Drumbeat: October 16, 2010
Posted by Leanan on October 16, 2010 - 10:38am
ANALYSIS - U.S. power supply inadequate for economic recovery
(Reuters) - U.S. utilities withstood one of the hottest summers in a decade without major blackouts, but the country might not have all the generation it needs if the U.S. economy rebounds quickly.U.S. electric use jumped 4.2 percent in the first half of 2010 from a year earlier, as the economy began to improve. The Energy Information Administration said July and August heat -- especially across the Midwest and Northeast -- may push second-half 2010 power use 5.2 percent above a year earlier.
Crude Oil Prices Fall a Second Day as Dollar Advances from 10-Month Low
Crude oil fell to the lowest level in two weeks as the dollar strengthened, curbing the appeal of commodities as an alternative investment.Oil retreated as the Dollar Index, which tracks the U.S. currency against six of its major peers, rebounded from a 10- month low after technical indicators suggested further declines would be difficult to sustain. The dollar declined earlier today after U.S. Federal Reserve Chairman Ben S. Bernanke said additional monetary stimulus may be warranted.
Commodity Increases Prompted by More Than Decline in Dollar, Barclays Says
Gains in commodities in the past week reflect increased global demand as much as the weakness of the U.S. dollar, according to Barclays Plc.
Potential market volatility means uncertainty at OPEC
The 12 OPEC ministers have stuck for the sixth time on the production targets they set nearly two years ago, amid increasing long-term uncertainties about global energy markets.
French Refineries Shut as Unions Set for Pension Reform Protest
(Bloomberg) -- France’s 12 oil refineries remained shut as unions planned a fifth day of protests to try to force President Nicolas Sarkozy’s government to drop its plans to raise the retirement age.“All the refineries are shut and they will stay shut until Sarkozy listens,” Eric Sellini, a representative of the CGT union, said today by telephone. “No crude is arriving, no refined products are leaving.”
VIENNA(UPI) -- Iran, jockeying for a top spot among oil-producing nations, takes over the presidency of the OPEC oil cartel for the first time in 36 years, Tehran said.Iran said through the Oil Ministry's Petroenergy Information Network that Masoud Mir Kazemi, the country's oil minister, will fill the rotating presidency of the Organization of the Petroleum Exporting Countries starting in January.
Turkmenistan inaugurates Russia-bound natural gas pipeline
ASHGABAT, Turkmenistan - Turkmenistan inagurated a pipeline Saturday that will help boost exports of natural gas to Russia.The 200-kilometre route links reserves in the barren Karakum desert to a compressor station that feeds into the Soviet-built Central-Asia-Center pipeline, which carries gas to Russia.
E.P.A. Official Seeks to Block West Virginia Mine
WASHINGTON — A top federal regulator has recommended revoking the permit for one of the nation’s largest planned mountaintop removal mining projects, saying it would be devastating to miles of West Virginia streams and the plant and animal life they support.In a report submitted last month and made public on Friday, Shawn M. Garvin, the Environmental Protection Agency’s regional administrator for the Mid-Atlantic, said that Arch Coal’s proposed Spruce No. 1 Mine in Logan County should be stopped because it “would likely have unacceptable adverse effects on wildlife.”
US giant to bring North Sea find into production
Oil company ConocoPhillips plans to bring the Jasmine discovery in the central North Sea into production in the next couple of years.The field found in 2006 is described as one of the UK’s largest finds in the last 10 years. Total recoverable reserves are expected to be more than 100million barrels of oil equivalent.
Idemitsu sticks to Kuwait refinery, denies reports
TOKYO: Major Japanese refiner Idemitsu Kosan Company renewed its commitment to actively engage in a proposed refining and petrochemical joint venture with Kuwait and Vietnam yesterday. The company denied recent media reports saying that the Tokyo-based firm was considering backing out of the project.
South Sudan tries to assure China on oil investments
South Sudan vowed on Friday that China's huge investments in its oil sector would remain safe, whatever the outcome of the region's January 9 independence referendum.
Spain to Break Two-Year Hiatus Selling Power Bonds This Month, People Say
Spain plans by the end of this month to sell the first tranche of an eventual 17.6 billion euros ($24.8 billion) of bonds backed by revenue from consumer electricity bills, three people familiar with the deal said.
You’ve heard of Peak Oil? Well, you ain’t seen nothing yet.
China Aid to Clean-Energy Industry Brings U.S. Probe After Union Complaint
The U.S. agreed to investigate China’s aid to its clean-energy producers, acting on a complaint from the United Steelworkers union that says the assistance violates global trade rules.Accepting the petition may lead the Obama administration to file a protest at the World Trade Organization over subsidies that the union says are contrary to trade rules.
US energy probe irresponsible: China
The US decision to investigate China's trade policies in the clean energy market is "groundless and irresponsible," China said on Saturday.
Price spikes inevitable after 'oil supply crunch'
The cycles of oil supply crunches leading to price spikes and recessions, followed by recoveries leading to further shortages outlined this week by a parliamentary researcher are inevitable, says a national sustainability think tank.Auckland academic, Dr Wayne Cartwright, said Sustainable Aotearoa New Zealand (SANZ) agreed the risks outlined in The Next Oil Shock, a research paper by Parliamentary Library economics and industry research analyst Clint Smith "is sound and provides very valuable future insight".
In NASA Image, a Submerged Pakistan
New satellite images from NASA show the extraordinary scope of the continuing disaster in Pakistan, where thousands of square miles of land remain submerged two months after the country was hit by catastrophic flooding.
Russia seeks to prove Arctic ‘ownership’
Russia has launched a drifting polar research centre on an ice-floe a thousand kilometres north of the Arctic circle.Some 15 scientists will man the station all year round gathering scientific evidence the Kremlin hopes will reinforce its claims over the region’s natural resources.
Climate protest closes road to UK oil refinery
(Reuters) - Climate change protesters blocked an access road to a major oil refinery east of London on Saturday in an attempt to stop tankers from leaving the site, organisers and police said.
Between denial and the deep blue (rising) sea
IT IS called the Bruun rule, and it works like this. For every centimetre the sea level increases, it says there is a decent chance of the shoreline retreating between 50 centimetres and a metre. If the sea should rise by a metre - which some scientists say is possible this century if ice sheets melt with global warming - that would mean 50 to 100 metres of coast swallowed by the ocean.
Climate change v capitalism: the feast is almost over
Take the case of President Obama. He generally signals a serious desire to address climate issues, but, like the leaders of all the developed industrial nations, has been caught in a terrible dilemma. He tries to argue for lower emissions limits, both globally and in the US. But he is simultaneously desperate to revive rapid economic growth and stimulate a sluggish industrial economy hampered by rising costs of energy, rapidly diminishing resources and venal bankers.So, while Obama talked climate change in Copenhagen, he pushed for accelerated growth and consumption, emphasising such climate-deadly industries as private automobile production, new road construction, nuclear power generation, and continued coal extraction (including horrendous "mountain top removal") while extolling an entirely theoretical "clean coal". He was also for expanding manufacture of heavy industrial equipment, and for more export-oriented industrial agriculture, as well as "new housing starts", increased oil drilling in deepwater zones – such as BP's – and for deadly tar sands development, all in hopes of growth, profit and jobs.
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Re: Climate change v capitalism: the feast is almost over
Great article. We've made similar comments numerous times. Is anybody out there in the "real world" listening???
E. Swanson
Not really I'm afraid. The comments on this type of article are always "informative."
Great article?
I think not. The article lumps nuclear power generation in with the other "climate-deadly industries". Just another anti-technology Green.
Hey PVguy - Sounds like you have a bunch of reading to do.
"What tech stock would Jesus buy?"
Cheers!
I agree - lumping nuclear power in with more cars and more roads, etc, was a dreadful comparison. I am not a huge fan of nuclear power generation (who could ever be?), but it is simply in a different class of problem-solution to the rest cited.
