DrumBeat: October 12, 2008

Michael Pollan: Farmer in Chief

After cars, the food system uses more fossil fuel than any other sector of the economy — 19 percent. And while the experts disagree about the exact amount, the way we feed ourselves contributes more greenhouse gases to the atmosphere than anything else we do — as much as 37 percent, according to one study. Whenever farmers clear land for crops and till the soil, large quantities of carbon are released into the air. But the 20th-century industrialization of agriculture has increased the amount of greenhouse gases emitted by the food system by an order of magnitude; chemical fertilizers (made from natural gas), pesticides (made from petroleum), farm machinery, modern food processing and packaging and transportation have together transformed a system that in 1940 produced 2.3 calories of food energy for every calorie of fossil-fuel energy it used into one that now takes 10 calories of fossil-fuel energy to produce a single calorie of modern supermarket food. Put another way, when we eat from the industrial-food system, we are eating oil and spewing greenhouse gases. This state of affairs appears all the more absurd when you recall that every calorie we eat is ultimately the product of photosynthesis — a process based on making food energy from sunshine. There is hope and possibility in that simple fact.

From the Subprime Crisis to the Financial Meltdown, Peak Oil the Hidden Responsible

The current events that nobody saw coming, were already announced in as early as 2006 by Dr. Colin Campbell, a geologist, former Vice-President of Fina Oil Company and founder of the nowadays respected ASPO (Association for the Study of Peak Oil). On a video interview available on YouTube, he declared:

"Expansion becomes impossible without abundant cheap energy. So I think that the debt of the world is going bad. That speaks of a financial crisis, unseen, probably equalling the Great Depression of 1930; it's probable we face the Second Great Depression. It would be a chain reaction, one bank would fail, and another one would fail, industries will close…"

Why hold a Con Con?: Because a Constitutional Convention could allow Hawaii to move from top-down rule to citizen-involved governance

Most frightening, however, is the inability of the present arrangement of power to prepare islanders for the coming major crises caused by soaring oil prices (Peak Oil), and, by the next decade, the effects of global climate change on all facets of our lives.

Australia: Ambitious cycling target for Coast

The Suncoast Cycling Alliance wants at least 15% of all trips made across the Sunshine Coast to be by bicycle within the next three years.

The aggressive target is more than double the 2011 target of 8% – an additional 805,000 bike trips per day – set by the state government for the south-east Queensland region.

Out Of Africa

The U.S. military was content for years to keep half an eye on Africa's security, sharing oversight of the continent with Europe, but in recent years U.S. strategic interest in Africa has grown. Not only does Al Qaeda have a presence on the continent, but the value of Africa's oil has soared and China has grown more aggressive in courting African nations. That was the reasoning behind the creation of AFRICOM, the first American strategic military command with sole responsibility for the 53 nations on the African continent, which officially started operations last week.

Despite Africa's new strategic value, U.S. officials have scaled back AFRICOM's mission significantly. When the idea was first floated early in 2007, proponents of AFRICOM had hoped to combine a wide range of military and civilian programs under one roof, training and equipping cooperative African security forces but also promoting development and aid projects across the continent. U.S. officials had also hoped to find an African country willing to permanently host a much larger U.S. military contingent. Unable to find a country willing to host American forces, the Pentagon has had to keep AFRICOM's 1,300 soldiers in Stuttgart, Germany. And it has scrapped, at least for now, plans to make AFRICOM anything other than an umbrella organization for military and security training. AFRICOM will focus exclusively on training the military operations of African nations and leave development work to civilian agencies.

Saudi Arabia, UAE Move to Protect Financial Systems

DUBAI--The United Arab Emirates said it would guarantee domestic bank deposits and, along with Saudi Arabia, promised fresh financial support Sunday to domestic banks.

Officials from both nations have said their banking systems are adequately capitalized and relatively unexposed to plummeting foreign assets that have dragged down firms in the U.S. and Europe. But they and other Persian Gulf leaders have struggled to shore up investor confidence amid the ricocheting global financial crisis.

Since reopening after a long religious holiday earlier this month, Gulf bourses have fallen sharply, wiping away billions of dollars of wealth from the region's mostly retail investors.

Venezuela's oil output slumps under Hugo Chavez

Venezuela's daily oil production has fallen by a quarter since President Hugo Chavez won power, depriving his "Bolivarian Revolution" of much of the benefit of the global boom in oil prices.

Iraq to begin first oil bid round in London

BAGHDAD (AP) -- Iraq's oil minister will meet Monday in London with representatives of international oil companies for the first round of bidding for new contracts in the country since the U.S.-led invasion in 2003, the minister's spokesman said.

Last April, Iraq chose 35 oil companies out of the 120 that applied to participate in the bidding round to develop six major oil fields and two gas fields.

Oil protest

ABOUT 80 protesters carrying a 12ft-high puppet of American vice-president Dick Cheney marched through central London yesterday to protest against plans to "sell off" Iraq's oil industry.

2 Endorsements of Nuclear Power, but Sharp Differences on Details

Contrary to what Democrats may think, there is more to John McCain’s energy program than “drill, baby, drill.” And contrary to what Mr. McCain has been saying on the campaign trail, where he proposes the construction of 45 nuclear plants by 2030, Barack Obama does not “oppose the use of nuclear power.”

Both men endorse nuclear energy, although to differing degrees, as part of their strategy to wean the United States from its dependence on foreign oil.

Biofuels and a dwindling water supply

AT LAST, many of the world's political leaders have begun to realize that diverting land and food crops to produce biofuels leads to higher food prices. But an equally important consequence of this policy folly is being largely ignored in the public and political debate: Producing biofuels will further deplete the world's already overtaxed water supply.

Indian Tribes See Profit in Harnessing the Wind for Power

ROSEBUD, S.D. — The wind blows incessantly here in the high plains; screen doors do not last. Wind is to South Dakota what forests are to Maine or beaches are to Florida: a natural bounty and a valuable inheritance.

Native American tribes like the Rosebud Sioux now seek to claim that inheritance. If they succeed in building turbine farms to harness some of the country’s strongest and most reliable winds, tribal officials like Ken Haukaas believe, they could create a new economic underpinning for the 29,000 tribal members whose per capita annual income is about $7,700, less than a third the national average.

Maritime Organization Seeks to Cut Air Pollution From Oceangoing Ships

The International Maritime Organization on Thursday adopted stringent new controls on airborne pollution from the world’s 300,000 oceangoing vessels.

Emissions from ships steaming into ports from Rotterdam to Shanghai to Long Beach, are blamed for about 60,000 premature deaths around the world annually.

Bicycle Commuter Tax Break Is a Bittersweet Victory for Measure’s Sponsor

PORTLAND, Ore. — People who pedal to work each day have long sought a kind of commuter equality: a federal tax break for biking similar to those given for parking or riding public transit. Last week, after years of rejection, the credit suddenly became law.

Scheduled to take effect in January, the credit was among a range of energy and tax provisions quickly added to the $700 billion financial rescue.

Yet here in the district of the congressman who first pushed for the bicycle bill, Representative Earl Blumenauer, a Democrat who wears a bicycle lapel pin and founded the Congressional Bike Caucus, no party is being planned.

Thomas Friedman: Hope for a hot, flat and crowded world

In his new, bestselling book, Hot, Flat and Crowded: Why We Need a Green Revolution — and How It Can Renew America, New York Times columnist Thomas L. Friedman describes a world in trouble. With climate change, globalization, and overpopulation, he argues, the central challenge to humanity has now become "to manage what is already unavoidable and avoid what will truly be unmanageable."

In an exclusive interview for Yale Environment 360, Friedman spoke with New Yorker staff writer Elizabeth Kolbert about the need for an energy technology revolution — a revolution he believes should be led by the United States. The three-time Pulitzer Prize winner told Kolbert that energy technology must be the next great global industry and that "the country that leads that industry is going to have the most national security, economic security, innovative companies and global respect."

Experts: Low gasoline stocks won't lead to shortages; demand also has fallen

The nation's gasoline inventory is lower than usual, but experts say the change has come alongside a drop in demand as gas prices have risen over time, so shortages should not result.

While shortages have struck the Southeast, experts attribute that not to low inventories but to hurricane-related disruptions of supplies, something they say would likely not affect the Northeast.

"The reason for this is that the region is supplied by mostly seaborne imports of gasoline brought in through such ports as Portsmouth, Portland, Providence, Boston, etc.," John Duff, survey manager for the federal Energy Information Administration's Weekly Petroleum Status Report, wrote in an email.

Higher taxes and bans on drilling hurt everyone

Politicians are fighting to levy additional tax burdens on U.S. oil and gas companies. There are, however, fundamental problems with specifically raising taxes for energy companies. To various degrees, we all depend on oil and natural gas, whether it's to heat our homes, to run our businesses, or to transport us and the goods we use every day. In the end, the real target of new taxes is consumers, who will pay every dime of taxes that government imposes on producers in the form of higher prices.

Call for UAE to fund alternative energy

The 15th edition of OGS 2008 will be held in Dubai from October 28 to 30, amid growing calls by business leaders for substantial investments towards alternative and renewable energy projects.

The Show seeks to embrace a spectrum of energy sources and strengthen its contribution to emerging sustainable development initiatives in the UAE and across the Middle East.

Nepal: Cooking gas from waste

Cooking gas plants that generate gas from bio-degradable household waste would be useful in addressing the current fuel crisis and waste disposal problem in the capital. But the technology has largely been ignored.

A New Flexibility With Thin Solar Cells

John A. Rogers of the University of Illinois, Urbana-Champaign, and colleagues have come up with a novel method for creating extremely thin solar cells that can be combined in flexible, even partially transparent, arrays. Described in Nature Materials, it could be called the rubber-stamp approach.

End of the world as we know it

It is not as bad as you might imagine - it's worse, and before you bury your heads in the sands of collective denial, please consider how it is coming about. The truth will set you free, but first it will probably make you ill.

We have had it too easy with cheap energy for a century and the cheap part is going to disappear. Quickly. Energy is the ubiquitous part of everything we consume, and liquid fuel is getting scarce.

The easy part is to understand how we got to where we are. The difficult part is predicting how we can possibly manage to make our way out of this one. It will draw on our deepest resolve and wisdom, and probably require a "Copernican" shift in our thinking.

Is Cheaper Oil A Good Thing?

How far can it fall? People have been anxiously wondering as they watch the plunging stock market. But increasingly the same question is being asked about another crucial figure: the price of oil. It has plummeted nearly 40% in just three months, from about $147 a barrel in July to below $83 on Friday, with no obvious bottom in sight. If that sounds good, you are probably a driver who winces these days at filling your gas tank. But the downward spiral could mean trouble for oil-rich countries and for the environment.

Oil analysts admit that most of them failed to predict how fast oil prices would drop. Just a few months ago, some were saying oil might reach $200 a barrel by year's end. "The analysts have been quite surprised by the pace and volatility of the decline," says David Fyfe, senior oil analyst for the International Energy Agency in Paris, which as a rule does not predict oil prices. "The volatility has been quite marked."

OPEC wants tighter controls over speculative oil trades

WASHINGTON (AFP) — The OPEC cartel called Saturday for tougher regulations to reduce the impact of speculative investment in the oil market which it blames for the huge volatility in crude prices.

..."The world oil market has been increasingly affected by financial market shocks from outside the physical oil market," OPEC spokesman Alipour-Jeddi told the International Monetary Fund meeting in Washington.

"The recent wild (price) swings demonstrate the need for concerted action to reduce the impact of financial markets which are damaging for the oil industry, as well as the global economy as a whole," he said.

"The existing regulatory framework has proved insufficient to properly contain the negative impact of speculative activity ... which highlights the need to consider further measures."

Oil's Outlook Darkens

Although oil prices have tumbled by almost half since approaching $150 a barrel in July, it looks like black gold still has further to fall.

Iran to study all factors before proposing oil cut

DUBAI (Reuters) - Iran says the recent steep slide in oil prices and worsening global financial crisis will be studied carefully before it makes a proposal on output reductions for OPEC, the Islamic Republic's OPEC governor said on Sunday.

"It is not fair to say so early. That is why we should consider all factors carefully and look at the supply-demand balance," Muhammad Ali Khatibi told Reuters.

Divisions could ‘tear Opec apart’

Divisions within Opec are being aired ahead of an emergency meeting the organisation has called for next month, signalling tense discussions to come as oil exporting nations struggle to balance their individual revenue needs with the world economy’s need for more stable oil prices.

The divisions could “tear the organisation apart,” a London oil analyst said.

Credit’s Crunch & Car Sales

Was Peak Oil the reason for the unbelievable price of oil, or was it serious disruptions in the supply and demand equation? Nah. As I pointed out, it was just the massive amount of money thrown into oil by speculators in dark, unregulated futures markets. The media has since accepted my position; as the oil bubble burst, and as you may have noticed, they’re now reporting that the speculators they refused to acknowledge just months ago are leaving the oil futures market en masse. And with the speculators’ departure, the price of oil is collapsing.

Keeping quality medical care

IN SPITE of an alarming array of distracting global problems, including a financial meltdown, climate change, and peak oil, it is critically important not to ignore the immediate challenge we face locally to keep Marin General Hospital open. It is the only hospital in the county providing acute trauma, labor and delivery, and emergency psychiatric services.

Ending Industrial Culture, Building Cultures of Resistance

On October 1 Lierre Keith and Aric McBay spoke with Healing the Earth radio in Guelph, Ontario. Lierre Keith and Aric are both authors, small farmers, and activists, and over the last couple years have been organizing weekend-long conferences entitled Deep Green Resistance. They speak of a systemic analysis of what we're facing, including the environmental and social costs of industrial culture, tying together the problems of climate change, peak oil, the power of the right-wing/fascist elements, economic collapse, and our responses to this.

They talk about the inherent costs of the industrial system that render any kind of reform or energy alternatives to be simply more of the same, since these false solutions don't take into account the cost of the infrastructure or the embodied energy required to make 'green' consumer items, from smart cars to biofuel and low-energy light bulbs. From this critique of individualist and lifestyle-based solutions, they offer the option of collective, co-ordinated, resistance to the actual power structures.

