many scenarios are possible.

We are currently bringing in a fairly large harvest. Corn is almost done and soybeans are in process..here in the upper Mississpi Valley area.

I personally elected to NOT drive grain trucks this harvest season as I intend to spend more time preparing my own 'life boat'. That means 'hoarding'.

The tea leaves are telling me that this is but a small time frame window of opportunity. Why?

Weekend before last my son and I drove to his last residence in Raleigh , NC. The gas crisis had hit this whole area. Getting back home was a nightmare. Previous to that the remains of the last hurricane came all the way up thru Mississippi and Tennessee to strike this area with the fury of unleashed hell. Huge tress were snapped off at about the 20 foot level. We experienced 4 days of blackout.

It was just a warning..followed by the preview of no gas.

And then??? Well the credit and financial crisis hits!!!!s

I think this country/nation is starting rapidly down the road to destruction..What here on TOD has been discussed many many times. Well its here now and its going to be a killer.

So my plans are to burrow in. Visit Sam's and stock up before everyone else gets the same idea. Finalize the plans I have been making ever since I started reading TOD many long months ago( 2 or 3 years at least)..

I still have my 'strike anywhere' wooden matches left over from Y2K even. Yet I am going to once more lay in a bigger supply. Fill all my propane tanks. Get my garden plowed and ready for spring planting since there may be very little fuel by that time. Plans and more plans.

Its going to get crazy out there.


PS. The story of the mystery boy from 1908? My father was born around that time. Around here boys did NOT leave the farms or were not kicked out. They stayed to provide needed labor. The farmer who had many sons was lucky. Not so those who were childless. Children were made to mind and were put to work. With WWII most did leave and never came back..this is what started us off to where we are now IMO...the beginning and now demise of the Great Amerkun Dream....sleep walking into chaos...stead of staying on the land and prospering...BTW some acreage up north in Middle Illinois just sold at over $9,000 per acre!!!I sold some two years ago for $4,000...about 10 times what I paid for it.

Around here boys did NOT leave the farms or were not kicked out. They stayed to provide needed labor.

You've said that before...but surely some had to leave, eventually. The land can only support so many people, and a farm can only be subdivided so many times.

This is what's happening with the Amish. Most no longer farm. With their large family sizes and small farms, there isn't enough farmland for them all. (Though that may change, with the mortgage meltdown.)

"Amos Jackman", a fictional story written in the 1950's illustrates both of your views - how the changing world economy disrupted the then "normal" lifecycle of farming families.

It follows the fate of a family farm that has been their's for several generations, as they experience the tug-O-war between the desire and need to stay on the farm, vs the stability offered by regular employment in the cities (as well as greater consumer comforts like indoor toilets).

The Amish do have a lot of children. I suspect the too-many-sons phenomenon applies to non-Amish farmers as well, but it is probably much less of a problem. It is also easier for the "English" to merge into normal society and get non-farming jobs.

The Amish, Hutterites, and Mennonites are moving out here to the prairie. One of the young women, who worked in a local greenhouse, said that they woke up one morning in PA and God had told them to move to Milbank, SD. They'd never heard of Milbank- but they packed up and moved out here and appear to be thriving.

A couple weeks I was talking with a 90 year old man who was from a large farming family. During the Depression they couldn't feed all the kids so the older boys drew straws to see who would leave the farm. He and another brother drew short straws and left the next morning with a loaf of bread each. He slept in culverts, was hungry (he started to cry as he recalled a woman who saw he was hungry and gave him cornbread). He walked 82 miles before he found a farmer who took him in to milk 17 cows. He worked for two years for room and food and one pair of coveralls.

This man said "Things are going to be worse in our future here than anything I've lived through." Gave me chills.

They're moving everywhere. Their population is doubling about every 16 years, so they kind of have to.

Interesting story about the old man. Someone posted here once about some relatives who traveled across the country during the Depression with only a roll of nickels. When they stopped to buy food, they'd take out one nickel, and pretend like it was all the money they had. They'd be given the food for free, out of sympathy. Only one shopkeeper took payment, and to this day, they gripe about the stingy guy who took their "last" nickel.

I wonder if people might become kinder as times get tougher. Now, there's a feeling that someone who isn't working is either lazy or has a substance-abuse problem. If it really gets impossible to find even low-paying work, that might change.

Everyone has a Hollywood image of what farming was like "years ago". The reality is that just like today, there was a small percentage of wealthy landowners, and a bunch of people hiring in to the wealthy farms, or sharecropping. My grandfather leased 40 acres in Southern Illinois. From the 40 acres, tended by him, a couple of jennies and my father who was a small child at the time, he made just enough to survive, as long as he supplemented his income and the larder by shooting rabbits and doves (the only game left around there at the time), running a sawmill, and doing odd jobs for other ranchers. He was in his 50's at that time. He made it to his 80's, a quite advanced age for someone who was born in 1872. He had five wives(all of whom preceded him in death) and fourteen children, all of whom he sent to live with others at various times because he couldn't afford to feed them all. This was not considered scandalous, either. Men worked, and women took care of children, and if the woman was gone, the children belonged somewhere else. My mother came from a similar background.

The problem now, of course, is that there are so many people(due to people like my grandfather having fourteen children!) that even leasing 40 acres is an impossibility for all but a small fraction of the population. And the relative prices have been pushed so low by mechanization and commercialization that it would be even tougher to survive today, even if you supplemented with other work.

One farmer wrote it costs $4.00 a bushel to grow corn and he was expecting costs of $5.00 a bushel next year.

"Now, there's a feeling that someone who isn't working is either lazy or has a substance-abuse problem."

That mirrors Orlov's opinion - the poor are "robbed" of their dignity in the US. And, as you note, as the entire middle class gets becomes poor it will likely change.


The Population around 1900 was much smaller. Much Land was still to be had. Amish today are "Fenced in" by subdivisions and such.

My father, simlar to Airdale's was born in 1900 and worked on the farm while young.

Some leave????

No most all leave and that is part of the farmers dilemma.

They don't want to farm. They want the exciting buzz of the yuppie world. They want to be branded with jailhouse artwork on their bodies. They want to drive fast cars and pickups. They want what they see their city cousins having and doing.

I know one farmer here who alone must drive the combine, run the planter and do all the various and many hard jobs. He puts in about 2,000 acres. Both his sons left some time ago.

The last one was finishing the combine work in the last acreage as I was in the field with my semi to haul it off. He came over and we chatted. H e said "soon as this field is done and I shut off the combine I leave right off for Nashville...No more stupid farm work for me.",,,,He hasn't been back either.

My buddy has to hire 8 workers seasonally and 4 fulltime all year. He has one son..Guess what...that son left this year.He was a bad worker and you could tell his heart was not in it. He was a fumbler and broke a lot of equipment too.

So the problem is really that we 'can't keep em down on the farm'...even though they stand to inherit a huge amount of assests in land and equipment. They don't want it.

Thats the way I think it is in most farming areas.


We're not talking about now. We're talking about 100 years ago. Obviously, things are completely different now.

I've met a lot of campesinos over the years who would love to have the opportunity to farm the land in your region. And I know there are a lot of down-and-out folks here in Oregon who'd very much like to work in the farm belt. IMO, economic hard times will solve the problem of "keeping them on the farm," but while they're absent, they're missing out on a whole lot of learning, the sort of learning you can never get from a book or website.

May your weather be fine and few pests come your way.

Same story everywhere in the industrialized world. in my hometown (well, if you call a cluster of villages with a population today of a few
hundred total a 'town') it's just the old folks left, and of them its just the ones who don't have an apartment down in the city to
spend the winters.. Maybe a dozen farmers still out there, and only 2 younger than 40. Their kids are all off to the bright lights & the big city,
and the rest of the work gets done with immigrant labor. In my parents generation people mostly stopped planting crops and were switching to
pasture.. and during my time even that is declining.
A positive side effect is the remarkable recovery of the forest and the natural environment. Lots of land is now totally reforested where it
had been planted in wheat 50 years ago and grazed down to the rocks even just a couple of decades ago.. The land has more water, the wildlife
is flourishing, to the point where there are even rumors of bears once in a while- there had not been a bear heard of in that region for generations.
It does make it tough to even find who owns what, if like me one is trying to actually buy some land out there, though.
good luck to all in preparing shelter from this mess.. the first drops of this storm have already been falling.

How much of this change in farming to forestry was driven by depletion of the topsoil ?

My observation is that marginal lands are going back to trees not for social reasons, but fundamental agricultural reasons.


So my plans are to burrow in. Visit Sam's and stock up before everyone else gets the same idea. Finalize the plans I have been making ever since I started reading TOD many long months ago( 2 or 3 years at least)..

Our brand-new saw mill arrived yesterday. We plan to put it to use in building an "underground" home (actually partially underground, with the north side buried in a berm). The mill will also be useful in providing fence posts, lumber, etc. for barter with neighbors.

A small indoor fish farm is also in the works. Tilapia are quite hardy, they breed prolifically, and they don't taste too "fishy."

I just hope we can have it all put together in time...

So Airdale, where do you get strike anywhere matches? I've looked everywhere and concluded they must have made them illegal because they "strike anywhere."

I think they strike at bowling alleys, home plate at baseball games and when the union is given a bad contract.

Try camping/sporting goods stores. Dip the match heads in candle wax to make them waterproof until used (put them in a tin with some dryer lint for emergency fire starter ;).

I get them right at the grocery store. I like "Ohio Bluetips".

Thanks for the information.

Hello Airdale,

How is your stock of poly rolls? Instead of ploughing the vegetable garden I've been covering in black poly winter over a straw mulch or wire frame for ventilation and the darkness and worms do the rest. As well where I am there is an over abundance of rain, so doing this also keeps more nutrients in place. Am trying fall rye this year and then will cover before the winter rains hit and see how that works.

BTW, any time you want to send me an acre or two of your land I will be glad to pay you 9000 dollars, very gladly, as prices here for a rock and stump farm in the bush run about 4 times that.

Covering the garden?

IMO its best to plow or break up your garden in the winter...after the frost has heaved it and broken it down. This results in a very nice workable friable soil in the spring.

Most work the ground in the spring but that doesn't always work out well. First too much moisture from spring rains and you can't plant soon enough. Also if you happen to work it without just the perfect amount of moisture then it clods up and will be cloddy for a long long time.This is not good.

I throw wood ashes and chopped up branches,spoiled hay and all the rest after I have achieved enough moisture in the fall for it to work properly. Then cover it or whatever.

The problem is getting it ready early enough to get potatoes and early crops in.

I really don't moldboard plow my ground. I run a chisel plow over it and then a disk. If I didn't have those I would just use the rototiller. If not that then one of those handy grubbing thype hoes that are so popular and advertised as the best tool going.


I retired from farming a long time ago, however, I still own a small interest in a land company that rents it land to farmers and keep up with farming where I live in South Louisiana. My guess is that the farmers have easier access to credit than Wall Street at the moment.


The co-op banks that lend to farmers have been around a long time and the credit system has survived its own ups and downs.

Thanks puhkawn, I feel slightly reassured. 8^)

The problem with the PCA system is that it relies on commercial banks for cash in excess of its own accumulated earnings. First National Bank in Boston used to be the institution most used by the PCA's around Texas. Anything which would impact the commercial banks would impact the PCA's.

Right on.

PCA = Production Credit Assoc

I went in once and asked about a loan since they posted very low rates.

They said: Sure we will give you a loan on your land or whatever.

I said: Do you sell that paper then?

Reply: Of course we do.

My father was farming when Earl Butz (ag sec at the time) stated to farmers "get big or get out"...my dad tried to get big. He borrowed from PCA...He then had 2 more farms for a total of 3.

He was in way over his head with this scheme and then farming went 'south'...cattle prices were simply worthless.......he tried row cropping and couldn't get 'big'enough...

So he died a broken and poor man finally. From 3 largish farms living on his SS and small pension he barely was able to support himself and his wife. He ended up with 10 acres and a huge debt burden.

Moral: He should never have taken that really bad advice and never should have mortgaged his life away based on some idiot in DC.

He never gave me a chance to buy one of the farms. He just offloaded them and tried to pay back his debts.

Local banks are what keep the farmers going. They deal in land as security. A likely safe investment as long as farmers need it. When farming start to crash then the security will be essentially worthless.

I foresee many squatters holding the land. Survivors more or less.
No banks to speak of. "Back to the Future Part III".

BTW local banks at least never sell the paper. Or 'securitize' it. At least not here. I know for I have made many many loans over the years. Now I have no mortgage on what I live on. Only one loan and thats on my motorcycle.

To deal with local banks one needs to have a 'good' reputation. No defaults,etc. In the outback everyone knows everyone. The reprobates are known as well.


There is a remarkable interview with Andrew Bacevich that all readers of TOD ought to read:


A quote:

ANDREW BACEVICH: They absolutely did not. And indeed, the election of 1980 was the great expression of that, because in 1980, we have a candidate, perhaps the most skillful politician of our time, Ronald Reagan, who says that, "Doom-sayers, gloom-sayers, don't listen to them. The country's best days are ahead of us."

BILL MOYERS: Morning in America.

ANDREW BACEVICH: It's Morning in America. And you don't have to sacrifice, you can have more, all we need to do is get government out of the way, and drill more holes for oil, because the President led us to believe the supply of oil was infinite.

It's been discussed here before. Search on Bacevich and it should come up. (Full transcript and video is at PBS.)

And you don't have to sacrifice, you can have more, all we need to do is get government out of the way, and drill more holes for oil, because the President led us to believe the supply of oil was infinite.

How about this...

And you don't have to sacrifice, you can have more, all we need to do is get government out of the way, and drill more holes for oil, buy houses we can't afford at outrageously inflated prices because the President led us to believe the supply of oil credit was infinite.

But, we've been given other words of advice from our fearless leader...

We believe the American people can spend their money better than the government can spend it.-
George W. Bush

Our T. Blair added his bit making us complicit in this unreal agenda.
Phil in UK

There is nothing in the preamble to the Constitution which defines the purpose of the United States of America as remaking the world in our image, which I view as a fool's errand.

