DrumBeat: December 13, 2008
Posted by Leanan on December 13, 2008 - 10:32am
Greed, hatred, warfare and the race for fossil fuels
NEITHER an optimistic nor a pessimistic prophet on energy, the author of "A Thousand Barrels a Second" states a simple fact: "civilization" makes us silly and greedy.Although Peter Tertzakian does not mean it, his vivid historical account of mankind's thirst for energy to pump up "civilization" lets the cat out of the bag: Modern history proves mankind's insatiable thirst for energy just to live better and, sometimes, to wage wars.
Falling oil prices taking its toll in more than one way
(MENAFN - Arab News) Oil continued its dismal performance, despite assertions from OPEC bigwigs that an output cut - and a severe one - is just round the corner. OPEC President Chakib Khelil said earlier the week the group could announce a "severe" production cut and suggested the grouping could seek to surprise the market with the size of the reduction in a bid to bolster the weakening prices.However, oil prices edged down Tuesday as investors continued to question whether the anticipated big production cut would be able to curb crude's stunning fall over the last five months.
Ghanem: Global Economic Well-being Concerns OPEC, Not Short-term Interests of Its Members
"The market needs some substantial action," he said. He said oil prices were rather low. "I think they are close to a bottom and after the OPEC meeting, they will rebound," he added. "We need to redress the market if we feel the economic situation is affecting demand," Ghanem said.But he added OPEC "wasn't looking at the short-term" interests of its members.
"If the glut continues so many projects will be postponed, there will be another energy crisis in the coming years," he said.
With oil prices falling, Iran's good times are almost over
Crashing prices for crude oil — Iran's main export — will ravage the country's economy in 2009, according to Iranian economists and businessmen, and European diplomats.With oil now hovering around $40 a barrel (and Iran's lower-quality crude selling even cheaper), bad news is just over the horizon, they say. Foreign imports will be throttled, incomes will drop, Iran's currency will weaken and inflation will grow even worse. Iranian President Mahmoud Ahmadinejad's populist spending programs, which have bloated the government budget but bolstered his popularity with poor Iranians, could sputter to a halt.
Iran to get three more supertankers
Iran's state shipping company will take delivery of three new oil supertankers in the first quarter of 2009, boosting its fleet by about 12 per cent, a senior company official said. Iran is the world's fourth-largest oil exporter, and operates 25 supertankers, which can each hold two million barrels.The new tankers are part of the National Iranian Tanker Company's (NITC) nearly $2 billion (Dh7.3bn) plan to boost its very large crude carrier (VLCC) fleet to 38 supertankers to meet the growing demand for oil shipping, its commercial director Shseyedan Seyedhabibollah said.
Plant shortage may hit LNG supply
BARCELONA: The world will face a severe liquefied natural gas (LNG) supply crunch when demand rebounds after the economic crisis and if more production plants are not built soon.
Proposed TVA Nuclear Plant Comes With Exorbitant Price Tag
Using estimates from the nuclear energy industry, the Nuclear Regulatory Commission found that the two pressurized water reactors planned for the site near Scottsboro, Ala., range from $9.8 billion to $17.5 billion. That’s compared to estimates of $6.4 billion to $7.1 billion a year ago.
Wood may be a renewable resource — and plentiful in Minnesota — but it has its drawbacks. Smoke can annoy neighbors and contains fine particles that can pose a health hazard, particularly for those with respiratory problems. Wood-burning appliances can pose a fire hazard, especially if not properly maintained.Still, if the price of natural gas and fuel oil remains high, burning wood is likely to remain attractive as a cost-saving method of home heating.
“They’re looking for an alternative fuel source, something that’s a little more stable than fossil fuels,” said Harlan Hill, owner of Fire Works Fireplace Installation in St. Cloud.
'Peak Oil Theory' Demands Energy Alternatives
Plummeting gasoline and diesel prices have given consumers relief at the pump. But oil pessimists believe the current slump in demand will pass. And when it does, the world will be in the same fix it was before the global recession. The era of easy oil is behind us. According to those who believe in what's called "peak oil theory," world oil production has already peaked, or flattened, and in the foreseeable future, the declining resource will inevitably change the way we live.
OPEC seen in consensus on output cut
ALGIERS (Reuters) - OPEC ministers are in agreement on the need to cut output when they meet on Wednesday in Algeria to prop up sagging prices, OPEC President Chakib Khelil said on Saturday."There is an OPEC consensus on the reduction. But I can not tell you (more)," Khelil told reporters.
ALGIERS, Algeria (AP) -- The head of OPEC says Russia and three other non-cartel members will take part in the oil producers' summit next week in Oran, Algeria.Chakib Khelil says Russia will send its deputy prime minister in charge of energy and its oil minister to Wednesday's summit. The other guest countries invited by the 14-member cartel are Oman, Azerbaijan and Syria.
Gazprom: OPEC system 'not applicable' to Russia
PARIS - The vice chairman of Russian state-owned energy giant Gazprom said Friday that his country could not take part in OPEC-style production quotas to limit output."The mechanism of OPEC couldn't be applicable straight-forwardly to the Russian Federation," Alexander Medvedev told a press conference here.
Kuwaiti expert calls on OPEC to cut 2 mln bpd in oil output
ABU DHABI (RIA Novosti) - A member of Kuwait's top advisory body on oil issues has called on OPEC to cut production by 1.5 million to 2 million barrels a day, the Al-Kabas daily reported on Saturday.In an interview published by the paper, Musa Maarafi said that the 1.5 million barrel decrease in daily output, which was agreed in October and came into effect in on November 1, had been "insufficient."
Phil Flynn: Capitol or Capital Creation
Of course what is the contango trying to tell us about this crazy world that we live in? Well perhaps a lot of things. For example if you are an optimist it could be telling us that even though demand is lousy now, the market expects the economy to recover and demand will rebound in the future so the market wants to pay to put away oil for a rainy day. Perhaps the era of low oil prices will create a new round of strong economic growth in the future similar to what happened in the late nineties. If you are a pessimist you could say that the market is paying us to put oil away because the economy is so bad and credit so tight that many oil production projects will be canceled leading to tight supply in the future. Or that in the future the dollar will be so worthless that it will take so many more dollars to by that same barrel of oil. Or that China’s economy will explode leading the world back to the brink of "peak oil” leading to the era of the next super spike and we will need that cushion of supply.
Maine governor: Don't count on low fuel prices
AUGUSTA, Maine—Gov. John Baldacci said he doesn't want to sound like a grinch, but he's warning Mainers not to count on lower fuel prices lasting very long...."Not to sound like the Grinch, but energy prices will go up again as our national economy begins to show some signs of recovery from this recession," the governor said in a text of his message. "We must remember that prices fell from record highs in just two months -- and it would not be a surprise if they went back up even faster."
End of the oil sands' building frenzy?
CALGARY, Alberta -- Canadians have grown accustomed to the flow of multi-billion oil sands investments from all corners of the Earth, turning Canada's currency into a petro-dollar and pumping economic prosperity.But as the sector struggles with its first downturn since the rush started 11 years ago, there's increasing discussion this is not a short-term pullback, but the end of the oil sands' building frenzy.
1962 The Albertan government implements an oil sands policy in order to organize the development of the oil sands as a supplement to conventional crude oil policy.
Petro-Canada moves closer to a cheaper Fort Hills
CALGARY - Petro-Canada is seeing "a pretty good response" as it re-negotiates deals to bring down costs at its delayed Fort Hills oil sands project, Ron Brenneman, chief executive, said yesterday."I don't know where it will end up or whether it's enough to make a difference in the overall project economics," but costs are moving down and are becoming more predictable, Mr. Brenneman said in an interview.
Iran expects "hard year" in oil market
TEHRAN (Xinhua) -- Iran's representative in the Organization of Petroleum Exporting Countries (OPEC) Mohammad Ali Khatibi said that his country expects a hard year in the global oil market, Iran's satellite Press TV reported on Saturday."The oil market will see tough times next year before the market re-stabilizes," Press TV quoted Khatibi as saying.
China May Boost Crude-Oil Imports for Reserves as Prices Fall
(Bloomberg) -- China, the world's second-biggest energy consumer, may import more crude oil to enlarge its emergency stockpiles as declining prices make purchases cheaper, a government official said.It is appropriate to buy oil when prices are low and funds are available, said the official, who helps oversee China's strategic oil reserves. The official declined to be named because of internal rules.
Russia offers Ukraine deal on gas debt: Gazprom
Russian energy giant Gazprom has offered Ukraine a compromise deal on its outstanding gas supply debts, the company's deputy chairman Alexander Medvedev told reporters Friday in Paris."We hope to find a solution. We are making proposals to our Ukrainian colleagues," said Medvedev, who is also head of Gazprom's export arm.
Why 'Energy Independence'?: We're Focusing on the Wrong Goal
"Independence" sounds healthy. Yet we make no attempt to be independent of other countries in regard to other goods or services. Actually, the policy of seeking energy independence is a dramatic exception to the broader American policy of free trade. The theory of free trade holds that a nation is better off when its citizens are permitted to buy goods from foreigners at any price they wish to pay and worse off if the government interferes with these arrangements. By this definition, the quest for energy independence is another form of protectionism. That word annoys a lot of people, and it doesn't settle the debate. But it does put the issue of energy independence in a useful perspective.
It's not as if the Big Three CEOs were blindsided by some cataclysmic event that overnight made their business model unsustainable. So-called "Peak Oil" theorists have been arguing for some years about the inevitable tipping point where global demand for oil begins to outstrip its supply, forcing prices through the roof for a scarce commodity.What we have seen over the last few years is precisely the beginning of that trend, as economic growth in China and India has rapidly increased the demand for energy. This has been coupled with falling oil production by two of the United States' most important suppliers, Venezuela and Mexico, who jointly make up for about 20 percent of U.S. imports.
Lincoln City crimps its carbon
Daniel Lerch, program manager of the Portland-based Post Carbon Institute, worries that city governments that strive toward a hard-to-define "carbon neutrality" could overlook issues of peak oil -- the adaptations needed as oil resources begin to run out."We aren't going to truly have a carbon-neutral city for many years," Lerch says.
Developer unveils coal-to-gas refinery for West Virginia
A New York electric power plant developer with a mixed track record announced plans Dec. 9 to build $3 billion coal-to-liquids plant capable of refining an estimated 6.5 million barrels of gasoline annually in West Virginia.
As someone new to peak oil quickly finds out, just about everything depends on oil and gas. One of the more startling revelations being that the entire consumer food system in most countries would collapse within a week without fossil fuels. If a shortage continued for long, nothing much would get planted, even on organic farms.But healthcare? Let's consider it for a minute, in two very different ways. At the most extreme point of use, namely hospitals, energy is the lifeblood. If the grid electricity supply fails, diesel generators have to kick in immediately. Many hospitals have a surprisingly short supply of diesel for their generators -- though some use natural gas, which may be more robust, except in an earthquake.
Population growth contributes to emissions growth
"Population is the unmentioned elephant in the living room when it comes to climate change," said Bill Ryerson, president and founder of the Vermont-based Population Media Center.U.N. officials contend that pushing policies on population growth could undermine already difficult negotiations that are fraught with finger pointing between rich and poor nations over who is to blame for global warming.
The developing world would oppose introducing population into the mix on the grounds that it would hold them accountable for a problem they blame on the West. The Vatican along with Catholic and Muslim countries, meanwhile, are opposed over fears population policies would increase support for abortion and birth control.
Africans to Unlock $990 Million Global-Warming Fun
(Bloomberg) -- Poor countries at the United Nations climate talks in Poland may win approval to tap into a $990 million fund as early as next month to cope with the damage of global warming, their biggest victory in 11 days of debate.
Obama's plan, which will rely on a free-market oriented federal carbon cap and trade system, also foresees a cut in carbon emissions from U.S.-manufactured cars by 5 percent in 2015 and by 10 percent in 2020.He likely will have the powerful leverage of a multibillion-dollar federal bailout to force Detroit's Big Three automakers to comply with his goals.
