Drumbeat: September 6, 2010

Mexican drug cartels cripple Pemex operations in basin

Reporting from Reynosa, Mexico — The meandering network of pipes, wells and tankers belonging to the gigantic state oil company Pemex have long been an easy target of crooks and drug traffickers who siphon off natural gas, gasoline and even crude, robbing the Mexican treasury of hundreds of millions of dollars annually.

Now the cartels have taken sabotage to a new level: They've hobbled key operations in parts of the Burgos Basin, home to Mexico's biggest natural gas fields.

Forced to defer production and curtail drilling and maintenance in a region that spreads through some of Mexico's most dangerous badlands, the world's seventh-largest oil producer has become another casualty of the drug war.

Oil Falls for Second Day on Speculation Fuel Demand Will Drop

Oil fell for a second day in New York on speculation that fuel demand will decline as the U.S. summer peak consumption season ends and amid concern that the global economy will be slow in recovering.

Today’s U.S. Labor Day marks the end of the peak driving season. Traders are betting more on falling gasoline prices rather than rising for the first time in almost four years. Crude inventories in the U.S., the world’s biggest oil consumer, are about 5 percent higher than a year ago.

A Burning Debate Over Natural Gas Drilling

Homeowner Stephanie Hallowich is like many in western Pennsylvania who have watched their once-pristine neighborhood become an industrial site. Sprawling plants with flares that reach high into the night, noxious smells, trucks, and containment ponds with unknown chemicals are among the complaints of people who live in areas where natural gas companies have descended.

Hallowich believes three natural gas-drilling operations bordering her property turned her well-water black, forcing her to purchase a tank of fresh water every month.

Kunstler: In The Headlights

It's all a mystery in Washington. Nobody can figure out what happened to their green-eyed champion called Growth, that savior who rights all wrongs and insures our eternal exception from the sad fates of other less-blessed empires. Isn't there a book of conjures somewhere in the Harvard Business School that guarantee perpetual growth -- even if there are different tomes around the campus that describe the essential tragic nature of life, viz., that there is a beginning, a middle, and an end to everything. And while this might not be the end of the human project in North America, it is certainly the end of the cheap oil abbondanza, and everything spun off of it in the way of mass consumer luxury, with air-conditioning and a cherry on top.

Oil book offers a must-read on the industry

"The Prize" sat on a shelf in the library just out of sight. It was big, being nearly 800 pages long. That was intimidating. There are a number of unread history books on the shelf of equal size.

But finally, this summer, just as gasoline prices finally settled in at the $2.50 to $2.70 mark, I took the book off the shelf. Then I couldn't put it down. I bought an updated paperback copy for a friend, Dan Bahl who claims the book is absolutely enthralling.

Taming the Arctic: How to govern the spoils of climate change

A small clique of northern countries currently governs the Arctic Circle. But as the Polar Ice Cap melts, external powers have expressed an interest in the energy-rich region, raising eyebrows among the Arctic nations.

...Territory is not the only thing at stake. Abundant resources also lie in the depths of the Arctic Ocean. As the globe warms and Arctic ice melts, a fortune in oil and gas could become accessible. The US Geological Survey has reported that 13 percent of the world's undiscovered oil and 30 percent of its undiscovered natural gas sits in the Arctic Ocean.

Report slams Transocean 'bullies'

Offshore managers at contract drilling giant Transocean's UK unit have been accused of bullying, aggression, harassment, humiliation and intimidation in a report issued by the country's safety regulator.

The revelations come a day before the managing director of the company’s UK unit is to be quizzed by parliamentarians in an inquiry into deep-water drilling off the UK.

Hedge Funds Turn Gasoline Bears First Time in Four Years

Hedge-fund bets against gasoline exceeded wagers that prices will rise for the first time in almost four years as the fuel fell in the final week of the U.S. driving season.

Net-short positions held by money managers in gasoline futures and options increased to 1,169 contracts the week ended Aug. 31, the first time speculators have been bearish since November 2006, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. Hedge funds cut bullish bets for four straight weeks.

Saudi Arabia Raises Prices of Crude Oil Sold to All Customers in October

Saudi Aramco, the world’s largest state-owned oil company, raised official selling prices for all crude grades for customers in Asia, the U.S., Northwest Europe and the Mediterranean Sea for October.

The formula price of Arab Super Light crude rose the most among grades to Asia, increasing by 75 cents a barrel to a premium of $1 above the benchmark Dubai price assessment published by Platts, a person familiar with the rates said.

Magnate with more in sight than oil in his homeland, Iraq

The battered inhabitants of the brave, new, democratic Iraq must be wondering what could hit them next.

Nearly six months after their enthusiastic participation in national elections, Iraq still has no legitimate government.

More than seven years after the US removed Saddam Hussein, the country’s infrastructure remains in tatters and most Iraqis receive less than two hours of electricity a day from the national power grid – a situation that is sparking violent protests.

Government Plans to Sell Part of Its Stake in Oil & Natural, Indian Oil

India’s oil ministry has decided to sell part of the government’s stake in Oil & Natural Gas Corp., the nation’s biggest explorer, and Indian Oil Corp., the second- biggest refiner, to raise money to cut its budget deficit.

Pipeline to pump crude from Russia

After over a decade of negotiation and two years of construction, China will be able to tap directly into Russia's gas output with the completion of a pipeline next month.

The China-Russia crude oil pipeline starts from Russia's Skovorodino Transmission Station and ends at Daqing City, Northeast China's Heilongjiang Province, home to one of the region's major oilfields.

Tropical Storm Hermine Forms in Gulf of Mexico Off of Tampico, Heads North

Hermine is expected to gain strength as it approaches northeastern Mexico or the south Texas coast early tomorrow, the hurricane center said. Heavy rainfall from Hermine and a storm surge “will raise water levels by as much as 1 to 2 feet above ground level along the immediate coast near and to the north of where the center makes landfall,” the hurricane center said.

The storm is in a similar location as Hurricane Alex, the first of the June through November hurricane season, which slammed into northeastern Mexico on June 30. Alex forced the evacuation of rigs in the Gulf and halted offloading at the Louisiana Offshore Oil Port, which serves tankers in the U.S.

Gazprom eyes bond issue

Russia's gas export monopoly Gazprom has mandated JP Morgan and Calyon to organise a Eurobond issue worth around $1 billion in November.

Jonathan Risks Clashes in Oil-Rich Nigeria With Election Bid

Nigerian President Goodluck Jonathan risks sectarian clashes when he announces whether he will seek election: in the Muslim north if he does, and in his native oil- rich Niger River delta in the south if he doesn’t.

Unrest in the delta may jeopardize oil output in Nigeria, Africa’s biggest producer and the fifth-largest source of crude to the U.S. At least 14,000 people have died in ethnic and religious violence since 1999, according to the Brussels-based International Crisis Group.

