Thursday, July 31, 2008

SAR #8213

Once you've convinced everyone the ship is sinking,
it's time to help people onto lifeboats.

Catastrophic Economics: From his tower, econowonk Paul Krugman asks: "Can we mobilize people to make modest sacrifices to protect against low-probability catastrophes in the distant future?" All he has to do is stop by the local coffee shop long enough to observe his fellow customers' constant shouting into cell phones or stand on any street and listen to the booming 'music' drive by. There is no concept of The Commons left on which to base such an effort. We are, deservedly, doomed.

Back of the Envelope: In dealing with peak oil and global warming, Plan A is generally taken to be business as usual, which leads to disaster, and Plan B, which doesn't exist.

Trusty Bonds: Covered bonds are simply as good (or not) as the trustworthiness of the banks issuing them. Raise your hand if you can think of a reason to trust any of the financial folks who will be issuing covered bonds.

Pending Revision: Seems that we've somehow overlooked 50% of the natural gas reserves in the US, or so says a new study funded by the natural gas industry. As usual, grab the salt.

Just The Facts: Despite short term gyrations, over the longer term, oil will rise. To meet the increasing Chinese demand, someone else will have to use less. If China's future consumption were taken solely from the US share of the world's supply, the US would have to swear off oil by 2025. And that's not going to happen.

Cup Runneth Under: Russia has reduced petroleum deliveries to the Czechs by 50% since June. Coupled with previously reported production shortfalls, it is beginning to look a lot like Peak Oil for Ivan. Not good news.

Snakes and Ladders: Merrill Lynch's 78% write-down on $30 billion in CDOs lead to a 90% write-off by National Australia Bank on $20 billion in the same instruments. It'll be interesting to see if this becomes a popular pastime.

Under-Achiever: Nigeria, the world's sixth biggest oil producer, appears to no longer able to meet its OPEC production quota. Production is now under 1 mbd, down from 2.5 mbd before rebel attacks on its oil infrastructure flared up.

Other Feet, Same Shoe: If a foreign power was engaged in covert activities that regularly killed American citizens and destroyed homes and factories on American soil, the American public would get pretty riled up and the government would have to Do Something. Attack, most likely. That's what the US is doing in Iran, regularly. You have to admire Iran's restraint.

Dutch Uncle: Dutch International relations institute Clingendael reports that a sustained period of worldwide oil scarcity will begin by 2010.

Uncommon Sense: Economists and Fed Chairmen are paralyzed with fear over the least hint of a recession. This leads to over-active intervention in the economy, sending 'messages' and addining stimuli at the drop of a Dow. Trouble is that the constant smoothing is not soothing - it simply hides the problem while it grows ever nastier.

Porn O'Graph: Nigerian Oil Production trends .

Tuesday, July 29, 2008

SAR #8212

The first priority of a politician is to get re-elected,
not to solve problems.

Now It Can't Be Told!: The Environmental Protection Agency has ordered its staff to "not respond to questions or make any statements" to Congress, the GAO or even its own Office of Inspector General, in order to to promote efficiency and consistency and to keep their stories straight.

Yes, But: PIMCO's Bill Gross knows how to solve the credit problems: solve the housing problem. Mind you our Bill doesn't claim to know how to do that, just that it should be done. He did suggest having the government buy a million new houses, blow them up, and then start all over again, but he was pretty sure this idea wasn't going to catch on. Golly, it must be rewarding to be a financial leader.

Yesterday's News: Some of the MSM is breathlessly revealing that Richard Perle, one of the original bomb 'em and buy 'em neocons, is thinking about going into the oil business in Iraq. Fellas, take a deep breath. Perle and company have been thinking about this since 1994.

Realty Strikes: BofA: "We're going to see continued declines in house prices..." Pulte Homes " immediate signs of this housing downturn relenting." Case-Shiller: House prices fell by the steepest rate ever in May, down 15.8%.

Mighty Casey: The US drive to force small farmers in the developing world out of business ran up against some common sense and the WTO's "last chance to strike a deal" struck out.

Baltic Avenue: A British blogger of some repute is predicting the collapse and nationalization of Swedbank following the devaluation of the Lati. As Mr. Hamptom points out, you have to be really careful of countries with "unsustainable current account deficits."

Fashionable Necessity: The fashionistas are leading a charge back to Depression-era chic. Making a virtue of necessity; my Scots ancestry will finally pay off.