The glaciologist's worst nightmare: Forget melting. The possibility of ice break-up could lead to an irreversible catastrophe
There was a line in the Intergovernmental Panel on Climate Change (IPCC)'s fourth report that didn't get the attention it deserved:"Dynamic processes related to ice flow not included in present models but suggested by recent observations could increase the vulnerability of the ice sheets to warming, increasing future sea-level rise."
The media picked up on the projected rise in sea levels of 18 to 59 centimetres by the end of the century, but they didn't question the models' limitations.
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I thought maybe somebody on the Oildrum could take up the challenge with Illargi. We're having a lively discussion at the automatic earth and Illargi mentioned
I believe he was also referring to in his predictions that the American and Western way of life as we know it is headed for a fast collapse as once credit dries up, the lifeblood of the world economy dries up and this leads to an ever downward spiral with millions and millions of job losses.
I'll quote illargi again,
So anyone have any ideas, on a possible slow collapse? Or a recovery in the near term followed by a peak oil induced break down?
Maybe a ray of optimism and sunlight on an otherwise scary outlook and possible future? :-)
Seems like if he is right, peak credit beat peak oil to the punchline.
EDIT: I found a succinct version of the argument made by Illargi
VK this scenario posits that the money supply can't be increased & gotten into circulation. in '29 yes. today i don't buy it. electronic printing in so fast & powerful & FDR type projects + global central bankers inflating fiat money in relative unison will i think eventually bump up stock markets, etc. ;though this funny money will be of less value.
then heating up some parts[bubbles probably]of the global economy will increase oil/energy demand & this then is slow collapse; up some energy costs, inflation, etc. then leg down.
until i think deflating fast collapse of dollar, & most fiat.
creg,
I agree. Whether we have inflation or deflation will be a policy decision. What happens to the U.S. Dollar will depend on who's pulling the policy levers.
This argument that deflation is inevitable or the only possilbe outcome is without merit.
This argument that deflation is inevitable or the only possilbe outcome is without merit.
And your credentials for making this statement are: ???
The point Ilargi and others have been making is that all the money being created is disappearing into the debt black hole, never to emerge. Of the trillions (now) of dollars that have been given to the banks, how much has actually gone back into the economy in the form of credit? Are the banks lending the money to the auto industry, the construction industry or to governments at affordable rates? Their solution to avoid disaster is to let the banks collapse (and the debt black holes with them) and spend whatever money governments have directly in useful activites that build a real economy. Blanket unsubstantiated statements to the contrary hold no merit.
It's not his credentials that would make him right or wrong. Just ask for the points in the argument itself. You're asking for an argument to be proved by Authority, begging for an Ad-Hom argument to start up.
That said,
The solution you refer to sounds sensible.. it seems that money trickles up, not down, and so should be planted down low in the economy. Throw water at the base of the fire, not on the biggest flames, right? My question is how could this be best expressed; in WPA-type jobs programs to catch the recently unemployed and so get critical infrastructure jobs underway while keeping families from falling (further) apart? Instead of direct Mortgage-forgiveness, is there a better instrument that encourages the best corrections for mis-valued housing stock, and doesn't spur the superdevelopment of more cheap construction?
Bob
FWIW...there was a study awhile back that found increasing food stamp allotments is the best way to stimulate the economy. People use food stamps, they don't hoard them. And the money stays in the US, a lot more than middle-class tax rebates do (that might be spent on new TVs or whatnot).
What about the possibility of competing currencies? Like what they had in Austria during the great depression. That got the town moving pretty quickly again till the authorities stepped in. Money is a human invention to facilitate trade of goods and services.
People can always use other things for trade and exchange, such as cigarettes, gold coins, alcohol etc.
At a local level, a lot can be done to stave of deflation if people chose to innovate and apply new ideas.
That should be fine, right after the average weight of a US citizen has returned to normal and the obesity plague has resolved.
Ironically, the poor tend to be more obese than the rich. Junk food is cheap, while fresh fruit, vegetables, and meat are expensive. So increasing food stamp allotments might actually reduce obesity.
Exactly..
you can't buy McD's with food stamps.
"You can't buy ammo with food stamps"
The Milagro Bean Field War
Funny book, bad movie
Well give it just a bit of time, they are hard and fast into their 1$ menu, only a matter of time before they take foods stamps and government vouchers. They are going to be the new soup kitchens. The planning and infrastructure are there, so a grant to feed people from the government is no different than collecting cash. This is, at least, for the first part of the slide down Classic capitalism.
So it gets bad, Obama wants to help, he sets it up so you present your id, and get a free meal, and the government prints some dollars to pay the McDonalds corp. Far fetched right? I can picture a time when the drive thru becomes the walk thru for free food.
Don in maine
"Far fetched right?"
Not really, I could see it happening.
Whether, where and how much the government decides to inject money into the system is again a policy decision.
The government can give money to banks, big corporations, small businesses, middle-class homeowners or poor people on welfare. It can choose to give money to all of these, some of these, or none of these.
The point I'm trying to make is that, if it wants to, it can create out of thin air $1 trillion, $10 trillion or $100 trillion and lavish it on all of the above. And it is a mistake to think that wouldn't cause inflation.
$100 trillion. Hmmm. Sounds like a lot. I assume you were just trying to make a point and so picked what seemed to you an incredibly high figure to make it.
And I think most people would be pretty much in your camp.
The trouble is that even hundreds of trillions of dollars may vastly underestimate the amounts being sucked under by hedge fund schemes.One estimate I've seen was $1140 trillion. But, given the secretive nature of these things, it could be much more than even that.
As long as the amount going into the toilet is less than the amount flushing down, we still have net loss of money in the system=deflation.
And when do you stop? If not at $100 trillion, at a quadrillion? Unfortunately zeros after ones are cheap.
Gee, A party in my name that i haven't been invited to. Where's the booze?
First: VK cites my reaction to a LondonBanker article called Deflation is inevitable, which can be found, among other places, at The Automatic Earth.
Doughboy, it's a mistake to think that the US can print whatever they want, at least for now. Big Mistake.
All US debt that is sold abroad goes through the bond markets, and when you print as much as you want, they will kill you. Simple. Murder all international trade, and you can print what you fancy, but then you have an entire other set of problems to deal with, like no buyers. Given that the US for the past decade has survived solely on international deb t purchases, I often wonder what is hard to understand about that.
Not that it would matter much either way: the gambling debt is so astronomical that printing presses nor helicopters could keep up once the chips start falling down.
Hi Ilargi,
It's great that you've popped over here for a bit of play. I wouldn't dream of accepting your challenge one-on-one (I've seen too many episodes of Zorro to forget what can happen to the shirt-fronts of those so foolish.) Besides, I pretty much agree with everything I've read of yours so far, at least to the extent that I could follow it.
What I have is a question, posted a few days ago over on The Automatic Earth.
In brief:
It seems to me that all of the various 'bail-out' funds must eventually wind up in the pockets of actual individuals, or institutions consisting of individuals.
And, if so, then who are they? Are they Arab Sheiks, Columbian Drug Lords, Sovereign Funds, Paulson's cronies, or just who, precisely? Is that even knowable and traceable in the first place?
Isn't it fair to conclude that those beneficiaries are the motive force behind the stunningly stupid outpouring of money?
My current opinion is that what is being sold to the public as 'solutions' is really just a robbery in broad daylight, whereby cash is involuntarily being 'borrowed' in our name , given to robbers for nothing, to be repaid by us peasants in some bleak and murky future (in the form of taxes, inflation and low wages I suppose.) The repayment part may be left vague because even the robbers don't expect anyone to be able to do it.
I would deeply appreciate further education about what happens beyond the event horizon of that Black Hole we keep hearing about.
DBS, I understand why you would think so, but it sort of just ain't so.
What's missing in your reasoning is that the majority of gamblers at the table - I'm talking about bankers with $100 million bonuses here- put in bets that were worth many times more than they could cover. You presume that for every winner, there's a loser. But what if one of the guys at the crap table defaults, and can't pay his losses?
Say that's $10 billion. What's it going to be? An art-deco redesign of the kneecaps, or a $1 billion loan provided by the Treasury? See, whether the creditor accepts that 10% down payment for now or not, the fact remains that the $1 billion loan vanishes into a previously created black hole of $10 billion. And before you say: but that's still $1 billion changing hands, you need to realize that not only did the creditor just potentially lose $9 billion, (s)he also used the probability of the full $10 billion payback (back in the day when that looked safe) as the collateral for a $100 billion bet of his/her own. Say that bet was lost, and only $1 billion was recuperated so far, with no kneecaps artistically modified. Where will the remaining $99 billion end up? Or, for that matter, more importantly, where will it come from?
The whole thing works as a zero sum game as long as the losers can cover their obligations. If they can't, considering it's not a two or three-way game, but an entire intricate web of losses and very few gains, all the bail-out funds will disappear into a deep pond of previously suffered losses. And since everybody who once was a winner is now a loser, and many will default on their losses, money will vanish just like that. If some one goes bankrupt, there's the same action: money is being written off as not collectable.
Ilargi,
Thank you for taking the time to walk me through the maze. It took several careful re-readings for the mechanics of how it works to finally sink in, and I've a few neural circuits that will never work properly again, but I believe that I now get it.
Black Hole is very appropriate nomenclature.
I see a big "Game Over" sign flashing for all but the absolutely most audacious in finance and government. For the rest of us, hard and very dangerous times.
"If some one goes bankrupt, there's the same action: money is being written off as not collectable."
Yup, it can be kind of painful though. we just won a judgement of $117,000, the company promptly declared bankruptcy. turns out they had bled it bone dry. Managed to grab about $900. Now we are on to discovery to try to find exactly what they did and where the money went, just more legal fees and time.
I think we can just kiss it goodbye. Pretty much sucks. Could have done a lot of PO prep with that.
Dead on ilargi.
Don in Maine
A flaw I see is the assumption that the banking crisis is the cause of the economic downturn. The banking crisis was caused by the recession that started over a year ago. All those gamblers counted on economic growth to cover their bets and when growth stopped more and more bets could no longer be covered and the casino closed. The big mistake of the Paulson plan was an attempt to reopen the casino instead of directly investing those funds in manufacturers and needed infrastructure which would sustain well paid workers. It is almost impossible to get bankers who have just been burned to loan money to folks who may soon lose their jobs. If businesses have no customers then bankers won't loan them money either. The recovery depends on creating well paid jobs which will keep folks working for the next five to ten years.
They should just let the banks default and fail, guarantee all the deposits in the failed banks and than use the 700 billion in TARP funds to create 100 new regional banks each with a capital base of 700 million.
The people laid off from the big banks would transfer to these smaller ones.
A clean start, would cause havoc for some time, US GDP would tank sharply but it gives a fighting chance for the financial system to hold and assist in preparing for peak oil.
If I understand correctly, this bubble that has burst means that people's ability to access credit has been curtailed so sharply that demand for oil will simply give way as no one will be able to afford it.
It's like the floor just fell through, we could easily face a situation where oil production plummets from 75 mn barrels to 25 mn in one year due to limited financing, lack of credit and loss of purchasing ability.
That would be THE shock scenario. It would mean that governments would basically have to take over at all levels of society?
Speaking of booze, peak oil = peak alcohol. I keep my johnny walker close to me!
Methinks there is a zero missing there somewhere.
But yes, in theory really feasible, even Meredith Whitney hinted at regional banks recently, the witch! In practice the problem is that the present financial system owns the government. As I wrote earlier today at TAE:
The guys you voted for have only one goal: to stay in power, A nd it's the old system that gave them that power. Regional banks to them is a threat, not an opportunity or a solution.
I wrote a lot more on that topic, on who owns and decides what, and the perversity of power right here in the comments at TAE today.
WOW, so that would be 7 billion for each bank and with a reserve ratio of 10%, that's 70 billion for each region in America.