I presume that you didn't read the entire article. That mention of nuclear power is only one sentence in the long article. The rest is about our capitalistic economic system, which treats the natural world as an externality, to be used/abused in every way possible, so long as a profit is returned by so doing.
As for nuclear power, it can easily be argued that the basic problem is that our economic activity and it's impacts on the natural world are the result of the availability of massive amounts of cheap energy. Thus, ANY source of that concentrated energy could be used to power the other sectors of the economy, the result being ever more destruction of the natural world. For example, given enough electricity, the transportation system could be totally electrified and all HVAC needs might also be provided by electricity. The assault on nature that is inherent in the suburban model of development (high densities connected to ever expanding rings of low density housing placed further outside the central core) could be expected to continue. This would further increase the demand for other resources, all taken from somewhere in the natural world. At some point, this development process must reach hard limits, since we live on a finite chunk of rock with a thin veneer of living organisms coating the surface. Nuclear power would only prolong the illusion that all is well...
E. Swanson
From the story linked up top: US giant to bring North Sea find into production
Read more: http://www.pressandjournal.co.uk/Article.aspx/1965540?UserKey=#ixzz12Wt8...
Emphasis mine.
Hmm, maybe someone should send them a link to http://mazamascience.com/OilExport/
From: The Energy Export Databrowser
Looks like they went negative right on schedule. That prediction was correct. Great Hubbert peak, by the way.
The dip right in the middle of the peak was caused by the Piper Alpha Platform fire on July 6th of 1988.
Ron P.
And that 1984 blip up in consumption was caused when the UK had to burn more oil instead of coal that year because of the UK coal miners' strike.
Jon
so we would have become a net importer a few years earlier had it not have been for the disaster.
Unsustainable Policies and Practices with Deficits, Is America On A Burning Platform?
This is a real eye opening article. Though this is Elliot Wave theorists Robert Prector's blog, the article is not about his market advice, it is about what is happening to the economy in general and it is burning according to this article.
Then he gives about 22 bullet points on "AMERICA ON A STURDY PLATFORM". One of them:
Then he gives corresponding bullet points on "AMERICA ON A BURNING PLATFORM"
All the other bullet points are just as alarming as the peak oil points. My God, Peak Oil is only one of the things that will soon drive the economy totally into the ground.
The whole theme of the article is summed up in the last part of the article, "THE SHIP OF STATE". And he depicts the ship of state as the Titanic hitting an iceberg.
Ron P.
Over at The Automatic Earth, the latest posting includes a link to an article which discusses the foreclosure problem in some detail. It appears that the big banks may go belly up sooner rather than later, unless the Government steps in yet again...
E. Swanson
Darwinian, good review of "Unsustainable Policies and Practices with Deficits, Is America On A Burning Platform?"
But you listed the author wrong...
It was written by this guy
I never said the article was written by Robert Prechter, I said it was on his blog, though I did spell his name wrong. But looking at it closer I was wrong on that point also, Robert Prechter just has the ad at the top of the page. That fooled me into thinking it was his blog. It is really The Market Oracle blog.
Anyway I am glad to get all that straightened out. I thought it was a great article regardless. Really scary when you weigh everything together that the article lists.
Ron P.
This guy Quinn is as serious as a heart attack.He is right in there with the likes of Stoneliegh and Ilargi in terms of message and credibility so far as I am concerned.one of the best.
4. Give purported mortgage holders 30 days to produce the original notes; if they cannot find them, hand the homes over to the owner-occupants—free and clear of debt.
I have a problem with this. It still comes down to people buying and living beyond their means. Sure, the banks(elite) are predators, however, if someone got on the greed train with housing, or simply cannot afford their purchases, why should they get something for nothing?
I go to a restaurant and order the 8 oz steak. They bring me a 16 oz by mistake and I can't finish it. So, I say, "waiter, you brought me the wrong meal. It is too much for me and I can't finish it. Because you didn't bring me what I ordered, I'm not paying for anything". I think that is a bit much....simple analogy, but a quick one.
Or, I ordered the steak but don't have enough money, in fact, my wallet is empty!! Go figure. I guess I get the meal for free.
It kind of makes a mockery of folks who live within their means their whole life, and work 30 years to pay off their debts. Plus, those same focused folks have their money in the bank or their pension funds have shares. Why should the focused pay for the mistakes of any of these people?
There is no free ride, even for those who borrow too much money. Where is personal responsibility? It is the banks fault, they talked me into borrowing all this! Boo hoo.
The culture is f...ed. The greed and distortions are houses built of straw. Excuse the pun, but it was intentional. "Little piggy, little piggy, I'll blow your house down".
I know that bad things happen to good people, and I know what failure is and how hard it is to pick oneself up after getting smashed down by circumstance. Maybe live in the house for awhile and don't pay the interest, but sooner or later the granite counters have to be paid for. Living is picking up and getting on. I think it means living ones life to a code of values, and teaching our children those same values by example.
What the hell is this? "Hey kids, look for the loophole and if you find it you can get a free house". what they forget is that we all pay for these crooks....the bankers and the broke consumer, just as all shoppers pay for the shoplifters. Throw the bankers in jail for a start, but remember this new new slant on an old ditty" two crimes don't make it right".
Paulo, I think most of us agree the squatters were naive and irresponsible.
The problem is the systemic fraud in the financial industry that was allowed to continue for a over a decade. How many worthless bundles of mortgages (commercial as well as residential) have been peddled to pension funds, other nations, banks, etc. ????
How much of this worthless paper has the Fed covered up in its un-auditable books?
Who created this pile of "financial weapons of mass destruction" that is now imploding ?
The little squatters are a distraction.
The Pigmen are the problem.
"The problem is the systemic fraud in the financial industry that was allowed to continue for a over a decade."
I would add on, that the financial industry spent A LOT of money making that happen through lobbying, buying politicians through campaign money, and else-wise.
They spent a lot of time, money, and effort destroying safeguards and re-writing financial rules so they could legally go prey upon unsuspecting people. Safeguards of that type are put in place because not everyone can be an expert in everything...and when it comes to large and complicated financial things, most people are mathematically incompetent.
Good point.
How much more premeditated of a crime can you imagine?
It is not a crime to ask for an accurate accounting of who owns a mortgage.
If such an accounting cannot be produced--especially because those involved were involved in such utter, greed-driven shenanigans and corruption that they created an utter mess--there is no mortgage.
There are no "two wrongs" here. There are a plethora of wrongs by the mortgage companies, and there is the "right" of discovering that they have fecklessly f'ed themselves in the desperate attempt to f all of us.
Quit being such an apologist for a-holes.
It's not either/or, of course. It's both.
This is a really big deal. What this will all amount to, who knows, but it's really huge in its implications.
There is an older guard here at TOD who still believe in this country, and that's understandable. They go to the voting booth, they are active politically, they dutifully read the newspapers, etc., etc.
It's been clear to me since 2008 that our country is now thoroughly fraudulent, from top to bottom. And of course, there are probably lots of people who can't believe that and so people like me become the nattering nabobs of negativism.
And so when people talk about the Chevy Volt or this or that rail project, I laugh and then yawn. Mitigate transportation problems? Maybe. Solve anything in a corrupt and bankrupt country owned by Wall Street? Unlikely.
I never thought that I would one day find my self agreeing with someone who calls himself Oilman Sachs.
But there you go! Though recently I often find my self trying to decide if I should laugh or cry...
Well, when I joined I wanted a name that combined energy with finance and came up with this. Suffice to say, I'm neither in the oil nor investment banking businesses.
Consider the following story:
http://www.bloomberg.com/news/2010-10-15/goldman-sachs-among-banks-getti...
So...the big banks profit from...green energy in Italy! I mean, how hard could it possibly be to sell stock? But yet, somehow, companies need to send millions of dollars to Wall Street to make it happen.
And when the banks lose money (as they inevitably do), they go crying to the Federal Reserve, which prints money, and...voila! More inflation and debt for the American taxpayer. Pretty sweat deal.