It seems to me that Bush, et al was more intent on remaking the United States in the image of Mexico.

India is the model, I believe.

Another nuclear-tipped democracy

It seems Becevich just elaborated on what Walt Kelly's Pogo knew a generation ago; "We found the enemy and he is us."


If I understood correctly, he is saying that fueling 1 million trucks with NG will save 40% of diesel consumption.

IMHO, the Achilles heel for North America over the coming decades is diesel supply more than anything else.

If you can't run the freight trains (eg coal for power plants) and heavy trucks, then everything else will collapse.

Pickens makes more sense in two minutes than all the politicians have in the past two years.

Hi calgary

re: "he is saying that fueling 1 million trucks with NG will save 40% of diesel consumption."

Does this include the cost of the conversion?

It's just human nature. People tend to be self-centered, self-aggrandizing and self-important. The typical person almost always places inordinate importance on what he does--his job, his endeavors, his successes, his failures, his opinions etc.

Economists, bankers and financiers are no exception. And this last week we saw this play out in spades.

“If you don’t march in lockstep with our economic nostrums,” they admonished us, “an economic Armageddon will rain down upon you.”

The following helps put all this fear mongering into historical perspective:

In The Folklore of Capitalism, Thurman W. Arnold tells of a conversation he had, before the bank panic, with a group of bankers, lawyers, and economists. They were one and all aghast at the possibility of a general bank closing. “My mind,” said one of them, “fails to function when I think of the extent of the catastrophe that will follow when the Chase National Bank closes its doors.” Mr. Arnold told his friend Professor Edward S. Robinson about this conversation, and found him unaccountably cheerful. “Do you think,” asked Professor Robinson, “that when the banks all close people will climb trees and throw coconuts at each other?” Mr. Arnold replied that this seemed to him a little unlikely but that a bank crash of such magnitude suggested to him rioting and perhaps revolution. Whereupon Professor Robinson said, “I will venture a prediction…. When the banks close, everyone will feel relieved. It will be a sort of national holiday. There will be general excitement and a feeling of great interest. Travel will not stop; hotels will not close; everyone will have a lot of fun, though they will not admit that it’s fun at the time.”

Despite the fact that indirectly the bank holiday (March 4, 1933 to March 15, 1933) brought new distress, through new curtailments of business and new layoffs, and intensified the suffering of many people who were already hard hit, Professor Robinson was essentially right. The majority of Americans felt a sense of relief at having the lid of secrecy blown off. Now everything was out in the open.

Frederick Lewis Allen, Since Yesterday

Excellent post.

And Denninger argues that we now have proof that the bailout won't work.

The Fed threw $630 billion into the market before the vote, and yet the S&P 500 was down 40 handles anyway, and in fact tanked after the vote.

Note carefully - Paulson's plan was $700 billion, and Bernanke spent $630 billion - almost the entire amount proposed - but failed to fix the problem.


I don't think this argument is valid. In my understanding the authorization allows the treasury to hold 700 billion in purchased value of debt obligations (ect). As it purchases Mortgage bundles (CDOs) it can sell the good assets and use the "new" money to buy yet more assets. In this way it should be able to cycle though a couple trillion, ending up with the worst assets unsold at the end. While several trillion is probably enough to solve the problem it will lead to the tax payer holding 700 billion in nearly worthless unsalable mortgages. If someone believes this to be incorrect please make that case.

it can sell the good assets and use the "new" money to buy yet more assets.

There are some problems with this. First, assuming there are some "good assets", it is impossible to know which ones they are. Practically the whole lot is rated AAA. Secondly, even the best assets are selling for pennies on the dollar. The reason the Treasury is considering this bailout is that there are no buyers for this stuff, other than the US government. Thirdly, these assets are mainly mortgage-backed securities and housing prices are nowhere near the bottom. The 20-city report had housing down another 16%. IMO, there is still anywhere from 30%-60% more to go. This means that the "firesale" prices these assets are selling for now is probably pretty close to fair market value.

Many banks are involvent. The basic task is to get the banks to feel comfortable with loaning money to other banks. You can do this with transparency and the closing of the bad banks, or you can try to prop up all the banks, good or bad. IMO, there are 3 basic options:

1. Transfer the losses of the banks to the public and let the banks continue unencumbered with bad debt (this is the Paulson plan).

2. Force the banks to take the losses on their books. This will force many of them (and probably all the big ones) into bankruptcy. You then do an S&L-style RTC to clean up the assets of the failed banks. This will be VERY painful, but it might provide a solid foundation for sound banking going forward.

3. Transfer just enough of the losses to keep the banks solvent, but do it in a way that doesn't stick the taxpayer with all the losses (i.e. give the public an equity stake in the banks). Some banks will still need to fail this way, but it might let the good banks move on with business.

I think I'd prefer to grit my teeth and go with #2. I realize this will be the ugliest in the short term. However, we have a big heaping portion of ugly coming our way, no matter what we do. Zombifying the banks isn't going to help with that, and it is a very bad time to burden the public with extra debt. Failing that, #3 (the Roubini plan) is better than #1, especially given the near certain knowledge that the banks will just take the $700 billion and leverage the crap out of it in risky investments (they might even buy back the toxic debt from the Treasury, mark it up, and then sell it back to Paulson at a profit).

My understanding of these financial vehicles including collateralized debt obligations (CDOs) is fairly minimal; however, if my interpretation of what many are saying is correct, the picture you have painted is not what others describe. While purchase price for CDOs (ect) will vary widely, it has been suggested that the purchase price paid by the Treasury will generally be between 25 and 75 cents on the dollar. This makes sense, property does not have zero value. Once the government owns the mortgage bundle it will break it up - not try to sell it as a whole. Almost all CDOs will contain some property worth face value that can be sold fairly easily. Indeed these properties will represent most of the value in the bundle, perhaps allowing most of the purchase price to be rapidly recouped.

The obvious question is "if it's really that easy to recover a high value percentage from CDOs, why aren't the banks themselves doing it and getting more than doing it via the Treasury will generate?" There seem to be two obvious possibilities: (1) they can't for some legal/bookkeeping reason or (2) there's so much value that was either never there in the first place or has been lost recently that it's not actually that easy. My suspicion lies more towards (2).

Great analogy/summary of the situation from THE AUTOMATIC EARTH

If you go to the racetrack and bet on a horse, you receive a piece of paper that confirms the bet you made. There are many different varities of bets possible; for now, let’s say you simply bet on one specific horse to win the race.

After the race is over, you have either won your bet or lost it. There’s nothing difficult about the process, anyone can -learn to- understand it, and everyone, except in very rare circumstances, accepts it, both the winners and the losers.

What is happening in world finance these days is that a group of very heavy betters have become very heavy losers, and they have done so with borrowed money. In the past few years, in order to hide their losses, they have turned to a very clever little trick: they want to make us believe that the race is not over, even though we can all see that it is. In fact, if they have their way, the race will never be over, unless and until their horse wins.

The US government has joined the argument on the side of the losing betters. They have allowed the losers - who are their friends-, for years, to hide their predicament, their losing tickets, through Level 3 and off-balance sheet "creative accounting". Now that the government’s betting buddies’ creditors are losing patience, and demand their money back, which the buddies don’t have, the Fed and Treasury want to buy all those losing tickets, with money that belongs to the taxpayers whose best interests they are presumed to represent.

And they up the ante today: the president declares that this will cost the taxpayer nothing; and if you believe that one, you’ll like the guys who claim that there are profits to be made on this avalanche of losing bets.

Now there'll be plenty of "experts" who are more than willing to tell you that comparing mortgage-backed securities -to take just one sort of bet- with horse racing is inherently flawed. Their argument will be that there is true value behind the securities: the homes that were purchased with the underlying mortgages.

At first glance, that may look plausible: it seems clear that the homes are not all of a sudden worthless, so how could the mortgages and securities be? My first thought is that the horse you bet on is not worthless either just because it lost one race. But that doesn’t make you win your bet, does it? And the horse is still tired.

There are deeper problems with the "the home still has value" argument. The most flagrant is the actual purchase prices, which doubled or tripled in a decade, while no value was added to the home itself. From that follows that many homes were sold at prices that people couldn’t truly afford. The US has for that reason already seen milllions of foreclosures, with many more inevitably to come. And the elevated prices, of course. are also the ones the securities are based on.

So perhaps at some time in the future your losing horse might win a race, and perhaps at one point some money can be made on a new mortgage for a foreclosed home. But that makes no difference for your losing bet, and neither does it make the securities valuable again. Both races are over. For good. Which makes it impossible for the US taxpayer to play even on the losing betting tickets their government is about to buy with their money, while making a profit on them is too ridiculous to seriously discuss.

If home sales ever recover to any kind of extent, it will be at prices that are far lower than they have been so far in this millenium. That is the only way to make them affordable. And even if it happens, it is going to take years. In the meantime, the gambling losses will have to be paid.

Your government tries to convince you that your life will be miserable without their losing betting buddies. If you ask me, it will be much worse with them, because if you want to keep them around, you’ll have to pay their debts. And they’ll just use the money to go bet on the next race. Maybe you should keep the money and buy your own tickets. That way you get to keep the profits too, if there are any.

But if I were you, I’d lay off the gambling for a while. It looks to me like a sure bet that you’re going to need every penny you have just to feed your children.

...they want to make us believe that the race is not over, even though we can all see that it is. In fact, if they have their way, the race will never be over, unless and until their horse wins.

Thank you for the best explanation that I've seen about the greatest scam of all time. The "Masters of the Universe" crowd have stolen (at least) 100's of billions of dollars.

Future historians will write write about our time:
"How could people have been so stupid!!!"

We wuz stupid, no doubt about it.

is not what others describe

What others? Paulson and Bernanke? That Wall Street Journal?

Part of the problem is that no one knows what the government plans to pay. The administration's bill lets that up to Paulson, and Paulson alone, with no review or court action possible. In his testimony to congress, Bernanke said the government should pay "mark to maturity" value. He also said that the current prices were "firesale prices" and those shouldn't be paid. Mark to maturity values probably work out to be between 75% and 90% of face value.

If you think about it, the one thing that cannot be on the table is to pay current market value. If the banks could let this crap go at current prices, they would. There are buyers at that price. But that price would ruin the banks. The entire point of the program is to pay more than the assets are worth.

Almost all CDOs will contain some property worth face value that can be sold fairly easily

Yes, you can probably break out the stuff that is not worthless and sell it for something. But that will reduce the value of the remainder by precisely the amount you sold the "good" stuff for. But it leaves you holding the remaining utterly worthless crap. The value of the assets as a whole will remain the same. You can't manufacture value that way.

I'm not arguing the assets are worth zero. I'm arguing they are worth nowhere near their mark-to-maturity value, and that their value will continue to declines as home prices decline. The reason they will decline is that more and more homeowners will default on their mortgages as they lose their jobs and as their home values drop.

On the other hand, David Gros (free reg required) argues that they are indeed worth close to zero

The non-recourse feature of U.S. mortgages translates in a de facto long put option for the mortgage owner and short put option for the lender. As long as house prices rise, the option is worthless but the more house prices fall, and the higher indebted the borrower, the higher the borrower's incentive to walk away (i.e. exercise the put)--> when the payout costs of this put option are taken into account, U.S. private-label mortgage assets are indeed nearly worthless.

In short, the problem is that house prices were too high and mortgages too big. The assets backed by those houses and mortgages worth less than the banks are valuing them at, and they will be worth even less in the future.

Real prices means that a larger segment of the American population is more financially ruined than in the great stock crash of '29. So that has consequences. It's bad enough trying to get Americans to understand that their houses were overvalued on Day 1, but living with those consequences is unimaginable.

So it's easy to sell the myth that the government is using tax money to preserve "natural" prices. It's not like most of us have ever priced houses in Pakistan or Ecuador so that we understand that the value of many assets is related to the local level of prosperity. Or sudden lack of same.

Within the body of an item about South America, Chomsky weighs-in on the IMF/Shock Doctrine type crisis the US in currently undergoing:

We should note that this is a regular feature of contemporary state capitalism, though the scale today is unprecedented. A study by two well-known international economists 15 years ago found that at least twenty companies in the top Fortune 100 would not have survived if they had not been saved by their respective governments, and that many of the rest gained substantially by demanding that governments "socialise their losses." Such government intervention "has been the rule rather than the exception over the past two centuries," they conclude from a detailed analysis. [Ruigrok and von Tulder]

We might also take note of the striking similarity between the structural adjustment programs imposed on the weak by the International Monetary Fund, and the huge financial bailout that is on the front pages today in the North. The US executive-director of the IMF, adopt ing an image from the Mafia, described the institution as "the credit community's enforcer." Under the rules of the Western-run international economy, investors make loans to third world tyrannies, and since the loans carry considerable risk, make enormous profits. Suppose the borrower defaults. In a capitalist economy, the lenders would incur the loss. But really existing capitalism functions quite differently. If the borrowers cannot pay the debts, then the IMF steps in to guarantee that lenders and investors are protected. The debt is transferred to the poor population of the debtor country, who never borrowed the money in the first place and gained little if anything from it. That is called "structural adjustment." And taxpayers in the rich country, who also gained nothing from the loans, sustain the IMF through their taxes. These doctrines do not derive from economic theory; they merely reflect the distribution of decision-making power.

The designers of the international economy sternly demand that the poor accept market discipline, but they ensure that they themselves are protected from its ravages, a useful arrangement that goes back to the origins of modern industrial capitalism, and played a large role in dividing the world into rich and poor societies, the first and third worlds.