I hope that the present financial system won't own the government in the future, as they'll be too broke :-)
What I find really strange is that I always thought that American politicians are held accountable for what they do eg Nixon, Clinton, the recent senators were caught in scandals. It may take time but usually justice is served.
I'm used to seeing despots and tyrants back in Africa. We had one for 24 years and the current one is no different - rigged an election, resulted in 2000 deaths. But America?? :-( The land of hope and freedom. Sometimes on blogs that I follow, I find myself to be the only one thinking that America is actually a great place. There's a lot of anger out there, just looking at the TOD board, marketwatch, mish, CR, TAE etc.
What i'd like to point out is that America's politicians might not be so bad compared to the rest of the world and especially developing countries. America might be on the descent but the fact that it so dominated the world and for so long must mean that you guys are doing something right!?
From an outsider's view, it seems like a really cool place.
I found this on Bill Boner's the daily reckoning, Chicago sounds a lot like back home I must say ;-)
You are obviously confused about the difference between the Fed and the US Treasury. The Treasury issues debt. The Fed can buy debt with money it creates out of thin air.
The Fed is like a money counterfeiter. The difference being that when the Fed creates money it is legal because those dollar bills are Federal Reserve Notes.
If the foreigners stop buying US Treasury notes the Fed can buy them. This'll cause inflation - inflation that is the opposite of the supposedly inevitable deflation.
Most commenters on here provide no information about themselves. Opinion is opinion. At least Ilargi and others claim to be active and trained/experienced in finance and the way banking operates. The technical posters on TOD reveal backgrounds of training and experience that support their work. Many people make reasoned and supported arguments even without any credentials. However there are many more who use tones of authority " ... without merit." with neither credentials nor reasoned arguments to support them. In any event, the resolution of this argument will come through either a renewed spurt of growth or producers going bankrupt with consequent shortages because prices deflate below costs. Perhaps we won't have long to wait.
If I say that I am not in economics, does that help?
I would like one of the money supply gurus to elaborate on the difference between 'potential' gains/losses and 'real' gains losses.
If I had 1 potato yesterday, and today I have 2 - I have gained a potato.
If my house cost me $100000, then it's 'value' rose to $200000, and now its back to $110000..I haven't lost $90000. I only lost the potential to sell it at the peak value and leave the country with the money.
There was no increase in wealth as real estate prices went up. There was the opportunity offered to get further into debt by increasing your loan against the increase in potential sale value as collateral.
So talk about 'trillions disappearing' due to falling property values is daft. On the other hand, money given to bail out bankers, well maybe that really is lost?
Anyone care to explain??
I think that a lot of people used appreciating home prices to borrow against the appreciation e.g. HELOC's. They used this money to make purchases, pay for their kids tuitions, healthcare etc. So when home prices rose, their spending ability increased and they indulged lavishly. As home prices fall, their HELOC's disappear, they can't borrow at all, affecting the real economy, they "feel" poorer and hence are inclined to spend less.
Thus this affects the economy as at every stage, people spend less, hence the economy worsens, as the economy worsens banks don't want to lend money, thus the people spend even less. It goes on, till it can't go on in this vicious circle.
Also the banks made a lot of income of rising home prices, they packaged all sorts of bonds and sold them off to investors across the world and each other. As home prices fell, people walked away from their homes, thus when they stop paying mortgages, the banks couldn't pay of their investors. Thus their holdings of CDO's became essentially worthless as the income stream had ceased. This led to massive write downs, further hampering the banks ability to lend as now they need capital replenishment either through equity or preferred stock or direct investments by government or sovereign funds.
Banks also made side bets of the bonds and loans they made, this is how the CDS market came about I believe and as the CDO's went bad, the side bets went bad as well. And the banks incurred further losses.
I believe that most banks leveraged up 20-40 times. Thus even a small loss means that their entire capital base is wiped out, think of Citi or AIG. Thus they can't lend out anymore as they need to rebuild their capital.
I think that's what I understand, I'm sure to have missed some points. But the basic gist of it is, that people borrowed and spent to much based on the illusion that growth in debt is real growth.
Thanks, that is a nice summary.
I understand the transient in the economy pinching off the supply of loaned money.
It's just that I have noticed that many commentators talk about:
drop in house values of [xx%] X the number of mortgages = money withdawn from circulation.
All that has been withdrawn is the extra debt that COULD have been offered to consumers by loan companies if your collateral value was higher, not the total value drop in 'potential sale value'. Moreover repaying that debt would have decreased their future spending power by more than they would have gained in loan [because of interest] so less money now means more money not paid in interest. The consumer will be richer..
I appreciate that the leverage in the banking system makes it very unstable for decreases. That is purely an issue with bad regulation standards.
If only municipal governments were forced to apply this obvious fact to property taxes.
I would refer you to another one of Martenson's segments that describes how money is created. The fellow is really a brilliant communicator and describes the process in a way that almost anyone can understand.
http://www.chrismartenson.com/crashcourse/chapter-8-fed-money-creation
As one can see from the video, there is abolutely no limit to the amount of dollars that the government can create, if it wants to.
It's this last point that people get hung up on. They either so fervently believe the government will do one thing or the other, or should do one thing or the other, that they lose sight of the fact that what the government ultimately will decide to do is not written in stone.
What I would like to ask, is how and why does Zimbabwe experience hyperinflation?
The people obviously have no ability to borrow given their incomes and banks are not willing to lend given that the economy is so bad. Yet hyperinflation is taking place.
But at the same time, a hyperinflation usually ends up in the collapse of the Government. Think of how much worse this global depression would be with rising prices?
The money poured into the banks is designed to prevent massive bank failures. We don't want to wake up on a Monday to all find out that all of our money in all of our bank accounts is gone. It would be truly moronic to let the banking system collapse. No one but little guy doomers could possibly want this to happen, so it won't happen.
It doesn't really matter to working people and people interested in investing in the living economy if we pour money into the black hole of the banks. In fact, inflating away debts is good for the living. The only people it's bad for are people with money who have an unrealistic desire for a life without risk.
It's true that bank bailouts are not enough to deal with the problems in the economy, which is why Obama's stimulus packages will be directed at jobs.
The programs we're creating will work well enough to stave off doom.
I think doomers are people who recognize that there are serious problems with the economic arrangements of the recent past. They want the system to collapse so that they can be proved right about the problems with the system and live the rest of their lives as part of something better.
But I don't think there's any need to hurt so many people so drastically to get things moving in a better direction, especially within your own life.
Plus, I think it's a big mistake to give up on others so easily. Even those who've been wrong for a long time, and a major pain in the a55 to the rest of us, are still capable of learning and can be part of a future solution.
Also, it's not healthy for the doomer him/herself to be a doomer. It keeps you from dealing effectively with life.
Mo_Gamble wrote:
A clearly short sighted statement. There are many people who no longer have control over their income, such as retired folks who live on fixed incomes. Even working folks will be hit hard by inflation if their incomes do not keep up with inflation, which has been the situation for the average worker in the U.S. for decades. Risk taking is not a bad idea if one is young and can expect to recover after failure, but the older one gets, the less risk is tolerated. You too (if you should survive until retirement) will be likely to find your resources limited, so you might rethink your claim...
E. Swanson
Moe, I appreciate your investment in making the system work well, I really do. That said, however, there are a number of uncritical assumptions here.
1. That the various bailouts and Obama's jobs program can fix things. I think we both know there are real questions about whether this is true - for example, 2-3 million jobs provided by Obama is unlikely to fix job losses if they continue at the pace they currently are - several quite mainstream economists are predicting a million job losses a month through most of 2009. 2 million jobs gets us to February, and then what?
2. You are assuming that the financial system won't collapse - I cannot speak for them, but my guess is that Ilargi and Stoneleigh would say something on the order of that it already has. That is, most of the banks and financial institutions that exist right now are still struggling, despite many billions poured in. They are not lending money out. Many dozens or hundreds of bank failures are being predicted, and the FDIC has substantial financial problems.
I appreciate your assertion that the programs you are creating will stave off doom - and they may stave off some measures of doom - I hope so. My own hope, for example, is that we will get universal health care out of this, which will ensure that the very worst outcomes of this situation are somewhat mitigated. But yours is simply an assertion, and you seem to question the motives of anyone who isn't simply a cheerleader for your position.
I hope that you are right - that when we look back on this in a year, we find that the worst outcomes were avoided. But thus far, most people who have said "oh, all we have to do is this and we'll be ok" have been wrong - not just a little wrong, but horribly wrong. And doing so has caused a great deal of suffering - that same message has led people to keep their savings in the stock market, even when they depend upon them to live, the same reasoning has led people to fail to prepare to live with much less. Much of the suffering comes not from those who prophecy hard times, but from those who assume they will not come.
Sharon
Yeah, my gal Sharon.
As I said earlier today at TAE:
One thing to add: the only reason US big banks still exist and look viable is that they are allowed to hide their gambling losses in level 3 and/or off balance sheets. I opened today's Debt Rattle with Jim Rogers saying that most US big banks are bankrupt. If people don't believe anonymous me, maybe they'll believe a billionaire. It's just the same thing I've been saying for ages, just from another source. It's like everybody keeps listening to, and quoting from, the same tight group of "experts", economists with a degree, who with for banks and other involved parties, and who keep on being utterly wring all the time, but still get the NYT/Bloomberg call the day after. It's hilarious, and deeply sad at the same time. You would never know what is real if that's all you read.
Oh, yeah, we might get universal health care out of this. But if we do, rest assured it will be a festive collection of loopholes, donut holes, evasions, broken promises, and requirements that one impoverish oneself to get "care". In other words BAU dressed in a sham, just like Medicare/Medicaid, only worse, because the broader the reach the less "the government", that magical provider of all things, will be able to afford it.
Careful about making such an absolute statement Moe. You might want to read (or re-read) Taleb (who says he currently wakes up at night in terror of the current systemic and potentially unstoppable crash of the financial system).
"We don't want to wake up on a Monday to all find out that all of our money in all of our bank accounts is gone."
Then they should just bail out depositors and not the bad gambling debts. They are doing the opposite.
“The programs we're creating will work well enough to stave off doom.”
Now you have just gone off the deep end. wtf?
“In fact, inflating away debts is good for the living.”
The one and ONLY group who inflation is good for are those whos income keeps up with and ahead of the inflation. The kind of inflation that people are projecting means that maybe 1% of the population will do good. The rest are truely F#@ked.
You sir have lost touch with reality.
Moe - Reading over my comment I realize I was rude and coming from a hairy old troll like me seems ironic so I apologize.
It looks like you are feeling good about being a part of something, change.gov, and you now feel optimistic about the future.
I would not consider myself a doomer but I am very pessimistic and proud of it. I do not want to argue which is better optimistic or pessimistic.
To each his own.
I will just caution against too much of one or the other.
Last piece of advice;
Find a small to medium size town with some agriculture in and around it and adopt it, make it yours.
Cheers!
Well, I am happy to pick up the trollish tone you are so ready to drop ;-)
No one gives a rat's tuckus about the "health of banks" except those who work in them and own them. The only reason anyone worries about banks is because their money is in them.
But that money is guaranteed. All you have to do is up the guarantee a bit more, then let the freakin' idiot corrupt @#$%^ banks fail and GIVE THE MONEY TO THE PEOPLE!
(There, I used all caps. That proves I'm a troll and also a lunatic who has been completely driven over the edge by the current insanity. I'm just wondering why more aren't here in the asylum with me ;-)
By the way, I really liked the title about $990 Million for Global Warming Fun! I want in on that party! (But I am trying to imagine what global warming fun is exactly.)
That Obama is looking toward "market solutions" shows that we are completely and utterly farked.
Oh, wait. I forgot. The magic of the market is always perfect at allocating resources in the most efficient way that yields the greatest benefit to the greatest number.
Just like it did with housing.
Just like it did with food in the last year.
Just like it did with credit itself.
Just like it is doing with oil.
Just like it is doing with GW.
I believe it was Rubini who noted that the market is working perfectly--it sets a value on everything and it has set a value on nearly all human (and most non-human) life at something below zero.
