Wednesday, April 30, 2008

SAR # 8121

Being wrong is understandable;
being right too soon, unforgivable.

One View : The reigning economic theorists explain starvation this way: "The world doesn't have enough trade in foodstuffs." I thought it was that there weren't enough foodstuffs to trade.

With 2 You Get Eggroll: The US national debt is $9.3 trillion - that's the government, we citizens have own burdens on top of this. The IRS says 134 million Americans work, so the individual worker owes $70,000 to... mostly Japan (30%). Yes, Japan, not China. China only holds 20% of US debt. Why aren't we nicer to Japan? Or more afraid of them?

Delayed Gratification : Not only are those Brazilian oil deposits that were going to save civilization 6 miles below the ocean's surface, they require equipment that can cut through salt a mile thick, withstand pressures of 18,000 psi and take temperatures of 500 degrees. That's Fahrenheit; it's only 260º in Celsius.

Biblical Verse: I don't know about evil, but the love of money certainly seems to have been the root of a lot of bad mortgages.

Location, Location, Location : Half of Cambodia has been sold to foreigners. Half the whole country, and in the process the same peasants uprooted by the Khmer Rouge are homeless again. Not just swaths of forest, but sections of rice paddys and cities too. Nearly all of Cambodia's coast has been sold to tourism developers and the protesting residents jailed, beaten, or simply turned away as their homes were destroyed. All inclusive, these places.

Contrary: Over 95% of mutual fund 'families' (Fidelity, Vanguard, etc.) experienced net cash outflows so far this year. If Joe & Josephine are bailing out, it may be time to get back in.

Mighty Oak, Not : North Dakota's Bakken shale formation has about 167 billion barrels of oil. But, according to scientists, only 1.25% of it is recoverable with current technology. Those 2.1 billion barrels of crude will not save civilization, but at $115 a barrel it's big money at my house.
Bargain: Countrywide took over $3 billion in write-offs for bad loans in 1Q2008, up ten times over last year, ending up with a loss of nearly $1 billion in the quarter and $2.5 billion in the last 9 months. Don't worry, Bank of America will turn it into a silk purse.

Remember the Swamp! The Fed has invented twenty-eleven ways to 'inject liquidity' into the system to overcome banks'' reluctance to lend to other banks. Now it wants to start paying interest on the excess reserves banks have on deposit with the Fed. Wouldn't this encourage banks to leave their excess reserves at the safe and solid Fed rather than lend them out, thus cutting liquidity?

Sudden Clarity: Among all the pleadings and scheming and vote-seeking plans to rescue the poor homeowner, the obvious goes unstated: A mortgage bailout is a bad idea because (a) house prices are too high and must fall to about 3 times median income - about 10% a year for the next 3 years. (b) Not everyone working at the local grab and run should own a house. (Perhaps in a more equitable society... ) The economy is making more and more renters, not more homeowners, and (c) Actions and decisions have consequences, or damned well ought to, none of which should involve the use of taxes to reward the greedy, the cheats, or the stupid.

Tuesday, April 29, 2008

SAR # 8120

Demand destruction for gasoline is called unemployment.

Surprise, Surprise: Reports are filtering out of Zimbabwe that the government has been re-educating those who erred while voting in last month's election.

Stimulus Checks: You'll soon be getting some of the $168 billion Bush borrowed from China to make you forget about his other failures. Save the money, you'll need it to offset the increase in prices that borrowing the money will cause. Better yet, put the check in an airtight plastic bag and put it away. These mementos of the failed Bush presidency will become valuable collectors items.

Pirates: Last year the coast of Somalia saw 31 pirate attacks, some as much as 200 miles off-shore. Eighteenth Century Capitalism.

Striking Lessons: One thing to learn from the Grangemouth strike is that the UK is running out of oil and the world is facing production declines. Once the North Sea oil is gone, so too will be the jobs at Grangemouth and the jobs of all those who depended on the oil money and the jobs of those who depended on those who depended on the oil and pretty soon it is not going to be very pretty.

Flag Waving: Mussolini, Jr. appears to be winning the mayoral election in Rome, by promising to persecute the gypsies and get rid of 20,000 illegal immigrants. That's Rome, Italy, not Texas.

Damned Trucks: Economists suspect oil will hit $200 a barrel this fall as refineries buy more low-sulfur (and high cost) crude to make diesel fuel to power the world's commercial haulers. Of course if there is a serious recession the demand for trucks to haul stuff around will go down, as will the price of crude, employment and much else. Pick the outcome you like.

Reality Check: Starbucks has cut its earning outlook again, expressing surprise at how quickly their business model - over-charging for coffee - can collapse when gently nudged with reality.

Malthusian Moment: Why have world food prices jumped so? Population is increasing, but not at 86% a year like wheat. Incomes, and thus demand for better quality foods, are rising, but not at 128% a year like rice. No, it is simply this: Say there are only three hamburgers but five people, four of whom have money. This results in: one hungry person and four bidding like crazy not to become the second hungry person.

Investors' Kids: A survey of Lake Woebegone Wall Street professionals showed that 74% of them managed to beat the S&P again last year. According to them.

Bridges and Towers. Almost all US critical infrastructure was built by the lowest bidder and has been getting only marginal maintenance as state tax receipts fall. Businesses have focused on "efficiency" that is reflected in quarterly earnings reports, at the expense of long term planning and investment. Essay question: What major infrastructure component will fail first and how will it affect your life?

