DrumBeat: February 18, 2009
Posted by Leanan on February 18, 2009 - 9:55am
Conoco says access to offlimit areas key for economy
NEW YORK, Feb 18 (Reuters) - Governments should allow oil and gas companies greater access to energy sources to help drive economic growth even as states push to expand alternative energy, the head of oil major ConocoPhillips said on Wednesday."Our hope is that the resource-rich countries will recognize that the industry needs greater access to low-cost oil and natural gas," Conoco Chief Executive Officer James Mulva said, according to the text of a speech he delivered in London.
Reasonably priced energy is needed for economic growth, he said, which must come from greater access to areas that governments have made off limits to production.
Chu Retracts Comment That OPEC Isn’t His Domain, Cites Naivete
(Bloomberg) -- U.S. Energy Secretary Steven Chu said today that lobbying OPEC on oil production is “not in my domain,” only to retract the statement hours later, citing his “naivete.”Chu, asked whether he would press the Organization of Petroleum Exporting Countries to refrain from cutting production, said at a forum in Washington this morning that the issue was “not in my domain.”
About three hours later, Chu, a Nobel Prize-winning physicist who was sworn in Jan. 21, said on a conference call with reporters that his comment was a mistake.
“I should be quite candid, it’s more my naivete than anything else,” Chu said. “Every country would want price stability, and certainly I can do what I can do to encourage OPEC countries to promote price stability.”
Venezuela-China fund reaches $12 billion
Venezuela and China agreed on Wednesday to put an additional $6 billion into a fund used finance joint development projects in areas ranging from oil production to infrastructure.
Strike in Guadeloupe escalates into rioting
POINTE-À-PITRE, Guadeloupe: As President Nicolas Sarkozy prepared Tuesday to meet with labor unions and employer representatives to try to head off mounting unrest over France's declining economy, a month-long general strike on the French Caribbean island of Guadeloupe escalated into widespread rioting, raising fears that political violence would spread to other French territories.Protesters ransacked shops and torched vehicles in Guadeloupe overnight as a strike over the cost of living escalated, and one senior local official said the island was "on the verge of revolt."
U.S. Oil Fund to Roll WTI Crude Futures Over Four-Day Period
(Bloomberg) -- The United States Oil Fund, an exchange-traded fund betting the price of crude will rise, said it will roll its futures positions into the next month over a four-day period instead of over just one day....Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix GmbH, said earlier this month that the fund has “reached a critical mass,” and its rolling activities help exacerbate the oil market’s contango, where prices are higher for months further into the future.
Oil Cos' Bet on Swift Price Rebound Has Its Risks
Major oil companies are trying not to repeat the mistakes of the last price slump in the late 1990s, when cutting back on investment left them ill-prepared to meet growing demand in later years. This time they promise to maintain investment through the current price dip, but the risk is growing that a prolonged slump could stymie their plans.If the years ahead follow the pattern of the last major recession in the early the 1980s, where global oil demand shrank during the downturn and remained well below production capacity for years, even as the recovery accelerated, prices may stay low for much longer than current expectations. Steady as she goes may be their mantra for 2009, but oil chiefs may be on course for some tough choices in 2010.
Oil Market May Need Boost From OPEC in 2010, Bernstein Says
(Bloomberg) -- OPEC may be called upon to boost output in early 2010 to meet oil demand after a decline in operating U.S. rigs causes production volumes to fall, according a Sanford C. Bernstein & Co. report today.Well shut-ins are “expected to grow markedly from March onward” as the cost of producing, transporting and paying taxes on the oil surpasses the price received for it, according to the analysts, led by Neil McMahon at Bernstein Research in London.
A Fire Sale on Natural Gas Fields
What on earth could prompt an oil patch player to voluntarily hand off an interest in a valuable gas property, gratis?Last week, Parallel Petroleum did just that, in agreeing to transfer half of its 35% interest in a Texas natural gas field to Chesapeake Energy.
Saying No to a Car Czar: A Smart First Step on Detroit
Times are tough, but imagine how much worse they would be if the United States were dependent on foreign oil or Americans were still using illegal drugs.Fortunately, our leaders solved those problems long ago, by boldly appointing czars to clean them up. So naturally, now faced with the near death of the U.S. auto industry, the government's impulse was to crown a car czar.
Canadian protesters urge Obama to shun oil sands
OTTAWA (Reuters) - Greenpeace activists scaled a bridge in the Canadian capital on Wednesday and unfurled two large banners urging U.S. President Barack Obama to take a tough stand on Canada's huge oil sands when he visits on Thursday."Climate Leaders Don't Buy Tar Sands" read one of the banners, which faced toward Parliament. The oil sands represent the largest reserves outside the Middle East, but extracting he heavy crude from the sands releases enormous amounts of greenhouse gases, blamed for global warming.
You may not know it to look at them, but urban planners are human and have dreams. One dream many share is that Americans will give up their love affair with suburban sprawl and will rediscover denser, more environmentally friendly, less auto-dependent ways of living.Those dreams have been aroused over the past few months. The economic crisis has devastated the fast-growing developments on the far suburban fringe. Americans now taste the bitter fruit of their overconsumption.
The time has finally come, some writers are predicting, when Americans will finally repent. They’ll move back to the urban core. They will ride more bicycles, have smaller homes and tinier fridges and rediscover the joys of dense community — and maybe even superior beer.
America will, in short, finally begin to look a little more like Amsterdam.
Well, Amsterdam is a wonderful city, but Americans never seem to want to live there. And even now, in this moment of chastening pain, they don’t seem to want the Dutch option.
H&P and PDVSA still negotiating
Venezuela state-run giant PDVSA and US drilling company Helmerich & Payne continued negotiations to settle PDVSA debts and to reactivate the operations of two rigs located in Monagas state, east Venezuela, which have been halted since late January.The Tulsa, Oklahoma-based drilling company has accused PDVSA of failing to pay a $100 million debt.
As a result, H&P halted operations of its rigs, said El Universal newspaper.
China's Russian Oil Deal Has Plenty Of Skeptics
Beijing may have signed a 20-year agreement with Moscow, but, in light of BP's experience, do not count on it lasting.
Arctic sovereignty: Sheathe thy sword
Now that global warming is rapidly melting the Arctic ice cap, opening up the possibility of shipping through the Northwest Passage and developing the region's vast oil and gas resources, the five Arctic basin states (Canada, United States, Russia, Denmark/Greenland and Norway) are scrambling to secure their claims to the region.
Energy Department to Issue Loan Guarantees by May
(Bloomberg) -- The Energy Department plans to use economic stimulus funds to begin issuing new loan guarantees by May for clean-energy projects, accelerating a program that hasn’t supported any projects since it began in 2005.In a speech in Washington today, Energy Secretary Steven Chu said he wants to use the stimulus funds to “start printing checks in the new loan guarantee programs” by the end of April or the beginning of May, “not three or four years” from now.
BP Appoints Ousted TNK-BP CEO Robert Dudley to Board
(Bloomberg) -- BP Plc, Europe’s second-largest oil company, appointed Robert Dudley, the ousted head of its Russian joint venture, as a director.Dudley “will assume responsibility for broad oversight of the company’s activities in the Americas and Asia,” the London- based company said today in an e-mailed statement. The appointment is effective from April 6.
Indonesia reopens peatland to palm oil plantation
Indonesia today acknowledged it had quietly lifted a year-long freeze on the use of peat land for palm oil plantations, fuelling fears of a rise in greenhouse gas emissions.
The future is Amish, not Mad Max: interview with Bart Anderson of EB
It could begin like a remake of Mad Max II… “In an indefinite future, oil reserves are exhausted and violence reigns. An ex-highway patrolman goes to the aid of a community under attack by hordes of motorized punks. The battle takes place around the storage tanks of a refinery.”In spite of the expected end of fossil fuels, Bart Anderson of The Energy Bulletin is reassuring. The post-industrial apocalypse will not happen tomorrow. At the risk of disappointing the more hardcore fringe of La Spirale's readership, less anxiety-producing outlooks are possible.
Oil Prices: How Much Is That Barrel Really Worth?
How much does a barrel of oil cost?No, really. Is crude oil in the mid-$30s per barrel, or in the low-$40s? Both, it turns out. Which makes it increasingly difficult to figure out the headline price of crude, the world’s heaviest-traded commodity.
Eyes on Saudis As OPEC Weighs Output Cuts
Crude oil prices have plunged to near five-year lows, fueling speculation that OPEC may again slash production levels when it meets in a month.Saudi Arabia, OPEC's kingpin and the world's biggest oil exporter, already has cut output by up to 2 million barrels a day from a 25-year high hit last summer when crude prices were soaring to near $150 a barrel.
But despite the Saudi-led cut backs, global inventories have swelled as the oil demand is shrinking worldwide, battered by the deepening economic crisis.
Platts Analyst Survey of EIA/API estimates suggests build of 3.5 million barrels in US Oil Stocks
Analysts expect a 3.5 million-barrel build in US commercial crude oil stocks to be reflected in this week's oil inventory data from the US Energy Information Administration (EIA) and the American Petroleum Institute (API), a Platts survey showed Tuesday.The API is due to release its data at 4:30 pm EST Wednesday, one day later than usual due to Monday's President's Day holiday. The EIA will release its survey at 10:30 am EST Thursday for the week ended February 13.
Norway's Saga Oil says unable to service debt
OSLO (Reuters) - Norwegian Saga Oil said on Wednesday the future of its operations was uncertain as it was unable to service its debt."There are considerable uncertainties with continued operations," Saga Oil's board said in a statement. "This is due to weak earnings, weak liquidity and the fact that the company is unable to service its loan commitments."
Nigeria Oil Output in Line With OPEC Obligations, Minister Says
(Bloomberg) -- Nigerian oil production is 1.885 million barrels a day, in line with its OPEC obligations, Minister of State for Petroleum Odein Ajumogobia told reporters at a conference in Doha, Qatar, today.“We are sticking closely to the OPEC prescribed ceiling,” he said. Nigeria is entitled to produce more than the 1.675 million barrels a day laid out in a document after the group’s Dec. 17 meeting because it produced less than estimated last year, he said.
Petrobras' Brazilian Oil Production Up 4.8% in January
Petrobras' average oil and gas production in Brazil, in January, topped-out at 2,219,165 barrels of oil equivalent per day (boe), 4.8% more than a year ago and 0.7% more than in December 2008. The exclusive oil production in domestic fields, 1,922,946 barrels/day, set a monthly record, 5.3% above the mark set a year earlier and 2.5% more than the volume lifted in December 2008.
China to lend Petrobras $10 bln for oil - report
SAO PAULO (Reuters) - The China Development Bank and Brazil's state-run oil company Petrobras (PETR4.SA)(PBR.N) are finalizing a deal for the bank to extend a $10 billion line of credit in exchange for future oil supplies, a Brazilian newspaper said on Wednesday.Petrobras Chief Executive Jose Sergio Gabrielli said on Monday that the company was seeking financing from foreign governments to bankroll an aggressive investment plan, but he gave no details on the amounts or sources.
Constellation Has $1.41 Billion Loss on Deal Costs
(Bloomberg) -- Constellation Energy Group Inc., the U.S. power marketer that’s selling a 50 percent stake in its nuclear plants to Electricite de France SA, reported a fourth- quarter loss as it cut back on trading and canceled the sale of the company to Warren Buffett’s Mid-American Energy Holdings Co.
Chevron Mulls Deepwater Indonesia Gas Project
Indonesia, which has far more gas than oil, has pushed companies to move faster in developing areas as the country badly needs the gas for domestic industries and exports.Chevron currently produces gas from several other fields in East Kalimantan, but the output is in decline.
Once considered too expensive, as well as too damaging to the land, exploitation of Alberta's oil sands is now a gamble worth billions.
Not long ago, my wife, PJ, and I tried a new diet—not to lose a little weight but to answer a nagging question about climate change. Scientists have reported recently that the world is heating up even faster than predicted only a few years ago, and that the consequences could be severe if we don't keep reducing emissions of carbon dioxide and other greenhouse gases that are trapping heat in our atmosphere. But what can we do about it as individuals? And as emissions from China, India, and other developing nations skyrocket, will our efforts really make any difference?
Chu to move quickly on stimulus
WASHINGTON (AP) -- Energy Secretary Steven Chu says he's ready to push out some of the billions of dollars provided by the economic recovery plan within a couple of months.Chu told reporters there are shovel-ready projects to build and improve power lines that will quickly produce jobs. He said he will speed up processing energy project loan guarantees and expects money to flow quickly to help low-income families improve the energy efficiency of their homes.
Obama's war on terror may resemble Bush's
WASHINGTON: Even as it pulls back from harsh interrogations and other sharply debated aspects of George W. Bush's "war on terrorism," the Obama administration is quietly signaling continued support for other major elements of its predecessor's approach to fighting Al Qaeda.In little-noticed confirmation testimony recently, Obama nominees endorsed continuing the CIA's program of transferring prisoners to other countries without legal rights, and indefinitely detaining terrorism suspects without trials even if they were arrested far from a war zone.
Nuclear Energy May Power the World
While the current global economic recession may have soured investor enthusiasm for the commodities sector, there are signs pointing toward a strong recovery in the uranium mining industry.
General Motors will make a financial decision about Hummer soon. Either way, it seems it won't be a GM brand anymore. It will be sold, or it will be phased out.Hummer had the worst sales fall-off of any brand in America last year, dropping by half to 27,485 vehicles.
High gas prices pushed customers away from truck-based SUVs, which are all Hummer sells. And as a love-it-or-loath-it niche product, the brand has always been highly dependent on new model introductions that sell hot for a while before they fizzle.
ANALYSIS - Asia diesel market seen going from bad to worse
SINGAPORE (Reuters) - After falling to near five-year lows, Asian diesel margins may be in for still deeper losses as a worsening global economy deals a harsh blow to industrial and transport demand for a product that two years ago led the barrel.The grim signs are everywhere: refineries reining in output; traders seeking to keep the fuel in tankers due to a shortage of onshore storages; new Indian supplies flooding the market, even as major buyers like Vietnam become more self-sufficient and Indonesia halts imports due to brimming inventories.
"It seems we are in for a storm," said a trader in Singapore, who declined to be named due to company policy.
Aramco, Dow plan to drop troubled RBS
Riyadh: Saudi Aramco and the Dow Chemical Company of the US are seriously considering dropping the cash-strapped Royal Bank of Scotland (RBS) as project financing manager of their joint venture industrial facility in Ras Tanura in eastern Saudi Arabia, according to well-informed sources.This was after reports appeared showing that the bank is facing acute cash-crunch as an aftermath of the global financial crisis. Saudi Aramco and Dow joined hands in establishing the construction, ownership and operation of a world-scale chemicals and plastics production complex, named the Ras Tanura Integrated Project.
Saudi Aramco: South Ghawar Producing Sets Green Standard
The FINANCIAL -- Saudi Aramco takes environmental protection seriously. That was the message in the exhibits and brochures at the Jan. 27-28 Environmental Awareness Campaign here organized by the South Ghawar Producing Department (SGPD) of Southern Area Oil Operations (SAOO).