So all is well, after all. Thank heavens for that.
Back in the early days of computers, some writers warned that we could create a race of super-intelligent and powerful computerized robots that would come to the logical conclusion that humans were not worth saving and they would annihilate us. It turned out we didn't need armies of computerized robots--just a system of universalized greed called "the free market."
"We thought we were getting something for nothing, but we were getting nothing for everything." Wendell Berry
We can't blame the "Market".
At the heart of the current malaise is fractional reserve banking, central banks deciding the price of money using the rate of interest as their main tool and far too much government intervention.
People's actions are guided by these things,their investment decisions are guided by capital gains tax, income tax etc.
All these bailouts we are seeing only serve to increase the debt load, making the problem worse. People are misguided and misled by other people. The market works, in fact it works to well. The fact that there were these monstrous credit bubbles shows how attuned and optimized society has become at allocation of money and resources.
The fact is that the markets are working, even today, they are telling us that the CDS market is worth zero, that the car companies are worthless. What the markets is revealing is the extent to which capital has been mis-allocated by previous bad decisions, it's just that no one wants the answers that Mr Market is giving i.e. The global banking system is insolvent, so basically most nations in the world are bankrupt.
I do see your point.
However ... Mr. Market would be working fine if we were not all bankrupt and saying "how did we get here?"
Mr. Market would also be working fine if attuned to the real value of the ecosystems that Mr. Market is devouring rather than conserving with care.
Mr. Market is real good at saying: "Ooops! You all made a deal with the Devil and now it is tiumke to pay! Ha, Ha, Ha!"
I call that a badly designed and run economy.
Corrupt Crony Capitalism, etc, etc.
Solutions? None that seem to be realistic "in a world where.... we've designed our economy to protect the pirates at the top at the expense of all the other pirates."
We stumble on like drunken ... pirates. Certainly not comprehending the bigger problem of the state of the real (ecological) economy and incoherently trying to convince ourselves that we have an endless supply of rum. Abiotic or otherwise.
I believe in silver linings, but this is the biggest, darkest cloud I've ever seen. We don't control the planet or the species -- both are ungovernable. The ride is quite fun at times, but also sometimes truly terrifying.
Did you ever close your eyes through some parts of a movie?
I agree.
All the errors that have compounded over the centuries i'd say are striking simultaneously. The biggest debt bubble in history, imminent decline of fossil fuels, potentially devastating climate change underway, peak oil implies peak NPK fertilizer = peak food production?, peak minerals?
:-( All this doomer talk, I think I should go down by the river and enjoy the sunshine and the ducks swim by.
Hopefully humans will adjust. We are resilient and innovative and Barack Obama could lead the way forward (Or is that just wishful thinking and hope - maybe I am doomed to hope!)
We certainly can blame our unquestioning certainty that we cannot blame "The Market", in that case. Markets are good only for allocation. They cannot address distribution or scale.
Permagrowth (aka "liberalism" - which is at heart an economic philosophy) tries to finess the allocation issue with whatever leaks to the slovenly slugs and union workers during the allocation process. Rising tide lifts all boats.
What's different this time is that we've hit limits. We cannot pump up the scale. It seems as if any attempt to do so brings with it such a quantity of externalities as to be an absolute negative return. A new coal plant, for instance. More cars. It's as if since the 70's we've been sliding on diminishing marginal returns - now they are absolute. That's only my hypothesis. Call it an assertion if you wish.
Absent the ability to increase scale and thereby leak a little on the unworthy, there is no way to address distribution. Markets do not address distribution; that's a matter of fairness, community values and social morality. Markets are immoral. [Markets could be amoral in a bigger structure, but where they are themselves the structure, that structure is immoral.]
Consequently, "liberalism", progressivism, obamaism, IMF, World Bank and every other institution, technology and society founded on liberal economic underpinnings is a dead man walking. The issue of our times is scale. Lberalism aka permagrowth can't handle that. It's not only irrelevant, but the "solutions" forthcoming from that philosophy make matters worse. Crisis of legitimacy everywhere.
Sharon Astyk writes how she hopes national health care might be an outcome. I share that hope; it seems the easiest way to "increase legitimacy" at all sorts of levels. It addresses distribution. It also paves the way for an entire culture to change from a "liberal" screw-they-neighbor mindset to a "communitarian" we're-all-in-this-together POV. Call me an optimist.
cfm in Gray, ME
As senior troll here at TOD I shall have to ask you to moderate your trollish ways ;}
BTW,I loved your comment.
Compared to other sites even the "trolls" on TOD are nice and intelligent. LOL.
VK, you haven't been here at TOD long enough. We do recall the bad old days at TOD when there were several trolls operating simultaneously at full volume...so much so, that they were actually banned (although some attempted to come back, under various guises-hi James Bond!). We only have a couple of ethanol trolls left now.
Thank you Moe. I am one of the others and it is good to better understand those who will fix things for me.
My wife and I are seniors and essentially without debt. We own our home and have some money in the bank that is well below the FDIC insurance.
As I understand it, you and those like you would like the money supply to increase so that the money we worked for and saved (my, what a novel idea) will be worth less. In other words you and yours would like to steal some of our purchasing power.
That is not nice and neither is the horse you rode in on.
Right on. WTF? Yeh, let's just screw those people who saved all those years and paid off their houses and handled their money wisely whilst preparing for retirement. Let's reward those who ran up their debt beyond belief and have those credit cards with $30,000 and up in debt. Screw 'em. They can always go back to work, even if they are pushing 70 or 80. Oh, wait, they are not hiring seniors? Or anyone, for that matter.
Moe appears to be one of the brigands:
Deflation has become inevitable
http://londonbanker.blogspot.com/
While it may be true that pouring money into investment banks and other banks may, in part, be intended, to also save individuals with money in the bank, a side effect is that many of those who were instrumental in getting us in this mess will continue to pull down their multi million dollar salaries. While congress may intended some restraint be shown in salaries and that bonuses not go to the undeserving, no one really knows what is actually going on within these institutions and Paulson doesn't care.
The question is, was this the only way to save the individual bank accounts. In addition to raising the limit guaranteed by the FDIC to $250,000, what else could be done? And I see little evidence that we are not just going to continue business as usual. All the toxic instruments still exist and they are still toxic. Are these being banned?
All this seems like going to the bank and giving the guy who just robbed your house and wallet even more money so that the "system" can be saved. Let us not just save the system;let us think about an alternative system where people are not paid millions of dollars to create and exploit exotic financial instruments that end up coming back and biting us in our big fat ass.
Just recently, the person in charge of the congressional oversight committee admitted she did not have a clue what Paulson has really done with our money. And this woman is an expert.
Stop the madness. Not one more penny injected into the financial system until we find out what really is going on. And, is it too late to get some of this money back? Ooops. Sorry. All gone.
Don't forget that the 250,000 dollar limit is only good until 12/31/09! No telling what will happen before then or after then really. John
It would be truly moronic to let the banking system collapse.
That is the accusation here:
http://www.tbrnews.org/Archives/a2899.htm
The only people it's bad for are people with money who have an unrealistic desire for a life without risk.
This bugs me, because the last time we had a scenario like this, in the 1970s, my grandmother, who didn't have much to begin with, was looted (via Regulation Q) in order to bail out politically connected people like banksters, massively overpaid automobile workers, and those affluent enough to get certificates of deposit, which IIRC took at least $100k in those days. Certainly a person who has become too old to be hired is not in a position to take risks, not with the "living economy" and not with anything else.
It might bug me less if the people looted by inflation were the ones who caused the problem in the first place...
My grip on economics is challenged but I wonder ...
Does the argument's merits reappear if one presumes that the Policy Lever Pullers (PLP) will act in their - and their club members - self interest ?
As a joe on the street, I expect my interests to not be anywhere near the same as the PLP interests.
Stoneleigh has never argued that inflation will *NEVER* happen - she's been quite explicit that she believes that the US, for example, may eventually inflate its currency, but only after an extended period of deflation.
It is no secret that I'm a partisan of both Stoneleigh and Ilargi's, so I'm unlikely to be the one to come up with evidence that they've been wrong. When Ilargi argued that the financial crisis would overwhelm concerns about peak oil and that we'd see oil prices drop like a stone, frankly, I thought he was out of his skull. He was right, I was wrong and the two of them have had a consistent understanding of what was happening.
Do I think they are infalliable? Absolutely not. But I can't think of a major subject on which they've been substantively incorrect - and I've been reading the blog since it started.
Sharon
Thanks for the reply. I read TAE pretty regularly but my challenges prevent me from much of anything but 20-20 hindsight.
BTW,
sounds great to me !
Sharon
This is a very strange thing to say for somebody who takes pride in getting the truth out. How should I see this?
You can view it any way you choose to. That said, my partisanship has been based on my growing conviction that they understand what's going on correctly - vindicated by in Ilargi's case, several years of correspondence and shared discussion and analysis. "Partisan" doesn't mean "blind partisan" - I'm their partisan because I think they are correct, and because I think their pattern of correctness means they are worth paying attention to. If I catch them lying, I'll tell you - but I haven't even caught them being significantly wrong, which is why I'm not the person to look to for evidence of their mistakes.
Sharon
Sharon, I personally find your positive view of TAE reaffirming. Those of us with financial skills that don't go much beyond a three column ledger depend upon others to try and clarify things. After over four years of paying attention and reading about these issues I am only left persosonally with the need to form an impression of the truth of things. Many comentators have contributed to that in my case. You, Ilargi, Stonleigh and Jeff Brown have been very important in my development. ELP has crystalized a direction of action and many of you have helped raise issues of what this involves in detail. TAE has helped, over the past few months, in clarifying the timing and the direction of the problem. Thanks.
As it stands right now, I think you're right on.
But it doesn't necessarily have to be that way.
Kevin Phillips in Wealth and Democracy does a stellar job of describing the political ebb and flow in the United States as it relates to wealth. There were indeed eras--the Gilded Age, the Roaring Twenties and the period from about 1980 to present, eras Phillips calls "Capitalist Heyday Periods"--when financial elites exerted inordinate political power. But there were other eras, such as those under the administrations of Jefferson, the two Roosevelts, Washington, Jackson and Lincoln, where the power and influence of bankers, financiers and corporate elites was greatly rolled back and kept in check by a more populist--and democratic--polity.
The current "Capitalist Heyday," however, is without historical precedent in its excess and extremity.
Layered on top of this are resource constraints that those in previous eras didn't have to deal with.
For these reasons, I think all bets are off as to what the outcome might be.
I used to think we would inflate our way out. Now, I'm not so sure, the neo-Hooverian tendencies (no deficits allowed) in the US body politic are much stronger than I had imagined. Once we see a little bit of evident recovery the temptation to end the Keynsian stimulus prematurely could be too strong to resist. Then we would see a repeat of 37 -and for essentially the same reason. Except this time we have the economic theory to know it is a mistake. But ideology trumps science (is economics science?) in the US.
Inflation is not as easy to stimulate as people believe. Somebody has to accept the money printed. Doing so increases prices as businesses have first and greatest access to those funds. If wages don't keep up, nobody will buy the product in question because they are too expensive.
We are in economic overshoot. Our credit/money system is in almost an identical mode as was Ireland during the famine. Prices of cars, houses and other assets are too expensive to afford as were potatoes in Ireland. There is no market turnover, so businesses in the 'potato' trades are going broke, too. Homeowners and developers can't sell because 'demand' cannot afford the high price and the 'Funky- Funky But Chic' credit that was used to bridge the gap up until last summer ... is long gone!
Adding cash and stirring would make matters worse. Ten dollar bread and government buildings will go up in flames.
Additionally, business is shedding employees as fast as they can. With a labor surplus, there is less and less pressure to increase wages and earnings. The unemployed cannot buy houses or cars ... and eventually will not be able to afford pototoes.
