Tuesday, January 1, 2008

SAR #8002

All Republics end, as do all Empires.

- Ian Welsh

Batter Up! Peak oil, climate change, or both, is going to force us to limit our energy consumption. Our economic model is predicated on growth, which cannot happen without growing supplies of cheap energy, cheap resources. Chasing eternal growth will (soon?) come to an abrupt stop. Mother Nature bats last.

Casting Call: Since 2000, 3 million extra new homes have been built above those that would have been built if things had followed long-run trends. After the inevitable foreclosures, lenders will be looking for 3 million better qualified buyers in a recessionary market. Prince Charmings, I suspect.

Running Twice as Fast: Increases in the cost of oil have more than exceeded the total value of the foreign aid / debt relief received by non-oil-producing African countries over the last three years.

Kipling: NATO relies on Pakistan being stable. When the civil war finally breaks out in the North West Frontier (Khyber pass and all that) suppling NATO troops in Afghanistan will become remarkably difficult. Getting NATO Forces safely out via those mountain roads will be a nightmare. It always has been.

New Term: Pay Option ARM (PO/ARM) lets the debtor pay only part of the interest due, the rest being tacked onto the loan amount until it reaches 115% of the original loan. PO's were sold to 'prime' borrowers, fully 75% of whom are making minimum payments. After the 115% mark, full payments, P&I are due - on homes that have decreased in value while the loan has grown. Groan.

Future Tense: The New Year's forecasts for our immediate future are glum. The NYTimes says our financial system "is coming unglued." America’s financial institutions have$1.1 trillion in capital but $11 trillion in debts. Home prices must fall by 30% before people with an average income can afford to buy them. Before this is over, they claim, millions of homes will worth less than the mortgage balance and are likely to be abandoned. Happy New Year.

Follow-through: Between constantly smaller areas of Arctic ice and the progressive thinning of the remaining ice, it seems possible that less than 25% of 1975's total ice volume is left. Many climatologists now view a 5 foot sea level rise as probable by 2100. While that would drown Florida, Louisiana and NYC, the real unmentionable is that sea levels will keep rising six inches. seven inches, eight inches a decade as Greenland melts faster and faster. Keep in mind: 2100, 2110, 2120 ...

Mad Max : The Nigerian National Petroleum Corporation (NNPC) claims that "very powerful Nigerians are behind the persistent fuel pipeline fires in the country." (A fire last week killed 45, another on the 26th killed 260). NNPC claims 'rich and powerful warlords' are responsible. Attacks on oil infrastructure keep nearly half of Nigeria's production sidelined. Because of the continual damage, oil rich Nigeria has constant fuel shortages.

Pay or Pray: Bush's recent claim that the uninsured can go to a hospital emergency room for their health care is false, an urban myth. People without insurance cannot get mammograms, vaccines, antibiotics, chemotherapy or any palliative care in emergency rooms. In this country you don't just need health insurance, you need very good, very expensive health insurance or the last thing you are likely hear will be: "Your policy doesn't cover... "

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