Which Part of "No"? Russia is very clear - even though its skies won't be - that it will not accept limits on its greenhouse gas emissions under the new climate regime, currently being negotiated. China feels pretty much the same way, so what's an Earth to do?

Chart porn of the day: the UK's trade balance; go look.

Sunday, April 27, 2008

SAR # 8119

In 1929 they defenestrated themselves out of shame.
Not this time, for they have no shame.

Louis Bryan

Piggy Bank: S&P does not view the bailout of Fannie Mae and Freddie Mac as "imminent", but you might want to start putting your loose change in a jar.

Now and Then: There are three reasons for the global rise in food prices/food shortages. The traditional: Climate change. Economics: China is exchanging its depreciating dollar reserves of US dollars for oil, rice and meat. Population is increasing, land isn't.

Friendly Skies: More match making in the airline world, now that Northwest is engaged to Delta. United has apparently asked both Continental and US Air to the prom and Continental doesn't want to dance. American can't make up its mind whether to date US Air or to go steady with Continental, who is being quite coy. Word is that United is not sure who the father is but really needs to get hitched. Ah, shotguns in the spring.

Two Plus Two: Oil has gone from $10 a barrel in 1998 to $120 today. Population is predicted grow from today's 6.5 billion to 8.3 billion in 2030. What will be the price of oil in 2030?

Terms of Endearment: Interest is the rent charged for the use of money. Beyond a certain base amount, the interest charged is based on how likely it is the debtor will actually pay back the loan. Federal Funds are at 2.25%. Bank of America, the nation's second largest bank, has to pay 8.125%. Merrill Lynch, third largest securities firm, has to pay 8.25%. And Citibank, the largest investment conglomerate, is paying 8.4%. I can get a 30 year mortgage for 6.125%.

One Damned Thing After Another: South Africa may be the poster child for the future: It is suffering from extreme shortages/outages of electricity. Now the fuel industry warns that crumbling oil pipelines and decrepit refineries are unable to reliably supply current, much less future needs. No electricity, no fuel, no food - no future.

Every Little Bit: In 2007, Countrywide CEO Mozilo was paid $10.8 million and gathered another $121 million in stock options while he led the company to a $704 million loss. He was also reimbursed $48,377 for his charitable contributions.

Global Politics for Dummies: Some nations, Group (A) use a lot of oil. Some nations have a lot of oil (Group B). Some of the Nations in Group A want to keep others in Group A from getting oil from those in Group B. The third group, C, has neither the oil nor the armies to get any and are not in the game. One nation is in both Group A and B and has a distinct advantage in this race.

Saturday, April 26, 2008

SAR #8118

If you think the oil situation is bad, wait.

Keeping score: Over half of Nigeria's oil production is shut due to strikes and militant attacks. Half of Great Britain's output is idled due to a strike. That's about 5% of all oil on the export market. If you remember gasoline at 32 cents a gallon, you're my age.

Piggy Bank: Standard & Poor do not view the need for a bailout of Fannie Mae and Freddie Mac as "imminent". Such a rescue would cost taxpayers between about $1 trillion. You might start putting your loose change in a jar.

Medical Marvels: The oil-rich Middle East is too rich for its own good. Diabetes, once unheard of among the desert dwellers, is pandemic. A fifth of the UAE's native population suffers from diabetes, Saudi Arabia (16.7%), Bahrain (15.2%) and Kuwait (14.4%). The governments are encouraging their citizens to become mall walkers.

The Levelers: More than half of all Americans think that the rich are not taxed sufficiently, that taxing the rich to redistribute wealth in the USA is a good idea - more than felt that way back in 1939. And 68% feel that wealth is unfairly distributed in the US and should be more evenly distributed. Even 63% those making over $75,000 a year thought wealth should be more evenly distributed. Damned liberals.

The Rules Ruling: The IRS has ruled that the losses Fannie May and Freddie Mac and other holders of defaulted loans ranging from auto lenders to credit card issuers suffer can be written off against taxable income - not just applied to offset capital gains. Applying the losses retroactively against four previous tax years will allow them to get back taxes they've already paid. This is a $290 billion windfall. Making money by losing money, it's the American way.

Voting Wrongs Act: Republicans, in a desperate attempt to rig a third consecutive presidential election, have stymied efforts to institute paper voting trails that would make recount of actual votes possible. This insures that GOP-controlled electronic voting machines will elect yet another Republican against the wishes of everyone but the Supreme Court. One dollar, one vote.

SAR # 8117

It's not about greed any more. It's about survival.
- Joe Lauria

Fair Housing: Countrywide's thief in chief was paid $132,000,000.00 last year, while the company lost billions and was taken over by Bank of America for a pittance. With that money Countrywide could have made the mortgage payment for over 15,000 of it's clients for the whole year. Might have stayed in business, too.

Myth and Mythless: The crew at FOX news, George The Decider, and other respected climate deniers say that global warming is a hoax, that mankind has lived through cycles of warming and cooling before. Scientists, however, say the North Pole could well be ice-free this summer. Who you going to believe, Exxon or those nerds with the thermometers?