Our situation is almost identincal to 1930. The difference is we just elected Herbert Hoover.
steve
actually agree with a lot of what u are saying, especially re $10 bread & employee wages, & not being able to afford to spend. a key to watch will be wage increases. i've already heard this talk in MSM.
did u accept the rebate check; spend it. uncle ben was clear w/ congress these stimulus checks needed to go where they would be spent. they can put these in our accounts overnight with electronic money.
yes it won't be easy to inflate; but the banks can be nationalized- all of 'em; etc. & they are showing us they will make major interventions, like the freezing of shorting financials. i think they will succeed; but maybe don sailormanis right & this is an odds thing.
so far stoneleigh & largi have been more right than anyone; but this is still early in the game with 6 mo. or so lags for most actions.
IMO the system does not need money/inflation it needs DEBT/inflation.
A much more difficult proposition.
People and business are not borrowing. Pumping money into the system makes borrowing unnecessary and worse, it ends up paying down debt which is deflationary.
If all debt were settled there would be no money in circulation.
It certainly seems that at least for now all roads lead to deflation on a unprecedented scale.
It is very easy to cause inflation. Here's my 2 step program:
1) Abolish all federal taxes.
2) Have the Fed buy all the Treasury notes needed to finance the few trillion dollar a year deficit caused by lack of taxes.
That'll cause probably about 30% inflation. Want more inflation? We move onto the 3rd step:
3) The Fed buys all Treasury notes that have already been issued.
Still want more inflation?
4) The US government increases spending by a trillion dollars per year.
We can keep turning knobs and make inflation huge. Buy all corporate debt. Give each US citizen a check from the US Treasury for $10000. Fund it with Treasury notes sold to the Fed.
Making price inflation is easy.
Inflation is not as easy to stimulate as people believe. Somebody has to accept the money printed. Doing so increases prices of goods and services. If wages can't keep up, fewer will buy the products in question because they are too expensive.
We are in economic overshoot. Our credit/money situation is similar to Ireland's during the potato famine. Prices of cars, houses and other assets are too expensive to afford right this minute, as was food in Ireland in 1945. Since there is no market turnover, businesses in the 'potato' trades - autos and houses - are going broke, too. Homeowners and developers can't sell because 'demand' cannot afford the high prices and the 'Funky- Funky But Chic' credit that was used to bridge the gap up until last summer ... is long gone!
Additionally, businesses are shedding employees as fast as they can. With a labor surplus, there is less and less pressure to increase wages and therefore, earnings. The unemployed cannot buy houses or cars ... and eventually will not be able to afford pototoes.
Without labor demand, there is no place for inflation to take hold. The alternatives are a slow credit unwinding or deflation. Since there is a large credit overhang as a result of all the bailouts and stimulus, a slow unwinding is unlikely. Either the service on the bailout funds becomes unsupportable or the funds trapped in the banks leak into the credit cycle. In either even this would lead to default, because institutional countreparties to dollar- denominated currency, interest rate or commodity trades will accept fewer dollars or none at all. When our borrowing and spending are overseas with foreign partners, there are penalties for debauching the dollar. Our partners simply will hesitate to do business wilth us, which is fatal.
Our wage relationhip- to prices and credit- situation is almost identical to 1930. The difference is we just elected Herbert Hoover.
It seems that the U.S. economy has primarily stood on three interrelated pillars -- housing, finance, and autos. Most of our economy is related to and revolves arounds those pillars, which are now crumbling. This is not a good long term basis for a viable, competitive, and productive economy in a global market place. We are in a phase of desperate attempts to prop up and put those pillars back together, using massive, incomprehensible levels of credit. The biggest, most powerful pump in the world does not do any good if the well is dry. Pumping air harder doesn't get you water.
Having said that, and recognizing Illargi's stellar record of prediction, there is still an element of uncertainty as to how this plays out. My gut feel is that Illargi is right, but I wouldn't put the few eggs I have left in that basket.
Taking Illargi's viewpoint at face value, it appears that all bailout attempts, including the auto industry, will be a hopeless waste of money, an increased dose of morphine for the dying cancer victim.
What will emerge from the dying ashes of this wrecked economy? Will we only be left with some sort of subsistence economy, at best?
Hi tstreet,
There is a fourth pillar, imperialistic militarism, sometimes called the Iron Triangle... but it's not instantly clear to me if that changes your equation or not. I suspect not, because that pillar, too, is stumbling if not actually crumbling.
As for what will emerge from the ashes we have only a few, and perhaps inadequate, historical comparisons. Our predicament is unique in several essential ways (energy, population, environmental stresses, etc.) but comparable in others (human nature, fall of empire, and physics, for examples.)
A couple of hopeful items that I haven't heard mentioned yet are that we sure have a lot of stuff laying around (with or without jobs and money) that could be pressed into further service and we also have that human quality of always trying to do the best we can with what we have. Some folks just don't know when they're licked ... and so they just keep going and wind up doing way better than they were expected to.
I reckon a whole lot of people are going to acquire a whole lot more first hand knowledge about real work than they ever suspected existed. It'll be good for 'em.
Somebody linked to this video presentation by Chris Martenson on another blog the other day:
http://www.chrismartenson.com/crashcourse/chapter-15-bubbles
He demonstrates that the housing bubble "has no historical precedent" and is "massively out of proportion to anything we've experienced before." He furthermore asserts that the housing bubble was only a symptom of the credit bubble, which is also without precedent.
So we are really in unchartered territory here.
However, he believes, as I do, that whether we have inflation or deflation is a policy decision. That said, he nevertheless concludes that a "catastrophe of the currency is the most likely outcome."
I agree, even though I fully understand that this thing is so incredibly complex and so multi-dimensional that making predictions is a fool's erand.
Regardless of whether the outcome is default or devaluation of the dollar, that will be only one of many events. So as to the issue of whether we suffer a fast or gradual decline I have to throw my lot in with Greer. The Roman Empire didn't fall in a day, and the American Empire won't either. It's a long, drawn-out procedeure.
I had never heard of Martenson before, but he also has a segment on peak oil. I find the seemingly simple and easy-to-understand way he presents things to be exceptional. He's a brilliant communicator.
TAE really nailed this one. Another issue is that the democratic process is breaking down severely-the MSM and politicians endlessly debate loaning 15 billion to automakers while another entity (the FED),bearing no responsibility to the public or the nation refuses to even inform where 2 trillion of taxpayers' money (133 times the auto amount) has went. Naturally, the great hope for CHANGE is silent on this like any docile employee.
Where is the reform? Where are the new laws and regulations that were suppose to be brought forward to prevent the recurrence of the same abuses that led to this mess. Where is the outrage that trillions of dollars can be pumped back into the financial system without any transparency, apparent rhyme or reason? Oh, we will try to deal with that later after it is too late.
Isn't it possible to just let all these criminal institutions fail while at the same time protecting the individual depositors. If we can't regulate these institutions in a way that protects the individual depositor, I say abolish them. At a minimum, we should bring back the Glass Steagall act.
After posting a comment on TAE last evening, and wishing I could edit it, I'm going to just wade in a bit further here. I would like to thank Ilargi for pointing out the imminent money crisis. I started following TOD about 3 years ago, shocked by a hurricane into a renewed awareness of the predicament posed by our obvious dependence on ultracheap energy. My education was in the sciences, so I've at least had a briefing on thermodynamics. The looming crisis is obvious.
In the area of finance, I came in knowing as little about money as the average politician knows about energy. So long as I have a regular paycheck, a car, a nearby grocery store and gas station, what more is there to know? :) So thanks, Ilargi, for revealing the mythological nature of money and the cynical kleptocracy which manages it for us; I had no idea. Your donation check is in the mail :)
Monetary collapse and deflation: The Federal Reserve can buy up tens of trillions of dollars worth of assets. The Fed has capabilities it can use to inflate the money supply and to drive up prices that it has barely touched. If the Fed wanted the US to have inflation on the scale of Zimbabwe then the Fed could make it happen - barring intervention by Congress of course.
The idea that the Fed can't prevent a deflation is absurd. The Fed can buy up all stocks, all bonds, commodities, land. The Fed can print money. It can use that money to buy anything it wants to buy.
So why hasn't it intervened on an even greater scale? Maybe the Fed governors do not yet see it as necessary. They have escalated and escalated again as they saw it necessary. If deflation really takes hold I expect them to intervene on a scale that pales what they've done so far.
Visualizations help lots of us. I’ve been gathering a few 55 gal. drums for oil/gas. I found myself wondering how many of these we burn a day.
Please do checks on my math. First, I knew I had heard 42 gal./barrel for oil but didn’t know why. Well per wiki this was from when the most available container was 40 gal. whiskey barrels/kegs,
http://en.wikipedia.org/wiki/Barrel_(unit)
so I decided to convert to drums[55gal.]; then use football fields[end zone incl.].
@ 84mil B/d I get 64 mil. D[drums]/day. Then drums occupy 4 sq. ft. A football field is 57,600 sq. ft. so I get :
4410 football fields of drums/day.
For leanan I used baseball fields [complicated by varying size] & got approx. 100,000 sq. ft./field so:
2540 baseball fields of drums/day.
For the Ag folk: 5830 acres of drums/day.
If correct this is still pretty hard to visualize other than;….. dam. Maybe vertical dimension like THATSITI’MOUT [Roger Conner]’s cubic mile is needed.
Stack them on top each other and see if they reach the moon. Stand them side-side and see if they reach from Yankee Stadium to Dodger Stadium - or (Miami) Dolphin Stadium to where the Seattle Seahawks play.
I'm too math challenged to try.
Pete
pete
i like the moon one so for a whole football fields worth i get 2.9 miles up.
for individual drums stacked about 34,000 miles. moon averages about 230,000 mi.away.
still not any image easy to make.
The world uses about 14 million m3 of total liquids per day. The world's largest building is the Boeing assembly plant in Everett, at 400,000 m3. So imagine filling (or rather draining) that thirty-five times per day, every day.
Wow. 640 acres is a square mile. 9 square miles is 5760 acres. A 3 mile by 3 mile square of oil drums. . .every day.
This is about the size of the lake by my house. With it now froze over and starting to fill with fish houses it is easy to get the visual as if they were oil drums.
i like the 3 mi. x 3 mi. image. thanks.
From what I read all the oil in exostance could fit in to a cube 4miles around the bases and 5 miles high. We have used half of it, so make that 2.5 miles high.
It's amazing to hear this from Cramer. He's ranting and raving mad in this video.
http://www.cnbc.com/id/28179214/
Wonder what would happen if Denninger got his own TV show?
I stay away from that stuff. It is the Shock Market, not the Stock Market.
Might be a tipping point-here you have one of the most well know stock market promoters admitting publicly that the USA market is corrupted almost beyond repair. Meanwhile, what do Obama's superiors (Paulson,Bernanke,Geithner,Summers) say? "We have the most vibrant, liquid and well regulated capital markets in the world". "Nothing happening here, move along, move along".
Sometimes I wonder if it's as easy as increasing SEC fees. Currently, they are 0.0000056, sell side only. For example, if I sell $1,000,000 worth of stock, I pay $5.60 in SEC fees.
I wonder if it shouldn't be orders of magnitude higher, so that buying or selling stock was seen as an investment, and the transaction fees would actually count for something, so it would be less profitable to just day trade, as the SEC fees would eat into returns.
As a side bonus, a well funded SEC might actually be able to do it's job, but I don't think funding is the major issue there at the moment.
Another essential element of an appropriately functioning stock market is that the focus of financial gains needs to be on DIVIDENDS, rather than on EQUITY. What is happening now is that investors are forced to focus on equity (which, of course, requires perpetual growth of the market) because dividends are so meager. And this, in turn, has a lot to do with the fact that upper management in today's corporate America is way, way, way overcompensated. They are essentially stealing stockholders' dividends with their gargantuan salaries.
To me, there is no reason why a CEO, COO, etc., should be paid more than 2-3 times what the average factory worker in the company makes. The expertise they offer and the services they render has the intrinsic value of an upper-middle-class salary, and no more.