Then & Now: The US Navy's Fourth Fleet has resumed patrolling the Latin American coasts, demonstrating "U.S. commitment to our global partners," Admiral Gary Roughead said, explaining that "The Fourth Fleet will send a strong signal to all Navies operating in the region." Like Venezuela?

Professional Credentials: The longest serving Republican Senator, Alaska's Ted Stevens, has been awarded the top recognition in his chosen profession: an indictment for corruption.

Vocabulary Helper: The people that brought you CDOs and such are now introducing a "new and improved" product, Covered Bonds. Don't get too excited, covered bonds are simply CDOs guaranteed by Banks that are too big to exist fail, and thus are backed by the pockets of the US taxpayer. It's like buying Treasuries with a better return rate.

Explanation: "The financial firms obviously think investors are utter fools."

Shell Game: For over a year Bernanke inflated the money supply while claiming that inflation was not a problem. Now that the CPI is above 5% and the PPI above 9% for the year, inflation is pretty obviously not part of the solution. Other means will have to be found to perpetuate the shell-game. Not talking about it seems to be working so far.

Porn O'Graph: It's all about Debt, no doubt .

SAR #8211

We have seen the future and choose to ignore it.

Demand Destruction: A lot of commentators have seized on the 3.7 percent drop in miles driven in May 2008 vs May '07 as a sign of Americans adjusting to peak oil. Nonsense. The report didn't mention that Americans spent more this year than lest, just that they went fewer miles. It's just the American underclass being priced out of driving.

Hearts And Mines: In what used to be casus belli, the US has lobbed another missile into Pakistan, killing some civilians.

Bush's Budget: It took several hundred years for Wester Europe to shed the feudal system where the son inherited the father's debts. It's taken the US only since Reagan to enslave their children and grandchildren to foreigners, who hold well over $1.5 trillion in US IOUs and sooner or later will want something in return.

Satisfaction, Not: Mr. Ben has lowered rates, offered everyone that owns a gray suit access to cheap federal funds, an d still mortgage rates are going up and borrowing rates are going down. Damn, what happened to 'economic man', the logical fellow who inhabits economic theory?

Action : Congress is itchy to do something, anything, about energy costs. There's no agreement on what should be done, nor any real indication that anything useful can be done, but don't worry, they'll do something. On second thought, worry.

Lemons/Lemonaide: By now there are entrepreneurs buying up cheap used SUV's in the US and shipping them to China.

All Fist, No Glove: The Bush administration is making it clear that Iraq's desire to be rid of US troops is unacceptable, and that "the objectives of Iraq must include continued dependence on US troops for an indefinite period." So much for the standing up and standing down.

Game of Nations: If leaders of other states - even if acting in the form of the UN's ICC -- encroach on the rules set up by the Peace of Westphalia and start imprisoning other leaders for what they do to their own subjects, all hell is going to break lose.

Quoted: “I cannot find a single convincing argument that tells me that astrologers won’t do better than economists,” Nassim Taleb.

Saved! We Are Saved! A group called the Post Carbon Institute has determined the best way to clean our room, mow the lawn and take out the garbage in preparation for peak oil and global warming. Or "How to save the world from energy shortages in 10 easy steps taking only ten short years; a guide for policy makers, citizens, and businesses", or so they claim. Considering we're a carbon-based life form, the name of this group is a bit scary.

Discretion: The credit collapse is spreading economic problems across the globe. Politicians are turning to their central bankers, saying 'Do something!" Unfortunately, for the first time in history central bankers have an unlimited ability to print money. And they will.

New Math: Merrill Lynch plans to raise $8.5 billion through the public offering of common stock, but to do so must pay its major stockholder, Temasek Holdings, $2.5 billion. When Merrill says $8.5 billion it means $6 billion. Then it sells $30.6 billion in CDOs for $6.7 billion and reports the difference as only $4.4 billion. There's a lot of that going around.

Monday, July 28, 2008

SAR #8210

If you think discussing abortion gets emotional,
try bringing up population control.

Security blanket: Stop at Gas & Go for gasoline, pay $3.85 a gallon. Run in and grab a small bottle of Aqua Natural, pay over $7 a gallon. Get back in car and curse Big Oil.

Paying The Band: It's apparent that US financial institutions will need additional infusions from non-US sources - especially Sovereign Wealth Funds. But the SWFs (and others) who rode to the rescue a few months ago have seen losses of 30% and more on their modest (under 10%) stakes. This time around they may want bigger chunks with a bigger say in the operation of the 'recapitalized' institutions. If you're gonna have the music....