Ill Wind, Blowing Good: World prices for grains are luring some Afgan poppy farmers to switch to legal crops because there is now more money in wheat than opium.

Quis custodiet ipsos custodes?: Ambac, the bond insurer, has lost $4 billion in the last year and had a return on equity of -77%. Its business has fallen 87% and it stock is down 97%. S&P rates this a AAA company. What rating should we give S&P?

T-Square: Did you know someone traces architects billings? It is one way to gage how much new commercial design and building is on the way. Apparently not much, for the ABI has fallen to its lowest level ever.

Legal ≠ Moral: The CIA continues to send hapless folks to dictatorships where more egregious torture than slow and repeated drowning can be applied to innocent Canadians. Because, the Agency explains, technically the other country is doing the torture, not the CIA and not on US soil. I've never cheated on my wife when we're in the same city, either.

Sticky Rice: Canada does not grow rice, it imports rice from Thailand, has for many years. Yesterday Thai shipments stopped. The US grows a lot of rice, exports half of it. Even so, panic is starting to creep in: Sam's Club is "restricting" sales to 4 bags per visit, and went on to reassure customers that "at this time, we are not restricting flour and oil..." Restricting is called rationing when the government does it, and what do they mean"not at this time"?

Double or Nothing: The vast majority of people "losing their homes" are not innocents taken advantage of by "predatory lenders". Go out to the mall, or Wal Mart and watch them getting out of their big SUVs and new pickups, chain smoking, cell phone pressed into their skulls, excitedly talking about how they almost won the lotto. They are thoughtless gamblers who thought theirs was a free lunch.

Not Solitary: The US comprises about 5% of the world's population yet holds 25% of the worlds prisoners, most of whom are locked up for things that do not draw jail time in other countries.
Christmas: The Fed's various bailouts - called facilities or windows- let banks, brokers, and Tom's friend Dick park their toxic credit derivatives (dismissively called 'bus tickets' by insiders) with the Fed and get low interest rate loans in return. They then lend the money back to Uncle Sam at high rates of interest. Pretty good deal. Let me have $100 and I'll pay you $1 and lend my $100 back to you for $3.

Nostalgia: March new home sales fell 36.6% from last year, to an annual rate of 526,000 units, the lowest level since 1991. Median price fell 13.3%, the largest amount year to year since 1970. There is an 11 month inventory of new homes on hand - the most since 1980.

Finger in the Wind: Starbucks reports a drop in sales, attributes it to "the sharp weakness in the U.S. consumer environment". After all, gasoline costs almost as much as a grande latte.

Thursday, April 24, 2008

SAR #8116

After 20 years of platitudes on Earth Day, what we
really need is Suicide Awareness Month.

Pause: Saddam's Deputy Prime Minister Tariq Aziz's show trial is scheduled for next week. He is accused of involvement in the execution of dozens of citizens in 1992. Does Mr. Bush, or Cheney, ever wonder what the charges might be at his trial?

Surged: General Petraeus and his sidekick LTG Odierno have been selected to head up Central Command. They will be supervising Bush's wars in Iraq, Afghanistan and Iran.

What If When: Methane hydrates frozen in the Arctic ocean floor have started to thaw and release methane "on a fairly notable scale". Methane is far more potent than CO2 at warming the earth. It is possible, maybe probable, that the frozen hydrates will vent massive amounts of methane into the atmosphere. The result would be a sudden and catastrophic acceleration of global warming. Scientists had warned that such a thing could happen. Now it seems likely that it will.

Body Count: Jacob Zuma, leader of South Africa's ruling party, says "I don't think we have reached the stage for an embargo " on arms shipments to Zimbabwe. They've barely begun killing each other.

Acknowledgment: Dr. Peggy Whitson, Commander of Expedition 16 to the International Space station, returned, somewhat bumpily, to earth holding the record for total time in space for any US Astronaut - 377 days. Brag on her to your daughter.

Tattle Trails: Hundreds of Environmental Protection Agency scientists say they have been pressured by superiors to skew their findings so as not to clash with the Republican platform, the Bible, or coal industry profits.

Cautious Math: We've seen several headlines to the effect that Brazil has found three huge oilfields that will save us from both peak oil and dependency on the Middle East. Take a deep breath, relax. It will take about 10 years to bring this production on line. We don't have ten years. And total recoverable oil is 33 billion barrels. Today the world uses 32 billion barrels a year.

Chorus: Credit Suisse joins Prof. Shiller in the dire prediction department. It sees 6.5 million houses in foreclosure in the US by 2012, with prices falling at least 25%. (Schiller says over 30%)

Anchors Aweigh! Bond insurer Ambac now finds some questionable Bear Stearns AAA mortgage packaging, where they are experiencing "at least" 82% of collateral loss. Out of 100 loans, people have walked away from 82 of them.

Outsourcing: Herr Chertoff's Down Home folks insist that airlines collect digital fingerprints of all foreigners leaving the country. The value of this is vague, but the cost will be $3.5 billion over the next 10 years, assuming both the airlines and the government last that long.

Wasted Time and Money: All the whiz bang new equipment on the ambulances and the extra training for EMS crews so they can provide advanced life support is not cost effective. And not needed. Trauma victims who received "basic" life support en route to the hospital had an 81.8% survival rate, compared to 81.1% for those getting the higher priced spread.