This wonderful anti-market system designed by self-proclaimed market enthusiasts is now being implemented in the United States, to deal with the very ominous crisis of financial markets. In general, markets have well-known inefficiencies. One is that transactions do not take into account the effect on others who are not party to the transaction. These so-alled "externalities" can be huge. That is particularly so in the case of financial institutions. Their task is to take risks, and if well-managed, to ensure that potential losses to themselves will be covered. To themselves. Under capitalist rules, it is not their business to consider the cost to others if their practices lead to financial crisis, as they regularly do. In economists' terms, risk is underpriced, because systemic risk is not priced into decisions. That leads to repeated crisis, naturally. At that point, we turn to the IMF solution. The costs are transferred to the public, which had nothing to do with the risky choices but is now compelled to pay the costs - in the US, perhaps mounting to about $1 trillion right now. And of course the public has no voice in determining these outcomes, any more than poor peasants have a voice in being subjected to cruel structural adjustment programs.

A basic principle of modern state capitalism is that cost and risk are socialized, while profit is privatized. That principle extends far beyond financial institutions. Much the same is true for the entire advanced economy, which relies extensively on the dynamic state sector for innovation, for basic research and development, for procurement when purchasers are unavailable, for direct bail-outs, and in numerous other ways. These mechanisms are the domestic counterpart of imperial and neocolonial hegemony, formalized in World Trade Organization rules and the misleadingly named "free trade agreements."

When this information is digested and combined with Obama's now strident demand for passage of a bailout bill and specious reasoning, it's fairly clear to see what sort of future "change" Obama envisions. Political damage for McCain is assessed here, but since Obama isn't even suggesting any alterations in the very flawed bailout bill, it's hard to see just how he might capitalize on McCain's blunders when so many people were able to see the naked man behind the curtain and--FINALLY--took action.

John Gray's insightful article that declared Reaganism thankfully dead notwithstanding, there will be a very hard fight for the few lifeboats on the sinking Titanic. And the ongoing battle to bailout Wall Street is a part of that.

Yes-everybody knew what Mccain was about-this whole episode has revealed the shark lying beneath Obama's Jimmy Carteresque facade.

These people who want money are not generating taxable income, they do not deserve to get bailed out. AIG and its gambling on insuring mortgages, investment banks investing shareholder's money on high risk mortgages given to the people who were least likekly to be able to pay back, giving out money to people who lied about their income, without any attempt to verify income. Giving mortgages on properties where the mortgage payments were much higher than rents in the area and to naive landlords hoping to rent out above market rates in areas with high vacancies. Now Wall Street wants carte blanche, a blank check. Bush is asking Congress to raid the Federal Reserve to give handouts to the big losers at the middle class tax payers' expense. Maybe they should incease the amount in the food stamps reserves and let some of these fly by night bankers have that as a safety net instead of some 100 million dollar a year salary for big time losing. Let the bums earn their 700 billion dollars instead of ask for charity.

Hello Rainsong,

Your Quote: "Let the bums earn their 700 billion dollars instead of ask for charity."

When the respected Economist magazine ran an editorial that extolled the virtues of the U.S. rescue plan, its chat rooms exploded with invective...

"If there had been the provision to make banking CEOs eat a bowl of live cockroaches for the $700 billion, this thing would have absolutely passed by a landslide," wrote MuskegonCritic in a response to the magazine's editorialists.
LOL! That would be progress,IMO. It would have definitely driven home the parasitic nature of high finance.

Finance is a boring and well paid business. If you offered them even 700 thousand to eat a bowl of live cockroaches, they would accept your offer. Beats showing up for work every morning.

Accepting what you said -or at least what I can understand - I think we are in agreement. I did not argue one can increase value by splitting CDO's and selling the valuable part - but, the valuable mortgages can be sold. This recycles the money and, as you state, leaves the taxpayer with worthless crap at the end on the process. I think that is the plan. I apologize for not sourcing my statements but I did not keep them. The prior thread on this topic (http://europe.theoildrum.com/node/4563#comments_top) was a primary source. In any case, I quit - you clearly understand the situation better than I.

the problem is that house prices were too high and mortgages too big.

This is not the cause of the problem. It is an outcome of the problem.

The root cause of the problem is that the regulators did absolutely nothing while the banking industry invented new financial instruments and used these new instruments to move mortgage loans off their books and extend greater amounts of credit.

This lack of regulatory oversight created "free money" and this easy credit was used to bid up the price of housing to unsustainable levels.

There were lots of warnings about the dangers of CDSs and CDOs but the regulators ignored all of those warnings and did nothing. Those same regulators are the ones who now want to use public funds to bail out their friends, the gamblers.

You don't need 700 billion in loans. You need 700 million pitchforks.

America consumes more than it produces (spends more that it makes)

America borrows money to pay its debt (uses the credit card to pay the mortgage)

America is SUBPRIME.

Thats the REAL issue here.

In addition to this, the Fed held interest rates below the rate of inflation for an extended period of time in order to prop up the faltering economy. What exactly did Greenspan think was going to happen? The Fed was effectively paying people to borrow money. Collectively, people borrowed to the hilt and invested the proceeds in real estate, stocks, bonds, commodities, SUVs, baubles, etc. This inflated a massive bubble, which is presently imploding.

The loose lending standards were just icing on the cake. This allowed a much more 'diverse' segment of the population to participate in the action, but it was the low interest rates which opened the door and invited this disaster.

What was not to like? Lenders were handing out loans to anyone who could fog a mirror at three percent, while real estate was climbing twenty percent annually. People already invested in real estate were taking out home equity loans and either investing it in the market or buying crap they could not afford. This created the appearance of a sound economy, all the while the real economy was being eviscerated by way of off-shoring.

As we know, there is no such thing as a free lunch and it was just a matter of time before this ponzi scheme came crashing down. It going to be rather difficult to right ourselves after this drunken orgy of debt financed consumption if we are presently at the peak and will soon be tumbling down the rocky slope on the other side of Peak Oil.

While several trillion is probably enough to solve the problem it will lead to the tax payer holding 700 billion in nearly worthless unsalable mortgages. If someone believes this to be incorrect please make that case.

The bubble is popped. It's not coming back. Look at the 20 year Case-Shiller chart:

We have to fall back to 1998 levels to fully unwind the 10 years of bubble. We are only 40% there. Even if we assume a steady rate of appreciation in real estate that matches the 30 year pre-1997 historical average, we're still no greater than 50% of the way to the bottom. And it will take 20 years for house prices to get back to what they are now.

But we know that in 20 years, these McMansion prices arent going to be high because people will never be able to afford the energy required to live in them. This money will simply be gone forever. Printed out of thin air, vanished into a black hole, with a bunch of crooks profitting from both transactions.

Here's another disturbing thought.

The mortgage industry used to rely on a formula based on income. Inflation-adjusted wages for most Americans have been flat or declining for years now. All that concentration of wealth in the hands of the upper class doesn't get more houses built; just nicer houses. Now they will stay put in those houses, and the rest of us will suffer further loss of real income which means we will never qualify for a mortgage again.

So non-mansion house prices might have to fall even lower than the 1967-1997 average.

Now they will stay put in those houses, and the rest of us will suffer further loss of real income which means we will never qualify for a mortgage again.

I *Partially* disagree. The lower 80% or so will suffer further income loss, no doubt, but we will still be able to get mortgages. There will be supply (people will sell houses, because they either need to or they inherited a house because someone died or something like that) and there will be demand (I assume that there will be a continuation of an economy for the forseeable future, even if it does get bad, and at least 75% of working age floks will be employed). Where there is a supply, and a demand, there will be a market, and the banks will extend credit to the good risks becasue that's how they make money.

So non-mansion house prices might have to fall even lower than the 1967-1997 average.


The other thing is that the longer prices fall or stay flat in any real estate market, the less upward pressure on prices because buyers see no potential for capital gain on the purchase. Peter Schiff covers this quite well-you can justify a large mortgage on a $700000 house if you feel it will be worth $1000000 in 7 years-if you think it will be worth $700000 (or even $600000) in 7 years you cannot justify the loan even if you qualify.

Rents need to be taken into account as well. If rents start exceeding mortgage payment amounts, people will start buying again. Rents have gone up a fair amount here in the DC area - partially at least because not many people want to buy or can't qualify for loans like they used to.

From a blog written by someone who went through the Argentina crisis:
"A small apartment would be a good investment.

Give it a few months, you’ll see rent prices go up in no time.
People can’t get loans to buy or they don’t have the money, so people start renting more. More demand, prices go up."

True-even though USA prices are still elevated, there are incredible bargains out there right now-a cursory glance on the Net will show this. Good time to be a buyer if you are willing to lowball and shop around for the killer deal.

Very good and important point. If housing prices are based on income, and income has been stagnant the last 10 years, then that does support the theory that the bubble must fully unwind back to 1997 values. And if our incomes go downeven more from here, because of depression, then so too must housing. Given all of this, it is possible that the housing bubble has only corrected 30% so far, with another 70% to go.

In general I see no real bottom for housing rising fuel and food costs coupled with stagnant to falling wages will remove disposable income fairly steadily from now on out. This has nothing to do with the housing bubble but is peak oil driven.

To borrow 20,000 dollars for thirty years costs about 116 dollars a month. So every time expenses increase by about 100 dollars borrowing ability drops by about 20k or so. So if your expenses go up say 200-400 dollars your purchasing power for a home declines by 40-80k. This decline is directly from peak oil. In addition to this we now depend on two income families to pay our mortgages.
Its reasonable to expect that as the job market becomes volatile and costs increase that the assumption of two steady incomes becomes untenable. Assume your dual income for the household is say 80k now in the coming years you probably will be forced to at least discount 24k if not more to adjust for job insecurity.

So thats at least 1000 a month off your ability to purchase a home or and additional 100,000k decrease in purchasing power. So most families will see their purchasing power decrease at least by 1200-1400 a month or their ability to purchase a home drop by 120-140k

This means that the average price for a traditional home thats now around 150k should drop to about 10-20k

You can recover some of this by not buying new cars but this catches you on the fuel efficiency side so thats probably a wash.

As you go up the economic ladder to wealthier families you have more disposable income but a lot of people will be dropping out of the top brackets so you have a oversupply of the largest homes.

My best guess is the the 500k-1million bracket falls to 100k-300k depending on location some falling a LOT more.

Rents of course will fall in line with disposable income however doubling up or sharing a rental renting out bedroom etc will help a lot. The move of homeowners and families to either rent rooms or move in with relatives or friends to share housing costs puts serious downward pressure on rents as rooms for rent are in oversupply.

On top of all this the baby boomers are retiring in masse and seeking to cash in on their dwindling equity and downsize. Expect the smart ones to start selling just to recover equity in homes. And last but not least with over 50% of the homes owned outright these people can afford to rent rooms at cheap prices to cover living costs.

All of this has nothing really do do with the current housing bubble I'm just looking at future income possibilities.

Effectively for all intents and purposes housing really has no bottom with many properties dropping to zero.

You can look at Detroit as and example of whats in store for America's housing market and esp watch Detroit as this current bubble wears off and the automobile industry implodes. They are a excellent example of where America is heading.

And yet another disturbing thought: the Great Bailout was set up with no funding, i.e., using purely borrowed money - new treasury bonds to be sold, I suppose. And who will have this kind of money to invest in those bonds? Presumably the same chaps who dabble in golden parachutes etc. So, we'll PAY INTEREST (about $20B/year?) on this new government debt to the same people who we then turn around and give the money back to. The death squads make you pay for the bullets too.

Of course, this is not really all that different from the general structure of our money system. If you want a loan, you go to the bank*, they create the "money" from thin air (loosely coupled to a much smaller "reserve" they have on deposit, or borrowed somewhere). They then collect "interest" on it. They're legally allowed to do that, you and I are not allowed. I call that financial slavery.

*) or you can go to a Credit Union, which can only loan out what they have in deposits, thus the interest you'll pay will go to your neighbors.

I cant seem to get this graph to post

Well, anyway, here it is:


The $630 billion was slightly different kind of dollar money than the proposed $700 billion. Most of it was from temporary swap lines of credit with Bank of Japan and Bank of England contributing the most, but also Australia, Canada, Sweden, Denmark, and Norway. These are short term loans due Jan 2009 (interesting date). It is true that the markets went down anyway (what do they want? first and second born?).

So this simply means they borrowed the money from foreign entities...? At what interest rates I wonder. They have to repay by January? With what I wonder.

McBama wants to raise the FDIC limit to $250,000.

And I think we know how they're going to spin it if the bailout doesn't work. They're going to say it didn't happen soon enough, so they can blame those who voted against it yesterday, even if it eventually passes.

Both these guys are lucky there isn't a third credible candidate with financial backing and a shot to win-neither one comes anywhere near the truth on this subject. Already the 100000 limit is a subsidy-250000 increases it. You will notice there is no talk of reigning in these cowboys in exchange for the increase to 250000-that is unacceptable. For those that feel this is not actually a subsidy, realize how many cars GM or Ford would sell if the federal government insured 100% of repair costs not covered by warranty, up to say 100000 miles. This would allow GM and Ford to keep selling crap, which is exactly what is happening with the financial sector.

Both these guys are lucky there isn't a third credible candidate [...]

No luck involved. Sadly, that's the plan, and they're sticking to it.

The problem is that there is no confidence in the banking system and the flight into Treasuries that's locking the system up. The raised limit would help a little.

In your example GM or Ford would be put out of business when a intervention is required, just as FDIC interventions do.

Problem with the FDIC is that it is underfunded. The payments put in by the banks do not measure up to the real risk the FDIC is currently facing. Raising the FDIC coverage limit makes the underfunding worse yet.

The Republicans meanwhile push their "insurance" program for the banks. I think that's worse than the bailout, it is a time bomb. It would put us taxpayers on the hook for the total losses. How will they figure out "risk free" premium levels when the current problem is that the value and risk of the "toxic waste" paper is totally obscure? And where will the "financial institutions" find the money to pay fair premiums? If they had the money they wouldn't need a bailout - they'd self-insure or buy insurance on the private market.

Yes, the raised limit would help-it is still a subsidy. There should be a number of different limits designated depending on the leverage and risk employed by the bank, and banks that fraudulently ignore the law should have top management thrown into prison. There is no justification for using the taxpayers money to protect criminals.