Saudi Aramco-Sumitomo Chem's JV losses swell in '08
RIYADH (Reuters) - PetroRabigh 2380.SE, a joint venture between Japan's Sumitomo Chemical and Saudi Aramco, said net loss almost tripled in 2008 on a drop in prices of refined products and a delay in the start of some units.The firm made a net loss of 1.26 billion riyals ($334.9 million) in 2008 down from 443 million riyals in 2007, the firm, also known as Rabigh Refining and Petrochemical Co, said in a statement posted on the bourse's website.
Gasoline prices are down in Virginia from above $4.00 to under $2.00. The energy crisis is over, right?Wrong.
The real energy crisis is not how much gasoline costs at the pump; it is the danger that heavy reliance on foreign sources of energy poses to our national security.
Tajikistan offers to export electricity to Pakistan
ISLAMABAD: Tajikistan has offered Pakistan to export electricity according to its needs aimed to meet recent energy crisis in the country effectively.
Tajikistan is one step to failure
The ICG report about the upcoming failure of Tajikistan was not a surprise for many people, since everybody knows about the recent developments: energy crisis (both electricity and gas), food crisis, crisis in Russia (consequently decrease in remittances from labor migrants), financial crisis (somoni loses its positions). This all gives us a clear picture of the whole social and economic situation in Tajikistan and it is far from what is called “stability”.
Burning Questions: What Does Economic "Recovery" Mean?
In our own backyard, much of the state of Texas -- 97.4% to be exact -- is now gripped by drought, and parts of it by the worst drought in almost a century. According to the New York Times, "Winter wheat crops have failed. Ponds have dried up. Ranchers are spending heavily on hay and feed pellets to get their cattle through the winter. Some wonder if they will have to slaughter their herds come summer. Farmers say the soil is too dry for seeds to germinate and are considering not planting." Since 2004, in fact, the state has yoyo-ed between the extremities of flood and drought.Meanwhile, scientists predict that, as global warming strengthens, the American southwest, parts of which have struggled with varying levels of drought conditions for years, could fall into "a possibly permanent state of drought." We're talking potential future "dust bowl" here. A December 2008 U.S. Geological Survey report warns: "In the Southwest, for example, the models project a permanent drying by the mid-21st century that reaches the level of aridity seen in historical droughts, and a quarter of the projections may reach this level of aridity much earlier."
The mood was somber at the Independent Petroleum Association of America's Private Capital Conference at the Houstonian Hotel in Houston in mid-January, where oil and gas executives gathered to discuss the state of the industry. There was a lot of talk of opportunity but not a lot of talk of available financing to expand companies, much less do deals."It's not like anything I've ever seen in my career," said Charles Hall, a managing director in the energy section of ING Capital LLC. "Last summer there was too much capital and too little opportunity. But ultimately there was a day of reckoning, and that's what we're going through right now."
The energy industry, like the rest of the economy, is suffering from the double whammy of lower commodity prices and sapped credit. Oil prices have fallen 70% from a record high of $147 per barrel in July to a four-year low of less than $33 per barrel in January. Natural gas prices have performed even worse, plummeting from a high of more than $13 per thousand cubic feet equivalent this past July to less than $5. By the end of January, rig counts in the U.S. had declined by 25% since their peak in September, to 1,515. At the same time, credit has disappeared from ailing and gun-shy banks, forcing oil and gas companies to cut capital budgets and lay off staff.
Deffeyes: The Second Great Depression
Now for the hard part: What's your message? "Savior of all mankind" is at the top of the list, but you need some specifics. I can't do your work for you, but here are some examples:● Don't blame the Jews. It's been done. That was so1930.
● Try blaming geologists this time. Charles Darwin, a geologist, robbed us of our divine origins. Most geologists work for oil companies.
● M. King Hubbert (geologist, Shell Oil) made a self-fulfilling prophesy. Once he convinced the geologists that there was little oil left, they drilled fewer and fewer wells.
● You might also demonize people with French-sounding names. The French made a mess of West Africa.
Tracking the storms of oil addiction
As the current economic crisis continues to deepen and branches out into additional sectors in more countries around the globe, we should be asking ourselves if the foundation of our economy is able to sustain us through the next several decades. We have built our modern civilization upon the use of fossil fuels, and as resources become more limited and population figures rise over the coming years, there is little doubt that the current crisis is but a precursor to a season of formidable storms.
Survive by turning back hands of time
If you want to survive the next long slump, become a small farmer -- go back to horses, because the 21st century version of the downturn will also involve an energy crisis, a double one: peak oil and climate change.
Oil industry locked in boom and bust
LONDON (Reuters) - After oil prices crashed to $10 a barrel in 1998, they more than tripled two years later as lower investment and higher demand strained supply.The signs are the industry, now reeling from a $100 crash, is still locked in a cycle of boom and bust.
A difference this time is high prices have permanently curbed energy use in many developed countries and the question is the extent to which Asia will continue to consume.
China's financial clout locks in energy supplies
SHANGHAI - Call it planning ahead.While China's exports plunge and millions of laid-off workers hunt for jobs, the country's big state companies are spending billions of dollars securing access to oil and other scarce resources the country will need in coming decades.
Total sticks to oil investment strategy
ROME — Total SA, the French oil giant in pursuit of Canada's UTS Energy Corp., thinks the world is closer to peak oil production than most energy companies expect and is maintaining its investment budgets in anticipation of a price rebound.
Bolivia's Morales calls on Total to up investment
PARIS – Bolivian President Evo Morales called Tuesday on the French energy giant Total to step up investments in his gas-rich Andean country, threatening unspecified action if the company fails to live up to its contractual obligations.
Russia Opens ‘Window to Asia’ With First LNG Plant
(Bloomberg) -- OAO Gazprom inaugurated Russia’s first liquefied natural gas plant off the country’s Pacific coast, opening up new export routes to Asia and the U.S.Russia is “building a window to Asia,” Japanese Prime Minister Taro Aso said at the opening ceremony on Sakhalin Island today. The plant will provide about 7 percent of Japan’s LNG demand, he said.
StatoilHydro Cancels 3.8 Billion-Kroner Troll Project
(Bloomberg) -- StatoilHydro ASA, Norway’s biggest oil and gas producer, scrapped a 3.8 billion-kroner ($540 million) project to upgrade pipes at Troll, the country’s largest gas field, citing weaker oil prices and higher costs.
Nigeria military repel attack on ExxonMobil compound
PORT HARCOURT, Nigeria (Reuters) - Nigerian security forces repelled an attack by gunmen on an Exxon Mobil housing compound in the Niger Delta state of Akwa Ibom, the local unit of the U.S. energy giant said on Wednesday.The attack on the Mobil Producing Nigeria (MPN) compound in Eket, where security measures were reinforced in December following a rise in violence in Akwa Ibom, took place at around 2200 GMT on Tuesday, security sources said.
Nigeria’s Kidnap Capital Forces Shell, Chevron to Cut Output
Today Port Harcourt ranks with Baghdad as one of the world’s most dangerous cities for foreign workers as criminal gangs and guerillas seeking greater control of energy revenue step up attacks, say job-placement firms. More than 300 oil industry employees, or two a week, have been kidnapped in the Niger River Delta since a surge in violence began in 2006, according to Oyibosonline.com, a Web site operated by expatriates.The attacks have cut exports from Africa’s largest producer by more than 20 percent, and last month the Delta’s main guerrilla group said it was resuming a campaign against the industry after a four-month cease-fire. A union representing office workers said it may pull members out of the region after gunmen killed the 11-year-old daughter of a Royal Dutch Shell Plc employee and abducted her 9-year-old brother in Port Harcourt.
Oil stays near $35 after big drop overnight
VIENNA – Benchmark oil prices languished around $35 a barrel Wednesday as further signs the U.S. recession is deepening spurred market concerns over crude demand.
Russia’s Micex Drops on Ruble, Economy Concern; Sberbank Falls
(Bloomberg) -- Russian stocks dropped, triggering a trading halt in the Micex Stock Exchange for a second straight day, on concern that a weakening ruble and worsening recession will fuel loan losses for banks.OAO Sberbank tumbled to the lowest in four years. The nation’s biggest bank said bad loans will probably reach 10 percent of overall lending by the end of next year. OAO Lukoil slumped 8.1 percent as crude traded below $35 a barrel. OAO GMK Norilsk Nickel dropped 13 percent as nickel prices neared the level that makes the company unprofitable.
Obama compares oil sands to coal
OTTAWA – President Barack Obama, in advance of his first foreign trip, said Tuesday that Canada's oil sands operations leave a carbon foot print that adds to climate change concerns.
Israel engaged in covert war inside Iran: report
LONDON (Reuters) - Israel is involved in a covert war of sabotage inside Iran to try to delay Tehran's alleged attempts to develop a nuclear weapon, a British newspaper said on Tuesday, quoting a former CIA agent and intelligence experts.An intelligence source in the Middle East told Reuters last year Israel planned to target Iranian nuclear scientists with letter bombs and poisoned packages and had set off explosions in Iran. Analysts offered similar accounts and said such tactics would be credible, but no confirmation has been available.
U.N. says food production may fall 25 percent by 2050
NAIROBI (Reuters) - Up to a quarter of global food production could be lost by 2050 due to the combined impact of climate change, land degradation and loss, water scarcity and species infestation, the United Nations said on Tuesday.The fall-off will strike just as 2 billion more people are added to the world's population, according to the U.N. Environment Program (UNEP), which says cereal yields have stagnated worldwide and fish catches are declining.
In a new report, it said a 100-year trend of falling food costs could be at an end and that last year's sharp price rises had driven 110 million people into poverty.
Alternative Energy Still Facing Headwinds
Obama said U.S. renewable fuel capacity will double in "the next few years." Noting that the electrical grid has changed little since the era of black-and-white TV, he promised a "better, smarter" network that will "ship wind and solar power from one end of this country to the other."Yet the $2 billion in the stimulus package devoted to transmission lines is a tiny part of what's needed. "I see it as seed money," said Jon Wellinghoff, acting chairman of the Federal Energy Regulatory Commission. "We need $100 billion to $200 billion worth of investment, and I believe we'll see that money coming from the private sector," he said, though current credit conditions make that difficult.
There are other hurdles besides financing, including multiple steps of permitting, as well as logistics and opposition to the transmission lines that would crisscross slabs of unspoiled landscape.
TOKSOOK BAY, Alaska — Beyond the fishing boats, the snug homes and the tanks of diesel fuel marking this Eskimo village on the Bering Sea, three huge wind turbines tower over the tundra. Their blades spin slowly in a breeze cold enough to freeze skin.One of the nation’s harshest landscapes, it turns out, is becoming fertile ground for green power.
Bringing Wind Turbines to Ordinary Rooftops
WIND turbines typically spin from tall towers on hills and plains. But in these green times, some companies hope smaller turbines will soon rise above a more domestic spot: homes and garages.
Nuclear firm fined for radioactive waste leak: court
LONDON (AFP) – A court Tuesday ordered a company which managed a nuclear power plant to pay 400,000 pounds after it was convicted of allowing radioactive waste to leak into the ground over a 14-year period.
Kuwait eyes nuclear power with French help - paper
KUWAIT (Reuters) - Kuwait is considering developing nuclear power with the help of a French firm to meet demand for electricity and water desalination, a Kuwaiti newspaper quoted the country's ruler as saying on Wednesday.
Renewable Energy Drops on Outlook for Delays, Profit
(Bloomberg) -- Renewable Energy Corp. ASA had the biggest drop in Oslo trading in more than two months after saying delays will hurt earnings at the start of the year.The shares of the Norwegian maker of solar-energy components fell as much as 9.3 kroner, or 13 percent, to 61 kroner, the biggest intraday loss since Dec. 9. They were at 62.4 kroner as of 11:35 a.m. in Oslo.
Los Angeles nears water rationing
LOS ANGELES (Reuters) - With a recent flurry of winter storms doing little to dampen California's latest drought, the nation's biggest public utility voted on Tuesday to impose water rationing in Los Angeles for the first time in nearly two decades.
UN Searches for New Employees as CO2 Projects Swell
(Bloomberg) -- The United Nations is looking for project managers and carbon-market experts to approve a backlog of wind farms, industrial-gas reduction projects and other ventures to cut carbon-dioxide emissions.
NYC can expect big storms more frequently: study
NEW YORK (Reuters) – New York City's average temperature could rise by as much as 7.5 degrees Fahrenheit this century, and once-in-a-century storms may occur as often as every 15 years, a climate change panel said on Tuesday.
Andean glaciers 'could disappear': World Bank
LIMA (AFP) – Andean glaciers and the region's permanently snow-covered peaks could disappear in 20 years if no measures are taken to tackle climate change, the World Bank warned Tuesday.A World Bank-published report said rising temperatures due to global warming could also have a dramatic impact on water management in the Andean region, with serious knock-on effects for agriculture and energy generation.
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Strongest language I have ever heard on CNBC
Howard Davidowitz of Davidowitz & Associates says we will never come back! And he said on CNBC yesterday afternoon. Cashing In On Trading Down
And he ranted on further about 2500 shopping centers closing this year. I think his rant came as a complete surprise to Maria Bartiromo and the rest of the CNBC crew. They had not expected such a bear. They were really looking for bottom picking stock tips. The other guy on the show, Brean Murray, gave them some but Davidowitz had nothing good to say about anything.
Ron Patterson
It is actually this kind of talk that may indicate a bottom, the same way people at the top of any mania expect it to go forever.
regards,
Nawar
"It is actually this kind of talk that may indicate a bottom, the same way people at the top of any mania expect it to go forever".
the Meme of the day. Except that the system is still broken.
and the Elite are still trying to fix it.
Money as debt is now impossible. Credit Cards will stop working.
Here's where the "bottom" is for this phase of cascading systems failure:
"At the end of this phase of geopolitical dislocation, the world will look more like Europe in 1913 rather than our world in 2007."
-LEAP/E2020
And we know what happened after 1913...
1. "We will not have any more crashes in our time."
- John Maynard Keynes in 1927
2. "I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future."
- E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928
"There will be no interruption of our permanent prosperity."
- Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928
3. "No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment...and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding."
- Calvin Coolidge December 4, 1928
4. "There may be a recession in stock prices, but not anything in the nature of a crash."
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929
5. "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
"This crash is not going to have much effect on business."
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929
"There will be no repetition of the break of yesterday... I have no fear of another comparable decline."
- Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929
"We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices."
- Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929
6. "This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929
"Buying of sound, seasoned issues now will not be regretted"
- E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929
"Some pretty intelligent people are now buying stocks... Unless we are to have a panic -- which no one seriously believes, stocks have hit bottom."
- R. W. McNeal, financial analyst in October 1929
7. "The decline is in paper values, not in tangible goods and services...America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin."
- Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929
"Hysteria has now disappeared from Wall Street."
- The Times of London, November 2, 1929
"The Wall Street crash doesn't mean that there will be any general or serious business depression... For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before."
- Business Week, November 2, 1929
"...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation..."
- Harvard Economic Society (HES), November 2, 1929
8. "... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall."
- HES, November 10, 1929
"The end of the decline of the Stock Market will probably not be long, only a few more days at most."
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929
"In most of the cities and towns of this country, this Wall Street panic will have no effect."
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929
"Financial storm definitely passed."
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929
9. "I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress."
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929
"I am convinced that through these measures we have reestablished confidence."