Most importantly, they ask the crucial questions that not too many are asking: given the crises we face, what, really, are we going to do about it? Thinking with seriousness, long-term strategy, and courage, what can we as caring people do to save this planet? What are some essential elements of a culture of resistance that offers any hope of a securing a peaceful and sustainable future?

The IoS Green List: Britain's top 100 environmentalists

A host of famous figures – including Prince Philip, David Bellamy, Professor James Lovelock and Richard Branson – who might have expected to be high on the list, were judged not to make the grade at all. The judges set out to identify who is really making a difference in Britain, either directly or by altering public perceptions, rather than those who make most noise. Unlike in some other lists, journalists were excluded from consideration.

Financial crisis clouds EU's climate change plans

BRUSSELS (AFP) - The financial crisis and slumping economic activity are threatening Europe's ambitious plans to slash greenhouse gas emissions, with governments eager to avoid saddling companies with additional burdens.

"The Germans are giving up and the Italians are getting ready to follow," said one European negotiator on condition of anonymity.

Credit’s Crunch & Car Sales (linked uptop)
("And with the speculators’ departure, the price of oil is collapsing.")

This was written by Ed Wallace, who hosts a local auto centric Cornucopian radio show every Saturday morning in the Dallas area, that is pretty much 100% supported by auto related advertisers. Mr. Wallace is on record as saying that we won't peak for at least 50 years and says that we need to vastly expand our road network in the US.

In any case, he attributes most of the fall off in car sales to a decline in foot traffic in dealerships, not a credit crunch. In other words, car sales are falling because of lower demand. But notice that he attributes the oil price decline to speculators leaving the scene, rather than lower demand.

Net Oil Exports and the “Iron Triangle” (July, 2007)

Meanwhile, over on the other two legs of the Iron Triangle, the auto, housing and finance group is focused on selling and financing the next auto and house, and the media group just wants to sell advertising to the auto, housing and finance group. The media group is only too happy to pass on the “Party On Dude” message to consumers.

To some extent, what we are seeing across the board, from large sectors of the energy industry to the auto/housing/finance industry, media and beyond, is the "Enron Effect," i.e., many people know that we have huge problems ahead, but their paychecks are dependent on the status quo.

The suburbanites are caught in the middle of this, although they have a strong inclination to believe the prevailing message from the "Iron Triangle." As in the movie "The Sixth Sense," for most of us the automobile based suburban lifestyle is dead, but we just don't know it yet, and we see only what we want to see.

Who is delusional here? Credit's Crunch &Car Sales

Sadly, it seems the media suffers under the delusion that car sales fell in September because people couldn’t get loans. As proof they point to how the rate of approvals fell from 83 percent to 64 percent over the last year. Besides the drop-off in subprime lending, there is a logical reason for that decline in approval rates; it probably had little to do with severe changes in lenders’ loan-buying requirements. It’s not a secret; it’s historical fact.

When traffic slows down at new car dealerships, the first customers you miss seeing are the best informed with the best credit. For whatever reason, people with good credit who are aware of the world around them are the ones to first show due caution. What is left for dealers are those of lesser means – the kind of customer whose credit elicits higher decline ratios for new loans. Credit rejects were that much higher because there were so many fewer people with exceptional credit applying for automobile loans.

The price of oil (and soon cars) is falling rapidly, but people have no money.

A few do, of course, and the result of any downturn (blip, depression, what's the difference) is to enrich a few at the expense of many. Pretty clearly, Peak Oil has set a ceiling for Peak Money. The "derivatives" were a desperate bid to deny the physical reality of money/food/energy. Their collapse will necessarily bring us back into some rough balance -- at the expense of billions whose lives will be upended, possibly ended.

My main question is the timing of all this -- is it just coincidental that it all comes apart at the end of an 8-year administration? Is it just co-incidental that the last investment bank standing is Goldman-Sachs? Was Sec. Paulson really blind-sided and totally surprised by the rapid collapse of everything?

Was there maybe just the teensiest push in one direction or another by some powerful players?

I saw a once/twice run item in Bloomberg's scroll of GM,
Ford, Chrysler facing bankruptcy. The next morning, Saturday,
replaced with GM in merger talks with Chrysler.

With Ten Year yields rising with every US gov't move now,
who is going to issue LOC's to finance car dealers, much less
loans to dead broke consumers.

This is the watershed moment where the monetizing of everything out to infinity collides with the peaking and decline of the energy growth that makes/made the monetizing possible.

I saw a once/twice run item in Bloomberg's scroll of GM,
Ford, Chrysler facing bankruptcy. The next morning, Saturday,
replaced with GM in merger talks with Chrysler.

Kind of like a drowning man grasping desperately at another drowning man for support.

GM in merger talks with Chrysler. ... Kind of like a drowning man grasping desperately at another drowning man for support.

Kinda reminds me of the old "Power of Two" a ways back when two loser computer companies (Univac, and Sperry-Rand) merged. I refered to the combo as loser squared.

I suppose if they merge product lines, then similar products from both companies can be combined (i.e. lots of engineers can be declared redundant). But it is hard for me to imagine short term benefits, and this close to bankruptcy.....

That was Univac and Burroughs. Sperry-Rand had owned Univac for many years. As I recall it was liquidating itself at the time.

Houston Chronicle a few days ago ran an article about the lottery ticket sales have declined around the state. They are ignoring the ecomnomy/credit crunch, and instead are blaming low sales on scratch off designs. The Texas lottery commision will rededign the lottery tickets to attract more buyers.

and lastly, about 2 weeks ago i went to the antique shopping event in Roundtop TX, and not many people were there, vendors have noticed less people shopping, to the tune of more than 50% from 6 months ago.

The Oregon Symphony for the past three months has offered two-for-one ticket bargains, which were unheard of nine months ago. Today's newpaper ad inserts have kiddie and adult Christmas toys already heavilly discounted. I'll be looking to see what the impacts are if any at several of the annual fundraising events I attend in Oct. and Nov.

"he attributes most of the fall off in car sales to a decline in foot traffic in dealerships, not a credit crunch. In other words, car sales are falling because of lower demand. But notice that he attributes the oil price decline to speculators leaving the scene, rather than lower demand."

I have mixed feelings about the Panic of 2008. In Calgary, median house prices are slowly declining but only about 5% to 10% depending on neighbourhood. This is not due to sub-primes but because all the speculators who bought pre-build in 2007 are now trying to unload all at once. Yesterday I noticed that 7-Eleven still has signs up begging for workers at $11 per hour plus benefits plus retention bonus.

Some oilsands projects are being scaled back, but this was going on before the excrement hit the rotating impeller blades, and is due to excessive construction costs. Conventional oil still pumps, albeit only at one-third of Alberta's peak production in the 1970s.

I went to set up an estate account last week for $121,000. CIBC said they could fit me in for an appointment on the 21st of this month; I ended up going to a credit union where it will only take them a week to accept my money. So Canadian banks, at least in Calgary, don't seem to be hurting if they are in no rush to set up new accounts.

At the moment, the effects of the "meltdown", or whatever you want to call it, are spotty. There are, and will probably always be, relatively wealthy havens. Calgary might be one of them, but I wouldn't bet on it.

There were a lot of rich people in the USA in the 30's, and lot of them continued to accumulate wealth all the way through.

The Baltic Dry Index is in cardiac arrest, in danger of flat lining.

"Update 12:10 AM: Confirmation comes from the Financial Post, "Grain piles up in ports" (hat tip reader Vox Sanus):

The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.

Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said.

"There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy."

So far the problem is mostly being felt in U. S. and South American ports, but observers say it is only a matter of time before it hits Canada.

"We've got a nightmare in front of us and a lot of people are concerned it's going to get a lot worse," said Anthony Temple, a grain marketing expert based in Vancouver...."

h/t mininggold @ Libertypost.

This pro-farming article predicted the U.S. cannot produce enough corn to meet demand:


The USDA predicted high year end grain stock piles, although there is increased risk of frost damage due to late spring planting:


This Peoria article indicates $4.60 corn prices are much higher than the pre-ethanol $2.30/bushel averages:


Another writer reported an expected 14% decrease in demand for livestock feed corn. There was a culling of cattle from herds and an increase in beef output as the price of corn reached $8.00 per bushel.

Ethanol demand is down due to decreased driving.

Southern farmers face worst season ever
8 Oct 2008

Victorian farmers are asking state and federal governments to repeat the $20,000 cash grants to irrigators and 50 per cent subsidies on municipal rates that helped them through last year''s drought affected season. Some farmers have received municipal rate increases of up to 68 per cent while irrigators must pay water bills in full, depite not receiving the full allocation. This season is shaping up as one of the worst in the state''s history as northern grain growers start cutting crops for hay, dairy farmers feedlot their herds and horticulture growers ponder their viability. Inflows into the Grampians and northern Victoria''s irrigation storages are at record lows following a failed autumn and disastrous September.

The Weekly Times, 08/10/2008

ABARE says the winter wheat crop is now forecast at 12.1 million tonnes, compared with a previous estimate of 15.5 million tonnes and the original estimate of 22.5 million tonnes in June. Exports have also been slashed by 18%.(http://www.abareconomics.com/publications_html/cr/cr_07/cr07_oct.pdf)

This forecast is under the one earlier this month from the US Department of Agriculture which estimated Australia's harvest at 13.5 million tonnes, compared to 21 million tonnes in September and 23 million tonnes in the first estimate in August. That will be updated in about two weeks.


I suspect a lot of the "lack of demand" we are seeing is really tied to the credit situation. Either buyer's letters of credit aren't being accepted, or banks that have inventory themselves (of oil, for example) are finding it necessary to sell. There may also be some impact of speculators leaving the market, and short sellers covering.

I have a hard time believing current prices reflect "demand" in the sense we usually think of, it terms of what buyers would use in a properly operating market. Instead, all of the disruptions are having an effect.

Gail, I wonder if there is some increase in bank deposits from people liquidating investments and 'temporarily' parking their money in bank CDs and such. Might this help out at least some banks?

For those who like new and interesting search engines I ran across this on this AM. http://www.cruxlux.com/

It performs searches by perspective. I made them aware of theoildrum.com this am. I'm not sure how it works but seems interesting.

Ted Koppel on Meet the Press: "The winners in this election are going to end up envying the losers."

I agree with him 100%.

Is that why the McCain camp seems to have thrown in the towel?

And how can a self-respecting Republican vote for Obama-Biden? Will they rather sit it out? Or is there a chance here for a dark horse -- disgusted voters in both parties settle on a third party. Ralph Nader's chance at last?

A lot of people thought McCain was just a placeholder anyway.

I seriously doubt any Republicans would vote for Nader. Bob Barr, maybe. Libertarian types are pretty incensed over McCain's mortgage bailout plan.

More likely, they'll just stay home. Which is good enough, from the Democrats' point of view.

Can we write in Ron Paul?

Depends on your state laws. In TN "write ins" are not counted unless someone has taken the time to have the person registered with the Dept of State. Many counties still will not bother to count the "write ins" and send in the numbers to the state. Also, unless the "write in" has someone to act as an official elector, the vote still will not count.
Currently there is a ballot access suit filed against the State of TN jointly by the Green, Libertarian, and Constitutional Parties.

You can write in anyone you want.

But Ron Paul's doctrinaire right-wing ideology would result in destroying the fraying remnants of the US social safety net just when the economic crisis will leave many homeless and desperate, including large numbers of elderly people whose mortgages have foreclosed and whose 401Ks are worthless. Paul would cut tazes on the rich when they need it least, while denying services to those who need them most, in the service of a rigid belief system that denies reality.

The Ron Paul For President website is full of claims that the current economic meltdown is a result of government activity. This ignores the historical fact that panics, booms, bubbles, and collapses have always been part of markets, with or without government intervention.

Since it conflicts with his belief system, the fact that our current economic problems are occurring after two decades of "deregulation" and government by "free-market fanatics" is ignored. To a true believer, markets can do no wrong, so all ills must be attributed to to government action (gotta love those tautologies).
Luckily Ron Paul will pull more votes from McCain than Obama.

I consider myself a centrist in most things. I am certainly not without compassion. But I liked his focus on the Constitution, which has been trampled on recently. He also supports Austrian Economic policies, which I favored until I saw what Leanan pointed out to me. I still think there is at least common ground in the belief that growth should be constrained.

I think Ron Paul's idea is to return to more of a Republic and decentralize, which I thought fit in more with some of the thinking I have seen here. There was a time when we had more local control in the country.

Just having someone who doesn't like Central Banking is progress in my opinion.

Ron Paul ... I liked his focus on the Constitution, which has been trampled on recently. He also supports Austrian Economic policies

Worshiping the "Constitution" is no more rational than worshiping the Bible.

Both are ancient parchments with ink scratched on them by the hands of fallible men.

These old men had some wisdom, but not infinite wisdom.

Their writings were meant for the feeble minded of their times, not our times.

Problem is, we can't think for ourselves. And thus we ascribe god like qualities to the authors of the ancient texts.

Umm, I would imagine the "feeble minded" of their times were just as savvy as the feeble-minds of our time. To assume "modern" means "wise" is a fallacy of the highest order, as even wisdom and intelligence have only a partial overlap.

Thinking for ourselves is good; thinking of others is good too.

The founding fathers had the advantage of first-hand experience with many varieties of faulty governments as well as a position of relative weakness. Today we have a world-view built from a position of strength and a presumption of superiority.

The Constitution has perfectly good mechanisms to manage change over time, and those can and have been used when desired, to good and ill effect. Rather than ignoring it, as so many in our gov't and courts do today, why don't we manage according to it, and simply modify it when necessary?

Which is why, if you're going to write in anyone, write in Kucinich:

* Peak Oil Aware
* Climate Change Aware
* True Maverick
* Constitutionalist
* Insists on Rule of Law
* Economic Crash Aware: voted against bailout
* Understands the market does not manage social issues at all well



And besides, Kucinich's wife is hotter than Cindy or Sarah.

Who do you want to be looking at for the next 4 years?
(A question for the rational minded males amongst us monkeys.)