Mission Accomplished: Republicans again used the threat of a filibuster to block an attempt by the Worker's Party to overturn The Business Court's ruling and make it possible for workers to sue employers for blatant pay discrimination. After all, it mainly affects female workers.

Wednesday, April 23, 2008

SAR #8115

What is 'fair'? Who will decide?

Peak Food: The 70 million new mouths we have to feed every year is not the real cause of food shortages. Not as much as the increasing affluence in Asia that makes tens of millions want to eat better, to eat meat, to go to MacDonald's. It takes 7 pounds of grain to make 1 pound of beef. The grain to make one tankful of bio-fuel would feed one person for a year. But the real cause is the cost of the oil it takes to grow the grain. The poor just don't have enough money to make feeding them worthwhile.

Planning Ahead: In the 1950s the Aral Sea was the fourth largest inland sea in the world; it produced 6,500 tons of fish daily. Today there is no Aral Sea. There's a lesson there, somewhere...

Belt Tightening: Deutsche Bank has been hit by the global credit crunch so badly that it has issued a memorandum to senior executives telling them that prostitutes can no longer be claimed on expense reports.

War Score: About 300,000 U.S. veterans of the Bush wars suffer from PTSD and another 320,000 suffer from traumatic brain injury. About half get no treatment from the VA. Something like 15% of all homeless are combat vets. Eighteen kill themselves every day. That's half a division, dead. Annually.

Saleing: Existing home sales for March were down 19.3% from 2007, while prices were down 7.7%. The National Realtors Association again said that now was the time to b....

Running on Empty: In 1Q 2008, Delta and Northwest together lost $10.5 billion due to soaring fuel prices. They plan on mothballing 90 aircraft. Fly now, you'll be able to tell your grandchildren you once did.

Keeping Score: April 8th. Merrill Lynch CEO John Thain: "Merrill... has no need to raise fresh capital." April 17th, Thain: Merrill "does not plan to issue common stock." April 21st. Merrill issues $9.5 billion in 8.625% preferred stock and bonds... I like an investment bank that is on top of the markets.

All in the Family: Bond Insurer AMBAC has hired lawyers to examine deals made last year with Bear Stearns & First Franklin. CDO's that were expected to have 6 to 12% losses have risen to over 80% write-offs. Tell your kid to go to law school, there's going to be lots and lots of work.

Shipping Shape: UPS and FedEx report that deliveries have continued to drop through the first quarter, that profits may drop 12 to 14%, and that "the trucks are not as full as they used to be."

Carriage-less Horse: The government wants higher gas millage by 2030. PBS's NOVA examines what will power the car of the future. No hint anywhere that the future of the automobile is not an automobile.

Oily Days: Oil at $120? $150? $180 by 2010? Probably. The International Energy Agency estimates that worldwide production is now falling each year by 4.5 million barrels a day. Just to stay even we need to find and pump 4.5 million "new" barrels every day. And we're not doing the finding.

Worth Considering: Bolivian President Evo Morales claims the first step in saving the planet is to abandon the capitalist model based on perpetual growth. The second step is to stop burning... anything. I don't know about saving the planet, but it may be the only way to save civilization.

Tuesday, April 22, 2008

SAR #8114

The future is here, it's just not widely distributed yet.

One Explanation: The judge ordered the 50 year old man to serve a 75 year sentence, the man said he'd do the best he could. Substitute the IMF and the oil industry, with the IMF demanding more oil and the industry saying they're doing the best they can.

Wild Blue: Defense Secretary Gates complains the US Air Force is not doing enough in the Iraq and Afghanistan wars. But we can't bomb them back to the stone age, they're mostly there now. Napalm, carpet bombing, now there's an idea....

Short and Shorter: Coal companies claim there will be serious electricity shortages in the US in 2 or 3 years unless more coal-fired power plants are built. Meanwhile, China is anticipating a 10 gigawatt shortfall this summer. Dr. Hansen is not amused.

Commuters: Literally billions of birds migrate between Europe and Africa every year, and every year fewer make the trip. More than half the 50 plus species have shown population declines of 30 to 50% of late. The usual suspects....

Too Logical: Blogger rcbowman has a novel suggestion for putting an end to all the nasty little (and big) wars in Africa: Stop sending them weapons. Dream on.

Go Team! Fighting broke out at the Church of the Holy Sepulcher between Greek Orthodox and Armenian Orthodox priests, with pushing, shoving and the ever-popular striking with palm fronds. The Armenians are ahead, two palm fronds to zero. Best three out of five wins the Holier Than Thou Cup.

Road Map: Royal Bank of Scotland, the UK's second largest bank, has raised $8 billion by selling assets, cut its dividend sharply, and is selling $24 billion of new stock to rebuild capital lost to write-offs. The board said it has ``full confidence that the executive team will be able to lead RBS through the current challenging conditions''... and into bankruptcy court.

Shave: The Fed's rescue of Bear Stearns - by paying Morgan to take it - was a big deal. Probably a bigger deal than we know. Oswald Grubel, Credit Swiss' ex-CEO says 'We narrowly escaped a system collapse. This has never happened before.' Note he did not say it would not happen again.

Papa Bear: Yale's much respected Robert Shiller now predicts US housing prices, which have fallen about 15% so far, will far in excess of the Great Depression's 30%. Housing bubbles typically take 5 to 7 years from peak to bottom, which suggests that 2008 will see a very steep decline followed by about 4 years of further but slower declines.