Goose, Gander: While Bush & Co bail out Freddie and Fannie and Daddy Warbucks, there will be none of this pandering to the poor. They've just got to learn that in a capitalist society only the capitalists get bailed out. The GOP understands that if you start helping people pay their energy bills, the next thing you know they'll be wanting decent healthcare...

Economics Lab: Today we're going to look at the effect of declining supply, as in PMEX shipping Valero 15% less crude oil these days, and demand, as in the increased production of cars in India.

Without Comment: "If any fraction of the observed global warming can be attributed to the actions of humans, then this, by itself, constitutes clear and compelling evidence that the human population, living as we do, has exceeded the Carrying Capacity of the Earth, a situation that is clearly not sustainable. " Albert Bartlett

Rock, Hard Place: When car companies cut programs that are producing poorly performing loans and cut out leases which are being orphaned by customers, they reduce their exposure to losses on their own borrowing costs. Too bad it also means cutting back on sales, but that too will reduce losses on finance costs.

Whisper Campaign: Seems that the SEC is quietly scolding Wall Street for a laundry list of shortcomings, from inadequate monitoring of personal trading to sloppy valuations of securities. Soon they'll get out the ruler and knock some knuckles.

Essay Question: In 500 words or less, explain what has changed about the nature of capitalism that now makes an explicit government guarantee for Fannie and Freddie palatable? For extra credit, include an estimate of how much longer before the peasants revolt.

Going Rove'ing: The Ohio Attorney General has been asked to provide immunity protection to Mike Connell and his wife. Reportedly Connell, a GOP techie, as been told by Karl Rove to "'take the fall' the GOPs 2004 election fraud in Ohio, or have his wife prosecuted by the Feds for supposed violations of lobbying laws. Smoke, maybe fire.

Good News/Bad News: As the Greenland Ice Cap melts, Greenlanders look forward to newfound resources such as lead and zinc deposits and possibly as much as 30 billion barrels of oil and other undiscovered riches. It's possible they'll get rich enough to move somewhere higher before the melting raises the seas enough to drown their settlements.

Porn O'Graph: New Home non-Sales .

Sunday, July 27, 2008

SAR #8209

Americans may soon come to appreciate the difference
between poverty and desperation.

Score: According to Realty Trac, 1 in ever 171 US houses received a "foreclosure-related notice" in the second quarter. At this rate housing could become a problem.

Details: The housing bill, according to the headline press, will "aid 400,000 homeowners facing foreclosure". In very small print there may be mention of the estimate that over one-third of those "helped" will end up foreclosed again after making payments for 2 or 3 years. So, 260,000 potential voters helped at an estimated cost of $300 billion. If I remember how to do political math, that's over $1 million a vote - all of which will end up in the pockets of the Usual Suspects.

Mission Accomplished: The richest 1% of Americans in 2006 garnered the highest share of the nation's adjusted gross income since since 1929.

Another Peak? Electric utility analyst Dan Scotto predicts US electric rates will double in the next five years, due to a lack of supply brought on by an aging generating base and international competition for coal.

Clear And Present Danger: In a report described as clear, chilling and detailed, the EPA has concluded that greenhouse gas emissions cause and will continue to cause climate change including rising sea levels, stronger and more frequent storms, an increase in wildfires, increased and more severe drought, and widespread public health dangers. President Bush has concluded the American public doesn't need to know any of this.

Resolutions: Chrysler announced that leasing cars will join the growing things that Chrysler no longer does, like making cars and profits.

We're Here To Help: The World Health Organization has determined that globalization is bad for your health. Data shows that when countries enter IMF programs, TB rates go up. When countries escape from IMF control, TB rates go down. It's enough to make you sick.

Step-Child: The now-disappeared Indy Mac, which sprang fully-formed from Countrywide (as a spin-off) apparently took its corporate culture with it when it left home. Vernon Martin, chief commercial appraiser for Indy Mac for six months in 2001/2 has spilled the beans, which seem to include a fair amount of fraud.

Understatement: England's biggest colony of puffins has decreased by 30% in the last 5 years. Scientists suspect that the birds are dying from starvation during the eight months they spend at sea - due to global warming driven environmental changes. Researchers fear "something is going badly wrong somewhere."

Shoemaker's Children: In the very near future, the oil-rich Gulf States will face a shortage of natural gas to fuel their diversification into petrochemical production, aluminum smelting, fertilizer plants and water desalination efforts. Oh, right. It's also the fuel of choice to produce electricity, which makes all these other industries, plus petroleum production, run.