Wiki of Kucinich
Kucinich My Space

Gee, step back, based on your criteria I should become president because my second wife was a natural golden blonde gymnast turned exotic dancer who makes all of them look rather homely. Sorry, no "family-site" pics.

You got my vote. :-)

"Ron Paul's doctrinaire right-wing ideology"

With this statement, I can see right away that you haven't actually read anything written *by* --probably just smear pieces directed *at* at Ron Paul.

Now I do not agree with Paul's rather purist brand of Libertarianism 100%. I don't think well functioning free markets = no regulation. I DO believe in the Tragedy of the Commons, and I do think some social progams are preferable to the alternative. Nonetheless, when it comes to government intervention having played a BIG role in this mess, he --and other like minded critics-- are spot on.

Tommyvee, Let me ask you a few questions about *your* beliefs:

1. Do you think that Greenspan's FF 1% and his shameless pimping of ARMs in the early part of this decade had any significant impact on mortgage interest rates or the extremely reckless mortgage lending that followed?

2. Do you think the GSEs had any significant role in the proliferation (and popular acceptance) of mortgage-backed securities, CDOs and other derivatives?

3. Do you think that a government backstop ("put"), either implicit or explicit, has any bearing upon whether or not investors perceive mortgage-backed derivatives to be "safe" or "unsafe"? Does this perception affect the risk premiums (interest rates) they are willing to accept?

4. Do you think that Congress's decision in 1997 to expand the MID to non-owner-occupier (investment) houses via the "any 2 will do" rule", or the expansion of the 1031 exchange rule had any impact on the overall perception of housing as a "protected" investment class?

5. Do you think it's wise for the government to heavily subsidize any asset class --either by direct subsidies, or via industry-targeted tax credits/deduction-- at the expense of other asset classes?

Here are some of my beliefs:

--REGULATION to me does *not* mean the same thing as industry SUBSIDIES or BAILOUTS.
--No "free market" can exist without some rules, either government-imposed, or self-imposed by industry.
--Markets without some form of government oversight/regulation on behalf of consumers, citizens and weaker competitors, inevitably lead to coercive monopolies, less competition, and socially/environmentally harmful behavior: pollution, unsafe products, unsafe working conditions, worker abuse, racketeering, collusion, etc.

The winners in this election are going to end up envying the losers

I agree with him 100%.

A month ago I would have agreed with you, but the meltdown has happened much quicker than I expected. Now it seems that the downturn will mostly be blamed on Bush. Of course the slow climb back up, will me more prolonged and painful than most of the population realises, but at least the attribution of the cause will go mostly to the previous administration.

I think the meltdown has not yet begun. There will be a rally, perhaps several, followed by new depths.

And both McCain and Obama voted in favor of the bailout, so are at high risk for being seen as part of the problem, not part of the solution. Especially if the economy doesn't turn around while they are in office. Which I suspect will be the case.

I tend to agree. Pakistan, Hungary, Ukraine and Kazakhstan could be heading for sovereign default. The impact on the retail and industrial sectors is yet to arrive. Unlike previous downturns, a systemic fault has been exposed in the financial system.

The 1930's really are the reference model. Authorities are desperately trying to avoid repeating the same mistakes, and attempting new solutions, but we are in new territory. Even if the bailouts stem the flood, the tide of debt still has to wash out.

Add the Baltics to the list of those likely to default.

In the 1930's much of the pain was caused by countries trying to stay on the Gold Standard. At least that can't happen now. The other thing we have to worry about is a latter day Smoot-Hawley. Pundits think that if Obama wins he will try to pass one to please his union backers. A good reason to support McCain?

What comes to my mind is the time between an earthquake underwater and a tsunami before it hits.

Hello Clint,

To help give a sense of scale to your financial imagination: artistic rendering of 1946 tsunami hitting Scotch Cap lighthouse on Unimak Island:


Before and after photos of lighthouse:


The wall of water later devastated Hilo, Hawaii.

Of course, a incoming financial tsunami will give some warning to alert TODers. For the un-informed J6P: my favorite analogy is that they will think they got hit by a suddenly released BlackHawk Landslide:

..Imagine an air hockey puck some five miles long and two miles wide, roughly fifty feet thick, moving about 270 miles per hour for eighty seconds...
Such is life...

I think a tsunami isn't a very good analogy, the decline of mainstreet will be more gradual, probably taking at least a year to bottom out. I think the main street economy has a lot of lags built into it. Things like waiting to see if sales declines are just a blip, or more serious, before layoffs. Then we have the second wave, the hit that currently healthy businesses experience when their customers are laid off, and quit buying. Roubini is talking about either a U of L shaped recession. The U presumably means a couple of years near bottom, and the L is a one way descent to an extended bottom. Normal recessions are described as a V (quick sharp decline/recovery). What we have is more like sea level rise than a tsunami. Plenty of time to clean out your desk when you lose your job. And the now unoccupied building will still be sitting there.

Okay, I guess I better tone down my alarm if that is the case. But with all the business failures in the past 5 weeks I am surprised if there is not a sudden impact. Just in the Financial, Insurance, and Real-Estate markets if nowhere else.

EOS, this isn't only mainstreet, but the forests, the seas and the ice. It's the $7T/year we've been taking from the forests - who can guess how much from other environmental "services". Nature can no longer maintain its own internal order any more than can Iraq - ok, that might be overstating it. But if we weren't hitting Gaia's limits, we'd not be in this meltdown in the first place. Do you think you might be skipping over the blowback from nature to focus on interactions at the next level down in the energy hierarchy?

Yeah, I too have wondered what the sea level rise vs time plot might look like if Greenland slipped into the sea over 1 or 5 years time. Tsunami? Or the liberals "neverending rising tide"?

cfm in Gray, ME elevation I gotta check that

And both McCain and Obama voted in favor of the bailout, so are at high risk for being seen as part of the problem

Obama almost certainly will if he doesn't change his financial team (via WRH):


But more than a decade ago, a woman you're likely never to have heard of, Brooksley Born, head of the Commodity Futures Trading Commission -- a federal agency that regulates options and futures trading -- was the oracle whose warnings about the dangerous boom in derivatives trading just might have averted the calamitous bust now engulfing the US and global markets. Instead she was met with scorn, condescension and outright anger by former Federal Reserve Chair Alan Greenspan, former Treasury Secretary Robert Rubin and his deputy Lawrence Summers. In fact, Greenspan, the man some affectionately called "The Oracle," spent his political capital cheerleading these disastrous financial instruments.

The actually NYTimes article is here: http://www.nytimes.com/2008/10/09/business/economy/09greenspan.html?_r=1...

It was bad enough that Obama had Rubin hanging around when it was known he was one of those behind the end of Glass-Steagall, but to find out he helped silence legitimate dissent...

Verily, we need to start over.


CNN had a story about the bailout this morning, by Frank Sesno. (The guy who did their peak oil documentary a few years back.) He wondered if what we're seeing now is what was discussed in the closed-door meeting. If they saw the abyss, but were afraid to tell us. He asked if maybe it would have been better if they avoided terms like "bailout," that suggested that it was a fixable problem, and instead told us the truth: that a lot of wealth and a lot of jobs would disappear, and never come back. But they didn't want to panic us. And everyone hates bad news, especially politicians. It doesn't make a good soundbite, and that's what political candidates and the media like these days.

Can't really blame them. Even among us peak oilers, who should know better, there's a tendency to try and keep the economy going, unsustainable as it is. We cannot have infinite growth on a finite planet, but we still try to keep it going for little while longer. Because I'm not ready yet. Because we need to finance wind farms and solar plants, to keep the party going awhile longer. Because we needed the banking system to support oil production.

"Build a bigger stone head" is our first reaction, even for those of us who know how that worked on Easter Island.

So you're agreeing with me that Ronnie and Bush 1 get most of the credit for the fiscal success years of the 90's, and Clinton shares in the loose-money blame (with Greenspan) for the current problems?

The economy and US Gov't finances were not perfect on January 20, 2001, but they were in the best shape they have been in my lifetime. (I am admittedly not a very good judge of the Eisenhower years since I was a young child then).

The ONE risk that GWB inherited from Clinton that he has truly eliminated was the risk of paying off the national debt. (Remember those oh so quaint discussions in late 2000 and very early 2001 ?)

Best Hopes for NOT putting GWB's and neo-con Republican screw-ups on anyone else,


I wonder if it had any thing to do with the price of oil? During the Clinton Admin WTI avg'ed $20.21 and during Bush so far it avg'ed $52.63.

10MM Brl's * 365 * 8 * $50 = $1.46MMMM
The past 8 years cost about 1 trillion more in imports. Not counting products.

No, unwarranted tax cuts (just because you like them, no other reason) that turned surpluses into deficits, the Iraq War and issuing $530 billion in federally guaranteed sub-prime ARM mortgages (with all the effects (real estate boom till they reset, then BUST) were the primary causes.

Oil price increases (to date) were secondary effects (and good federal policies, lacking in GWB administration) could have largely mitigated those effects in 7.8 years.


"Clinton shares in the loose-money blame (with Greenspan) for the current problems?"

clinton was kept in check by the spiteful gop congress.

no such control in the last 8 yrs and guess what ? damn near double the national debt.

bush cant keep his pants on.

I don't think you can separate the two, really. The loose money was part of the fiscal success. Now it's time to pay for the party.

One thing I think is clear is that both parties share the blame. This disaster has been building for a long time, through Democratic and Republican administrations and Congresses.

I couldn't agree more Leanan. I followed this on the PrudentBear site for years, and that is certainly the conclusion there.

As far as I am concerned, we have been living beyond our means for decades.

However, I think you have to acknowledge that the current administration allowed their ideology of "no regulation" to turn a bad situation into a disaster of historic proportions.

The Office of the Comptroller of the Currency and the SEC could have reigned in a lot of the bad practices.


There needed to be a correction, but it did have to look like this unfolding disaster.

There needed to be a correction, but it did have to look like this unfolding disaster.


We don't do the blame game on TOD...that's a Fox News thingie.

Reagan/Bush didn't do squat for the economy. Volker and the entry of North Sea and North Slope oil onto world markets and the rise of the Asian Tiger economies are what fueled global growth rates in the 1980s, until the 1st deregulation-related crash of the savings-and-loans in the late 1980s due to Raegan/Bush policies--the same policies and ideology that fueled the current debacle.

As for Clinton, he got lucky with the business cycle as the rise of the dot.com bubble didn't fully burst until he was offstage. People forget that Greenspan/Bush inflated the housing bubble to mitigate the deflating dot.com bubble. There's more to the picture, but this outline does well for now. The 1946 Full Employment Act made the president responsible for the country's economic performance and created the Council of Economic Advisors. But very few presidents have actually tried to maintain full employment; certainly none since Nixon. Real unemployment is quickly moving toward 15%. In some regions, it is likely close to 30%. When the auto makers go bankrupt, the Rust Belt is really going to hurt.

People forget that Greenspan/Bush inflated the housing bubble to mitigate the deflating dot.com bubble.

I certainly do not forget ! That INCOMPETENT decision is the root of our current problems !

GWB and Greenspan deserve FULL, 100% blame for our current problems because they made that choice, along with their tax cut and Iraq War choices !

The largest part of their real estate bubble was issuing $530 billion in gov't guaranteed sub-prime ARMs to add new "buyers" to the market, temporarily pumping demand and values up, till the reset date.

More competent people would have issued 7 years till reset instead of 5 years till reset sub-prime ARMs. Then the blow-up would be after their term. But NO ONE has ever accused GWB of competence.


A remark directed to the Obama campaign (can't recall to whom it was attributed):
"The good news is that the economic distress will continue until the election.
The bad news is that it will be much worse in January."

Recall that Matt Simmons' interview where he said he would cry a profuse amount of tears if he found out that he[Matt himself] was the new POTUS.

Strap In for an Extended, Slow Recovery

It has become a familiar refrain among financial advisers and investment strategists: The stock market may go down, but it always recovers over time.

If history has proved anything, it's that sometimes, it takes a really long time.

Rome had a million people in AD 200, then crashed. No city had a million people until London in the 1700's--
1500 yeas is a while.

Yes, and a fairly good case can be made that the military collapse of Rome was brought about by a financial collapse-- that in turn was triggered by "peak trees."

It is wrong to oversimplify -- but I wonder when all the media pontificators will get around to admitting the reality that the basis of civilization is energy, and our current energy source is in decline-- not that "speculators" have ruined the "credit markets?"

When, for example, will Jarred Diamond take up that theme?

Money is borrowed into existence. We have a debt based economy. In a debt based economy the economy must grow! A debt based economy depends on the future being better than the present. There must be growth in order to pay the interest on debt.

Unless there is growth in the energy available to industry, industry cannot grow. Energy production has plateaued. This, along with the sudden increase in the price of energy has stopped growth in its tracks. No growth means the money supply dries up. Companies as well as ordinary citizens simply defaults on their debt. This has driven most of the financials into bankruptcy.

Not to worry however, the economy will recover whenever the availability of cheap energy begins to increase again....whenever that is. ;-)

Ron Patterson

Virtually 100% of the analysis of our current financial problems completely ignores the fact that there is an underlying, energy/resource/environmental basis to our predicament. If only we can pull the right financial levers and provide the right amount of cash in the right places, all will be well. This may have been the last bubble.

"We have a debt based economy. In a debt based economy the economy must grow!"
Does that mean that an economy not based on debt must contract?

Your assertion that industry cannot grow in the absence of energy growth ignored the increase in real GDP per unit of energy.
Finally we may be approaching peak oil, but there is no evidence that we cannot continue to increase energy supply especially from nuclear, solar, geothermal and wind for a very very long time.

You are confusing a financial crisis( one of many over last 200 years), issues of credit/debt with peak energy issues.
Are you saying that if US had no net debt they would not have to worry about peak oil? What about Japan a net creditor, surely they still have to be concerned about future energy.

In Western Europe, that is. Baghdad probably managed it 600 years later. But I acknowledge the general point.