The current setup is fundamentally perverse in that the means-to-the-end (namely, stock-equity as a means of sharing in a company's profits via dividends) has been transformed into an end-in-itself. This perverse situation, which has a lot to do with upper management greed, creates a situation where the only way stock investors can make money is through unsustainable stock equity growth.
A very successful stock broker I knew told me that the entire federal budget could be paid for by only a 2% tax on investment market transactions. Our reliance on GDP as an economic indicator is like trying to catch only those fish you can reach from sitting on the dock while ignoring those you could catch by using a boat.
What kind of funny video!
It seems to me, that Cramer has lost quite a substantial amount of money with this "corrupted" market. Now, that this super ex hedge fund manager (this is actually his marketing tool: to be a ex hedge fund manager) is beaten down, he calls for more regulation, ie. he calls for the government to save his life! It couldn't be more absurd.
This guy is the textbook example of a gambler, who earned millions PER YEAR with trading paper values in the last 30 years, called the "great bull market".
Now the music has stopped on the players of ‘musical chairs’.
I agree with Cramer - not that he or anyone else cares - that "the" stock market is broken. Certainly for the smaller and individual investor - the primary issue is probably lack of trust.
So, is it too simplistic to say that "a" sock market, as a capital market ,is there (only, primarily) to rasie capital and, perhaps, so that other entities can become "owners" and share in increased/decreased value?
And, if that's the case how does one rationalize short term (say day), trading, shorting, etc.
I supposee what I am "wondering" is what would the simplist stock market look like - on that primarly was interested in a place for entities to raise capital and for others to share in the ownership and increase/decrease in value of said companies?
Not that I excpect anything more that some regs around the edges in the real world.
Pete
I'm locking in your Typo, Pete. I think of it as 'Found Art', and don't want it tampered with.
The Sock Market
.. as in Rockem' Sockem' Robots! le Jeux sont fait!
(pardon my French.. I studied German)
Bob
Doh...It is true I have lost far more in The Stock Market that in My Sock Market - the one in my dresser drawer. My Sock Market is ever so much simpler and I can mostly rely that any socks I put in there will be there when I need them.
But still...
Pete
My dog is making the losses in my sock market close to my losses in the stock market.
Re: Maine governor: Don't count on low fuel prices
This quote caught my attention [my emphasis]:
[House Minority Leader Josh] Tardy, of Newport, said the opinion of many who spoke at the Ocean Energy Task Force meeting was that the state will need to make a sweeping transition to electric heat and electric and hybrid vehicles to maintain Mainers' present way of life.
"Clearly, we will need to generate massive new amounts of electricity to make this transition possible -- about three times as much as we produce today," said Tardy.
In light of widespread and likely prolonged power outages throughout the state due to Friday's ice storm and high winds, this is a troubling thought.
Best hopes for a speedy restoration in service.
Cheers,
Paul
Interesting Maine energy facts.
In 1997 the Maine Yankee Nuclear Power plant, which produced in 1990 4.8 million megawatt-hours of electricity , was closed. At the time, this represented 30.5% of Maine's electricity.
In 1990, Maine obtained 22.4% of its energy from fossil fuels, primarily at that time petroleum.
In 2004, Maine obtained obtained 60.2% of its energy from fossil fuel sources, primarily natural gas.
In the period between 1990 and 2004, the use, in percentage terms, of renewable energy including wood, garbage burning, tidal, wind, solar PV and concentrator fell slightly from 21.4% to 20.4% of the electricity generated in Maine.
In this period the annual carbon dioxide emissions in Maine rose by two million metric tons.
Happily sulfur dioxide emissions fell by 32 thousand tons to 20 thousand tons, and nitrogen dioxide fell by 3 thousand tons to 11 thousand metric tons.
Electrical consumption in Maine rose by about 800,000 megawatt-hours from 1990 to 2004.
The data can be obtained here: http://www.eia.doe.gov/cneaf/electricity/st_profiles/ma...
Still out of power here. Not surprising, while I'm not at the end of the earth, I can see it from here. 21 degrees and bright and sunny today.
Don in Maine
Broken link. Perhaps this?:
http://www.eia.doe.gov/cneaf/electricity/st_profiles/maine.html
Interesting data points... perhaps a little vignette of our catabolic future?
Whoops. sorry about that, same info I think, but I was looking at
http://www.eia.doe.gov/cneaf/electricity/st_profiles/maine.pdf
Thanks !!
Don in Maine
Don;
I forget how close to the coast you are. Have you done any kind of a dataset on your immediate Insolation amounts? I'm not the most adept research-hounddog, but I'm sure there is a way to forage for some good Sun numbers for Portland and other places. The big NREL maps are not detailed enough.. not the ones I've seen anyway.
Bob
Hi Bob, yup I did years ago, and as I recall the real problem up here was the number of fogged in days. Really made a dent in the total. The house is a small passive solar saltbox. South side is about 15 degrees east of south, going for the early warm up. that said, my next big purchase is about 600 watts of PV, just to have it.
One thing we have is wind, a real dependable sea breeze every summer. I have a couple of Air Xs stored if I need them. I'd rather have them in new condition if needed rather than fly them now. BTW, if you go to Camden harbor in high summer, you'll see a lot of Air Xs on the sailboats there.
Right now, the battery bank stays topped off from the grid and that gives me plenty of use. if needed I can always pull out the generator and recharge the bank and run the house needs at the same time. Helps the efficiency of the generator. Like I said, heat with wood, cook with wood or propane so we have minimal need for electricity. House is small enough so a single 75w cf will light the whole downstairs.
Don in Maine
Sounds Great!
We built a Passive Solar Post&Beam saltbox up in Stoneham when I was a teenager, framing it with the 1980 blowdown of Hemlock on our property.. I'm getting ready for another one. I really miss the masonry stove!
By 75watt cfl, you mean a 19 or 23 watt actual, right?
By the way, now that the 'Warm White' LED Christmas Strings are more common, is anyone using these for atmospheric lighting? The one that I've bought so far only draws 4.5 watts.. and very pretty light! I'm prepping a blog post for an upcoming Sustainability Blog where I'll be a contributor, and my second installment is about making lighting not just from high-efficiency sources, but also making it more effective and attractive, which often just means it's easier for our eyes to USE that lighting. We mask CFL's and other sources under heavy shades and diffusers which often diminish a LOT of the lightcandles.. so I've been looking to get the most out of my lamps and amps.. I'll post some links when it's up and running.
Bob
( Sometime Director of Photography and Videographer )
Hi Bob,
I have a problem with the visible flicker from these inexpensive [non-filtered/rectified AC] LED strings, plus their colour rendering leaves a whole lot to be desired (not too fussy about their greenish/yellow appearance either). Low-voltage tungsten-halogen IR offers superb light quality, but where a more efficient source is desired, a good quality CFL is hard to beat. At the other extreme, ceramic metal halide (e.g., Philip's MasterColour Elite) is another option -- expensive and less flexible in terms of general operation, but very good colour rendering (90+ CRI), high efficiency (up to 100+ lumens per watt) and huge volumes of light where it may be required (up to 33,000 lumens). That said, a relatively inexpensive F32T8 linear fluorescent fixture equipped with a 930 or 950 series lamp (http://www.nam.lighting.philips.com/us/ecatalog/fluor/pdf/P-5037-D.pdf) can provide excellent light (up to 98 CRI) albeit at reduced lamp efficacy.
Cheers,
Paul
Figured you would chip in if I got started on Lights, Paul.
When I first plugged in the WarmWhites, I definitely saw the 60hz, but later when I had untangled and stretched out the string, it seemed to have gone away. Might be I detuned an untentional resonant coil, or maybe all these yrs under CFL has desensitized me. In video, we have had to be pretty aware of flicker, since it cross-pulses with the frame-rate something terrible.
Just the same, I'm likely to ravage a string or two and rewire them for DC, where the flickers don't go..
Thanks for the info on better looking CFL's .. every time you post it, I forget to cut and paste it into a place I'll find it when I want it. As I look at effective AND efficient sourcing, I have been going back to inline fluorescent, as well. (T8 being the best on lumens/watt, no?) There are still many setups that call for a soft source, while people seem disinclined to consider 'tubes' in residential lighting design nowadays. Do they outperform CFL's, and are just less convenient in their packaging?
Bob
Hi Bob,
Given your work in photography, I can appreciate how critical good lighting is to your craft, but I no first-hand experience with film, so I'll have to defer to the judgement of others. FWIW, I came across this conversation on http://photo.net/photography-lighting-equipment-techniques-forum/008tqj and this is what one of the contributors had to say:
GE "Daylight" bulbs have very low CRI of 75. They're essentially unusable for photography.
GE "Sunshine" bulbs are also known as "Chroma 50" and have a CRI of 90. They're not bad, and were the first fluorescents I ever used for photography. CRI 90 is just far enough off so you'll have problems with cosmetic colors, dyed cloth colors, paint colors, etc. so they can sometimes be a bit of a pain for product work.
[....]
The Philips F32T8/TL950 has a CRI of 98. That's going from the 10% "wrongness" of a CR90 "Sunshine" bulb to a near undetectable 2% error. You can shoot just about anything you want with the TL950 bulbs. It's a 5000 degree bulb. You can also get it in a 3000 degree bulb that lets you work well with mixed incandescent light.
Whist I agree with pretty much everything said, I wonder if some of the better halophosphate lamps (e.g., Sylvania's F40T12 "Incandescent Fluorescent") might be a little less "spiky" than their more efficient T8 brethren (not so critical in terms of general illumination, but it could have some relevance in your line of work).
And, for sure, high performance T8 lamps driven by high efficiency electronic ballasts are as good as it gets in terms of energy performance -- upwards of 100 lumens per watt.
Cheers,
Paul
Oh, and the color..
The string I just got was a pretty good 2500k or so. (To my eye) Warm enough that I look at them for atmosphere light, not as great for task, reading, countertop, where the hotter kelvin colors work better.
I've seen some greenish ones, but these are nicer. I'll post the brand once I get home next week.
Any idea if these Warm ones are a new diode formulation, or did they just filter down a 'Daylight LED' ?
Bob
I'm afraid I know little about LED technology, but my understanding is that these "white" LEDs all produce light in the range of 450nm – 470nm and utilize a yellowish phosphor coating that stimulates the red and green receptors of the eye, thereby ensuring the required mix of red, blue and green -- a slight adjustment in the chemical composition of this coating and you can effectively "tune" the colour temperature of the lamp.
My partner recently bought some of these warm white LEDs at Walmart, I believe, because he didn't like the "icy cold" appearance of our previous sets. Personally, I kinda prefer the somewhat bluish tone of the old ones, but to each his own.
Cheers,
Paul
Most simple, (relatively) inexpensive "white" LEDs are blue or occasionally violet LED chips either coated with a down-conversion phosphor or else covered with a dollop of epoxy or silicone that has the phosphor mixed in. They're something like fluorescent bulbs. Neither process lends itself to precision, so my guess is that the ratio of LED blue to phosphor yellow is sorted out rather than manufactured in. These LEDs are fairly deficient in green, so the color rendition can be a bit odd, but at least there aren't strong spectral lines as with sodium and halide lamps. The phosphor is not fully transparent, so the ones with warmer color temperatures (the ones that got more phosphor) tend to deliver less light.
I use a 3 watt CFL over my computer (screwed into socket to outlet adapter; replaced LED on gooseneck in USB port). Model MB-301 from Lite Tronics (MicroBrite Line). More lumens/watt than LEDs (They also make 2, 3, 4, 5 and 8 watt versions, some candelabra base).
Cold cathode tech (life not affected by # of on/off cycles, but 1+ minute to full bright). Expensive, but worth it !
I now only use LEDs for night lights and when colored light is required.
Bought them from
http://www.1000bulbs.com
http://www.1000bulbs.com/2-to-3-Compact-Fluorescents/
They have some volume deals.