- Herbert Hoover, December 1929
"[1930 will be] a splendid employment year."
- U.S. Dept. of Labor, New Year's Forecast, December 1929
10. "For the immediate future, at least, the outlook (stocks) is bright."
- Irving Fisher, Ph.D. in Economics, in early 1930
11. "...there are indications that the severest phase of the recession is over..."
- Harvard Economic Society (HES) Jan 18, 1930
12. "There is nothing in the situation to be disturbed about."
- Secretary of the Treasury Andrew Mellon, Feb 1930
13. "The spring of 1930 marks the end of a period of grave concern...American business is steadily coming back to a normal level of prosperity."
- Julius Barnes, head of Hoover's National Business Survey Conference, Mar 16, 1930
"... the outlook continues favorable..."
- HES Mar 29, 1930
14 "... the outlook is favorable..."
- HES Apr 19, 1930
15. "While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us."
- Herbert Hoover, President of the United States, May 1, 1930
"...by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent..."
- HES May 17, 1930
"Gentleman, you have come sixty days too late. The depression is over."
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930
16. "... irregular and conflicting movements of business should soon give way to a sustained recovery..."
- HES June 28, 1930
17. "... the present depression has about spent its force..."
- HES, Aug 30, 1930
18. "We are now near the end of the declining phase of the depression."
- HES Nov 15, 1930
19. "Stabilization at [present] levels is clearly possible."
- HES Oct 31, 1931
20. "All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
- President F.D. Roosevelt, 1933
Excellent, excellent collection of quotes, worth saving and sharing.
"Excellent, excellent collection of quotes, worth saving and sharing."
The problem with that collection of quotes is that I have seen them about every 3 years since I was 14 years old, and I now have gray hair on my head waiting for the catastraphe. As was said of one doomer in the the 1980's "yes, he has called 6 of the last 4 recessions."
Right now, the quotes are all the opposite, I can find NO ONE who is predicting even a shred of hope, much less recovery. The press is a one note machine predicting THE END NOW. What a switch, the business media who have NEVER been even half right about anything will be 100% correct across the board if we are in the end times, wouldn't that be an improvement of their shitty sickly history!
But who knows, this could be it. The U.S. could be done, finished, over and out. But how does that change your life? How do you really want to live? Becuase at the end of the day, that is what you are going to strive for. I have lived among the poor, who lived as if the world was never out of a recession, even a depression. The saw the world dark, and never planned or strived for anything. Predictions of doom are self fulfilling. You can create your own depression with your mind.
The poor, like the rich, have always been with us. We choose which group we will strive to join. If we fail, we live poor but had a hell of a time trying. If we fail to even try, we live poor but must live with the shame of never even making the effort and at least gave ourselves a shot at going where we wanted to go. We will all die. Which way would you prefer to live? That choice, rich or poor at the end, will determine for you how you view the quality of your life. If you can say you were happy with the choice you made, then you are rich.
RC
Yes, that's a nice set of quotes that show how boundless positive sentiment can cloud the overall picture and a lesson as a previous replier said why -as sentiment approaches its most pessimistic- we get the opposite.
We will probably know when the Doomers are proved correct because no-one will really care anymore, they will just be too pre-occupied with mere survival...
Nick.
If talk is a contrarian indicator of bottoms and tops, we are indeed in deep doo-doo. Almost every talking head on CNBC and Bloomberg is saying "time to buy; the market is near the bottom."
However if you watch FRONTLINE from last night, (link below), you will likely get a better picture than you would if you rely on contrarian indicators from talking heads. There is no visible light at the end of this tunnel. However there are a lot of foolish traders who simply look at what happened at other market bottoms and believe business as usual is just around the corner.
Ron
OptionArmageddon has GE leveraged at 140:1.
Until ratios drop to 10:1 and housing below 3X
$37,000, we're not there.
"If we consider this the chart of a financial bubble, then we can deduce that prices of whatever asset this chart tracks will retrace to approximately 1998 levels, or $200,000, down from $570,000 at the peak.
This would be a 65% decline, not a 35% drop. Thus the buyer of a home which topped out at $340,000 might think $220,000 is a bargain, but if the price is set to fall all the way back to its pre-bubble value of $120,000 (a 65% decline), then there is another $100,000 to go.
One of the most pernicious consequences of buying in during a "false bottom" is the "capital trap" which snaps closed on the new buyer. I have updated my early-2008 Capital Trap illustration to reflect updated points in time: "
http://www.oftwominds.com/blog.html
So what's the target price per square foot if we roll-back to housing prices that people can afford? If average income drops to $35K, and houses to $100K, and average house size is 2K sq ft, then $50 per sq ft will be the average.
Here with home prices at $50-$75 per square foot for suburbia it seems reasonable that many people will continue to afford houses for a while. But for those who live in the land of $250 per square foot and up, I think many will be well and totally screwed if they own property with a mortgage. As the economy slows it'll be hard to keep anything close to those prices and necessary salaries going.
Of course YMMV, as those who live in walkable areas who can do without a car may benefit heavily as oil goes back up. Those in condos/apts may benefit versus separate houses as utilities rise as well.
I have one word - Jubilee. I think we are headed for the grandest jubilee of all time if the banking sector continues to disintegrate.
Perhaps. But if so, spare a thought for your children, nieces, nephews, students, etc., should you have any. Where Jubilee existed in ancient times, much business ground to a halt or took place clumsily and expensively as the appointed time approached. After all, few potential lenders were actually intending to make gifts, or could even afford to do so.
Since there is currently no predictable law or system for periodic Jubilees, even one that happened under the veneer of formal legislation would be essentially lawless. In the aftermath, no one would want to guess whether it might happen again in a month or in a century. Good luck, then, to young folks trying to get car loans, mortgages, college loans, etc. I suppose they'd just have to get in line for loans from the government. Maybe the paperwork would wend its way through the bureaucracy in 20 years, by which time they wouldn't be young any more...
I'm expecting there to be a lot less borrowing in the future, no matter what they do on the bailout front.
Sounds exactly like what we are experiencing now! ;-)
Seriously, though, I think that the "difficulties" business would have in such a situation would not be an issue as I would expect that it will result from a dramatic collapse in the banking industry. At some point enough financial institutions will have failed that there won't be enough left to "own" all that debt. Jubilee would be merely a means of cleaning out part of the mess.
Before that happens I would expect most banks will, on their own, stop foreclosures. Banks don't want to own property, especially not property that continues to lose value. At some point they will look at their books as say, "gee, x% of our assets is already tied up in suburban real estate, how much more does it make sense for us to carry?"
Enron: "If you liked us at $40, you'll love us at $20!"
"It is actually this kind of talk that may indicate a bottom, the same way people at the top of any mania expect it to go forever."
Nawa,
You will know the bottom, when you are walking behind the horse, that is pulling the plow.
Power Down, now while you can.
And I assume that Davidowitz is not even assuming constrained energy supplies. I think that Thom Hartmann may have had the best analogy.
http://graphoilogy.blogspot.com/2007/04/elp-plan-economize-localize-prod...
He is not considering peak oil. Someone posted this yesterday. His concerns are:
I've also seen some talking heads argue that we're looking at a permanent drop in the standard of living because of globalization. Americans have long had a standard of living way higher than their productivity justified, and in the new, flatter world, some of that privilege will inevitably pass to other nations.
But very few seem to "get" that resource constraints might mean a permanent decline for everyone, permanently.
And he did offer some advice: all the mouths still need feeding, and that food will not grow itself.
Does the US have a food surplus of 25%?
Since the US agricultural sector is highly dependent on FF inputs, and most readers of TOD anticipate a growing scarcity of FF, what does that imply in terms of the US being able to grow the required food?
More than just the US financial sector is guilty of wishful thinking.
This brings me to a thought that has been percolating through my brain. westexas keeps raising the issue of ELM - as production goes down, the exporters will hold onto their share and imports will decline at rate even faster than that of the production.
But the same logic can be applied to food as well, as food is an absolute requirement for everyone on the planet. The food producers will for various reasons see declines in production (reduced fertilizer, topsoil problems, emptying of aquifers, climate changes such as drought, etc), and the first inclination for a food producing nation will be to reduce exports.
And there is a symbiotic relationship between food production and fossil fuel production. Countries that can export both are in an excellent position. Countries that import both are going to be hit with a double-whammy.
I agree the ELM applies to food.
As an example, Libya has contracted with Ukraine to take ownership of all output from a specific agricultural area. Libya is essentially renting the land from the Ukrainian government with, IIRC payment being made in FF. China has been reported to be seeking similar deals. If the output is already under contract then there is less available to come to market for purchase.
US = major oil importer, major food exporter
KSA = major oil exporter, major food importer
Looks like we will be doing business with KSA for some time. They've got lots of oil, but they also have 22MM people who like to eat.
There's also this:
Land rental deal collapses after backlash against 'colonialism'
It is surprisingly common for nations to be in the midst of famine and still exporting food on a fairly large scale. How many Americans realize that during the famine in the Sahel in the 1980s, they were exporting grain? I do think the ELP applies to food, but I also think we'll see export contracts filled while people go hungry - after all, we do it now.
Sharon
I think it might.
Half our wheat crop is exported.
Then there's all the grain we feed to animals. We could feed 800 million if people ate it, rather than the livestock. (No, I'm not expecting a ban on meat-eating, but I am expecting "rationing by price.")
In addition, those population projections are based on BAU. I don't think we'll have that.
My hunch is that Nate will have something to say about humanities ability to curb its impulse for immediate gratification with complete and utter disregard for the consequences 9 months later. In fact, I think the whole history of humanity falls firmly on the side of sexual BAU. Carpe Diem!!
The projected population increases are largely due to immigration, not our inability to refrain from sex. If there are no jobs here, there will be less appeal for would-be immigrants. Not to mention a likely backlash by unemployed citizens that might finally close the borders.
Also...there was no dieoff during the Great Depression, but there was a drop in the birthrate.
Hello Leanan,
Taken from the latest USGS datasets:
US net import reliance upon I-NPKS
-----------------------
[N]itrogen 48%, [P]hosphorus 9%, Potassium[K] 81%, [S]ulfur 28%
------------------------
UN FAO Fertilizer Forecast is for North America to be headed into phophate deficit [recall prior posting]. Morocco is very important [source USGS:US Census Bureau suppresses info].
Trinidad & Tobago are probably more strategic to US national security than Hawaii because we import 56% of our ammonia and urea from this area [source USGS]. Can we start ramping full-on O-NPK recycling?
Well, if NPK becomes a logistic problem effecting food availability we will get a full-on practical experiment in recycling urban waste from water treatment plants for fertilizer, regardless of the risks of paint, oil, and drugs in that waste.
Here's a wild card and it's really troubling:
Wheat Rust Emerging Food Threat
Rusts and other diseases will become more important as food producing areas warm and become drier (or wetter). Insects from bark beetles to fire ants are expanding their ranges along with diseases which afflict livestock.
Don't forget that we grow less and less crops. Only a few varieties of rice, wheat and corn feeds most of humanity. That makes us very vulnerable to crop diseases.
So there are two sets of impacts:
1) A generalized resource constraint that will affect all nations equally.
2) A set of impacts specific to the USA. In addition to the wealth effects you describe (negative impacts of a cumulative $32 trillion!!) there is a further negative impact due to the past off shoring of US industry. This occurred over a decade and will be extremely difficult to reverse given credit constraints and a population unwilling to work for 3rd world wages.
Since innovation is tightly coupled to productive capacity (how do you innovate if you have no intimate knowledge of either the product or the process for its manufacture?) this implies future growth will favour nations other than the US and that the US may have great difficulty recovering from its current financial problems.
We are already seeing the start of this process. Asian firms once were invisible component suppliers to major US brands. They are now innovating entirely new product categories (netbooks) and establishing their own brands and US firms are forced to play catch up. The "hollowed out" US firms are forced into competition with their own component suppliers.
If some other nation or group of nations (SE Asia) leads the world out of recession, we can expect investment funds to flow to those nations. This would likely have detrimental impact on the US dollar and make the American recovery subject to receding horizons.
The language of electronics [and I presume mechanical engineering] is English. Asian manufacturers have tolerated this depite their market dominance. The day all schematics are in an asian language, the west will be royally screwed.
The language of electronics is accomplished through schematics and is a language unto itself, like the myriad programming languages. There are already a number of variants, depending on the industry, i.e. JEDEC, NEMA, ANSI, ladder, or relay and many others) If another standard were to be adopted, (which is counterproductive and highly unlikely, unless it defined a new variant technology), it would become yet another language, regardless of the human culture of origin. Einstein did not propagate his theories in German, he did it in the language of mathematics.
The core language of microprocessors is Boolean logic which is indecipherable to most humans except the human subset of geeks.
Schematics, with different standards, are also used for pneumatics, hydraulics and most other disciplines where flow of some sort is involved, be it money, energy or sewage.
The language of engineering (mechanical or otherwise) is mathematics, which uses the Greek or Cyrillic alphabet as well as symbols not found in any human language.
For the most part, the purpose of any new symbolism in commerce or science is to negate the vagaries of human language or culture, not to isolate people.
Before you post a rubbish assertion like this again, I recommend you study semiotics. If you have the time, a study of physics, electronics, logic and process flow might also be worthwhile.
IOW, you presume a great deal with little apparent knowledge.
'To understand the price of everything and the value of nothing..' He's not talking about the root schematics, the symbology that runs the numbers.. but the coin of the realm. Sound as a pound! Pay unto Caesar what is Caesar's..
That’s an interesting point Leanan: “….that resource constraints might mean a permanent decline for everyone, permanently.” As bad as it may get in the US we may likely be in one of the better spot globally…perhaps even the best. Forgetting about our personal plights for the moment, what’s the big picture model for the rest of the population? Despite whatever missteps we might have made overseas let’s consider the positives. I recall reports that the US is the largest source of charitable support in the world: food, medicine, cash. Beyond what we give away consider the amount of food products we currently sell abroad. If farming collapses here to some degree, prices will rise. Despite our ailing economy I suspect Americans will still be able to outbid overseas buyers. If there are little or no surpluses coming from the US then other food exporters will have absolute control over the market. Though I’ve never took serious consideration of the “big die-off” scenario preached by some I can now see that potential. If the US can just barely sustain itself agriculturally in the future what does that future look like for the 3rd world?
And despite what some might call an uneven application of US military force around the world, I do think our presence has aided stability in many areas. If our declining economy encumbers our military strength, how will that affect the weak in a world of hunger yet relatively powerful forces? I know more than a few folks who don’t have much good to say about any US law enforcement group. But I don’t any of them who wouldn’t call 911 if they were threatened. Opinions vary, but the UN military capabilities are pathetic today IMO. What can the world expect from the UN (other then verbal condemnation) when it looses much of its financial support (with much now coming from the US)?
As far as dealing with PO, how many countries will be able to match us financially or militarily? We might not be as capable in the future as we were a year ago, but who will become stronger during this period? There are many other such aspects to consider but most here can generate those on their own. As bad as many think it may become in the US we may be an even greater beacon of hope to the rest of world then we’ve been in the past.
I don't know if we'll be a beacon of hope, but I do think there's reason to believe that we'll weather the crisis better than most. I know many feel the exact opposite, and they could be right...but maybe not.