I love all the scientists and engineers on this site, they seem like intelligent, down to earth people. But many of them are incredibly naive. They talk about this project here or these graphs there, but they don't realize that the entire sociopolitical organization is corrupt to the core.
Until we solve finance (and population), we solve nothing.
I'm not a communist. But I am in favor of sound money, and some form of population control. And believe me...if we had sound money and population control, the banks would be making less than a tenth of what they make now, and most of the people of the world would be better off.
Best to avoid the blanket generalizations. There are plenty of scientists and engineers here who know quite well what the score is. To be honest, when you say you are for "sound money" what I hear is someone who still thinks this system can be fixed, which strikes me as quite naive.
As for population, it will fix itself in response to outside forces. Probably quite unpleasantly. If you have a plan for fixing the population problem, I don't want to hear it. The thing to understand about collapse it that you (we) are not in control.
You are right, I shouldn't generalize.
As far as money and population, there will only be fixes after the die off, not before. I don't discount cultural evolution, but it only happens in response to catastrophe.
One of the organizing principles of our global civilization is that of the nuclear deterrent - the big players don't go to war with each other. And it happened because nobody wants another Hiroshima. Yes...we apes are actually capable of being reasonable sometimes.
So it's like that...after the die off, it actually is possible that the remaining humans will collectively construct a better system of money, and a way to control population without disease, famine, or war.
Likely, no, but possible. More likely is a return to a second Dark Ages.
A second dark ages yes, but remember that took hundreds of years in general. In some places it happened pretty fast (British isles), in other places not so far or so fast. For perspective I would recommend "The Fall of Rome and the End of Civilization" by Bryan Ward-Perkins, as well as "The Ecotechnic Future" by John Michael Greer.
I actually think there were more people on TOD saying the the end is near five or six years ago than there are now.
It's not that the old guard is naive, it's that you can't keep saying: "I am 100% certain that the world will end in six months" for five years without looking stupid.
Not that that stops everybody. It is actually fairly common for people to try to prove their doomer credentials by saying something like: "I've been predicting the world will end imminently for 30 years" without realizing that they are basically saying they have been wrong for as long as I have been an adult.
I'm not saying everything is going to be fine, but "death tomorrow doomerism" about as profound as lunch. And I am a big fan of lunch.
My recollection is completely different than yours.
There were not that many persons in 2005 who said the economy was soon headed for some type of depression. More typically were comments that the economy could head down once peak oil, a mortgage crisis, or a credit collapse was reached.
If you are trying to make some point other than a sweeping generalization perhaps you could back it up with facts, or even a theory. Such as I'm going to be enjoying a lot of fine lunches in the future because peak oil will never arrive, as we now have evidence of production increases coming on line in - well you fill in the blank.
Now was that so hard?
It's not that the old guard is naive, it's that you can't keep saying: "I am 100% certain that the world will end in six months" for five years without looking stupid.
I call this the "hindsight" effect. Once peak happened (the most recent) and the world didn't end.....well...suddenly it becomes necessary to redefine what the consequences were supposed to be. Fast crashing fell out of favor for exactly the reasons you mention.
But peak oil was supposed to do SOMETHING...so.....presto...instant peak oil caused financial mess. Of course, if you read predictions back before peak happened in 2005, you barely even see the word mortgage, let alone an explanation that peak oil would immediately cause people to sign mortgage documents for houses they couldn't afford.
I challenge you to find one doomer comment that I have ever made.
Many of us are just trying to understand the arc and seeking an analysis that could provide some policy assistance. Burying your head in the sand is not policy advice and you more than anyone else understands that the oil industry will not give any advice (unsolicited or not). It is really up to us.
I challenge you to find one doomer comment that I have ever made.
You can challenge a celery stick to grow wings....certainly it isn't required to respond any more than I am. I don't recall ever calling you a doomer, your specialty is more having a hammer and desperately looking for nails to use it on in a hayfield.
Burying your head in the sand is not policy advice and you more than anyone else understands that the oil industry will not give any advice (unsolicited or not). It is really up to us.
What is "up to us"?
Remember that a hammer usually has a claw that goes along with it :)
My claw & hammer is logic & math. If that isn't a broad enough toolkit for you, I don't know what is.
Do you need the hammer to pound the message into your head?
No. I just don't know what you think is "up to you", unless you are referring to your open science concept again.
You are completely missing the picture here.
We are two years into the crisis. At this point, the majority of the people with delinquent mortgages bought houses to reside in them, did not buy opulent homes, but far more modest homes, at inflated prices because the alternative was to keep renting in America's bedbug districts. Now they have fallen into the same hard times as the rest of us, i.e. layoffs with rehires at lower wages, and cannot keep up with the mortgages. SHould they still face foreclosure? Possibly, but usually not, and here's why:
There are three parties here: the homeowner, the mortgage owner, and the mortgage PROCESSOR.
In a lot of these cases, there are two outcomes:
1. Loan restructuring: part of the loan is forgiven, the payment is reduced, and life continues. Mortgage owner takes a 22% haircut on the loan amount, mortgage processor takes a 22% haircut on the monthly ppayment processing fee, owner takes a hit to his credit.
2. Foreclosure: homeowner loses his house, his credit, and possibly his health. Mortgage owner is stuck with property he can't resell very quickly, so effectively he is faced wiht a far bigger haircut. But the mortgage processor gets paid a hefty one time fee for putting the foreclosure through.
The middleman here, the processor, is contractually obliged to act in the interests of the mortgage owner, but has his own interest to look at, and prefers to go to the latter route, even though it means everyone else loses even more. There is a LOT of that going on. The middlemen are preventing mortgage investors from getting the best they can from these circumstances, ruining the lives of the mortgagees, and raking money in on foreclosure processing fees, when the truth is they are also cavalierly mishandling all the paperwork for these transactions and rightfully belong in prison.
"did not buy opulent homes, but far more modest homes, "
Where do you live? When I look at housing developments from the 1950s (back when people had more kids than they do today), I see houses about half the size and on lots as third as big as the average modern houses (I am not talking about McMansions).
Where do you live? When I look at housing developments from the 1950s (back when people had more kids than they do today), I see houses about half the size and on lots as third as big as the average modern houses
I seem to recall that, too. A typical couple would live with their four kids in a three bedroom, one bathroom house. They would have a six-cylinder Chevy in the one-car garage, and meat and potatoes on the table every night. The wife would stay home and look after the kids because the husband could easily afford the modest mortgage payments and gas for one car on his salary alone, and there was no question of him being laid off before retirement if he showed up for work on time every day. They thought they had died and gone to heaven because all they had to compare it to was the Depression and WWII.
Nowadays you have a couple with 1.5 kids in a house twice as large on a lot three times as large. The kids never go outside to play in the enormous yard because they are always inside playing video games. They need four vehicles because nobody goes the same place together, ever, and there is no public transportation anywhere around. Both husband and wife have to work to meet the mortgage and car payments, and they only eat at fast food restaurants because nobody has time to cook anything.
Then, the economy turns down and the companies lay everyone off because that's the first think they always do. The family has no savings, they can't make the mortgage payments on one salary alone, they can't pay for gas for all the cars, and they lose it all and end up living in cardboard box.
Somehow, I think the former system was better. Other than the fact I had to share a bedroom with my brother and ask my father for permission to borrow the car to go on dates.
Hi RMG,
Depressingly truthful, as always! When you put it that simply, it really makes you wonder why anyone would bother with the two car, two parent working bigger house and debt model
I too had to grow up sharing a bedroom with my older brother (and asking to borrow the car) it was not the end of the world, but a parent today would be ostracised for doing that.
Other than the chance of being laid off, everything else is a factor of the people wanting more stuff - it does not always make for a better life, but always makes for a more expensive, complicated and rushed one.
I see houses about half the size and on lots as third as big as the average modern houses
Local building codes now mandate a certain size for the home.