Au Contraire! Keeping its record for inaccurate records, the government today claimed that US house prices rose 0.6% in the last three months and are only down 3.1% from the all time high. Who you gonna believe, the government or your own lying eyes?

Good News, Bad News, Worse News: Scientists report that current research into using solar power to replace petroleum and natural gas for transportation and electrical generation is extremely promising. But it will take 10 more years of intensive research to make it practical. We don't have the 10 years.

Voice of Experience: Wachovia, which wrote off $2 billion in bad mortgages, reports that “... the overarching assumption is that we're about halfway through the decline in housing prices with the trough expected to occur sometime around the middle of 2009.” No "bottom", no "turnaround" and no, not a good time to buy.

Conspiracy: In explaining the coordinated rise in commodity prices, some seek explanations in terms of a commodity 'bubble', others see low interest rates as the culprit, most seek a "macroeconomic explanation." How's this: Hubbert's Curve applies to all non-renewable resources, the more you use the less there is. Eventually what's left is worth more. That, and too damned many of the wrong people wanting to live Americans.

Monday, April 21, 2008

SAR #8113

I Want it All... And I Want It Right Now!
- Citibank Visa Ad, 2008

Buckets: The Bank of England is offering British banks unlimited cash, starting with $100 billion, and unlike the Fed's pretense of '30 day renewable' loans, they're starting out with a one year term. Banks can put up any debt - and BoE will accept it at face value, even if it last traded for 20 pence on the pound. Question: How, in a year, will a bank be able to buy back bad paper at 100% when it's not worth near that now and declining every day? And why would they want to? "The UK financial system remains fundamentally strong..." Yada yada...

Fuel for thought: Oddly enough, the largest use of natural gas is in petroleum refining. The second largest use is in making fertilizers; 97% of fertilizer applied to US crops is made from natural gas. But natural gas is so expensive fertilizer manufacturers make more selling their fuel than making fertilizer. Another contribution to soaring food prices.

Tofu Too: Research shows that genetically modified (GM) soybeams produce 10% less harvest than conventional seed. Less for more, in more ways than one.

Shaken, Not Stirred: There are two engines that drive the world's oceans: an area near Greenland and an area near Antarctica. In these places, heavy salty water sinks to the ocean bottom, drawing the surface waters towards the poles. If the surface waters were to become less salty and lighter, they would stop sinking and the great ocean conveyor belt would stop. Climate chaos would ensue. We thought you'd like to know that the surface water in both areas is freshening.

O Brother, Where Art Thou ? Until we see people like Bush, Cheney, Paulson, Greenspan, and Bernanke in orange jumpsuits the only change we'll see is more families in soup kitchen lines.

Rescue Me ! Cleveland's National City Bank is the 10th largest in US with a market value of $5.3 billion. It is raising $6 billion by issuing shares at $5, even though National's stock was at $8.33 . That's a 40% drop, overnight. National's shareholders are used to it - the stock is already down 78% in the last year.

Stormy Weather: The jet stream is slowly weakening and moving northward. That means even less rain for the South and more storms for the North. It might also lead to stronger hurricanes. Global warming may or may not be implicated.

Spiral: California is looking at at least an $8 billion budget shortfall as both housing nd employment stumble. California's unemployment rate (6.2%) is the third-highest behind Michigan with 7.2% and Alaska with 6.7%. California is worse than the Rust Belt.

Marching On: Wall Street cheered when retail sales for March were reported to be up 1.8%. But the increase in sales consisted of an 19% rise in gasoline sales, 4% in food and 4% in health care. Everything else was down. Unless you actually used 19% more gas and 4% more food and health, this wasn't an increase in sales, just another increase in costs.

Blue Moon: A US attack on Iran would be an act of sheer lunacy. It would isolate the US in the world, drive the price of oil towards $200, alienate the entire Middle East, ruin Bush's legacy, and condemn the world to living out the script of a very bad sci-fi movie. Odds are better than even that Bush will do it.

Progress: In the 1950's coal power plants returned 30 times the energy it took to mine the coal burned. Today it is about 3 to 1. Soon we'll be better off not mining the coal.

Carded: An index of subprime derivatives values implies that 9 out of 10 subprime mortgages are expected to default, with investors getting zero back. Financial markets have fully priced in a 50% default rate and a 50% correction in US home prices. 'Correction' in the sense of Department of Corrections.

Sunday, April 20, 2008

SAR #8112

Once its tax resources are exhausted,
the state's only recourse is force.

Count the Votes: Over 30% of American households rent. Less than 2% of the nation's households are in foreclosure. Explain again why Congress wants to bail out the greedy and the speculators? Ah, right; renters don't owe Wall Street a bunch of money.

Good to the Last Drop: Exports from oil producing nations have dropped 1.7 million barrels per day from the December 2006 peak - mostly because their internal use is up. That goes a long way towards explaining $117 a barrel oil. Why are those people using so much of our oil?

Waves of Destruction: Villages are being lost to the rising sea. The choice is to waste millions on a losing battle with the ocean, or to abandon whole villages now. No, not Bangladesh. Britain.