In particular, our greatest weakness - our wastefulness - may also be our strength. We have a lot of room to cut back. We can trade our SUVs for Corollas. We can live several families to a McMansion, instead of having 10,000 sq. ft. single family homes. We can get those mini fridges they use in Europe, rather than the monsters even poor families use here. We can eat more beans and fewer burgers.
People who are less wasteful - who are already driving tiny cars or taking the train, eating lower on the food chain, living in energy-efficient housing, etc. - have much less room to cut back without feeling real pain.
And we are still the global breadbasket. We are likely in overshoot, but much less so than much of the rest of the world. Food will probably be less of a problem for us than for most.
And as you note, we have a military that will likely dissuade invaders.
The disadvantages...probably that we have less social capital than many other countries. We are very diverse, and that will inevitably lead to conflict - racial, political, religious, etc. We still have a "frontier" type attitude, which means we are likely to be less cooperative than many other countries. We may end up being so busy fighting each other that the rest of the world doesn't have to worry about us.
Excellent point about the "fat" we can trim. Unfortunately, so many folks in our society are making a marginal living off that fat. As a result we may likely see an ever growing differential between the poor and the OK (formally known as the rich). As you say, this could lead to expanding internal conflicts. Your frontier attitude will likely serve us much better here in Texas and out west (except for southern CA I suspect). The northern urban areas might well turn into some of those worst case scenarios the doomers go on about. I’ve been to a few spots in Africa the last few years. As we all know, there is little or no “fat” there. If they loose what support they receive from the rest of the world today and local conflicts explode with no outside intervention from the “civilized” world, it’s not difficult to imagine the death toll climbing into the 100’s of millions.
I know that. I'm talking about an apocalypse type situation, not things like unemployment rates.
I wonder. Texas and out west have had some of the fastest growth rates in the country. A frontier attitude is fine when your nearest neighbor is 50 miles away. That is not the case now, in Texas or the southwest.
I think basics like food and water may be problems there, more than in the rest of the country.
Maybe. But in previous societal collapses, people have moved to the cities. The northeastern urban cities were built before the fossil fuel fiesta started, and are located for a low-energy world. They are overpopulated, of course, but so is the rest of the country. At least water is not a problem in the north.
More and more, I'm thinking the right model is the Great Depression. Plenty of food, but no money to buy it. Environmental disaster (the Dust Bowl), that led many people to leave...though they ended up wishing they hadn't. It was bad, but there was no dieoff.
Government and monopoly employment levels in the 1930s were a fraction of today's levels as a % of the workforce-the USA is heading toward a 1950s Eastern Europe situation, unlike 1930s USA.
Possibly. I've long thought we'll go through 1984 before getting to Mad Max or Ecotopia.
Look at CA as an example-what % of the overall workforce makes more money than a cop or fireman (or city garbage collector)? The place is bankrupt because there isn't enough private sector money to carry the expense of the government.
The place is broke because of a dysfunctional state government system. The bigest problems:
(1) The supermajority (67%) needed to raise any tax.
(2) The system of electoral propositions, which leads to spending on foolish things (like $10B last election for high speed rail), and which keeps adding unfunded mandates (forced spending with no revenue attached).
(3) Draconian criminal laws (three strikes and your in for life), which yield a huge and growing prison population which eats state resources.
We are already poised for 1984.
- Can't board planes at your leisure.
- Have no privacy
- can be arrested on the presidents say so
- can be arrested for being nothing more than a little pissed off on an airline
- can be disappeared
- in a state of emergency, the president has declared himself the director of the other two branches of gov't
- Bill of rights abrogated en toto
- FBI/HS has their "helpers"
- US military deployed on US soil for use against civilians
Etc.
The only thing keeping it from being active and pervasive is the sheep-like attitude of the masses. Should they start mobilizing, peacefully or not, you'll see the active implementation of 1984.
Africa has plenty of problems, among which corrupt leadership figures prominently. Yet who is always the first to step in to shore up the most corrupt of these leaders: the French, the British and the Americans. And now the Chinese. And why? Because Africa is for looting.
Whether it's via military intervention, trade policy, or 'foreign aid', Africa is for looting.
The flow of low entropy from Africa to the 'developed' world has always overwhelmed what little has flowed to Africa.
I often sardonically muse about employing sub-Saharan AIDS orphans for subsistence factory work as child laborers. By any measure of first-world standards this would be illegal and reprehensible, yet without outside assistance many or most will die of starvation or disease. It seems like "child labor" if they're working for a corporation, but it's "helping the family" if they're doing chores on a farm.
As the economy slow, charity for charity sake will be even less common, and workfare charities may well be the low-cost producers of the world for low-tech materials and raw resources.
Thought question for you: would you rather your 10-year-old children starved or work 8 hours a day picking beans on a factory farm or shoveling coal scraps onto a conveyor belt? That sort of decision will face many around the world, I fear.
You two are the reason I don't have much to say here on TOD. You express express my opinion very well.
I should add; I was referring rockman and leanan.
Leanan, I agree with everything you say about cutting back. We can do with a lot less. We can become a far less wastful nation. However it is what you didn't say that concerns me and it is the point everyone forgets when everyone talks about living leaner, cutting the fat so to speak. And that point is unemployment.
Litterly millions of Americans, and Chinese for that matter, are employed producing all that fat that we waste. When everyone cuts back and lives on a lot less, there will be tens of millions in the US, and hundreds of millions around the world, who will be thrown out of work.
How are we going to solve that problem? What are your solutions for that problem?
Ron
My guess is the solution to the problem will be "workfare." Instead of food stamps and welfare, people will have to join the military or work on the ADM plantation to get food.
It's true that the "Green Revolution" is far more efficient, but if you have a lot of people around who need jobs, the "efficient" solution will be to use them.
Sooner or later, the US is going to have no choice but to institute some program like the Depression era CCC, but on a much larger scale. The deal ("New-New Deal?") will be that this program will be a safety net of last resort - a place you can go to get served a reasonably nutritious three (institutional) meals/day, a dormitory bed in a secure heated shelter, clothing (a work uniform), & medical care. In exchange, you work 8 hrs/day on an assigned project - anything from picking up trash to whatever else of social value the government can find you to do. If this isn't the life you want to live, then you are free to try to make it on your own in the marketplace. In the economy that we are likely to have in the future, it will be harder and harder for more and more people to find work that will support a standard of living much more than the aforementioned minimums. It would not surprise me at all if 20-30 years from now, this national service corps (or whatever it ends up being called) comprises a fourth or a third of the entire adult working-age population.
Nobody is going to like this, but I doubt that they are really going to like any better the shantytowns ("Shruburbs"), masses of homeless beggers on the streets, dead and dying people lying in the gutters, massive crime waves, and urban meltdowns ("riots" is much too mild a word). At a certain point, people will say "enough is enough" and realize that they are going to have to do what should have been done all along.
Or we can hand each one an AR-15 to go march against a Chinese guy with an SKS somewhere in the heart of Africa, battling for raw materials.
Pick your Horseman -- one of them is likely to get most of the unemployed.
The Road to Serfdom courtesy of the Friedmanites.
This will certainly be true just not in the way The Economist viewed it.
Does someone need my assistance? I think I can Help.
Image posted on photobucket by MJordan77
Diversity isn't a total negative. Granted, it can make achieving social cohesion more difficult. However it has its positive side too:
I could give numerous examples of how diversity has been overcome to unleash a whirlwind of productivity and innovation--15th-century Venice, 16th-century Dutch Republic, right on down the line to today--but I think perhaps this example hits closest to home:
I agree that diversity has a positive side...but that seems to be mostly when you're on the upslope of the resource curve. If you have some positive examples from the downslope, I'd be happy to see them.
Decline does always seem to go hand-in-hand with increasing intolerance of diversity.
But does the decline cause the intolerance? Or does the intolerance cause the decline?
pre-ww2 Germany is a prime example.
Well, Rockman, you may know your rocks, but it's obvious you know shite about foreign aid. But not to worry, you're in plenty of company. Most Americans widely overestimate the size and value of US 'foreign' aid, (less than 1% of federal government expenditures), most of which aids Americans more than anyone else.
I won't even get into the politics which sees Israel as the recipient of the largest bundle of US aid (IIRC, about 30% of the total).
Here is a place to start if you want to free yourself of the delusions that grip most of the body politic in the US:
http://truthmonk.wordpress.com/2008/04/21/does-the-united-states-spend-t...
Many of us overestimate US aid, but I think you underestimate the US overseas contribution (for good and ill) overall.
If you include personal giving the numbers are far different, as they should be (why should we have the gov't in the loop for charitable giving, given a bureaucracy is its own favorite charity?). And like it or not, UN spending and military programs are "aid" in many ways (bases overseas especially). As is money sent home by foreign workers here. Are these all "foreign aid" or "strings being pulled"? Depends a lot on your perspective, but dollars are dollars when a poor nation gets them to spend.
When you have gov't sized the way we do, 1% would still be a lot, but the truth is the US gives a good bit compared to the rest of the world (per USA today, 2006):
"Gaudiani said Americans give twice as much as the next most charitable country, according to a November 2006 comparison done by the Charities Aid Foundation. In philanthropic giving as a percentage of gross domestic product, the U.S. ranked first at 1.7%. No. 2 Britain gave 0.73%, while France, with a 0.14% rate, trailed such countries as South Africa, Singapore, Turkey and Germany."
The majority does go to religious organizations, though.
UN funding (Wikipedia), $4B total:
Member state Contribution
(% of UN budget)
United States 22.00%
Japan 16.62%
Germany 8.66%
United Kingdom 6.13%
France 6.03%
Italy 4.89%
Canada 2.81%
China 2.67%
Spain 2.52%
Mexico 1.88%
South Korea 1.80%
Netherlands 1.69%
Australia 1.59%
Brazil 1.52%
Other member states 19.19%
Another source puts the US high in individual giving, low in gov't charity, and middle in overall standings:
"Comparing USA aid to that of European countries is not in itself a simple task. The American people are actually no less generous than those of other developed countries. By comparing aid as a percent of Gross Domestic Product (GDP) you measure the amount of aid that is given by individuals. On this scale, Americans look angelic, giving twice as much as Britons or Canadians. By comparing aid as a fraction of Gross National Income (GNI) as the studies on this page has done, you combine the generosity of the government and individuals. Europeans pay higher taxes to their governments, who in turn operate as welfare states, doing much charitable work2. For this reason, European governments always appear more generous in league tables compared to American governments, which is decidedly not a welfare state. American citizens give no less than others, according to The Economist, "the extra percentage point of its GDP that individuals deposit in rattling tins hardly reflects the much lighter taxes they pay"2. American citizens give more, but the government does so much less that the country as a whole looks miserly. It would not be right to blame the citizens for this, but the lack of a socially-minded government. "
If you want to include US military bases in Germany, Japan, etc in the foreign aid column, go right ahead. It's about as useful as the money spent on consultants by many of the so-called 'religious' charities, in any case.
Look, there are good people in the US donating to low-overhead organizations doing good work in the US and around the world. But it is a tiny drop in a tiny cup compared to the barrels flowing to the US (and to Europe, Canada, etc).
Which way is low entropy flowing? That is the river to watch.
Don't forget that "dark" portion of the US FedGov budget. Nobody without a senior level security clearance has any idea as to how much of that gets funneled overseas in one form or another. My guess is that it must be well in excess of $10 Billion at least.
A big part of the way secrets are secured, is compartmentalization. Making sure no particular individual knows enough about the secret empire that compromising him could do serious harm. Basically it means that the vast bulk of the people with high level clearances only know/(have access to) the information needed for their job. Only a handful of senior administrators would know stuff like the budget.
Personally i would not be surprised if black projects were funded by black fund raising schemes. Public money is too well accounted for to let it just disappear, like the $10k hammer joke.
Oh? Why do you think there are all those "cost overruns" on defense projects? A little creative accounting could easily divert those tens of Billions thought to be going into the Black programs. This has been going on for more than 40 years, so they've gotten real good at it...
E. Swanson
There will be worse places to be than the US, for sure. However, I rather suspect that there will be some better places, too.
1. Energy supplies are entering a trend of long term decline. Because per capita GDP is strongly correlated with per capita energy use, this implies a long term deline in US per capita GDP.
2. Globalization is resulting in many industries being offshored to countries with lower energy costs. Taken to its logical conslusion, globalization should inevitably result in a global "reversion toward mean" in global labor wage rates. This means that high labor cost countries like the US can expect a long term decline in per capita income/GDP.
3. The US allowed itself to become systematically, extremely, and unsustainably overleveraged. The present economic and financial dislocations are only the start of what must be an inevitable, painful, and very long term deleveraging and adjustment to an economy which is at balance. This can only be achieved through a long term decline in per capita GDP.
Match, Set, Game. This is our future.
"which has the appearance of considerable activity.."
Man, I wonder if that's cultural? Who else has been at a job where, if there was nothing to do, you still had to look busy? 'Don't want it to look bad, do you?' .. and then, if that weren't superficial enough, you also had to rein it in when you were actually getting TOO MUCH accomplished, so you didn't make less-productive peers look bad..
Doug Henning (ala SNL,)
"It's a Worrrld of Illusion! Magic is everywhere!"
Try to become self employed if possible. Then all the appearance issues go away.
Someone has said that people can and should be able to live comfortably working about 2 hours a day. Animals do it. They have no boss. They spend most of their time sleeping or resting. Farm animals have a very easy life for the most part. Of course they are slaughtered in the end but we all end up as dead meat.
A lot of the time spent at a job goes for taxes, profit for the boss and maintenance for oneself so that the whole thing can repeated the next day. What is left over is not enough to get ahead very much for most people.
Marrying into wealth is always smart.
Or try to buy some land. If you own land and claim you are a farmer no one can dispute it. Then try to make the thing produce enough to live on. A lot of expenses become tax deductable for a farmer. Try to get USDA subsidies if available. But don't work more than a few hours a week. Crops and such don't grow any faster if the owner is looking busy or trying to find something to do. Working smart is more productive than working hard.
But if you do work hard you get all the profit, at least before taxes. And for farmers there are a lot of depreciation type "incentives", i.e. tax loopholes.
I have never heard of anyone self employed only working 2 hours a day, but I guess I know the wrong people..
Yesterday I drove up to the nearest shopping center/mall from me.
Its too long to go very often,yet its the one I mostly go to when I have to.I was looking for some bargains of course. I also needed some software.
What I saw was the continuing shutdown of many stores and less and less traffic. They had just put in two outlier strips in the same Mall area yet detached. Construction finished about 1 yr ago.
In those 'newer' more classy(?) strips I saw only a few cars. For about 10 storefronts there were about 8 cars in the lot.
Must be terrifying to be an owner or worker and look out the windows on a normal day and see only a very few vehicles parked there. I wondered about that as I cruised by. Must be absolutely terrifying.
The main mall(enclosed) is slowly shutting down. Customers are coming less and less judging by the huge parking areas. Discount cards are still affixed to rack of items.
I think most of them are likely preparing for their demise shortly.
One of my first jobs after a paper route and golf caddying was working in one of the very first major shopping centers and a major brand in N. St.Louis county. It was Famous and Barr,,owned by May Dept Stores.