Many of those mandates are bigger than your 1950's citation.
These building codes make illegal the type of neighborhoods that most people grew up in the 1950's. In fact, they create neighborhoods that are unlivable without using a car to drive everywhere.
These neighborhoods will be unlivable, period, in the post-peak-oil era. They will have to be abandoned, and that will be a bad experience for the people who live in them, as if its not already a bad experience.
And the reason is to keep out trailers. When the maximum size of trailers goes up, the building codes usually follow.
Not everyone bought beyond their means; true, a lot of people were using their houses as sources of funding for things they couldn't easily have afforded (I've heard of some who refinanced every couple of years, until the brokers said 'no more'), but there are also people who were hurt financially in the last two recessions, needed money to pay bills, and refinanced before the market collapsed. They're all facing foreclosure because the value of the mortgage is now roughly 50 percent more than the market value of their property, assuming someone could buy it.
They're all facing foreclosure because the value of the mortgage is now roughly 50 percent more than the market value of their property, assuming someone could buy it.
No one gets foreclosed on because their house is underwater. They get foreclosed on because they can't afford the payments. Now that does happen a lot because the payments jump up on a reset that neither they nor the bank expected they would ever see because they could flip the house or refinance before that .. and they can't refinance an underwater house. But that's the fault of both the bank and them and they should probably all share the pain.
No one gets foreclosed on because their house is underwater. They get foreclosed on because they can't afford the payments.
Nope. The press has citations of people who can afford the payments and are underwater who opt to walk away.
And I know of one personally.
I have a problem with this. It still comes down to people buying and living beyond their means.
Interesting position. Wrong headed as you are thinking in terms of foreclosures, but interesting none the less.
I know that bad things happen to good people
Like fraud?
I think it means living ones life to a code of values, and teaching our children those same values by example.
If the banks committed fraud, why should they continued to get paid?
" two crimes don't make it right".
What 2 crimes? You have a crime of fraud.
where is the other crime?
Although the big banks are the mortgage servicers for a majority of the mortgages, they do not have a finanacial interest in the majority of mortgages. Most of the crap paper was peddled by firms like Countrywide, WaMu, Golden West, IndyMac, and by smaller mortgage lenders, not by banks. These were sold on to the wholesale operations at Lehman, Bear Stearns and other investment banks. When Bear and WaMu were forced into merger with JPM, JPM only took on some of the mortgages -- they went through them and sorted out the bad stuff into a bundle that the US govt had to stand behind. BofA didn't do this with Countrywide, since they did a voluntary merger, but they did so with Merrill Lynch.
BofA might get burned a bit, but JPM and WFC less so.
The effect of all this will be to raise the costs of foreclosure by a few thousand in legal fees and reduce the recovery by the investors in the mortgages -- namely US taxpayers, public and private pension funds, insurance companies, etc. Note that by now, foreign investors have pulled out of any mortgage paper that is not guaranteed by the US government.
I made a post to the Business Insider, but not the specific article linked above, but on another page. Part of my response is this:
http://www.businessinsider.com/the-second-leg-down-of-americas-death-spi...
Basically no one that is handling the ownership and management of mortgage pools appears to be following state and federal rules and regulations.
Having said this, it now appears that the overall problem is so bad, and would lead to a collapse of the financial system, there is no constructive way of fixing the problem. So the problem will be swept under a very large rug, or the US government will just issue special rules, or have Congress pass such rules, that over-ride the fraud commmitted along the way. Plus they will probably just fail to enforce the rules on MBSs/REMICs which would make the owners owe billions, yes billions more, in various federal taxes - not to mention millions in transfer fees that that the mortgage pools failed to pay over to local governments.
In sum, I don't think they will suddenly allow banks to go belly up, but rather banks will be sanctioned to transfer the risk and losses to the government, or be possibly allowed to just over-ride existing laws to solve the problem.
It appears that the arrival of a new quantitative easing program now is no coincidence.
Exactly. I cannot imagine that people really believe the banks will take a hit on this issue after all that has been done to prop them up. Has no one noticed what date it is? In a couple of weeks the posturing will be over, and this issue will be "fixed" - and not in our favor.
Thanks Ron for the link.
I understand the plateau is scaled and hard to recognize in our short vision of time, however, as I logon I always look for the one news article that definitely says (for me)"this is it".
I haven't seen it yet, and wonder if it will be the end of the Obama admin if he takes the blame for 'no short fix'.
This might be a good campfire post...."What is the tip moment/incident for you"?
Thanks paul
The question implies some sort of dramatic "tipping point" event. That is one possibility.
More likely, I think, is many years of contraction, some of it punctuated perhaps, but years in which people quickly learn to adjust to the "new normal".
For example, in the last great depression it was not until two years after the stock market crashed that the bank runs began, and even then it started quietly, almost a "whisper" as was poignantly described in this eyewitness account:
Since Yesterday at Project Gutenberg
Even in Wiemar Germany, noted for it's hyperinflation and economic malaise, the troubles did not start with a bang. Life became harder, much harder for some, but people valiantly struggled to "keep up appearances" even as they emptied their homes of all possessions, nothing too dear that it could not be sold for food and rent money.
When Money Dies
I don't have a link handy, but I recall reading that the more recent example of a collapsing economy in Argentina also wasn't announced with trumpets blaring. People were simply going about their lives, going to work and school as always, and over time it slowly became clear that something wasn't right.
It was probably a different experience for everyone, but it was described as waking up one day and quietly realizing that something had gone missing from the world, that their lives had fundamentally changed even as people went about their normal daily routines. They were well into that "crisis" of confidence before the bank holidays started grabbing headlines.
So, if these examples are any guide, then I think we can expect the beginning of the end to come not as a dramatic event, suddenly everyone's hair on fire, people grabbing their bug-out bags and madly rushing for the doomstead bunker in the hills. More likely it will be a quiet and collective loss of confidence. Loss of confidence in the system. Loss of confidence in the future.
In fact, I would go so far as to say that we may already be seeing that kind of tipping point in the rear-view mirror. I have recently seen a number of reports of people valiantly struggling to "keep up appearances"...
Cheers,
Jerry
The 1920s and 1930s are poor parallels to the present time because those decades were an interregnum between the first and second half of the World War. 1918 resulted in the cessation of military action (mostly, except in Russia); the removal of the crowned heads of Germany, Austro-Hungary, Russia and Turkey; the divvying up of part of their imperial possessions by the victors (especially in the Middle East); and the imposition of huge reparation payments. No real reconstruction of political, social and economic institutions was attempted; economic turmoil and collapse was inevitable; and the resumption of war was also inevitable.
The global situation is now more like that of the 1880s. Since 1814 the pax Brittania had reigned, since Britain was the preeminent Naval Power, the greatest economic and trading power, the largest and most prosperous empire, and the balance of power in Europe. By the Panic of 1873, Brittain had started to slip. Prussia had won the Franco-Prussian War decisively, and Germany had been united. Italy was also united. Continental manufacturers were out-competing the British manufacturers, and Argentina, Australia, Canada, and the United States had made British home agriculture unprofitable for the landed gentry.
The decline of the US beginning with the Bush I adminstration in terms of international political, military and financial influence parallels that of Great Britain beginning in 1873. The rise of China and the resurgence of Russia parallel the rises of Germany and Italy. Brasil and other emerging economies parallel the US in the late 1800s.
Actually, the US is somewhat worse off now than Britain was over a century ago. While the foreign policy, military, finance and trade problems are similar to those of Britain, the United States has a sclerotic political system, regional and ethnic factionalism, and inequalities of social and economic classes that more resembles Austria-Hungary.
Yes, I think you're right. Greer wrote about that, only he used the French Revolution as an example. Looking back, it seems sudden and dramatic, but to the people living through it, it wasn't.
Thanks for the link Ron.
And Guy Caruso (EIA) tells us with a straight face that "the world is not running out of energy resources" - we just need to cough up $26 Trillion for future oil production.