Sasol to sell five fertiliser blending plants

JOHANNESBURG (Reuters) - Petrochemicals group Sasol said on Monday it would sell five fertiliser blending plants to comply with a deal struck with the competition authority to help cut fertiliser prices in South Africa.

South Africa's Competition Commission agreed for Sasol to divest five of its fertiliser blending facilities and cease within 25 months all importation of ammonia other than for use in South Africa to help reduce prices.

Estonia Aims to Cut `Too High' Energy Subsidies, Minister Says

Estonia’s government wants to reduce subsidies for renewable energy producers to cut costs for consumers, Economy Minister Juhan Parts said.

The Economy Ministry will prepare a bill on amendments within a month, Parts said in a phone interview in Tallinn. “The order of magnitude” for the reductions will be 50 percent, while cuts may differ across energy sources. Proposals will be based on a study by the country’s Competition Board, due to be presented “soon,” Parts said.

U.S. Plays Catch-Up on High-Speed Rail

AUSTIN, TEXAS — Spanish trains whisk passengers from Madrid to Barcelona in little more than two and one-half hours. Japan has bullet trains. China is building a vast network of high-speed rail routes, including the recently opened line between Guangzhou and Wuhan, which covers 1,070 kilometers at the world’s fastest average speed.

Soon, perhaps, the United States, with the world’s largest economy will also clamber on board. So far, the United States — in spite of or perhaps because of its vast size — has virtually no fast trains capable of moving swiftly enough over a long distance to compete with airplanes.

Australia: E85 Fuel & Energy Vulnerability

Holden’s imminent release of the so-called ‘flex-fuel’ VE Series 2 Commodore, which can run on 100 per cent petrol or petrol-ethanol belends up to E85, has – near enough – coincided with Caltex’s roll out of its tongue-twisting take on E85. Called Bio E-Flex, the high-proportion ethanol fuel will be available in 32 city servos initially, and is set to expand to more than 100 stations within a year or so.

Merkel Proposes 12-Year Nuclear Reactor Extension

E.ON AG and RWE AG soared in Frankfurt trading after German Chancellor Angela Merkel’s government agreed to extend the lifespan of nuclear power plants in exchange for payments to fund alternative energy projects.

Asia powers on with its nuclear expansion

When South Korea was selected late last year by the UAE Government to build four nuclear power stations, it represented the first time the north-east Asian nation had secured a contract to build reactors overseas.

However, these four reactors, which propelled South Korea into the international nuclear power big league alongside France, the US, Japan, Canada and Russia, are just the beginning.

Study: Italy should get own nuclear energy

CERNOBBIO, Italy—A study chaired by the chief economist of the International Energy Agency is making a strong case for the introduction of nuclear energy in Italy.

The study, presented Sunday at a business and policy conference on Lake Como, says Italy can diminish its dependency on foreign nations and cut carbon emissions.

Enel Seeks at Least 10% Return on Nuclear Energy Spending, CEO Conti Says

Enel SpA, Italy’s biggest utility, expects to have a return of “at least” 10 percent on its investments in bringing nuclear energy back to Italy.

“The benefits of nuclear energy offset the costs,” Chief Executive Officer Fulvio Conti told reporters at a conference today in Cernobbio, Italy. He said the investment for a nuclear plant with a capacity of 1,700 megawatts is 4 billion euros ($5.2 billion) to 5 billion euros.

Solar interest rises, but bottom could fall out

The price of photovoltaics is falling. Panels are cheaper than ever. They're quiet and clean. They're green. Could it be time to consider investing in an array or two?

Experts in the field, including unabashed solar advocates, urge caution -- until Vermont stabilizes energy financing policies.

But don't let that stop you. Solar panels still are selling like hotcakes. And hundreds of professionals in the field are hoping you'll discover new ways to afford them.

Row River farm tour offers an agricultural history lesson

DORENA — A dozen onlookers watched in awe as Walt Bernard scooped up a bowl full of wheat seed Sunday afternoon and let it tumble gently into a contraption he bought from a farmer for $50. It looked like something Willy Wonka might have used to make some kind of magical candy.

But “The Clipper” is an old farmer’s mill, heaving and squeaking as it blows chaff out of one end and lets clean seeds drop into a box with a screen in the bottom. It’s one of a dozen odd-looking pieces of machinery around the 70-acre Ruby and Amber’s Organic Oasis farm that Bernard and his wife, Kris Woolhouse, own in this bucolic stretch of the Row River Valley.

Bhutan’s wise pursuit of wealth in happiness

What is incredible is the thoughtfulness with which Bhutan is approaching this process of change, and how Buddhist thinking guides it. Bhutan is asking itself the question that everyone must ask: how can economic modernisation be combined with cultural robustness and social well-being?

In Bhutan, the economic challenge is not growth in GDP but in gross national happiness (GNH). I went to Bhutan to understand better how GNH is being applied. There is no formula, but, befitting the seriousness of the challenge and Bhutan’s deep tradition of Buddhist reflection, there is an active and important process of national deliberation. Therein lies the inspiration for all of us.

Bee decline already having dramatic effect on pollination of plants

A decline in bees and global warming are having a damaging effect on the pollination of plants, new research claims.

Researchers have found that pollination levels of some plants have dropped by up to 50 per cent in the last two decades.

The "pollination deficit" could see a dramatic reduction in the yield from crops.

HSBC Says Low-Carbon Market Will Triple to $2.2 Trillion by 2020

HSBC Holdings Plc says the global market for low-carbon energy and efficiency projects will triple to $2.2 trillion by 2020.

The bank based its forecasts on the likelihood of meeting renewable energy, efficiency and carbon-dioxide emissions targets.

U.S. Affirms 17% Climate Target; Envoys Cite Progress on `Green Fund'

The U.S. failure to pass cap-and- trade legislation won’t change its target for 2020 to reduce greenhouse-gas emissions by roughly 17 percent, climate negotiator Todd Stern said today.

Tony Blair: 'Heavy price' for climate inaction

World leaders may pay a heavy price in history if they fail to tackle global warming, Tony Blair has warned.

Environment NH to release global warming report

CONCORD, N.H.—Environment New Hampshire is releasing a new report Wednesday it says shows how global warming cold lead to extreme weather in the future.

Iron ore cargo ship takes Arctic route, makes history

OSLO (Reuters) - The MV Nordic Barents is lugging 40,000 tonnes of iron ore from Norway to China on an Arctic Ocean shortcut through melting ice -- and making a little history in the process.

Steaming east along Russia's desolate northern coast, the ship departed on Saturday as the first non-Russian commercial vessel to attempt a non-stop crossing of a route that skirts the receding Arctic ice cap.