The Frugal Teenager, Ready or Not

Indulged. Entitled. Those labels have become hot-glued to middle-class and affluent teenagers born after the last major economic downturn, in the late 1980s. They were raised in comparatively flush times by parents who believed that keeping children happy, stimulated and successful, no matter the cost, was an unassailable virtue. A 2007 study by the Harrison Group, a market research firm in Waterbury, Conn., found that nearly 75 percent of parents caved in to their children’s nagging for new video games, half within two weeks.

But as the economy totters, many families have no choice but to cut back, which may lead to a shift in their thinking about money and permissiveness. Last week a semiannual survey of 7,000 15- to 18-year-olds by Piper Jaffray, an investment bank and research firm, showed that annual discretionary spending by teenagers, whose money comes from allowance, gifts and part-time jobs, had dropped 27 percent to $2,600, from its spring 2006 peak of $3,560.

“Parents are suddenly saying ‘no’ and their kids are saying, ‘What do you mean?’ ” said Robert D. Manning, an economist at the Rochester Institute of Technology and author of “Credit Card Nation.”

Hello Leanan,

Thxs for your efforts. I was hoping the author of the NYTimes 'Frugal Teenager' article [in the Fashion & Style Section] would have included a list of Peak-related books and/or weblinks such as TOD, EB, Dieoff, etc.

IMO, this would have helped offset the glamorous Christian Dior multi-photo advertising that appeared on my screen. But I can't imagine a fashion editor going strongly against the power of WT's Iron Triangle PTB, then hoping to stay employed.

Of course, my 'wishful thinking' dream is to have everyone study the 'Thermo/Gene Collision' and 'Catabolic Collapse', then coming together to give their best effort for 'Optimal Overshoot Decline'. In the meantime, let's hope lots of parents are giving their teenagers books by Heinberg, Tainter, Diamond, Simmons, Deffeyes, et al. I would not expect the Iron Triangle to ever allow high school teachers to teach this material.

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

Afternoon all-

Been watching your posts on the sidelines (mostly) for a few years. Thanks again for the insight. Quick question about that iron triangle...heard it referenced several times. What makes it up again? I knew the media was one part, not sure on the rest.

Thanks again.

Upthread: See Drumbeat's first comment [by Westexas] for details. Thxs for your earlier lurk and now joining the discussion.

Dude -- use gooooogle or else reference the first comments post above and:


The Iron Triangle is comprised of three elements:

-- the Oil Industry

-- the Real Estate/Auto Industries

-- the Finance Industry

The message to American citizens from the Iron Triangle is "Party On, Dudes! expand the suburbs and the exurbs ad infinitum, it's all good!"

Peak Oil, destruction of our habitat, resource war -- all of these are inventions of the leftists who oppose killing off people for "life, liberty, and just plain fun!"

This triangle merges very well with the industrial-military complex which exists to supposedly protect democracy and the non-negotiable American Way of Life, but in actuality exists to kill people and steal their good shit.

Every four years, we pretend to care about noble stuff, and re-enact a kind of macabre ritual to elect a new POTUS, who like The Old Boss, promises goodies but plans to abuse most of the people and planet in even worse ways than did the previous POTUS.

Does that help?

Thx for the info - when checking wiki - I found the triangle defined as: legislature; bureaucracy and interest groups - was left a little befuddled - lol


The media is controlled by the iron triangle; Autos, Housing, and the folks that provide the credit and cards.

Doug Noland is always informative:


The hedge fund/shadow banking empire (built on cheap money) is collapsing. The Hedgies were borrowing massively and buying into every asset class with the borrowed money, and driving up prices in the process. Now, the debts have to be paid and there is nobody to buy the asets - used as collateral for the borrowing - at the credit-inflated prices.

Why couldn't some economist(s) with some old computers lying around model this economy a few years ago and 'war game' it? Some decent strategies could have been developed, other than the 'I once read a book about the Great Depression when I was a kid ...' We would know whether we are in an inflationary or deflationary cycle. (Bet on deflation!) We would know the effects of the Credit Default Swaps on the 'real' economy. (The CDS 'market' is kaput.) We would know that interest rate and currency swaps are clogging the interbank lending markets. We would be able to wall of the bad from the decent and let the Hedgies pay the price for miscalculating, rather than allowing the entire credit edifice crash.

We model climate and airplane crashes, why not the economy?

With hedge funds falling over like ten-pins, the shadow banking empire set to 'dissolve' and cheap credit disappearing, what will prop up asset prices? Nothing, nada, zilch! At the bottom there is a 'productive economy' that is built upon the shoulders of 'Jose' who carries a leaf- blower and cleans up the driveways of America.

"Jose, the Country is counting on YOU!"

Everyone else is flipping houses or flipping burgers or begging on the street corner. People line up at 7-Elevens and buy lottery tickets as an income generating strategy. They list their occupation as 'speculators'.

Assuming that there is asset price decline 'overshoot' (as second- and third- level speculators are wiped out by margin calls) and prices of stock, commodities and debt head toward zero, there will be a wipeout of cash value (as opposed to credit value) as well. Our $15 trilion annual GDP could wind up being $3 trillion ... for years.

If it stays at this high level, it will be thanks to Jose. If he quits, our country is in deep sh*t(trouble.)

Add trillion dollar annual government deficits 'as far as the eye can see' and the result is 'Argentina'.

My opinion is that we are witnessing the failure of Keyesnian economics. Austrian economics had it right. Unfortunately the vast majority of economists are Keyesnian and that is what they teach in our colleges. It is a mistake in our thinking at a fundamental level.

Also only a relatively few of us can see the big picture, and we do not get mainstream attention.

My opinion, FWIW.

My simplistic understanding of Keynesian economics is that Government can use fiscal policy to borrow and spend in times of economic distress, but then pay back the borrowing later with increased taxes while reducing government spending when the economy is operating again and might overheat. Of course, the U.S. Government appears to be incapable of responding to bubble situations by turning off the spending tap, which has left the entire load on the shoulders of the monetary policy side, i.e., the Federal Reserve with it's ability to control interest rates. Of course, trying to stimulate economic activity only works when there are resources (particularly energy) available to fuel the economic activity, else we would all be working with our hands in the fields instead of harnessing all those horses under the hood to enjoy "Happy Motoring" between our service jobs in the city and our McMansions in the woods...

There's lots of interesting discussions about Keynes' original theories on the net. HERE and HERE are just two examples.

Well, gotta go, it's Fall and the leaves need attention...

E. Swanson

I somehow can't describe Alan Greenspan and Ben Bernanke as "Keynesian" economists. I certainly can't see the last 20 years of US financial policy as Keynesian either. Tax cuts to the rich? Decrease of regulation? Cutting public spending in social areas (the budget kept rising basically because of pork, the military and intelligence)?

Perhaps not, but my intention was to highlight the difference between Austrian and Keyesnian economics. There is plenty of info available. Mises described the "Crack-Up Boom" which has just ended.

Greenspan I can't fathom. I guess he just "sold-out". Ron Paul grilled him about the disparity between his writings frm the 60's and his policies as Fed Chairman. Greenspan apparently didn't think there was any disparity. Go figure....

Mises also equated peak oilers with Hitler.

Didn't know that. Learn something new every day huh?

Thanks Leanan,

I find that terribly unfortunate. I liked the idea of a commodity currency that is constrained in growth, and decentralizing the banking system.

I don't have time to dig into this stuff to the extent I would like so I apologize for my ignorance. It could be an opportune time to push for a different paradigm such as what Nate is working on, but gaining enough support will be a challenge.


Is that the official position of the von Mises Institute, or just the opinion of some imbecile called Sean Corrigan? Corrigan is not listed on the faculty or staff, and his bio says "Sean Corrigan is Chief Investment Strategist at Diapason Commodities Management, in Lausanne, Switzerland. "

Corrigan is obviously of the "infinite resources" school. I really think finance types would be keeping their head down, but their arrogance appears to be infinite.

"Mises also equated peak oilers with Hitler."

Since the literal interpretation would have been very surprising, as von Mises died in 1973, I checked the link and it was "Sean Corrigan" saying that. And many of the comments - probably from people liking Austrian Economics - were against his view.

IMV, Sean Corrigan's post could be as representative of Austrian Economics as Pat Robertson's call for taking out Chavez was representative of Christian thought.

Wasn't the entire screw-the-poor Social Darwinist ethos of the 1920s closer to Mises than anything America has had since? A professor of mine once called libertarians "autistic" because of their inability to actually see the poor. What was Mises' response to the Bonus Army marchers? Or the Iowa farmers forming mobs to attack repo men?

When your heartless market theories say that a worker must accept less money in wages than he needs to pay his rent, that worker should pick up a gun. That's the only alternative to big government that exists.


Super, with Austrian economics there would have been no Great Depression because there would have been no Roaring Twenties in the first place. Sure enough, once the economy was at the top of the credit bubble and starting to deflate, was NOT the time to start applying Austrian economics.

A growing economy is a highly ordered stack of energy waiting for release. It will pulse.

I wonder how much your critical view of Keynesian economics has in common with mine, which I described here.

Basically, if you are aware of the role and limits of physical inputs to the economy, Keynes' "in the long run we are all dead" is implicitely followed by "and we don't give a @#%& for those who will be living then."

Austrian economics, though not aware of physical limits to growth, would have yielded, if followed, a smoother and slower rate of economic growth during the XX century (no Roaring Twenties and no Great Depression). And a slower rate of ascent to Hubbert's Peak would have allowed for a subsequent slower rate of descent than what the world is going to experience shortly.

Of course, Ecological Economics (Daly, Ayres, Hall) is the ticket.

Anyway, have my rating up.

You say:
Keynes' "in the long run we are all dead" is implicitely followed by "and we don't give a @#%& for those who will be living then."
This is a standard misinterpretation of Keynes by Austrian school.
IIRC "the long run" referred to the prescriptions of equilibrium economics -- just wait and the crisis will work itself out. Rather than an expression of indifference it was a call to be concerned about what was actually happening in the present.

I don't know as much as I would like to about it, but my take is that the government does a poor job of managing growth as is necessary to prevent asset bubbles. When people are making money it is too hard to spoil the party. The market should have built-in mechanisms to prevent bubbles.

I don't know anything about environmental economics, but I am intrigued and will look into it.

Why couldn't some economist(s) with some old computers lying around model this economy a few years ago and 'war game' it?

I think that economists were modelling the economy, but I think the Keynes (?) quote applies to economists as well:

A 'sound banker,' alas! is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him."

If you're an economist going around predicting problems when there aren't any obvious problems, you aren't likely to get a nice consulting position to a government, non-governmental organisation or industry block. Whilst Hyman Minsky [1] appears to have had an ok academic career he doesn't seem to have done as well as gung-ho economists predicting we've solved all the problems of human beings and economic interactions.

[1] http://en.wikipedia.org/wiki/Hyman_Minsky

Why couldn't some economist(s) with some old computers lying around model this economy a few years ago and 'war game' it? (...)

We model climate and airplane crashes, why not the economy?

I believe Ilargi reckons that was done already, perhaps in the mid '80s or earlier. To quote a remark once seen on TOD, "They do have a plan, and you're not in it."

We model climate and airplane crashes, why not the economy?

You'd have to have SCIENCE to model. VS a buch-o-handwaving-crap like 'free markets'. Hard to model what does not exist.

(Go ahead. Show a functioning free market. )

Economists do computer model trading interactions (although I don't know of anyone modeling things like inflated property appraisals and faked NINJA loans). The problem is that the results you get depends on the assumptions of how individual agents will act, and the assumptions of fully rational agents with perfect knowledge tend not to be what people actually do and this affects the results you get. The process of changing the assumptions of how people react seems to be unpopular in economics.

I really think the free market thing is a bit of a red herring for the current market conditions, because most of the violations of classical economics are not due to coercion, legal barriers, etc. The way that people actually act and react is a much, much bigger disparity with the real world, combined with things economists didn't model (aforementioned property appraisers, etc). If you think about it, the whole move to "off-balance sheet instruments" is a move towards "freer" markets but has created more problems from human psychology.

Economists do computer model trading interactions

And all the working models are shared with 'us mortals' for our benefit just like weather and airplane crashes modeling.

I really think the free market thing is a bit of a red herring for the current market conditions

And when was it not a red hearing?

No, really. I asked for proof of a 'free market' - do you have 'em to show off?

eric, you're being a bit harsh aren't you? I mean you can use computers to model Astrology. ;-)

Then again, Scientific American seems to be more on your side here.

The Economist Has No Clothes
Unscientific assumptions in economic theory are undermining efforts to solve environmental problems

By Robert Nadeau


The strategy the economists used was as simple as it was absurd—they substituted economic variables for physical ones. Utility (a measure of economic well-being) took the place of energy; the sum of utility and expenditure replaced potential and kinetic energy. A number of well-known mathematicians and physicists told the economists that there was absolutely no basis for making these substitutions. But the economists ignored such criticisms and proceeded to claim that they had transformed their field of study into a rigorously mathematical scientific discipline.

So what has been evident to many of us for awhile is now allowed to be published in Scientific American. These scientific journals are always behind the curve (my opinion from personal observation).

Way behind... but that's what you get when the majority of "scientists" work for companies whose bottom line is the dollar.

eric, you're being a bit harsh aren't you?

Not at all. I've asked for open and transparancy - so I'll quote from theautomaticearth.

Our policy leaders in Washington are thinking domestically when the solution to the credit crisis will be global. It is not that the world lacks money; it is that the world's money is sitting on the sidelines -- more than $6 trillion in idle global money markets alone. The challenge will be to reform our financial system quickly to draw that global capital back into more productive uses. The first step should be efforts to make the market for future asset-backed paper more transparent and credible.

Actually there has been some speculation that TPTB secretly paid good attention to Hubbert's ideas back in 1959 and waited until Reagan and Greenspan to position things so that it would end up like this. (I think it was Ilargi who said this a few days ago on TAE). I was a bit shocked to read that, and it's only speculation I think.

A lot of people have become fabulously wealthy by hollowing out their own country though.

Definitely since the 1990s I'm sure that the US Govt has been modeling the economy and probably did know about this but either they felt helpless or they didn't care.

I think it was Ilargi who said this a few days ago on TAE). I was a bit shocked to read that, and it's only speculation I think.