Guy Caruso and Danny Yergin play in the same sand box is some parallel universe.
Since the US has about 1.8% of oil reserves, it would seem that our share of the $26.5 trillion would be around $450 billion. This seems manageable over that period of time.
I would not be surprised to see US try to sell that math Merril ;)
Maybe we could get Gollum-Sachs to negotiate that deal.
Gollum-Sachs would charge the $450 billion in fees...
Export Lands have to charge enough per barrel so that their profits finance exploration and production of their reserves.
I read the article on downstreamer's forum before I came to TOD. I found it extremely disturbing from many points of view. First, it would appear that, based upon past actions, there will never be a "recovery" and, in fact, things will get worse. Second, that energy problems will not be addressed but will get worse. I say this because almost every potential "solution" costs money and the money isn't going to be there. Third, that a financial collapse is unavoidable.
I see this article as a wake up call for people to get serious about how they plan on coping with a bad (at best) future. It is way past time to still be talking. At the very least, people should have already established the ability to provide their own water, food, shelter and heat for extended periods (and not the two week FEMA crap) as well as having sufficient funds to carry them for this period. I wish I could say how long the "period" will last but that is an individual decision. If I had to pick a time, I'd say "forever."
Time is running out.
Todd
PS I don't know if the TAE article mentioned above is the PBS clip of the couple who are going broke after doing everything right. If not look at it at TAE.
Almost everyone goes down one rung on the ladder in this decade (except perhaps for the super rich): the rich become the new middle class, the middle class become poor and the poor become destitute.
Here is the a link to the video you are referring to. It shows how the middle class are becoming poor (by PBS, it's well-produced):
http://www.youtube.com/watch?v=T-joJo9S1E0
Watched the presentation in its entirety. Very moving. I often fret knowing that if I lost my job, which my entire little family depends on, we would be about six months away from being homeless, too....
I felt a touch angry at one of their decisions, as it was mentioned they chose not to pay for unemployment insurance when their business was flourishing. Perhaps it would have saved them some pain until they found work.
I second your recommendation to take personal responsibility and not leave yourself at the mercy of the government. My biggest concern is the lack of concern or awareness by so many of my neighbors.
Currency and trade wars just a simmerin' on the stove now...:
"Who would have guessed those Chineses know exactly what the Fed is doing..." - and trade wars ???
China warns US against making yuan dispute a 'scapegoat' for a flagging economy
And the unraveling mortgage fraud disaster:
Are ALL Mortgage Backed Securities a Scam?
The dollar could collapse, but seriously, what other currency is any better?
I wonder how well a global barter system would work...
The dollar could collapse, but seriously, what other currency is any better?
That would be gold. It is the ONLY currency that governments cannot print.
It is also the most historically stable currency - the amount of gold need to buy a middle of the range house in Roman times is about the same to buy a middle of the range house today.
If you have the time to read it all there is an excellent argument made for a return to the Gold Standard here;
http://www.newworldeconomics.com/archives/2010/090510.html
And also a great series about modern and traditional cities.
"I second your recommendation to take personal responsibility and not leave yourself at the mercy of the government."
Yes, but how many are taking on that responsibility? I've been reading "The Oil Drum" for many years and everyone is fully aware of the predicament we're in and that action needs to be taken. Yet, from what I can see very few have taken on any "personal responsibility" and undertaken any real action (other than tinkering with solar panels, getting a bike, stockpiling provisions, etc.). There's lots of talk of grand schemes, universal preparation and other such, which require the headless chicken that's government to react in a totally alien manner and do something its incapable of.
So there you have it, even the cognisant are doing nothing, the unaware are doing nothing, governments are doing nothing. No one is taking personal responsibility for anything. Why?
I believe the reason is that we're so far into collapse now that no one can do anything about it. We are in actuality already powerless even before we lose access to a plentiful supply of concentrated energy. What happens now is that everything we have and everything we depend upon is going to be slowly taken away from us as time moves forward. Its already started and people only gain realisation when they wake up one morning and say "I don't want to live like this any more". Of course, taking personal responsibility at that point doesn't change a thing.
What else is there to do? People are doing what they can, but as Greer points out, any actions taken now have to make economic sense in the current situation, not the imagined future (not least because the future will probably not be as we imagine).
Hi, Leanan. That's my point, we're already so far into collapse that people no longer have any choice, it's too late, they're already locked in place and there's little they can do. Anything they now do just aggravates their position and accelerates their own personal collapse towards poverty.
What makes economic sense now is probably diametrically opposed to what should be done because it simply promotes BAU. Can anyone find sufficient time and money to simultaneously maintain a BAU lifestyle and do what it takes to be independent of it? For most all their time and effort is insufficient to maintain the first, never mind the herculean effort needed for the latter.
We don't know the detail of our future true. But the more control we have over our personal circumstances and the less it depends on a collapsing system the better we can withstand what the future holds for us.
I'd be interested in what specifics come to mind for you.
Your statements are fairly broad, "BAU Lifestyle" in particular is spoken so often around here, it really needs to be resaid with very clear definitions..
Bob
Hi Bob. By BAU lifestyle I'm referring to a unique system of dependencies that allow people to live a certain lifestyle. Over the decades dependencies have been slowly moved away from the simple local self-sufficient systems to our current highly complex globalised system. People, especially those in cities, are now wholly dependant upon the global system and its supply chains to deliver even the very basics for living (survival). That is the BAU that I refer to.
Both the Australian dollar and Canadian dollar have risen to trade at parity with the US dollar over the past year. Neither country has had any bank failures and both have extremely healthy economies.
It helps to sell things that the Chinese want to buy.
Also, their currency itself is better. Australia's bills are actually made from plastic, and Canada's will be soon. The US is stuck with old-fashioned paper money, which are a distinctly old-fashioned shade of green. And it still prints $1 bills under the illusion that its dollar is worth enough to keep in your wallet.
Any idea of how much Energy exports are responsible for these healthy economies?
Energy exports (and other raw materials in high demand) account for a lot of it. However, the fact that Australian and Canadian banks didn't indulge in many of the creative banking innovations that self-destructed in the US and EU has a lot to do with it as well.
And it still prints $1 bills under the illusion that its dollar is worth enough to keep in your wallet.
When you take it out of your wallet, buy a buck double, then hand that to the dog - is the greed/joy of the dog for the 10-15 seconds of eating worth $1?
Or is that a reflection of still how high America is on the top of the heap that dogs can get food while others starve?
I think the point was, it is not worth printing a $1bill - it has such a short lifetime that it is a serious operating "overhead" for the central bank to constantly replace them. Canada and Australia got rid of them decades ago, with $1 and $2 coins, the smallest note is a fiver. Better still the Australian (plastic) ones are different colours, and different sizes for each denomination, much harder to mistake a bill in low light.
The plastic notes cost twice as much to make, but last four times as long, and even longer in humid tropical environments, or the washing machine.
His way of ending high unemployment is to throw more people out of work without unemployment benefits. So where is all those savings to come from? Not from the unemployed. The filthy rich will continue to invest in jobs for the Chinese instead of investing in Americans. Somehow all those infrastructure problems will be solved by letting the economy bottom out. Just like it did in 1933. Perhaps he believes unemployment will go away when wages fall to 10 cents an hour.
It seems to me that the West,primarily the Anglo Saxon part,need to thoroughly rethink their economic systems.Parts of the political system,particularly relating to funding of political parties,also need reform.There also needs to be more proportional representation to moderate the present domination of two party systems.
The current systems have gone down the road of privatization of public enterprises,deregulation across many sectors,globalization and free trade which have resulted in massive job losses and trade imbalance.The only real beneficiaries of these policies have been the oligarchies which run the nations concerned - ie,the rich and powerful.Those who have fallen for this ideology need to take a more rational and broadminded view of the situation.Ideology aka religion has never been and will never be a solution to practical problems in the real world.