Global warming to boost economic power of cities in the 'New North' which can unlock natural resources

Global warming will make cities in northern countries like Canada and Scandinavia the next big global economic powers, a senior academic has predicted.

Rising temperatures will mean that previously frozen natural resources like gas, oil and water will be unlocked just as the rest of the world is facing dramatic shortages.

Professor Laurence Smith, a UCLA professor of geography and of earth and space sciences, claims that sparsely populated parts of world like the northern US, Greenland and Russia will become 'migration magnets' as people flock to the new centres of global power.

Failure of the Famine Meme from the Right Side News

This article from “Right Side News” is a review of the book The Coming Famine: The Global Food Crisis and What We Can Do to Avoid It

The “Right Side News” is of course a right wing blog that constantly tries to debunk anything concerning the environment, peak oil, global warming or anything else that warns of problems ahead with our consumer driven economy. That is, if someone warns of a threat to business as usual then it must be debunked now.

According to the Right Side News everything that attempts to make any kind of prediction, economic or otherwise is a meme. That is it is a contagious idea that simply spreads through the population and does not necessarily have any foundation in fact.

The book in question came out in August of 2010 and predicts that there will be famine within the next forty years unless certain steps are taken by the world’s community of nations. This article says that meme is already a failure.

It is the putative failure of the global warming meme – the pivot point of many power elite promotions – that in our view is bollixing up a number of other promotions as well. There are three promotions in particular that it has affected: peak oil, drought and famine. All three of these promotions were in our view to be predicated on the success of the global warming meme.

There you have it. The global warming meme is false therefore, because they are predicated on the success of the global warming meme the peak oil, drought and famine memes are doomed to failure also.

The article concludes with this line: Conclusion: We are in no position to predict the future,… Yet the article is saying that there will be no global warming, no drought, no famine and no peak in oil production. If this is not a prediction of the future then I do not know what a prediction is.

One more point. From the Amazon.com link to the book above I found this in one review:

"The Coming Famine" deals systematically with all the major threats to the food supply: water shortages; soil depletions; nutrient loss and waste; fishery collapse; the Green Revolution and private ownership of genetic material; war and mass migrations; peak oil; climate change; uncontrolled human population growth; and unfair trade practices.

Sounds like a book I would like to read.

Ron P.

The NY Times had a more reasonable review.

There's also an excerpt.

I posted this a week or so ago, I never checked to see what the TOD community thought about this Point of View:


Particularly discussion-provoking is the bar chart depicting the amount of arable land in the World's regions, and the amount of that land currently in production.

The chart appears to depict that considerably less than half of all arable land is currently in production.

The Economist goes on to cheer-lead that Brazil's 'Cerrado Miracle' could be replicated in other parts of the World, most notably in Africa.

This article also seems to contradict a more recent article out there in the aether which states that most of the World's new farmland is carded out of rain forest. According to this Economist article, at least in Brazil, most of the new farm land has been creted on land that was Not rain forest.

Food for thought...

Large amounts of new arable land coming into production seems unlikely with desertification on the rise and other consequences of climate change making growing seasons unpredictable, particularly in large parts of Africa and elsewhere in tropical and subtropical regions. With declining oil production and hence fewer feedstocks available for industrial agriculture, the size and mechanization of farmland seems bound to decrease as well, along with yields per acre. And growing populations make the prospects of famine even more likely. In any case, moving large numbers of farmers onto said new land, were it available, would surely cause a great deal of social and economic disruption.

The Right tends to be more religious. They see the world as a mystery and have little time for evidence and reason. This is hard for some atheists like myself to understand but we can try.

Perhaps it is easier for me since I use to be a believer until I was about 28. That was forty years ago but I can still recall the difficulty I had in dealing with the conflicts which eventually led me to reject religion.

Here is another atheist trying to make sense out of the religious right view of reality:


Science too has its share of mysteries (or rather: things that must simply be accepted without further explanation). But one aim of science is to minimize such things, to reduce the number of primitive concepts or primitive explanations. The religious attitude is very different. It does not seek to minimize mystery. Mysteries are accepted as a consequence of what, for the religious, makes the world meaningful.

For the religious and many on the right it is all about faith with no evidence to back it up. Setbacks are seen as testing faith and belief. Lack of faith (doubt) and unbelief are seen as evil and of course sin.

Whereas doubt is the foundation of atheism and science.

I believe that some people believe things that I cannot possibly believe are possible.


AIDEActually I think their claim is that global warming is failing as a meme, ie. the idea is not becoming firmly established in the minds of the people. This might well be true. They are fighting a battle for mindspace. Whether the "memes" they are fighting against are true is not a primary concern. What matters in the midspace battle are winning hearts/minds. To this end spin, lies, PR, ad hominem style argumentation are all valuable tactics. I think a lot of this conviction flows from a strongly held meme on the right, "we are god's chosen, unlimited abundance is available to those who believe".

On this, as usual, unseasonably warm September day, thank goodness it is safe to go out now that the global warming meme has been declared inoperative. The utter arrogant stupidity of it all.

Rising temperatures will mean that previously frozen natural resources like gas, oil and water will be unlocked just as the rest of the world is facing dramatic shortages.

For some things you can say that it's not a problem but an opportunity. Yet sadly I don't think this is one of those situations.

Reservegrowthrulz should be happy. As I recall he mentioned a few years ago that the melting ice would allow more exploration chances.

The rate of melting of arctic ice has taken a late surge the last week or two. Probably because winds are driving the already broken and scattered ice south into open water, where it disperses below the 15% coverage cut-off definition for sea ice.


If this rate of 'melting' continues we will have a new record low, at least in from this definition of sea ice, by the end of the week.

The more conservative sea ice extent looks likely to be the second or third lowest on record.


However you look at it, I'm glad polar bears are good swimmers.

I'm glad polar bears are good swimmers.

That only carries them so far. Swimming consumes energy. The battle for the bear's is whether they can gain enough energy during the hunting season to survive the times of famine. Having to swim more consumes energy and makes hunting more difficult.

With due respect to Dr. Chapman and his work at UIUC, the calculation of the variable called "concentration" tends to overstate the actual reduction in sea-ice area. That's because the measurements using passive micowave emissions is based on the difference between emissions of solid ice and open water. As a result, the emissions from melt ponds appear as open water to the algorithms used in the calculation. I do agree that an increase in melt pond area over time would be an important change, but those melt ponds hide the area of sea-ice which exists below them. Of course, if the area of melt ponding increases fast enough, that would speed the melting of the ice below, since the albedo of the melt ponds are lower than that of frozen sea-ice...