Ruppert too. Lots of others. Anyone who looks at the repeated actions sooner or later has to conclude that they are intentional and not "incompetence". OF course, the McBama crew will continue the same "incompetence".

You are being ripped off. Big time. Totally. Why won't you recognize it?

cfm in Gray, ME

So what?

"Being ripped off totally"---that is exactly why I emigrated out of the US. The govt doesn't care there at all, it's much less than in most other countries. Wasn't there a tape of Nixon on "Sicko" explaining to one of his henchmen how the govt would trick simple people into believing that national health insurance was bad?

Par for the course!

Ruppert is borderline paranoid schizophrenic, so that certainly means it's a very daft conspiracy theory.

The idea that there is a secret cadre of geniuses operating within government to manipulate society doesn't last long if you have ever met anyone in government. If the US govt is so fricking clever, why did they get it so wrong on Iraq? The only way this conspiracy theory survives is by inventing extra layers of conspiracy.

The fact is, governments are not controlled by malevolent super-humans, they are composed of people like you and me.

Of course, governments like to give the impression of knowing exactly what they are doing. Ruppert's paranoia projects onto the government.

I would say you have been fooled by that, "big time". Why won't you recognize it?

Just who said they got it wrong serf. As far back as Cheneys meeting with the oil majors and the maps of Iran and Iraq, this is going by the book. Last thing to do is gut the economic system before they are pushed out of power. Gee they even cashed out once, now we get to cash them out again. I'm jealous. Your great grand-children will thank you for it. These are extra-global people, they have no alligence to a country, That's quaint. need somebody tortured, well just fly them here we can do it there no problem. Did you miss all of this? It happened on your watch. We are proceeding just as planned.

Don in Maine

"If the US govt is so fricking clever, why did they get it so wrong on Iraq?"
Who says they got it wrong? When the Russian Empire collapsed, TPTB needed a new threat to justify their position. Only real choice was between China and Islam. Reason for choosing Islam is another story, but invading Iraq win or loose or whatever was sure to further Islamic rage against the West which fits in with the program. Part of that same program, don't work too hard to ward off big terrorist strike against US.

"Why couldn't some economist(s) with some old computers lying around model this economy a few years ago and 'war game' it?"

That's a good question. Of course, economists do run models - problem is no-one fully understands the system. In particular, an airplane crash can be modelled using physical laws that are predictable. This works fine in many areas where the maths is not chaotic. When you have a chaotic system, it is impossible to model with certainty. The feature of predictable systems is that errors can be averaged out, and do not affect the overall outcome. Chaotic systems are the opposite, errors accumulate and eventually influence the overall result - known as the Butterfly Effect.

There is no set way to identify and deal with chaos. In practice, systems often have both linear and chaotic modes. Even in airplanes, chaos can occur, for example in turbulent airflow around the wing. Engineers design systems to avoid encountering chaotic modes. Control systems invariably use the principle of negative feedback, as these tend to reduce error.

By contrast, the economy includes many positive feedbacks, which are likely to amplify small changes. Economists generally work with equilibrium models, and simply don't attempt to model any chaotic aspects. So while we are in a stable part of the curve, everything looks good, but when a chaotic mode takes effect, the system seems to take on a life of its own and looks completely haywire.

An example of a simple equilibrium model that also contains a chaotic mode is p(t+1) = r.p(t). This is an equation for population growth. For different values of r (growth rate) you can get an equilibrium state or a chaotic state. If chaos can arise in such a simple formula, you can imagine the difficulty of studying a complex system or designing it to avoid chaotic behaviour.

Chaos arises a lot in natural ecosystems, but they have evolved to deal with it, and in some cases take advantage of it. Humans are still pretty much stuck on the notion they can live inside a predictable, stable state.

As with most descriptions of "chaos", that's "right but misses some important points". Firstly, the fact that a nonlinear system amplifies tiny effects is an advantage as well as a problem, since you can make tiny modifications to modify the large scale system behaviour. The difficulty in the chaotic regime is that it's difficult to figure out which precise feedback will yield the desired effect.

Secondly, predictability only matters on the scale the times between of manual interventions into the system, since those are the points at which you "change the system" anyway. Of course, government/central bank interventions are supposed to be relatively rare, but in controlling other nonlinear systems it's possible.

(Incidentally I think you mean the logistic map p(t+1)=r*p(t)*(1-p(t)). )

Yes, thanks - I cut and pasted wrong equation.

In theory a chaotic system can be directed by making small changes, if you can figure out exactly which changes to make. I don't know of any practical examples. There are some scientists proposing to control hurricanes in this manner.

Now, the intriguing question, what if the intervention becomes a feedback in the system? E.g. if people know that the government is intervening to control the economy, will they react in the desired way to that knowledge? We have seen that if an announcement is made to reassure the market, that announcement often has the opposite effect.

I suspect that any effective control would have to be done in utmost secrecy, which raises questions of practicality as well as accountability.

"Why couldn't some economist(s) with some old computers lying around model this economy a few years ago and 'war game' it?"

They did, and they could not predict the crash because they used the wrong mathematical functions in their models. All their modeling is based on the standard distribution, but the risk of a real-world crash does not follow that function. The distribution of economic risk is skewed in a way that catastrophic events are much more likely than expected. Benoit Mandelbrot (of Fractal fame) showed that already in the 60ies, but nobody listened. See Mandelbrot, B and Hudson, R. L.: The (Mis)Behavior of Markets for details.

No grand conspiracy here, just incompetence and greed.

The crash is happening faster due to modern technology, and I think government is having a time keeping up with events. That says nothing about the speed of recovery of course.

I am still puzzling over the value of money, such as does oil go to $40 or $200? I understand the viewpoint that the dollar is (currently) the world's reserve currency, commodities are priced in dollars, and that money should be loaned into existence. I am also aware of the trillions being vaporized. However I am trying to reconcile these facts with the infamous speech Bernanke made several years ago where he essentially said we have a printing press and we're not afraid to use it.

For those who understand money better than I, is the situation basically such that even with coordinated currency depreciations in the G20 nations deflation is imminent?

I apologize if such specifics have already been discussed, and don't want to start contentious debates. I am also now leaning over to deflation as the probable outcome. But IMO, the question is central to protecting ourselves and I wonder if anything conclusive can be offered to reconcile the above.



Give this key post a careful read. I think it does a nice job reconciling these two positions.


Thanks. The answer I was looking for is in one of Stoneleigh's posts.

'Printing money' (monetizing debt) will not help under these circumstances as injections of liquidity disappear into a black hole once a cash-hoarding mentality has taken hold.

I don't know offhand how to link to it, but it is starting to make more sense.

wont cash hoarding soon run into inflation and get out of favor again ?

the hertofor inflated stock market was inflated by excess money in the system too many dollars chasing too few investments. but the govt hasnt stopped creating money. where are those helicopters ben ?

and wont those dollars that have been destroyed find their way back into the system and wont declining energy production meet up with increasing population and "modernization" ?

imo, just as global warming has brought about more volitile weather, so will ever increasing "money" bring about financial volitility.

Add to that the certainty that the authorities are aware of the constraints going forward and will seek to compensate somehow. I think it is assured that they will overcompensate. But for now I am almost certain deflation is happening as we speak, oil is down and gold is being sold to raise cash.



refers to a 'whiff of deflation 'prior to major inflating.

does seem like a little more than a 'whiff' to me too.

& yes this stuff matters re how u run these rapids . my ira account is down about 60 % partly due to them messing up my deflation hedge with the rule changes re shorting -skf- .i have since caught skf up a little ; sold it & sent in the form for early withdrawing that amount.

as several said yesterday they will change rules again & as leanan said ira money will be very tempting!

It is pretty scary to watch what is happening, I agree. But now the markets are going up after this weekend G7 meeting and maybe if the market rallies you can get out when it goes up. The govts are getting pretty serious about stuffing cash into the banks and the markets are reacting. So don't despair, just wait.

"as we speak, oil is down and gold is being sold to raise cash"
Up and down, up and down .... But the trend is inflationary for those at the bottom. We aren't buying gold, we're buying food and fuel. Of course, these aren't part of core inflation.
About the unpredictability of it all. No one can predict just when the big forest fire will break out, but you can still measure the piling up of dry brush and understand that it's going to happen. And no miraculous knowledge of butterfly effects can keep warding it off indefinitely.

What I think we are experiencing with this contraction and that of the dot.com contraction is the contraction or deletion of "virtual" wealth. Virtual corporations (internet-based) and virtual wealth (derived value) are attempts to produce virtual growth. We believed things could grow through virtual realities, but in the end that reality can vanish as quickly as it was created because it is not based on a solid reality.

So far, the bust of 2008 has been massive in terms of virtual wealth and companies making a killing from virtual wealth, but what has it really done to the folks on the ground and in the trenches. Unemployment is pretty bad and 401Ks (based on the game of virtual wealth) are affected, but we have dropped the DOW more in the last week (%-wise) than ever before and still things do not look even close to what we saw for the average person during the Great Depression. Who has this contraction really hurt more? Not the Joe in the streets!! It's wounded corporations, hedge funds and governments that had bet the farm on unlimited growth in virtual wealth. It is EASY to grow wealth inside a computer-based world. It is much more work to grow capital and tangible wealth that makes the economy truly run and provide products and services to the population.

I think the experiment in virtual wealth as a long, sustaining mechanism to grow physical wealth is what we see failing at the moment.

As a side note: I am surprised how quiet the business news has been this weekend. Here we have all the high-level financial folks meeting and plotting how to save the world, but very little has come out. Monday is a holiday, so most economic news will be spurred by Europe and Asian. Come Tuesday, we may be in for some bigger moves here in the US.

I agree that things are way quiet. I was looking for news on the anomalous move in the bond market on Friday, when bonds sold off during the market descent. Usually, bonds benefit as a "safe haven".

Rick Santelli explained it as a sign that the credit freezeup is showing signs of thawing, but I see it more as a canary in the coalmine indicating loss of faith in "security of last resort" i.e. the treasury bond.


Usually, bonds benefit as a "safe haven"

I think bonds are no longer considered to be safe. I had a shock last weekend, when I calculated that the bond portion of my portfolio was priced at $.68 on the dollar, i.e. it fell more than stocks (and that was a beginning of the month price, undoubtedly it is worse now). So many people have been burnt by supposedly safe bonds, that no-one wants them anymore.

When I went to college two things I learned were:

1. markets are a form of rationing
2. rationing is required because a "good" is not infintely reproduceable.

So how could we produce "goods" in a virtual world and then have a market selling them? Everything should just be copied until everyone has it. Which is what tends to happen to movies and music unless harsh measures are enforced to limit supply to protect copyright holders.

Maybe the government should have spent the last 20 years encouraging the explosion of virtual non-goods (which obviously have development costs but can only obtain profits via gimmicks like banner ads) to add to our quality of life while leaving the market sector to do its worst in crushing both wages and availability of stupid, wasteful goods. Would we now be happier living in the same houses we had in 1989, with some real cash still in our bank accounts, with all the free entertainment and services that the Web offers via government-financed broadband, while the real estate racket and the junk bond traders and the SUV factories and the movie/music pimps all fell into dust?

Do you mean the same houses or the same types of houses? Clearly we can't use the same houses as 20 years ago, because there are many many more people now; Australia for example has gone from ~20 mil to ~25 mil, that's required a lot of nes houses; for example on both my old BMX tracks, and the city I live in (Canberra) has probably tripled in size.

They could have been the same types of houses, but with two estates, one with modest 3 bed homes on normal blocks and the other with 5 brm McMansions with the roofs nearly touching, most people seem to prefer the latter. It's not my preference but I can see the appeal.

As observed here in other threads, by default happiness comes from doing "better" than your peers by some measure. It takes a conscious understanding of this to adjust one's mindset to seek happiness through other means. If I can seel any product which allows the buyer to feel superior in some way, even if it's a green holier-than-thou feeling, then I can usually make money.

The govt in our country offers superb quality broadcasting on TV and radio through SBS and ABC, and it is possible to use these and other free govt services to completely provide allnecessary research, enetertainment and self-education needs. They even show programs linked to open university studies. I understand the BBC to be similar in this regard.

Despite this, we still have a massive materialist culture, especially amongst the young. People need to belong to a group, and the materialist groups generally have a lower barrier to entry than the academic or scientific or arm-chair/pubstool politico groups.

Young people need tribes, and tribes need identification. That in turn, whether it be lion's teeth or blinged-out baseball caps, needs to be relatively difficult to obtain for it to have any meaning.

Ike brings a new sense of normalcy

Even the story of the dead had not been fully told. The official count was 72 killed across the country as both direct and indirect result of the storm — 15 in Galveston County.

Officially, four people had drowned in the county, two on Galveston Island, one in San Leon and a woman whose body had been found in a huge debris field in Chambers County, northwest across Galveston Bay from the Bolivar Peninsula.

Goat Island

It appeared the death toll would be highest among residents of the low-lying, unprotected peninsula.

Another six bodies, one man, one woman and four unidentified even to that extent, had been found in a second jumble of debris on Goat Island in Galveston Bay just north of the peninsula. The cause of their deaths had not been determined by Saturday, according to the Galveston County Medical Examiner’s Office.

About 200 people were listed as missing on an Internet database maintained by the Laura Recovery Center, an organization that typically lists abducted children. About 100 peninsula residents were listed, some by nickname or description alone, on a similar site compiled by the Gilchrist Community Association.

All the numbers, derived from reports by relatives, friends and neighbors were uncertain. The vast debris field in Chambers County had not been completely searched.

County officials warned that some of Ike’s victims might never be found.

This is WOT but it's the weekend...

A few days ago someone commented that they lost some stored pasta (IIRC) to bugs. The odds are that it was Indian Meal Moth, a common contaminant of grains and grain products. The easiest thing to do to eliminate this is to put the package/bag in the freezer for a month or so. This kills any living moths and their eggs. I'll be adding another 100# of flour to my larder next week and will do this - fortunately I have a lot of freezer space. I'll put it into one of my olive barrels after this period. But even someone with only a little freezer space can re-bag/re-package it and do a bit at a time.