Famous was 'the' place to go. I was a stock clerk and also worked on the loading dock when needed. I got very good discounts and got to rub elbows with a lot of very pretty girls and young women.
Famous was taken over by Macys some time ago. I still had a Famous card on my TransUnion credit stmt. I went to Macy and asked them if my wife was still on it and that I had no card so might they wish to issue me one?
This received lots of raised eyebrows from the clerk. She asked me a whole bunch of personal questions and finally found me in her database on the register/PC. Then I asked if someone else was on the card.
I was told'we can't give out that personal information'.
I said do you wish to do business with me or not? She flustered and said nothing. I told her to call the floor/dept mgr. Who came over and I explained and then said "Do you wish me to walk out the door after you delete my acct or do you wish to retain me as a customer and give me a new card?"
She said..keep you. She told me to go to a phone some distance off and place a call to someone...I said "nope...you can do that"...ok she did and handed the phone to me.
Was the finance people of Macys. Who said "your card is expired and we are taking it out of the system and will issue you a card if you fill out out consent and terms and conditions form."..
At this point I told them they had just lost a customer and told that to the dept mgr and clerk standing by me. Hung up the phone and told them to watch my coattails as I left Macys to never return.
End of true story.
IMO this is stupidity of the worst sort. I had that acct since 1962. They lost me for good. I don't wonder then why they are in trouble.
Airdale-shopping malls suck,I will take their extreme bargains if I need something but never open an acct. Each time they ask me if I wish to they will get a wiseass reply. Its called payback. I get all of it I can from the merchants who deserve it so richly.
It has been over a year since I've been in a mall, and doubt that I will be visiting one any time soon. They hardly have anything that I would want to buy.
I'm a big guy and hardly any of the stores have any clothes that would fit me, even if I cared to buy what they had on offer at any price - which I don't. Any more, I have better luck just ordering the very few clothes I ever need to buy over the Internet. I can find exactly what I need in exactly my size, and get it delivered within a few days. It only takes a few minutes, and no driving. Yes, I miss out on that unexpected 50% or 75% off markdown, but I rarely get to hit that jackpot anyway. Furthermore, I also end up just buying what I need, and avoid the temptation of buying other stuff I hadn't planned to buy; I probably save more by not buying stuff I hadn't planned on than I could save on the markdowns anyway.
I suppose there might be a few things in the tool dept of Sears that I might need on rare occasions, but at this point I'm pretty well set up, and I can get just as good at my local hardware store, or over the Internet if they don't have what I need. Ditto for just about anything else sold in the typical array of mall stores. I really can't think of anything that any of them have on offer that I can't get with less trouble by just doing an internet search.
With any luck, airdale and I might both still be around for at least another decade or two. I very much doubt that Macy's and its ilk will last that long.
We could probably have a good discussion sometime talking about how these soon-to-be vacant massive buildings could be repurposed.
"Must be terrifying to be an owner or worker and look out the windows on a normal day and see only a very few vehicles parked there. I wondered about that as I cruised by. Must be absolutely terrifying."
There was a new specialty store in town that I decided to stop in and see if they had some things that I was looking for. I always try to buy local if stuff is available and competitively priced. Located in a small strip mall.
Parking lot was almost empty. There was one woman customer in the store when I entered. We both spent about 15 minutes wandering around the store waiting for the owner to get off the phone - And we could hear the conversation and it was definitely a personal call.
The woman customer left and a minute later I left too. The owner was still continuing the personal phone call when I left. I would bet the business doesn't survive 6 months! And they will chalk the closing up to the bad economy when it is just bad management.
I called another local company on the phone to inquire about their price on a new shop tool. Their price was $1700 dollars plus 6.5% sales tax. I can buy the same item on the internet for $1400 with no sales tax but maybe $50 shipping. I explained this to the person on the phone and they just said that they could not match that internet prices and that none of the local companies selling that type of merchandise would honor the manufacturers guarantee on goods that had been purchased on the internet.
(Sarcasm on)Those lucky businesses on the internet have no building, no phone, no employees, no expenses - It's no wonder they can sell stuff so cheap? (Sarcasm off)
What really ticks one off is that those same local businesses that refuse to be competitive with internet offerings and expect the locals to pay much more for merchandise from them then take their profits and buy stuff with it - Over the internet!
I live in a small town (roughly 2500 souls). There has been some significant redevelopment in the the old downtown. It seems a VERY wealthy movie studio owner is throwing money around creating beautiful infill construction and generating new retail space.
the latest development restored an old hardware store (it was almost falling down) and created several seperate spaces from one building.
Last year these all filled up with what I call "boutique" stores. Fancy handmade invitations, Anitque furniture, some kind of salon, and a designer clothing boutique. I told my wife that I was glad to see the development but that I predicted these stores would all fail.
We have a relativley wealthy city nearby who waste money on such things, but as predicted they didnt have this much appetite for overpriced crap.
One store is already closed, the others are always empty of customers - its just a matter of time before their working capital is gone.
I enquired about the rent on such an establishment last year - I was thinking about opening a bicycle shop (thinking post peak!). The rent was STAGGERING. thousands of dollars per month. There was no way I could make ANY business in that small of a town with rent like that.
Either the rent will come down or the shops will close - maybe a little of both. Maybe if the rent came down I could make my bike shop work...
A realtor friend of mine tells me commerical rents have only fallen a little so far - something which he says is odd since empty commerical property is everywhere. Seems like the commercial real estate market is slower to adjust?
The people you speak of have brains that are still locked down with what the Ad People bullshit about.
Their bodies live here with ordinary people but as they cross the threshold of the store some type of mentat thingy steals their brains back to the one above...the man behind the curtain stuff.
Trying to talk real sense with them is a waste of time so I tell them somewhat impolitely how bad their products/service is. Invariability I get a robotic smile and a 'Have a Good Day' mantra.
I tell them I hope they have a bad night.
Doesn't help them but it settles my mind about the situation. It could help them if they had a mind open to see what was happening before them.
So they are podpeople half the time at least.
Why is this I wonder? Are they programmed in some manner? Like the 'greeters' at Sams Club. You have a hard time talking beyond the mundane level them. I think they like to be 'podded' whilst working at a donothing , gonowhere job that a dog robot could perform.
Airdale-and Sam Walton said what? Something about hiring those who sat down to eat and didn't salt their food before tasting it? Bullhocky nonsense. He (Sam) I hope is in hell doing the 'greeter' thing.
PS. Yet I must say. Sam's does offer stuff at a good price. I shop there when I need large quantities of staples.
"Greeters" are known in the retail business as "LP" or Loss Prevention. They are there to say "Hi" from a customer service perspective, but also to put a sticky tag on returned items, and harass people who set off the theft alarms. If you'll notice at places like Best Buy, the LP guys wear yellow, and don't bother greeting. If they're not harassing you when you're walking out, they're staring at the video from dozens of video cameras, and then calling local departments to tail potential shoplifters.
There is something to be said of "mindless" jobs such as greeters. You get to see a lot of people, and while that likely involved lots of ugly people at Walmart, you get to see some good ones too. (Pick a University town.) Not only that, but it's low stress and you can daydream while you work. I once had a data-entry job, and I could listen to music, daydream, and enter checks into the system at a blazing speed. Low-stress, but it was also low-pay. But hey, I needed a job, and it got my foot in the door for a much nicer job 2 years down the road. It was worth it.
~Durandal (http://www.wtdwtsht.com))
I make a point of shopping local, even if it costs me a few bucks. The money I spend locally has a good chance of coming back around, the money I spend on some Internet business is probably being carted off to Antigua - oops! too late that's disappeared too (see Totoneila below).
Whether here in BC or getting materials for our historical house rebuild in FL, I tried to use the local merchants. They appreciate the business and know my name - sort of - and they even stock cut nails (the old square type). When TSHTF, I don't expect Home Depot to hang around long or work towards rebuilding the community. The only legacy they will leave behind is a rotting hulk of ugly orange shelving that will end up selling as $5/night as high density sleeping quarters for the destitute.
http://abcnews.go.com/Blotter/WallStreet/story?id=6903014&page=1
-----------------------
Manhunt: Accused Financier Scammer Stanford Missing
Authorities say Investor Losses Could Rival Madoff Scandal
Texas financier R. Allen Stanford is accused of cheating 50,000 customers out of $8 billion dollars but despite raids Tuesday of his financial empire in Houston, Memphis, and Tupelo, Miss., federal authorities say they do not know the current whereabouts of the CEO.
-------------------
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
As Warren Buffet puts it, when the tide goes out, you find out who has been skinny dipping.
IMHO, this stuff is widespread-a great many hedge funds have blocked redemptions and with the current state of auditing and regulation, a statement from a hedge fund re what your capital is worth and where it is invested has to be taken with a huge grain of salt. Again IMO eventually there is going to be a groundswell of outrage in the USA re the coddling of these guys by the government (if not outright funding and rewarding).
Hey, what did you expect? They've had the best government that money could buy!
.. or who has been in the Pirhana patch, even..
......Ouch! ..........
And when the tide comes in it may raise a lot of boats but it also raises a whole lot of 'trash'.
And leaves that trash in plain view as the waters recede.
If we are lucky the bad scum settles to the bottom and we never see it. Like they 'run away' or get a tiny slap on the wrist and wear a bracelet for a bit.One is visible,the other not.Both get a pardon and told "Bad Boy..Bay Boy"....
At some later date; 'let the healing begin' is trotted out. They sleaze back into the system. Rapists and pedophiles are part of this rabble.
Airdale
Dear Totoneila,
It is much worse than Made-Off. It may affect English Cricket:
http://news.bbc.co.uk/sport1/hi/cricket/england/7896623.stm
Rgds
Dropstone.
Hello Dropstone,
I am not familiar with how much running is involved with playing cricket, but the bank run is sure on:
http://www.reuters.com/article/newsOne/idUSN1842429020090218
---------------------
Hundreds of people lined up at Texas billionaire Allen Stanford's Antiguan bank on Wednesday seeking to withdraw funds, a day after the tycoon was charged with an $8 billion fraud.
Two police officers stood watch at the Bank of Antigua at midmorning as at least 600 people stood in a line stretching around a street corner, despite assurances from regional monetary authorities that the bank had sufficient reserves.
"I'm worried and I'd like to get my money out," said Andrea Lamar, 28, who joined the line with a friend on a street popular with tourists in the state capital, St. John's.
A woman in the queue who declined to give her name said, "I wasn't panicked until I saw this crowd. Now I'm concerned."
-------------------------
Why don't these people just write a check to themselves and go deposit/cash it somewhere else?
Because they would still have to wait until the check clears. You will find the everyday banking operations in the U.S. to be pitifully outdated and lagging many other countries. If I deposit a check in Canada, they know within one business day whether the funds can be honored. None of this waiting 10 business days B.S.
$51 billion.
And according to ex FBI agent, 27 more funds could be next.
Those that have had no neg quarters in the last 5 years.
Did anybody notice that he looked a little like Whimpy? 'I'll gladly pay you Tuesday for a 401k today.'
Jon.
Did you guys and girls watch the PBS Frontline special "Inside the Meltdown" last night?
It was cereal to see current events in a historical time-line fashion.
You can watch it online at PBS.org
I did. It was interesting in the sense that you could see Paulson's and Bernanke's hands in all of this. The interesting part was the discussion of moral hazard and systemic risk..
Thanks for the tip. Watching it while eating my morning surreal.
Great minds think alike. . .
For others here's the direct link to Frontline's "Inside the Meltdown":
http://www.pbs.org/wgbh/pages/frontline/meltdown/view/
Interesting to watch. Frontline chronicled the crisis from the spring of 2008 with the run on Bears Stearns to the recent bailouts and you can see the changing mindsets of Paulson and Bernanke.
Some questions remain unanswered. Was the initial run on Bears Stearn's stocks, the smallest of the investment banks, merely a lack of confidence by investors that was exasperated by the actions and comments of the media and its CEO? Did the failure of the government to bail out Lehman Brothers make a difficult situation worse? Was Paulson's bluff legitimate? Was the initial rejection of a bailout by Congress a dire jeopardy to the financial order? What does it truly mean to say, "moral hazard", is dead?
Despite not touching some of the implications of these questions, I found the documentary to be a good review of recent events. Worthwhile watching.
The way they described all the other investment firms tearing through Bear Stearns' books, they made it sound as if BS demise was sacrificial so all the other companies could compare BS books to their own.
My unanswered question:
WRT what happened to Bear Stearns and Lehman, to what extent was Paulson operating in an objective, disinterested manner, with only the public interest in mind, and to what extent was he using his position to settle old scores with former, hated competitors?
This is not a question that I expect to see asked very much in public, or ever answered truthfully. But I do think it is relevant.
I had two problems with "Inside the Meltdown:"
1) In the presentation about the two times that Congress voted on TARP, no mention was made of the electorate, which IIRC was >90% vehemently opposed. This is at least as big an indicator of creeping fascism as the cronyism/looting of the public trust.
2) The story closes with an ominous-sounding statement, "No one knows if it will be enough." Yes we do - Those of us whose jobs do not depend on our not seeing the plain truth know without doubt that it will not be "enough," that there will be no resurrection of BAU, that there is no way back, and there hasn't been for probably a decade.
So the show was better than nothing - maybe - or maybe it was merely a "limited hangout" to try to buy back some lost credibility.
Please send your comments to Moyer -- maybe he will read on air.
I found it interesting. I think I am beginning to understand why these guys are flailing. In addition to the technical challenges -of trying to make things balance out etc, there are huge psychological constraints, that are almost impossible to predict. Multiple actors are watching every move, and any/all of them are prone to panick and stampede, based upon their reading of the tea leaves. I think the big ones are: financial traders: if they read the tea leaves to mean firm X is in trouble, an immediate run on it's stock prices, and customers running for the exits can be almost instantly fatal. Then there is the reaction of the rest of us, to the feeling that we are being fleeced. Then there is the political grandstanding, which feeds off the emotions of fear and anger. No wonder the Wunder-Kid Geithner's first move was to balk! It seems that any thing they try is going to boomerang in some unpredicatble but particularly nasty way!
My analogy, is trying to stop a bus without breaks careening down a hillside towards a cliff. Its not an easy technical problem. Then if you turn right, the passengers of the left side of the bus might spot the cliff and panic panic, and rush the driver causing disaster. But if you turn left, the passengers on the rightside might do the same. If you shift into a low gear, the horrible sounds from the engine/transmission tearing itself apart might panic a third group of passengers, who will again rush the driver, causing catastrophe!
I watched it while having some oatmeal surreal.
(Sorry, I couldn't resist, I've had my share of typos too).
Moving from Bush country to Boston didn't help my communication skills much.
That's enough serial jokes ;-)
Not quite - there is always room for one more....
Obama Visit
It's a relief to know that we still have a sound baking system. I enjoy toast in the morning after eating my surreal...
From the Yahoo News article you quoted:
Obviously, Obama is still looking for growth to get us out of this mess. The old paradigm, it appears, is stuck in the noggin of the new guy.
At least he seems to be aware that future fuel supplies are dirtier than those of the past. That's movement in the right direction.
Meanwhile, I agree, calgarydude, it is surreal to be assured that while everything else is tanking (dollar, manufacturing, commodities, oil), our banks are holding their own. Three cheers for our pinstripe guys.