Hauling Ash: Canada ships a lot of pure sulfur - a major ingredient in fertilizers. Last year the price was $50 a ton, today it's $650 a ton. Food shortages are making sulfur, potassium and phosphorus - fertilizers - very expensive. Let's speculate and make money!

Bomb, Bomb, Iran: US Energy Secretary Bodman says the US will continue to buy oil for the US Strategic Petroleum Reserve, and intends to fill it with enough oil for 90 days by October. Why's that, y'think?

He Said/They Said: According to a new Pentagon report, the Iraq war is "a major debacle” and the outcome “is in doubt”. Unfortunately, the report was not released before General Petraeus mislead Congress once again.

Inquiring Mind: Why did JPMorgan choose to pay 7.9% interest to raise $6 billion when they can get billions from the Fed on the cheap?

Proportion: The increase in the price of grains means those who live on $2 a day will cut meat out of their diet. Those with but $1 a day will eat only cereals - no meats, no vegetables. Those living on 50¢ a day this means total disaster. Over a billion people live on $1 a day, the next poorest 1.5 billion live on less than $2 a day. Nearly half the world. The other half.

Climate: It was the warmest March on record over the land surface of the world, at an average of 40.8º F, which is 3.2º F above average. The pot's coming to a boil.

Diplomacy: We keep borrowing ever greater sums from the Chinese to spend on weapons to fight a war with the Chinese that they have no intention of fighting or even arming themselves for. They'll just threaten to dump the dollar and we'll surrender.

Felony Theft: Washington is providing Wall Street a new group of suckers investors for their worthless paper. Taxpayers. Trillions in losses are being put on your tab. Now Congress wants give the greedy and deadbeats a free ride. Of course the money they're waving around is your money, your kids' money. Grandkids', too.

Worth Remembering: 2008 marks the 152nd anniversary of the Eight Hour Day. Action by stonemasons on April 21, 1856 led to the Eight Hour Day. The Eight Hour Day became a symbol of workers rights not only as workers, but as citizens in a democratic society.

Wish I'd Said: We are witnessing madness, whether we look at $62 trillion in credit derivatives or at letting millions of people starve. It's the same thing. Ilargi

Saturday, April 19, 2008

SAR #8111

What's the worst-case scenario?
This is; what's unfolding before our very eyes.

Perfect: Hellasious at Sudden Debt : The top 50 hedge fund managers in 2007 made a combined personal income of $29 billion and now plan to incorporate themselves as a country.

Soldiers of Fortune: Mexico's "Gulf" drug caratel is advertising openly for current and former soldiers to join their Zeta hit squad. They offer "good salary, food and family care. Don't go hungry any longer," on banners hung over the main roads near Nuevo Laredo and Reynosa on the US border. No mention of retirement benefits.

Government Statistics: The GDP includes the rent money you would pay yourself to rent your home if you didn't own it. Their guess is $1.1 trillion. It's unclear if the money you would pay someone to mow your lawn if you didn't mow it yourself is counted or not. The tip you didn't give yourself for doing it yourself is included.

Twins: On Friday, the US dollar hit all time lows and oil hit all time highs. Essay assignment: Send us $30 or more and we'll send you 500 words or less.

Vocabulary: Add "Dribble Out" to "Trickle Down". Firms are terminating employees a few at a time, week after week - dribbling them out - rather than in large layoffs. Large layoffs makes a firm look financially weak. Dribble out will only make them look morally weak.

Cliff Notes: Morgan Stanley estimates that one in ten mortgage-holders will end up with negative equity as house prices fall another 15-20% by 2010. When they want to sell the house, they'll have to pay the bank more than they sell it for. That's best case. That, or walking away, away.

The Lease They Can Do: The Interior Department wants to wait a few more months to see if the polar bears all drown, saving them the trouble of listing them as endangered before selling off the oil rights.

Papers, Please: Last week, over 50 state and local police and sheriffs offices in Arkansas, Mississippi and Tennessee took part in a massive round-up called "Operation Sudden Impact." Over 300 arrests - 142 on fugitive warrants - were made. Homeland Security paid for the "anti-terrorism and martial law training" exercise. Feel safer?

It's A Gas! The frozen Arctic floor has started to thaw and release methane that has been trapped for hundreds of thousands of years. A methane 'burp' is thought to have caused sudden global warming in the past. Stay tuned.

Accommodation: “World agriculture has entered a new, unsustainable and politically risky period,” says International Food Policy Research Institute Head Joachim von Braun. Millions, tens of millions, will soon starve. Hundreds of millions will go hungry. We will all have to find a way to live with the blood on our hands.

Success: The "trickle down" theory was a complete failure in terms the poor seeing any of the money the rich got from tax cuts. I bet it'll work a lot better when it comes to unemployment.

Rationing: The Philippines has made hoarding rice punishable by life imprisonment.

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.)

Thursday, April 17, 2008

SAR #8109

Things that cannot go on forever, don’t.

Simple Math: 24 previously admitted + 9.5 current confession = $33.5 Billion. Or, $33,500,000,000.00 That's how much Merrill Lynch has lost in less than a year. These folks want to manage your investments, too.

Revisionist: The President has a new plan to curb US greenhouse gas emissions. The old plan was to hope they would go away. His new plan is to hope they go away by 2025 or that his buddies can get rich pretending it did. Or both.