EDIT: I want to add that there is a perception that the variable called "area" is declining quickly and that this indicates that there will be a complete loss of sea-ice in the relatively near term. If most of the decline is due to increasing melt pond area, this would appear to be an unreasonable extrapolation, since there is sea-ice remaining below the ponds. On the other hand, the extent variable, defined as the sum of the areas with "concentration" greater than 15%, may understate the overall impact of the decline, as this computation tells nothing about what's happening to those areas which fall within that boundary. Thus, it would be prudent to consider some sort of average between the "area" and the "extent" computations as an indicator of the overall rate of loss of sea-ice. Others have claimed that the volume of sea-ice is such an indicator, but volume is very difficult to determine, especially given that accurate data over many years is not available. Efforts to measure the area of multi-year sea-ice may also prove to be a good indicator of the impact of global warming. Of course, by the time the "extent" goes to zero, then there will be no doubt that climate has changed...

E. Swanson

Do you think that an industry, which has been financing the climate change confusion effort, is anticipating year round ice free conditions in the Artic? Is it anticipating storm risks no greater than those in the GOM?

What price the insurance to operate in this environment?

the melting ice would allow more exploration chances.

I have my doubts about whether it will play out that way. On land, thawing permafrost makes human exploitation dificult as formerly solid ground turns to mush. On the sea, travel becomes easier, but on land it becomes much more difficult. Alaska used to have a rule for tundra travel with heavy vehicles. I don't remember the specifics, but it specified how strongly the ground must be frozen before havy vehicles could be allowed to operate. They made the standard pretty conservative because they could do that and still have a long season to do the work. recently they were revisting the standard, because the season of hard frozen ground had shrunken so much it was getting it the way.

Reservegrowthrulz should be happy. As I recall he mentioned a few years ago that the melting ice would allow more exploration chances.

Happy is the wrong word. At the time I was simply noting how much more feasible it is to drill when being clobbered by moving ice isn't a problem. Just a statement of fact.

Are all these offshore platforms going to have to be gravity based? As I understand it that's largely how it's done in the north North Sea. Have the Russians built any production platforms in iceberg territory?

If a platform is built hardy enough to take on random bergs they'll come with price tags like Hibernia's $5.8 billion, which paid for what is essentially a 384 foot tall concrete island. Other approach is to build an artificial island for a project like Northstar, which came on late, was overbudget, and underperformed. Or just settle for ultra long directional drilling, like at Sakahlin or Liberty. If anything this latter makes the most sense, until the short term future of Arctic ice and petroleum markets is more clear. But it does put a limit on how long your lines will be, unless they keep raising the bar for ULDD - Liberty's shooting for 44k feet.

Obviously the majors weren't afraid of spending a few bucks to produce in the 80s, since they were wildcatting in the Barents and Chukchi Seas. I think they even punched some of the holes after Mukluk, which would have soured anyone off the Arctic I'd think.

Is there a good reason to believe there's even much oil down below all the ice in the first place? In any case, if we have an Arctic free of ice then I believe finding more oil will be the last of our worries.

The USGS assessment of the Arctic would seem to indicate that its more gassy than oily.

Apologies if this has already been posted. I came across this posting a few places over the last few days:

Mysteriously, Solar Activity Found to Influence Behavior of Radioactive Materials On Earth

How's this for spooky action at a distance? The sun, at 93 million miles away, appears to be influencing the decay of radioactive elements inside the Earth, researchers say.

My first reaction is disbelief. Either this is a major discovery or something else. Either way, you don't hear something like this every day coming out of Purdue do you? Any thoughts on this?

I have no idea about the quality and defend-ability of the cited research, but the last sentence from this excerpt of the PopSci article is disappointing and annoying:

- if there is a correlation between decay rates and solar activity, changed decay rates could provide early warning of an impending solar storm.

But while that's good news for astronauts, it's bad news for physics.

New information, especially once confirmed by multiple independent experiments and analysis and peer review, is great news to science, scientists, and those who understand the scientific method.

Previous theories can and are continually challenged by new evidence; they are tested, re-tested, and sometimes the previous theories are amended or replaced.

New discoveries are good news.

I had heard of it. It would be pretty extraordinary if it turns out to be true. Nuclea decay is thought to be driven by the internal state of the nuclei, i.e. not influenced by the environment. It is of course true that absorption of an exotic particle by a nucleus could induce a decay, that is how the nuetrino detection experiments work. But that is an exceptionally small effect. As usual the proviso that extraodinary results require extraordinary proof applies.

What are we to think?

It is either true or not true. If not true meh.
If true - well then things in the Universe are more connected to each other than we thought before. Which means new math/theories or your spiritual side gets an 'atta-boy'.

And if that's not freakish (interesting) enough:

Changing one of nature's constants

Fine Structure Constant not constant?

There has been talk about this for a while. Check through recent stories on New Scientist and you will find more information. Current thoughts centre around neutrinos being behind it.


The efforts of the elite to keep the bonanza going is running out of steam:

Housing Woes Bring New Cry: Let Market Fall Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.

As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

The disappearance of the imagined wealth and the unprecedented efforts to restart the bubbles is a demonstration of mass psychosis.


Whats really interesting is that for the economy building new houses is the economic engine not reselling existing stock.

This means that the sooner housing prices fall to clear existing inventory and reignite demand for new stock the sooner the economy recovers to what ever level it should run at.

Keeping prices artificially high on existing stock and further more allowing some more overpriced new stock to be created accomplishes ziltch for the economy. It does however keep bank balance sheet looking much healthier than they should. Perhaps this is the reason ?

In any case I'm a big fan of CalculatedRisks bank failure friday and give the backlog of banks that need closing the lack of closings the last few weeks is starting to get pretty dang interesting. If they go much longer without closing banks then something big is going on.

Perhaps the FDIC finally realizes they are not going to solve the problem using their traditional approach of closing banks. Either they are going to do the right thing and close banks aggressively en masse or more likely some sort of major bailout for smaller banks is in the works. TBTF is perhaps getting smaller.
Pretty soon the motto will be leave no bank behind. But I'd hazard this would require pouring close to 10 trillion down a rathole if not 20 trillion.


My own view -- I might be wrong-- is that we are going through an epochal compressive contraction, which is the opposite of growth. Money is disappearing because debts are being welshed on in such a volume that all the digital dollars conjured out of chief wizard Ben Bernanke's magic booty box are but empty spells cast into a hurricane of broken promises.

Money is not disappearing. This idea is based on pure ignorance and/or incapacity to absorb the logic of our financial infrastructure.

The problem is that too much money is idle. Investment is insufficient. From the Globe and Mail: http://www.theglobeandmail.com/report-on-business/economy/banks-struggle...

The head of Canada’s largest bank says the sputtering economic rebound has dealt the industry a tricky dilemma: how to boost lending when solid borrowers are increasingly hard to find.