Shipping Out: International miner Cleveland Cliffs' $10 billion buyout of US coal miner Alpha Natural Resources may prompt a blitz of M&A deals in US coal. It'll be interesting to see the Congressional scramble when China starts shipping West Virginia to Beijing.

Saturday, July 26, 2008

SAR #8208

It is neither moral nor sane to believe that any government
should have the power to put people in cages for life.

Dominoes: At their weekly Friday night after work get-together the guys at FDIC stopped by First National Bank Holding Company in Scottsdale, AZ and closed all 28 branches of 1st National Bank of Nevada and First Heritage Bank, in Nevada, Arizona and California. In an act of generosity, they gave all depositors, including those with funds over the FDIC insured limits all of their money back.

Just Maybe, Or Maybe Just: If oil has dropped to the low $120's because the bloom is off the speculators, well that's probably okay. But if rapidly declining demand caused the fall, a lot of other things are going to fall a lot harder.

The Damage That We Do: US driven globalization via US dominated WTO trade rules to allow subsidized US farm surpluses to force native farmers in impoverished countries to become part of the problem. But the bigger problem is greed and the law of unintended consequences - another way of saying "we didn't think this one through" - that's part of the problem. Letting them eat dirt is not part of the solution. Or shouldn't be.

You Say Tomahto... The Food and Dodge Administration has narrowed the culprit in the nationwide salmonella outbreak to that type of tomato generally known as the jalapeño.

Repeat After Me: “The projections in the Outer Continental Shelf access case indicate that access to the Pacific, Atlantic and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.” Energy Outlook 2007, U.S. Energy Information Agency.

Less Is More: Oddly enough, the rising price of food will lead to increased obesity. As fuel becomes more expensive, growing and delivering healthy food will become ever more expensive, while 'food products' crammed with corn sweeteners and such will remain relatively cheaply available. Thus the poor will be forced to eat cheaper and less nutritious calories.

Getting Rich As The US Goes Broke: A trillion dollar US budgetary deficit is not only possible, but arguable possible. Run to 'other' currencies, short the dollar, don't sleep at night. Even it it works, it'll seem sinful.

One Explanation: In the scramble to blame speculators for $140 oil and to blame speculators for $120 oil, a simple point is being missed: It is pretty clear that while we can limp by at $120 and maybe survive $130 oil, an awful lot of things simply don't work at $140. And when those things start shutting down, the price of oil goes down. And pretty soon we'll cycle through that process again. And again. It's called demand destruction.

The Other Shoe: Leonard Pitts Jr., one of the more thoughtful columnists writing today asks: "You Think Slavery Ended in 1865?" Go read.

Folly By Golly: There is no good reason to attack Iran and every good reason not to do so. So, will they? Quite possibly. Why? Because they can. That may be the best explanation.

Mark To Myth: The National Australia Bank has marked nearly a billion dollars worth of AAA super and senior "strips" at 10 cents on the dollar. Is NAB being over-cautious or simply realistic? Better hope they are a bunch of nervous Nellies, because a similar truth-telling markdown by a couple of big US institutions would end the good times.

Porn O'Graph: Banking on the good times.

Friday, July 25, 2008

SAR #8207

Peak oilers have physics on their side.

Gone Fish'n: The experts (you know who they are) are now proud that profits and the market are - as Mom used to say about my grades - "not as bad as expected". Given the general herd mentality, I'm waiting until they all are wearing sack-cloth and ashes.

Splash: The collapse of IndyMac and Fannie and Freddie's death spiral are being ignored, while the market votes to believe that the US taxpayer is going to rescue Wall Street.

Essay Contest: In 500 words or less describe events surrounding Washington Mutual without using the phrase 'run on the bank'. Usual prize, or 10 WaMu shares, whichever is less.

Without Comment: "Gov. Arnold Schwarzenegger is planning to cut the pay of about 200,000 state workers to the federal minimum wage of $6.55 an hour until a budget is signed, according to a draft of the governor's order obtained by The LA Times."

Atheists In Foxholes: PIMCO's Bill Gross thinks about a trillion dollars in US mortgages are going to be written off. Bill's an optimist.

Sunny Side: The National Safety Council reports that traffic deaths are dropping as the price of gasoline rises, with a 9% drop so far this year compared to last.