The WAMU and Wachovia models already did this. FDIC guarantees bad paper above a certain amount and the deposits are acquired in full by another institution while the equity and debt are wiped out.

This is not a bad model as long as everyone connected to the failed bank, other then the depositor, get wiped out. They just need to put the legal framework in place retroactively.

I figure that we're not seeing as many details today since the market isn't tanking, but they're twisting arms behind the scenes and that's when we'll really get it stuck to us.

I see the 25B for the Big Three went through -- more bailout money for US automakers, but no agreement on money for renewables or a Prius that I could order today.

The FDIC limit makes sense to me though. $100K was never indexed for inflation, and it just isn't enough for business accounts, or even some people buying and selling their house, moving retirement funds, or settling a modest inheritance estate. For even a modest business $100K can be a few days receivables, especially if it's an "end of the month rush" sort. It's got to really hurt local banks when their "best" business customers get skittish and start spreading around their cash into short-term bonds, money market, and so forth.

And FDIC insurance doesn't protect bad investments, it protects PEOPLE WHO SAVE MONEY, a welcome rarity in this society.

The economy has to contract, the way I see it. The goal now isn't to keep it from getting to where it needs to be, but to make it do so without much undershoot.

The 630b is a swap so eventually the banks have to pay it back.

The 700b heist is a initial # and it is revolving, it would basically allow grants to the banks at any time they overpay for bad paper, and they hope to keep the ball in the air until they can restart the fraud bubble.


Gulf crude output to inrease by 10 mn bpd by 2015

Some of the new projects will be needed to offset observed declines in existing oilfields. The opinion of the author of the article seemed to be new projects will exceed decline rates and observed capacity growth will be 10 million barrels per day.

Saudi Arabia has been experiencing decline rates in excess of seven percent in its producing fields as the larger fields were legacy fields. Saudi Arabia stated it would reach maximum oil production capacity in 2009, not 2015. According to a ConocoPhillips presentation the worldwide observed oilfield production decline rate is about 4.5%. Some oilfields were developed to provide a plateau period before declines set in. Some writers assumed that the new oil projects would add to production as if oil field production declines were non-existent. At any rate oil production capacity is scheduled to expand in the Persian Gulf area as high prices have brought expensive technology to the region.

Here's some good news to interrupt the constant stream of TSHTF:

NREL Solar Cell Sets World Efficiency Record at 40.8 Percent

Scientists at the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) have set a world record in solar cell efficiency with a photovoltaic device that converts 40.8 percent of the light that hits it into electricity. This is the highest confirmed efficiency of any photovoltaic device to date.

The inverted metamorphic triple-junction solar cell was designed, fabricated and independently measured at NREL. The 40.8 percent efficiency was measured under concentrated light of 326 suns. One sun is about the amount of light that typically hits Earth on a sunny day. The new cell is a natural candidate for the space satellite market and for terrestrial concentrated photovoltaic arrays, which use lenses or mirrors to focus sunlight onto the solar cells.

(Apologies if this is already been posted, the news is from last month but I just found out about it.)

I saw a talk by one of the NREL guys about these multi-junction cells last summer and was blown away by the concept. The standard PV you might mount on your roof has an efficiency of ~12-15%. Instead of trying to get a more efficient conversion process for a single semiconductor (which is max. ~20% theoretical efficiency), they are harvesting the same photon more than once by using layers of different semiconductor with differing efficiencies. You get three electrons out for each photon you harvest. I thought it was analogous to the old steam engines with three cylinders to get the maximum work from the steam, it's just here they've got three photon absorbent materials. The cost will probably be pretty high for them though, but at least it can be done.

*edit* Oops. What I was telling you about above was the old design. The new one uses three layers that each have a different spectral range they are most efficient in collecting photons from.

Under perfect conditions, i.e., clear skys, concentrator cells seem like a great idea. However, these systems rely on precise 2 axis tracking and are about useless under cloudy conditions. The cost of the concentrator and tracking portion of the overall system offsets much of the advantage of the small physical size of the PV device per unit of energy produced.

Also, there's an extra cost associated with the cooling needed to remove the 60% of the energy which is not converted to electricity. If the cooling system fails, the PV will be fried rather quickly, which implies that the reliability of the cooling system must be very high, thus making that portion of the total system even more expensive. The fact that there is energy available from the cooling system would be a plus, but only if these are located near places where the low grade thermal energy would be of use, such as a district heating setup or for winter heating of greenhouses. That low temperature thermal energy might also be used with a so-called "bottoming cycle", that is, a heat engine running on a low boiling point liquid, such as an HCFC or propane.

E. Swanson

Black_Dog -

You touch upon a very important point re solar energy. And that is:

For stationary power applications solar energy capture efficiency, in terms of the percent of incident solar energy converted to electricity, is of secondary importance to the overall installed unit capital cost in terms of dollars per KW of deliverable power. In other words, for someone actually buying a PV system, a large and inefficient but cheap system is generally preferrable to a smaller high-efficiency system of the same output but which is expensive. (With bounds, of course.)

Many people, including some engineers who should know better, don't make a sufficient distinction between physical efficiency and cost-effectiveness.

Right on. My solar-powered heating fuel "plant" (a woodlot) is only 1% efficient, but the only "capital" cost is the property taxes.

Stirling engines are simple mechanical devices that can achieve efficiencies of 40% and above ... at high temps. Google around.

This new solar PV innovation adds nothing of interest in regards to the upcoming energy squeeze, although I see a possible benefit for space applications.
The grand expenditure concerning concentrating solar is the mirror systems et al but those remain the same.

.... and as BlackDog indicates, the cooling will probably become a paramount challenge

The problem with solar is that since it became more common, people have been touting it as the answer of the future to all our energy problems, but it's still an immature technology in terms of our synthesis ability and the complexity of the systems we can design (e.g., a plant has a much more advanced solar power generator and energy storage system than we what can make). As evidence, I offer this: I still have textbooks that show the maximum possible efficiency of solar is ~20%. Few people back then (the early 1990s) realized that multi-junction cells could do better than this, yet here we are at 40%.

It's has taken a long time to get to this point, longer still because of the rapid die-off in solar funding with Reagan in the 1980s when renewable energy became unfashionable partly because solar cells didn't immediately show up on every house along with flying cars. But have some patience! The modern internal combustion engine has its roots in the 19th century, same with coal burning to create electricity. This is well over 100 years of research and development to come to the point we're at now, but you want to come up with the replacement for the status quo in 30 years? Won't happen.

So, I agree that the short-term benefit of these is virtually nil, but in all things, the next step after an improvement in design is to work on lowering the cost and simultaneously address other problems like cooling as Black_Dog pointed out. Slow progress, but progress nonetheless.

My point Gwydion is that this new PV-gallium device is not adding anything of real new value (!?) IMO. The “job” this gallium-plate is touted to do is already served with an old fashion basic device called the Sterling engine. Concentrating solar-concepts are up and running, adding their small and (till date) expensive share of power to the grid.

Gallium is amongst the rarest substances on the planet, why not just use the abundant substance of iron (Stirling-engine) , as long they are supposed to do the same job at almost the same efficiency ?

from wikipedia :

Gallium does not exist in free form in nature, nor do any high-gallium minerals exist to serve as a primary source of extraction of the element or its compounds. Gallium is found and extracted as a trace component in bauxite, coal, diaspore, germanite, and sphalerite

Will there be given priority to go after these trace fragments in the future ?
(and also EROEI comes to mind , my 2 cents only)

Gallium is quite rare, sure, but if I need only a thin layer of it, it will help mitigate the cost (as in this cell apparently, but I don't have the details). Also, when the useful life of a solar cell is finished, if the gallium can be recycled after use it will help, especially with respect to EROEI. (e.g., it only takes about 20% the electricity to recycle aluminum than to mine it). This all goes for iron in the sterling engine as well of course. The question is what's the theoretical efficiency of a sterling engine and how much room for improvement is there?

I looked around and could only find this quote on a solar powered sterling engine that's being produced:

The [sterling engine solar cell] technology appears to compare well with photovoltaic panels. The company claims that its product achieves 24% efficiency, compared to the 12 -15% of standard solar panels. The dish shape could also be a big space saver over flatter designs. The company says their device could produce electricity 20-30% cheaper than photovoltaics as well. Units will be priced at around $20,000.

24% efficiency.

Here's another research sterling engine solar collector made by SNL:

This January, on an exceptionally clear and cold day, scientists for the Sandia National Laboratory and Sterling Energy Systems recorded a 31.25% solar-to-grid efficiency, nearly 2% better than the 1989 record.

So the record seems to be 31.25%. I'm sure there could be improvement in this, and you're right, sterling engines will be a heck of a lot cheaper per watt generated, but you never know when there will be a break-through that might have a good balance. E.g. the Grätzel PV cell is TiO2 mostly, cheap as dirt, covered with a single monolayer of a dye molecule. The efficiency is terrible, but you never know if a good blend between efficiency and cost might be arrived at in the future.

One more thing: I'm under no illusions that this cell will be the energy panacea. Right, that was kind of the point of the earlier post, you have to take a longer view to see if this sort of research pays off in the end or not. Ultimately however, we're not going to know if it helps or not until well after the fact, much like peak oil I might add. But technically, I guess agree that this (probably) adds little to the short-term energy situation.


On the infinia units you'll also have noticed "6kW thermal energy available", Which give the cogen efficiency at 72%.


The problem with the Sterling engines is the scale needed. These things look a lot like radio telescopes. As the physical dimensions become greater, the amount of material needed to maintain structural stiffness (against gravity and wind loads) goes up faster than the cross section of the device -which determines the potential output. The advantage of the high efficiency PV, is that the unit size per reflector can be made small. The SolFocus reflector cell is maybe 2cm across, and the array looks like a thick solar panel. There are several different designs, all attempt to minimize concentrator/tracker costs. And only time will tell which are most cost effective.

As the needed conditions for any of these concentrating collectors are more specialized than for non-concentrating flat panels (they can't use diffuse light, and high winds may interfere with the ability to focus/track), these types of systems will have lower power availability than the traditional panels. Installations also tend to not cost effectively scale to small size, expect commercial and utility sized installations only. I don't expect to see concentrated PV for the homeowner.

A stirling engine requires moving mirrors, which requires sturdy stems for them to stand on and sturdy motors/servos to move them.

A PV cell you can just "paste" to a wall or roof.

They both have their niches.

These 40.8% efficient cells are useful for soldiers marching off into the desert. They don't have to carry ten pounds of batteries on top of all the weapons and ammo and their employer doesn't care about costs. These cells don't have anything to do with the real world.

It is perhaps a small bump. There are already at least two commercial suppliers of similar multijunction cells, with efficiencies approaching 40%. The name Spectrolab comes to mind. So this is -if it pans out, incremental progress.

There are a host of startups with different concentrator designs. All of course need 2axis tracking. One SolFocus, has a unit cell size so small (the active cell is 1mm across), that fancy cooling isn't required. I think there is great promise in the field, but until large scale generation at low prices is demonstrated we can't count on it.

Nano car plant delayed

The Marxist government of West Bengal state had said it would hold a meeting on Sunday with India's largest vehicle maker Tata Motors about the fate of the plant at Singur on the outskirts of state capital Kolkata.
The firm has promised to roll out the car, to be sold for 100,000 rupees (2,150 dollars), in the October to December financial quarter.
But it has said it will try to launch it as close to next month's traditionally big-spending festival season as possible. The company has not said from where the vehicle aimed at making automobile transport affordable to ordinary Indians would roll out first, only saying it would be from one of its existing sites.

You gotta love it. Communists stole land from peasants to hand it to big businessmen to produce a car that peasants are supposed to buy. The final train wreck between our love of private property and our love of infinite consumerist growth, and all associated ideologies.
Or was that what just happened in the United States last week?

A friend of mine has just released a new Peak Oil Film Named

Blind Spot

The documentary on Peak Oil debuts at the Woodstock Film Fest next weekend

The film is now available at Film Baby.

Here is the link:


Please pass the word along to anyone you think would be interested.

You can see some clips of the film at:


Here is the Woodstock Film Festival link:


Please anyone who knows anyone that can help with distribution, send an email at the above link. These are good folks who have done a good job.

Help them out if you can and pass the word.



Wow...take a look at that cast. I'm ordering it today, just based on who's in it. Thanks for posting this.

The final revised US oil consumption statistic for July has been released:

19,416 barrels per day. (all liquids)

How far do we have to go back to find a July that was lower?

Answer: 11 years (1997)

What is the record for July consumption?

Answer: 20,939 (2005)

July consumption is now down 7.3% from that peak.

What goes up comes down.


Welcome to the land of Demand Destruction.

This is actually pretty good news... It means that we CAN conserve, we CAN cut our CO2 emissions (less oil burnt means less CO2) and we can survive on less oil. Maybe it means more Priuses or bus rides or telecommuting, or taking fewer trips or buying less stuff. But hey... did anyone really care for the decadent, materialistic society we've become in the last 30 years?

Listening to Public Radio they had an "announcement" about the home remodeling show and that you could win a $100,000 dream kitchen remodel. The idea of it turned my stomach in this economic climate. It's time to quit remodeling and be content with what you have. (Okay-- as soons as I've got to get some new energy efficient windows upstairs.)

Just a guess-you are not a female.

Or a cook for that matter.

The kind of beautifully efficient kitchen you can get for $100K, my mind simply boggles at the prospect.
I'd probably never even be tempted to eat out with a kitchen like that :)

So wrong! I am female-- love to cook-- and preserve a lot of my own home grown food. Even thought I hate my stove I simply am not willing to mortgage my future for my "dream" stove. If I won $100,000 I put in some solar PV arrays and then get some of my elderly neighbors some solar thermal air systems....

True, there are much better ways to spend $100K than just on a kitchen remodel, but given that kind of money specifically for a kitchen remodel you can get a pretty amazing kitchen.

A Multi-fuel ceramic oven, a nice range top, excellent ventilation and well designed cupboards and work spaces and you have a kitchen that can anchor a serious household.

Or just go Kubrick with this kitchen...