I had moths that got into my pasta/flour years ago, and they were a pain to get rid of. I had to take literally everything of this sort, either pitch it or put it in the freezer, and then really clean up all of the shelves (the moths would eat holes in bags, and flour had spilled out).

I probably got the things when I bought some rice from an Asian grocery..

That was me. I assumed that my packaged pasta had been contaminated after being put in our cupboard. Proposed remedy was to use it more promptly. I'll think about freezing packages when we get them in future. We keep a lot of stuff in the freezer to prolong its usefulness. Thanks for the tip.

I could be wrong, and someone will likely do a google and say I am wrong..but.

I believe that most of the grains I am familiar with need a certain moisture percentage for the eggs of the critters that inhabit most of the grains to hatch.

We store grains at about 14 percent in the bins.
I myself try more for about 12 or 10 percent and then place them in sealed containers like plastic bags or gallon jars or whatever. Just so it keeps the moisture out.

If one has high humidity in their home or they let some water drip into a sack of meal then moths will hatch out. Weevils will too.

I have some shelled corn stored in my barn in the open and over a year have noticed no lifeforms in it. We stored it in corn cribs as well..open to the outside. I think wheat is a different case.

I keep a lot of flour and corn meal on hand and if a bag is left open too long then due to my higher than normal humidity (concrete floor,open windows,etc} then before long moths will be flying about.

Just a few drops of water inside a bag of meal can start them off.

So to me at least,,moisture is the key to this. Keep it dry and sealed. Thats my observations.

Better yet I keep some wheat in the seed stage and only grind it as need be. Corn as well.

I keep a lot of shelled corn on hand but the wheat I take more care of to prevent infestation.

When we haul off grain to the graineries they will dock the load depending on amount of infestation but I have never noticed it higher than one percent. Most farmers run blowers until its at the right stage. They like to keep it a bit higher so the weight doesn't shrink on them.

Right now out of the field corn is running about 14 percent. If you take a 'wet' load to the graineries they just might tell you to take it somewhere else. They don't like it above 18. They will dry it however if needed and dock you for that.

Some farmers just have to get the combines going as soon as they can for some odd reason and not having driers nor willing to pay the very high price for drying will take it to the graineries none the less.

I take a 5 gal bucket with me and just take it out of the load for myself if the moisture is ok. Else I dry it on a concrete slab in the sun.

We all carry moisture testers but here of late they don't seem to be in vogue anymore.

Around here many farmers are adding new bin capacity on their farms. I think the are trying to game the market and not take such a hit at the graineries. But what would they do if the future went thru the floor instead of taking the current market price? We'll see a bit later.



In Japan, Hope Fades for Disposable Workers

A sign on one blue van, barely legible in the twilight, offered a 15-day construction job paying $95 a day, minus $33 in room and board. Although the terms were comparatively decent, the recruiter sitting in a folding chair in front of the blue van had found only one suitably young laborer by 5 a.m. Most were above the unwritten cutoff age of 55.

...And yet it was the older men who really knew how to work, he said, adding: “They’re the ones who worked during Japan’s decades of economic boom, so they know the ins and outs of every job. It’s just that they don’t have the strength anymore.”

Finance Students Keep Their Job Hopes Alive

For students who set their sights on Wall Street during the boom years, the end has come just as they are getting ready to join the party.

...But even as the markets spiraled downward, business and finance students at top universities said they were not panicked about their futures and were confident that the financial markets would recover. For the young achievers drawn to finance, expectations die hard.

The scariest thing, IMO, is that they're graduating $200,000 in debt.

Vandalism in Toronto Injects Eerie Chill Into Campaign

Last weekend, more than 30 Toronto residents awoke to find the brake lines on their cars severed, their telephone and cable television lines cut and political graffiti gouged into automobile paint and scrawled on their homes. The sole link among victims: a lawn sign promoting a Liberal candidate in the current federal election campaign.

The sabotage occurred in two leafy, upper-middle-class residential neighborhoods, where raccoons raiding garbage pails are normally a bigger concern than crime. The episodes have provoked bafflement, anger and defiance. They have also brought a tinge of nastiness to an election campaign short on drama.

Pirates Seize Tanker Off African Coast

MOGADISHU, Somalia (AP) — Pirates hijacked a huge tanker off the Horn of Africa on Friday, even as world powers deployed military ships to the Somali coast on Saturday to try to end a two-week standoff aboard another seized ship laden with tanks and weapons, officials said.

New Cost Overrun Bedevils Planned Mission to Mars

“The cupboard is kind of bare now,” said Sean C. Solomon of the Carnegie Institution of Washington, chairman of the planetary science subcommittee of the NASA Advisory Council. “And to come up with $100 million-plus gets really, really challenging.”

I have a feeling Bush's "manned mission to Mars" is not long for this world.

"I have a feeling Bush's "manned mission to Mars" is not long for this world."
too bad
i think the only chance for humanity's long term survival is to be in 2 places at once.
wouldn't think it would be too hard to colonize mars we have experience warming planets.

george soros on fareed zakarai this morning as well as greagory sacks.(sp)

"too bad" [?]

The metastasis needs to stop here!

Whatever happens on Earth - global warming, asteroid impacts, whatever - it will be orders of magnitude easier surviving on Earth than on Mars or anywhere else. If we have the technology to colonize/terraform other planets, we can surely get by on Earth.

I have a feeling Bush's "manned mission to Mars" is not long for this world.

Do we still call it a 'receding horizon' when it's in space, or is there a more planetary term for it? 'Expanding universe?'

UAE Upper Zakum Oil Reserves

Dubai oil production was at 400,000 bpd in the early 90's. By 2005 production dropped below 100,000 bpd. Recent production was reported as low as 75,000 bpd. They stated 4 billion barrels as their

The UAE stated its largest field is Upper Zakum with 50 billion barrels of reserves. They stated 16-20 billion barrels of their Upper Zakum reserves may be recovered. Upper Zakum has been producing 500,000 barrels per day (more or less)of 34 API oil since the mid-80's and may have produced more than 4 billion barrels by now. It is one of the largest oilfields in the world. It was described as having poor pressure and low porosity limiting the recovery factor. Exxon is supposed to boost
production capacity to 750,000 barrels a day within about two years. Current plans as summarized by the EIA show the UAE as trying to reach output of about 3.5 million barrels per day in 2010. Previous plans to boost UAE production capacity to 4 million barrels a day have been abandoned. They might produce large quantities of oil for decades. Market conditions and OPEC quotas may have limited UAE production more than geological limitations.

UAE Cretaceous Oil Deposits Map (Greg Croft Inc.):


Did some more reading and found the Bu Hasa (over 200 sq miles), one of UAE's largest fields, was stated as having 20 billion barrels of official oil reserves, another source estimated recoverable oil of 8 billion barrels same as Shaybah recently developed by Saudi Arabia. Either way OPEC quotas seem to have a greater influence over national production than the amount of oil an OPEC nation has.

you refer to oil in place as reserves. this is not correct. reserves are the remaining portion of recoverable oil.

Yo Drummers, I will be out of contact for a couple weeks. My wife retires the end of the month (@69 yrs old) and must take the rest of her vacation time. Her sister and BIL live here and he is able to get off so we four are going to Ada MN to visit another sister and BIL. This is probably our last major trip due to age and fading horizons. From Reno it is 1685 miles. With good highways and weather we should make it in three easy days. We will spend a week there and about three days back. We do not have a hybrid so we will use quite a bit of gas even though I understand your concern. Sometime soon a 140 gallons of regular will be precious.

I would like to say a few words before we leave. America’s present situation is very complex. When you see the DJIA move 300 or more points in a couple minutes, you know the pits are near chaos and in a feeding frenzy for traders. I just finished “The Black Swan” and “Fooled by Randomness”. Though the theme was quite repetitious, it is important to realize that the more complex the situation, the less likely one can forecast the outcome. The more complexity, the more openings there are for an unexpected event(s) either good or bad. If one cannot forecast or model even the short term outcome, then what should one do?

Each of us has different resources in physical property and talent. The prudent action is to supply yourself with essentials. We do this every time we go to the store. Only now, I would suggest taking a longer view of essentials. Absolute sustainability will only be available for a small percentage of us however a few weeks sustainability is often obtainable and with some effort, training and determination full sustainability can be an achievable goal.

This is not the time to panic to the point where one might do nothing. Panic may come Tuesday or Wednesday or next month but for now, try to prepare logically the best you can. If the situation turns around and looks great we can all celebrate and enjoy our surplus of peanut butter. If things go to hell in a basket we can really enjoy our peanut butter.

I dreamed I was a butterfly who was dreaming he was a man. I wondered, “Am I a man or a butterfly?” When I first awoke, I flew away laughing on rising currents and the second time I awoke I was sitting at my computer about to type something. I still wonder …

Best to you and yours. BCNU in a couple weeks.



Have a safe and enjoyable trip!

As you probably have read, a number of us have been shouting, "Time is of the essence!" for some time. While everyone cannot afford to "really stock up," it certainly is possible to have enough essentially on hand to go for a a few weeks or months. Essentials includes water!!

A good survival product can be made from dried whole milk, peanut butter, oil (I think) plus a multi-vitamin. I don't remember the proportions but if anyone is really interested I'll look through my information and post it some time.


Mhhh s..my thoughts are that storing a bunch of canned goods in the basement is simply not going to be enough.

I know that Todd is ready. I am pretty much ready and so are some of the others here who have left the normal lifestyle and went out and purchased land for their own 'lifeboat'. They are the ones IMO who stand the far better chance of surviving.

Simply being in a city or the suburbs will make you a victim very very shortly.

This has been discussed long and hard on TOD and elsewhere. Its got to the point where its actually boring and so I spend less time on TOD than I used to. More better that time be spent in my garden or finding my forge and scrounging up as much metal as I can.

Some may not know it but I find that scrap metal laying around the countryside is very rapidly disappearing. Lots of people living on the edge are stealiing it, begging it, hauling it off in huge amounts for the scrap price.

What are we to do when we won't be able to reinvent the basic tools we need if TSHTF? All of it will have been sent to China!!.

I drive by three scrap yards on each grain truck run. Always loads going in and doing a lot of business.

It sorta scares me.


Hello Airdale,

Thxs for all your posts--a TODer must-read, IMO. My guess is China wants plenty of our former scrap metal on their land for when they postPeak need to build lots of bicycles and wheelbarrows [SpiderWebRiding too?]:


I sure hope everyone is buying at least a bicycle, and possibly a wheelbarrow per family member. I sure don't see our Govt moving towards Strategic Reserves of rail stocks [AlanFBE's idea], bicycles & wheelbarrows, or I-NPK stockpiles for the Hubbert Downslope. My feeble two cents.

Snow flies early this year.

Be careful. Stay safe. good luck.

“One In Six Americans Are Underwater on Loans”: Horse Hockey!

I am so sick and tired of seeing that headline; it seems to be everywhere, in newspapers, on TV news tickers, on the local news, online. It’s freaking people out, and it’s just plain wrong. Here are some facts:

1. Only 68 percent of Americans own homes
2. 32 percent of Americans who do own homes have no mortgage at all
3. The average time horizon for owning a home is 6 years

I am so sick and tired of seeing that headline...

I read it a bit differently. The set in question is not all Americans, it's Americans_with_mortgage_loans. And of those Americans_with_mortgage_loans, 1/6th have negative equity.

What's hard to understand about that? Nobody who's bought a house in the last 3 or 4 years can sell that same house for what they paid a short while ago.

Why is "freaking people out" bad? So 32 pc of 68pc is about 20pc, leaving 48pc owing money on houses. 1/6 is about 16%, which says that 1 out of 3 homeowners are underwater. Given a decade of easy loans, more than half of all loans could have been in the "easy terms" pile, with second mortgages on top of that. From an article in Dec 2007 (things are worse now, I'm sure):

"Thanks in large part to mortgage-related tax deductions and a drumbeat of advice that everyone should own their home, the U.S. homeownership rate rose steadily in recent decades. It peaked at 69.2 percent in 2004 before backing down to 68.2 percent at the end of the third quarter, according to the Census Bureau, which has collected the data since 1965.

But that small decline masks a much larger plunge in the amount of equity homeowners hold. This figure, equal to the percentage of a home's market value minus mortgage-related debt, fell to an average of 51.7 percent at the end of the second quarter, down from 62 percent at the end of 1990, the Federal Reserve reported, even as the average home value surged 139 percent during that period.

Some economists believe the home equity number will drop below 50 percent by the end of next year, marking the first time homeowners will owe more than they own since the Fed started recording the data in 1945. The central bank is set to release the third-quarter equity figure Thursday.

"Although homes increased hugely in value, homeowners were borrowing against them as fast if not faster than the appreciation," said Dean Baker, co-director for the Center for Economic and Policy Research. "And when people were buying new homes, they were getting them with as a little as 5 percent, 2 percent down, even nothing at all."

Eleven percent of first mortgages originated in 2005 and 2006 had down payments of less than 10 percent, according to the Mortgage Bankers Association. Another 1 percent of the mortgages surpassed the value of the property."


Financial crisis clouds EU's climate change plans.............from the link above.

Now that's what I'm talkin' about, lets get down to it.
The overriding human emotion is self preservation, when push comes to shove, FYJ is in all of us.
FYJ to all flora, fauna, the environment and anyone else, the fight will be to try and be the last man standing.

Do not kid yourself, that any country, state, city, county, family or person will make sacrifices if they see their neighbour is not, they won't make sacrifices at all, if they expect them to REALLY be sacrifices.

The human is like any beast, we are bound by evolution and instinct, the effects will be felt from the micro to the macro scale.

Reading the Oil Drum is becoming a puzzle, but fun. I may be able to give up crosswords. In Bandits post, FYJ (F*** You, Joe?) Previously, BIL? (Oh yes, Brother-in-Law.) WOT? (Waste of Time?) Iron Triangle (above)? Wikipedia says it's relations between Congress, Interest Groups, and Bureaucracy, but this doesn't quite fit the context.