Pick A Number: Over the next 5 years, Fitch Ratings expects US house prices to decline: (a) 8%, (b) 25%, (c) 33%, (d) 47%, (e) all of the above.

Why A, If B? (A) Natural gas prices have plummeted in recent days. (B) Merrill Lynch (among others) predict that a “brutal winter (is) coming for utility bills.” ...“This is going to be huge.” A combination of natural gas shortages and the consumers increasing inability to pay for it is already leading to problems that can only get worsen as time passes.

Check's In The Mail: As the government prepares to use taxpayer's pocketbooks to bail out Fanny n' Freddie (and Wall Street, soon), their efforts have lead to an increase in mortgage rates. That'll stimulate the heck out of home construction.

Wells, Reasoned: Discussions of drilling in ANWR and on the OCS are often more emotional than rational. It's nice to see a calm, reasoned article that is neither panic nor platitude; "the oil won't flow from these areas for perhaps a decade, but by then we are likely to be in very bad need of it."

Stop Me If You've Heard This One... Housing sales fell "more than expected" last month while house prices dropped further.

Divorce Is Inevitable: There's getting to be a steady background buzz to the effect that Uncle Sam's indulgent creditors may be becoming a bit less credulous. It'll be interesting to see what happens when the music stops and there are nowhere near enough chairs to go around.

Wrong Question: Over At Economist's View the question is "Why Is Airline Service So Bad?" The real question is "Why do Americans put up with being treated like children?"

Porn O'Graph: Its the demand, stupid!

Sunday, July 20, 2008

SAR # 8202

In whose interest was it to make our currency
the harlot of the world?

Credit Where Credit Is Due: Oil at $140 a barrel gets the headlines, yet the US uses only 15% more today than it did in the early 1970s. Meanwhile, electricity consumption has grown 115%. Think of Ready Kilowatt as round two.

Band Aid Removal: Theories vary. Some prefer the quick but sharp pain of sudden removal; others prefer to proceed slowly and deliberately, suffering a little pain, longer. Same choices seem to exist in the credit crunch rectification business. I suspect it will be both sudden, sharp, and very slow to go away.

Feeling Safer: In 2004 Dr. Steven Kurtz, of the University of Buffalo, was arrested for having petri dishes of the bacteria Bacillus subtilis at home. He was using them in an artwork about genetically modified foods. The FBI labeled him a bio-terrorist even though tests showed the microbes to be harmless. Dr Kurtz was incarcerated under that part of the Patriot Act designed to protect Monsanto from tasteless artwork. In the end Kurtz was charged with mail fraud. When the case - after four years of harassment - got to court, the judge immediately dismissed it. Feel safer now?

Crawl First, Walk Later: We cannot wait until the fuel runs out to find a new fuel, a new energy source, a new basis for our economy and a new civilization. These steps need be taken while we still have access to cheap and plentiful petroleum, not after. Now, not 10 years from now; but we won't.
Guess the Date: Usual prize for the person coming closest to picking the date of the first military skirmish over Arctic resources. Bonus points for naming the combatants..

Even with my warped view of the world one gets tired and needs rejuvenation. Thus a vacation. We will return about July 25th. Meanwhile go visit the guys listed on the left.

Saturday, July 19, 2008

SAR # 8201

As a species our main talents are lying and killing.
- Ilargi

Gone Fishing: Oxygen-starved dead zones have increased 30% in two years. There were 44 such areas in 1995, now there are over 400. Runoff of fertilizers, topsoil and sewage combine with global warming's warmer waters to suffocate all life in these areas. Another dead canary.

Dizzyland: Saudi Arabia is a magical kingdom; they have pumped over 46 billion barrels of oil without any decrease in their reserves and without finding any new oil. Imagine what must be going on behind the curtain.

Hip Bone's Connected To The... Fish cost more because fishing boats run on increasingly expensive diesel and the catches are dwindling due to overfishing. The captain cuts wages and tries to get the bank to refinance the boat. Oil, Food, Credit.

Grades: If the Fed's efforts in the housing and credit crisis were marked pass/fail...

Reorganization: Studies of Greenland ice cores reveal that the Northern Hemisphere's atmospheric circulation was twice 'reorganized' in one or two years, with the temperature rising over 20º F in the following 50 years. This will happen again.

Casualty: The internet is supported by advertising. In a steepening recession, at what point does the decline in the economy begin to dry up the funds that keep the internet interneting?

Impermanet Frost: The permafrost in East Siberia holds about a thousand trillion pounds of CO2 which has been frozen in the soil for over 20,000 years. Don't worry, it's only just starting to melt a bit.