A Rose By Any Other Name: Scents produced by flowers readily bond with pollutants and lose the aromas that attract pollinators. In the 19th century, a flower's scent could travel up to 4,000 feet. Today the range is less than 1,000 feet. It may still be called a rose; it no longer smells like one.

Equality: The world's wealthiest 200 individuals have more money than the poorest 2.5 billion combined. What would Jesus do?

All Over But The Shouting: JPMorgan/Chase says the credit crisis is over. That's why they're paying 7.9% interest to raise another $6 billion. What's your mortgage rate?

Conscience: How should a well-fed American react when some people are actually eating dirt? Shame, I suppose. Wouldn't it be refreshing if one of our Presidential wanna-be's would actually make this a campaign issue? But then we'd all switch to FOX and watch American Idol.

Auction Blocked: In California, 97% of foreclosures sent to auction are coming back unsold as lenders refuse to take the bids. And this is after they've knocked 21% off the previous loan.

6 or 12/2: Cars are getting better mileage, so we'll save on gasoline. But the less gasoline we buy, the less money there will be for road repairs. They'll have to double the tax on gasoline. So we'll spend the same on filling up. Some savings.

Takes One To Know One: Washington Mutual - no stranger to bad loans - is now forecasting credit card losses of 10% this year, double current levels.

Diplomatically: The US State Department is once again picking volunteers to be sentenced to the Zigurrat in Baghdad.

My Pet Goat: "Reading is Fundamental", the oldest and largest children's literacy organization in the US, tries to help schools with No Child Left Behind requirements. Bush's 2009 budget eliminates funding for the program.

FDIC : What does the FDIC have in common with the bond insurance folks? Neither can actually pay off on their guarantees. The FDIC has just $52 billion in reserves. The failure of a bank a only 10% the size of Bear Stearns would wipe out the FDIC. Mattress World is having a sale.

Best Guess: When do the wars start? The ones between the nations of the starving and the nations that refuse to export grains? Contest, usual prize. Winner must name all three: Attacker, Attacked, Month. Actual date will be used in case of a tie.

Reality Shows: There's only so much money. And unless there is an increase in the money supply, what goes up somewhere must push something else down. The prices of life's essentials - food, energy, healthcare - are rising. The prices of the things we are stuck with - houses, 401ks - are falling. Pull up a chair, this can go on for longer than you suspect.

All Over the Map: Exclusive Marco Island, Florida provides today real estate porno; take a look.

SAR #8108

The drug industry is interested in the survival of patents, not patients.

Welcome to the Future: Oil has passed $115, on its way up. Wheat's up, Rice, too. Riots have begun. Troops are guarding unharvested fields to prevent theft. This is what peak oil looks like. Not suddenly one day there is no oil, but steadily every day oil costs more and everything that is dependent on oil costs more. Our education on just how much of everything is dependent on oil is just beginning. Welcome to the foreseeable future.

Taking Stock: Goldman Sachs, in a market forecast entitled "Fasten Seatbelts", advises its clients to prepare for another 15% drop in the S&P, for a total of 30% off the 2007 high. Wells Fargo says that those who are now bullish on stocks are "bordering on delusional".

Sign Here . . . and Here: "Prestigious" doctors are presented with drug-company-prepared research papers and told to sign them. They're also given checks, which they also sign. So the studies don't mention the side effects or the subject deaths. It's not Big Pharma's fault - their name's not on the research. And the "authors" certainly had no idea - they didn't do the research. As Kojack used to ask: Who d'ya trust, baby? (c) none of the above.

Recipe: In Haiti desperate women prepare "biscuits". The main ingredient is yellow clay, trucked in from the nearby mountains. Salt and vegetable fat are added to make a dough that is then baked in the sun. For many Haitians, the mud biscuits are their only food.

Funhouse Mirror: The tightening of loan standards means some companies are having trouble raising enough funds to file for bankruptcy protection while they try to restructure. Too broke to go broke?

Don't Splash! New data indicates oceans will rise 1.5 meters (nearly 5 feet) by the end of the century, three times higher than the last IPCC estimate. This will wreak havoc with low-lying places like Bangladesh and Florida.

Old Soldier: America is not a military dictatorship, exactly. It’s a more of a militaristic oligarchy with a fascist overtone and a theocratic undercoat. It’s the civilian leaders, not the four-star generals, who want to drag us into war everlasting. As General MacArthur said: "Our country is now geared to an arms economy bred in an artificially induced psychosis of war hysteria and an incessant propaganda of fear."

Science Fair: A 13 year-old German kid claims NASA's comforting estimate of a 1 in 45,000 chance of an asteroid hitting the earth any time soon should actually be 1 in 450. By 2036. NASA and the European Space Agency say the kid is right. I made a model volcano for my science project.

Psst! It's not just the demand for oil that is pushing up the price of food. China has just contracted for potash from Canada for the rest of the year at double the going price. Pass it on.

Flattened Tax! McCain wants to remove the federal tax on gasoline "for the summer". Summer apparently lasts until election day. This will look like a Really Good Idea when the next bridge collapses and kills a couple of dozen Republican voters. Tell the truth; when you're going down the interstate and come to a bridge, don't you wonder, just for a moment?

Burp! We may be quite close to triggering the release of huge quantities of methane into the atmosphere. At that point it would no longer matter what we do. Gaia takes over.