Best Hopes for Energy Efficient Lighting,
Alan
Bob, driving back from Portland before the power returned in Falmouth and Cumberland, I was amazed at the number of Christmas lights powered up. No other light in a house, no power, but Christmas lights - sometimes those single "candles" in the windows and sometimes a tree. What's with that? Are these things battery powered? I thought that a perfect commentary on our culture.
cfm in Gray, ME
It's a Christmas miracle, C!
I was in Madison for Thanksgiving, and they have some strict rules about Holiday Lighting, I guess.
But if you happen to see a Snoopy Santa on my house, don't be too hard on me, Ok?
Bob
Those window candles are battery-powered. Dunno how they managed the trees.
Thanks, Don, for this historical overview. Looking at http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=ME, I see the average retail price for residential customers, as of September, 2008, is $0.1621 per kWh, a little below the New England average of $0.1812. Forgive me for pounding salt into an open wound, but the trailing block rate in neighbouring New Brunswick, where two-thirds of all homes are electrically heated, is $0.0861 CDN (US$0.069). I can't imagine the level of investment that would be required to triple generating capacity in your state and to beef-up the transmission and distribution networks to support these additional loads, nor the impact this would have on electricity rates.
If what I understand is correct, four out of five homes in Maine are heated by oil and the average home consumes roughly 1,000 gallons (3,785 litres) of fuel oil a year -- some 33,000 kWh of space heating demand. There's simply no way those requirements can be met by the power system and certainly not at any reasonable cost.
Cheers,
Paul
A heat pump with a COP of 3 will need about 10,000 kWh of electricity to provide that much heat, you should be able to cut it in half with decent insulatation, and a wood burning stoves for when the air temperature drops below freezing.
A wind turbine will supply about 2,500 kWh per year for each kW of installed capacity. You would be looking at about 1 2MW turbine (~80m blade diameter) per each 1,000 homes.
Theoretically the turbines and heat pumps could be installed on an intelligent network which would adjust the power demands of the heat pumps to balance the wind supply.
Since most heat pumps are now using brushless DC motors there could be a new market for small scale wind turbines, producing straight to DC to power the heat pump compresser or charge batteries. That way you avoid the expensive inverter and net metering and the wind electricity is being used to offset heating during the winter months, when winds capacity factor tends to be higher (up to 0.6 in some places)
I can hear the collective groans of this forum now that you've mentioned those two dreaded words in my presence. Trust me, there's no bigger cheerleader of this technology. I installed a ductless unit in my home four years ago and it cut my heating costs by more than half and, as it turns out, tomorrow morning, I'm adding a second, high efficiency inverter model to better serve my lower level (a Sanyo 12KHS71).
This Sanyo works down to -20C and continues to provide over half of its nominal heating capacity at -18C (0F); the HSPF rating is 9.3, so the seasonal COP in my climate (Zone 4) is 2.74. I paid $1,350.00 CDN for this unit, plus another $220.00 for misc. hardware and a buddy of mine and a friend of his who is a licensed HVAC tech will be handling the install. Altogether, my cost comes to just under $2,000.00 (US$1,600.00).
This is a DC inverter model and operates at 15-amps/115-volts, which is important to me as I have just one breaker slot left in my main panel. In addition, it will be plugged into a Kill-a-Watt meter so that I can record its power usage, match that with its rated heating performance at various outdoor temperatures and more accurately calculate my net savings.
With this second unit in place, I don't expect to burn another drop of oil for space heating purposes.
However, I'm fortunate that I could afford to do this as well as make extensive improvement's to my home's thermal envelope -- not everyone is so blessed.
Cheers,
Paul
Well, I can't speak for the rest of the forum, but I look forward to your discussions about heat pumps! I am taking notes and saving my pennies. Sanyo 12KHS71 you say...
Hi Bryant,
Didn't hear the shouts "No!, no!, For God's sake, don't encourage him!"? :-)
My friend Tom is coming over tomorrow morning to get things started and his buddy will swing by a little later to purge and initialize the system. I'll take some pictures and post a link to them in tomorrow's Drumbeat.
Sanyo's mini-split catalogue can be found at: http://www.sanyohvac.com/assets/documents/brochure/SplitCatalogue2.pdf
To learn more about the technical performance of this product, see: http://www.sanyohvac.com/assets/documents/service/Service_KHS_9-12_71Ser...
(e.g., the table on page 25 of this guide lists the heat output of this model at various temperature points down to 0F.)
I had planned to go with a Fujitsu, but the local distributor raised their prices by 26 per cent and after exploring my options, found this Sanyo offered similiar performance at roughly half the price.
For additional background info, visit http://www.hvac-talk.com/vbb/, click on the Search option at the top of this page, enter "Sanyo" in the Search by Keyword field, enter the Image Verification code, then click Search Now.
Cheers,
Paul
Paul, I did some hunting around and found this power plant which runs on diesel / heavy oil (pretty much the same as heating oil) hitting about 55% thermal efficiency.
http://www.power-technology.com/projects/wasa/
Using this to generate the electricity to power heat pumps would yeild about 60% more heat energy than using the heating oil, assuming the district heating system mentioned is fairly efficienct it could probably deliver up to twice as much heat energy.
1kWh of heating oil - (in a 90% efficienct furnance) 0.9kWh heat
1kWh of heating oil - (in the above power plant) gives 0.5kWh of electricity ~ 1.5 kWh of heat (from COP 3 heat pump) + 0.3kWh of heat from the district heating system.
Total of 1.8kWh of heat from the 1kWh of fuel.
These engines can also be co-fired with natural gas to further reduce emissions and particulates. Due to their size and lower electrical output compared to large centralised power plants they should be quicker to build and connect to the grid.
There is an interesting presentation here
http://www.dpi.nsw.gov.au/__data/assets/pdf_file/0019/223831/CSIRO-NSW-c...
about an alternative approach to 'clean coal' instead of large plants with CCS (20% efficiency penalty + doubled price of electricity) the emphasis is on smaller units (up to a few hundred MW) running on micronised coal mixed with water in low speed diesel engines (50% thermal efficiency) with limited run hours. This would allow coal to act as the fuel of choice for peaking units, since with even a low price on carbon, current coal technology is not competative with nuclear, wind, CSP or CCGT for baseload provision.
A "sweeping transition to electric heat" - Gov Baldacci is more than a little challenged on that "vision thing". Hybrids. Who will build the hybrids, Governor? Who will buy the hybrids? In fairness, I've not heard him talk about making Maine a leader in the global hydrogen economy for a while.
The windmills - though probably a good idea technically - are nonsense. Worse than that, obscene, because the power will get sold out of state. That violates the liberation principles of "preferential option for the poor" and "stewardship". Let alone the more congregational concept of the Commonwealth. We'll get stuck with the costs and none of the benefits. But it will be good for state GDP and the natural resources lobby (those that grind up the state) in Augusta.
"Three times as much". More, more, more. The bipartisan consensus on scorched earth and permagrowth, ignorant of scale and distribution.
cfm in Gray, ME
Maybe I'm splitting hairs, CFM, but when we get High Winds as a accompaniment to storm induced power-outages, I'd say that the windmills aren't nonsense at all. Talk about turning Lemons into Lemonade. Have those high winds actually running space heaters in your house? It's like Schwartzenegger's great 'MachineGun Repartee'' in Raw Deal "Dis mahst be vat dey mean by Po-ahtic Jahstice!"
Let's take on the policy that sends that power out of state, or make sure at least that these exports are priced/taxed to give the people of Maine their due, like we should be doing with Poland Spring.
Would it make sense for municipalities (as much as us individuals) to own some power-generation, both for energy security, as well as for a small but regular revenue stream? How is the Saco windmill turning out at this point? Should we invest in Solar Heat/Electric and Windpower on our Public School rooftops, both to partially shield the school energy budgets, as well as to have some public-spaces that are self- heated and lit for emergency situations? These would also be potentially great Community Education and Advocacy Centers, to get the word into the neighborhoods about becoming more Energy-Resilient.
DIRIGO means us, sadly not Augusta.
Bob
Sorry, my bad, I didn't edit that right. The windmills make sense technically. They will generate a lot of power, and I think the spar floating models make a lot of sense. Ride with the waves, don't buck it, etc.... The obscenity comes in where the power goes away, what you pick up on in your subsequent paragraphs. The first obscenity is the structure in which they will be placed; it will not benefit Mainers. Watch, we'll end up subsidizing their construction and siting (already have) even though Maine's budget is crashing. [Budget - the physcial implementation of social policy: give to the rich and from-away.] The second obscenity is "more, more, more". The way windmills get implemented in Maine - as another facte of the plantation economy - strikes me as illegitimate. [That whole issue of "legitimacy of the state" - a state that fails to meet the needs of its people loses legitimacy.] Electric heat - that's not obscene, just idiotic. Or maybe the Governor thinks there will be so much power from the windmills we can burn it up as heat.
Ownership matters. A lot. Munis and community investment trusts. Every Maine windmill owned locally. Financed by state-chartered banks that hold the paper themselves. I can't imagine why IMF and Wall Street so hate the "development from within" approach. Of course, what I'm suggesting is close to illegal; it would violate the personal rights of corporations.
cfm in Gray, ME
Not sure of the status of this now:
"Maine finds no insurmountable obstacles to leaving regional grid"
http://www.boston.com/news/local/connecticut/articles/2007/01/19/maine_f...
As I understand it, we're paying higher rates to finance some frenzied transmission line building in the more populous southern NE states.
I'm all for it, Dryki.
Don in Maine
Well put, Dryki.
As heating goes, I'd only put heaters on my windmill's output for diverted load when there's just too much wind for the batteries or charger to take..
I am also a bit anxious about the free-for-all industrial installation of windpower.. while I'm still agnostic about the Bay of Maine proposals.. smaller setups with a broad diversity of ownership sounds a lot more stable and democratic to my ear.
For warmth, Geothermal, Passivhaus and Solar could keep us plenty cozy.
Bob
My assumption when I read about heating with electricity is that ground sink heat pumps would be the mechanism. No?
http://www.financialsense.com/fsn/main.html
simmons & hirsch for an energy roundtable. excellent as usual.
Man O Manischewitz!!!!!!
That as doomie as I have ever heard it.
Good grief. Not listened to it all yet but seems Hirsch forget to send the memo about going quiet on Peak Oil to himself.
"We're in very serious trouble."
- Robert Hirsch, December 2008
[Edit]
Wait a minute. Is this not big news. Simmons says that the IEA's actual position as stated by Dr. Fatih Birol, (IEA Cheif Economist) in "quiet" briefings to world governments is that:
"Basically the game is over.... Based on the most optimistic assumptions they can make (using their access to the best raw data in the world - 798 fields) current crude oil production of 73 million barrels a day will be down to 25 million barrels a day by 2030"
And that's absolutely the best possible case. The IEA's worst case is 9 million barrels per day by 2030 according to Simmons (although he thinks even that could be optimistic)
"Wait a minute. Is this not big news."
Agree. There is lots to parse out in that talk. A feature post maybe even.
How about his talk with the petrobras engineer?
"...it's like poking through the earths crust, center of the earth stuff, you can't believe the degree of difficulty, etc."
If this alleged Birol whisper is true, then the IEA's recent colossal lying in their official report is inexcusable - utterly inexcusable. What a profound betrayal of their public trust - it's simply disgusting.
Both Simmons and Hirsch go out of their way to praise the IEA to the utmost for actually getting the real message out in private. The only reason they didn't say it out loud is because they were leant upon by their political masters to "not shout fire in a crowded theatre" and forced to tone down the published report according to Simmons.
The likes of the EIA and CERA are a totally different story again according to Simmons and fully deserve all the criticism as, even in private, they maintain their published bullshit (my wording) is true.
If what you are saying is true, then I duly redirect my ire at the political masters. However, one could also perhaps reasonably expect a measure of courage by people like Birol on occasion manifesting itself in a willingness to buck his political masters.
TSHTF!
Listening to that right now, we are so screwed... :-(
Really. So they go around the world giving private meetings to world governments with the real data and the public is fed half the truth. sigh.