Friday, July 18, 2008

SAR # 8200

Secretly, late at night, don't you suspect
that Malthus was right?

Over the Rainbow: USB, Lehman Brothers, and Deutsche Bank all claim the S&P will gain the most in 26 years during the second half of 2008. Before you get too excited, stop and reflect on how well UBS and Lehman's have been doing of late.

Good News, Bad News: The good news is that this is not a financial crisis. The good news is that a recession is not the worst possible outcome. You don't want to know the bad news.

Fair's Not Fair: FAS rule 157 - the mark-to-market rule - was great when the mathmagicians invented CDOs that were worth more than the mortgages they were based on. Now that the CDOs are worth less, often far less, than the underlying mortgages, rule 157 is "problematic" Does this dress make me look fat?

Quoted: "The first two of the four indictable offenses at Nuremberg were: 1. Participation in a common plan or conspiracy for the accomplishment of crime against peace. and 2. Planning, initiating and waging wars of aggression and other crimes against peace. One hopes most senior US military officers are aware of this fact."

Here's a TIPS: Treasury Inflation Protected Securities don't have a chance as long as they are tied to the US governments deceitful version of inflation.

Choice of Concerns: Energy investment banker Matt Simmons says that by 2015 the worry isn't that we may produce 60 million barrels of oil a day, but that we will only be able to produce 40. “We are living in an unsustainable society. If we don't change we are just going to start fighting one another... So let's just start assuming the worst and plan for it.”

The Three Big Lies: The check's in the mail. I'm from the government and I'm here to help. Saudi Arabia can produce 12 million barrels a day of crude oil for the next 20 years.

Lose/Loose: In one of mankind's rare acts of cooperation, the ozone hole over the Antarctic is finally beginning to subside. As the hole recovers to pre-1969 levels towards the end of this century it will cause air temperatures to rise about 9º C, enough to begin melting. No more fire, the flood next time...

Leaning Tower: If my neighbor's $400,000 mortgage is converted to a $250,000 fixed rate 30 year loan, at no cost to him, why should I keep paying my on my overpriced now underwater mortgage that I have no equity in it? I'd better walk away; buy the same thing down the block for less. That's how Congress is going to save the neighborhood.

Thursday, July 17, 2008

SAR # 8199

It wasn’t incompetence after all; they planed this!

On Being Prepared: Demitri Orlov, who lived through the Russian collapse and rebirth, suggests that most Americans cannot imagine life without money. He suggests some thought be given to this possibility. Soon.

Confusing Facts: While importing over 60% of its crude oil, the US oil industry is exporting 1.6 million barrels a day of refined petroleum products - a 30% increase from a year ago. That's twice as much as the EIA estimates could ever be pumped from ANWR. So let's start drilling so big oil can export even more.

Prior Restraint: Under a Bush proposal, a factory farm could get a permit uncer the Clean SWter Act by claiming they will not discharge animal waste into waterways. Once granted the permit the federal government could not check and see if they were violating the law. I'm going down to the police station and promising not to commit murder....

Tick Tock, Tick Tock: Delinquencies on home-equity lines of credit (HELOC) are on the rise, as are delinquent credit card accounts, as people tap any available source of funds to pay daily expenses. This is bad for the customers - what will they use to live on when the credit's gone? And it is terrible for banks - nearly 100% of HELOC defaults get written to zero.

Teeter Totter: According to the IMF if food and energy prices rise further, "some governments will be unable to feed people and at the same time maintain stability in their economy." Remember Maslov's hierarchy?

...Gone Tomorrow: Scientists have discovered that man's impact on the environment is driving endangered species to extinction 100 times faster than previously thought. Penguins and polar bears, among many others.

Wednesday, July 16, 2008

SAR # 8198

Peak oil: The end of 'more'.
Wendell Barry

Neighborhood Guards: That's what Genral Pretraeus calls the thugs we are arming throughout Iraq. According to the troops, "We are basically paying these guys off with money and weapons to not kill us."

Better Things... Thru Chemistry: Gardeners in the UK have watched as their crops wither. The government has warned them not to eat their produce. The culprit, a new herbicide. But the gardeners didn't use the stuff - it was sprayed on crops that cattle ate and was transferred to the gardens with the animals' manure. Dow, maker of the poison, has "full sympathy for everyone involved." Especially Dow and their shareholders.