I am all for sustainable growth. If you want plenty of long term energy for fueling growth take a look at Sweden and some of the neighbouring countries, there will be plenty of electricity for decades.
We have recently had a change for the better in the Swedish energy policy with an ok for renewing nuclear power to avoid a lack of power in the 2020:s and 2030:s and there are solid investments in biomass power, wind power, etc. We will most likely be one of this centurys net energy exporters and the long term goals are a fossil fuel free transportation sector in 2030 and no net CO2 release in 2050.
Those goals can be reached if the current trends in research, technology development and investments continue. And why should they not do that when the post peak oil era makes it profitable?
And regarding the drumbeat links, I dont believe in farming with horses. Current tractors can be converted to 80 % biogas and 20 % diesel, there are a multitude of efforts to refine engines and make different kinds of biofuels and if nothing else works out I know about an inventor who works on a reasonable pellet fired steam tractor and even that is much more convenient and also efficient then a horse since it runs on scrap biomass. It would take a few years to tool up for producing 100 000 to 200 000 tractors per year with with current excess car making infrastructure in Sweden alone and scrap metal. Dont worry about a need for primitive farming.
Yup, a strong, focused societal level will can mitigate much. I don't see the US there yet.
Good on Sweden et all !
Also, did anyone watch the program "Living with Chernobyl" right after?
The reason I ask is that I am almost sure that the narrator was a synthesized voice. Sort of a next generation version of the text-to-speech system used by Hawking. Did anyone else notice this?
The credits state Lawrence King as the narrator, but Google turned up nothing.
Apologies to Mr. King if he exists.
Cheers
pragma,
There you are! I've been looking for you.
I wanted to respond to your comment the other day about Mexico and also do a little more in the way of explanation in hopes of filling in some of the gaps I left on my first pass.
I think we've already extended a $30 billion swap line to Mexico to try to buoy the imploding Peso. The Mexican government was not profligate. It had almost $100 billion in Forex when this crisis began:
http://www.bloomberg.com/apps/news?pid=20601086&refer=news&sid=aRi.gP063ouw
Marijuana is by far the biggest cash crop for the Mexican drug capos. I wish the U.S. would legalize marijuana. I don't see marijuana as being any more harmful than cigarettes or alchohol, and I think much of the crime problem would disappear overnight if it were legalized. Columbia did legalize drugs, at least small quantities. Perhaps that had as much to do with ameliorating the problem in Columbia as the mano duro? A year or so back the Mexican legislature passed a similar law to legalize drugs here in Mexico. But the U.S. intervened, pressuring Fox to veto the measure.
Doomers getting ready for the societal collapse they believe lies ahead?
Well Mexico certainly offers a case study of what happens when a country follows the path of the anti-government proselytizers.
Mexico, like all countries, is a product of its history. The Tlatelolco Massacre in 1968, in which several hundred students participating in a peaceful protest were gunned down by police and military personnel, completely transformed the country’s political landscape.
http://www.ronaldecker.com/massacre.htm
In the aftermath of that atrocity, it was no longer possible to keep from public view the internal rot that had spread throughout the government and criminal justice system. The people correctly concluded that the government no longer served their interests and could not be trusted. Corruption was ubiquitous, the situation having deteriorated to the point that Etzioni warns of: "If those whose duty it is to set and to enforce the rules of the game are out to maximize their own profits...there is no hope for the system."
The path Mexico chose to take out of this dilema was to greatly curtail the power of government. Mexico thus became a libertarian's wet dream. Mexicans sum it up as follows: El mas bravo gana. The most ferocious wins.
Mexico is now suffering the acute consequences of this folly--of the decision to disembowel a dysfunctional government instead of reforming it. Not only is the country falling into anarchy, but the eviscerated government is powerless to act in the face of ever-growing abuses of wieldy economic actors. The result is that the ruling economic elite competes with criminal thugs in the minds of the people to see which can do the most damage to the public sphere.
Here is but one example of what I’m talking about. From today’s NY Times:
A "monopolistic culture" has thus engulfed Mexico. The fortune of Slim, perhaps the richest man in the world, is equivalent to 7% of Mexico's GNP (La Jornada, "Articulista del New York Times destaca que en Mexico impera la cultura monopolica", August 28, 2007, p. 21) . Compare that to Bill Gates or Warren Buffet, whose fortunes represent less than ½ of 1% of U.S. GNP.
http://www.nytimes.com/2007/08/27/opinion/27mon4.html?_r=1&scp=1&sq=carl...
To give an idea of what Slim’s monopoly costs the average person, take a look at my cell phone plan. I recently renewed my plan, and currently pay about 60% less than my previous plan (the old plan was entered into a couple of years ago). But even after falling 60%, I still pay approx. $25.00 U.S. dollars (at current exchange rates) which includes 100 free minutes, no charge for roaming or long distance, and extra minutes at $0.08 per minute. There are no “rollover” minutes, no “free weekend/nightime” minutes nor any “family” plans. I know my plan is structured differently than most U.S. plans, but I belive even after the 60% downward correction, I still pay rates that are significantly higher than users in the U.S. And let me assure you, that isn’t because Telcel pays its workers more than AT&T or Sprint do.
I like much of what Denninger has to say. He and I both, although for somewhat different reasons (That’s why it’s possible for me to support the stimulus package while at the same time opposing the bank welfare plan, while Denninger opposes both.), want to put a stop to the finance industry’s multi-trillion dollar looting of the U.S. treasury. If that runaway freight train is to be stopped, it will require persons on the left (like myself) and those on the right (like Denninger) to show some solidarity.
However, the innocence of the libertarians, along with the great passion they have for their cause, can’t help but remind me at times of the young artists who so enthusiastically gave themselves to the Communist revolution in Russia:
The innocence common to both the libertarians and the Marxists was noted by Neibuhr many decades ago:
I really wish you wouldn't do this. It's okay if it's a short note ("please e-mail me"), but hijacking another discussion with such a long comment ruins the threading of the discussion.
Agree and as to pot use? I would hate to ride in a vehicle with someone smoking pot. No thankee. Riding a mule might be ok.
Speaking of his dissertation on legal MJ.
Actually, if we want to save oil, we should encourage pot use by motorists. If everybody did 35 on the highways, it would save lots of oil.
OK. You're the boss.
I won't do it again.
Good to hear from you DS.
I am a big believer in a strong government, in that it is responsible for establishing an environment which is conducive to the well-being of its citizens. Foremost in this environment is the rule of law, closely followed by various infrastructures which address issues of safety, security or projects which exceed the resources of the private sector.
Further, the private sector does not have an entitlement to conduct business in any way that is detrimental to the society on which it depends. In a perfect world, corporate citizens would be pillars of their communities and be self governing but this, for the most part, is just a fantasy, hence the absolute need for regulation. People can moan all they like about the government telling them what to do, but left to their own devices, most people are pretty self-serving.
The issues you highlight in Mexico are a grim warning of what is happening, or will happen in the US.
Printing money out of thin air is only the latest in a litany of changes that have taken place which have made many societies bankrupt. When paper wealth is created without a proportionate increase in real wealth, the entire system is devalued, leading to inflation or bankruptcy.
Similarly, creation of unfettered rights without an understanding of the associated responsibilities and enforcement of those responsibilities leads to moral bankruptcy.
You speak of the innocence of libertarians, but I’m not sure it is innocence as much as it is dogma, tightly held along partisan lines. In spite of the obvious failures of de-regulation, I’m sure you could find many that are so thick headed as to still denounce regulation.
For example, when one privatizes the prison system, one automatically creates a situation where increased incarceration means increased income for a few while the society as a whole is impoverished. Clearly, self-interest is anything but benign.
The US currently has the worst of both worlds; An enormous government system which is largely ineffective if not paralyzed. This is different from Mexico, yet the effect is essentially the same.
I agree with Etzioni completely and I am afraid this sums up the situation. I doubt that anything short of revolution will advance your and Denninger’s goals.
I have concluded that the possibility of societal collapse is no longer a question as we are already in one and have been for some time. As for peak oil and ACC, it is not what can be done, but what will be done, so I’m not optimistic.
Ain't postmodrnism great?
I read something the other day that I think sums up the situation perfectly:
DS, thank you for the quote by Gertrude Himmelfarb. I'll add that one to my collection.
I've just finished listening to a CBC radio programme, Ideas, which featured William Gairdner talking about his book, The Book of Absolutes. Interestingly, he has reached similar conclusions.
http://mqup.mcgill.ca/book.php?bookid=2251
The CBC Ideas page is at: http://www.cbc.ca/ideas/
Please, o please, may the day hasten on when doublespeak will become plain speech again. Thankfully, there are some authors who still give me hope that not all is lost.
Thanks for the links.
I'll add the cbc one to my favorites and listen to some of those lectures as time allows.
You're welcome.
Btw, I really enjoy your posts. Ditto for pragma.
DS,
With a quote like that, there's not much doubt that you grokked my post.
I've haven't spent much time studying sociology; I'm more a "nuts and bolts" kind of guy, but I know what works and what doesn't.
Is postmodernism a university term for "we're all screwed so to hell with the rules"? Seems like it. Not surprising when post-adolescents become parents but don't want to become adults.
Zadok, (interesting handel :-) ) thanks for the Gairdner reference, I'll check it out.
Cheers
I didn't see it but it sounds like a similar program as CNBC's "House of Cards". Although I bet frontlines program felt more stern.
I think we should start putting infamous pictures of these Banker/Loan crooks on boxes of Cereal!
Yes, pictures on the sides of cereal boxes and milk cartons.
Along with their addresse and a map to their home(s).
deleted > enough piling on about the homonyms.
Hello TODers,
Evidently, George Soros likes hugging lots and lots of bags of I-NPK:
http://www.financialpost.com/news/story.html?id=1301663
------------------------
Billionaire investor George Soros's hedge-fund firm bought more shares of Potash Corp. of Saskatchewan Inc. in the fourth quarter, almost doubling its holdings.
Soros Fund Management LLC increased its holdings in Potash by 2.6-million shares to 2% in the fourth quarter according to a filing yesterday with the U.S. Securities and Exchange Commission. The New York-based firm also bought 16 million shares of the Petroleo Brasileiro SA, bringing its stake to 1.45%. Petrobras and Potash are now the firm's two biggest reported U.S. stocks.
------------------------
Have you hugged your bag of NPK today? Leanan's toplink from the UN FAO on declining food production doesn't seem very cornucopian to me.
I've been reading Soros' latest book, about the financial crisis. He seems like a pragmatic to me. It wouldn't surprise me if he reads TOD, or have someone read it for him.
Looks like the U.K. is starting to fire up the printing presses....
Bank of England seeks power to inject more money into economy to fight recession
With the FTSE breaking 4 000.
Every minute that passes now...
tick tock.
Swift, steep downturn crisscrosses globe: Markets are hammered as hope fades for quick recovery
Complementing the Andean glacier story:
Bank woes forces Germany into nationalisation law
Fed downgrades projections, predicts at least 8.5 percent unemployment
Multiply that unemployment by 2 and you get 17.0 to 17.6%
Multiply that GDP growth (decline) rate by 2 and you get -0.4 to -2.2%
Those numbers sound like they might be getting close to being in the ballpark. Probably still too optimistic, though.
"President Obama is unveiling a $75 billion multi-pronged plan Wednesday that seeks to help up to 9 million borrowers suffering from falling home prices and unaffordable monthly payments."
So the people who made bad decisions, wasted money, lived beyond their means, and partied all night are now getting relief while the good law abiding conservative citizens continue to suffer and pay our mortgages on time. If your payment is more than 31% of income, you get help. How did they get a loan payment that big in the first place? ARM loans that should have been illegal.
Another $75 billion of tax money down the hole. Reward the ignorant and punish the good.
RIP: Moral Hazard is Dead.
As usual, Nowhere, you provide us a bunch of unsupported generalizations. And a shitty analysis just to top off your pile of fly dung.
You have no information about those who will be the direct beneficiaries of the program. Not a clue about how many were and are hardworking and sober citizens, now facing job loss, paycuts, pension curtailments, etc, etc, etc...
Nor do you have a clue about the indirect beneficiaries: those whose houses will retain a little more value because the house across the street has not been foreclosed and gone to seed, those who taxes won't rise or services decline, as much, because their municipality has a broader base,...
The vile bile you spread is only helpful to the demagogues and fascists waiting in the wings, hoping that a continuing economic deterioration will pave their (your?) way to power.
Oh, puhleeze. Cry me a river.
While we're at it, let's all help ourselves to million-dollar houses on 31% of however little we happen to feel like becoming qualified to earn. After all, we're as entitled to those as we are to effort-free "A" grades in school nowadays.
Oh, wait a minute, not all of us are entitled, only the most feckless. Where are the free rides for all those who didn't make pigs of themselves and aren't over 31%?
Oh, and wait another minute, let's not forget that "those whose houses retain a little more value" are getting their free rides on the backs of first-time buyers - or would be except that nowadays first-time buyers are hopelessly priced out of the market. So where are the free rides for all those who can't even afford to nuzzle their snouts up to the trough?
Moral hazard, RIP indeed.
"the most feckless"
No data. Just more shitty 'analysis.This level of ignorance and sanctimony has you ready for primetime, on Fox.
You have no real information on what proportion of people who may directly benefit from the announced program were the 'most feckless'.
The gov't shouldn't be in the business of determining who "wins and loses" at every round of the financial game. The rules were mostly clear, and where they weren't the Gov't might better spend their time improving and simplifying regs and prosecuting fraud. Surely you don't pretend that the Gov't can do a better job at determining "fecklessness" than your average TOD blogger?
When you resort to ad hominem attacks against an author it weakens your already weak case. There is no moral high-ground for keeping houses unaffordably expensive and keeping people in houses they can't afford.
I wonder if you are ready to really implement such a philosophy. And by that I mean, are you ready to remove the protections that limited liability corporations and corporate juristic personhood afford? Are you ready to remove the corporation from the "financial game"?
How is that related? I have no problem with the Gov't stating clear rules and adapting them as needed over time, but that's a 'fair playing field for all'. I have a problem with using taxpayer money to bail out one set of players at the expense of others just because somebody doesn't like it that they're losing while somebody else is winning, especially if one of the players is the house or the resident shark.
I see little problem with corporations for fiscal and tort liability independence, but I'm not a hard-liner for executive responsibility evasion and inculpable boards either. In many ways a publicly traded company is less onerous in behavior, more democratic in investment, and more transparent in operation than a privately held venture, and I don't think you want individually-owned mega-companies out there either.
Surely you're not suggesting that there is no need for corporations at all?
Government has always been in the "the business of determining who "wins and loses" at every round of the financial game." That is especially what Bush's government was about. In the end, their problem was typical for neo and paleo con politicians: so incompetent that even a chunk of the 'base', as Bush called them, are emerging as losers.
You can stuff your pious talk about ad hominem attacks. This discussion started with Nobody Home making unsubstantiated insults against the people facing foreclosure. That is called prejudice: pre-judging. No facts, just ignorant commentary.
I suppose you favour the government getting out of the way and letting a rock-fall turn into an avalanche. I guess you think you're safe, so f--- the rest of them.
The avalanche has already started my friend....time to call in the Joint Chiefs.