The current system is not set in stone and it can be changed for the better if enough of the citizenry are made aware and get active through the various avenues available in a civil society.While voting every few years is necessary it is not enough.Taking a defeatist line,which many on TOD do unfortunately,means you are defeated before you even go near the battle field.
For those interested in the economic side of the current situation I can do no better than suggest a look at Modern Monetary Theory.
The political system of the "Anglo Saxon part" evolved from the system that the Normans used to maintain control of the more numerous Anglo Saxons and later the Welsh, Cornish, Scot and Irish subordinate populations. It is designed to vest as much political power in a small elite class as possible.
It has evolved into a system where political and economic competition is among factions of the elite class, some factions of which consider themselves transnational and not bound to the commonwealth of any given country.
Meanwhile, it is in the interest of the elites that the rest of the people consider themselves to be independent "free" individuals with few group associations and identifications (other than sports teams, churches, media personalities, etc.) so that public opinion can be more easily and predictably manipulated by the competing factions.
I'm not sure. You could make the exact opposite argument in Asia where people are encouraged to repress individuality in favor of the group, which seems far more favorable to elite manipulation.
I live in Thailand, where they perennial call for "unity", just means shut up and believe what your are told.
I'm not saying your point is not without validity, but it is just one tiny piece of the pie. Elite rule appears to be a natural condition for humanity past a certain level of development.
Anglo-Saxon's are hardly unique, except in form.
Re the Leanan's links above:
The Russians up the ante on the artic resource grab.
Spain is dead meat. Anyone stupid enough to buy their bonds should also be ready to try and collect from the squatters, protesters and rioters after their bankrupt utilities default.
France is a basket case:
That sounds so much like the articles from Europe in September 2000... which side blinks first this time?
Not quite
High Velocity Train AVE Madrid - Valencia starts.
It will generate 136.000 jobs
(warning! pdf in Spanish, good photographs)
http://www.elpais.com/elpaismedia/cvalenciana/media/201010/14/20101014el...
The first trips AVE Madrid-Valencia began this week. It is about 500 Kms between both cities (Valencia is an important port in the Mediterranean) and it also serves the country in between, branch lines to the port of Alicante, other cities.
This latest line joins the working lines to Barcelona (passes through important cities like Zaragoza), also to the South, Sevilla and Cádiz. Each line is about 500 Kms long, Spain is around 1000 Kms from shore to shore, Madrid is in the center.
High speed lines to Bilbao in the North, also to Lisbon/Lisboa and most everywhere are being built, some almost finished. The one to Lisbon the Portuguese have chickened out, probably Spain would built it anyway, we can't let out Portuguese brothers sink.
These high speed train lines ~300 Kms/hour given the relative size of both countries would be like the USA building a High Speed Train Line between New York and Los Angeles, Florida to Alaska and so on.
☼ AVE shall absorb 4 in 10 trips between Madrid and Valencia, both by plane and by cars; it'll transport 3,6 million people in the first year.
http://www.elpais.com/articulo/Comunidad/Valenciana/AVE/absorbera/viajes...
More news about this, in:
http://www.elpais.com/buscar/ave-valencia
136,000 jobs doing what? If that's 136,000 jobs just maintaining and running the train line, no one will be able to afford to ride it. If that's other jobs, who's currently being prevented from engaging in what activity for lack of the train? (Lobbyists seem always to give huge numbers for "multiplier effects" that hardly ever pan out in the real world...)
I agree - if takes this many people to run a train system, something is wrong. It will either be unaffordable, or subsidised to a ridiculous extent.
But really, what is the great advantage of being able to travel 500kms by train in 2hrs, instead of in 4? Is it really worth the expense, for the benefit of the elites whose time is worth that much?
If Spain really is in trouble, and they are thinking this will save them, the phrase (shuffling the deck chairs on the Titanic" comes to mind. Doing "high speed" shuffling won;t really change much.
I'm sure the French can deal with it. How about like this:
100 years ago: Martial law imposed on week-long French railway strike
Or this:
Sarkozy mobilizes riot police to break French oil strike
I dunno, but reading the comments about the mortgage fraud story and about how a country like France will deal with such strikes, I wonder if maybe people think their governments are run by small, furry, helpless kittens or something.
OTOH there's also a very long history of French governments caving in, time and time again, to theatrics of this sort. People can never be quite sure whether the government of the day is run by kittens or lions.
I keep wondering where those protesters in France think the money is going to come from to pay for their retirements at age 60. I ahven't seen anything on the MSM or on line to suggest that there is a rational basis to continue such extravagent retirement benefits. And the students are rioting for retirement benefits! What am I missing?
What you are missing is a sense of humor, if you aren't getting the joke. ;)
You're missing the last 80 years of governments progressively borrowing more and more from the future and giving it away to buy votes. And the end of the gravy train coming. And the clueless recipients not understanding why all the free benefits that they are "owed" are going to end.
Kunstler's vision of suburbia becoming the next ghetto is coming true
Poverty grows in suburbs, but social services don't keep up
"yet few of the suburban communities have a social services infrastructure in place to address the challenges this increased poverty poses"
Some of believe that the poor need jobs and cash, but are very doubtful that social services are all that useful.
France hit by new wave of mass pension protests
Has anyone ever heard Gerald Celente talk about peak oil? Seems like he should seeing as how he is a trends forecaster.
In the LA Times today
He puts parking in its place
That's well understood in the UK. We've had maximum parking standards here for years. Check out Planning Policy Guidance Note 13 (PPG13).
Trouble is the UK has an inverse attitude to parking. It may have changed in the years since I lived there though. If there is little alternative to car use then the parking charges are extortionately high, if there are alternatives then the prices are low. My local train station had heavy parking charges, they persuaded the local council to institute parking restrictions that prevented off station parking in the area. Why? The local bus services connecting residential areas to the station were useless. The last bus to mine ran about 5 or 10 minutes after the earliest commuter train was due to arrive, a train that was mostly 1/2 hr or more late, never mind a later train. If you wanted to catch the train the choice was car or car. When company bikes were allowed I did get one to commute to the station, worst summer weather for years it ended up, and that machine has been revived to transport me now.
NAOM
Wow! A little over a days worth of oil equivalent and that is "one of the UK’s largest finds in the last 10 years." It seems we are indeed in deep trouble. Now please excuse me while I go and throw up.
alan from the islands
I kept wondering what would happen with the economy during a tepid recovery while oil hovers around $80 a barrel. I kept thinking there would be persistent problems, and as we can see from the article below, its caught in what is being referred to as a 'liquidity trap'.
http://www.bloomberg.com/news/2010-10-16/-liquidity-trap-plagues-u-s-mor...
`Liquidity Trap' Plagues U.S., More Stimulus Is Required, Fed's Evans Says
That last line says it all. I have never before heard of an economic situation in which additions to the money supply fail to stimulate the economy. Usually low interest rates stimulate the economy on quick order because its advantageous for business and individuals to borrow money to make more money over time. But now the system is stuck, jammed into a hard position by widespread default on loans, which has established stringent rules by the banks in procuring loans. Additions to the money supply are not jarring it loose, the money is failing to move like it use to and that's keeping unemployment high.
The suggestion in the article is the need for more stimulus. But isn't this just more voltage to try to revitalize an oil based economy back into BAU, without taking into account the higher cost of oil? Are we not now bumping up against the constraints of higher priced energy?
Probably lots of people in the govt understand that but it`s not a message that has any reason to be heard. Because people will use the oil up anyway. And because encouraging a transition means that someone will suffer.....for example car makers would suffer if the govt came out and said "oil based economic growth is now officially over for good!" Ford, GM ---or house builders, etc would just get mad, perhaps there would be lawsuits. It would end up in court. The SUpreme Court might have to take on the whole thing. It would be very interesting. But better to let the situation develop naturally without interference??