Faster And Faster: Again the IPCC's climate predictions turn out to be conservative. The world's oceans have warmed 50% faster than predicted. This will lead to changes in sea level, sea life, and climate patterns. None of this is good.

The Fire Next Time: Now that the sub-prime mortgage write-offs are tapering off, the next batch of disagreeable announcements will come from Option ARMs. Business Week is estimating that the default rate on Option ARMs over then next 12 to 18 months will be in excess of 50%.

Plagiarism? There appears to be strong evidence that the life of Jesus as depicted in the New Testament follows a script in circulation many years before he was born.

Drain: An ever growing part of economic growth - in the US and UK - has been based on debt. As credit extension slows, so will the economy. Idle productive capacity will increase and idle workers will follow. This is bad news for stockholders.

Tuesday, July 15, 2008

SAR #8197

The US now is a market democracy,
one dollar equals one vote.

Oil Or Consequences: At $150 a barrel, petroleum will bring a change of leadership. At $200 a barrel, it will bring a change of government. Not long after the airlines and trucking companies face bankruptcy the populace will awaken to the bankruptcy of capitalism as practiced since Reagan. And dollar denominated democracy with it.

Flushed: Beijing will run out of water within 10 years. Removing much of the population elsewhere is complicated by the fact that there is no "elsewhere". Can 7 or 8 million Chinese come camp in your back yard?

Words Of One Syllable: OPEC's president, Chakib Khelil, explained "The price of oil will rise again in the coming weeks. We have to follow the evolution of the dollar, because a one percent fall in the dollar means four dollars more on the price of oil."

If Only...: The key to the proposed housing bailout legislation is finding a way to make homeowners into renters of the houses they once were buying, and make them happy about it, while preserving the profits for the investment community and getting most of the House and Senate re-elected.

Silence: People ask "What's after oil?" as though there was an answer.

Say 'When': Waterboard 'em. Bury them alive. Hoist them by the hands tied behind the back until they suffocate on their collapsing lungs. All this, and more, is quite legal, according to John Yoo, who ought to stand trial next to Bush and Rumsfeld and Cheney when the time comes.

We Don't Need No Infrastructure: In 2005 the American Society of Civil Engineers estimated that $1.6 trillion was needed over five years to bring just the existing infrastructure into good repair. This does not account for future needs. By 2020 freight volumes are projected to be 70% greater than in 1998 - but our highways, railways and airports are deteriorationg. "We're basically sliding toward Third World status," said Rep. Peter DeFazio, D-Ore. "It's pathetic. "

Monday, July 14, 2008

SAR # 8196

Newspapers are starting to look remarkably Biblical.

Yacht Sales: Tom Petrie of Merrill Lynch says "we need to use price as a way to ration consumption." JP Morgan said that if you have to ask the price, you can't afford it.

First: The Brits owe 173% of what they make; more debt than any G7 nation's citizens ever have struggled under. If somehow they could live within their incomes and pay off even 10% of their debt it would take them, with interest, well over two decades to break even. Given the coming world recession, three decades, if ever. Ireland is not a G7 (ie: important) nation, but things are much worse there.

Buffet: The mountain pine beetle is happily eating its way across western Canada, headed eastward and northward as the climate warms. It leaves behind a matchstick desert, waiting for wildfire. It has killed half of British Columbia's lodgepole pines in a decade and will kill another 25% in the next few years. Worse, it threatens the boreal forest that spreads across Canada to Newfoundland, south into the US.

Oil For War: The US military in Iraq will now be paying $170.94 a barrel for refined fuel, a 34% increase in six months. I don't know who is losing in Iraq, but I'm pretty sure who's winning.

Once More, With Stealing: The greatest hurdle Peak Oil presents us is the breakdown in our social and political systems. There will arise charlatans and demagogues who will pander to the publics fears. These people are incredibly dangerous.

Planning Ahead: As crisis piles on top of disaster, and economies creak under the weight, those who have read Naomi Klein wonder if it isn't all part of The Plan. Or a result of The Plan going awry on a global scale.

Sunday, July 13, 2008

SAR # 8195

On a per capita basis oil production
has been falling since 1971

Real World: The US list of state sponsors of terrorism includes North Korea, which has not been linked to a single terrorist act in 20 years, and does not include Venezuela, which has been linked to a steady flow of oil for over 20 years. Terrorism is obviously in the eye wallet of the beholder.

Quoted: "When the summer is over, we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit." - Tom Friedman.