Yeah,when even Simmons, the king of PO, says it's much, much worse than he thought, you know we're in big, big trouble, and soon.
Did I hear him mumble something about "then we get into resource wars real fast"?
The probability of this leading to a new kind of world war is one that hasn't gotten much discussion here, as far as I've seen.
What can we say about resource wars - it's a different world than. Russia, the US, Europe and China all battling for strategic interests through initially proxy wars and than full fledged conflict?
These are countries with big bad nukes. If it ever gets that far, we are so deep in the S*it.
I reckon any sign of a global conflict and economies will collapse, stocks at ZERO and industry virtually halted. Whole countries will shut down.
This is ultimate doom scenario. It's well covered on dieoff.org, well if gets that far, there's very little we can do to prepare for such a scenario. It would be truly truly ugly.
Robert Hirsch was more optimistic, I liked the way he said by golly we can get through this and even Simmons seemed optimistic about the wind farm and ammonia powered cars. So best hopes are for the best case scenario to pan out, that countries live within their means.
But knowing human nature, the best case scenario probably won't happen...
I was more struck by Simmons embrace of Socialism [in Australia this tends to just mean government ownership of economic activities, though I know that "real" socialists hate that use]. I agree, Capitalism is dead for at least a decade. Imagine looking for a loan for some economic activity. If it depends on oil [e.g. airlines, trucks, almost anything] then the lenders will say: "What happens if oil goes to $150/barrel again?" and if it is in the oil industry or competes with it then the question will be "What if oil goes back to $35/barrel?". So we can safely bet that all lenders will decide that it is better to invest in US Treasuries at negative interest rates.
I also liked Simmons saying: lets get teams of smart people to figure out what will work, and scale it right. Yes! I want to see those themes combined into a simple political/economic philosophy for the duration of The Triple Crisis [energy/financial/environmental]. Possible names: "Engineering Socialism"; "Socialist Engineering"; suggestions welcome. It would be good if it didn't include the word Socialism, since that has such negative connotations in North America, but really it is the government economic activity itself that is disliked, and we might as well be up front in the name. However if Bush can buy an Insurance company and Matt Simmons can embrace government action then I think Socialism's little hour in the sun has arrived [well maybe 30 years in the sun].
One thing that I want to emphasize is that government enterprises don't have to be competition-free zones. We need multiple enterprises competing on various performance indicators, with real rewards for the winning teams.
Yep Souperman, that is a serious doomer porn talk by experts in the field. TPTB know this stuff as they are being briefed by these same EIA people. They know what has to be done but in back of the argument is how can I use this information to best get elected again! (huh???) BAU for TPTB. If you are not ready for the period of chaos, it is your own fault.
When the trucks stop coming to fill up the shelves you will think, WTF-OMG. When the grid goes down three or four weeks later what you have is all you're going ever have. BFN
http://www.urbandictionary.com/define.php?term=BFN
See #6
That's a great discussion of our present situation.
The link is to the main page, which will probably roll forward to the next batch of comentary in the days ahead. To catch the link before it's gone, here are the links to the hour long audio interview segment:
Audio Format: RealPlayer, WinAmp, Windows Media, Mp3...
E. Swanson
http://www.npr.org/templates/story/story.php?storyId=98203926
this must be the npr story Matt referred to
Ecuador defaults on foreign debt
How long before other countries find that this is a good idea?
Speedy-
Anything put together by the IMF, or World Bank can probably be made a case for to be written off,
as the terms were generally suicidal for the debtor, and ideological and superstition based by the lenders, exploitive and harmful.
Plus, many of the leaders were puppet clients for global capital.
Speedy, even more to think about is when does the US do something like this? John
I remember about in the early 90s seeing a talking head explaining that many African countries which were very poor but had reasonable government were opposing an initiative the G7 (then) was putting together for debt forgiveness on the grounds that it would be taken by other non-gov lenders as a sign the country might not repay future debts and hence wouldn't lend money in the future. They were happy to indefinitely "roll over" the debt so that, in effect it might amount to the same thing, but technically having a big international loan that was "in print" as not being repaid was apparently a Very Bad Thing.
Now I'm not really not happy about the UK budget deficits and the amount of control commercial lenders and SWFs exert on the UK, but I'm equally worried if the UK were forced to go completely, totally without any foreign lending or commercial lending. That's why I was discussing wih DaveMart a week or so ago whether the UK would end up repudiating some "debt" like depositor protection schemes in order to avoid a general default and hence having no-one willing to lend to us for a considerable period.
Probably "leaders" educated in US.
The US government won't default. It can print it's way out. It issues all it's debt in US dollars and hence can print as many as they want. This will severely devalue the dollar but they won't default IMO.
Ecuador's debt is probably based in dollars/ euros. Hence it can't print it's way out. So default is a better outcome.
"The US government won't default. It can print it's way out."
Isn't that pretty much six of one and half-dozen of the other?
Isn't printing more money somewhat akin to the magical train that lays its track ahead of itself? (Nod to Wallace and Grommit, if anyone has a picture of that) It's still about the direction your train is heading, not the cycle of bills that you're riding on to get there..
http://uk.youtube.com/watch?v=PQsAoEzbOl4
It's either six of default and deflation or half a dozen of printing money and inflation. That choice does matter - see the lively argument over inflation/deflation above in this drumbeat.
I was wondering how many cubic feet of natural gas at say,1000 btu per cubic foot, would it take to equal one gallon of gasoline. This may have been posted before but its hard to catch everything.
boby,
This doesn't address your question exactly, because the heat content of a gallon of gasoline isn't necessarily the same as that of a gallon of oil.
But a barrel of crude oil has approximately 6 MMBTU, or the same heat content of 6 MCF of natural gas.
There are 42 gallons in a barrel.
42 gallons = 6 MMBtu
1 gallon = 6 MMBtu/42 = .143 MMBtu
or
1 gallon = .143 MCF of natural gas energy content equivalent
Let's see if I follow correctly:
1 gallon of oil = 143 cu.ft. of natural gas
1 barrel of oil = 6,006 cu.ft. of natural gas
1 MMCF of natural gas = 1,665 barrels of oil
1 MMCF = 1 million cubic feet
1 MMCF = 1000 MCF
1 MMCF = 1000 MCF/(6 MCF/Bbl)
1 MMCF = 166.7 barrels of oil
Thanks for the info DownSouth. This is really enlightening. In my opinion, based on this info, there is no way CNG will ever come close to replacing oil for the motorfleet in this country.
I agree.
There's a lot of potential in the various natural gas resource plays. And as Boone Pickens pointed out, there's significant natural gas that is used to generated electricity that perhaps could be better used as a transport fuel.
But it seems like, even with all the increased drilling activity in the shale plays, the nation is struggling just to keep natural gas production flat. There's been some controversy about this, but I think even if you were to take the most optimistic view, the increased natural gas production would not make much of a dent into the amount of energy that is currently used for transport.
And what is going on now--the stacking of drilling rigs because of the screw ups of derelict bankers and financiers--is criminal.
DS -- there even more downside to anticipating NG as a motor fuel alt. As you say, the shale gas plays are behind our modest gain in production. But over the next two years we'll likely see a very quick reversal. You might have seen my post elsewhere: the bottom has fallen out of the unconventional NG plays. We're one of the biggest UNG players in the country and a month ago cut our 2009 budget from $1.4 billion to less then $700 million. We'll be releasing about 40% of our rigs over the next couple of months. We'll be drilling only from cash flow. We have good credit lines but don't want to pay that premium during times of uncertain pricing.
I suspect all the other payers are doing likewise. And we all know how Chesapeake has become somewhat crippled in the last few months. I doubt we'll see much drop in deliverability this winter but with the very high decline rate the UNG wells experience we will likely see a sharp downward shift during the next year or so. The only thing keeping the national NG rate up was the ever-expanding drilling effort. With that tanking it's just a matter of time before we see supplies drop off. In the worse case scenario this drop may be greater then the demand destruction drop. Thus as the economy worsens we may see higher NG prices add even more pain. Now add to that the possibility of diverting more NG to motor fuels: not a very stable biz model.
listening to Matt Simmons and Mr. Hirsch on podcasts from Financialsense.com the future of oil/gas looks dire, due to production stops. one of them said "basically, we have shot ourselves in the knee in the next week or 2".
talk about short notice.
Right. Same with coal to liquids. You can see it very clearly if you look at the EIA charts of energy use in the USA.
EIA Energy Use by Sector
Oil is almost as large as NG and Coal combined. And that is without the conversion losses. With coal at peak net energy and natural gas production on plateau, it will be impossible to double the energy we get from them.
It is very likely we hit peak energy in 2000-2001 when the economy stopped growing. (see Gail's chart here).
Article
A telling and about as official statement as you can get from China on the economic outlook.
Recession risk 'worse than expected': NDRC
By Fu Jing (China Daily)
I'm surprised TOD has not yet run an analysis of the recent UN climate conference in Poland
http://news.bbc.co.uk/2/hi/science/nature/7781022.stm
In my opinion the whole thing is not worth a tinker's cuss. Free passes and stalling will undermine all their lofty intentions.
Any carbon emissions slowdown will come from a mixture of depletion, declining net energy, 'above ground factors' and recession worsened by liquid fuel issues. Politics may be the unexpected casualty of Peak Oil as it becomes less relevant to real world outcomes.
UPS is now doing
Bike Deliveries
Edited to fix bad link.
Thanx Leanan!
I will try to be more code careful.
S'okay. I wasn't chiding you. Just wanted to let people who had already tried it and gotten a 404 know it was fixed.
It's an interesting story. UPS seems extremely interested in saving fuel. They also use special software to map out their routes for maximum fuel savings. Including avoiding left turns whenever possible. (They've supposedly found that it's more energy-efficient to go around the block than to make a left turn.)
More tough mfg news for US and Maine hightech (mfg would be 'manufacturing', in case anyone had settled on other options..)
http://pressherald.mainetoday.com/story.php?id=227286&ac=PHnws
Fairchild offers packages to reduce work force
FWIW, Fairchild/National Semi has historically been one of the industries most subsidized by the state. Beats out even BIW/General Dynamics. No doubt they will be returning those subsidies.
Dr Decline tries to cure Irritable Bailout Syndrome
Link here
Also, Britain's total external debt is 400% of GDP. Is it any wonder the pound is wilting before our eyes? Link here
This a repost?
Red tape strangles Whitehall's plans to boost green energy
http://www.independent.co.uk/environment/green-living/red-tape-strangles...
Am I coming or am I going? What came first, the chicken or the egg? Don't put the cart before the horse.
Everything in the world seems muddled right now. Credit is tight - global warming is tipping - oil is cheap again - renewables seem great but expensive - carbon trading has more detractors than support.
As Obama gets ready to take office, everything seems uncertain, off kilter. Yet, at the same time we are at what I believe to be a threshold point in time. We can use cheap fuel to fall back into old bad habits of driving guzzlers and ignoring climate change, or we can muster the inner strength to embrace a 'new golden age' of renewable energy production, and with it a much smaller carbon footprint.
Would it be so difficult to require all new construction to have solar panels installed on every roof? Would it be too big of a task to allow people to sell their excess energy back to the utilities? Would the Big 3 auto makers go bankrupt making electric cars on a much bigger scale? Is the development of a new electric grid in the US possible, and if so could there be a wind and solar corridor that hooks up to that new infrastructure that reduces coal & oil usage dramatically?
I admit to basically being rather pessimistic regarding humankind, because I see the greed that pervades everyday life and my posts often reflect that sentiment. However, I am so enthused by the prospect of this golden age we are approaching, along with the steady leadership of Obama, that I am heavily invested in renewable energy stocks, and companies that will be part of the rebuilding of the electric grid.
In a sense, my optimism comes from a realization that moving forward we only have two basic choices. We can embrace the past or chart a new future. I choose the latter, because I think everyone agrees its time for change, that the old ways of producing energy are obsolete, antiquated, dirty and destructful.
So onward to the future we go!!!