Demand for credit, particularly from corporate clients, has dried up amid a stubborn economic recovery that refuses to take hold. Royal Bank ... chief executive officer Gordon Nixon said the banks must now find ways to build their lending operations – a key driver of their profits – without being coaxed into making unattractive loans just to get more business in the door.

“What you hope you don’t see happen is banks starting to do stupid things again,” Mr. Nixon said in an interview, referring to the past several years where credit was easy to come by, and banks around the world were all too eager to lend.

“Right now we’re in an environment where demand for credit is very, very low … It’s not that credit isn’t available – there’s not a lot of demand."
Despite that caution, banks must find a way to increase their loan books over the next few quarters amid a sluggish economy. Companies around the world spent the recession slashing budgets and many now find themselves cash-heavy and reluctant to invest. For the banks, that means competition for lending is the tightest it has been in years.

“You’ve got corporate balance sheets more liquid today than they have been in I don’t know how long,” Mr. Nixon said. “There’s a tremendous amount of cash sitting on balance sheets and companies aren’t borrowing.”

I agree with the new-Keynesians that aggressive fiscal stimulus is required to increase aggregate demand, to reduce long term debt and to avoid the burden of long-term unemployment. But this stimulus should be accompanied by measures that influence the investment direction of currently idle private savings, and even induce the private sector to redirect some of its current investment.

These measures necessarily need to build confidence.

I expect that before long Bill Gates will be joined by the banking industry pushing for a carbon tax in order to build confidence in non-fossil fuel and negawatt investment opportunities. The banking industry is awash in bright people, capable of absorbing data, including price signals such as the sustained higher oil price, relatively quickly.

It should be interesting to watch divisions in the economic elite harden into two warring factions with the hydro-carboners going head to head against against a new-enertech/financial industry coalition.

Despite that caution, banks must find a way to increase their loan books over the next few quarters amid a sluggish economy. Companies around the world spent the recession slashing budgets and many now find themselves cash-heavy and reluctant to invest. For the banks, that means competition for lending is the tightest it has been in years.

So you expect companies to trust the banks after having their credit lines cut because of a financial crisis inside the banking industry ?

I question the actual cash reserves of most companies banks are not the only ones who can play games with their accounting. Regardless if you want your company to survive you will be building your cash reserves right now and not borrowing. Companies work on a cash flow basis at the end of the day unlike banks build and they will come does not work well for a real company dealing with real demand.

Pushing on and over cooked piece of spaghetti simply does not work ask Japan.

Money is not disappearing. This idea is based on pure ignorance and/or incapacity to absorb the logic of our financial infrastructure.

Can you explain this further?

Do frame it in the context of a Fractional Reserve Currency and show how the fraction can NEVER shrink.

Bonus points if you can give the textbook name of the economic system. Is it a Kensian system - as an example.

What don't you understand?

Money is not disappearing. This idea is based on pure ignorance and/or incapacity to absorb the logic of our financial infrastructure.

Can you explain this further?

Banks and similar institutions e.g. Fannie Mae are unable to collect on their loans. To them the money appears to have disappeared. However, the money that was lent is still out there in the economy/other bank accounts. Yes, it could to be sitting in bank accounts not doing much except perhaps collecting on meager interest (saving accounts). Or it could be slowly traveling up the wealth ladder where it has been accumulating in the last three decades.

To them the money appears to have disappeared. However, the money that was lent is still out there in the economy/other bank accounts.

"The money that was lent out is still out there" seems to be a claim made with no facts to back it up. The IRS seems to have something called "loss" in the tax code...if money is never disappearing - how can there ever be "a loss"?

The original poster claimed "This idea is based on pure ignorance and/or incapacity to absorb the logic of our financial infrastructure. " So do place a response in terms of the 'logic' of 'our financial infrastructure'.

It would be helpful to have a name for the financial system that is in operation also.

if money is never disappearing - how can there ever be "a loss"?

Have ever heard of the expression: One man's gain is another man's lost?
You are confusing failure to collect with the disappearance of money or lost of money.

disappearance of money or lost of money.

And why is it you can't explain how, in a fractional reserve system, money can only be created - never destroyed.

And why is it you can't explain how, in a fractional reserve system, money can only be created - never destroyed.

We have more money today than we have in 1903, 1910, 1980, 2009 etc. That is right, we can't destroy money unless it is intentional e.g. burning it, fat finger mistake or a repudiation of it via a political revolution. I think you are confusing credit via a loan i.e. a money contract with actual money. The popular understanding of the "fractional reserve system" is deeply flaw, and a lot of intelligent people here on TOD and elsewhere are simply mistaken in their understanding. I am digressing a bit here. The one myth that I find very disturbing is the idea that private banks e.g. Wells Fargo can loan money into existence. This is simply not true.

The fact that you keep insisting that I invoke some theory to explain our money system suggest that we don't really have a complete understanding of how money works. I'm simply interest in the daily working of banks (private in this case) e.g. when Wells Fargo made all those home loans using depositors money and investment and then have a large portion of these loan go bad - Wells Fargo had simply lost depositors money when they fail to collect on those loans. This things happen routinely albeit unusual on this scale, and most of the time the bad loans are small in proportion that the good performing ones who pay interest can cover the lost.

Finally, you can either see my argument or you don't. We can go back and forth and talk pass each other til the cows come home, and nothing will change.

The one myth that I find very disturbing is the idea that private banks e.g. Wells Fargo can loan money into existence. This is simply not true.

You claim its a myth.

Yet, the web has plenty of pages it seems to the google query 'bank loan money into existence'. About 10,900,000 results (0.26 seconds)

If you claim its a myth, you must have a law you can point to showing how the myth is wrong. Or something with less handwaving than 'its a myth'.

Finally, you can either see my argument or you don't.

You are just making statements - like "this is a myth". or "actual money". Can you define what "actual money" is? Because the Federal Reserve NOTE is a NOTE and not 'actual money'. At one time, the Federal Reserve Note fulfilled the legal definition of note - what with the 'redeemable for' language.

Money can dissapear, i.e. it can be destroyed. Normally it simply changes hands, as in a transaction. But the various central banks are charged with the job of controlling the total volume of money in the system. The C.B. create, and destroy money all the time.

There also is the net amount of percieved wealth. Before the crash the total percieved wealth was much greater than currently. Net worth is the sum of home equity, stocks, bonds, and other investment wealth. So someone who calculated his net worth at say $5million would be willing to buy say a fancy sports car, and a yacht. Then the crash comes, and his home equity goes negative, and his stocks and bonds crash. He now percieves that he only has $2million even though he still owns exactly the same assets as before. So he decodes not to buy either. Then the guys that build and sell and finance such purchases lose their jobs.....