Scale: "To put things in perspective, today's extra shipping cost from East Asia is the equivalent of imposing a 9% tariff on East Asian goods entering North America," said Rubin of CIBC World Markets. "At $200 per barrel, the tariff equivalent rate will rise to 15%.

How High The Seas ? The West Antarctic Ice Sheet could collapse within the next 20 years, bumping up seal levels worldwide about 15 feet. Ashland, North Carolina will be on the coast.

End of an Era: Signs of approaching doom: The giant oilfields that have carried us for 50 years are running dry. Each year more money is spent on exploration. Each year less and less is found. There's a pattern here.

Why Worry? More than half of the world's ocean-going sharks are at risk of extinction, a new analysis concludes. Specialists with IUCN (formerly the World Conservation Union) found that 11 species are on the high-risk list, with five more showing signs of decline. Sharks are particularly affected by over-fishing as they reproduce slowly. Sharks are the sanitation workers of the oceans; unlovely perhaps, but necessary.

Non-Lethal: About one-third of people shot with Tasers are injured sufficiently to require medical treatment. Not lethal, but not quite as harmless as advertised.

Saturday, July 12, 2008

SAR # 8194

Civilization is about three meals from anarchy.

Foreign Policy 101: International politics is a competition to see who will control how fast the last barrel of oil gets used and how much the others will have to pay for a cup of it.

Science of Denial: Bush/Cheney tried mightily to muzzle science and scientists in order to allow its supporters to continue to profit from endangering the whole planet by pretending the science was unclear. And they have managed to continue the charade for eight years, much to the shame of Congress, the Press, and the People.

How Come? Why is it that the US has a Strategic Petroleum Reserve but no Strategic Food Stockpile? a) George hasn't had the dream about seven lean years b) let them eat cake, or c) the military can forage for food - if they have the fuel.

Well Supplied: Supply side economics is a nice story, a hopeful story. It offers a clean, plausible policy framework: lower taxes to encourage investment, and prosperity is sure to follow. Trouble is that after 20 years it still hasn't worked. The only thing about the supply side policies that worked was the shift of taxes from the rich to the poor and money from the poor to the rich.

Anticipation: With oil at $130 a barrel and gasoline at $4.00 a gallon, what's there to look forward to? Alexei Miller, Gazprom's CEO, suggests $250 in 18 months is a reasonable expectation, mostly as a result of Bush's bumbling attempt to 'secure' Middle Eastern and Caspian oil.

Crude: Saudi net petroleum exports peaked in 2005, while their production has steadily increased. Net exports fell 10.5% between 2005 and 2007, dropping from 9.2 mbd to 8.2 mbd. Saudi Arabia may be upping production; doesn't mean they're sending it to the US..

Porn O'Graph: Bringing it home.

Friday, July 11, 2008

SAR # 8193

Here’s what’s scary:
Our problem is much worse than you think.
Tom Friedman

Arctic Bonanza: Russia's Gazprom estimates that natural gas from the Yamal peninsula will cost $91 a thousand cubic meters verses the $7 a thousand for older fields. Gas from the Arctic shelf will be double or triple that.

Zombification: Term used to describe the future of the regional and small banks that do not fail quickly, but rather languish for years, teetering on the edge but not quite failing.

Money Trail: If you want to know what will be done about the energy crisis, figure out who can make the most money doing what. Bingo. It doesn't have to solve the problem. It doesn't even have to work. But it must generate enough money to profit the insiders and pay off the politicians, who will provide the tax breaks and public funding for private profit.

Monkey See: The US has decided that if you try to quit America with more than $600,000 in assets, there'll be an exit fee. They got the idea from the hedge funds.

The Optional Curse: Option ARMs - those delightful "products" that let the debtor decide if and when to make payment - will begin resetting en mass in April 2009, at $5 billion a month and build to $10 billion a month by January 2010. Nearly all these mortgages are now underwater. Selling or refinancing them will not be viable alternatives. That's not light at the end of the tunnel, it's a bonfire. Maybe a firestorm.

Volunteers: Nigeria needs $85bn of investment in its power infrastructure in order to produce electricity 24 hours a day, experts say. Great deal! They'll pay you back in oil.

RRRRRRRRRRRead: An Indiana teacher who tried to inspire her students was suspended for 18 months for using an award winning book, The Freedom Writers Diary. Someone should encourage the school board to read the Constitution.

Ouija Board : The Federal Energy Regulatory Commission warns that prices for natural gas and coal will result in "significantly higher power prices that will last for years to come.”