Tuesday, April 15, 2008

SAR #8107

The real causes of global warming are waste and greed.
Wendell Barry

Peeking At Peak : Russian oil production has peaked and output fell 1% during the last quarter while prices and internal consumption rose quickly. The world’s biggest oil producers cannot keep up with demand. Russian production will follow the North Sea and Cantarell pattern of dramatic production decline. This does not bode well for our oil-based civilization. Go to The Oil Drum and educate yourself on Peak Oil and the Export Land Model.

Mountain Climbing: Scientists have succeed in using lasers to trigger lighting in passing thunder storms; apparently just to see if they could.

Quick Counts: Retailers closing stores: Foot Locker, Zales, Ann Taylor, Lane Bryant, Fashion Bug, Wilsons Leather,Pacific Sunwear. Seeking bankruptcy: Levitz, Shaper Image, Linens 'n Things, Wickes, Fortunoff, Harvey Electrnics, Lillian Vernon, Bombay, Domain. Curtailing expansion: JC Penny, Lowe's, Office Depot.

Good News/Bad News: The good news is that retail sales were up last month. The bad news is the increased sales were all at the gas pump - we're paying more and buying less. But it's not inflation; gasoline doesn't count!

Curves Ahead: Food shortages and steep price increases pose a greater threat to economic and political stability than the current credit problems. The food crisis poses questions about the survivability of political regimes and the concept of democratic government. People are starving, more will starve. This problem is not going to go away. We drive, they starve.

Swarming: Oregon's Hatfield Marine Science Center recorded more than 600 earthquakes in the last 10 days. The series of earthquakes does not fit the usual pattern of a big shock and a declining series of smaller ones. Something is certainly thrashing around down there.

More Joy: Moody's reports that credit card charge-offs and delinquency rates continue to rise. Can't pay the mortgage, can't pay the Visa bill, can't hardly wait for my $600 check to make all this go away.

Words are Words: Wachovia CEO Ken Thompson, "What we are seeing is that when equity in the home approaches zero, behavior changes." VP Don Truslow adds: "When a borrower crosses the 100% loan to value, their propensity to just default and stop paying their mortgage rises dramatically and I mean really accelerates." Forgot to mention mailing in the keys, Don.

For The Birds: In less than 25 years eastern Australia's shorebird population has dropped by 75%. New Zealand's resident shorebird population has suffered the same massive collapse. Both due to destruction of wetlands by the usual suspects.

Am-bush-ed: With the rise in retail bankruptcies, someone should tell the kids at the checkout that come the day they are third in line to be paid. Uncle Sam is always first and thanks to the Republican 2005 improvement in the bankruptcy law, suppliers come second. If there's anything left after a year or two of bankruptcy proceedings, the employees get paid. And Uncle Sam gets his cut of that, too.

Monday, April 14, 2008

SAR #8106

The difference between an optimist and a pessimistis that the pessimist is usually better informed.
Claire Booth Luce

Previews: This week the banks again do their laundry in public. Citigroup will write off another $10 billion. Merrill about $5 billion. Germany's Deutsche Bank is looking to dump $55 billion. Deutsche Bank's toxic leveraged loans exceed their shareholders total equity.

Examination: The Army is upset that soldiers who joined in order to take advantage of the education benefit incentive to join the Army leave the Army as soon as they have qualified to take advantage of the education benefit that was the incentive for them to join the Army. Somebody certainly needs a tad more education.

Rat Race: Doctors are always saying "Exercise more... " Well, not if you are mouse. Prostate tumors grow more quickly in mice who exercise. Print this out and put it in your wallet, just in case.

Distinct Difference: Wachovia, the nations 5th largest bank just got a $7 billion "infusion" from "investors". They raised over $8.5 billion two months ago; that's already gone. The investors got a 15% discount on Wachovia stock. If it sounds more like Wachovia is paying 15% interest on a loan, you don't understand the difference between an "infusion" and a loan shark.

Co-eds: Boys and girls may learn differently, but both boys and girls do "markedly" better scholastically in mixed classrooms at all grade levels. Classrooms with 55% females also improves the boys' behavior, math and science scores. Beats homework.

Foresight: Merrill Lynch does not plan to raise more capital right now. "We deliberately raised more capital than we lost last year." CEO John Thain said. That's a good plan, John. We're proud of you.

This Just In: A 40 year study of 1,500 women documented that those who drank wine regularly were considerably less likely to suffer from dementia. I hope my scotch study turns out as well.

Prodigal Son: Former Fed Chair Alan Greenspan gets beaten up regularly these days for his part in the housing bubble. Fair enough. But in his book he admits he knew that Iraq was about oil, that Bush's taxes were disastrous, that Republinomics was a sham, and that he kept his mouth shut to keep his job. He joins a long list of administration whores.

Apocalypse Now : Basic access to food is slipping out of reach of people in developing poor, forgotten countries. The cost of rice has risen 75% in two months; the price of wheat doubled. Desperation has turned deadly in a dozen countries. The situation is desperate. Countries that can produce food now desperately need to produce more. Yet Americans would rather feed SUVs than human beings.

Picture Porn: US banks' net borrowings make an ever girmer picture. The vertical lines on the far right of the chart are part of the data. The chart is here.