Money can dissapear

Money has a specific legal meaning also. The $5 mil -> $2 mil valuations on property in your example are not really "money" as "money" is 'legal tender' or, as defined by various legal documents a certain amount of gold/silver.

You are right however that, under the present system the Central Bank has been claimed to have the power by its charter to create or destroy "money" as needed.

Thus the statement:
Money is not disappearing. This idea is based on pure ignorance and/or incapacity to absorb the logic of our financial infrastructure.
is pure bunk if the Central Bank has the power to create OR destroy the money supply.

But in looking at the actual enacting legislation seeing if I could find a bit where it says 'you can create or destroy money' I found this bit that perhaps TOD could thrash out instead:

§ 225a. Maintenance of long run growth of monetary and credit aggregates
How Current is This?
The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

Here on TOD the general consensus is we are at a peak energy flow. That peak energy flow will make it hard, but not impossible, to increase production. Thus - what is the Fed supposed to be doing if TOD is 'right' about the energy flow -> increase production. And I don't think anyone has asked the Fed - "Hey - what is YOUR prediction to increase production" or other questions along the production/energy line.

The terms used here at TOD can be confusing, such as money, because some posters have a different definition of money.

Regular measures of money tracked by the Federal Reserve have not contracted for any period longer than a few months, and are not contracting now.

Depsite some well known posters here saying over the last year that we are, or will be, in a credit collapse, the total amount of credit in the US continues to rise. There has not been even one quarter of decline.

So using traditional measurements, money and credit are not disappearing.

I believe it is extremely unlikely that the total amount of 'money' and 'credit' will suffer any sustained decline in the near future. I also believe that sustained general price deflation is extremely unlikely, despite more than a few very popular posters here who have come to opposite conclusion, and have been making these predictions for more than a year now. Granted debt is being defaulted on and banks aren't lending. However government deficit spending does result in 'money' getting into the economy. Also when the Fed 'prints' money, as it did most of 2009, the money indirectly is paid to those that sold their homes when the Fed finances a mortgage with new money.

So techincally saying money is disappearing is incorrect. Now if someone said wealth based upon cheap and regular oil supplies was disappearing, that would be true. In the post peak world, a lot of wealth will disappear, sometimes abruptly, but we seem to be in a period where the effects of PO have at least slowed a bit.

See also:

An interview with Stoneleigh - the case for deflation

The Case for Inflation from a Plateauing Supply

The terms used here at TOD can be confusing, such as money, because some posters have a different definition of money.

Its hard to have a meaningful discussion if everyone is using different definitions.

Bad enough when one party thinks things taught in economics have meaning or is a science and another thinks its all hokum and voodoo. Not alot of meetings of the mind happens on TOD when one party thinks peak oil is a fraud or abiotic oil is real and meaningful either.

"Economics" is obviously enough a science within the usual meaning of the term-if one means by that the systematic gathering of information and trying to discover the rules and relationships between data and trying to make predictions based on these rules and relationships.

It's just that in spite of having been studied for a very long time by many brilliant men, not as much progress has been made as we would like.

If we mean the practice of a profession based on this field of study, I agree that there are many times as many charaltans as scientists, and that the charlatans almost invariably have the king's ear.

The vast majority of the of the people practicing this "profession"-another very poorly defined term-are no more than hack tradesmen with thier ear to the ground and a finger in the air of course, trying to make a buck as the hired gun or mouth piece of some business or organization.

Look at the Z1 accounts from the Federal Reserve. Household and business debt are contracting. This has been going on since mid 2008. Government debt is expanding.

To me, government debt is not at all equivalent to private debt.

Consider: the Federal Government is the borrower of last resort. Banks are required to 'invest' in Treasuries. Since everyone is now lending to Uncle Sam, rates are down (check out the latest rates at http://www.ustreas.gov/offices/domestic-finance/debt-management/interest...). Good news for us, I guess. Except that we are borrowing so much!

What seems to be happening is that, rather than disappearing, money is going down the rat hole, or maybe it is the rabbit hole?

Money was big when Alice was little...


Household and business debt are contracting. This has been going on since mid 2008. Government debt is expanding.

James Galbraith:

Since the 1790s, how often has the federal government not run a deficit? Six short periods, all leading to recession. Why? Because the government needs to run a deficit, it's the only way to inject financial resources into the economy. If you're not running a deficit, it's draining the pockets of the private sector. I was at a meeting in Cambridge last month where the managing director of the IMF said he was against deficits but in favor of saving, but they're exactly the same thing! A government deficit means more money in private pockets.

To me, government debt is not at all equivalent to private debt.

What does this mean? That investing in people's health or education and spending on weapons systems is not the same as spending on private healthcare and investing in weapons building plants? What do you mean by equivalence? For accounting purposes the debts are equivalent. For job creation? For maximizing societal welfare over five years? Fifty years?

In any case, as I said at the top of this thread, money is not disappearing. (Note the use of the present tense.) But private sector investment is inadequate, as is indicated in the banker's comment about private sector balance sheets. The problem is how to get savings invested in the jobs of tomorrow. In current conditions, as Krugman tries hard to explain to the dumbfounded, the way to do that is to increase stimulus spending and expand the deficit. And to ensure that the benefit of public policy is not disproportionately captured by the already overwealthy to the point of ridiculousness, the Bush tax cuts for the rich should be allowed to expire.

The IRS seems to have something called "loss" in the tax code...if money is never disappearing - how can there ever be "a loss"?

the irs draws a free body diagram of you the taxpayer. gain or loss is only relative to you, the free-body-diagram-taxpayer.

Keynesian economic policy...Sheesh!

Here's what I know: A lot of money was lent or leveraged on homes and infrastructure that is not being serviced. The homes and infrastructure are still there but they have little value if the debt is not being serviced. I don't want to buy a home and pay what they're asking and get caught with my equity leaking out like air from a punctured tire. I believe that all of that perceived value will continue to unwind until it reaches a point where value matches peoples ability to repay. Today it doesn't. That's as deep as my tiny lizard brain goes.


LOL or really needs too.

Except at some point the valuation in money may be less than its utility value aka Housing in Detriot.

This simply means that the financial value has fallen below the utility value.

Now one concept you should probably keep in your lizard brain :)

Valuations for big ticket items and indeed many items today are not even remotely based on their utility value.
Only the cheapest actually have market values which approach their utility value even here the availability of revolving credit tends to inflate values. Yes this is a shocker but something your lizard brain needs burned into it.
Credit causes price inflation. Now to just focus on housing for decades lending standards have been steadily lowered reaching the nadir with fog a mirror loans. Although currently they are not much tighter. The problem is the ability to lower lending standards to expand to pool of new credit worthy borrowers has peaked. This means that the inflationary demand from this method has peaked.