"I, _____ (SSAN), having been appointed an officer in the Army of the United States, as indicated above in the grade of _____ do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign or domestic, that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservations or purpose of evasion; and that I will well and faithfully discharge the duties of the office upon which I am about to enter; So help me God." (DA Form 71, 1 August 1959, for officers.)
They took this oath, now let them really defend a country.
Obama's plan does not help homeowners with no job. You have to have an income.
The one's I refer to are the ones with payments more than 31% of income.
If their payment is more than 31% of income, then someone made a bad decision.
How did they come to make that decision - the homeowner and the mortgage company?
I could have went out and got a huge mortgage if the government was going to pay it.
But, I chose not to live off of the government. My payment is only 17% of income.
There is no retaining of value at this point, it is already lost.
Accept the loss and move on. Obama could have chosen to do something better with that $75 billion, like build some new clean energy plants, or give it to smart people who make good decisions.
Most of the $75 billion is going back to the banks (who helped make the dumb decisions) in interest payments on the loans that are no good. Then when the payments are missed again they can start back into foreclosure, with a smaller loss to the bank.
Government is not the solution! Government is the problem!
Surprisingly, Denninger kind of likes the idea. At least, he doesn't hate it. He thinks this might actually work.
I suspect he'll rethink it. :)
It may well "work" at keeping people in houses, and maybe that's good in some cases, but it won't fix a situation where job loss or wealth inadequacy cannot sustain a high-expense lifestyle. Not every CAN be rich, and pretending to be is a risky game to play.
It would be far better to create a mechanism to shuffle people into lower-price houses and grease the skids so that every body moves down to a rung that they can afford. That would leave the biggest, most expensive houses carrying the bulk of the loss, which only makes sense.
Preventing foreclosure helps the banks just as much as the individuals. Let's figure out how to get the individuals where they need to be and let the bond-holders eat the losses.
From what the talking heads were saying, Obama's plan is not for those who don't have jobs. They're hopeless cases.
As for the rest...the value of real estate is location, location, location. And a lot of expensive locations are becoming much cheaper, simply because there are so many foreclosures.
And that's much of my point -- the weakest links will continue to fail, as the recession claims more wages as part of the downward spiral. You'd be better off getting people to cut their lifestyle in half (cheaper house in a cheaper neighborhood closer to work) than helping them barely hang on until the next wage cut happens.
It all "works" if you assume the downturn is temporary. If it's not, then they may as well all default and get on the path to mending.
On a better note, I noted that Chase had upped my interest rate to 28% on a credit card I'd paid off...and upped the annual fee to $85. One quick call to cancel and it miraculously turned into a 'regular' card with no fee and 13%. It's kinda fun having cards you don't intend to use. :)
They're already in a cheaper neighborhood. This plan seems to be aimed at helping people whose houses are now worth less than they owe. Banks have been reluctant to refinance in such cases, but Obama's plan would offer insurance against further price falls.
But that leaves the gov't (public) buying the loss from the lender or debtor or both, but only in the case of some plausible hardship, while leaving those who own outright or who have the means to pay an inflated mortgage on the hook for their own debt AND their share of the shared load.
Why not just give the money to every individual, and let it be "fair", and let them spend it as they wish? I might get solar panels, you might buy a house, and Joe might add insulation, while poor Dave salvages a new mortgage for himself.
It's not that the plan won't help some people, but that it's abjectly unfair and rife with moral hazard.
That's always the problem with "helicopter money." Those don't get any are resentful of those who do.
They tried that last time, and people saved the money. (The nerve!)
The only way I'm buying a house is if they give me enough money to pay for it completely, cash on the barrel head.
So now they are trying to target it more. (If you want solar panels, there's a nice tax break for you in the stimulus package.)
Actually, I only resent other people getting my money (and my children's). I'm fine with people earning more than I do. But you are 100% right that I'm resentful, angry, and indignant all at the same time about the mortgage approach.
I would rather have cash to pay off this house or save, but solar panels will be fine if I sell this one and buy something with cash. That's what I'll have to do if they temporarily prop up neighborhood values with public money -- I'd be silly not to sell and wait for it to come down again next year.
"Helicopter money" is not money legitimately earned. It's government money thrown from helicopters, as "Helicopter Ben" has threatened to do.
The resentment of those who don't get any is a real problem, and one that has long been a concern of economists. The gold confiscation during the Depression was supposedly "helicopter money." It was a way to give money to some people, without incurring resentment from the others.
I'm with TAE on this one:
A guesstimate would be that you could have the federal government pay all residential realty taxes for $275 billion annually. ($2500 X 110 million). Just a guess. Simple and immediately overall residential RE jumps in value as carrying costs decline (in some areas such as Florida dramatically)-local governments and employment stabilized-no need for 1200 pages of baloney. No multi-pronged convoluted mathematical calculus nonsense. IMHO of course this latest plan is a minor step forward, but there is no actual desire to fix the problem (yet). Just a desire to bamboozle the public.
"You'd be better off getting people to cut their lifestyle in half (cheaper house in a cheaper neighborhood closer to work) than helping them barely hang on until the next wage cut happens."
- it seems to me that these kind of plans "to help struggling homeowners" are thinly-disguised plans to help the banksters: keep those "homeowners" paying something for some more months before defaulting. Or better yet, buy the loan from the banksters, so that when that default happens it'll be us the taxpayers taking the loss. So yes, it will work, but you may not like the real goals.
I was very unhappy about the proposal to hand out $15,000 in tax credits to those who'd buy a house this year. They didn't hand me the down payment when I bought! Luckily that got taken out of the final "stem-a-loss" bill. Plenty of nonsense left in it, but it's peanuts relative to the bankster tarps.
From the few details I saw over at Kevin Drums, there are rather small caps on the payouts. Principal payoffs of no more that $1K/year for five years. Small bribes, like paying for the paperwork. It sounded more like incentives for those who could be saved to act, rather than large sums for the otherwise hopeless cases. The question for the rest of us is:
I don't know the answer to that, but the fact that I can't flippantly just say no way Jose, is I think a good sign.
Who writes this crap?
As someone in their early 30s I prefer to think of it as giving up on "financial delusion" rather than "risk". But hey, I'm just another crank on the Web, not one of the masters of the universe!
Yea, it's called once burnt, twice shy. Advice that should be given: stay away from open flames.
40 years ago, the mantra of the baby boom generation was: "don't trust anyone over 30". Who writes this crap, you ask? May be it's someone who doesn't trust anyone under 30. If so, irony knows no bounds.
What's wrong with kids these days? I can't sell them Brooklyn Bridges, Bridges to Nowhere, or High Yield Bonds to save my life! Thank God this Libertarian isn't too proud to accept the kindness of Senators!
If states start not refunding tax payments , such as Kansas, then I wonder how long before folks will decide to not send in their taxes...such as quarterly? Or reduce their withholding to zero,if possible?
Put a real bunch of hurt on the states and national budgets.
Yes, this is exactly what I expect to happen. A tax revolt. It will lead to rapid government collapse, extreme civil disorder, the worst possible scenario. Its every man for himself.
Gerald Celente has been stating the same thing for a good while now, saying that the collapse of the US is pretty much a foregone conclusion via financial implosion and tax revolt. Note that Celente does not expect "Mad Max" so please, any cornucopians reading this can just forget dredging up that strawman, ok? Instead he sees the US shattering into several smaller nations in a manner similar to the collapse of the USSR.
airdale -
Those states such as Kansas (and possibly California) that plan to withhold state income tax refunds are going to find themselves with an army of irate citizens on their hands in no time.
It is going to take about a mili-microsecond for taxpayers to decide to take retaliatory action. Such as i) reducing withhold to zero and then subtracting the refund due from the amount of tax owed for the following tax year, ii) in the case of the self-employed, reducing the quarterly estimated tax payments by the amount of the refund due, or iii) the more radical anarchist approach: not even filing a tax return for the following year.
This is a very dumb idea, and the states that try it are going to pay a much bigger price than the revenues they think they will be saving.
I've also noticed that several states (including mine) have sharply increased auto registration and transfer fees. I strongly suspect that a lot of poor people are not even going to take their cars for inspection to renew their registration. The police can only ticket and/or impound so many cars before things rapidly get out of hand.
The system is certainly being stressed in multiple directions, some we haven't even thought about yet.
The IRS WILL invalidate your W4 and set the withholding for you if you try to under-withhold and pay in arrears. They hold all the strings, and you will jump when they tell you to.
Paleocon -
Yes, but that only addresses income from wages. The taxes on income from many other sources, such as interest income, usually doesn't get settled up until your tax return is filed, so I think that is where there is a lot of leeway for the taxpayer to subtract the amount of refund withheld by the state. It is far easier for the self-employed, who pay quarterly estimated taxes plus self-employment tax (in lieu of Social Security withholding).
There are some interesting legal implications regarding the above. If the state withholds your legitimate tax refund from the previous year, and you then subtract that amount from your taxes due for this year, exactly what law are you breaking? How can the state legitimately not pay you what's due to you while at the same time expect you to pay what's due them? By withhold a tax refund, is the state breaking some sort of implicit contract or agreement?
Besides, we are not talking about an IRS problem here, but rather a problem with the departments of revenue in certain individual states. Without doubt it has the potential for getting very messy and very nasty, particularly with regard to those people who are depending on that refund.
As I implied in my initial post, the states that plan to do this are shooting themselves in the foot. I think that many people who were heretofore honest about their taxes will now have no qualms about engaging in outright tax cheating.
Agree on all points. In fact, I'm actively seeking ways to reduce my tax footprint for the first time. Used to be I worried about making more money. Now I'm worrying more about keeping what I get. AMT will push down the incentive for high-end marginal earners significantly, if it's not bumped back up.
If the state unilaterally decides to keep a citizen's tax overpayment how is that different from an act of theft? If the taxpayer then applies the retained amount as a credit on his next tax installment on what grounds can the state object?
I think the US has a problem with its government being for so long engaged in willful disregard of both domestic and international law. This disregard is now beginning to impact the citizens where previously it was some putative terrorist or "unlawful foreign combatant."
The American way of life is non-negotiable. Now you get to find out exactly what was meant by that phrase. Your government dictates to you. Next step is getting the trains to run on time. Then we can move the "unproductive" into those KBR camps. Trying to claim your freedoms is likely a sign of poor social adjustment which renders you "unproductive."
BOP -
Indeed.
Notice how more and more the State isn't even trying to make a pretense of legality or social legitimacy, but rather is blatantly exercising arbitrary power .... essentially telling its subjects, "So there, and what are you going to do about it?"
I'm becoming more of the opinion that if the shite hits the fan in the US, it could possibly start with something to do either with a tax revolt or states rights (possible examples of the latter being a state refusing to send any more of its national guard troops to Iraq/Afghanistan or preventing federal marshals from enforcing certain federal laws or regulations within the state). Or it could be a total black swan, such as another Katrina at just the right time or an urban riot ignited by some completely irrelevant incident.
If things continue the way they are, KBR better ramp up its work on detention camps because they'll have NO VACANCY signs up in no time.
I live in one of the states (CA) that won't be handing out refunds. But this won't bother me, as I will not be due a refund, but will have a small payment to make. I have never understood the practice of giving a state or the IRS a bunch of my money interest free for up to a year just to get it all back in one lump sum. There are ways of doing this, and earning a small amount of interest at the same time, without giving it to the government. I'll bet there are a lot of Californians who may rethink that method of saving after this fiasco.
A more likely scenario is the continued expansion of the cash/barter economy.
I posted a few days ago that my mother who is a kansas srs employee has been told the state is officially out of money and that she might not get payed this payday. Not refunding people's state taxes this year is not to far fetched at the moment.
Housing Experts Skeptical Over Foreclosure Fix Plan
I feel better already. I should go buy something.
As the chat has led to foreclosures, I’ll pass on an interesting story I just read about avoiding such an outcome. It’s essentially called the “show me the paper work that says I owe you anything” defense. Given all the mortgage flips that have occurred in recent years, many current mortgage holders have neither the original nor copies of the mortgage agreement. A number of home owners have already succeeded in topping foreclosure actions by such a ploy. Granted not all bankruptcy judges will buy this defense but many have suspended proceedings while the mortgage companies regroup. At the least it may buy some folks time for any mortgage bail out to kick in. There’s a law firm in FL that has specialized in this defense. They are also sending staff out across the country to school other lawyers in the process.
If this catches on big time and if enough judges go along (hard to imagine that this might not end up in front of the Supremes (state or Fed) it might be the ultimate punishment for all those investors who benefited the subprime madness: no tickee….no repayment.
The strategy is called "Produce the Note," and it can buy you a few months to negotiate lower loan payments. There was an article in the Oregonian recently about foreclosure resistors, and I posted this link in the comments:
http://www.consumerwarningnetwork.com/2008/04/04/fight-foreclosure-make-...
I think it's fantastic. A mortgage company should be able to produce copies of the signed agreements with little problem. If they can't prove the terms of the mortgage, then there's no reason the people should pay at all!
It looks like the former high priest of de-regulation, Alan Greenspan, is now calling for more regulation:
He is also open to nationalization of the insolvent banks:
It takes a lot of courage to stand up in front of the world and say that your assumptions were wrong, and thus the resulting policy decisions were also flawed.
Are 80-year-olds the only people we have left in America with any integrity?
Sarcasm? Alan Greenspun should be doing hard time, not pontificating on the world economy.
Greenspan needs to take a walk back into the 'Mists' and be glad his ass is not chewed to shreds.
I suppose anything to preen one's ego by poppery before blow-dried idiot
talking head bimbo on a TV set.
The f**ker needs to be held accountable for his spew and sputum regarding his bullshit talks on the 'economy' that I used to hear so much of some time back. He is the trash that rising waters deposit on the shores as the water recedes.
I remember looking at the fool as he yammered on about arcane nonsense on TV and thought...."this guy is a big con artist".
In the 'Real Energy Crisis' story from Bacon's Rebellion, Mr. Framme champions the efforts of DOMINION energy company. The name reminded me of a Mega Resort in Puerto Rico where I was crewing on a Banker's Trust video, featuring a bunch of economic Masters of the Universe, including Bush Sr. The resort is called 'El Conquistador', no doubt to warm the cockles of the hearts of the local villagers who got to be servants there. The money's almost good. Who needs pride when you get to work for the Alpha Dog?
http://www.coopamerica.org/programs/responsibleshopper/company.cfm?id=216
Nuclear Energy, in safe strong hands! 'What could POSSIBLY go wrong?'
I just listened to Chesapeakes conference call (Largest US nat gas producer).
After listening to the myopic questions being asked I decided to get in the queue as a representative of the University of Vermont (in my history of investing, I have never heard a question asked from a non-investor but I figured what the heck). In any case -they ran out of time and I didn't get to ask this:
If we consider an energy theory of value, especially juxtaposed against a credit/fiat debt crisis, energy, not dollars is what we have to spend. Our society has been built on cheap oil and gas. 1) How much of the remaining nat gas resource in NA is recoverable at a price affordable to society and 2) how much energy in BTU/boe/mcf equivalent does it take for you to procure the marginal mcf on CHK leases?