I see what you're saying the in the early part of your post. What good would it do to announce the situation, the problem. But I'm not advocating an announcement, but instead the realization that BAU as we have known it up to now is not going to be the same. There doesn't even seem be an acknowledgement of the situation at hand. And if there was, maybe an early transition to a different type/mode of BAU could be possible.
To let the situation move forward without interference, without making wholesale changes is a bad road to go down. But it seems that is where we are headed.
You are quite right, but I don't think oil or the price of oil has much to do with their decision.
Former Federal Reserve chairman Greenspan said not long ago that he "did not get" some things that affected the economy. I think he was talking about oil prices and its effects. But I don't think those at the top of the Fed "get" peak oil, that it is not just a matter of price but whether enough oil will be left to power BAU.
Anyway, they are putting us on notice that inflation is coming. As I have said for five years here, expect higher prices for most necessities, even though the economy is struggling just to stay above water for a little while. Everyone should start to consider that prices may also, at some point, start rising faster. As mentioned above about Weimar Germany, hyperinflation did not happen overnight, but crept up slowly at first.
PE - Interesting point. I wonder if there isn’t an addition factor contributing to the effects of your liquidity trap. Even though businesses might not have the borrowing base they once had they are sitting on a fair sized cash basis. But it has been speculated that with the uncertainty over future tax rates and a potential significant cost increase in providing health insurance, companies are hesitating to use their cash positions for expansion. Makes sense: if my overhead costs for my employees will be rising by an significant but uncertain amount, how can I expand if I can’t estimate the expense of doing so. And, on top of that, my tax rate may be going up also? It’s a lot less riskier for me to sit on my cash and see what the future brings. And then it can become a self full filling prediction: lack of expansion keeps unemployment high which keeps growth low which justifies the anticipation of continued low demand.
It won't be long before we have certainty regarding taxes. Then we can find some new reason for businesses not to invest. Besides, the Chamber of Commerce advocates investing overseas in overseas employees. So, even if money if freed up by certaintly, we shouldn't expect any extra money lying around to be invested here.
As far as health care goes, those who advocate single payer did so, in part, because it takes the cost equation away from business. It is hard to compete when direct costs of health care by other countries is taken care of by the government. Even before the health care bill, the only thing certain about health care bills was they would increase astronomically year by year. I have had years my health care costs have gone up as much as 30%. So, I don't think health care explains very much of what happens to be happening now.
We have not been able to create enough jobs to cover increases in the labor force all through the Bush years. Obama made a half hearted attempt to change this through government stimulus. The only problem is that if you look at government at all levels, the stimulus has not really been a net stimulus. The deficit has even come down a bit so fed expenditures have not been able to overcome decreases at the local and state levels.
"Uncertainty" is a mantra for taxes. The best case is that taxes stay the same, in which case uncertainty will be over. That is when it will dawn on investors that crying about uncertainty implies that a Republican takeover will make it all better. Once the Republicans take over the house, uncertainty will be reduced, but nothing will have really changed.
The mantra we hear daily is that we just need to unleash private enterprise and the good times will roll again. Once investors realize how hollow this mantra is, that is when the stock market will begin to take a very serious dive.
One thing is certain, however. The window for serious government intervention in the economy is over because of our dysfunctional politics. Obama will be blamed for doing too much when he really did too little.
Further, lowering interest rates on government bonds by buying them up just seems crazy.
A log jam in other words. Yes, and who can blame businesses for the caution of holding more cash than usual after seeing so many other companies get shuttered. Most people started saving more for a rainy day too. It's a tough economic situation to snap out of when businesses and people have had the bajeezas scared out of them. Makes me wonder just how slow things could get if and when oil price rises to another crescendo that pops in a 2nd big step down.
Not looking forward to that one. But for now people have bought into that bit from the govt. that the recession is over, at least here in no. calif. where the roads are once again full of traffic.
I think that is why the US government is having announcements about intentionally increasing inflation. It is my understanding that a high inflation rate compels investment, because during high inflation uninvested cash that is sitting gets its value eroded away.
Well we've had an artificially stimulated economy since WWII, and one on steroids since the early 1980s.
So any talk of stimulus, monetary or fiscal, strikes me as perverse.
We are truly up shit creek, folks.
Yep . . . a liquidity trap. Pouring more money in is just "pushing on a string", the phrase often used.
The Keynesian economic theory would say that a big government spending program is what is needed . . . but the political climate for that is dead. So we are just going to have the "Hoover" for a while and hope for the best. I predict continued stagnation. For years. :-(
"The suggestion in the article is the need for more stimulus."
More stimulus to buy what? More stimulus used to pay off debt won't jumpstart the economy. But so many are so deep in debt that they don't want to take on even more debt. If you can't make the payments on the debt you already have, why would you take on even more? This is the point Krugman, et. al. can't seem to grasp.
Until incomes go up, there is no more money to spend. If incomes threaten to go up, then the jobs will depart, driving incomes right back down. Continue the cycle until Chinese and US incomes are effectively the same.
On top of that, since the little light went on that the McMansion will not be funding 30 years of golf-resort retirement and a class A motorhome, savings for retirement are going up as far as shrinking income can manage.
There is just not much joy to be had around the economics classroom.
A smarter analysis would have included 2007/8 figures, as 2009 is a known low year anyway.
Doing that shows 2009 was down 4% on 2008, and 2008 was down 0.7% on 2007, so that makes the 4.2% still under 2007, and the forecast 5.2%, only slightly (0.5%) so given the push to lower Coal use, by simply burning Coal less, it is very hard to believe there is not 0.5% of extra capacity should it be needed.
I just caught up with the last couple of keyposts over the past couple of daze...busy working for the man, your tax dollars hard at work!
My current frame of mind wrt PO:
The emergence of certain important posters such as RGR and Alaska_Geo seem to have brought a balance to the Force on TOD.
It wasn't too long ago that Gail and some other TOD editors were suggesting to the TOD crowd that PO was in the rear-view mirror, or 'proven', and that TOD should throttle back discussing oil production and focus on strategies about how to cope with less oil in the future.
I think the spectrum of topics over the past year or two on TOD are OK (including discussing how to live more simply and use fewer resources), but after considering the words of people who work in the oil extraction industry who claim that we are not about to fall off a cliff tomorrow, it seems that these folks come equipped with their real-world experiences and facts which seem to put the doomers on their collective back foot.
Predictions of a PO 'cliff' or step function down from TOD folks seem to have shifted from ~ 2010 to ~ 2012 then to ~ 2014/15 and even later...perhaps the 'current production men' posters here are to be taken seriously...perhaps with increased DW, ANWR/NPR-A/Beaufort Sea and other fields coming on-line in the World over the next few years, the predictions of an imminent cliff are specious and are indeed further examples of 'crying wolf'.
Don't mis-understand me...I know for a fact that oil (in whatever guise you want to define it, C&C, heavy, etc) is finite, but production may stay more or less constant or even rise somewhat...who knows, maybe the 'time of reckoning' will occur in the mid-2020s...maybe a a decade later.
Again, do not mistake me for a cornucopian...however, I have come to wonder whether we will have more oil than we thought...
It would be nice to think that if we could develop high confidence, across political and even national lines, that we will have a plateau for another 'x' years, that we would organize ourselves collectively to use this time to prepare for a post-oil future...(higher efficiency, do less, develop energy sources such as nuclear, wind, solar, geo, etc.)
But, I know that we will founder and continue BAU and squander our remaining legacy of 'ancient sunshine'.
Since the 'free market' will not try to respond to the backside decline whenever it comes (and then it will be too late), and since most people live with a day-to-day focus and cannot imagine things being different, and since politicians only stroke our egos to get re-elected, maybe I'll just stop worrying about PO...small cog, ginormous machine, and all that.
Of course, I am uncertain about current nature and future position of these matters...
Live, laugh, love, dance and all that.
Peace be with you all.
Where exactly did someone at TOD say that oil extraction will fall off the cliff tomorrow? Can you even provide one example?