Add a computer... And have a little conversation with it...

Dave Bowman: Hello, HAL do you read me, HAL?
HAL: Affirmative, Dave, I read you.
Dave Bowman: Open the pod bay doors, HAL.
HAL: I'm sorry Dave, I'm afraid I can't do that. (2001, A Space Odyssey)

What goes up comes down could also apply to net oil exports. Since your tabulation of EIA net exports showed two years of declining net oil exports, with an accelerating annual decline rate, someone had to be consuming.

In any case, it is useful to consider the recent increase in consumption in Saudi Arabia and China. From 1997 to 2007, their combined consumption went from 5.3 mbpd to 9.9 mbpd, a combined annual rate of increase of 6.5%/year (EIA). At this rate of increase in consumption, in 2017 they would be consuming 19 mbpd--which BTW is roughly what the US is currently consuming.

Here are the separate Saudi and Chinese consumption charts, and their individual rate of increase numbers for consumption:

Saudi Arabia (+5%/year 1997-2007):

China (+6.7%/year 1997-2007):

WT, This is totally unfair. When you discuss a subject, it is like Charlie Gibson interviewing Sarah Palin. The only difference was that he went and asked her questions.

The breadth of your understanding of these markets is amazing. We should have a WT Day here on TOD in your honor.

To be fair, Datamunger was more correct than I was about the supply situation on the Gulf Coast this summer. I thought that the rapid decline in net exports from Venezuela & Mexico (VenMex) would outpace both the decline in consumption and our ability to quickly offset the decline with oil from other sources, resulting in calls for the release of oil from the SPR by the end of summer, and he disagreed, arguing for a faster rate of decline in consumption. While we have seen SPR releases, it was related to hurricane disruptions.

But as noted above, the US is not the world and if Khebab and I are correct about a long term, and accelerating net export decline, we will in effect continue to see a process of auctioning off declining net oil exports to the high bidders--with the low bidders being forced to conserve.

Well heck, just cut an entire large city in Georgia off from 90% of its gasoline and you can get a big drop in consumption before the mainstream media raises a fuss. Then you just target another city for a few days. It's a rolling gasoline blackout.

...and the EIA has provided us with an updated graph of US all liquids consumption.

The product that is especially down recently is distillate fuel oil. Aren't people putting aside fuel in the summer for winter heating? Or are fewer trucks driving?

Fewer truck are driving.

This article is from Newsweek in July.

High Oil Prices Boost Rail Travel

From page 2 of the article:

Trucking firms are also feeling the competition, as more companies switch to cost-effective rail shipping. According to one recent study, more than 900 American trucking companies went under in the first quarter of this year. For some the logic is clear. One of the country's largest trucking concerns, J.B. Hunt, last week announced that it would be shifting more of its cargo from road to rail.

900 trucking companies when bankrupt. Did anybody notice?

Most of those companies would have been quite small.

But nevertheless, the sheer power of the economy to adapt to changing conditions is startling. If last year, the government had attempted to decree a crash in SUV sales, a decline in trucking, and large drop in oil consumption, not God herself could have passed that legislation.

I only know two over the road truck drivers and both of them have been laid off in the last 6 months.

Why are the numbers so scattered before the early 1980s?

Winter oil consumption (for heating). It looks random in the graph but it's really a very substantial seasonal variation.

What struck me from this graph was the dispersion of datapoints in the 1970s vs 1990-2008. The monthly volatility of distillate was very high -compared to tight groupings in recent years. I am guessing that was supply/infrastructure related. Also, I wonder how much more dependent we now are on distillate (diesel fuel for trucks for basic goods and heating oil for winter) than we were in the 1970s. To me, gasoline is the more discretionary and distillate more linked to basic needs - but this is just a hypothesis - we'll see in coming recession what elasticities of the 2 are - so far HO has gone down a lot less than RBOB futures.

Just do a plot with the dots connected and you'll see what changed. There used to be enormous seasonal variation with a massive increase in consumption during the winter months. That faded with energy crunch of the late '70s.

It's fascinating that in February of 1979, 21,287 barrels per day were consumed. That monthly peak was not surpassed until August of 2005 (a full generation later). Dec 2005 and Aug 2006 also topped it.

But never again.

Is electric heat cheaper than heating oil?

This depends on a number of variables. This site provides calculators to compare different fuel types.

Electric heat pumps are a lot cheaper.

Depends upon where you are, I guess. Here is a discussion page for various options in the Montreal area:

Heating Options Discussion

I did the conversion from oil to full electric in 2005 and haven't looked back. At that time it cost me close to $6000 (including new 200 amp service entry, new hot water tank and of course the forced air electric furnace). This was when I was paying $0.52 / litre for heating oil and at that time I estimated my payback in savings would take me 6 1/2 years. Well, since then we all know what has happened to the price of heating oil. With the 2008-2009 heating season quickly approaching and a forecast high of $1.20 / litre, by the end of this heating season, I figure my furnace and conversion will be paid for a full 2 1/2 years ahead of my original estimate. Not only have I saved mega dollars, I've also reduced my carbon footprint so it's a win win situation for both myself and the environment. Also, now that the oil tank is gone, the house smells a lot better as well. Come on folks.... convert to clean and renewable energy. Give OPEC and the stock market a kick in the butt.

Ok, I'll bite. How does your electric company make the power? In Eastern CA there's a lot of Hydro and you can feel pretty good about converting to electric (as long as too many others don't do it.)

Down and over here (New England) our power rates have gone up, making the conversion from oil less of a benefit. Natural gas is cheaper than electric, and any kind of wood beats them all, as long as the wood lasts.

I'd suggest taking half the savings to superinsulate the house, before the rates go up...

$4.00 per gallon heating oil at 140,000 Btu per gallon and a 87% efficient oil burner would be the equivalent of 11.2 cent per kWh electricity.

Technical Analysis (TA) – 15th Post

Was the give-out bill killed? Nope, it just looks like it will keep being voted on until a bill is passed http://www.cnbc.com/id/26952595 The Smart Money (SM) is nothing if not persistent. Maybe it doesn't matter anyway as the central banks have upped their “injections” (sounds like some kind of addict talk to me) to $620 billion http://www.cnbc.com/id/26949983 In addition, there is talk of expanding the FDIC. (We don't need no stinking Congressional approval!) It says that the central banks (including ours) may now be “forced” to cut interest rates. Did that help Japan during its cuts to almost zero in the 90s? Nope, it just made a small bumps where the SM could sell off some of their doggy stuff (kind of like what has happened after our rate cuts).

What a day yesterday! And, it looks like we could have a big relief rally the other way today. These big moves are surely knocking off a lot of stops, which always seems to be a profitable time for the SM, if the prices come back. All of this volatility doesn't seem to be making people run to the “safety” of commodities, as oil, gold and silver are either down or flat. It may be that until the T-bills are pressured, the commodities will not seem like the safe haven.

The DJI appears to be going up on hopes of new votes on the give-out bill. This could be bullish for oil as these hopes increase inflation expectations. The dollar is up a lot this morning (vs EURO), and gold is down – which is normally bearish for oil. There seems to be some expectation that the non-US central banks are close to lowering their interest rates. Which should ultimately increase inflation and raise the price of oil.

The gasoline futures are at about 2.35 this morning, but we still aren't able to get gas here in Atlanta. I wonder if my neighbors would mind if I bought a tank truck of gas in the midwest, drove it here and parked it in my back yard. With 9,900 gallons of highly flammable love, I would be the subject of much envy and fear (not to mention police action). Because all gas in Georgia has to be metered through state certified pumps, even the tanker truck drivers are having trouble getting enough gas to get to work.

Maybe this gas crisis in Atlanta isn't totally bad, it could be considered to be practice for peak oil – without the $10 (or $100) per gallon gas price.

(About the following TA analysis: I apologize for the jargon, and I have attempted to give as much of an explanation as possible in the last paragraph. Unfortunately, I have a stack (and growing) of books (and the Internet) that explains everything, so it is not possible to explain much more without overloading this post. In addition, you will want to get a copy of the chart of the oil ETF “USO” (I trade USO because I don't have an oil futures account) to see the price movement. Also, I am not using TA as a magic tool to make money, it is 80% to keep me focused on the price so that I stop out and avoid big losses. Most of the value I get in these posts could be summed up by just saying, “It looks like the price has made a big (or small) move opposite my position today, so it looks like I will stop out (or not).”)

Is USO stable? Their website http://www.unitedstatesoilfund.com/ indicates that USO only invests in exchange-traded funds (less counter-party risk). I also have read that even though Lehman went bankrupt, their ETFs are still valid, but I'm not sure how that works.

As far as my TA on OmniTrader is concerned, for USO, I am only getting unfiltered (“unconfirmed”) signals. I am getting an overall short signal of (81/99) from combined short signals from the unfiltered volume, “all systems” and reversal strategies, and a short “kicking” (2/5) recognized pattern along with a short “breakaway gap” and a short “trend line reversal.”

Breaking the $100 mark is not a good sign for the price of oil. The USO close price of 77 went below the previous short term low range of about 84, and got close to the overall low of 73. This is normaly bearish for oil.

Almost all of the indicators are bearish for oil, but I bought some USO yesterday for “war insurance” at about 80 and I have my stop set at about 73 (based on the overall low). This will probably be the last time I go against the TA until after the elections.

Every day, it seems like that are multiple stories that make me paranoid about war, such as this one about a false flag operation using a nuke/EMF weapon http://www.abovetopsecret.com/forum/thread396260/pg1

(For my TA, I am using OmniTrader for short term movements (20-day backtested, end-of-day [EOD]) with the pattern recognition module (short, med, and long), and I trade USO as a proxy for oil, and UGA as a proxy for gasoline. I am using the standard strategies for breakout, trending, and reversal (all filtered and non-optimized), one that I created with all 75 systems, another one I created with only the volume systems (both optimized (this means that the signals could change every day) and unfiltered), and an unfiltered version of the reversal strategy. I use OmniTrader because is is highly automated, and somewhat easy to learn; however, I don't know if the this the “best” program out there. Once again I have put myself out as a fortune teller – a sure way to end up looking like a fool. I am not an expert at TA, I am a beginner (sometimes a badly hungover beginner). This is in no way to be considered to be investment advice, I'm the one who needs investment advice. Please add to this analysis, and don't feel shy about flaming me if I said something dumb. I definitely want to stay out of the group of the “stupid people losing money.”)


Well, fifteen posts later, what is your cumulative portfolio return?

My return after 15 posts? I'm not sure if my returns will help anyone out because I only have two trades in that time and one is still open. Also, I have been trading long enough to know that one can have great results (and everyone thinks you are a genius), or bad results (and everyone thinks you are an idiot) – but the results could have been simply been luck.

Also, because I tend to trade in options, the results can look really good, or really bad. The only trade that I closed was a put option that made about 60% over about seven days, and the position I opened yesterday is up today by about 2.4%. However, these numbers can be very misleading because if the market had gone against me, I would have had to stop out and take a big loss. TA did help with the first trade, but the second was mainly made because I am paranoid about war.

It is well within probability that a person could have a run of luck that could last for years. On the other hand, a person could have a run of bad luck, never win and run out of money.

The main point that I have learned through these posts is this: “Keep a close eye on price and volume, and if I buy an investment, set profit and loss stops and use them.” Sounds logical, huh? But I guess that I needed a computer program, and the “meat-grinder” of posting to get me started.

I looked at the charts provided in my brokerage account (TradeKing), but for some reason I was never able to learn TA from it. Because OmniTrader is the only TA program that I have used, I don't know if it is the best. The reviews seemed ok, and I have found it to be automated and it is helping me learn TA. I have heard that maybe the program TradeGuider is a more effective program, but it was a great deal more expensive, and it didn't have the automation that attracted me to OmniTrader. However, maybe in a year (after I feel better about my TA skills), I will buy TradeGuider.

By the way, it looks like tomorrow's post will be my last for some time. I had some spare time this month to write posts, but it looks like that is coming to a halt. However, I will be doing the TA and some research, and if I see anything big coming, I may pipe up with a short post or two (more likely, I will be totally blindsided). It has been fun and a great learning experience, so if anyone else is considering doing something like these posts, I recommend it.

There is enormous profit to be made in that business, but the profit is made by selling get-rich-quick dreams to the rubes, not in trading any of these schemes. Your posts here sound like you're under the spell. A lot of people here aren't under the spell, and to them you sound like a walking commercial. In trading (and anything else) there is no substitute for knowing what you're doing and what's going on around you. No amount of arithmetic formulas with exotic or serious sounding names will make up for common sense. If you're new enough to this to be fretting about which trading software to buy, what is so informative or useful about these posts? Just parroting what a piece of software says doesnt really contribute anything.

btw, investment and speculation are _not_ the same thing. This kind of thing is barely trading, and certainly not investment..

(gee, i didnt think i had that many comments when i started this :)

"even the tanker truck drivers are having trouble getting enough gas to get to work."

Tractor tankers dont run on "gas" they run on Diesel fuel.

I checked the Omnitrader web site and found they were twiddling thumbs and shooting scrap paper ball hoops into waste baskets....seems someone with poor credibility was hyping their product all over the net blogs and caused potential customers to snub the product.

Upside is...Omnitrader petitions Ripleys believe it or not for longest paper clip chain in the world award.

"even the tanker truck drivers are having trouble getting enough gas to get to work."

Tractor tankers dont run on "gas" they run on Diesel fuel.

Nep, please read the post a little closer before replying. Tanker truck drivers drive cars to work! And I find it extremely strange that you could tell what the folks at Omnitrader were doing simply by looking at their web site. I went to http://www.omnitrader.com/ and could not tell what the folks there were doing as they had no web-cam trained on the folks in the office.

I get flamed when I complain about people just making up crap but they do. What is wrong with simply asking people to post the source of their info. How do you know what the folks at Omnitrader are doing?

I realize you were not serious and just trying to be cute, but taking up bandwidth with "cute" is something we do not need.

Bailout Bill

The battle isn't over yet folks. Here is an opinion piece I just sent to the Seattle Times.