Next of course you can lower interest rates however banks make their money by borrowing short and lending long what this means is they leverage short term loans either borrowing your savings account or other methods to obtain cash and lending long aka 30 years. They intrinsically make their money off the differential in interest rates between short and long term rates. This is simplified but its the basics as Banks only make money off the differential in interest they pay and interest the earn. ( Wonder why they have so many fees ?)

In any case this is important because another way to expand credit demand is to lower interest rates which balloons the amount people can purchase for the same payment. How much a month Joe6pk sees a big increase in his purchasing power as interest rates fall from 8% downwards.

This fails as longer term interest rates fall. Short term rates are zero so they are already floored however long term rates still have plenty of room to fall. As they fall the banks make less money unless loan values increase to compensate for the lower rate. Aka Joe and Jane how much a month keep their monthly payments constant or rising as interest rates fall.

The problem for banks is that existing borrowers will refinance into lower rate loans and in time into shorter duration loans aka 15 instead of 30 year loans thus they are bleeding money left and right from their existing customer base.

Now a quick one the loan payment on 100k borrowed for 30 years is 950 at 8% 694 at 4% and 586 at 2% 538 at 1%

Assuming that pressure from reducing lending standards has hit its natural limit then housing prices would start to flatten and falling interest rates have less and less and impact on monthly payments. If your a banker or know one then your tie is starting to feel tight as you approach zero on the long end. You can look at interest paid to see this. And of course the influence on borrowers costs from interest payments drops off as you enter the 4% cliff with the principal becoming increasingly important.

So today you have lowered loan standards to their lowest level further drops in interest rates simply cost banks money your at the end of your rope unless housing prices increase.

However you have a problem every time you lowered lending standards you where really simply pulling forward demand for credit. As they hit zero you where really lending to people who simply where not credit worthy and may never become credit worthy. This was covered of course buy steadily increasing asset prices which have the magic property of making everyone credit worthy. Until they don't.

Now of course your in a tight spot as values are falling and the pool of credit worthy and even non-credit worthy borrowers has bend exploited till you indeed reach the real end game when you really simply don't have any greater fools left.

Worse of course many of the fools that "bought" are wising up and defaulting as it becomes clear that the asset prices where not intrinsic but purely driven by artificial credit demand.

Housing prices peak and begin to fall back toward their intrinsic value whatever that is.

Now of course the banks are in a real bind. The only thing they can do to increase their revenue flow is to start increasing interest rates. Of course this will naturally lower asset prices that are already falling.

Demographically the baby boomer peak borrowing is behind us and on top of all the games you have a fundamental drop in credit worthy borrowers. And of course the last craze lead to a real bubble any extensive overbuilding in many areas. You have and intrinsic oversupply of homes.

On top of all this you have peak oil and a depression going on.

The take away is where is the bottom ? Given the above it looks like something akin to Detroit in most areas.
Indeed its sort of a reverse bubble with collapsing home prices in certain areas ensuring any ability to move and cause pressure on home prices in other areas itself collapses. Borrowers become underwater and locked in or default. All real estate is local except when its not and as mobility falls your dealing with local income levels and demand. Given and intrinsic oversupply your talking a marginal value of zero.

Thats right believe it or not the calculated marginal value of housing is zero. Rent vs Owing works for a bit but eventually the intrinsic oversupply pushes rents steadily down. Early cash buyers find their equity evaporating and rental income falling so they decide to cash in sending prices down. No the cash buyer does not put a floor on prices they are simply another knife catcher and even more likely to sell as its clear they bought into a losing game. All the way up density was extremely low so you have plenty of room to increase the number of people living in a particular house. As people get poorer cutting housing costs by living with friends and family is a time honored way to reduce expenses.

So you big fat zero simply remains zero. However it can go negative. The problem is in the end you don't actually own your property but lease it from the state for a nominal fee called taxes. As property values fall tax revenue falls and the states are forced to raise taxes and or cut their payroll. Given governments are the largest employer when they cut as they must prices will decline. Many government employees are a tad bit unsuited for private employment and at the minimum make lower wages sometimes substantially when forced into the private sector.
And of course regions so desperate they are forced to lay off government workers are least likely to offer private employment forcing these workers to move. These steady pay check government workers are far more likely to be loan owners and thus need to sell.

Values fall tax revenue falls and in time the taxes themselves make the property value less than zero as no one wants to pay the taxes and the government refuses to set its tax rate effectively at zero.

Now I know this is getting long but there is more. On the other side of the table people have jobs they work everyday and bring home a pay check. Surely at some point this will work to put a floor under housing or will it ?
Well here we have some nasty problems. The baby boomer generation is retiring and trying to collect its retirement.
Many people where employed directly or indirectly in housing and or commercial real estate. Others like the medical field although not considered directly employed depended on the insurance payments from those that where. Indeed insurance in general eventually has a significant dependency on the debt machine. People with no money don't need insurance or can't afford it. All across the spectrum people find their incomes adversely affected from the collapse of real estate even if they have a job. Making them even less likely to borrow. Many face long periods of unemployment and bankruptcy and thus simply are not going to borrow when or these days if they get a job.

Just because people have jobs does not seem to help once unemployment and even fear of income loss crosses certain levels. During the Depression 70% of the work force remained employed yet their demand was not sufficient to keep asset prices from falling. We have a lot more leverage and debt in the system today thus once can expect a lower high persistent employment problem to induce malaise if you will in asset purchasing power. Over time as asset prices fall more and more of those people who have jobs and want to borrow will choose to go underwater at a price they can afford for good or bad but most importantly they are taken out of the borrowing pool and locked into their decision. They are just knife catchers in the end. Certainly they can afford to catch the knife as prices fall what they can't do is hand it off to someone else.

My point is there is really nothing that can induce expansion in the demand for credit from this point forward its maxed out and simply intrinsically will shrink and falling asset prices will force demand for credit downwards in a vicious circle. Where the real bottom might be is so far out its hard to discern at some point mobility will improve and as values fall units will fall into disrepair and be destroyed but this is a long term process decades perhaps as houses are pretty dang durable and can fall into shocking condition before finally being destroyed.
Crack shacks simply further depress values on the way down thus it does not help.

Perhaps one day wages are low enough that manufacturing returns and jobs not dependent directly or indirectly on real estate become more common. The economy finally diversifies with people making more of the stuff we use on a daily basis. As we once again expand to making more and more of our own stuff to survive wages will stop falling and the employment rate will increase. I doubt seriously the financial establishment can make it to this natural bottom and we can expect a new financial system at some point. Even this does not help really by the time it finally happens it will be a mute point. Debt would have been extinguished and demand for debt now so low it would take decades to rebuild the ponzi scheme of debt assuming that you have the resources to do so.

So thus finally with peak oil one expects any sort of return to BAU like we have today to be highly unlikely.
So no again no real bottom just something really different and almost certainly poorer at least as far as I can see.