I was a m a z e d at some of the statements and questions on this conf call. Aubrey implied that if demand keeps dropping as fast as supply that only a handful of north american energy companies will survive and 10,000 could go out of business -only those with best acreage in the top 4 shale plays will survive. Later, in response to a question he said that 50% of north american nat gas is uneconomic below $7.5-$8 per mcf and that once the economy recovers that will be a floor because supply and demand will result in much higher prices, etc. ALL of these energy guys are looking at their own companies and not thinking about society as a whole. We need energy gain in SCALE from some source in order to be able to have the wealth to pay for $10+ nat gas. IF we somehow get solar, nuclear, tidal, wind etc energy gain to the level that society has some breathing room THEN we will only need the nat gas if it is of superior quality usage anyways.
I think it is a race between social trainwreck and energy trainwreck and they are neck and neck. NG prices will spike in 2010 but the EP companies going out of business will reach the hundreds before then.
I might just call Aubrey and ask him, though I don't expect successful business folk to think in these terms. If they did they might not be successful business folk.
It might be worth thinking about how to phrase your question in a way that talks about net energy, without saying net energy. Something like "Drill casing pipe hit all time high prices in the last drilling runup. How much redirection of steel into the gas industry do you think society can stand?" I don't know. Something tangible his company might have already considered.
We know from the Credit Suisse report that the E&P average total cost structure is $5.95 per Mcf. That was not weighted by production volume. It was just an average over the number of companies. So if Aubrey is right, then the cost distribution by volume is much, much worse than by company. This has been one of my worries.
http://www.theoildrum.com/node/4562
Did anything else come to light as to the true $ per Mcf of Chesapeake? It is interesting that they claim an operating cost average of $4.69 and yet were willing to cut CAPEX when prices fell below $7.00. There must clearly be quite a wide distribution of return within the company.
So, if only the best acreage in the top 4 shale plays survive, which pipelines go under?
costs are coming down fast but not as fast as commodity.
There was lots on the call -but most of it highlighting how well CHK is positioned for future etc - after all it is a for-profit company -whether society has enough natural gas in future isn't their problem as long as they get good prices for their contribution (in general). The transcript is online somewhere (I have the pdf -its 121 pages).
The biggest disconnect in energy industry is STILL focusing on supply/resource and not focusing on affordable flow rate/timing. Some are starting to catch on but most are still figuring out what to go long or short.
Regarding pipelines, even if other plays are not economic to drill at current prices, that does not mean we will see production shut in. Just as producers today have not shut in significant volumes, they continue to produce, viewing earlier drilling as a sunk cost. At least they can cash flow out the assets. So you will see volumes decline but it will take some time before the pipelines really start to feel it.
How in the world can Brent Crude continue to sell for $8.00 to $9.00 barrel More than WTI, week, after week?
Its those canny Scots.
http://www.upstreamonline.com/market_data/?id=markets_crude
A year ago, WTI was $95.57 versus an average of $96.10 for the other 10 grades of crude on the above list, a difference of 53¢. Currently, WTI is $34.68 versus an average of $41.47 for the other 10 grades of crude on this list, a difference of about $7.
At one point a few days ago, the spread between WTI and Minas was about $20.
Has it got anything to do with shipping costs and 'local' demand?
Is there such a thing as the "Baltic Wet Index"? :o)
Nick.
The kindly grandfather says "do as I say,not as I do" http://www.thestreet.com/_yahoo/story/10464539/1/buffett-watch-the-oracl...
While reading and watching the talking heads, I see from our government, from Obama et al, a simple message to all the people that have worked hard and are NOT in trouble with credit cards and mortgages, "Screw You".
...and your children's children, unto the seventh generation."
Ahhh how about those who threw the vote lever in his favor be the first to feel the 'maroon harpoon'?
No, that is not a PC thing to say and I would estimate that about 80% of TODers voted for the Oman. Most might deny it later. I remember some very hot rhetoric about Obama here back before the election. Where are those kind souls now I wonder. It did get rather hot. You were not supposed to say much negative about him or your pants legs were set on fire.
Airdale-I threw that lever for no one for Prez but I was in a voting booth just the same voting for locals. I gave up on Presidential politics some time ago.
I voted neither Democrat or Republican for the presidential election. Instead of voting for the lesser of two evils, I voted for who i thought was best, even though the chance of him winning was virtually impossible. For the primaries, Dr. Paul received my vote.
I didn't vote for Obama or McCain, either. Voting for the bailout was a deal-killer for me, and both did it. I can't remember who I voted for. Green Party? Socialist? It was strictly a protest vote; my vote didn't matter in the presidential race.
That 's funny - you only remember who you voted against.
I voted for Cynthia McKinney.
I voted for Obama.
I don't expect him to walk on water, but I do think he's smarter and more prepared to try and to lead than his opponent, or his opponent's party. He walked into this with open eyes, knowing his first task was to catch an Earth-sized bag of flaming poo.. sorry if he's pissing everyone off, but as the kid said in 'Stand by Me', "I don't think this is supposed to be a party."
I'd have voted for Kucinich or Nader if I could, but I don't know how different it would look with any human being catching an incendiary crap-bomb like this. It's going to stink, it's going to hurt, and we've had it coming for a long time.
Best of luck!
.. and when I saw Leanan's Rahm Emmanuel story, the echoey voice that whispered in my ear was Rumsfeld, saying 'you don't go to Washington with the Party you WANT, but the party you HAVE'.. Yeesh! Watta Mess! Incoming!..
Russia restricts gas
So much for Gazprom's claim that their production crash is due to lack of demand...
From Blue Chip to Fizzle
Looks likely that today the markets will close down a tad, after sorting out short-covering profit takers and bottom-believers. If we get bad unemployment numbers this week we just might retest Nov's lows (just 1% below today for the DOW) and dig in for another slide.
Edit: Deleted dup of Leanan's FOMC post. Markets are edging up a bit now -- maybe they see the FOMC news as better than expected?
Today was a bounce day, after a horrible Tuesday, although the bounce barely managed to get the dead cat off the floor this time. Tomorrow will be more interesting. So far the market is down over 2000 points since St. Obama was elected. Thursday and Friday may make that number a wee bit worse, depending on upcoming economic reports.
The United States is producing more natural gas than during the 80's or 90's. The production from a typical Barnett Shale well has grown due to increases in multi-stage fracture technology. Haynesville Shale wells are producing several times more gas than what shale wells were able to produce a few years ago. There was cheap gas in the Pinedale Anticline (WY), the Fayetteville Shale (AR), and the Marcellus Shale (PA) There is now more than 1,000 tcf of estimated gas in place in the Marcellus. The price of LNG is half of what it was last year with more LNG capacity under construction. If expensive energy is what might cause economic collapse, cheap energy should produce the inverse effect, except when people behave stupidly.
http://seekingalpha.com/article/120880-america-needs-a-natural-gas-trans...
Flex-cars are being designed to operate on gasoline or natural gas. Natural gas is cheaper than gasoline or ethanol per BTU and cleaner than both.
Natural gas prices dip to lowest since 2002!
See details at:
http://setenergy.org/2009/02/18/natural-gas-price-falls-with-economy/
-Dennis
Which talking heads to trust
I was with him until he picked Larry Summers as someone you should be listening to...
Very good point Leanan. It brings to mind the teacher of my first statistics course. I learned that he asked the same question on the first day of every semester: If I flip a coin 19 times and it comes up heads every time, what are the odds of it coming up heads on the 20th flip? Naturally we all mumbled "50-50". He would laugh at us and tell us we had much to learn about evaluating the statistical analysis of others. He said to forget about the probability charts. It was highly unlikely any one of us would see 20 head flips in a row in a dozen life times. Much more likely that he had a two-headed coin. It wasn't just a joke. He hammered us all semester about paying attention to the population selection in every statistical analysis. We thought the answer was 50-50 because we assumed the population was an honest coin even though the teacher never specified such. If we had been aware of the true nature of the population the answer would have been obvious: 100% chance of the 20th flip being heads. The validity of any statistical analysis of any trend is subject to the assumptions regarding the population analyzed. Never accept any statistic until you at least fully understand the population selection process. And to be more confident in the results, challenge those assumptions.
Don't trust a tycoon for investment advice. He might play you for a dupe to increase his own accounts.
While Warren Buffet recommended buying American stocks he was selling them:
http://www.cnbc.com/id/29258337
Your comment seems to ignore the above noted qualifier.
Disclosure: I don't play the game.
Buffett can remain solvent longer than many, at least. Keynes was probably right when he said, "The market can stay irrational longer than you can stay solvent."
The corollary might be that nobody is really quite sure what is rational and what is not.
You misread me. Buffet was telling people it is time to buy American stocks. According to Cramer, Buffet was not following his own advice. Why? Perhaps he changed his mind, or needed someone to buy a load of stocks he wanted to dump.
What is Cramer's definition of timeframe? The old adage that if you hold a stock long enough it should go up in value might not hold true if the company goes out of business, nor be worth waiting for if a company gets a ten year downturn.
The advice was vague anyway. Buffet might be able to show you dozens of stocks that have gone up since then. It is as important to know what to buy as when to buy.
People sold naive real estate investors Florida swamp land, suggesting it was the right time to buy, or sold used cars that were described as "in perfect condition." Caveat Emptor -- Latin for "Buyer Beware."
$7/Watt PV Rebate to all residences
Comes out of the stimulus package
Like in California .....
http://www.cpuc.ca.gov/PUC/energy/Solar/070424_csilowincome.htm
What would be a better use of the stimulus package $$$ ?
That's California's plan, the latest dated as October 16, 2008, not Obama's. The Stimulus doesn't change the incentives for PV, as near as I can tell by reading the Bill, H.R. 1.
E. Swanson
There is no real stimulus for residential solar. Why not ??
So Saab is "10 days away from" failure, and the Swedish gov't says "So?"
It seems to me that Maud has more testicular fortitude than anybody in Obama's administration. If the Big-3, UAW, and bond-holders actually believed their next step was a bankruptcy then they'd have gotten things done in their 90-day window. But they didn't.
"Sweden plans $3.4B auto bailout; won't buy Saab, Volvo"
"The government said its support package is needed to safeguard "the continued success of the Swedish automotive industry," even if the industry's crisis deepens. It also called for quicker development of green vehicles.
"The plan, which needs approval by lawmakers, includes a maximum of 20 billion kronor ($2.5 billion) in credit guarantees to automotive companies, and up to 5 billion kronor ($614 million) in rescue loans to bail out companies in crisis. The government said it would also earmark 3 billion kronor ($368 million) for automotive research and development."
http://www.usatoday.com/money/autos/2008-12-11-sweden-auto-bailout_N.htm
Has there been a single member of Obama's administration who has proposed buying GM or any of the others?
This is the MO of paleo, neo and cons in general: add a little truth to the big lie. Distort, distort, distort.
What's the point of your bullshit, paleo?
To annoy you mostly, it seems? Note that February news typically trumps December news, and Sweden will not be buying or helping Saab in any case.
I care little for what is "proposed" or said -- the actions speak plenty loudly for any politician, which is why I didn't support Obama during the campaign trail. It's not about gov't buying, it's about gov't spending, and there is plenty of that to go round. What the chance that the gov't tells the union to pound sand, the bond holders to take a walk, the dealers to eat their franchises, and the employees to join the ranks of the unemployed or the Medicaid-style pensioners? I'll be very pleasantly surprised if we don't hear, "It'll be cheaper to bail out the Big-3 forever than to pick up the pensions", or "the nation can't handle THESE unemployeds hitting the roles." Let's give it till, say, April 15th and see how wrong I am?
You can slam me for being against gov't spending all day long, but you can't blame me for digging at Obama, since I did the same for Bush. They're all big-spending, big-gov't advocates, and so are you from what I can tell. Go spend your money as freely as you like, but please don't pretend that you or the gov't have a moral right to spend mine.
Edit: Apparently GM didn't want the Dec loans:
Saab apparently needs about $1B to last the year, and Sweden isn't willing to do it on GM's terms.
Regarding SAAB etc, your line was that the Swedes had more testicular fortitude than shown by the Obama administration, when the facts show that both governments are negotiating conditions for support of domestic industry.
You distorted the picture to make it fit your ideological position.
I don't have to pretend that government has a moral right to take 'your' money and spend it elsewhere. That right has long been established, though some streams of moral philosophy might prefer to call it a duty: a duty of good government matched by a duty of citizenship to pay up. Personally, I'm not of the duty school, but then who cares. What I can tell you is that if we were on lifeboat together with others and you were claiming ownership and exclusive right of use of the remaining food because you had managed to grab a bag of sandwiches from the diner before the ship went down, I would gladly vote to choose you as the first candidate for dinner if the USS Rescue didn't soon show up.
Just because taxation and income redistribution is legal doesn't make it moral. I know duty, and it's a personal thing. My gov'ts duty is outlined in the Constitution, and even Amendment 13 didn't intend the level of income redistribution and policy leverage that the tax code provides now.
As for posts and comments, I post news that I feel strongly about one way or the other, and my posts of course reflect my leanings just like yours and most others do. I'm not ashamed to be a fiscal conservative, but boy it sure does make some people mad when I act like one!
Your final comment reminds me, it's time to get that concealed carry class squeezed in. Never know when I might need to defend myself from self-righteous cannibals.
You didn't post news that reflected your leanings; you cherry picked a part of a story in order to distort the picture.
That says a lot about your morality.
Unsurprisingly, you missed the point of my lifeboat example.
You haven't a clue what my leanings are, except perhaps by now, you may have figured out that I don't respect people who spread half-truths.
How would TOD folks classify this video?
http://www.youtube.com/watch?v=cMnSp4qEXNM
That's part of the story. Dems like Fannie and Freddie, Republican's liked Countrywide and Indymac. Both parties have dollars on their hands.
Ha . Its already been pulled.
And I had to restart my EVDO to get my browser back.
And your PC might be set afire for even posting this link.
Just kidding.
The fact that it was pulled? What does that say about glasnost on the youtube circuit?
Got another link of same?
Airdale, you switched to EVDO from dialup? Fantastic. I had done the same a while back, but my new location doesn't have CDMA coverage, so no EVDO. I'm now on AT&T with EDGE, and it is DOG SLOW. Even when I have 3G coverage in other locations, it's SLOW compared to my old Sprint card.
I just tried the link and it is working.
I am no fan of either political party. They are just different sides of the same coin.
However anything that comes through the filter of FOX
NEWSBS is not worth my time.What do the Neo-Cons have to say about the mess ?
Here's one for Fertilizer Bob:
World fertilizer prices drop dramatically after soaring to all-time highs
How well does I-NPK store ?
Looking to change cash into ??
Food
Tools - (includes - wheelbarrows ,weaponry , solar panels ,etc)
P Metals
Fringe media asking questions the MSM won't touch about Robert Rubin and Barack Obama http://www.thenation.com/doc/20090223/howl?rel=hp_currently&ref=patrick.net
He thinks Daschle was too much?
Does Anyone In Obama's Administration Pay Taxes?
And worse:
As California goes so goes the Nation.
Sorry if this was posted earlier.
http://www.abcnews.go.com/Blotter/story?id=6907429&page=1
"Plus ca change; plus c'est la meme chose".
How long before the huddled masses determine exactly how snookered they've been these past 30 years?
Oh, looky here, Mr. fox is applying for the position of hen house guard eh?