Please bug your congressmen yet again.

-- Jon


Thomas Friedman's recent editorial "A buildup, not a bailout" is long on sentiment but short on thoughtful analysis. After correctly identifying the immediate credit crisis as "a breakdown in confidence" he flippantly offers the received wisdom: "You don't fool around with a credit crisis. You have to overwhelm it with capital." and then: "You have to save the system."

I beg to differ.

The current 'system' is what got us into this mess. Giving Hank Paulson control over 700 Giga-dollars to 'fix' things is precisely the wrong solution. You see, the business-as-usual system that our leaders are trying to protect is not in the midst of a liquidity crisis for which a quick cash fix might help. It is at the beginning stages of a much deeper solvency crisis that will take years to sort out.

And it is folks like Paulson that got us into this mess. We are talking about the same Paulson who worked for John Erlichman from 72-73 during Watergate; the same Paulson who, as CEO of Goldman Sachs from 1999 to 2006, oversaw the most grotesque of the financial dealings that led to today's problems; the same Paulson who amassed a personal fortune of over $700 million during his tenure at Goldman Sachs; the same Paulson who, in 2006, sold $500 million of stock on which he paid no taxes. Is this really the man we want in charge?

The problem with the bailout bill, even in its current, unbelievably ugly, 100+ page form, is that it addresses the current symptoms of the problem rather than the root cause while concentrating near dictatorial power in the hands of a political appointee. Instead of bringing openness and clarity to the opaque dealings of Wall Street it gives awesome powers to a man who least deserves our trust.

The first real step toward dealing with the financial crisis before us would be to open the books of all our financial institutions and put 'rule of law' ahead of 'rule of man'. Financial blogger Mark Denninger, like Friedman, identifies confidence as the immediate problem but poses an entirely different solution:

1. Force all off-balance sheet "assets" back onto the balance sheet.
2. Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity markets.
3. Force leverage by all institutions to no more than 12:1.

Simple, straightforward, honest and no one gets unreasonable power. It places 'rule of law' over 'rule of man' and removes the secrecy that leads to mistrust. When everyone is naked, no one has anything to hide.

But what of the current bill?

Will the market go down significantly if we don't pass the bailout bill? -- Yes it will.

Will the market go down significantly if we do pass the bill? -- Yes it will.

We have a long and difficult road ahead at this point and some will experience hard times. But we should be adamantly opposed to the bailout bill. At best it distracts from the real problem and only delays the inevitable. At worst it is another step toward tyranny. Forcing banks to come clean about what's on their books is the only honest step toward dealing with this crisis. Openness, integrity and hard work provide the only path out of this wilderness.

Still, there are many who choose to believe that some economic Superman can rescue us, if only we give him enough power. I have no doubt that we will get what we deserve in the end. My concern is that it may not be what most expect.

Jonathan Callahan

"Please bug your congressmen yet again."

My rep is Congressman Dennis J. Kucinich of Ohio. He pretty much doesnt need anyone to prod him into voting no. Denny even tried to impeach the lot of em but sadly got no support. Something about being a Cleveland boy that makes a person tough.Theres no possibility he stands a chance agaisnt the neocon's and he has zero support from his party the dems..but he fights on regardless. What ever a voter might think about Denny and his puny stature..a coward he has and will never be.

He has a really hot wife also...so he must be endowed like a typical Cleveland male, if it wasnt for my Mohel I would of been his equal or better.

People like Kucinich may not need prodding, but they could probably use a lot of support and encouragement. It's a lonely position he's taken. No amount of thanks would be too much to remind him that many people agree with his 'road less taken'.

The man should have been our president come this January. A freaking shame how absolutely stupid Americans have become.

And he gave them hell during the bail out debate, too. YouTube...


It's not "stupid Americans;" rather, it's the combination of the Propaganda and Indoctrination Systems and the DLC elites who marginalized Kucinich with media coverage and debate exclusion. The promotion of Obamamania was very controlled so as not to instill the "thrill of democracy" in his followers, as democracy is far too dangerous for elites (please see Chomsky item linked above).

Many of his supporters begged him to bolt the Democrat Party. Why he refused to do this remains an enigma as he seems very committed to his principles. You asked me in a personal email about where you might buy property and move. It would be a difficult choice as it requires learning another language and culture, but Ecuador is becoming ever more attractive.

If you can, tell me why you find Ecuador attractive (you can respond privately if you don't wish to clutter the thread). Thanks.

Cheers. Mine too. I live in North Olmsted and work for Key Bank .... so I get to watch our economic implosion from the inside :)

Still, there are many who choose to believe that some economic Superman can rescue us, if only we give him enough power.

Yeah, good luck on that one... But hey, we've at least found a Bizarro Superman:

Our mission, as set forth by the Congress is a critical one: to preserve price stability, to foster maximum sustainable growth in output and employment, and to promote a stable and efficient financial system that serves all Americans well and fairly.- Ben Bernanke

Good piece.

Please bug your congressmen yet again.

-- Jon

Done! [For all the good it will do: none. But it may give a staffer a chuckle.]

Dear Representative Hoyer,

I wasn't going to write you because I had already determined from your voting record that you do not care about us average Marylanders in the 5th District, only your fat cat banker friends in New York. And I was correct, you voted for legalizing their national theft on Monday.

But the stunning upset yesterday by those to the left and far right may give you pause before you sell out your constituents on a re-introduced Economic Emergency bill.

The people are against this bill. We know that the CEO pay cut is a red herring, instead they ought to be prosecuted for fraud. We know that homeowner mortgagee assurances in this bill are weak and, therefore, a complete lie. We know that the Democratic Party, Joe Biden, and Steny Hoyer recently took away our rights to declare personal bankruptcy and are now bankrupting our government, upon which we rely for what is left of the social safety net [military pensions, Medicare, Social Security, FDIC], all for a bailout of Wall Street frauds. We even know that Candidate Obama opposes the provisions that ease mortgage debt on average Americans and instead proposes increasing FDIC coverage for the wealthier depositors. So much for change from the Republican's class warfare.

Either you betray your base, or you are extremely and repeatedly gullible:

Yes this is an economic emergency. Yes there are going to be more bank failures. This bill would not stop it. Yes there is going to be a Greater Depression. This bill would not stop it. This bill just lines the pockets of your fat cat friends with what we could have used to address the poverty when it occurs.

Franklin Roosevelt, who saved capitalism from itself, is rolling over in his grave.





Actually... the thing that worries me the most is the desire to anoint a "strongman" to resolve this thing. This is what got the Europeans into big trouble in the 1930's. Broke and clueless... we're repeating history.

Exactly my point! But perhaps I was too subtle.

Nancy Pelosi: "this vote will not stand".

UPDATE: New post finished. It really needs some alternative solutions added, but the baby is insisting I spend time with him...

I'm working on a new post on my blog. I'll e-mail the link out to my family and friends when done. However, it's 4:44 AM here,and I need to get back to bed.

Any feed back on errors or ideas would be appreciated.

Of Crashes, Failures and Bailouts - Round II

This is what I sent out prior to the first vote:

Of Crashes, Failures and Bailouts


Hat tip to Gwydion of yesterday's DB.

Here's how your representatives voted.

Thomas Friedman's recent editorial ... correctly identifying the immediate credit crisis as "a breakdown in confidence"


I beg to differ.
This is much more substantive than a "a breakdown in confidence".

When you buy stock in a company, you expect the value of that paper to be backed up by "earnings". In other words, there is a positive revenue stream somewhere out there (in the near future if not now) and this piece of "paper" (P/E) gives you the right to somehow tap into the revenue stream.

Similarly, when you buy a real estate backed piece of paper, you expect it to be backed up by a positive revenue stream somewhere out there. A house is just a cold pile of bricks (or wood with a stucco facade pasted on). It by itself does not generate a revenue stream. Instead the revenue stream comes from the people who occupy the house, be they tenants or mortgage payers. They are the revenue stream.

If expectations are that the tenants/mortgagees can keep "producing" the positive revenue stream, then the paper has value. However, if the tenants/mortgagees are no longer treading above water and instead they are drowning in ever overwhelming costs for fuel (i.e. gasoline), for food; and at the same time the jobs by which they "produce" the revenue stream are faltering, then you have a situation ripe for a foreclosures avalanche.

All those experts who were laughing about the impact of persistently high crude prices ("Ha ha, our economy is robust, the fundamentals are strong, we can easily handle crude north of $100/bbl") were simply wrong.

Yes, we could have handled a short spike of crude above $38, of crude above $76, or of crude above $114 (triple Yergin). But when the yellow snow keeps piling up with no relief in sight, then something has to give sooner or later. What gave out was the ability of the tenants/mortgagees to keep "producing" a positive revenue stream by paying their rents/mortgages while at the same time covering for ever increasing food and fuel costs. The mini-avalanche in foreclosures became a maxi-avalanche in understandings that the real estate-backed paper was no longer backed by positive revenue streams (P/(+E)).

The federal government's attempt to stop this avalanche with a white collar picket fence of 700B little twigs is a useless gesture. Throwing twigs and taxpayers in front of this avalanche is not going to stop it.

Here is a seemingly reputable device to more perfectly volitilize fuel for more efficent burning...
A silver BB at best...here is a snippet from the paper: A small device is thus introduced just before the fuel injection for the engine, producing a strong electric field to reduce the fuel viscosity, resulting in much smaller fuel droplets in atomization. Because combustion starts at the droplet surface, smaller droplets lead to cleaner and more efficient combustion. Both laboratory tests and road tests confirm our theory and indicate that such a device improves fuel mileage significantly. The technology is expected to have broad applications, applicable to current internal combustion engines and future engines as well...Because our technology, developed on the new physics principle, consumes very small power and improves fuel efficiency significantly, we expect it will have wide applications on all types of internal combustion engines, present ones and future ones. By adjusting the values for the electric field and time duration, we could make this technology work effectively for other fuels, such as biodiesel, kerosene, and gasoline.
Could increase fleet MPG's by 6 % or so.

I used to think that making my homemade black powder more powdery and fine, I was increasing its power.
Turns out that, to a degree, more course actually improves the explosive instant energy that propels the projectile better. Turns out this knowledge was widely known by nearly everyone but me and has easily explained physics to why its so....something too do with surface area during combustion.

Hello Nephilim,
Yes surface area is important for more complete and efficient combustion. A simple example of this is flour. You can stick a match next/into it and nothing happens but if you make the particles airborne with an ignition...BOOM a very loud and potent explosion. Silos sometimes blow up because of this effect.

Here is another article about the process http://nextbigfuture.com/2008/09/200-device-boosts-diesel-fuel.html

Love your congressman! If we had Congressman Dennis J. Kucinich of Ohio running the country things would change. He came to our small college town when he was running and he was enthusiastically received. If the people throw the other bums out he could be the last man standing...oh well, we can wish for some political sanity.

Nephilim -

Making your black powder finer will not increase the amount of energy it releases but will make it release that energy more rapidly. Which is not necessarily a good (or safe) thing. Ideally, you want as steady an expansion of combustion gases as possible as the projectile travels up the length of the gun.

As an example of how important particle size is for artillery propellants, the larger the gun, the larger the propellant particle size, all other things being equal. Great pains are taken to ensure that particle size is within a desired range for that particular size and type gun. I'm not sure if it was the French or the Italian Navy, but I recall reading that during the early part of WW II they had one of their 15-inch battleship guns blow up because someone at the munitions plant took a short-cut and substituted smaller particle-size propellant intended for 12-inch gun for the larger particle-size propellant designed for their 15-inch gun. Particle size makes THAT big of a difference.

So, if it were my black power, I wouln't mess with it.

Are you making it from chicken "litter" like they mentioned in Backwoods? What are you using to grind it? Are you using an FFFg screen (is that right?) to measure the particle size? If so, where did you get it?

I've been curious about this since I read an article about it but I don't have any chickens hanging around who are willing to donate their "stuff". It sounded like the final result worked pretty well since the guy mentioned his grandmother putting food on the table for years (20+) with squirrels and other varmits.

I'll see if I can dig up the link.

Though I'm not a survivalist, I have always felt that if I had to own a black-powder gun for practical purposes, the Remington .44 percussion pistol looks like a winner. Now I hear that Uberti or one of those other Italian replica-arms firms is making a carbine based on that same gun with a 16-inch barrel. Quite lightweight, but I might want to wear goggles if my eyes are going to be so close to burning black powder. Buy a few extra cylinders and some birdshot too.

Super390, as one of the resident gun-nuts here, I feel the need to warn you that those "revolver carbines" aren't very popular for a reason. Old percussion cap revolvers are prone to chain fires if you don't seal the cylinders properly with either a "wonder wad" or lube such as Bore Butter. Basically the ignition crosses over the cylinders and KA-Boom, revolver goes splat. If its in a carbine form, your face is right next to the cylinder...very bad thing, not that having an exploding pistol in your hand is good but atleast any explosion is directed away from you instead of at you.

Also, birdshot isn't going to work very well in a rifled bore, even with conventional store bought shot loads the range is about 10 feet, enough for a snake, not much else. Your Remington 44 revolver idea is right, but you might want to couple it with a smoothbore Kentucky Hawken if you want to use projecticles and shot. I carry a replica Remington44 during ML season as a backup to my H&R 50cal, they are much nicer than the Colt due to the ease of cylinder removal for cleaning. Uberti make good stuff, but a revolver carbine isn't one of them.

From the link above to the Next Big Future Website.

The technology, developed on the new physics principle, consumes very small power and improves fuel efficiency significantly.

I did not do well in my college physics course but I'm pretty sure "new physics principles" are not likely:)

This is a typical case of someone inventing a MPG enhancing devise in a price range ($200) that will be low enough for them to make considerable money from the general public. The classic device in the past is a magnet that goes around the fuel line which imparts a "magnetic polarity" to the gasoline molecules. Looks like we have evolved to a an electric charge. A telltale sign of an MPG scam is easy installation for the consumer. I would be less harsh if this were a redesigned fuel injector.