I keep a Google search window open at the top of my screen, and an Acronym dictionary in my favorites column: http://acronyms.thefreedictionary.com/ Very helpful nowadays.

In this context, the "Iron Triangle" consists of (1) The oil industry itself; (2) Auto, housing and finance; and (3) Media. They all have a vested interest in maintaining BAU (heh - another acronym - business as usual).

Here is a handy acronym guide that may help with some of these the ones that are more specific to peak oil:

BAU isn't in the guide however...

More info here:

And most puzzling: questions about the impact of the 3 approaching arriving Storms:

1. financial: hyperinflation or deflation
2. resource: demand destruction or supply constraints
3. climate: global warming [desertification] or global cooling [slowing N Atlantic current/pump]

All the conflicting opinions make for very puzzling reading indeed!

Trains, water and power may be next in line for a bail-out

The chancellor must take emergency steps to prevent rail, water and power companies going bust in the global economic storm, former cabinet minister Peter Hain has warned.

Hain, the former work and pensions secretary, urged the government to draw up reserve powers that could be used in the event of a major utility collapsing and taking vital services with it. His words follow jitters in the City about the damage a freeze in bank lending could do to some companies that have borrowed heavily to invest in infrastructure.


Latest from the BEEB is that the £50 billion planned is being used up completely by just four banks, so the cost is escalating.
It's about time that it was realised that the Banks are not able to be rescued, and that money should be channelled to setting up alternative banking whilst they are allowed to go bust.

Looks like this sucker is going down.

The catch is even if countries set up alternative banking, they will get back to the same problems quickly, if the same debt based monetary system is used as in the past. Somehow, we have to come up with a new system, perhaps modeled after what Herman Daley talked about a couple of days ago in his post. We can't continue to have infinite debt growth. In fact, it would be good if we could make the money supply decline to match the decline in goods and services as oil and other essential goods decline. Debt should be only a very incidental part of the new system--probably only very short term, to cover shipping.

Gail, you know shed loads more about finance than I, so the comments as opposed to the links I give should only be regarded as the most amateur of comments, and an expression of frustration - I barely know more than Alan Greenspan, although I do know that you can't go on continually expanding debt.

However, it is fair to say that I don't go along with the paradigm that growth is necessarily over as ineluctable limits have been reached.
Sure, at some stage there are real physical constraints, and you can't grow forever, although it should be noted that even in a steady state economy if the population was shrinking individual wealth could still increase, but the really interesting question has always been when and under what conditions growth ceases.

There are powerful reasons for thinking that we might be at that point, but it is by no means a done deal, as the issue is not primarily technological.
We at at or about at a real constraint on liquid fuels, but we also have available or are likely to shortly have available high EROI energy alternatives in advanced nuclear fission and solar energy, whilst China has plenty of savings to build them out.

So in my view a temporary patch may be quite sufficient, with the losses absorbed by the shareholders and holders of the derivatives, and primary attention given to re-capitalising a banking system.
Certainly some delay could be built into any deterioration of the system, by the companies responsible being wiped out, the Directors prosecuted and fined for much more than their bonuses, and onerous capital ratios being imposed.

In any case, debt and credit is likely to be contracting for the foreseeable future.

On a more technical level, in case you miss it in another thread to which I posted it, I would be grateful for your lights on whether it is relevant to attach the importance to LIBOR rates that they currently have in policy setting, since in reality banks are getting very cheap credit from Central Banks and not raising money at LIBOR rates:

but the really interesting question has always been when and under what conditions growth ceases.

Growth continues past what the medium can sustain. Therefore collapse. Seems to me that is not nearly as interesting a question as what is the region of sustainability. They are not the same.

I don't go along with the paradigm that growth is necessarily over as ineluctable limits have been reached.

Does that mean you don't think limits have been reached or that limits are irrelevant? You aren't going to be able to answer your question unless you can state it clearly.

Here in Maine, we are considering salt water fishing licenses because there aren't enough fish in the sea. Hello World?

The significance--and ultimately the quality--of the work we do is determined by our understanding of the story in which we are taking part.

- Wendell Berry, Christianity and the Survival of Creation

cfm in Gray, ME

I think that it is not possible to determine with absolute certainty whether many of the limits have been reached save in retrospect, and also that since the limits at least to energy supply appear to be at some distance, the extreme poverty of most of the world means that we should try to increase total productivity - although this does not mean that we should be going for trickle-down economics.

Simply, population appears to stabilise and then decline if prosperity reaches a certain level, and that is what we should go for.

If you are referring to demographic transition, then no, that's not what we should go for.

An affluent society uses many time the resources than a poor society even if the affluent society has a small population.

Demographic transition makes the problem worse, not better.


The population especially of the developing world is growing, and some people remain fixated on this. They note that populations of countries like Kenya are growing rapidly, and they say that’s a big problem. Yes, it is a problem for Kenya’s more than 30 million people, but it’s not a burden on the whole world, because Kenyans consume so little. (Their relative per capita rate is 1.) A real problem for the world is that each of us 300 million Americans consumes as much as 32 Kenyans. With 10 times the population, the United States consumes 320 times more resources than Kenya does.

These sort of generalised comments on the US consuming 320 times more than the Kenyans really tell us very little of any use.
If the concepts of renewability and recycling have any validity, then for a start you have to take into account the degree to which they are applied by the society.

For instance, Sweden currently uses a lot of fertiliser, although not more than some much poorer countries.
However if it's plans to recycle sewage are implemented, then that figure will fall hugely.
IOW the issue is one of implementation of a reasonable plan, and the overall level of development has little to do with it.

In a similar manner it was alleged that over-population in the Sahel was causing deforestation.
The considerable difficulty with this thesis was than on closer examination little evidence of overall deforestation could be detected, and furthermore it did not correlate with population density, but rather with the legal and social environment - where the people could benefit from maintaining tree cover, they did so, and the problem was one of depletion of the commons rather than an absolute one of depopulation.

It is also unclear what you are advocating in practical terms, presumably that people should accept a mass die-off and a standard of living equivalent to that in Kenya.
This program would seem to be a difficult sell politically, especially since it is based on a whole series of sweeping assumptions and generalisations which have little foundation in detail.

None of this should be taken as advocating unlimited population growth or consumption of resources without recycling, but rather for the wholly more moderate position that we should base our plans and projects on attempting to keep as many people as possible out of the present population alive, and hopefully manage our resources better so that a more stable state where numbers and resource utilisation levels gradually decline to more reasonable levels.

It is also unclear what you are advocating in practical terms, presumably that people should accept a mass die-off and a standard of living equivalent to that in Kenya.
This program would seem to be a difficult sell politically, especially since it is based on a whole series of sweeping assumptions and generalisations which have little foundation in detail.

I'm not advocating anything Dave. I'm just spelling it out as it is.

It doesn't really matter how much fertilizer Sweden uses. The population is clearly in overshoot and the carrying capacity of the world has already been diminished.

Plan all the projects you want. I find it amusing you think arguing on the internet is gonna make one whiff of a difference.

I find it amusing you think arguing on the internet is gonna make one whiff of a difference.

Presumably that does not apply to your own posts! :-)

It absolutely applies to my own posts!

I simply can't imagine what you think is the point of assuming inexorable doom.
You may be correct, we have certainly got ourselves into a pretty fix, but there seems no utility in assuming so.
What is the downside to acting on the assumption that we can muddle through?

If we make the assumption that there is no way out, that will certainly come true, but if we assume the opposite then maybe we have a chance.

We will only really be able to properly assess how grave the situation is in retrospect, and allegations of overshoot are far more difficult to substantiate in detail and specifically.

For instance, the statement that American's use 320 times the resources of Kenyans.
Are we sure it is not 200 times? Or maybe it is 400 times?
Would recyling narrow the gap? How much?
Does this take account of the heavy impact which the use of wood has on the environment in Kenya?

As soon as one gets specific, it is apparent that this is a rhetorical device, rather than any level-headed assessment.
Maybe you have worked out that we have no way out, and this inevitable. Maybe you are correct beyond any peradventure, and you certainly seem to have convinced yourself.
The rest of us though may beg to differ, and to see how things pan out.

In any case, although the ship may indeed be sinking, on the chance that we can do something about it it seems worthwhile to make every effort to keep it afloat.

Dave, I sympathize with you, I really do.

But your thinking is 30 years out of date.

Seriously man, pick up the latest update to limits of growth and give it a read.

I'd save your sympathy for those who have given up.

'The difficulties at the beginning are too great for some persons. They get stuck and never find their way out; they fold their hands and give up the struggle. Such resignation is the saddest of all things.'

That's pretty sad.

You honestly think your postings are part of some noble crusade to save industrial civilization from itself?

Please, give me a break.

Give up, fight the good fight, whatever. Things are the way they are. You wallowing in your intentional ignorance changes nothing.

Really man, why don't you read the book, then get back to us? What are you afraid of?

Other people have read books too, you know.
In fact more than one.
So although you may feel that you have read THE book which allows you to see into the future, and that you now have all the answers you need, others may disagree.

Your studies whatever they may have been seem to have merely resulted in the assumption on your part of a state of impotence to affect any good result, and to bandy spurious polemic to the affect that the US per person uses exactly 320 times as many resources as a Kenyan.

Whatever floats your boat.


The Limits to Growth has been updated in the last 35+ years.

Don't you owe it to yourself to read it?

What are you afraid of?

"and to bandy spurious polemic to the affect that the US per person uses exactly 320 times as many resources as a Kenyan."

I'm not sure I follow you here. I linked to a Jared Diamond NYT article about the demographic transition. Are you accusing him of being spurious?


I get tired of you saying these things over and over. It is not logical to assume that seeing a collapse ahead, of any kind or degree, equals giving up. I am also tired of your lack of logic in asserting planning for the worst is a waste of time. That's like saying having a boat in a flood is bad. It's actually foolish of you to keep asserting this, let alone illogical.

The danger of working to preserve what is, i.e. muddle through, is not being prepared for far worse. This is not logical thinking. Being prepared for the worst will, by definition, leave you at least somewhat prepared for muddling through. Is the opposite true? I think not. The reasoning being that a complete crash would leave you scrambling for things that simply won't be available by the time you realize you need them.

Essentially, why don't you stop giving people crap because of their view of things and denigrating them because of it?


Going back to one of my original questions, "Does that mean you don't think limits have been reached or that limits are irrelevant?" You seem to imply it doesn't matter but that we should try to muddle through.

Agreed on the muddling through; that is the best we can do. Still it matters a lot to that muddling through what resources and expenses one has. If one has hit limits, much of that muddling is going to be a total waste of time and remaining resources. All the while expenses increase. To take one example, the financial meltdown. The current muddling through - or at least what appears as that - is only absorbing all resources and resulting in no improvement for the bulk of the planet. It is, of course, vastly enriching the already engorged fat-catters. So muddling through with a lack of analysis is not helpful.

Another fictional fantastical example might be propping up US auto industry with a prius equivalent for everyone. Absent limits one might argue for that. In the presence of limits, it is an entirely different matter.

Without knowing the scope of the predicament, muddling through is only flailing helplessly.

cfm muddling through in Gray, ME

I certainly do not think that limits are irrelevant, and they may well be reached or breached.
OTOH, I don't much like broad-brush approaches, and want to know what and where more specifically, which is a lot tougher to establish.

Statements like 'the world is finite, so we will run out' or alternatively 'human ingenuity will always win through' seem to me to generate more heat than light.

Many posters on this site have done a superb job of itemising the real limits of flow rates for oil, and in my view this is definitive.
Even for gas though, things get a lot tougher, although it looks very much like things will get a lot tighter, with peak perhaps no more than 10 years away. That bet changes though if methane hydrates are harvested, which is not impossible but depends on technology under development, and so by definition we can't know whether it will work out. The implications for greenhouse gasses and so perhaps GW are then likely to kick in, of course.

Some other resources such as helium are also in very short supply.
For most though, availability depends above all on the price of energy and it's EROI.
Both advanced nuclear and solar are at a pretty high state of development, and both are capable of very high EROI, so to me at least it does not seem likely that the world overall will run critically short of materials such as refined iron, although obviously political constraints on energy production could hit some regions and development.

On the ecology, it is clear that severe constraints are appearing in many areas, for instance in the news today in the Murray-Darling basin.
Translating that from anecdotal evidence to an overall picture is a different matter though.

The lack of information and detailed descriptions of specifically what is limited is as much a problem for those who emphasise limits as those who do not, as it would be pretty daft if, for instance, a concern for limits to lithium led to not attempting to develop plug-in cars if supplies turned out to be adequate.

This is no more than a description of the human condition however, as we usually have to make decisions based on partial and inadequate information.
Under those circumstances a degree of muddling through is often the only realistic option, as it is better to act in the full knowledge that your information is imperfect than to develop a theory containing umpteen assumptions.

To put that in more concrete terms, I would regard proposals to expand suburbs and build new runways at airports as nuts, and proposals to expand railways especially for freight as excellent.
On EV cars I would tend to favour muddling through much more, as we can certainly build several million with current lithium supplies in any case, and even if it were not possible to build more having emergency vehicles is dead handy.

For demographics and the possibility of a population crash, it is clear that previous projections of population growth and falling birth rates are likely to be falsified by a shortage of energy, or at any rate of liquid fuels.
I previously did my best on this forum to come up with some initial guesses on possible populations by region, and for some areas the guesses were pretty depressing.

Should we be successful in producing solar power for around $1/watt, as seems quite possible by 2015 or so, then we are likely in a very different energy and hence likely demographic world to if we don't, just as if China, say, comes through the present financial turmoil relatively intact, then that is obviously a vast area which would have the finances needed to rapidly develop renewable and nuclear technology.

All this is before you throw in variables and unknowns like the possibility that we have a massive increase in GW in the fairly near future.

It all boils down to a very uncertain future, with very real limits, but those limits in many respects dependent on the technological and political choices made.
I don't know what the future holds, although some elements of it are clear, and I don't believe anyone else does either.

Overall though my present estimate is that for many areas of the world we have adequate technology and resources to get through, but that does not mean that we will put the political, economic and ecological measures in place to do so.


