Friday, April 18, 2008

SAR #8110

Uncontrolled birth-rates will lead to uncontrolled death-rates.

Queuing Up: Rice passed $1,000 a ton as panic spread after the Philippines was unable to buy as much as it needed and Bangladesh was unable to buy any at all.

Ignorance is Bliss: Citi reports $5.1 billion in losses, and $13 billion in write-downs, bringing write-downs to $40 billion. Its stock goes up 10%. With a little more bad investing they write off over $50 billion. Then their stock'll really zoom. It's a whole new world.

Not Necessarily News: Germany is mired so deep in the subprime crisis that its entire banking structure is under threat of collapse. Spain is worse. England is worse yet. Iceland is apparently for sale, as is.

Red Shoes: John McCain says that reducing federal spending and cutting taxes will make the economy grow - just as Bush's increasing federal spending while cutting taxes has worked so well.

Seltzer Water: The oceans are getting saturated and absorbing less carbon dioxide - only half of the amount of absorbed in the 1990's - leaving ever more in the atmosphere and accelerating global warming. It was funnier when Harpo sprayed Groucho.

Puzzle Pieces: The PPI is up. The CPI is not. Oil is up. If producers' costs are up but the prices to consumers are not, someone's not making much profit. The consumer hasn't got a raise in years, has to pay more for gas, and even though he's on a diet he still has to buy food. Nothing left over to buy the other stuff and no credit, either. They'll have to cut prices. Then wages. A deflationary depression. Look it up.

Alfred E. I’m not sure why any of us is doing long-range planning; this summer scientists at CERN may produce a black hole that swallows the Earth, or possibly the universe. Just my luck.

Intuition: Most convincing argument for Peak Oil: Exxon, at $478 billion in capital, is the world's largest company. If anyone has both the incentive and the resources to find and sell more oil, it is Exxon. But they can't. In the last five years, as the average price of oil has more than tripled, their production has been flat and their discovery of new oil has not replaced a fraction of what they pump.

Expot Land Model: Middle Eastern oil producers are increasingly consuming their own oil to feed their fast-growing economies. This reduces the amount of oil on the export market and drives up the price of oil. How dare they use our oil! We'd send in the marines, but they're busy.

Saved? Congress is going to save the day! Not; $300 billion may sound like a lot of money, but there are $11 trillion in U.S. mortgages outstanding and about $2 trillion of them are in trouble. $300 billion’s a drop in the bucket. Even so, it is wrong to rescue any of the foolish or any of the greedy - unless you can explain to my wife why we didn't buy a bigger place.

Buy The Numbers: Retailers from JCPenny to Starbucks have quit reporting monthly store sales data and estimating their annual profits. They say these reports "confuse investors", and encourage a focus on short term results. It also will hide short term results.

Clarification: The mortgage crisis is not "almost over". Sub-primes peak in June this year. It takes about 15 months to move to foreclosure, so they'll hit in late 2009. Then the Alt-A and Pay Option ARMS reset in 2010-2011, and got to foreclosure in 2011 and 2012. And all along the way people will just walk away as house prices fall below what they owe. Why would anyone want to be President for the next four years?

Penny Saved: The three candidates for president agree the US should stop filling the Strategic Petroleum Reserve. Okay, but how much difference does that 0.0008% of the world's daily use make? And how dumb do they think we are? (That's a rhetorical question, Harry. Put your hand down.)

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