A sales brochure using the word "Electrorheology" will certainly sound impressive and immediately stop any attempt at skepticism. The Wiki website is interesting: http://en.wikipedia.org/wiki/Electrorheological_fluid

Sorry, but this one won't fly.

PriorityX, thanks for responding. Did you read the SCIENTIFIC paper published by peer reviewed physicists in my first post? This is not a sales brochure but a science paper. Please read and get back to me why the physics is wrong.
By the way I am a fast crash doomer, not a cornicopian. I said it was a silver BB at best. It will not solve the declining oil problem or the unsustainability of the american car culture. It may buy us a few months of lower fuel consumption.

Here is the paper again in HTML

Electrorheology Leads to Efficient Combustion

R. Tao,* K. Huang, H. Tang, and D. Bell

Department of Physics, Temple University, Philadelphia, Pennsylvania 19122


It was produced in a physics department at Temple University and supported by RAND.
The scientific publication is the American Chemical Society.

They have perfected and tested this on diesels.

As for your belief (PriorityX) that no new priciples can be discovered in science...reminds me of the head of the american patent office proclaiming in 1905(?) something like this:
No new scientific priciples are to be discovered therefore we can begin to shut down the patent office. (Googled but could not find the exact quote).

Thanks for the HTML link.

I am an engineer and I will do the same thing here that has got me thrown out of more meetings for not "being a team player" and "thinking positively".

From the article, I quote:

The typical laboratory test result of the Mercedes-Benz with a dynamometer is shown in Figure 7, At a fixed fuel consumption rate close to 500 g/h, the dynamometer measured the engine output. When the device was turned off, the average power output was 0.3677 hp. It increased to 0.4428 hp after the device was turned on.

I wish they would be specific. 500 g/h. Grams per hour? Gallons per hour?

Average power output 0.3677 hp? Are you kidding? My weed whacker puts out more power than that.

Do they proofread these releases?

I am so frustrated by "science" papers that are not properly proofread. But I will take it as fact the presenter is properly groomed before his presentation.

When engineers detect problems, we get derided as having a bad attitude and are dismissed.

This sort of stuff reeks to me as stuff one presents to money-men in exchange for grants.

Yeah, and the delta was 0.075hp - out of how many nominal? There is more energy in a fly sneeze. Whatever, that's in the noise. Sorry, it's bullshit.

EDIT: I see I misread it, and the average output was 0.3677 hp without the device. It makes no sense to measure the device with a Mercedes-Benz engine at an output level of 1/3hp, unless you're playing games. And the improvement was still 0.075hp, which is nonsense.

Hi twilight, it is a poorly worded article. They tested two engines one mercedes and an Italian motor Cornaglia Iveco.

From the paper: Continuous road tests of the Mecedes-Benz 300D for 6 months showed that our device increased the fuel mileage significantly. On the highway, the device increased the fuel mileage from 32 miles per gallon (mpg) to 38 mpg. In city driving, the improvement of fuel mileage was not as good as that on the highway but was averaged at 12−15%.

This is remarkable and a breakthrough. The device works and can be improved to increase city driving MPG by varing the electric field.

Road testing is inherently uncontrolled, and therefore not meaningful. Honestly, measuring brake specific fuel consumption on a dyno is as old as the hills - there is no rocket science involved. It either makes a measurable improvement in controlled, repeatable tests on the dyno at realistic output levels, or it's BS.

This is one hell of a breakthrough. It will be tested I assure you by impartial parties.

The government should buy this with a small portion of the 700 billion. It would save the taxpayer billions and reduce pollution.

Here's to accepting things you did not invent or imagine but still exist anyway.

No, it is not a breakthrough - it is a scam unless it is proven. Why do you continue to promote it? Would you seriously suggest that our tax dollars be invested before the thing is proven? Especially when proving it would be so incredibly easy and cheap, using methods that have been standardized for decades?

The hallmark of science is reproducibility. If the science and technics are real then it will be reproduced by others.

I guess you don't believe in science and technics therefore I wish you would throw your computer out and send smoke signals to me instead. This is a peer reviewed scientific journal. Obviously you didn't read what I wrote before.

From thee novel 1984: Ignorance is Knowledge. I guess you absorbed the lesson well.


Hi there Hardhat, I was trained as an engineer too. I am not responsible for the poorly worded release but I agree proof reading is needed. But a badly worded scientific advance is just that, a breakthrough.

I find it interesting that a device that has been "road-tested", peer reviewed in a major scientific journal gets little play here.

We have the theory, the device and real world tests. No laws of science were broken making this device. Unless the scientists are delusional and lying (believe me it will be tested by others), this is the largest breakthrough in hydrocarbon engines since fuel injection. A 5-10% increase in efficiency and reduction in pollution (a byproduct of cleaner combustion) is a major advance!

I am a fast crash doomer. This will not save the car centric auto culture and the american way but it may buy a few months to transition to bikes, electric vehicles and walking(my favorite).

I do not own a car and have no stake in this technology.

Before I invest any money, I would verify the electrorheological properties of diesel fuel.

I would rig up a small DC motor, like those used in cassette players or the like, and have it spin a cd or similar submerged in diesel fuel. I would observe the motor rpm and armature current while operating it at reduced power from a variable lab power supply ( so I do not burn out the little motor ). I can tell quite readily from the disk RPM how viscous the fluid is.

Then I would take a TV flyback transformer, and use a pulse generator and a horizontal output transistor to excite it. It will put out about 20 Kilovolts or so, DC. I would arrange some jar lids in my container of diesel fuel so that they would form a diesel-fuel dielectric "capacitor" in the diesel fuel.

I would then start my motor, set it to rotate for several RPM ( not like I am really trying to stress the motor - just enough to circulate the diesel fuel between the plates of the dielectric capacitor jar lids will be sufficient ) and note the RPM given whatever current I elect to supply.

Then I would turn on the high voltage DC and note if the motor had an easier time turning the disk while the high voltage DC is supplied. If this is the case, the RPM would rise if I was feeding the motor a constant current.

Then I would turn off the DC and see how long it took the motor to slow back down.

If this sandbox experiment worked to my satisfaction, then I would be interested enough to spend money.

If nothing happened, I would say "bullshit" and have them prove their point.

In most cases like this, I get this far - trying to separate wheat from chaff, only to be told by the people selling to the money-men that I can only think "inside the box" and my observations are moot. Which leaves me infuriated and frustrated to see shysters make off with the money while I only know what I saw to be true.

I can not tell you how many times I have done everything in my power to get to the truth, only to be told that my services are no longer wanted. I have come to the conclusion that people who have money have a need to spend it, and sales acumen will trump engineering acumen any day of the week with the moneyed people.

Thanks for responding Hardhat,
I agree with your engineering approach and have had seen shysters promote dubious products and claims. I like that you came up with your quick and dirty test using a tv flyback transformer. If the claims are true then flyback transformers coupled with a energy efficient tranformer base of the new green versions of flourescent lights could provide the electric field for pennies.

I am interested in electrical/plasma phenomena. Explanations for many space phenomena seem to indicate charged plasma is the cause of the universe as we see it, not gravity. The Hubble space craft and other superb devices are showing that the universe is laid out in strings (Birkeland currents) that are Z pinched to create galaxies, X-rays, etc. Matter is/has an essential electrical component that has been overlooked by astronomers, and physicists. They will talk of magnetic fields without referring to the electrical field that created it. Electromagnetic forces are 10,000 times stronger than gravity and are scaleable to the super micro dimension and to the super galactic.

Here is a website from The Los Alamos lab from the top researcher-scientist(Peratt) in the world! Enjoy!


On a sunnier note:

Ex-CIA Official Pleads Guilty in Corruption Case

Kyle "Dusty" Foggo, the former No. 3 official in the CIA, pleaded guilty yesterday in federal court to one count of wire fraud stemming from sweetheart contracting deals he awarded to a friend and a high-level CIA job he got for his mistress.

Prosecutors say he received $1,000 meals and lavish vacations from his friend, California businessman and GOP donor Brent R. Wilkes, in exchange for helping Wilkes score CIA contracts. Foggo, 53, was originally charged last year with 28 counts of wire and mail fraud, unlawful money transactions and making false statements.


But there's no mention in the article of Foggo's politicizing of the Agency, or of cooking intel to justify GWB's agenda. I guess lying us into a war isn't illegal.

I'm glad to see this story open up again, though hardly anyone will notice in the current crisis. To cut a long story short, Foggo was the first peek into what I suspect was a massive scheme to set up fake software companies in southern California with big Pentagon contracts, with money kicked back to the Abramoff/Duke Cunningham GOP networks in Congress. This was in the late '90s, before Rumsfeld announced on the day before 9/11 about that trillion dollars that couldn't be accounted for. Services not performed.

There's been a lot of dirty money in political campaigns before, but never billions.

It's also important because of my contention that the connection between the neocons in Israel, the US and the UK was far less a Jewish conspiracy than a bunch of transnational bastards hitting upon a new pyramid scheme for national economies. I noticed that Israel got on an economic roll in the late '90s based on, you guessed it, exotic defense software firms. Then the bubble moved into real estate in the settlements. There was even a manifesto for it, the "Clean Break" paper. The same combo of Orwellian military techno-doggle and real estate bubbles burst onto our scene on 9/11, when Greenspan embraced moral hazard to shift the bubble from tech stocks to real estate. Britain tagged along as usual. Naomi Klein completed my picture in "The Shock Doctrine" by showing the mechanics of Israeli bubble economics. It is appropriate that Abramoff was involved in exporting his Indian reservation casino racket to the Occupied Territories, and that Mr. Ohlmert was caught as the long-time mistress of a Long Island real estate tycoon.

What is the model?

Deregulate, cut social spending, swing that spending into high-tech war.
Kick back the war booty into the political system to elect even more hard-line capitalist freaks.
Turn on the credit tap, and create the inevitable real estate boom, which creates (for a while) enough tax revenue to pay for the fake weapons.

Israel's settlements, according to Klein, loaded up with aggressive Russian immigrants with attitudes parallel to Bush's suburban redneck cult. But these settlements need water, just as American suburbs need cheap gasoline. Eventually resource limitations had to pop the bubble. But the awful performance of Israeli and US armies against impoverished Arabs in subsequent wars also wrecked consumer confidence and ate up tax revenues. What good did the high tech do in Lebanon and Iraq?


For the view of where we're headed, he has some new columns. As Leanan noted, his investment advice is cheap gold rings and good body armor. We're not there yet, but the view from the cheapseats is that train is loaded and leaving the station.

Kudos to everyone who contacted their congressmen and reminded them who they actually work for. When Pelosi, Paulson, Bernake and Bush agree on something, it must be really bad for the rest of us.

Headline: Carbon Dioxide Captured Directly From Air With Simple Machine

Yeah, it's called a tree!

When I read that article my first thought was of an industrial plant to create gasoline/diesel from carbon extracted from the air and hydrogen extracted from desalinated seawater, powered by thermal solar, say in an arid area near the sea (KSA could be a fine location). You extract carbon from the atmosphere, convert it to conventional hydrocarbons, and ship it to markets. It burns in vehicles and returns that same carbon to the atmosphere. That would give us a zero-net-carbon solution which should be utterly renewable, and makes use of our existing transportation technology. The issue would be price.

I saw the TV show on the device in question. Apparently the system is scale dependent. A small bench top model proved to use too much electricity per pound captured while the larger device proved better than claimed. One issue not addressed on the show is the amount of energy needed to produce and/or recycle the caustic soda they used. Part of the show was about sequestering the CO2 using dry ice torpedos dropped over the side of a ship. Again the energy input wasn't addressed. Fascinating work in spite of its faults.

It's rediculous anyway. Coal has already passed peak BTUs. Soon oil will pass its peak of net energy. With "peak BTUs" comes peak emissions. So the CO2 is heading downwards anyway. And as it does, there isnt going to be too much concern about emissions. Carbon emissions are like the Constitution. They both just sorta go out the window when public outrage reaches a crescendo. The only reason they're doing it is to bring in more control... in fact the ultimate control: since everything we do produces carbon emissions, a tax on carbon is a tax on life.

Not sure where you get the concept that "peak BTUs" is linear with "Peak Carbon/CO2". Peak BTU is because the quality of the coal is dropping, ie you burn more coal, release more carbon to get the same energy


You're never going to get any grant money to develop your *tree* idea, dude.

Too simple and no blinking lights :)

Wadaya mean trees don't have blinking lights? Come back around the end of December. Of course, there may be less of that this year.

$ up 2.51% against the Euro.
Oil broke 100$, trading at 100.39. This is a 4.17% surge so far today.

Don't blame the sinking buck for rising oil prices!

There was an article in today's DB about "Vertical Farms" which inspired this post.

Recently, I have been seeing more hydroponically grown produce in grocery stores - mostly lettuce and tomatoes. I have switched to hydroponically grown tomatoes (which I buy at SafeWay) because they taste better than ones imported from California or Mexico.

The original impetus for the locally grown stuff was food quality because of contamination scares about some Mexican produce. And, IIRC, the local stuff used to cost quite a bit more.

Now you can see some items (eg cherry tomatoes on the vine) in identical packages with one marked "Local hydroponically grown" and the other marked "Imported from Mexico". Prices are pretty much the same.

All this has occurred before there were major concerns about energy prices. I know very little about hp gardening, but I can add a couple of datapoints.

LED lighting seems to have made greenhouse illumination much more efficient.

The Future of Hydroponics

Also, there was a TV report a few months back about a Mongolian farmer who was making a fortune in northern Manitoba (Winnipeg MB is in the middle of nowhere and northern MB is at the end of nowhere). Basically, he built a "Mongolian style" greenhouse by piling up earth on all the walls except the south. IIRC, he didn't use any supplemental heating at all. Then he could sell his fresh produce to the stupid locals who were used to getting tasteless crap flown in.

There seems to be a lot of activity (for a whole host of reasons) in growing food more locally - including in very northern climates. It's a subject that I am trying to learn more about.