The reasons for my pessimism on growth have to do as much with the current credit issues as specifically peak oil issues. I think the credit problem will be very difficult to solve. It may be possible to paper over it for a quarter or two at a time, but it will keep coming back in full force. Lack of credit will cut off production just as effectively as lack of oil will.

I am afraid I don't have any special knowledge on the LIBOR rates.

Gail, as I have said I have just recently tried to get some basic understanding of what is going on in the financial markets, so what you and others have to say about it is likely to be much, much more valuable.

I do though notice something that I have done on this forum before, due to the high representation of people from the US here, there is a tendency to confound the US with the world - which at least for leadership has often been a valid equation since the Second World War.

It appears though that the identity may be breaking down, and I would suggest that perhaps the Far East and in particular China is in a much better position to weather the storm than most of the West, although possibly it may be argued that even there Germany and France are far better placed than the US.

As a separate argument and consideration it should perhaps be noted that in spite of talk of the capitalist system being only suitable when growth was available, for most of capitalism's history growth was so much lower than in the last century that it was virtually imperceptible, and often reversed for decades.

If it is argued that this was not true, full-blown modern capitalism, it is certainly the case that it had many of the fundamental characteristics, including the provision of funds in exchange for interest.
This in a society of no overall growth had the effect of channelling funds to areas which were growing, as even in a steady-state economy some parts will grow whilst others shrink, and so allowed effective allocation of capital.

"China has plenty of savings to build them out."

Savings are not energy. Money is not reality. Technology is not energy, nor is it resources.

If China is going to use its "savings" to build something out, they'd better get hopping.

Money is not real. If we haven't learned anything else in the past month or so, surely we've learned this?

We are finally coming down to the place where actual reality trumps virtual reality. It's been a long time coming.

They are. Check out their figures on build of coal plants, wind and nuclear, together with rail and subway systems.
If they stop chucking money into duff US real estate they can accelerate this.

Hello Sgage,

Your Quote: "If China is going to use its "savings" to build something out, they'd better get hopping."

Radical reforms to set China's farmers free

• Long leases give peasants more choice over land use
• Plan to cut export reliance and spur rural spending
If China is smart, I would expect them to start building the most sophisticated, ecologically sound, and extensive postPeak O-NPK recycling networks on the planet. Job specialization is dependent upon food surpluses. We will see...

Another thought: I hope all TODers have read Leanan's excellent toplink:

The Food Issue: Farmer in Chief

My guess is that culturally: China is more likely to postPeak paradigm shift much faster than us here in the US, but I would love for all the J6Ps to abandon NASCAR and other sports to prove me wrong. It would now seem that ASPO-CHINA has been more Peak Outreach successful with the Chinese leadership than ASPO-USA has been with our Shrub & Congress.

Of course, Tiger Woods plowing under Augusta National [along with the White House Lawn] might incentivize us to catch up with the Chinese in relocalized permaculture pretty quickly....

Many TOD comments are being uncritical in the assumptions that peak oil or even peak energy is going to prevent any further growth or that in fact peak oil is responsible for the financial crisis.
The OEDC countries have had an annual GDP growth 1.3% higher than energy growth over the last 50 years, because of the decline in energy intensity. I am sure you would agree that nuclear,wind,geothermal and solar energy can expand at least to compensate for declines in FF availability, so there is no intrinsic reason why growth cannot continue. This doesn't mean that population growth has to continue or that it is desirable to have 9 Billion people living on the planet.
Secondly, there is no intrinsic reason why debt and credit will have to contract, as long as others are prepared to save and invest. In Australia, many baby boomers have saved through superannuation for their retirement, although when younger they would have taken on a lot of debt primarily to purchase a home. These savings have been lent out or invested in long term assets, including renewable energy, transport infrastructure, and mining companies. World wide similar investments have been made by sovereign wealth funds, pension funds etc. These investors can't keep it under the pillow, and the world economy needs these long term investments. The only investments not needed are hedge funds and other forms of financial churning that rely on high leverage. Debt is not bad if its used to invest in either productive investments or provide housing. Last time I checked people even in US want to live in houses not in cars or under overpasses. If all of the houses with sub-prime mortgages were affordable again I can see no reason why most of those people would not want to continue staying and continue paying off these homes.
Now if the reason they are defaulting on mortgages is because of the high energy prices due to peak oil, then that would be a different matter but I am not convinced that high gasoline prices had a significant contribution to sub-prime defaults.
It does put possible peak oil problems in perspective, gasoline rationing or even rolling blackouts may not seem too bad next to a possible world wide depression.

The catch is even if countries set up alternative banking, they will get back to the same problems quickly, if the same debt based monetary system is used as in the past. Somehow, we have to come up with a new system, perhaps modeled after what Herman Daley talked about a couple of days ago in his post. We can't continue to have infinite debt growth. In fact, it would be good if we could make the money supply decline to match the decline in goods and services as oil and other essential goods decline.

Please see Creating New Money written in 2000, with warnings of the banking collapse that is now happening:
If the amount of new money created as suggested in this paper were linked to the amount of available energy, then money would cease to be a meaningless man-made invention and would instead reflect reality. And about time too!

Hello TODers,

I haven't been on a plane in years: my last flight, which was a very brief, no film, sardine-can airhop from AZ to CA, was shortly after the failed attempt of the 'Shoe Bomber' [late '01--early '02?]. Out of curiosity, this is directed to those TODers that still fly: have movies such as 'End of Suburbia' and the more recent 'Blindspot' been feature presentations on airplanes?

Does Sir Richard Branson, to enhance his eco-awareness street-cred, offer movies, like those listed above, for free on his Virgin Airline? Or does he only allow his passengers to watch 'Iron Triangle' films such as:

Thxs for any reply.

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

Last Qantas flight was when I came back to NZ from the UK to (finally, age 40) go to Uni. They had a fairly comprehensive Video on Demand system, quite a few breakthough alternative arthouse options (but you had to go browsing for them)...

Even some documentary content - but nothing too edgy though - I very much doubt airlines would host anything too environmentally sound, or less than upbeat in conclusion.

Hello Jaymax,

Thxs for responding. So I guess no Polar overflight passengers were allowed to watch Gore's 'Inconvenient Truth', then look down on the seawater, snow, and ice below?

That's pretty funny, Bob. Sorry, there's no

    The God Who Wasn't There

in-flight entertainment on that transatlantic charter flight to Lourdes, either! :^)

LOL! The pilot and crew would have a passenger mutiny on their hands!

In 1929 there was a run on United States banks. Many banks failed. The dollar was a gold certificate and was backed by gold in United States vaults. People started trading their dollars in for gold (Wickipedia) to stash as they no longer trusted banks or cash. Deflation occurred. In 1933 FDR banned private ownership of gold. People traded in their gold for dollars. The banks were bailed out. FDR formed the FDIC in 1934. The stock market bounced up in 1934 and employment began to rise during 1935.

If you extend too much credit to a borrower, he/she may not be able to pay you back. Usually people paid their employees out of profits. Business owners whose businesses were economically weak contacted Congress feeling violated over not being allowed to borrow more money.

The high flying investment bankers borrowed the greatest maximum allowed, could not pay back, and the system is crashing. They went to the only lender in Wasington D.C. willing to lend to organizations with such bad credit ratings; the Federal Treasury.

Liquidity is available, but it has its price.

The DOW Jones Industrial Avg. was at 898 in 1968.

A Hershey chocolate bar cost 5 cents in 1967. The price had been steady since 1920. In 1968 the price of Hershey bar was raised to 10 cents. In the early 1970's the U.S. went off the gold standard.

Has the DOW Jones Avg. outperformed the cost of a Hershy bar since 1968?

Your observation of the price index's steadyness is the same as my old Econ prof. I really wonder what he'd say now.

The Depression started in 1921, in the farm sector, when highly inflated commodity prices caused by the World War crashed and never really recovered. At the time, the Ag sector underpined the whole US economy. But the day's media was focused on the "Return to Normalcy," and ignored the farm sector's plight. Fast forward to now. The lower and middle classes's incomes have declined in real terms for almost two decades, and in the post-industrial service economy, those two classes underpin the US economy in much the same manner as the farm sector in the 1920s. Credit ultimately stems from savings, and the US savings rate has been close to zero or negative for at least a decade and has relied on global savings to underwrite its credit/debt. It was known by many economists that this was unsustainable and the wall would eventually be hit. Higher energy prices caused the velocity of money to slow at the same time additional demands were put on global savings to pay for rapidly increasing costs of basic commodities. Meanwhile, hedge funds were gaming the indexes for specific derivitives, while massively and illegally short-selling numerous mortgage companies, which created a need for increased liquidity that was no longer available. Mortgage companies started to fail, while the hedge funds continued their attacks, which further dried up liquidity and started the "lack of confidence" process as it was difficult to determine friend from foe. The effect snowballed, and yet the hedge funds are still making the same illegal trades which continue to destroy liquidity and thus credit. The actions of the hedge funds are very similar to those who created the various Ponzi schemes that came crashing down in October 1929. The major difference is in the size of the monetary Black Holes, the current one being perhaps a billion times larger than the 1920's.

The Great Depression was Man Made. The Greater Depression is also Man Made. Both have their international components, but the main damages in both were/are inflicted by greedy Americans who had/have the US government in their pocket and thus escpaed any form of regulation that might have prevented the debacle. What's happening now can get worse unless the hedge funds are arrested--literally. This act would greatly help to restore confidence between the few bankers remaining. The top hedge fund managers who knowingly caused this debacle must be tried for treason, and if found guilty suffer the same fate as the Rosenbergs. Congress must also take steps to regulate them out of existence.

Hershey kept the price of a chocolate bar at 5 cents but kept fiddling with the size.


Consolidation likely as small oil explorers seek cash

The credit crunch is set to unleash a “forest fire” of consolidation across the oil industry as smaller exploration companies struggle to refinance debts, according to industry experts.

“Right now, if you are a pure exploration play in need of cash, then you have no hope. You are in dire straits,” Richard Griffith, director of equity research at Evolution Securities, said.


On Reuters Thursday 9 October Oil drop may hit supply growth, keep boom and bust.


The plunge in oil prices toward $80 a barrel will curtail oil companies' spending on new projects, limit production growth and perpetuate the industry's tendency for boom and bust.

High cost projects will be cut first and all eyes are on Canada's oil sands projects. Christophe de Margerie, chief executive of France's Total said last month that $90 a barrel crude was needed to generate a 12.5 percent return on his oil sands plans.

Increasingly tough economics, due to rising costs and regulatory delays, had already prompted the Canadian Association of Petroleum Producers to cut its 2015 oil sands production forecast by around 600,000 barrels of crude a day (bpd) to 2.8 million bpd, compared with around 1 million bpd today.

"Some of the deep water projects we see in Nigeria and Angola have breakeven prices of $80/barrel or slightly higher," Derek Butter, head of corporate analysis at Wood Mackenzie, said.

North American gas companies have also been cutting back on capital expenditure (capex) plans following falls in U.S. gas prices, analysts at Citigroup said this week in a research note.

With share prices having fallen sharply in the sector, companies may prefer to buy rivals than invest in new capacity.

If the financial system in the West stabilises somewhat and indicates anything less than Armageddon, as seems reasonably likely at the time of this writing, then this together with the relatively good performance of China and India is likely to lead to oil prices going up like a rocket, would be my guess.
This is turn would greatly hit the Western economies and finances again, so I think that you are correct, and the instability in oil prices is going to do more damage than simple high prices would.

Hello TODers,

It seems like everyone is celebrating the recent fall in oil and gas prices as if it were a sign of a return to the days of happy motoring. However, I think this celebration will be short-lived. I'm not gonna say that oil prices are going to skyrocket anytime soon. For all I know, oil prices may never again see $100 a barrel. The economy may not recover and demand may never recover. At first glance, it might look like it could lead to a slow crash. I'm not so sure this is the case.

I always think back to Chip Haynes' "60 Days Next Year" story to give me an idea of how it could pan out. In his story, Saudi oil production falls low enough that they cant make enough money to cover their IMF payments. The Saudi govt cuts social services, which leads to riots by the people of Saudi Arabia and the destruction of Saudi oil infrastructure. In our current economic situation, the same thing could happen but a little differently. Instead of production being too low to make enough money, the price of a single barrel could be too low for Saudi Arabia to sustain their social programs. To make it worse, their production is falling at the same time that the price of oil is falling.

The same situation can apply to many other oil-producing nations around the world like Venezuela and Russia. What do you folks think?

Hi spudw,
A few months ago, most TODers voted that the oil price would continue above $120. The reality is that we are at or have passed peak oil, the price of oil ( in purchasing power) is going to continue even if the US has a severe recession. The reason that KSA hasn't cut output is possibly the price decline has been so rapid, or waiting until after US election in November. It makes no long term sense for any oil producer to keep selling a depleting resource for less than cost of replacement by other energy sources.
US consumers had a warning in 1979, and responded by buying more fuel efficient vehicles for a decade, they had a second warning a few months ago, if they don't respond by forcing GM, Ford etc to put out better mpg vehicles there may not be a third chance. Now might be the last opportunity to trade in the SUV for a fuel efficient vehicle.

spudw, thanks for posting that I read it some time ago but then couldn't find a link later as i hadn't made a note of the title. Anyway the whole thing can be found at


With unmanned gas stations filling up on odd/even days won't work so maybe it will have to be odd/even days for driving! at least for the first few days until it all runs out.

Can anyone explain why banks borrow from each other? Don't they have enough float to get themselves through a single week without having to borrow?

Check out this blogger

I really can't get over my tax bucks going to a bank which might charge me interest to borrow back my bucks AND can refuse to lend me my bucks.boggles indeed. Is this capitalism?

Has anyone seen the scary headline on Bloomberg "Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports"???? Empty shelves are already there!

This is all happening so fast.
The next country to feel the pain is???

Living in a country that imports 40% of its food is suddenly seeming like not such a GOOD IDEA!!

Thanks by the way to Totoneila for the advice to buy a bicycle and a wheelbarrow. I think I will do that!!

Did that alarm bell do the trick, rise and shine!

What has happened to oilwatch monthly? Was september skipped?