The good news is if you keep your gunpowder dry at some point through this disaster you can meet your utility needs i.e food clothing shelter if you have a little bit of money and a job any job.

I expect that before long Bill Gates will be joined by the banking industry pushing for a carbon tax

Of course the banking industry wants a Carbon tax. The banking industry takes 30% of the money spent on a Carbon project. Few businesses have government force AND a 30% margin. The sad part is Carbon projects are only 30% effective (money wise) 70% of the money is "overhead".

Anyone have mosquitoes? This is the worst I have seen them. They are just insanely out of control. I get attacked in the garage, in the driveway, during the day, at night... At this point i think they have mutated into some super breed. I haven't been able to take the kids outside in weeks. There was one cold morning that i was able to harvest a bunch of raspberries without needing a blood transfusion. Here is hoping for an early freeze! The ragweed can go with them.

Yup - we've had about four times the number seen historically. Too much standing water from thunderstorms.

The city was out spraying last Tuesday evening, due to finding West Nile virus in the area.

They use Evergreen 60-6, which many people say is a cure worse than the disease. It is pyrethrum-based, and a contact killer of insects. They spray around dusk, so that the chances of getting mosquitoes rather than beneficial insects is increased. It is supposed to be rapidly degraded by sunlight.

We'd have less of a problem if integrated pest management was used - e.g. people turning out kiddies paddling pools, and not leaving buckets around the yard.

Anyone else concerned that the Italian study recommending new nuclear power plants was released in Cernobbio? The Italians had a small amount of nuclear power until the the passage of the Italian nuclear power referendum of 1987 which resulted in the termination of work on one near complete power station and the early closure of two others. Everyone agrees that voters were highly influenced by the 1986 Chernobyl disaster.

Coincidence or conspiracy? You decide.


Pres. is proposing $50 billion over 6 yrs to build/patch roads and runways. Oh yes, rail too. This after the $787 billion passed previously which had such astonishing results.

So all the unemployed in your town can line up at the 7/11 to lay down asphalt now, then rip it up in a few years for fuel. WPA 2 this ain't.
Who besides the usual payola boys will benefit?

Obama's got some interesting ideas - and it is election time after all - but this country doesn't need more roads or even high speed passenger rail.

What it needs is a moratorium on immigration and establishment of a metal standard.

Until we solve population and money, we solve nothing.

But we won't solve population and money, because Wall Street runs our government.

Obama might as well buy $50 billion worth of scooters and hand them out to people who show up with a valid driver's license? Probably get a bulk deal from Honda :)

I'm not generally in favor of give aways, but the thought of free scooters is intrigueing.

The biggest problem, as I see it , with scooters is a failure of the market to deliver a reasonably priced durable ,reliable utilitarian product.

Any scooter with the name of a well known for quality manufacturer on it has a price problem;consider a scooter with ten or fifteen percent of the materials in a compact car and even smaller percentages of expensive machine work and auxiliary systems such as air condotioning entirely absent;yet three such scooters cost as much as a FAR more sophisticated compact car.

The entire manufacturing budget of the off make manufacturers seems to have been diverted into flashy paint jobs and spaceship styling.

My personal somewhat cynical estimate is that the life expectancy of the typical Chinese import scooter is well under five thousand miles.I know of quite a few that have been junked at less than a thousand due to catastrophic engine failures or the lack of an utterly unobtainable part.

I spent several days once investigating the parts problem;at the time there were over five hundred manufacturers, each of them apparently throwing scooters together like I built my hot water system -out of anything handy that will serve-the difference being that I am retaining ownership and therefore had an iron clad incentive to do a good job.

The U.S. government already hands out free scooters. Haven't you seen the "Free scooters paid for by medicare" commercials?

Pres. is proposing $50 billion over 6 yrs to build/patch roads and runways. Oh yes, rail too. This after the $787 billion passed previously which had such astonishing results.

If you think the official economic reports have any validity, the $787B made the Great Recession a couple of million unemployed less severe than it would otherwise have been. The big problem was that he needed to stimulate at least twice as much. Now, since half a dose of medicine didn't work the patient is refusing more. So the idea is to put a drop into the mostly empty bucket just so he can say he is trying.... The problem with being so timid, is that people think they've seen what your ideas can do (i.e. nothing), and you won't get another chance. I think it is a case of better do it right the first time, otherwise you won't get another chance. I've seen that happen in industry as well. Idea XXX sounds right. Someone tries to implement XXX but does a crappy job and fails. Now XXX is discredited and others won't touch it with a ten foot pole. Eventually a new generation who doesn't know the unfortunate history comes in and goes "I think XXX sounds like a good idea, lets try it".

And of course, most of whats being built like roads -or in the places I drive through, rip the roads up, and rebuild to a marginally better road, are not really the infrastructure investment we need for the long haul.

Enemy of the State, 50 billion is just a quarter the cost of this latest one today, in which businesses will be given an opportunity to expand their businesses tax free up to 200 billion dollars.

'Obama to Propose Massive Tax Breaks for Businesses to Invest in Growth'


President Obama, in one of his most dramatic gestures to business, will propose that companies be allowed to write off 100 percent of their new investment in plant and equipment through 2011, a plan that White House economists say would cut business taxes by nearly $200 billion over two years.

Does anyone else smell desperation to win the next elections and shock the economy back into coherance?

Or how about this one. There are serious discussions now about letting the price of homes plummet to wherever they are going to go and let those with mortgages that are in trouble fall by the wayside, so that a new breed of home buyers can start builing up home prices once again.


'Housing Woes Bring a New Cry: Let the Market Fall'

As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

It's sad, yet macalbly humurous, all the fiscal flip flops that are being considered to reignite the economy without ever considering that high oil prices may be hampering that recovery. It just seems to be off the radar screen. As if its just a matter of coming up with the right combination of magical economic fanagalings will somehow resucitate the old paradigm just one more time.

Hirsch had a spending plan that attacked the root problem. Too bad it's 10+ yrs late, would require a dictatorial Secretary of Energy War, several trillion$ much of which would be spent to import know-how and manufactured parts, and would prop up the carbon house of cards.

So it's Powerdown time. Shopping carts not plug-in electric cars are our personal transport future.

So it's Powerdown time. Shopping carts not plug-in electric cars are our personal transport future.

Please...not only was Hirschs report flawed (assuming you were referring to his 2005 DOE report and not his prior "sky is falling" work) but there hasn't been any indication that peak oil (of whatever vintage, 2005 or 2008) has caused any leanings towards powering down, or even indicated that BAU can't continue for the foreseeable future.

Financial circumstances not PO directly will put more folks behind shopping carts. That sector of BAU will expand faster than PHEV drivers I bet.