The problem with so-called "vertical farming" to my mind is that the source of energy, which is sunlight, is going to be the same as that on a horizontal surface at the same latitude. With a multi-story vertical layout, what happens is that some of the sunlight from the surrounding land is captured by the high rise building. The surrounding land thus would be deprived of the naturally available sunlight, which would have negative impacts, such as less snow melt in winter. Also, the infrastructure cost of the enclosed space would tend to be larger than that of a typical one story greenhouse. The other story about a hydroponics system sounds like a very efficient greenhouse, as there was added insulation and thermal mass on the sides not facing the sun. That's not a vertical farming system.

E. Swanson

I was posting more about trends in hydroponics than about vertical farming per se. Perhaps my reference to the DB article was confusing.

There has been a lot of interest in recent years about *green* (or greener) commercial buildings. A technique that some architects are employing is the use of Light Tubes to distribute solar energy efficiently - specifically, reducing solar intake during the summer and maximizing it in winter.

Also, they like to use lots of "thermal mass" to moderate temperature fluctuations and lots of growing plants to oxygenate the air and reduce the need for mixing outside air.

Twenty years from now, maybe it will be very common for most new buidings to incorporate growing plants as an integral part of their design. And there will probably be a range of designs from purely decorative gardens to (maybe) commercial food growing.

In my view, any growing of plants on electric lighting (rather than sunshine) is a crazy idea. Plants are the original, and best, solar collectors. Artificial lighting is either climate-busting or, at best, an indirect and inefficient use of sunshine. Any claim to "grow biodiesel-rich algae underground" is a red flag for me. So are "vertical gardens" - you can do _some_ vertical stacking, but as soon as your top plants are shading the bottom ones the thing is self-limiting. At higher latitudes, where the sun shines "sideways" a lot, perhaps one can grow plants stacked vertically, but only if the structure is in the open and not shaded by other structures on the E, S, and W sides. Not a typical existing skyscraper. (Not to mention the glass windows that are designed to leave most of the sunlight out, and the energy cost of pumping water up there...)

Plants are not all that good at converting solar energy, at least in terms of providing usable energy to us. Present day solar panels are much better. As a thought experiment, it is possible to conceive of an 80% efficeinct solar panel which is used in combination with 90% efficient lightings which would have an overall efficiency of 72%. Plants us only a portion of the spectrum (about 60%) so that one could feed them just as much light as full sun equivalent in that portion of the spectrum and still have power left over for other uses from the solar panel. Not much, but it makes the point that we could out evolve plants with solid state physics.


Basically, he built a "Mongolian style" greenhouse by piling up earth on all the walls except the south.

This is nothing more than a version of passive solar. There's no reason in the world why we need to spend tons of money on homes and heating. None at all.


While our politicians wrangle over finance, Ecuador Constitution Grants Rights to Nature

One passage says nature “has the right to exist, persist, maintain and regenerate its vital cycles, structure, functions and its processes in evolution.”

A step in the right direction for valuing capital other than financial....

This new constitution is one of the reasons why I suggested Ecuador to CCPO above as a potential place to move. South America's energy and other natural resources along with ample untapped human capital will make it a very promising place over the next several decades as the West fades away.

Ok, I see. Ignore my previous post unless you care to expand on this.

The unifying aspects turning around real participatory democracy combined with the other things I mentioned make most of South America rather attractive, especially for someone in their late 20s or early 30s as I believe adaptation to a new culture and language is much easier at that age. Just the political potential of a dynamic South compared to a disintegrating North will soon be very attractive to adventureous people as some have already discovered. The key though is to deeply immerse oneself in the local culture and lose one's gringo or yankeeness as these are not welcomed traits as you might imagine. For most US citizens, a move to the South would be a challenge and would defeat many, but would reward those more capable/adaptable. If I didn't have my current responsibilities and was 25 years younger, I'd seriously look into it knowing how things are likely to occur here in the North.

Having spent several years of my life in Peru and Ecuador, permit me a few observations. These are highly class- and race-stratified societies, a legacy largely of the long Spanish colonial period but very much alive underneath new clothing. Not being plugged into long-standing networks of power and influence, you'd have little social capital, and not be in a very good position if/when push comes to shove. I toyed with the idea of moving to Peru 25 years ago, but times were different and even though a little savings could go a long way, I realized that, finally, it wasn't my culture. Paraphrasing Vargas Llosa, I am very passionate about these people and their cultures - I love visiting and taking students and study tours there, love some aspects and hate others (one can't be neutral for very long), but in the end I don't think it would be wise to permanently relocate there unless you have already existing ties.

I saw my neighbor at Borders the other day in the travel section, they're thinking of moving to Mexico. I offered that Mexico would not be a good place to be (even worse than Peru or Ecuador), but urged them (w/o explaining) to consider Panama or maybe Costa Rica if they were going to go through with this - both countries with much less of the colonial legacy of social stratification.

Then there's Paraguay... ;->

I really wonder if it's wise to emigrate anywhere. When TSHTF, you don't want to be the outsider. And I suspect that no matter how well you think you've assimilated, that is what you will always be, if you move to another country.

Heck, not just another country. I think it probably holds true within the US as well.

Mike Ruppert moved to Oregon and then to Venezuela, but in the end, returned to Los Angeles - because it was home. I suspect that's what a lot of people will end up doing.

Leanan has a very good point. People need someone to blame for their problems. Who better than someone in a minority or someone who has a different appearance.

I also suspect that minorities will be seen as threats only when they become significant in number e.g. Indians in the US or UK.

Lawlessness will increase when unemployment goes up. Right wing parties will make a comeback (see recent example in Austria). I expect the BJP (Hindu nationalist right wing) party in India to win the next election. Muslims and Christians will be (subtly) asked to fall in line or else... I can see left of centre liberals like me in a minority.

The last reason is the only one that might make me consider emigration to Canada. But as Leanan says - blood is thicker than water. We live in interesting times.


Currently, there is a huge Indian population in Toronto-they are barely noticed-there is certainly no friction. There is another minority group that dominates the public focus.

OTOH the writer John Irving has a home in the area and he made the comment that he likes being in Toronto because he has an excuse/reason for feeling like an outsider-in the cities he lived in in the USA he was more troubled by this feeling as he was a native.

As I have said before, when an angry mob is in the streets, don't count on their being able to appreciate the difference between bad Americans, good Americans, or even former Americans.

We've already given lots of people around the globe lots of reasons to be very angry at us - and you ain't seen nothin' yet!

LoveOregon--Thanks for your observations. They do a good job fleshing out why the challenges relocating there would defeat most who tried. Paraguay just elected its first left-progressive president in its history and will be an interesting story to follow, as most of South America is currently. The same goes for Uruguay. I agree that not knowing how to integrate oneself into the existing social networks would be a major problem, but it could be countered by some pre-moving education and total immersion once in country.

Leanan's point is quite valid, which is why I suggest only the young make such a drastic move. The stresses of Future Shock are real and can be fatal if one isn't strong enough. I know that here in Oregon there's recognition that our population will increase by about 1/3 over the next tem years through immigration, an amount I view as too small. My estimate is that Oregon will double in population within 5 years, with the I-5 corridor becoming much like the US-99 corridor in California. What this influx of people will do for jobs is unknown, and I think a state-wide sales tax will be imposed to pay for the services they'll need/demand.

I'd love to live in Oregon, but I'm concerned about the invading hordes from the failed state of California...

IMO best place in South America is Uruguay.
Really like Punta del Este, like being in Europe without being in Europe.

Costa Rica is interesting...no military, highest per capita income in Central America, 97% literacy rate, an active and engaged population. Their actions in preserving their natural heritage are also notable.

Thanks for the interesting comments.

Hello Nate,

Thxs so much for this find. I have never used the TOD rating system to upmod/downmod any other TOD post before, but today, for the first time: I think this new 'constitutional value' is worthy of a rating click up.

Hopefully, Ecuador and every other country will now get serious about establishing the necessarily ruthless Earthmarines to guarantee 'ecosystem rights & protection' from the rapacious Overshoot to promote my Optimal Overshoot Decline speculation.

Is Cascadia, the Great Lakes, the New Vermont Republic, and other potential biosolar habitats getting ready? Time will tell...

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

I think it's a mistake to use the words "valuing" and "capital", as it implies we intend to own nature, which is part of what got us in trouble in the first place.

Petrobras started production off the coast of Espirito Santo, Brazil at the Jabarte heavy oil field in 2002. It was thought to contain 2 billion barrels. Now there has been a discovery in the subsalt strata below Jubarte thought to contain about 2 billion barrels of light oil.


fantastic! two billion barrels is about four months of USA oil consumption. we just gotta find one of these discoveries every four months, until the end of time, and we'll be set.

God bless him...pope goes solar:


Here comes the Son?

or...they've seen the light?

Hello TODers,

It appears that TODer Souperman's location and business model may serve him well as he serves others:

Goodbye $1 Billion Salary, Hello Campbell Soup

..Campbell Soup Co. was the only stock in the S&P 500 that escaped yesterday's historic sell-off. That’s right: 499 fell, and just one rose...

You might also have a look at BRKB...if it was down, it was miniscule.

Thanks for the mention Toto.

And yes we are selling more soup this year than last.

Dare I say it looks like we might be on the near vertical leg of the exponential graph, (too early to call a peak).


Goodbye $1 Billion Salary, Hello Campbell Soup

I actually used to work there. I put myself through school working graveyards for 5 years at Campbell Soup in Paris, Texas.

Hello TODers,

100 Years of Ammonia Synthesis: How a Single Patent Changed the World

As a result of the Haber-Bosch process for synthesizing ammonia from atmospheric nitrogen, billions of people have been fed, millions have died in armed conflict and a cascade of environmental changes has been set in motion.

Mark Sutton of the UK's Centre for Ecology & Hydrology, who is co-chairman of the UN task force and one of the feature's authors, commented: "It is remarkable how a century of Haber-Bosch nitrogen has transformed all our lives. Without it, half of us might not be alive today.

...with a potential doubling of fertilizer use predicted over the coming century.
Sadly, no Peak Everything analysis in this article.

Ammonia can also be used to fuel vehicles.

Ammonia Fuel Network

Matthew Simmons is a big promoter of using ammonia as a fuel:

Simmons Ammonia Plans

matt simmons: will that be odd that turns out that liquid ammonia from our oceans through electricity turn out to be the savior?

The same technology that allows us to make explosives and overpopulate could also lead to a sustainable energy supply.

Technology has never been the problem - the problem has been our stupid application of our technologies.

IMO this Paulson scam is a very good preview for what will happen in the USA when oil depletion really starts to hurt-everything the federal government does will be designed to hurt the country and benefit a relatively small number of people. The truth will be realized by the vast majority of the citizens yet anyone that aspires to a powerful position (like Obama) will need to mislead to keep the support of their owners. All useful adaptation will be coming from the grassroots level, none from the top at all IMO.

MMS report for Tuesday shows shut in crude production increased over Monday, from 624 to 742 M barrels. Not good, Why?
No report for Sat & Sun.
Total 32 days:
Crude 33,271,981 Barrels
NG 165,503 MMM Cu Ft



Hello TODers,

Recall my posting yesterday about me shuffling along in a postPeak world, then I am confronted by youths:

Bike-riding muggers grab women's bags

Good samaritan killed in street attack

The future belongs to the young, always has, always will...

Please see my earlier postings on Hans Selye's General Adaptation Syndrome [GAS] and/or google this topic for your own further research. My many postings on Asimov's Foundations, Earthmarines vs Mercs, biosolar vs detritovore habitats, and so on, seeks to leverage off this evolution based response to help assert Optimal Overshoot Decline. Predictive Collapse and Directed Decline leading to focused conflict for some measure of ecosystem protection.

It seems intuitively obvious to me, but I admit that I am not the sharpest pencil in the box. I hope that Jeff Vail, Derrick Jensen, John Robb, and others can advance my rudimentary thinking on this topic.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

For the young, immersed in violent video, x games, and tv, with very little real world knowledge, they are just going to take what the want, until someone stops them.
They don't even have the knowledge to reject the other, as it doesn't exist in their world.
I taught these young people, so this is primary information. Colleagues till teaching are horrified at the ignorance of the current generation.
Some positive observations-- they are color blind, and race is less of a issue, and women's roles are seen as more equal.

National Debt to Exceed $10 Trillion Tomorrow
by CalculatedRisk

It now looks like the National Debt will be over $10 Trillion tomorrow.

As of Sept 29th, the debt was $9,945,578,231,981.59

The surge in the National Debt over the last two weeks has been because of the Supplementary Financing Program (SFP) with the Treasury raising cash for the Fed's liquidity initiatives (announced a couple of weeks ago).

Today the Treasury sold $45 billion in 15 day Cash Management Bills that are all for the Fed. Tomorrow the Treasury will sell $50 billion in 42 day bills also for the Fed. And that Wednesday auction should put the National Debt over the $10 Trillion mark (we will know on Thursday).

For good measure, the Treasury is also selling another $45 billion for the Fed on Thursday.

The good news is the borrowing rates are pretty low!

Even though this rapid increase in the debt is being driven by the Fed's liquidity initiatives (and should be paid back), crossing $10 trillion will still be quite a milestone ...

How come Matt Simmons has not published a new presentation in almost 4 months?

I assume it is because he is trying to do his best Richard Rainwater imitation, too. If I remember correctly from an earlier posting by some other TODer: he has his own farm and Eco-Tech survival bunker that he is ramping up for WTSHTF.

The only interviews I've seen lately have been via phone. Even the cnn piece on him had the reporter going to his farm in Maine.

He's getting old. He's about my age, 65. As one ages, fighting losing battles becomes less and less attractive.

And now with demand for oil falling faster than supply due to economic recession, Peak Oil does not seem as threatening to many compared to economic survival. And I am pretty sure he has more money than he knows what to do with.

Why not hole up on a farm and live quietly for the rest on one's life? That's what I try to do. Life is short.

His daughter got married recently. That probably kept him busy.

He was at ASPO, wasn't he?