Charles,
Finding this took me about 90 seconds.
I am certain, from my memories, that you can find many other examples, both from TOD keyposters and from commenters.
http://www.theoildrum.com/files/Slide20.png
http://europe.theoildrum.com/node/4712
See you in 'Mad Max 4, Beyond Hubbert's Peak ' NLT 31 December 2012!
"Predictions are hard, especially about the future"
Someone else can waste their time finding other examples...it is like asking someone to 'Find just on example' of someone referring to someone else as 'Hitler' on any site with comments, including this one!
Cheers
You said you were reading recent posts, then you dig up something from 2008. BTW, 2012 is not tomorrow.
Where exactly is that prediction you are talking about? Can you be more specific than telling us to wade through hundreds of posts?
You are trying to pick nits...I have seen the 'cliff' type predictions migrate to the right on the timelines offerred on TOD...2012...2014...2015...2018...????
My point was, I thought it was premature when the TOD editors declared 'victory' on 'proving' PO...no one rally knows...that doesn't mean we aren't smart enough to understand that 'finite happens' and that we should be preparing for the eventuality now. But we won't.
Well, it looks like peak happened already.
Exciting, wasn't it?
A few folks have been saying that even after geologic peak it will all be "above ground factors" until production stops with extractable oil still in the ground. I see a lot of "above ground factors" and not much in the way of new production, so I'm leaning that way myself.
The main idea is that the longer the plateau, the steeper the eventual decline.
Google "The Overshoot Point". This was predicted in 2005.
That 'idea' depends on the reasons for the plateau, and which plateau.
The mix of energy is always changing, and if the plateau is driven by a move to alternatives, that is less serious than if the plateau is driven by a finite flow feeding an insatiable need.
This idea that oil production is on a plateau is starting to irritate me. It's not a plateau, it's a poorly-defined peak. There's a lot of noise in the data, and many people are incapable of seeing the trend for the noise (i.e. they can't see the forest for the trees.) A decade or two after the actual peak, it will become apparent that production is undergoing an irreversible decline, although even after it becomes steep many people will not believe that it is a decline.
The US department of energy still does not seem to believe that US production is past its peak, even though the US peak happened 40 years ago (December 1970, to be exact) and production is down to half the level back then. It is amazing how many people, particularly bureaucrats, including otherwise intelligent ones, are capable of ignoring the obvious.
There is something to be said for the idea of adapting to meet the needs of supply for a certain period of time.
No one knows the future and is smart enough - except you! You are implying that you know the future by saying most posters are wrong about the future. You even go so far to say our predictions are worthless by saying they are specious.
Cheers!!!
Are you posting while intoxicated? Usually, you're more coherent than this.
No one's "declaring victory." Certainly, none of us think we've proven anything.
Rather, there's a general consensus (among the staff) that peak oil is in the rear view mirror. That means trying to calculate when the peak will be is kind of pointless now.
It's not victory. Sort of the opposite, really.
No, I was not intoxicated, but I appreciate your concern. I am a tee-totaler...2-3 glasses of beer and 2-3 glasses of wine per month, and that may be an exaggeration. No dope or anything else either...I am pretty boring in that respect.
I can see that my use of the term 'victory' was inflammatory, my apologies.
In case my previous posts did not make this clear, I agree that oil is finite (who wouldn't?) and that we will experience a production decline off the apparent current noisy plateau at some point.
I am just not that sure that that point of departure (down the backside) will be in 2012, or 2015...my point is that RGR's words to the effect the 'once upon a time, Ghawar was seen as too hard', and similar ideas about the Arctic North Slope or deep water oil, would lead me to be a little more cautious of blindly accepting claims about a steep production fall-off in the next 5-10 years. Maybe after that, but we are all just guessing here. Witness the facts Alask_geo brought to bear when some folks were predicting a big problem with TAPS by ~ 2015 or so...a case of someone with facts from personal experience stating that the TAPS MOL was about one-half of what some folks were saying. There are other examples.
A production fall-off will occur, but when? We should all be collectively (as individuals and in concert with our governments) be preparing for the eventuality now. Doesn't seem as if that will happen.
It is a conundrum: If we cry wolf repeatedly and a drop-off doesn't happen, our case for the inevitable weakens (not as if Joe lunch bucket reads TOD or knows or cares about finite oil anyway); if we make more conservative predictions of a big problem but 10-15 years out, then people won't react to that either because their mental zone of concern doesn't typically extend that far...or they will imaging that will be enough time for a magic new technology to save us from any eventual declining oil.
I understand that the TOD staff's consensus is that we reached PO already (maybe in 2005). However, without proof, I could point to consensus among U.S. citizens about all kinds of fanciful things. Don't get bent...I was not calling PO or your consensus fanciful...but if nothing is proven with empirical data or predicted with a verified and validated and accredited geological reserves model or models, then the consensus is a not-very-well substantiated estimate.
At any rate, TOD is not the U.S. government, nor is it the majority of the U.S. citizenry.
Certainly the TOD consensus wrt PO being in the rear-view mirror is not shared by any appreciable portions of federal, state or local governments, nor is it shared by the majority of U.S. citizens, to my knowledge.
Until such time as the governments (fed, state, local) and a majority of the people agree that oil production will decline and that steps have to be taken across the board to deal with that, society will not be able to take such steps.
Keep on keeping on...this site certainly serves a good purpose.
It's not that the staff's beliefs are correct. It's that we do this for free, in our spare time, because we think it's something important and worth doing. If we no longer think it's worth doing, then things will have to change. Either the staff, the focus of the site, or both.
You have not been around long. Things like the Alaskan pipeline were discussed before, years ago, and no, most here did not panic and say expect it would suddenly shut down.
Basically since the business of oil extraction is so complicated, we must rely on experts who are quite familiar with the nuts and bolts of how things work in the oil business. Those that seem to know the most expect world oil production to fall off a plateau by 2012. I do not count RGR in that group of experts. Sorry.
Even the concept of a plateau is a cheery idea. Light sweet crude peaked out in 2004 or 2005, and since then the overall quality of what 'oil' we have is dropping. High quality oil has been replaced by lower quality oil to maintain the plateau, such as biofuels and other 'liquids'.
Not to mention oil exporters keep taking a bigger share for themselves.
In the last month there have been several threads with discussion about TAPS shutting down. Most were prompted by statements by Kevin Meyers of ConocoPhillips, in one of which he suggested it could shut down as early as 2015. There were at least 3 threads (Drumbeat Oct 7, Deepwater Spill Oct 2, and Drumbeat Sept 26) in which this was discussed. There seemed to be a fair number of people who were taking Meyers' comments at face value. Whether they were in panic or not, I can't say. My recollection is that several seemed to take it as confirmation of their preconcieved ideas. I merely tried to give some insite that suggests shutdown will not come nearly that soon, and that Mr. Meyers was exagerating the situation for politcal reasons.
You do not read too well for understanding.
I said that I caught up on some articles from the past couple of days.
In a later paragraph I said that I had noticed, over time, predictions of a peak and a substantial decline thrown out there for numerous dates, and then over time I noticed that these predictions have been generally sliding to the right...
http://www.theoildrum.com/files/PetrobrasSlide6.jpg
http://www.theoildrum.com/node/6169
The graph in question may not show a cliff, but it would make a nice ski run!
BTW, I am an analyst for the largest organization in the U.S., and I work on certain models that look out 40 years for certain issues...to me, 2012 is indeed tomorrow.
And 2012 certainly is tomorrow for something as important as falling off an oil production cliff.
Have fun feasting on those nits!
What is your estimated date for Peak Oil?
I do not have one, except that it will happen.
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We're going to rise above net energy decline?
Let's say a person bicycling has X number of dollars to pay for food energy while treking across the country. But as this journey continues, the cost of food rises providing less and less calories to expend pedaling. If there is no increase in tail wind, no motor, and no other force applied to assist the bike, how would this rider rise above a continuous drop in energy supply?